Slide 1: First Quarter 2022 Earnings Call
First Quarter 2022 Earnings Call April 28, 2022 Nick Zarcone – President & Chief Executive Officer Varun Laroyia – Executive Vice President & Chief Financial Officer Joe Boutross – Vice President, Investor Relations
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures 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 A
Slide 3: Q1 2022 Highlights
Q1 2022 Highlights • Strong organic revenue and EPS growth enabled by focus on key operational initiatives ◦ Total Q1 revenue growth of 5.6%; organic revenue growth for parts and services of 6.9% ◦ Net income from continuing operations of $269 million ◦ Segment EBITDA(3) of $447 million for a margin
Slide 4: Consolidated Results Q1 2022
Consolidated Results Q1 2022 Revenue(1) EPS(2) +5.6% +6.8% +6.4% $1.10 $1.10 $3,600 $1.00 $1.00 $1.00 $3,400 $3,348 $0.94 $0.94 $1.00 $0.90 $0.88 $0.90 $0.94 $3,171 $3,200 $0.80 $0.80 $3,000 $0.70 $0.70 $2,800 $0.60 $0.60 $2,600 $0.50 $0.50 $2,400 $0.40 $0.40 $0.30 $0.30 $2,200 Q1 2021 Q1 2022 Q1 20
Slide 5: Demand Impact
Demand Impact Organic Parts & Services Revenue Change (Per Day) 40% 33.0% 30.1% 30% 21.3% 19.2% 20% 13.7% 14.6% 11.8% 10.0% 10.2% 10% 7.3% 6.2% 5.4% 6.0% 3.6% 1.8% 0.3% 0.1% 0% (4.7)% (10)% (7.5)% (9.8)% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Wholesale - North America Europe Specialty Self Service
Slide 6: Q1 2022 Revenue
Q1 2022 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% 7.3% 7.5% Wholesale - North America 13.6% 0.6% —% 14.2% 1.7% 1.6% 13.7% Europe 6.9% 0.3% (5.5)% 1.8% 14.4% Specialty (8.3)% 8.8% —% 0.4% 75.0% Self Service 14.6% —% —
Slide 7: Financial Results Q1 2022
Financial Results Q1 2022
Slide 8: Operating Results
Operating Results First Quarter Change ($ in millions, except per share data) 2022 2021 F/(U) Revenue $3,348 $3,171 5.6% Gross Margin 1,357 1,294 4.9% Operating Expenses 924 849 (8.9)% Operating Income 371 371 —% Pre-tax Income 356 353 0.7% Net income from continuing operations 269 266 0.8% Segment
Slide 9: Wholesale – North America – Q1
Wholesale – North America – Q1 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 50.0% 49.1% Total Revenue $1,201 $1,051 14.3% 49.0% Gross Margin $572 $500 14.5% 47.6% 47.6% 47.6% 47.5% 47.6% 48.0% 47.2% Operating Expenses $359 $309 (16.1)% 29.9% 29.4% 47.0% Other Income, ne
Slide 10: Europe – Q1
Europe – Q1 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 41.0% Total Revenue $1,488 $1,463 1.7% 40.0% Gross Margin $562 $562 —% 37.8% 38.4% Operating Expenses $439 $424 (3.6)% 29.5% 28.9% 39.0% 39.6% Other (expense) income, net $(2) $2 38.0% 38.4% 38.4% Segment EBITDA(1
Slide 11: Specialty – Q1
Specialty – Q1 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 29.9% 29.9% 30.0% Total Revenue $461 $459 0.4% 28.8% 28.2% Gross Margin $138 $132 4.2% 29.9% 28.8% 28.0% Operating Expenses $81 $72 (12.5)% 17.5% 15.6% Segment EBITDA(1) $58 $61 (5.5)% 12.6% 13.4% 27.1% 26.0% (
Slide 12: Self Service – Q1
Self Service – Q1 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 50.1% 51.0% 48.6% Total Revenue(2) $199 $199 —% 48.0% Gross Margin $86 $100 (14.0)% 43.1% 50.1% 45.0% 42.5% 43.1% Operating Expenses $46 $45 (4.0)% 23.3% 22.4% 42.0% Segment EBITDA(1) $40 $56 (28.5)% 20.0% 2
Slide 13: Q1 2022 Capital Allocation
Q1 2022 Capital Allocation ($ in millions) $750 $409 $(59) $(53) $500 $(144) $327 $274 $(71) $(23) $(6) $250 $0 Beginning Cash Operating Cash Capex Debt Repayments, Share Dividends Other Activity, net FX Ending Cash 12/31/21 Flows Net Repurchases 3/31/22 • Operating cash flows: ▪ Operating cash flow
