Wall Street expects a year-over-year decline in earnings on higher revenues when LKQ (LKQ) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on April 23, 2024, might help the stock move higher if these key numbers are better than expectations. ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) LKQ Corporation is a global distributor of alternative vehicle parts and specialty products, operating through four segments with a strategy focused on growth, technology adaptation, and asset optimization [Overview](index=3&type=section&id=Item%201.%20BusinessOVERVIEW) LKQ Corporation is an S&P **500** global distributor of alternative vehicle parts and accessories, operating through **four** segments to serve the vehicle repair and maintenance industry - LKQ is a global distributor of vehicle products, offering alternative parts (aftermarket, recycled, refurbished, remanufactured) as a substitute for new OEM parts[15](index=15&type=chunk)[16](index=16&type=chunk) - The company is organized into **four** reportable operating segments: Wholesale - North America, Europe, Specialty, and Self Service[17](index=17&type=chunk)[18](index=18&type=chunk) [History](index=4&type=section&id=Item%201.%20BusinessHISTORY) Formed in **1998**, LKQ expanded significantly through approximately **300** acquisitions, including Uni-Select Inc. in **2023**, enhancing its North American paint distribution and Canadian mechanical parts market presence - The company was formed in **1998** and has grown through approximately **300** acquisitions[19](index=19&type=chunk) - The **2023** acquisition of Uni-Select Inc. complements LKQ's North American paint distribution and provides a scaled entry into the Canadian mechanical parts market[22](index=22&type=chunk) [Strategy](index=4&type=section&id=Item%201.%20BusinessSTRATEGY) LKQ's strategy focuses on **four** pillars: growing offerings, geographic expansion, technology adaptation, and asset rationalization, with the '**1** LKQ Europe' plan as a key integration initiative leveraging AI and prioritizing free cash flow and profitable growth - The company's strategy focuses on **four** pillars: growing offerings, geographic expansion, adapting to technology, and rationalizing assets[25](index=25&type=chunk) - The "**1** LKQ Europe" plan is a multi-year business transformation to create a single, integrated Pan-European organization by leveraging scale in procurement, logistics, and product strategy[24](index=24&type=chunk) - LKQ utilizes artificial intelligence (AI) in its salvage business to make more accurate purchasing decisions and control inventory[26](index=26&type=chunk) [Wholesale - North America Segment](index=6&type=section&id=Item%201.%20BusinessWHOLESALE%20-%20NORTH%20AMERICA%20SEGMENT) The Wholesale - North America segment is a leading provider of alternative collision and mechanical replacement products, expanded by the Uni-Select acquisition, sourcing from diverse vendors and utilizing AI for salvage procurement to serve professional repair shops - The segment is a leading provider of alternative vehicle collision and mechanical replacement products in the U.S. and Canada[28](index=28&type=chunk) - The acquisition of Uni-Select expanded the segment's paint business and provided entry into the Canadian mechanical parts market[30](index=30&type=chunk) - Approximately **51%** of aftermarket purchases in **2023** were from the top **seven** vendors. The largest vendor accounted for about **12%** of the segment's annual inventory purchases[32](index=32&type=chunk) - The segment uses proprietary software with embedded AI to assist in the procurement of salvage vehicles from auctions[34](index=34&type=chunk)[35](index=35&type=chunk) [Europe Segment](index=8&type=section&id=Item%201.%20BusinessEUROPE%20SEGMENT) The Europe segment distributes aftermarket mechanical parts across over **20** countries, focusing on the '**1** LKQ Europe' integration plan to standardize operations, optimize purchasing, and reduce inventory complexity, serving customers through multi-step models - The "**1** LKQ Europe" plan aims to integrate European operations to optimize purchasing, logistics, and systems, with a projected completion by the end of **2027**[48](index=48&type=chunk)[55](index=55&type=chunk) - The segment's inventory is primarily composed of mechanical aftermarket parts, with over **900,000** unique part numbers. A key goal is to reduce this complexity[49](index=49&type=chunk) - In **2023**, the top supplier represented **9%** of the segment's aftermarket inventory purchases, and no other supplier comprised more than **5%**[50](index=50&type=chunk) [Specialty Segment](index=9&type=section&id=Item%201.