Slide 1: Third Quarter 2022 Earnings Call Presentation
Third Quarter 2022 Earnings Call Presentation October 27, 2022
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: Q3 2022 Highlights
Q3 2022 Highlights • Organic revenue growth for parts and services of 4.8% (5.3% on a per day basis) ◦ Wholesale - North America organic revenue growth for parts and services of 10.9% ◦ Europe organic revenue growth for parts and services of 4.8% (5.8% on a per day basis) • Strong results enabled by
Slide 4: Consolidated Results Q3 2022
Consolidated Results Q3 2022 Revenue(1) EPS(2) (5.9)% (1.0)% (4.9)% • Currency translation $4,000 $1.80 $1.80 effect: (6.9%), or $228 million $3,800 • Constant currency(4) revenue growth of $1.60 $1.60 $3,600 1.0% $1.40 $1.40 $3,400 $3,297 $3,200 $3,104 $1.20 $1.20 $3,000 $1.02 $0.96 $0.95 $0.97 $1.
Slide 5: Q3 2022 Revenue
Q3 2022 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign 100.0% Organic Divestiture Exchange Total(1) 6.3% 7.1% 1.8% 1.6% Wholesale - North America 10.9% (10.6)% (0.2)% 0.1% 14.6% 14.1% Europe 4.8% 0.5% (14.7)% (9.4)% Specialty (9.1)% 6.6% (0.3)% (2.8)% 75.0% Self Ser
Slide 6: Outlook 2022
Outlook 2022(1) (effective only on the date issued: October 27, 2022) Full Year 2022 Full Year 2022 Previous Outlook(6) Updated Outlook Organic parts and services revenue growth 4.5% to 6.5% 4.75% to 5.75% Diluted EPS(2) $4.09 to $4.29 $4.12 to $4.22 Adjusted diluted EPS(2)(3) $3.85 to $4.05 $3.85 t
Slide 7: 2022 Adjusted EPS Guidance Walk
2022 Adjusted EPS Guidance Walk $4.5 (1)(3) $0.03 $4 $0.02 $3.95 (1) $3.90 ($0.04) ($0.03) ($0.03) $3.5 Previous FY 2022 Operating Results Share Repurchases Scrap & Precious Metal Fx Rates Tax Rate & Interest Current FY 2022 Adjusted (2) (2) Adjusted EPS Prices EPS (1) The amounts represent the midp
Slide 8: Financial Results Q3 2022
Financial Results Q3 2022 LKQ
Slide 9: Operating Results - Q3
Operating Results - Q3 Third Quarter ($ in millions, except per share data) 2022 2021 Change F/(U) Revenue $3,104 $3,297 (5.9)% Gross Margin 1,276 1,344 (5.0)% Operating Expenses 861 898 4.0% Operating Income 358 378 (5.5)% Income from continuing operations before provision for income taxes 347 365
Slide 10: Wholesale – North America – Q3 2022
Wholesale – North America – Q3 2022 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 50.0% 49.1% 49.1% Total Revenue $1,109 $1,112 (0.3)% 49.0% Gross Margin $544 $525 3.7% 49.1% 47.2% 48.0% 47.5% 47.6% Operating Expenses $335 $337 0.7% 30.2% 30.4% 48.3% Segment EBITDA(1) $2
Slide 11: Europe – Q3 2022
Europe – Q3 2022 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 Total Revenue(1) $1,380 $1,525 (9.5)% 40.0% 39.6% 39.7% Gross Margin $548 $604 (9.2)% 39.7% 39.6% 39.2% Operating Expenses $395 $432 8.4% 28.7% 28.3% 39.0% Segment EBITDA(2) $155 $175 (11.2)% 11.3% 11.5% Tran
Slide 12: Specialty – Q3 2022
Specialty – Q3 2022 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 29.9% 29.9% 29.7% Total Revenue $452 $466 (2.9)% 30.0% 28.8% Gross Margin $130 $131 (1.1)% 28.7% 28.2% Operating Expenses $81 $81 (1.2)% 18.0% 17.3% 28.2% 28.7% 28.0% Segment EBITDA(1) $49 $52 (5.0)% 10.8%
Slide 13: Self Service – Q3 2022
Self Service – Q3 2022 Change % of Revenue Gross Margin ($ in millions) 2022 2021 F/(U) 2022 2021 50.1% 51.0% 48.6% (1) Total Revenue $164 $195 (16.2)% 48.0% 43.1% Gross Margin $54 $84 (35.1)% 33.0% 42.5% 45.0% 42.0% Operating Expenses $50 $47 (5.0)% 30.5% 24.4% 42.5% 39.5% 39.0% (2) 39.7% Segment E
Slide 14: YTD 2022 Capital Allocation
YTD 2022 Capital Allocation $2,000 ($ in millions) $399 $1,500 $1,010 $(148) $(119) $1,000 $500 $(872) $269 $274 $(210) $(23) $(42) $0 Beginning Cash Operating Cash Proceeds from Capex Debt Share Dividends Other Activity, FX Ending Cash 12/31/21 Flows disposal of Repayments, Repurchases net 9/30/22
Slide 15: Operating Cash Flow and Free Cash Flow
(1) Operating Cash Flow and Free Cash Flow (1) $1,600 ($ in millions) 100% 98% $1,400 90% Actual FCF 80% conversion of $1,200 EBITDA(2) 66% 64%(3) 70% $1,000 60% 60% Targeted annual FCF conversion of $800 50% EBITDA (55%-60%) $1,444 $1,367 $600 $1,271 40% $1,064 $1,074 $1,010 30% $400 $798 $862 20%
