Slide 1: Second Quarter 2023 Earnings Call Presentation
Second Quarter 2023 Earnings Call Presentation July 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: Q2 2023 Highlights
Q2 2023 Highlights • Organic revenue growth for parts and services of 4.8% (5.4% on a per day basis) ◦ Europe: 8.5% (9.8% on a per day basis) ◦ Wholesale - North America: 8.3% • Strong results enabled by focusing on key operational excellence initiatives and leveraging our diversified portfolio of b
Slide 4: Outlook 2023
Outlook 2023(1) (effective only on the date issued: July 27, 2023) Full Year 2023 2023 Full Year Outlook Previous Outlook(5) Updated Outlook Organic parts and services revenue growth 6.0% to 8.0% 6.0% to 7.5% Diluted EPS(2) $3.68 to $3.98 $3.65 to $3.85 Adjusted Diluted EPS(2)(3) $3.90 to $4.20 $3.9
Slide 5: 2023 Adjusted EPS Guidance Walk
(1) 2023 Adjusted EPS Guidance Walk $4.5 $0.05 (2) $4.05 (2) $4.00 $4 ($0.07) ($0.02) ($0.01) $3.5 Previous Operating Scrap & Precious Metal Interest Tax Rate Updated Guidance Results Prices Guidance (1) Adjusted Diluted EPS is a non-GAAP measure. See Appendix 5 for reconciliation of forecasted Adju
Slide 6: Consolidated Results Q2 2023
Consolidated Results Q2 2023 Revenue(1) EPS(2) • Organic growth: 3.0% +3.2% (29.5)% -% • Currency translation $3,800 effect: 0.5% $1.80 $1.80 • Acquisition and $3,600 divestiture: (0.4)% $1.60 (3) $1.60 $3,448 $1.49 $3,400 $3,341 $1.40 $1.40 $3,200 $1.20 $1.20 $3,000 $1.09 $1.09 $1.05 $2,800 $1.00 $
Slide 7: Financial Results Q2 2023
Financial Results Q2 2023 LKQ
Slide 8: Q2 2023 Revenue
Q2 2023 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% Wholesale - North America 8.3% (1.3)% (0.3)% 6.7% 5.5% 7.5% 1.8% 1.8% Europe 8.5% 0.9% 1.6% 11.1% 12.8% 15.3% Specialty (12.9)% (0.2)% (0.5)% (13.5)% 75.0% Self Servi
Slide 9: Operating Results - Q2
Operating Results - Q2 Second Quarter ($ in millions, except per share data) 2023 2022 Change F/(U) Revenue $3,448 $3,341 3.2% Gross Margin 1,414 1,367 3.5% Operating Expenses 938 898 (4.5)% Operating Income 407 559 (27.2)% Income from continuing operations before provision for income taxes 389 543
Slide 10: Wholesale – North America – Q2
Wholesale – North America – Q2 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 51.0% 49.8% Total Revenue $1,199 $1,144 4.8% 50.0% 49.5% 49.1% 49.0% Gross Margin $598 $553 8.0% 49.8% 48.3% 49.0% 48.3% 48.0% Operating Expenses $352 $340 (3.4)% 29.3% 29.7% 47.0% 47.6% Segment
Slide 11: Europe – Q2
Europe – Q2 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 42.0% 41.0% Total Revenue(1) $1,638 $1,477 10.9% 39.7% 40.0% 39.2% 39.4% Gross Margin $645 $579 11.4% 39.4% 39.2% 39.0% Operating Expenses $460 $422 (9.1)% 28.1% 28.6% 38.0% (2) Segment EBITDA $188 $160 18.0% 11.5
Slide 12: Specialty – Q2
Specialty – Q2 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 34.0% Total Revenue $443 $513 (13.5)% 32.0% Gross Margin $115 $152 (24.3)% 26.0% 29.7% 29.9% 29.7% 30.0% 28.7% Operating Expenses $76 $84 10.1% 17.1% 16.4% 28.0% 26.7% 26.0% Segment EBITDA(1) $42 $69 (38.8)% 9.