%20BusinessSPECIALTY%20SEGMENT) The Specialty segment is a leading North American distributor of aftermarket equipment for RVs, trucks, marine, and performance vehicles, sourcing from a fragmented supplier base and primarily relying on online sales through a hub-and-spoke distribution model - The segment distributes specialty aftermarket products for RV, truck, towing, marine, and performance vehicles in North America[56](index=56&type=chunk) - The supplier base is highly fragmented. In **2023**, the top **three** suppliers accounted for approximately **19%** of purchases, with the largest supplier providing about **9%**[57](index=57&type=chunk)[58](index=58&type=chunk) - Online sales represent the majority of the segment's sales, primarily through platforms like ekeystone.com[61](index=61&type=chunk) [Self Service Segment](index=10&type=section&id=Item%201.%20BusinessSELF%20SERVICE%20SEGMENT) The Self Service segment operates 'LKQ Pick Your Part' retail yards where customers self-remove parts from older salvage vehicles, with remaining hulks sold as scrap metal, serving DIY mechanics and small shops, and utilizing a mobile app for customer engagement - The segment operates retail self-service yards where customers can pull parts directly from salvage vehicles[65](index=65&type=chunk) - Inventory consists of older, lower-priced salvage vehicles sourced from towing companies, auctions, and the general public[66](index=66&type=chunk) - The segment utilizes a mobile app that sends push notifications to customers about vehicle inventory, allowing them to search for specific parts[69](index=69&type=chunk) [Human Capital](index=12&type=section&id=Item%201.%20BusinessHUMAN%20CAPITAL) As of December **31**, **2023**, LKQ employed approximately **49,000** people globally, with a human capital strategy focused on attracting, retaining, and developing talent through competitive compensation, comprehensive benefits, and a strong ethical culture - As of December **31**, **2023**, the company employed approximately **49,000** people globally (**20,000** in North America, **29,000** outside)[73](index=73&type=chunk) - Many employees in Europe are represented by unions and/or works councils, and approximately **1,000** employees in North America are represented by unions[73](index=73&type=chunk) - The company provides competitive compensation and benefits, including medical coverage, paid parental leave, retirement plan contributions, and a scholarship program for employees' children[77](index=77&type=chunk)[78](index=78&type=chunk) [Sustainability Matters](index=14&type=section&id=Item%201.%20BusinessSUSTAINABILITY%20MATTERS) LKQ's sustainability efforts encompass environmental stewardship through vehicle recycling, social responsibility via an inclusive work environment and community support, and enhanced corporate governance with a refreshed, diverse Board and a global Code of Ethics - Environmental efforts focus on vehicle recycling and reuse, contributing to a circular economy and reducing raw material use[86](index=86&type=chunk)[87](index=87&type=chunk) - Social initiatives include fostering an inclusive work environment and community support via the LKQ Community Foundation[88](index=88&type=chunk)[89](index=89&type=chunk) - Governance enhancements include significant board refreshment (over half added since August **2018**), with **44%** of the current board from underrepresented groups, and the adoption of proxy access[90](index=90&type=chunk)[91](index=91&type=chunk) [Risk Factors](index=14&type=page&id=Item%201A.%20Risk%20Factors) LKQ faces diverse risks including economic downturns, intense competition, reliance on insurance companies, fluctuating accident rates, commodity price volatility, supply chain disruptions, substantial debt, and regulatory challenges from intellectual property claims, environmental laws, and data privacy regulations - Business is sensitive to economic conditions, competition from OEMs who may restrict the use of alternative parts, and reliance on insurance companies to promote alternative parts usage[95](index=95&type=chunk)[103](index=103&type=chunk)[107](index=107&type=chunk) - OEMs are increasingly using intellectual property claims (design patents) and vehicle telematics to limit the use of aftermarket and recycled parts[104](index=104&type=chunk)[105](index=105&type=chunk)[110](index=110&type=chunk) - The business is dependent on vehicle accident rates, which could decline due to advanced accident avoidance systems, and is exposed to fluctuations in scrap metal and precious metal commodity prices[115](index=115&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) - A substantial amount of debt (**$4.3 billion** as of Dec **31**, **2023**) and related service obligations could limit operational