Slide 16: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) Total $4,000 Capacity(1) $4,000 $3,500 $3,500 $3,150 $3,150 $3,000 $2,824 $3,000 $274 $2,447 $2,500 $1,194 $2,550 $2,500 $269 $1,460 $2,000 $2,178 $69 $2,000 $69 $1,500 $1,500 1.4x $1,000 1.3x $1,000 $1,887 $1,621 $500 $500 $0 $0 December 31, 2021
Slide 17: Share Repurchase Program
Share Repurchase Program # of Shares 4.3 5.3 2.7 8.1 6.8 2.4 Repurchased Million Million Million Million Million Million $404 M $343 M $297 M $219 M $49.63 $144 M $50.89 $56.57 $119 M $50.50 $53.20 $50.02 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Through October 21, 2022 On October 25, 2022, our Board
Slide 18: Expanding Global ESG Programs
Expanding Global ESG Programs 18
Slide 19: YTD Results and Supplementary Information
YTD Results and Supplementary Information
Slide 20: Consolidated Results YTD 2022
Consolidated Results YTD 2022 Revenue(1) EPS(2) • Currency translation +18.2% (1.0)% (1.1)% effect: (4.9%), or $13,500 $486 million $3.60 $3.60 • Constant currency(4) $3.37 (3) $12,000 revenue growth of $3.30 $3.30 3.8% $3.09 $3.06 $10,500 $3.00 $2.85 $3.00 $9,903 $9,793 $2.70 $2.70 $9,000 $2.40 $2.
Slide 21: YTD 2022 Revenue
YTD 2022 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign 100.0% 7.0% 7.4% (1) Organic Divestiture Exchange Total 1.8% 1.6% North America 11.7% (6.1)% (0.1)% 5.4% 14.5% 14.7% Europe 5.3% 0.4% (10.5)% (4.8)% 75.0% Specialty (9.7)% 7.9% (0.3)% (2.1)% Self Service 11.6%
Slide 22: Operating Results - YTD
Operating Results - YTD YTD Change ($ in millions, except per share data) 2022 2021 F/(U) Revenue $9,793 $9,903 (1.1)% Gross Margin 4,000 4,053 (1.3)% Operating Expenses 2,683 2,648 (1.4)% Operating Income 1,288 1,194 7.9% Income from continuing operations before provision for income taxes 1,246 1,1
Slide 23: Wholesale – North America – YTD
Wholesale – North America – YTD Change % of Revenue ($ in millions) 2022 2021 F/(U) 2022 2021 Total Revenue $3,454 $3,282 5.3% Gross Margin $1,669 $1,574 6.0% 48.3% 48.0% Operating Expenses $1,034 $980 (5.5)% 29.9% 29.9% Segment EBITDA(1) $648 $603 7.4% 18.7% 18.4% (1) Segment EBITDA for each segmen
Slide 24: Europe – YTD
Europe – YTD Change % of Revenue ($ in millions) 2022 2021 F/(U) 2022 2021 Total Revenue(1) $4,345 $4,565 (4.8)% Gross Margin $1,689 $1,771 (4.6)% 38.9% 38.8% Operating Expenses $1,256 $1,298 3.2% 28.9% 28.4% Segment EBITDA(2) $446 $484 (7.8)% 10.3% 10.6% (3) Transformation Expenses $8 $9 (2) (3) Se
Slide 25: Specialty – YTD
Specialty – YTD Change % of Revenue ($ in millions) 2022 2021 F/(U) 2022 2021 Total Revenue $1,426 $1,457 (2.1)% Gross Margin $420 $423 (0.7)% 29.5% 29.0% Operating Expenses $246 $233 (5.7)% 17.3% 16.0% Segment EBITDA(1) $176 $193 (8.5)% 12.4% 13.2% (1) Segment EBITDA for each segment is a GAAP meas
Slide 26: Self Service – YTD
Self Service – YTD Change % of Revenue ($ in millions) 2022 2021 F/(U) 2022 2021 (1) Total Revenue $571 $603 (5.4)% Gross Margin $222 $285 (21.9)% 38.9% 47.1% Operating Expenses $147 $137 (7.4)% 25.8% 22.8% Segment EBITDA(2) $76 $148 (48.8)% 13.3% 24.6% (1) Includes Other Revenue of $399 million and
Slide 27: Liquidity as of September 30, 2022
Liquidity as of September 30, 2022 • 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 ($735 million) in aggregate due in 2024 and 2028 Debt Structure • Varia
Slide 28: Metals Prices
Metals Prices Scrap steel impact Q3 scrap steel prices decreased Q3 precious metal prices declined Sequential changes in scrap steel prices impact to Segment YoY and QoQ YoY and were mixed sequentially EBITDA: (sequential change of 29% in 2022) Self Service: • Q3 2022 unfavorable by $16 million; YTD
Slide 29: Lag Effect - Scrap Steel Prices
Lag Effect - Scrap Steel Prices Self Service Lag Effect $300 $279 $279 • Margin benefit or detriment based on the movement in market prices $265 between purchase date and scrap $255 date (we typically scrap cars within $251 $251 90 days of purchase) $265 $250 $255 $250 $250 • Purchase price reflects
