Slide 1: First Quarter 2023 Earnings Call Presentation
First Quarter 2023 Earnings Call Presentation April 27, 2023
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 2023 Highlights
Q1 2023 Highlights • Organic revenue growth for parts and services of 7.9% (7.1% on a per day basis) ◦ Wholesale - North America: 14.4% (quarterly record growth rate) ◦ Europe: 9.7% (8.2% on a per day basis) • Strong results enabled by focusing on key operational excellence initiatives ◦ Net income(
Slide 4: Outlook 2023
Outlook 2023(1) (effective only on the date issued: April 27, 2023) 2023 Full Year Outlook Organic parts and services revenue growth 6.0% to 8.0% Diluted EPS(2) $3.68 to $3.98 Adjusted diluted EPS(2)(3) $3.90 to $4.20 Operating cash flow approx. $1.275 billion (4) Free cash flow approx. $975 million
Slide 5: Consolidated Results Q1 2023
Consolidated Results Q1 2023 Revenue(1) EPS(2) 0.0% • Organic growth: 6.3% 7.4% 4.0% $3,800 • Currency translation $1.20 $1.20 effect: (2.8)% • Acquisition and $3,600 divestiture: (3.4)% $1.10 $1.10 $1.04 $1.01 $1.00 $1.00 $0.94 $1.00 $3,400 $3,348 $3,349 $0.90 $0.90 $3,200 $0.80 $0.80 $3,000 $0.70
Slide 6: Financial Results Q1 2023
Financial Results Q1 2023 LKQ
Slide 7: Q1 2023 Revenue
Q1 2023 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% 5.9% 7.3% Wholesale - North America 14.4% (10.3)% (0.4)% 3.8% 1.8% 1.7% Europe 9.7% 0.7% (5.9)% 4.6% 11.8% 13.7% Specialty (13.5)% —% (0.5)% (14.0)% 75.0% Self Servic
Slide 8: Operating Results - Q1
Operating Results - Q1 First Quarter ($ in millions, except per share data) 2023 2022 Change F/(U) Revenue $3,349 $3,348 —% Gross Margin 1,372 1,357 1.1% Operating Expenses 931 924 (0.7)% Operating Income 365 371 (1.7)% Income from continuing operations before provision for income taxes 361 356 1.5%
Slide 9: Wholesale – North America – Q1
Wholesale – North America – Q1 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 51.0% Total Revenue $1,229 $1,201 2.3% 50.0% 49.5% 49.1% 49.0% Gross Margin $608 $572 6.5% 49.5% 47.6% 49.0% 48.3% Operating Expenses $366 $359 (2.2)% 29.8% 29.9% 48.0% Segment EBITDA(1) $252 $2
Slide 10: Europe – Q1
Europe – Q1 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 42.0% (1) Total Revenue $1,555 $1,488 4.5% 41.0% 39.7% Gross Margin $588 $562 4.6% 37.8% 37.8% 40.0% 39.2% Operating Expenses $441 $439 (0.4)% 28.4% 29.5% 39.0% (2) Segment EBITDA $151 $131 14.8% 9.7% 8.8% 38.0% (
Slide 11: Specialty – Q1
Specialty – Q1 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 34.0% Total Revenue $397 $461 (14.0)% 32.0% Gross Margin $106 $138 (23.2)% 26.7% 29.9% 29.9% 29.7% 30.0% 28.7% Operating Expenses $76 $81 5.4% 19.2% 17.5% 28.0% 26.7% Segment EBITDA(1) $31 $58 (46.3)% 7.9% 12.6
Slide 12: Self Service – Q1
Self Service – Q1 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 51.0% (1) Total Revenue $169 $199 (14.8)% 48.0% 43.1% Gross Margin $70 $86 (18.4)% 41.3% 43.1% 45.0% 41.3% 42.0% 39.5% Operating Expenses $48 $46 (3.3)% 28.2% 23.3% 39.0% Segment EBITDA(2) $22 $40 (43.5)% 13
Slide 13: Q1 2023 Capital Allocation
Q1 2023 Capital Allocation $750 ($ in millions) $223 $500 $41 $(70) $342 $(25) $4 $(74) $278 $(35) $250 $0 Beginning Cash Operating Cash Capex Acquisitions, net Debt Borrowings, Dividends Other Activity, net FX Ending Cash 12/31/22 Flows of cash acquired Net 3/31/23 Operating cash flows: • Operating
Slide 14: Operating Cash Flow and Free Cash Flow
(1) Operating Cash Flow and Free Cash Flow (1) ($ in millions) ($ in millions) $1,600 100% $1,600 *Full Year Outlook $1,400 90% Actual FCF $1,400 $1,275* 80% conversion of $1,200 EBITDA(2) $1,200 70% $1,000 60% 60%(3) $975* 60% Targeted annual $1,000 FCF conversion of $800 50% EBITDA (55%-60%) $800
Slide 15: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) Total Capacity(1) $4,000 $4,000 $3,500 $3,500 $3,150 $3,000 $2,740 $3,000 $2,662 $2,500 $2,500 $2,500 $2,500 $1,295 $645 $591 $2,000 $2,000 $69 $69 $74 $1,500 1.5x 1.6x $1,500 $1,000 $1,000 $1,786 $1,786 $1,835 $500 $500 $0 $0 December 31, 2022 Ma
Slide 16: Liquidity as of March 31, 2023