flexibility and ability to obtain future financing[137](index=137&type=chunk)[139](index=139&type=chunk) - The company faces risks from laws that may prohibit or restrict the sale of aftermarket or recycled products, as well as complex environmental regulations[153](index=153&type=chunk)[158](index=158&type=chunk) - Cybersecurity and data privacy are significant risks, with evolving regulations like GDPR and new SEC rules imposing stringent requirements and potential liabilities[176](index=176&type=chunk)[177](index=177&type=chunk) [Unresolved Staff Comments](index=28&type=page&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments - None[189](index=189&type=chunk) [Cybersecurity](index=29&type=page&id=Item%201C.%20Cybersecurity) LKQ's cybersecurity risk management, overseen by the Board and CISO, employs a cross-functional strategy including technical safeguards, incident response, third-party risk management, and employee training, with no material impact reported from threats - The Board of Directors, supported by the Audit Committee and a management-level Risk Management Committee, oversees the cybersecurity risk management program[191](index=191&type=chunk)[198](index=198&type=chunk) - The company's strategy includes technical safeguards, incident response plans, third-party risk management, and regular mandatory employee training[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The Chief Information Security Officer (CISO) has over **26** years of experience and holds multiple professional certifications (CISSP, CISM, GCIH)[200](index=200&type=chunk) - The company states that cybersecurity threats have not materially affected its business strategy, results of operations, or financial condition[201](index=201&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) As of December **31**, **2023**, LKQ operated approximately **1,650** mostly leased facilities globally, including key headquarters in Chicago, Antioch, and Zug, which are deemed sufficient for current needs - As of December **31**, **2023**, the company operated approximately **1,650** facilities, most of which are leased[202](index=202&type=chunk) - Facility distribution includes approximately **550** in the U.S. and **1,100** in over **25** other countries[202](index=202&type=chunk) - Key headquarters are located in Chicago (Global), Antioch, TN (North America), and Zug, Switzerland (Europe)[203](index=203&type=chunk)[204](index=204&type=chunk) [Legal Proceedings](index=31&type=section&id=Item%203.%20Legal%20Proceedings) In November **2023**, a Uni-Select subsidiary pleaded guilty to environmental violations and paid a C$**600,000** fine, while other ongoing legal claims are not expected to materially affect LKQ's financial position - A subsidiary, Plastique Royal Inc., pleaded guilty to environmental violations and paid a C$**600,000** fine in November **2023**[207](index=207&type=chunk) - Management believes that other currently outstanding claims and lawsuits will not have a material adverse effect on the company's financial position, results of operations, or cash flows[208](index=208&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[209](index=209&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) LKQ's common stock trades on Nasdaq, paid increased quarterly dividends in **2023**, and maintains an active stock repurchase program with **$1.1 billion** remaining authorized, while its stock performance outperformed peers but lagged the S&P **500** over **five** years | Dividend Amount | Declaration Date | Record Date | Payment Date | | :--- | :--- | :--- | :--- | | $**0.275** | February **21**, **2023** | March **16**, **2023** | March **30**, **2023** | | $**0.275** | April **25**, **2023** | May **18**, **2023** | June **1**, **2023** | | $**0.275** | July **25**, **2023** | August **17**, **2023** | August **31**, **2023** | | $**0.30** | October **24**, **2023** | November **16**, **2023** | November **30**, **2023** | | Period | Total Number of Shares Purchased (millions) | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (millions) | | :--- | :--- | :--- | :--- | | Oct **1** - Oct **31**, **2023** | **0.2** | $**43.73** | $**1,099** | | Nov **1** - Nov **30**, **2023** | **0.1** | $**43.83** | $**1,096** | | Dec **1** - Dec **31**, **2023** | **0.4** | $**45.65** | $**1,076** | | **Total Q4 2023** | **0.7** | | **$1,076** | - The Board has authorized a stock repurchase program of up to **$3.5 billion**, with a scheduled duration through October **25**, **2025**[218](index=218&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In **2023**, LKQ's revenue grew **8.4%** to **$13.9 billion**, driven by acquisitions and organic growth, despite a decline in operating income to **$1.4 