Slide 1: Fourth Quarter & Full Year 2023 Earnings Call Presentation
Fourth Quarter & Full Year 2023 Earnings Call Presentation February 22, 2024
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: 2023 Highlights
2023 Highlights • Strong full year organic revenue growth for parts and services of 4.7% (5.1% on a per day basis) ◦ Wholesale - North America: 8.2% (8.6% on a per day basis) ◦ Europe: 6.9% (7.4% on a per day basis) • Segment EBITDA(1) of $1.76 billion; Segment EBITDA(1) margin of 12.7% ◦ Wholesale
Slide 4: 2023 Adjusted EPS Walk
(1) 2023 Adjusted EPS Walk $4.50 $4.00 $3.85 $0.02 $0.06 $3.83 $0.10 $0.27 ($0.19) $3.50 ($0.13) ($0.09) ($0.04) ($0.02) $3.00 (2) FY 2022 Scrap & Interest Italy VAT Uni-Select PGW Operating Share Income Taxes FX Rates FY 2023 Precious Metal Issue / Strikes Acquisition Divestiture Results Repurchase
Slide 5: Q4 2022 to Q4 2023 Adjusted EPS Walk
(1) Q4 2022 to Q4 2023 Adjusted EPS Walk $1.50 $1.00 $0.12 $0.02 $0.84 $0.78 $0.03 ($0.04) ($0.01) ($0.03) ($0.03) $0.50 $0.00 (2) Q4 2022 Scrap & Precious Interest Strikes in Germany Uni-Select Operating Results Income Taxes FX Rates Q4 2023 Metal Prices Acquisition (1) Adjusted Diluted EPS is a no
Slide 6: 2024 Adjusted EPS Guidance Walk
(1) 2024 Adjusted EPS Guidance Walk $4.50 (2) $0.04 $4.05 $0.09 $4.00 $0.22 $3.83 $0.01 ($0.09) ($0.05) $3.50 $3.00 FY 2023 Scrap & Precious Income Taxes FX Rates Operating Results Italy VAT Issue / Uni-Select FY 2024 Metal Prices Strikes in Germany Impact Operational improvements and post-acquisiti
Slide 7: Outlook 2024
Outlook 2024(1) (effective only on the date issued: February 22, 2024) Full Year 2024 Outlook Organic parts and services revenue growth 3.5% to 5.5% Diluted EPS(2) $3.43 to $3.73 Adjusted Diluted EPS(2)(3) $3.90 to $4.20 Operating cash flow $1.35 billion Free cash flow(4) $1.0 billion Free cash flow
Slide 8: Consolidated Results Q4 2023
Consolidated Results Q4 2023 Revenue(1) EPS(2) • Organic growth: 1.7% +16.6% • Currency translation (4.2)% +8.0% $4,000 effect: 2.6% $1.00 $1.00 • Acquisition and $3,800 divestiture: 12.4% $3,600 $3,501 $0.84 $3,400 $0.80 $0.78 $0.80 $3,200 $0.72 $3,001 $0.69 $3,000 $2,800 $0.60 $0.60 $2,600 $2,400
Slide 9: Financial Results Q4 2023
Financial Results Q4 2023 LKQ
Slide 10: Q4 2023 Revenue
Q4 2023 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% 4.1% 5.8% Wholesale - North America 5.3% 30.6% —% 35.9% 1.5% 1.8% Europe 3.9% 1.8% 5.6% 11.3% 10.6% 12.1% Specialty (7.0)% 8.8% —% 1.8% 75.0% Self Service (5.6)% —% —
Slide 11: Operating Results - Q4
Operating Results - Q4 Fourth Quarter ($ in millions, except per share data) 2023 2022 Change F/(U) Revenue $3,501 $3,001 16.6% Gross Margin 1,399 1,223 14.4% Operating Expenses 1,022 861 (18.7)% Operating Income 277 293 (5.5)% Income from continuing operations before provision for income taxes 222
Slide 12: Wholesale – North America – Q4
Wholesale – North America – Q4 Gross Margin Uni-Select Acquisition Change % of Revenue impact of (370) bps 56.0% ($ in millions) 2023 2022 F/(U) 2023 2022 54.0% 52.0% 49.8% Total Revenue $1,467 $1,102 32.9% 48.3% 49.1% 49.0% 49.5% 50.0% Gross Margin $662 $540 22.1% 45.0% 49.0% 48.0% 45.0% 46.0% 47.6
Slide 13: Europe – Q4
Europe – Q4 Gross Margin 42.0% Change % of Revenue 41.0% 39.7% 40.0% 39.4% ($ in millions) 2023 2022 F/(U) 2023 2022 39.2% 38.7% 39.0% Total Revenue(1) $1,546 $1,390 11.2% 38.0% Gross Margin $597 $526 13.6% 38.7% 37.8% 38.3% 37.0% 37.8% 37.8% 37.8% Operating Expenses $477 $395 (21.1)% 30.9% 28.4% 36
Slide 14: Specialty – Q4
Specialty – Q4 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 32.0% 29.9% 29.7% Total Revenue $371 $365 1.8% 30.0% 28.7% Gross Margin $91 $101 (8.9)% 24.8% 27.7% 28.0% 26.7% Operating Expenses $73 $79 8.1% 19.6% 21.7% 26.0% 27.7% (1) 26.0% Segment EBITDA $21 $23 (7.9)% 5.