Liquidity as of March 31, 2023 • Rated Baa3 (investment grade) by Moody's Credit Rating • Rated BBB- (investment grade) by S&P Global Ratings • Rated BBB- (investment grade) by Fitch • Fixed Interest Rate Bonds: €750 million ($813 million) in aggregate due in 2024 and 2028 • Variable Interest Rate C
Slide 17: Uni-Select Acquisition: Q1 Activity
Uni-Select Acquisition: Q1 Activity • On February 27, LKQ announced definitive agreement to acquire Uni-Select • Entered into foreign exchange forward contracts to hedge CAD purchase price ◦ Fair value of $23 million reported as a gain on the income statement (excluded from Adjusted Diluted EPS(1))
Slide 18: Supplementary Information
Supplementary Information LKQ
Slide 19: Metals Prices and Foreign Exchange
Metals Prices and Foreign Exchange Average Metals Prices Q1 2023 vs Q1 2022 Segment EBITDA Impact $300 $279 $265 Wholesale - North ($ in millions) Self Service America $239 Scrap Steel $9 $1 $250 $208 $213 Precious Metals $(15) $(9) $240 $200 $185 All Metals $(6) $(8) $198 $148 $151 $175 $180 $150 $
Slide 20: Inventory Procurement
Inventory Procurement ($ in millions, vehicles purchased in 000s) Q1 2023 2022 % Change Total aftermarket procurement $1,444 $1,675 (13.8)% Wholesale - North America salvage vehicles 64 60 6.7% Europe wholesale salvage vehicles 8 8 —% Self Service salvage vehicles 137 135 1.5% • Aftermarket purchase
Slide 21: 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. 21
Slide 22: Constant Currency Reconciliation
Appendix 1 Constant Currency Reconciliation The following unaudited table reconciles revenue and revenue growth for parts & services and total revenue to constant currency revenue and revenue growth for the same measures: Three Months Ended March 31, 2023 (in millions) Consolidated Europe Parts & Se
Slide 23: Constant Currency Reconciliation (cont.)
Appendix 1(cont.) Constant Currency Reconciliation Three Months Ended March 31, 2023 Consolidated Europe Parts & Services Revenue growth as reported 1.5% 4.6% Less: Currency impact (3.0)% (5.9)% Revenue growth at constant currency 4.5% 10.5% Total Revenue growth as reported —% Less: Currency impact
Slide 24: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended March 31(1) % of % of (in millions) 2023 revenue 2022 revenue Revenue Wholesale - North America $1,229 $1,201 Europe 1,555 1,488 Specialty 397 461 Self Service 169 199 Eliminations (1) (1) Total Revenue $3,349 $3,348 Segment EBITDA
Slide 25: Reconciliation of Net Income to Segment EBITDA
Appendix 3 Reconciliation of Net Income to Segment EBITDA Three Months Ended March 31(1) (in millions) 2023 2022 Net income $270 $273 Subtract: Net income from discontinued operations — 4 Net income from continuing operations $270 $269 Add: Depreciation and amortization - SG&A 58 59 Depreciation and
Slide 26: EBITDA and Segment EBITDA Reconciliation
Appendix 3 EBITDA and Segment EBITDA Reconciliation We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations.
Slide 27: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS from Continuing Operations Three Months Ended March 31(1) (in millions, except per share data) 2023 2022 Net income $270 $273 Subtract: Net income from discontinued operations — 4 Net income from continui
Slide 28: Adjusted Net Income and Adjusted EPS Reconciliation
Appendix 4 Reconciliation of Net Income and Diluted 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 operatin
Slide 29: Forecasted EPS Reconciliation
Appendix 5 Forecasted EPS Reconciliation Forecasted Fiscal Year 2023(1) (in millions, except per share data) Minimum Outlook Maximum Outlook Net income from continuing operations $989 $1,070 Adjustments: Amortization of acquired intangibles 58 58 Restructuring and transaction related expenses 37 37
Slide 30: Reconciliation of Net Cash Provided by Operating Activities 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) 2023 2022 Net cash provided by operating activities $223 $409 Less: purchases of property, plant and equipment 70 59 Free cash flow $153 $350 Year Ended December 31(1
Slide 31: Free Cash Flow Reconciliation
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