Financial Data and Key Metrics Changes - For the full year 2024, diluted earnings per share (EPS) was reported at $2.62, with adjusted diluted EPS at $3.48, a decrease of $0.35 compared to 2023 [35][36] - The fourth quarter reported diluted EPS of $0.60 and adjusted diluted EPS of $0.80, a $0.04 decrease from the prior year [36] - The decline in adjusted EPS was primarily influenced by a combined $0.30 impact from interest and taxes, and an additional $0.13 decrease attributed to commodity prices and foreign exchange rates [36][37] Business Line Data and Key Metrics Changes - North American revenue declined by 8.5% per day, with collision parts revenue down approximately 4% when adjusted for non-recurring benefits from UAW strikes in 2023 [18][19] - The European segment reported an organic revenue decline of 20 basis points on a per day basis, remaining flat compared to Q3 [20] - Specialty segment posted organic revenue down 7.3% on a per day basis, but showed sequential improvement from Q3 [26] Market Data and Key Metrics Changes - The average cost of auto insurance in the U.S. increased over 20% in 2024, which is expected to moderate in 2025 [19] - Total U.S. light vehicle sales increased by 7.1% in Q4, with pickups and SUVs at 14.8% and 4.9% respectively [27] - The RV market is anticipated to grow in 2025, supported by higher dealer inventories and strong consumer interest [27] Company Strategy and Development Direction - The company aims to simplify operations and enhance margins while focusing on organic growth and small, synergistic acquisitions [58][59] - The integration of FinishMaster was completed, leading to increased annualized synergies [31] - The company plans to continue its SKU rationalization initiative in Europe, targeting a reduction from 750,000 to 600,000 SKUs by the end of 2027 [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges and delivering strong operating results, emphasizing the importance of operational excellence and a sound balance sheet [11][12] - The company expects organic parts and services revenue growth between 0% and 2% for 2025, with North America revenue expected to be roughly flat [52][53] - Management highlighted the potential for improved EBITDA margins in Europe, aiming for double-digit margins in 2025 [41][42] Other Important Information - The company returned $678 million to shareholders through share repurchases and dividends in 2024, exceeding its commitment to allocate at least 50% of free cash flow [47][48] - The company has a total debt of $4.2 billion with a leverage ratio of 2.3 times EBITDA, showing improvement from the prior quarter [49][50] Q&A Session Summary Question: SKU rationalization project in Europe - Management confirmed that the SKU rationalization is a cautious, long-term project aimed at maintaining revenue while improving vendor terms [62][64] Question: Impact of lower new SAR levels on vehicle population - Management noted that the aging vehicle fleet is beneficial for LKQ, and they are monitoring the impact of new car production on repairable claims [72][73] Question: Mega-yards initiative - Management explained that mega-yards allow for consolidation and increased capacity, leading to better long-term returns [85][88] Question: North American and European supply chain differentiation - Management indicated that less than 5% of total purchases come from Mexico, Canada, and China, suggesting a potential competitive advantage amidst tariffs [78][79] Question: Margin opportunities in Europe - Management expressed optimism about continued margin improvements in Europe, projecting growth beyond 2025 [105][106] Question: EV initiatives - Management highlighted ongoing efforts in recycling and remanufacturing EV batteries, with a focus on future opportunities as the market develops [116][117]

FEBRUARY 20, 2025 Fourth Quarter and Full Year 2024 Earnings Call Presentation 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 Act. Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, ho ...

Core Insights - LKQ reported revenue of $3.36 billion for the quarter ended December 2024, a decrease of 4.1% year-over-year, with EPS at $0.80 compared to $0.84 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $3.42 billion by 1.73%, while the EPS exceeded the consensus estimate of $0.75 by 6.67% [1] Revenue Performance - Organic revenue change year-over-year was -3.2%, slightly better than the average estimate of -3.5% from five analysts [4] - Revenue from Parts and Services totaled $3.20 billion, below the average estimate of $3.26 billion, reflecting a year-over-year decline of 4.5% [4] - Revenue from Parts and Services in Europe was $1.51 billion, compared to the average estimate of $1.55 billion, marking a year-over-year decrease of 2.2% [4] - Revenue from Parts and Services - Wholesale in North America was $1.30 billion, slightly below the estimated $1.32 billion, representing a 7% decline year-over-year [4] - Revenue from Parts and Services - Specialty was $349 million, exceeding the average estimate of $343.02 million, but still showing a year-over-year decline of 5.9% [4] Market Performance - LKQ shares returned +1% over the past month, while the Zacks S&P 500 composite increased by +2.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Insights - LKQ reported quarterly earnings of $0.80 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, but down from $0.84 per share a year ago, indicating a 4.76% year-over-year decline [1] - The company posted revenues of $3.36 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.73% and down from $3.5 billion year-over-year [2] - LKQ has surpassed consensus EPS estimates two times over the last four quarters, while it has not beaten consensus revenue estimates during the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.86 on revenues of $3.64 billion, and for the current fiscal year, it is $3.65 on revenues of $14.47 billion [7] - The estimate revisions trend for LKQ is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Automotive - Replacement Parts industry, to which LKQ belongs, is currently in the top 36% of over 250 Zacks industries, indicating a favorable position compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact LKQ's stock performance [5]