Slide 15: Self Service – Q4
Self Service – Q4 Change % of Revenue Gross Margin ($ in millions) 2023 2022 F/(U) 2023 2022 48.0% Total Revenue(1) $118 $144 (17.7)% 45.0% 43.1% 41.3% 41.3% 42.0% Gross Margin $49 $56 (11.5)% 41.3% 38.4% 38.4% 39.0% 39.5% Operating Expenses $42 $49 12.7% 35.5% 33.5% 36.0% Segment EBITDA(2) $7 $7 n/
Slide 16: 2023 Capital Allocation
2023 Capital Allocation $4,000 $531 ($ in millions) $1,394 $(358) $2,000 $1,356 $110 $49 $(2,225) $278 $(420) $299 $(302) $(38) $(76) $0 Beginning Operating Proceeds Proceeds Capex Acquisitions, Proceeds Proceeds Other Debt Dividends Share Other Ending Cash Cash Cash from from net of cash from from
Slide 17: Operating Cash Flow & Free Cash Flow
(1) Operating Cash Flow & Free Cash Flow (1) ($ in millions) $1,600 100% $1,400 90% Actual FCF conversion (2) 80% of Adjusted EBITDA $1,200 70% $1,000 60% 60% 59% Targeted annual FCF 60% conversion of Adjusted EBITDA (55%-60%) $800 50% $1,367 $1,356 $600 $1,250 40% $1,074 $1,028 $998 30% $400 20% $2
Slide 18: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) Total Capacity(1) $4,500 $4,281 $4,500 $4,000 $4,000 $3,500 $3,500 $3,150 $3,000 $3,000 $2,662 $2,500 $2,500 $2,500 2.3x $2,500 $1,295 $645 $2,000 $2,000 $976 $69 $69 $1,500 1.5x $1,500 $110 $1,000 $1,000 $1,786 $1,786 $1,414 $500 $500 $0 $0 Decem
Slide 19: Liquidity as of December 31, 2023
Liquidity as of December 31, 2023 • Rated Baa3 (investment grade) by Moody's; Outlook Neutral Credit Rating • Rated BBB- (investment grade) by S&P Global Ratings; Outlook Neutral • Rated BBB- (investment grade) by Fitch; Outlook Positive • Fixed Rate Instruments: ◦ $1.4 billion in aggregate ($800 mi
Slide 20: 2023 Results and Supplementary Information
2023 Results and Supplementary Information
Slide 21: Consolidated Results 2023
Consolidated Results 2023 Revenue(1) EPS(2) • Organic growth: 3.3% (14.6)% (0.5)% $18,000 • Currency translation +8.4% effect: 0.8% $4.50 $4.50 $16,500 • Acquisition and (3) divestiture: 4.2% $4.20 $4.11 $4.20 $15,000 $13,866 $3.85 $3.90 $3.90 $3.83 $13,500 $12,794 $12,000 $3.60 $3.51 $3.60 $10,500
Slide 22: 2023 Revenue
2023 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% 5.0% 6.7% 1.7% Wholesale - North America 8.2% 10.3% (0.2)% 18.2% 1.8% 12.0% Europe 6.9% 1.3% 2.1% 10.4% 14.0% Specialty (10.1)% 3.6% (0.3)% (6.9)% 75.0% Self Service 2.4
Slide 23: Operating Results
Operating Results Fiscal Year ($ in millions, except per share data) 2023 2022 Change F/(U) Revenue $13,866 $12,794 8.4% Gross Margin 5,575 5,223 6.7% Operating Expenses 3,870 3,544 (9.2)% Operating Income 1,357 1,581 (14.2)% Income from continuing operations before provision for income taxes 1,235
Slide 24: Wholesale – North America – 2023 Results
Wholesale – North America – 2023 Results Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 Total Revenue $5,282 $4,556 15.9% Gross Margin $2,486 $2,209 12.5% 47.0% 48.5% Operating Expenses $1,535 $1,372 (11.8)% 29.0% 30.1% Segment EBITDA(1) $975 $852 14.5% 18.5% 18.7% (1) Segment EBITDA
Slide 25: Europe – 2023 Results
Europe – 2023 Results Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 (1) Total Revenue $6,323 $5,735 10.2% Gross Margin $2,437 $2,215 10.0% 38.5% 38.6% Operating Expenses $1,842 $1,651 (11.6)% 29.1% 28.8% Segment EBITDA(2) $614 $585 5.1% 9.7% 10.2% (1) The foreign currency impact on p
Slide 26: Specialty – 2023 Results
Specialty – 2023 Results Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 Total Revenue $1,668 $1,791 (6.9)% Gross Margin $430 $521 (17.4)% 25.8% 29.1% Operating Expenses $305 $325 6.4% 18.3% 18.2% Segment EBITDA(1) $134 $199 (32.7)% 8.0% 11.1% (1) Segment EBITDA for each segment is a G
