Slide 1: Third Quarter 2016 Earnings Call
Third Quarter 2016 Earnings Call October 27, 2016 Rob Wagman – President & Chief Executive Officer Nick Zarcone – Executive Vice President & Chief Financial Officer Joe Boutross – Director, Investor Relations
Slide 2: Forward Looking Statements
Forward Looking Statements Statements and information in this presentation that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act. Forward-looking statements i
Slide 3: Mission Statement
Mission Statement To be the leading global value-added distributor of vehicle parts and accessories by offering our customers the most comprehensive, available and cost effective selection of part solutions while building strong partnerships with our employees and the communities in which we operate
Slide 4: Consolidated Results
Consolidated Results Q3 2016 YTD 2016 $6,759 $2,600 $0.50 $2,387 $6,600 $0.45 $1.50 $1.41 $2,300 $0.45 $6,200 .2% 24 .6% .3% $1.35 22 30 $0.40 .0% .0% 25 $5,800 14 $1.22 $0.40 $2,000 % $1.15 1.2 $5,444 $1.20 $1,832 2 $0.36 $5,400 $1.07 $0.35 $0.33 $1,700 $1.05 $5,000 $0.30 $0.90 $1,400 Diluted EPS A
Slide 5: Q3 2016 Revenue Growth
Q3 2016 Revenue Growth Revenue Changes by Source: Organic Acquisition Foreign Exchange Total(1) North America 2.1% 0.2% —% 2.3% Europe 6.7% 54.6% (10.6)% 50.8% Specialty 3.7% 6.2% —% 9.9% Glass nm nm nm nm Parts and Services 3.7% 32.6% (3.2)% 33.2% Other Revenue (10.1)% 0.8% (0.2)% (9.4)% Total 2.8%
Slide 6: YTD 2016 Revenue Growth
YTD 2016 Revenue Growth Revenue Changes by Source: Organic Acquisition Foreign Exchange Total(1) North America 3.3% 2.0% (0.3)% 5.1% Europe 7.2% 41.1% (6.3)% 42.0% Specialty 7.3% 8.9% (0.4%) 15.8% Glass nm nm nm nm Parts and Services 5.1% 24.0% (2.1)% 27.0% Other Revenue (17.2)% 3.8% (0.2)% (13.6)%
Slide 7: Q3 2016 Operating Highlights
Q3 2016 Operating Highlights North America • Roadnet routing software installed in 93% of North American fleet (3,300 trucks) representing an average of 49,500 daily deliveries • Roadnet is continuing to drive a lower cost per stop • On pace for 1,000 new trucks to be introduced into the fleet.This
Slide 8: Inventory
Inventory Inventory Procurement: Q3 YTD ($ in millions, Cars purchased in 000s) 2016 2015 % Change 2016 2015 % Change Total procurement $1,267 $747 69.6% $3,320 $2,136 55.4% Wholesale salvage cars and trucks 70 71 (1.4)% 214 216 (0.9)% Europe wholesale salvage cars and trucks 5 5 —% 17 16 6.3% Self
Slide 9: Acquisition Activity
Acquisition Activity Number of Q3 TTM Number of YTD TTM Acquisitions Revenue* Acquisitions Revenue* North America 1 $9.0 million 1 $9.0 million Europe 3 $61.0 million 6 $1.1 billion Specialty — — — — Glass — — 1 $1.1 billion Total 4 $70.0 million 8 $2.2 billion North America • We acquired a small sa
Slide 10: Financial Results
Corporation Financial Results
Slide 11: Operating Results
Operating Results Third Quarter YTD ($ in millions,except per share data) 2016 2015 Change 2016 2015 Change Revenue $2,387 $1,832 30.3% $6,759 $5,444 24.2% Gross Margin 883 713 23.9% 2,566 2,136 20.1% Segment EBITDA* 274 207 32.1% 829 662 25.3% Operating Income 203 167 21.7% 632 553 14.3% Pre-tax In
Slide 12: Q3 2016 Consolidated Margins
Q3 2016 Consolidated Margins Q3 Q3 Change (as a % of Revenue) 2016 2015 F/(U) QTD Commentary Revenue 100.0% 100.0% —% Primarily reflects a negative effect of 1.7% and 0.8% from our PGW and Rhiag acquisitions, respectively. Gross Margin 37.0% 38.9% (1.9)% Offsetting these negative impacts was a 0.9%
Slide 13: YTD 2016 Consolidated Margins
YTD 2016 Consolidated Margins YTD YTD Change (as a % of Revenue) 2016 2015 F/(U) YTD Commentary Revenue 100.0% 100.0% —% Reflects a negative effect of 1.3% and 0.5% from our PGW and Rhiag acquisitions, respectively. These negative Gross Margin 38.0% 39.2% (1.2)% impacts were partially offset by high