billion** and net income to **$936 million** due to margin pressure and restructuring costs, while generating **$1.0 billion** in free cash flow and maintaining **$1.3 billion** in liquidity after the Uni-Select acquisition [Results of Operations—Consolidated](index=39&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20OperationsResults%20of%20Operations%E2%80%94Consolidated) For **2023**, total revenue increased **8.4%** to **$13.87 billion**, driven by parts and services growth, though partially offset by lower commodity prices and a decline in gross margin and operating income due to higher costs and Uni-Select acquisition expenses | | **2023** | **2022** | |:---|:---:|:---:| | **Revenue** | $**13,866M** | $**12,794M** | | **Gross margin** | **40.2%** | **40.8%** | | **Operating income** | $**1,357M** | $**1,581M** | | **Net income attributable to LKQ stockholders** | $**936M** | $**1,149M** | | **Diluted EPS attributable to LKQ stockholders** | $**3.49** | $**4.13** | | Revenue Category | **2023** (in millions) | **2022** (in millions) | Total Change | Organic Change | Acquisition/Divestiture Change | Foreign Exchange Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Parts & services | $**13,174** | $**11,933** | **10.4%** | **4.7%** | **4.8%** | **0.9%** | | Other revenue | $**692** | $**861** | (**19.6**)% | (**16.0**)% | (**3.4**)% | (**0.1**)% | | **Total revenue** | **$13,866** | **$12,794** | **8.4%** | **3.3%** | **4.2%** | **0.8%** | - Restructuring and transaction related expenses increased to **$65 million** in **2023** from **$20 million** in **2022**, primarily due to costs associated with the Uni-Select acquisition[250](index=250&type=chunk) - Total other expense increased to **$122 million** from **$63 million**, largely due to a **$136 million** increase in interest expense from higher rates and debt related to the Uni-Select acquisition. This was partially offset by a **$49 million** gain on foreign exchange contracts related to the acquisition[254](index=254&type=chunk) [Results of Operations—Segment Reporting](index=42&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20OperationsResults%20of%20Operations%E2%80%94Segment%20Reporting) In **2023**, Wholesale - North America and Europe segments saw revenue growth, while Specialty and Self Service experienced revenue declines and compressed EBITDA margins due to market softness and lower commodity prices, respectively | Segment | **2023** Revenue (M) | **2022** Revenue (M) | **2023** Segment EBITDA (M) | **2023** EBITDA Margin | **2022** EBITDA Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Wholesale - North America | $**5,281** | $**4,556** | $**975** | **18.5%** | **18.7%** | | Europe | $**6,323** | $**5,735** | $**614** | **9.7%** | **10.2%** | | Specialty | $**1,665** | $**1,788** | $**134** | **8.0%** | **11.1%** | | Self Service | $**597** | $**715** | $**36** | **6.0%** | **11.7%** | [Liquidity and Capital Resources](index=48&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20OperationsLiquidity%20and%20Capital%20Resources) As of December **31**, **2023**, LKQ maintained **$1.28 billion** in liquidity despite total debt increasing to **$4.3 billion** to finance the **$2.1 billion** Uni-Select acquisition, while generating **$1.36 billion** in operating cash flow and remaining compliant with debt covenants | Liquidity Data (in millions) | Dec **31**, **2023** | Dec **31**, **2022** | | :--- | :--- | :--- | | Cash and cash equivalents | $**299** | $**278** | | Total debt | $**4,281** | $**2,662** | | Availability under revolving credit facilities | $**976** | $**645** | | **Total liquidity** | **$1,275** | **$923** | | Cash Flow Data (in millions) | Year Ended Dec **31**, **2023** | Year Ended Dec **31**, **2022** | | :--- | :--- | :--- | | Net cash provided by operating activities | $**1,356** | $**1,250** | | Purchases of property, plant and equipment | ($**358**)| ($**222**)| | **Free cash flow** | **$998** | **$1,028** | - The Uni-Select acquisition was financed with **$1.4 billion** from new senior notes, a CAD **700 million** (**$531 million**) term loan, and borrowings under the revolving credit facility and cash on hand[290](index=290&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk) - The company was in compliance with its debt covenants as of December **31**, **2023**, with a maximum total leverage ratio of **2.3** (covenant: **4.00**) and a minimum interest coverage ratio of **7.5** (covenant: **3.00**)[295](index=295&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) LKQ faces market risks from foreign exchange rates, interest rates on variable debt, commodity price volatility for scrap and precious metals, and inflationary pressures on costs, which could impact