Slide 27: Self Service – 2023 Results
Self Service – 2023 Results Change % of Revenue ($ in millions) 2023 2022 F/(U) 2023 2022 (1) Total Revenue $597 $715 (16.5)% Gross Margin $222 $278 (20.0)% 37.2% 38.8% Operating Expenses $188 $196 3.9% 31.5% 27.4% Segment EBITDA(2) $36 $83 (57.3)% 6.0% 11.7% (1) Includes Other Revenue of $365 milli
Slide 28: Metals Prices & Foreign Exchange
Metals Prices & Foreign Exchange Q4 2023 vs Q4 2022 Segment EBITDA Impact Average Metals Prices Wholesale - North ($ in millions) Self Service America Total $300 $279 Scrap Steel $7 $4 $11 $265 $239 Precious Metals $(13) $(10) $(23) $227 $208 $213 $209 Total $(6) $(6) $(12) $240 $196 $185 2023 vs 20
Slide 29: Inventory Procurement
Inventory Procurement ($ in millions, vehicles purchased in 000s) Q4 Fiscal Year 2023 2022 % Change 2023 2022 % Change Total aftermarket procurement $1,760 $1,328 32.5% $6,399 $5,974 7.1% Wholesale - North America salvage vehicles 69 58 19.0% 258 246 4.9% Europe wholesale salvage vehicles 7 6 16.7%
Slide 30: 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. 30
Slide 31: 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 Year Ended December 31, 2023 December 31, 2023 (in millions
Slide 32: Constant Currency Reconciliation (cont.)
Appendix 1(cont.) Constant Currency Reconciliation Three Months Ended Year Ended December 31, 2023 December 31, 2023 Consolidated Europe Consolidated Europe Parts & Services Revenue growth as reported 18.7% 11.3% 10.4% 10.4% Less: Currency impact 2.7% 5.6% 0.9% 2.1% Revenue growth at constant curren
Slide 33: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended December 31 Year Ended December 31 % of % of % of % of (in millions) 2023 revenue 2022 revenue 2023 revenue 2022 revenue Revenue Wholesale - North America $1,467 $1,102 $5,282 $4,556 Europe 1,546 1,390 6,323 5,735 Specialty 371 365
Slide 34: Reconciliation of Net Income to Segment EBITDA
Appendix 3 Reconciliation of Net Income to Segment EBITDA Three Months Ended December 31 Year Ended December 31 (in millions) 2023 2022 2023 2022 Net income $178 $195 $938 $1,150 Less: net income attributable to continuing noncontrolling interest 1 1 2 1 Net income attributable to LKQ stockholders $
Slide 35: Segment EBITDA Reconciliation
Appendix 3 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. Refer to p
Slide 36: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and 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 December 31 Year Ended December 31 (in millions, except per share data) 2023 2022 2023 2022 Net income $178 $195 $938 $1,150
Slide 37: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and 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 38: Forecasted EPS Reconciliation
Appendix 5 Forecasted EPS Reconciliation Forecasted Fiscal Year 2024 (in millions, except per share data) Minimum Outlook Maximum Outlook Net income from continuing operations attributable to LKQ stockholders $918 $998 Adjustments: Amortization of acquired intangibles 144 144 Restructuring and trans
Slide 39: Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow
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) 2023 2022 2021 Net cash provided by operating activities $1,356 $1,250 $1,367 Less: purchases of property, plant and equipment 358 222 293
Slide 40: 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 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