Slide 30: Foreign Exchange
Foreign Exchange $1.45 • £ down 14.6% Q3 2022 vs Q3 2021 $1.40 $1.40 • € down 14.6% Q3 2022 vs Q3 2021 $1.35 $1.38 $1.38 $1.35 • $224 million unfavorable impact GBP $1.34 of translation of weaker Q3 rates $1.30 (14. 6)% relative to the US Dollar on $1.26 European parts and services $1.25 revenue gro
Slide 31: Inventory Procurement
Inventory Procurement ($ in millions, vehicles purchased in 000s) Q3 YTD 2022 2021 % Change 2022 2021 % Change Total aftermarket procurement $1,439 $1,590 (9.5)% $4,646 $4,764 (2.5)% Wholesale - North America salvage vehicles 63 61 3.3% 188 174 8.0% Europe wholesale salvage vehicles 7 6 16.7% 23 19
Slide 32: Inventory Balances
Inventory Balances ($ in millions) Wholesale - North America Europe $1,600 $2,000 2 Q4 2021 to Q3 20 $1,400 to Q3 202 ild 22 Q4 2021 tory bu $1,800 Total $205M inve ntory build $143M inven To tal (Glass) FX ($220M) ivestiture $1,200 ($102M) D $1,600 $1,000 $961 $1,402 $1,400 $817 $1,327 $1,312 $1,30
Slide 33: Inventory Balances (cont.)
Inventory Balances (cont.) ($ in millions) Self Service Specialty $100 $700 022 Q4 2 $600 t o Q3 2 ild 021 02 1 bu $7M inven to Q3 20 Q4 2 ventory in tory 2 redu 2 $5M ction $500 $458 $463 $56 $400 $380 $362 $50 $50 $43 $301 $300 $38 $32 $30 $212 $200 $100 $0 $0 0 0 1 1 1 1 2 2 9 9 0 0 c-2 c-2 p-2 p
Slide 34: 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. 34
Slide 35: 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 Nine Months Ended September 30, 2022 September 30, 2022 (in
Slide 36: Constant Currency Reconciliation (cont.)
Appendix 1(cont.) Constant Currency Reconciliation Three Months Ended Nine Months Ended September 30, 2022 September 30, 2022 Consolidated Europe Consolidated Europe Parts & Services Revenue growth as reported (5.0)% (9.4)% (0.7)% (4.8)% Less: Currency impact (7.4)% (14.7)% (5.3)% (10.5)% Revenue gr
Slide 37: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended September 30(1) Nine Months Ended September 30(1) % of % of % of % of (in millions) 2022 revenue 2021 revenue 2022 revenue 2021 revenue Revenue Wholesale - North America $1,109 $1,112 $3,454 $3,282 Europe 1,380 1,525 4,345 4,565 Spe
Slide 38: Reconciliation of Net Income to EBITDA and Segment EBITDA
Appendix 3 Reconciliation of Net Income to EBITDA and Segment EBITDA Three Months Ended September 30(1) Nine Months Ended September 30(1) (in millions) 2022 2021 2022 2021 Net income $262 $284 $955 $856 Subtract: Net income attributable to continuing noncontrolling interest — — — 1 Net income attrib
Slide 39: 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 40: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders and Adjusted EPS from Continuing Operations Attributable to LKQ Stockholders (1) (1) Three Months Ended September 30 Nine Months Ended September 30 (in millions,
Slide 41: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income Attributable to LKQ Stockholders and Adjusted EPS from Continuing Operations Attributable to LKQ Stockholders We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attrib
Slide 42: 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 attributable to LKQ stockholders $1,145 $1,173 Adjustments: Amortization of acquired intangibles 62 62 Restructuring and
Slide 43: 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 September 30(1) Nine Months Ended September 30(1) (in millions) 2022 2021 2022 2021 Net cash provided by operating activities $273 $429 $1,010 $1,362 Less: purchases of property, plant and equ
Slide 44: 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 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 45: Reconciliation of Total Debt to Net Debt
Appendix 7 Reconciliation of Total Debt to Net Debt (in millions) September 30, 2022(1) December 31, 2021(1) Current portion of long-term obligations $50 $35 Long-term obligations, excluding current portion 2,390 2,777 Total debt, net of debt issuance costs $2,440 $2,812 Add: Debt issuance costs 7 1