revenue, expenses, and margins - Foreign currency fluctuations are a key risk, as operations outside the U.S. accounted for **50.8%** of revenue in **2023**. A **10%** change in the U.S. dollar's strength would alter consolidated revenue by **5.1%**[319](index=319&type=chunk) - The company is exposed to interest rate risk on its variable-rate debt. As of December **31**, **2023**, **$1.24 billion** of this debt was unhedged. A **100** basis point change in rates would affect annual interest expense by approximately **$12 million**[325](index=325&type=chunk) - The company is exposed to price fluctuations in scrap metal and precious metals (platinum, palladium, rhodium), which affect both revenue and inventory costs, potentially compressing margins during periods of rapid price changes[326](index=326&type=chunk) - Inflationary pressures on product, labor, and shipping costs are a significant risk. The company attempts to offset these through price increases and productivity initiatives, but may not be able to fully mitigate the impact on margins[327](index=327&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents LKQ's audited consolidated financial statements for **2023** and Deloitte & Touche LLP's unqualified opinion on both financial statements and internal controls, noting critical audit matters related to goodwill impairment and the Uni-Select acquisition [Reports of Independent Registered Public Accounting Firm](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20DataReports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued unqualified opinions on LKQ's **2023** financial statements and internal controls, excluding Uni-Select from the latter, while highlighting critical audit matters concerning goodwill impairment and Uni-Select business combination valuation - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting[332](index=332&type=chunk)[346](index=346&type=chunk) - The audit of internal controls excluded Uni-Select Inc., acquired on August **1**, **2023**, which constituted **16%** of total assets and **4%** of revenue for the year[348](index=348&type=chunk) - Critical Audit Matters identified were the Goodwill Impairment Assessment and the valuation of intangible assets related to the Uni-Select Business Combination[336](index=336&type=chunk)[339](index=339&type=chunk) [Consolidated Financial Statements](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20DataConsolidated%20Financial%20Statements) LKQ's **2023** consolidated financial statements show **$13.87 billion** in revenue and **$936 million** net income, with total assets increasing to **$15.08 billion** and liabilities to **$8.90 billion** primarily due to the Uni-Select acquisition, while generating **$1.36 billion** in operating cash flow | (In millions) | **2023** | **2022** | | :--- | :--- | :--- | | **Revenue** | $**13,866** | $**12,794** | | **Operating income** | $**1,357** | $**1,581** | | **Net income attributable to LKQ stockholders** | $**936** | $**1,149** | | **Diluted EPS attributable to LKQ stockholders** | $**3.49** | $**4.13** | | (In millions) | Dec **31**, **2023** | Dec **31**, **2022** | | :--- | :--- | :--- | | **Total current assets** | $**4,868** | $**4,258** | | **Total assets** | $**15,079** | $**12,038** | | **Total current liabilities** | $**3,318** | $**2,271** | | **Total liabilities** | $**8,898** | $**6,571** | | **Total stockholders' equity** | $**6,181** | $**5,467** | | (In millions) | **2023** | **2022** | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $**1,356** | $**1,250** | | **Net cash (used in) provided by investing activities** | ($**2,442**)| $**172** | | **Net cash provided by (used in) financing activities** | $**1,102** | ($**1,394**)| [Notes to Consolidated Financial Statements](index=66&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20DataNotes%20to%20Consolidated%20Financial%20Statements) The notes detail the **$2.1 billion** Uni-Select acquisition, its impact on goodwill and debt structure, segment performance showing mixed revenue trends, the **2023** effective tax rate of **24.8%**, and information on restructuring, leases, and pension plans [Controls and Procedures](index=103&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December **31**, **2023**, excluding the recently acquired Uni-Select from the internal control assessment, with no material changes during the quarter - Management concluded that disclosure controls and procedures were effective as of December **31**, **2023**[586](index=586&type=chunk) - The assessment of internal control over financial reporting excluded Uni-Select, which was acquired in **2023** and constituted **16%** of total assets and **4%** of revenue[588](index=588&type=chunk) - Based on its assessment, management determined that the company maintained effective internal control over financial reporting as of December **31**, **2023**[592](index=592&type=chunk) [Other Information](index=104&type=section&id=Item%209B.