Slide 14: Components of Quarterly Revenue
Components of Quarterly Revenue $2.39B $1.83B $6.76B $5.44B • A large portion of change in margins on a 100.0% 4.7% 6.6% 4.9% 7.2% consolidated basis is attributable to change in 10.8% 6.9% 15.5% revenue mix 14.8% 80.0% 13.8% 13.1% • North America historically has highest Gross margins and EBITDA ma
Slide 15: North America – Q3 2016 Results
North America – Q3 2016 Results % of Revenue Gross Margin ($ in millions) 2016 2015 Change 2016 2015 44.1% Total Revenue $1,047 $1,037 0.9% 43.8% 44.0% 43.2% Gross Margin $459 $438 4.7% 43.8% 42.2% 42.7% Operating Expenses $320 $312 2.6% 30.6% 30.1% 42.7% 42.0% 42.4% 42.2% Segment EBITDA* $141 $129
Slide 16: North America – YTD 2016 Results
North America – YTD 2016 Results % of Revenue ($ in millions) 2016 2015 Change 2016 2015 Total Revenue $3,215 $3,129 2.8% Gross Margin $1,400 $1,328 5.4% 43.5% 42.5% Operating Expenses $955 $916 4.2% 29.7% 29.3% Segment EBITDA* $452 $417 8.5% 14.1% 13.3% *Refer to segment EBITDA reconciliation on pa
Slide 17: Scrap Steel Prices
Scrap Steel Prices $200 • Decrease in other revenue partially attributable to lower scrap steel prices YOY $150 $141 $140 • Average price we received for scrap steel was ~4% lower YOY, at $123 $138 $123 per ton for Q3 2015 vs. $118 $118 per ton in Q3 2016 • Estimated positive YTD EPS $100 impact of
Slide 18: Europe – Q3 2016 Results
Europe – Q3 2016 Results % of Revenue Gross Margin ($ in millions) 2016 2015 Change 2016 2015 40.0% 38.9% Total Revenue $770 $511 50.7% 37.9% 38.1% Gross Margin $279 $196 42.6% 36.2% 38.3% 38.0% 38.3% 37.4% Operating Expenses $207 $145 42.3% 26.9% 28.4% 37.0% 36.0% Segment EBITDA* $73 $53 37.6% 9.4%
Slide 19: Europe – YTD 2016 Results
Europe – YTD 2016 Results % of Revenue ($ in millions) 2016 2015 Change 2016 2015 Total Revenue $2,141 $1,508 42.0% Gross Margin $796 $569 39.8% 37.2% 37.7% Operating Expenses $577 $416 38.8% 27.0% 27.6% Segment EBITDA* $220 $153 43.6% 10.3% 10.2% ECP Branches 210 198 12 Sator Branches 92 86 6 *Refe
Slide 20: Foreign Exchange
Foreign Exchange $1.65 • £ down 15% Q3 2016 vs. Q3 2015 • UK referendum to leave the EU $1.55 $1.55 $1.52 $1.53 $1.52 had an impact on Q3 2016 average rate $1.45 $1.43 • € up 1% Q3 2016 vs. Q3 2015 $1.44 • Translation impact of stronger $1.35 dollar on Europe revenue growth: $1.31 – Q3: $(54) millio
Slide 21: Specialty – Q3 2016 Results
Specialty – Q3 2016 Results % of Revenue Gross Margin ($ in millions) 2016 2015 Change 2016 2015 32.0% 30.8% Total Revenue $313 $284 9.9% 30.3% 30.0% 29.2% 30.1% Gross Margin $87 $79 10.1% 27.9% 27.9% Operating Expenses $55 $53 4.1% 17.7% 18.7% 28.0% 27.9% 27.7% 27.9% Segment EBITDA* $32 $26 24.4% 1
Slide 22: Specialty – YTD 2016 Results
Specialty – YTD 2016 Results % of Revenue ($ in millions) 2016 2015 Change 2016 2015 Total Revenue $938 $810 15.8% Gross Margin $273 $239 14.0% 29.1% 29.5% Operating Expenses $169 $148 14.0% 18.0% 18.2% Segment EBITDA* $106 $92 15.6% 11.3% 11.3% *Refer to segment EBITDA reconciliation on page 31 Spe
Slide 23: Glass – Q3 and YTD 2016 Results
Glass – Q3 and YTD 2016 Results Q3 2016 QTD % of Revenue ($ in millions) 2016 2016 Total Revenue $259 Gross Margin $59 22.6% Operating Expenses $37 14.1% Segment EBITDA* $28 10.7% *Refer to segment EBITDA reconciliation on page 31 Q3 2016 YTD % of Revenue ($ in millions) 2016 2016 Total Revenue $469
Slide 24: 2016 Capital Allocation
2016 Capital Allocation $ in millions $2,400 $1,631 $2,200 $2,000 $(153) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $524 $600 $400 $272 $200 $87 $(1,815) $(3) $0 Beginning Cash Operating Cash Financing Capex Acquisitions & F/X and other Ending Cash 12/31/15 Flows Other Investing 9/30/16 Activities • Op
Slide 25: Leverage & Liquidity