Slide 13: Self Service – Q2
Self Service – Q2 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 51.0% (1) Total Revenue $169 $208 (18.9)% 48.0% 45.0% 43.1% Gross Margin $56 $82 (31.3)% 33.5% 39.5% 41.3% 42.0% 39.5% Operating Expenses $50 $51 2.0% 29.6% 24.5% 39.0% Segment EBITDA(2) $7 $32 (78.5)% 4.1%
Slide 14: YTD 2023 Capital Allocation
YTD 2023 Capital Allocation $3,000 ($ in millions) $1,394 $(136) $1,904 $2,000 $(52) $(90) $(148) $(30) $(15) $703 $1,000 $278 $0 Beginning Cash Operating Cash Proceeds from Capex Acquisitions, net Debt Dividends Debt Issuance Other Activity, Ending Cash 12/31/22 Flows issuance of U.S. of cash acqui
Slide 15: Operating Cash Flow & Free Cash Flow
(1) Operating Cash Flow & Free Cash Flow (1) ($ in millions) ($ in millions) $1,600 100% $1,600 *Full Year Outlook $1,400 90% $1,400 Actual FCF $1,275* 80% conversion of $1,200 Adjusted EBITDA(2) $1,200 70% $1,000 60% 60% Targeted annual $1,000 $975* 60% FCF conversion of Adjusted EBITDA $800 50% $8
Slide 16: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) (5) Total $4,030 Capacity(1) $4,000 $4,000 $3,500 $3,500 $3,150 $3,000 $3,000 $2,662 $2,500 $2,500 $2,500 $2,500 $1,295 2.3x(5) $645 $700 $2,000 $2,000 $69 $69 $74 $1,500 $1,500 1.5x $1,000 $1,000 $1,786 $1,786 $1,726 $500 $500 $0 $0 December 31,
Slide 17: Liquidity as of June 30, 2023
Liquidity as of June 30, 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: ◦ $1.4 billion in aggregate ($800 million (5.75%) due in 2028/$600 million (6.25%) due in
Slide 18: Uni-Select Acquisition: Q2 Activity
Uni-Select Acquisition: Q2 Activity • The Uni-Select Acquisition has received approval from regulatory authorities in the U.S. and Canada and is pending clearance from the U.K. Competition and Markets Authority ◦ On July 21, 2023, the U.K.'s Competition and Markets Authority issued its Phase 1 decis
Slide 19: YTD Results and Supplementary Information
YTD Results and Supplementary Information
Slide 20: Consolidated Results YTD 2023
Consolidated Results YTD 2023 Revenue(1) EPS(2) • Organic growth: 4.7% (14.9)% +1.4% $9,000 • Currency translation +1.6% effect: (1.1)% $3.00 $3.00 • Acquisition and divestiture: (1.9)% $7,500 $2.70 $2.70 $6,689 $6,797 (3) $2.42 $2.40 $2.40 $6,000 $2.06 $2.09 $2.12 $2.10 $2.10 $4,500 $1.80 $1.80 $3,
Slide 21: YTD 2023 Revenue
YTD 2023 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign (1) Organic Divestiture Exchange Total 100.0% 5.7% 7.4% Wholesale - North America 11.4% (5.9)% (0.3)% 5.2% 1.8% 1.7% Europe 9.1% 0.8% (2.2)% 7.8% 12.3% 14.5% Specialty (13.2)% (0.1)% (0.5)% (13.7)% 75.0% Self S
Slide 22: Operating Results - YTD
Operating Results - YTD YTD ($ in millions, except per share data) 2023 2022 Change F/(U) Revenue $6,797 $6,689 1.6% Gross Margin 2,786 2,724 2.3% Operating Expenses 1,869 1,822 (2.6)% Operating Income 772 930 (17.0)% Income from continuing operations before provision for income taxes 750 899 (16.6)
Slide 23: Wholesale – North America – YTD
Wholesale – North America – YTD Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 Total Revenue $2,428 $2,345 3.5% Gross Margin $1,206 $1,125 7.2% 49.7% 48.0% Operating Expenses $718 $699 (2.8)% 29.6% 29.8% Segment EBITDA(1) $500 $432 15.5% 20.6% 18.4% (1) Segment EBITDA for each segment
Slide 24: Europe – YTD
Europe – YTD Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 (1) Total Revenue $3,193 $2,965 7.7% Gross Margin $1,233 $1,141 8.0% 38.6% 38.5% Operating Expenses $901 $861 (4.7)% 28.2% 29.0% Segment EBITDA(2) $339 $291 16.6% 10.6% 9.8% (1) The foreign currency impact on parts and servic
Slide 25: Specialty – YTD
Specialty – YTD Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 Total Revenue $840 $974 (13.7)% Gross Margin $221 $290 (23.8)% 26.3% 29.8% Operating Expenses $152 $165 7.8% 18.1% 16.9% Segment EBITDA(1) $73 $127 (42.2)% 8.7% 13.1% (1) Segment EBITDA for each segment is a GAAP measure,