%20Other%20Information) During the fiscal year ended December **31**, **2023**, none of the company's directors or executive officers adopted, modified, or terminated any Rule **10b5-1** trading plans or any non-Rule **10b5-1** trading arrangements - No directors or executive officers adopted, modified, or terminated any Rule **10b5-1** trading plans or other trading arrangements during the fiscal year[594](index=594&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=105&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on directors and executive officers, including the upcoming CEO succession plan where Dominick Zarcone will retire and be succeeded by Justin L. Jude, with further details incorporated from the Proxy Statement and the company's Code of Ethics available online - Information regarding directors is incorporated by reference from the Proxy Statement for the May **7**, **2024** Annual Meeting[596](index=596&type=chunk) - A leadership succession plan was approved in November **2023**: Dominick Zarcone will retire as President and CEO on June **30**, **2024**, and will be succeeded by Justin L. Jude[598](index=598&type=chunk)[605](index=605&type=chunk) - The company's Code of Ethics is applicable to its principal executive, financial, and accounting officers and is available on its website[608](index=608&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011.%20Executive%20Compensation) All information related to executive compensation is incorporated by reference from the company's Proxy Statement - All information related to executive compensation is incorporated by reference from the company's Proxy Statement[610](index=610&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated from the Proxy Statement, with **1.6 million** securities issuable from outstanding options and **7.5 million** available for future issuance under approved equity compensation plans as of December **31**, **2023** | Plan Category | Securities to be issued upon exercise (a) | Securities remaining available for future issuance (c) | | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | **1.6 million** | **7.5 million** | | Equity compensation plans not approved by stockholders | **0** | **0** | | **Total** | **1.6 million** | **7.5 million** | [Certain Relationships and Related Transactions, and Director Independence](index=107&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) All information related to certain relationships, related transactions, and director independence is incorporated by reference from the company's Proxy Statement - All information related to certain relationships, related transactions, and director independence is incorporated by reference from the company's Proxy Statement[612](index=612&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) All information related to principal accountant fees and services is incorporated by reference from the company's Proxy Statement - All information related to principal accountant fees and services is incorporated by reference from the company's Proxy Statement[613](index=613&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=108&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements included in Item **8**, notes the omission of financial statement schedules, and provides a comprehensive list of exhibits filed with the report, including governance documents, debt agreements, and management compensatory plans - The financial statements are referenced in Part II, Item **8**[615](index=615&type=chunk) - All financial statement schedules have been omitted because they are not required, not applicable, or the information is included elsewhere[616](index=616&type=chunk) - A detailed list of exhibits filed with the Form **10-K** is provided, including management contracts and compensatory plans[617](index=617&type=chunk)[618](index=618&type=chunk) [Form 10-K Summary](index=113&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company's filing - Not applicable[621](index=621&type=chunk)

LKQ Corporation (NASDAQ:LKQ) Q4 2023 Earnings Conference Call February 22, 2024 8:00 AM ET Company Participants Joe Boutross - VP, IR Nick Zarcone - President & CEO Rick Galloway - SVP & CFO Justin Jude - EVP & COO Conference Call Participants Daniel Imbro - Stephens Michael Hoffman - Stifel Craig Kennison - Baird Bret Jordan - Jefferies Operator Hello, and welcome to today's LKQ Corporation Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Jordan and I will be coordinating your call to ...