Slide 14: Operating Cash Flow and Free Cash Flow
Operating Cash Flow and Free Cash Flow (1) ($ in millions) $1,600 100% 98% $1,400 90% Actual FCF (2) 80% 80% conversion of EBITDA $1,200 66% 70% 60% $1,000 60% Targeted annual FCF conversion of EBITDA- $800 50% 55%-60% $1,444 $1,367 $600 $1,271 40% $1,064 $1,074 30% $400 $798 20% $200 $350 $409 10%
Slide 15: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) Total Capacity(1) $4,000 $4,000 $3,500 $3,500 $3,150 $3,150 $3,000 $2,824 $2,721 $3,000 $274 $2,500 $327 $2,550 $2,500 $1,194 $1,268 $2,394 $2,000 $2,000 $69 $69 $1,500 $1,500 1.4x 1.3x $1,000 $1,000 $1,887 $1,813 $500 $500 $0 $0 December 31, 2021
Slide 16: Share Repurchase Program
Share Repurchase Program # of Shares 17.3 1.5 6.2 4.3 5.3 2.7 Repurchased Million Million Million Million Million Million $469 M $304 M $297 M $27.09 $219 M $144 M $49.21 $56.57 $50.50 $57 M $53.20 $38.35 2018 - 2020 Q1 2021 Q2 2021 (1) Q3 2021 (2) Q4 2021 Q1 2022 Invested $144 million repurchasing
Slide 17: Expanding Global ESG Programs
Expanding Global ESG Programs Our North American ENVIRONMENTAL Recycling Achievements Q1 2022 Global Leader in Vehicle Recycling • Europe segment continues to test & expand use of EV delivery • Our salvage operations recycle more than 90% of materials from vehicles total loss & end-of-life vehicles
Slide 18: Outlook 2022
Outlook 2022(1) (effective only on the date issued: April 28, 2022) Full Year 2022 Full Year 2022 Original Outlook(6) Updated Outlook Organic parts and services revenue growth 3.0% to 5.0% 4.5% to 6.5% Diluted EPS(2) $3.50 to $3.80 $3.57 to $3.87 Adjusted diluted EPS(2)(3) $3.72 to $4.02 $3.80 to $4
Slide 19: 2022 Adjusted EPS Guidance Walk
2022 Adjusted EPS Guidance Walk $5 $4.5 $0.08 $0.10 $0.10 $3.95 (1) $4 (1) ($0.09) $3.87 ($0.06) ($0.05) $3.5 $3 Previous FY 2022 Operating Results Scrap & Precious Share Repurchases PGW Divestiture Ukraine/Russia FX Rates Current FY 2022 Adjusted EPS Metals Prices Conflict Adjusted EPS (1) The amou
Slide 20: Supplementary Information
Supplementary Information a
Slide 21: Liquidity as of March 31, 2022
Liquidity as of March 31, 2022 • Rated BBB- (investment grade) by S&P Global Ratings (upgraded in April 2022) Credit Rating • Rated BBB- (investment grade) by Fitch (initiated in May 2021) • Rated Ba1 by Moody's • Fixed Interest Rate Bonds: €750 million ($830 million) in aggregate due in 2024 and 20
Slide 22: Metals Prices
Metals Prices Q1 scrap steel prices increased YoY Q1 precious metal prices declined Scrap steel impact • Average price for scrap steel increased from $213 per ton and QoQ YoY but increased sequentially in Q1 2021 to $265 per ton in Q1 2022 $275 • Sequential changes in scrap steel prices impacted $2,
Slide 23: Foreign Exchange
Foreign Exchange $1.45 • £ down 2.8% Q1 2022 vs Q1 2021 $1.40 • € down 6.9% Q1 2022 vs Q1 2021 $1.40 $1.35 • $79 million unfavorable impact of $1.38 $1.38 $1.34 $1.35 GBP weaker Q1 2022 rates relative to the (2.8% ) US dollar on Europe parts and services $1.30 revenue growth • Foreign exchange (tran
Slide 24: Inventory
Inventory Inventory Procurement: Q1 ($ in millions, Vehicles purchased in 000s) 2022 2021 % Change Total aftermarket procurement $1,675 $1,545 8.4% Wholesale - North America salvage vehicles 60 50 20.0% Europe wholesale salvage vehicles 8 7 14.3% Self Service salvage vehicles 135 137 (1.5)% • Afterm
Slide 25: Inventory Balances (Slide 1 of 2)
Inventory Balances (Slide 1 of 2) ($ in millions) $1,600 Wholesale - North America $100 Self Service $90 $1,400 2022 2 1 t o Q1 uild 0 b Q4 2 ventory (Glass) $80 2022 in to Q1 $20 M r le sa Q4 20 2 1 build $1,200 ) M h eld fo i n v e ntory $(100 $70 $8M $1,000 $961 $959 $60 $58 $50 $773 $776 $50 $80