Leverage & Liquidity ($ in millions ) ($ in millions ) Revolver Availability(1) $3,600 8.0x $4,000 $3,290 $3,200 $272 $3,500 $3,199 $3,018 $2,800 6.0x $3,000 $2,400 $1,177 $2,500 $2,261 $2,000 4.0x $2,000 $71 $1,600 $1,600 $87 $1,513 2.6x $1,304 $1,500 $1,200 2.0x $1,000 $66 $1,951 $800 1.7x $400 $5
Slide 26: Key Return Metrics
Key Return Metrics Return on Equity Return on Invested Capital* 14.0% 14.9% 15.0% 14.4% 14.5% 14.5% 14.7% 13.7% 12.0% 10.9% 10.9% 10.8% 10.9% 10.8% 10.5% 12.0% 10.0% 9.0% 8.0% 6.0% 6.0% 4.0% 3.0% 2.0% 0.0% 0.0% 2011 2012 2013 2014 2015 TTM Q3 2011 2012 2013 2014 2015 TTM Q3 2016 2016 (*) Amortizatio
Slide 27: Guidance 2016
Guidance 2016 (effective only on the date issued: October 27, 2016) Full Year 2015 Full Year 2016 ($ in millions excluding EPS) Actual Guidance(1) Organic Revenue Growth, for parts and services 7.0% 4.5%-5.0% Adjusted Net Income(2) $459 $551-$569 Adjusted Diluted EPS(2) $1.49 $1.78-$1.84 Cash Flow f
Slide 28: Q3 2016 Key Takeaways
Q3 2016 Key Takeaways • Organic revenue growth of 3.7% and 5.1% for parts and services in Q3 and YTD 2016, respectively • Constant currency* revenue growth of 36.4% and 29.1% for parts and services in Q3 and YTD 2016, respectively • Net Income improvement of 21.1% and 15.1% for Q3 and YTD, respectiv
Slide 29: Consistent Business Model and Strategy
Consistent Business Model and Strategy Niche and Fragmented Markets High Industry Leading Fulfillment Management Rates Attractive Synergy and Adjacent Leverage Markets Opportunities Sustainable Growth and Margin Expansion 28
Slide 30: Appendix - Non-GAAP Financial Measures
Appendix - Non-GAAP Financial Measures This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included with this presentation are reconciliations of each non-GAAP financial measure with the most directly compar
Slide 31: Appendix 1- Constant Currency Reconciliation
Appendix 1- Constant Currency Reconciliation • The following unaudited table reconciles revenue growth for Parts and Services to constant currency revenue growth for the same measure: Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 Consolidated Europe Consolidated Europe P
Slide 32: Appendix 2- EBITDA and Segment EBITDA Reconciliation
Appendix 2- EBITDA and Segment EBITDA Reconciliation QTD** YTD** % of % of % of % of (in millions) Q3 2016 revenue Q3 2015 revenue Q3 2016 revenue Q3 2015 revenue Segment EBITDA North America $ 141.1 13.5% $ 128.5 12.4% $ 452.3 14.1% $ 416.8 13.3% Europe 72.6 9.4% 52.8 10.3% 220.1 10.3% 153.2 10.2%
Slide 33: Appendix 2- EBITDA and Segment EBITDA Reconciliation
Appendix 2- EBITDA and Segment EBITDA Reconciliation We have presented EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our operating performance and the value of our business. We calculate EBITDA as net
Slide 34: Appendix 3- Adjusted Net Income and EPS Reconciliation
Appendix 3- Adjusted Net Income and EPS Reconciliation* QTD YTD (in millions, except per share data) Q3 2016* Q3 2015* Q3 2016* Q3 2015* Net Income $122.7 $101.3 $377.6 $328.2 Adjustments: Restructuring and acquisition related expenses 8.4 4.6 32.3 12.7 Loss of debt extinguishment — — 26.7 — Amortiz
Slide 35: Appendix 3- Adjusted Net Income and EPS Reconciliation
Appendix 3- Adjusted Net Income and EPS Reconciliation We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share as we believe these measures are useful for evaluating the core operating performance of our business across reporting periods and in analyzing the company’s historica
Slide 36: Appendix 4- Forecasted EPS reconciliation
Appendix 4- Forecasted EPS reconciliation* (in millions, except per share data) Minimum Guidance Maximum Guidance Net Income $475 $493 Adjustments: Restructuring and acquisition related expenses 32 32 Loss of debt extinguishment 27 27 Amortization of acquired intangibles 83 83 Inventory step-up adju