Change % of Revenue 10.0% 0.9% (1.3)%(0.5)% (0.4)% (0.4)% Q4 2022 Gross Margin Personnel Expenses Labor Strikes in Germany Nonrecurring Compensation Charge Other Expenses Q4 2023 6.0% 8.0% 10.0% 12.0% 8.3% Change % of Revenue | --- | --- | --- | --- | --- | --- | |--------------------|--------|--------|---------|-------|-------| | ($ in millions) | 2023 | 2022 | F/(U) | 2023 | 2022 | | Total Revenue (1) | $1,546 | $1,390 | 11.2% | | | | Gross Margin | $597 | $526 | 13.6% | 38.7% | 37.8% | | Operating Expens ...

Revenue Performance - Fourth quarter 2023 revenue was $3.5 billion, a 16.6% increase compared to $3.0 billion in Q4 2022[3] - Full year 2023 revenue reached $13.9 billion, an 8.4% increase from $12.8 billion in 2022[4] - Revenue for Q4 2023 was $3,501 million, a 16.6% increase from $3,001 million in Q4 2022[26] - Full year 2023 revenue reached $13,866 million, an 8.4% increase from $12,794 million in 2022[28] - The company reported a total of $4,974 million in wholesale revenue for North America for the year 2023, an 18.2% increase from $4,207 million in 2022[34] - Wholesale revenue in North America for Q4 2023 was $1,393 million, a 35.9% increase from $1,025 million in Q4 2022[33] - Parts & Services revenue for Q4 2023 was reported at $3,356 million, with a year-over-year growth of 18.7%[35] - Revenue growth at constant currency for Parts & Services was 16.0% in Q4 2023, while total revenue growth at constant currency was 14.0%[35] Profitability Metrics - Net income for Q4 2023 was $184 million, down from $193 million in Q4 2022, while adjusted net income increased by 7.9% to $226 million[4] - Full year 2023 net income was $0.94 billion, a decrease of 14.6% from $1.14 billion in 2022[5] - Operating income decreased to $277 million in Q4 2023, down 5.5% from $293 million in Q4 2022[26] - Full year 2023 operating income was $1,357 million, down 14.2% from $1,581 million in 2022[28] - Net income attributable to LKQ stockholders for Q4 2023 was $177 million, an 8.8% decrease from $194 million in Q4 2022[26] - Net income attributable to LKQ stockholders for the full year 2023 was $936 million, an 18.5% decrease from $1,149 million in 2022[28] - Basic earnings per share for Q4 2023 was $0.66, down 9.6% from $0.73 in Q4 2022[26] - Diluted earnings per share (EPS) from continuing operations attributable to LKQ stockholders for FY 2023 was $3.51, down from $4.11 in FY 2022[41] Cash Flow and Capital Management - Operating cash flow for 2023 was $1.4 billion, with free cash flow of $1.0 billion[7] - The company repurchased 0.7 million shares for $30 million in Q4 2023, totaling 0.8 million shares for $35 million in 2023[8] - The board declared a quarterly cash dividend of $0.30 per share, payable on March 28, 2024[9] - Free cash flow for FY 2023 was $998 million, slightly down from $1,028 million in FY 2022[44] - Forecasted free cash flow for FY 2024 is projected to be $1,000 million[46] Future Outlook - For 2024, the company anticipates organic revenue growth of 3.5% to 5.5% and adjusted diluted EPS of $3.90 to $4.20[13] - Forecasted net income from continuing operations attributable to LKQ stockholders for FY 2024 is projected to be between $918 million and $998 million[43] - Forecasted adjusted net income from continuing operations attributable to LKQ stockholders for FY 2024 is expected to range from $1,045 million to $1,125 million[43] Integration and Restructuring - The integration of Uni-Select is ongoing, with half of the FinishMaster