Slide 26: Inventory Balances (Slide 2 of 2)
Inventory Balances (Slide 2 of 2) ($ in millions) $2,000 Europe $1,600 Specialty 2022 2 1 to Q1 $1,800 Q4 2 0 build in v entory ase $1,400 $9 M cre 2022 $ 36M) De 2 1 to Q1 $1,600 F X ( Q4 20 build M i n v entory $1,402 $1,200 $61 $1,400 $1,318 $1,303 $1,327 $1,300 $1,278 $1,000 $1,200 $1,000 $800 $
Slide 27: Appendix: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Following are reconciliations of each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP. 27
Slide 28: Constant Currency Reconciliation
Appendix 1 Constant Currency Reconciliation The following unaudited table reconciles revenue growth for Parts & Services to constant currency revenue growth for the same measure: Three Months Ended March 31, 2022 Consolidated Europe Parts & Services Revenue growth as reported 5.9% 1.8% Less: Currenc
Slide 29: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended March 31(1) % of % of (in millions) 2022 revenue 2021 revenue Revenue Wholesale - North America $1,201 $1,051 Europe 1,488 1,463 Specialty 461 459 Self Service 199 199 Eliminations (1) (1) Total Revenue $3,348 $3,171 Segment EBITDA
Slide 30: Reconciliation of Net Income to EBITDA and Segment EBITDA
Appendix 3 Reconciliation of Net Income to EBITDA and Segment EBITDA Three Months Ended March 31(1) (in millions) 2022 2021 Net income $273 $266 Subtract: Net income from discontinued operations 4 — Net income from continuing operations $269 $266 Add: Depreciation and amortization 59 66 Depreciation
Slide 31: EBITDA and Segment EBITDA Reconciliation
Appendix 3 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 32: Reconciliation of Net Income and EPS to Adjusted EPS
Appendix 4 Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS from Continuing Operations Three Months Ended March 31(1) (in millions, except per share data) 2022 2021 Net income $273 $266 Subtract: Net income from discontinued operations 4 — Net income from continuing opera
Slide 33: Adjusted Net Income and Adjusted EPS Definitions
Appendix 4 Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS from Continuing Operations We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations as we believe these measures are useful for evaluating the core operating perfor
Slide 34: Forecasted EPS Reconciliation
Appendix 5 Forecasted EPS Reconciliation(1) Forecasted Fiscal Year 2022 (in millions, except per share data) Minimum Outlook Maximum Outlook Net income from continuing operations $1,006 $1,090 Adjustments: Amortization of acquired intangibles 66 66 Restructuring expenses 18 18 Other adjustments 5 5
Slide 35: Reconciliation to Free Cash Flow
Appendix 6 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow Three Months Ended March 31(1) (in millions) 2022 2021 Net cash provided by operating activities $409 $523 Less: purchases of property, plant and equipment 59 42 Free cash flow $350 $481 Year Ended December 31(1
Slide 36: Free Cash Flow Definition
Appendix 6 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow We have presented free cash flow solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our liquidity. We calculate free cash f
Slide 37: Reconciliation of Total Debt to Net Debt
Appendix 7 Reconciliation of Total Debt to Net Debt (in millions) March 31, 2022(1) December 31, 2021(1) Current portion of long-term obligations $31 $35 Long-term obligations, excluding current portion 2,680 2,777 Total debt, net of debt issuance costs $2,711 $2,812 Add: Debt issuance costs 10 12 T