Slide 26: Self Service – YTD
Self Service – YTD Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 (1) Total Revenue $338 $407 (16.9)% Gross Margin $126 $168 (24.7)% 37.4% 41.3% Operating Expenses $98 $97 (0.5)% 28.9% 23.9% Segment EBITDA(2) $29 $72 (59.1)% 8.7% 17.6% (1) Includes Other Revenue of $215 million and $2
Slide 27: Metals Prices and Foreign Exchange
Metals Prices and Foreign Exchange Q2 2023 vs Q2 2022 Segment EBITDA Impact Average Metals Prices Wholesale - North ($ in millions) Self Service America Total $300 $279 Scrap Steel $(5) $1 $(4) $265 Precious Metals $(15) $(8) $(23) $239 $250 $227 Total $(20) $(7) $(27) $208 $213 $240 YTD 2023 vs YTD
Slide 28: Inventory Procurement
Inventory Procurement ($ in millions, vehicles purchased in 000s) Q2 YTD 2023 2022 % Change 2023 2022 % Change Total aftermarket procurement $1,486 $1,532 (3.0)% $2,930 $3,207 (8.6)% Wholesale - North America salvage vehicles 65 65 —% 129 125 3.2% Europe wholesale salvage vehicles 7 8 (12.5)% 15 16
Slide 29: 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. 29
Slide 30: 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 Six Months Ended June 30, 2023 June 30, 2023 (in millions)
Slide 31: Constant Currency Reconciliation (cont.)
Appendix 1(cont.) Constant Currency Reconciliation Three Months Ended Six Months Ended June 30, 2023 June 30, 2023 Consolidated Europe Consolidated Europe Parts & Services Revenue growth as reported 5.4% 11.1% 3.5% 7.8% Less: Currency impact 0.6% 1.6% (1.2)% (2.2)% Revenue growth at constant currenc
Slide 32: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended June 30 Six Months Ended June 30 % of % of % of % of (in millions) 2023 revenue 2022 revenue 2023 revenue 2022 revenue Revenue Wholesale - North America $1,199 $1,144 $2,428 $2,345 Europe 1,638 1,477 3,193 2,965 Specialty 443 513 84
Slide 33: Reconciliation of Net Income to Segment EBITDA
Appendix 3 Reconciliation of Net Income to Segment EBITDA Three Months Ended June 30 Six Months Ended June 30 (in millions) 2023 2022 2023 2022 Net income $282 $420 $552 $693 Less: net income attributable to continuing noncontrolling interest 1 — 1 — Net income attributable to LKQ stockholders $281
Slide 34: 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 35: Reconciliation of Net Income and Diluted EPS to Adjusted EPS
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS from Continuing Operations Attributable to LKQ Stockholders Three Months Ended June 30 Six Months Ended June 30 (in millions, except per share data) 2023 2022 2023 2022 Net income $282 $420 $552 $693 Less
Slide 36: Reconciliation of Net Income and Diluted EPS to Adjusted EPS
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income 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 Attributable to LKQ Stockholders as we
Slide 37: Forecasted EPS Reconciliation
Appendix 5 Forecasted EPS Reconciliation Forecasted Fiscal Year 2023 (in millions, except per share data) Minimum Outlook Maximum Outlook Net income from continuing operations attributable to LKQ stockholders $981 $1,035 Adjustments: Amortization of acquired intangibles 60 60 Restructuring and trans
Slide 38: Reconciliations to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA Three Months Ended June 30 Six Months Ended June 30 (in millions) 2023 2022 2023 2022 Net cash provided by operating activities $480 $328 $703 $737 Less: purchases of property,
Slide 39: Reconciliations to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA Year Ended December 31 (in millions) 2022 2021 Net cash provided by operating activities $1,250 $1,367 Less: purchases of property, plant and equipment 222 293 Free cash flow $
Slide 40: Reconciliations to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA 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 l