locations converted ahead of schedule, expecting to exceed $55 million in synergies[11] - Restructuring and transaction-related expenses increased to $65 million in 2023 from $20 million in 2022[28] - Restructuring and transaction-related expenses for FY 2024 are expected to be $30 million[43] Balance Sheet Highlights - Total assets increased to $15,079 million as of December 31, 2023, up from $12,038 million in 2022, representing a growth of 25.4%[30] - Cash and cash equivalents at the end of the period were $299 million, up from $278 million at the beginning of the year, reflecting a net increase of $21 million[32] - The company’s retained earnings increased to $7,290 million as of December 31, 2023, compared to $6,656 million in 2022, marking a growth of 9.5%[30] - The total current liabilities rose to $3,318 million in 2023, up from $2,271 million in 2022, indicating a significant increase of 46.1%[30] - The company’s total stockholders' equity increased to $6,181 million in 2023, compared to $5,467 million in 2022, reflecting a growth of 13.0%[30] Segment Performance - Segment EBITDA for Q4 2023 reached $396 million, representing 11.3% of total revenue, compared to 12.4% in Q4 2022[36] - Segment EBITDA for the year ended December 31, 2023, was $1,759 million, which is 12.7% of total revenue[37] Other Notable Items - The company incurred $214 million in interest expense for the full year 2023, significantly up from $78 million in 2022[28] - The company experienced a decline in specialty revenue, which fell to $1,665 million in 2023, down 6.9% from $1,788 million in 2022[34] - The impact of currency fluctuations on Parts & Services revenue was a reduction of $76 million in Q4 2023[35] - The company noted adjustments related to the Uni-Select acquisition and the ongoing impacts of the Ukraine/Russia conflict[39] - Adjusted net income from continuing operations attributable to LKQ stockholders for Q4 2023 was $226 million, up 8.1% from $209 million in Q4 2022[41] - Amortization of acquired intangibles for FY 2024 is estimated at $144 million[43]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________ FORM 10-Q ____________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number: 000-50404 ____________________________ LKQ CORPORATION (Exact name o ...

Third Quarter 2023 Earnings Call Presentation October 26, 2023 Forward Looking Statements and Non-GAAP Financial Measures Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different. All forward-looking statements are based o ...

LKQ Corporation (NASDAQ:LKQ) Q3 2023 Earnings Conference Call October 26, 2023 8:00 AM ET Company Participants Joe Boutross – Vice President-Investor Relations Nick Zarcone – President and Chief Executive Officer Rick Galloway – Senior Vice President and Chief Financial Officer Conference Call Participants Bret Jordan – Jefferies Craig Kennison – Baird Scott Stember – MKM Partners Gary Prestopino – Barrington Research Brian Butler – Stifel Daniel Imbro – Stephens Operator Thank you for joining the LKQ Corpo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________ FORM 10-Q ____________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number: 000-50404 ____________________________ LKQ CORPORATION (Exact name of reg ...

Second Quarter 2023 Earnings Call Presentation July 27, 2023 Forward Looking Statements and Non-GAAP Financial Measures Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different. All forward-looking statements are based on ...