Revenue Performance - Fourth quarter revenue was $3.4 billion, a decrease of 4.1% compared to $3.5 billion in Q4 2023[3] - Full year revenue for 2024 was $14.4 billion, an increase of 3.5% compared to $13.9 billion in 2023[5] - Revenue for Q4 2024 was $3,357 million, a decrease of 4.1% from $3,501 million in Q4 2023[24] - For the full year 2024, revenue increased to $14,355 million, up 3.5% from $13,866 million in 2023[26] - Total revenue for the year ended December 31, 2024, increased to $14,355 million, a growth of 3.5% compared to $13,866 million in 2023[33] - Wholesale revenue in North America for the year increased by 9.9% to $5,465 million from $4,974 million in 2023[33] - Revenue growth at constant currency for parts & services was reported at (4.2)% for the three months ended December 31, 2024[34] - Revenue growth at constant currency for the year ended December 31, 2024, was 4.0% for parts & services[34] - The company reported a currency impact of $(9) million on total revenue for the three months ended December 31, 2024[34] Net Income and Earnings Per Share - Fourth quarter net income was $156 million, down from $184 million in Q4 2023, with diluted EPS of $0.60 compared to $0.69[4] - Full year net income for 2024 was $690 million, a decrease of 25.4% from $942 million in 2023, with diluted EPS of $2.62 compared to $3.51[5] - Net income attributable to LKQ stockholders for Q4 2024 was $156 million, a decline of 11.9% from $177 million in Q4 2023[24] - Net income attributable to LKQ stockholders for the full year 2024 was $690 million, a decrease of 26.3% from $936 million in 2023[26] - Basic earnings per share for Q4 2024 was $0.60, down 9.1% from $0.66 in Q4 2023[24] - Net income for 2024 was $693 million, down from $938 million in 2023, representing a decrease of 26.1%[31] - The net income attributable to LKQ stockholders for the year ended December 31, 2024, was $690 million, down from $936 million in 2023[36] - Adjusted net income for Q4 2024 was $207 million, a decrease from $226 million in Q4 2023, with full-year adjusted net income at $918 million versus $1,027 million in 2023[38] - Diluted earnings per share for Q4 2024 were $0.60, down from $0.69 in Q4 2023, while full-year diluted earnings per share were $2.62 compared to $3.51 in 2023[38] Cash Flow and Capital Management - Operating cash flow for 2024 was $1.1 billion, with free cash flow of $0.8 billion[6] - The company returned over $150 million to shareholders in Q4 2024, including $80 million in share repurchases and $78 million in cash dividends[8] - Free cash flow for fiscal year 2025 is forecasted to be between $750 million and $900 million, based on net cash provided by operating activities of $1,075 million to $1,275 million[41] - Free cash flow for 2024 was $810 million, down from $998 million in 2023, with net cash provided by operating activities at $1,121 million compared to $1,356 million in 2023[42] Expenses and Financial Metrics - The company incurred restructuring and transaction-related expenses of $36 million in Q4 2024, compared to $12 million in Q4 2023[24] - Interest expense for the full year 2024 was $262 million, an increase of 22.4% from $214 million in 2023[26] - The company incurred $149 million in amortization of acquired intangibles and $135 million in restructuring and transaction-related expenses for the year ended December 31, 2024[38] - Adjusted EBITDA for 2024 was $1,612 million, a decrease from $1,705 million in 2023, with net income from continuing operations at $690 million compared to $942 million in 2023[42] Shareholder Returns and Dividends - The Board of Directors declared a quarterly cash dividend of $0.30 per share, payable on March 27, 2025[8] - The company repurchased approximately 65 million shares for a total of $2.8 billion since initiating the stock repurchase program in late October 2018[8] Future Outlook - For 2025, the company anticipates organic revenue growth for parts and services of 0% to 2% and diluted EPS between $2.91 and $3.21[12] - Forecasted net income for fiscal year 2025 ranges from $755 million to $833 million, with adjusted net income expected between $883 million and $961 million[40] - Forecasted diluted earnings per share for fiscal year 2025 are projected to be between $2.91 and $3.21 for reported figures, and between $3.40 and $3.70 for adjusted figures[40]

Fourth quarter revenue of $3.4 billion; annual revenue of $14.4 billionFourth quarter organic revenue for parts and services decreased 3.6%; annual decreased 2.2%Fourth quarter diluted EPS2 of $0.60; fourth quarter adjusted diluted EPS1,2 of $0.80Annual diluted EPS2 of $2.62; annual adjusted diluted EPS1,2 of $3.48Annual operating cash flow of $1.1 billion; free cash flow1 of $0.8 billionRepurchased $80 million of LKQ shares in the fourth quarter of 2024Exceeded commitment of returning 50% FCF to shareholde ...

Core Insights - LKQ is expected to report quarterly earnings of $0.75 per share, reflecting a year-over-year decline of 10.7% [1] - Revenue is anticipated to be $3.42 billion, down 2.4% from the same quarter last year [1] - There has been a 0.2% downward revision in the consensus EPS estimate over the last 30 days, indicating analysts' reassessment of their forecasts [1][2] Revenue Estimates - The consensus estimate for 'Revenue- Other- Total' is $138.84 million, indicating a decline of 4.3% year-over-year [4] - 'Revenue- Parts and Services' is projected to reach $3.26 billion, down 2.9% from the prior-year quarter [4] - 'Revenue- Parts and Services- Specialty' is expected to be $343.02 million, reflecting a year-over-year change of -7.5% [4] - 'Revenue- Parts and Services- Europe' is forecasted at $1.55 billion, showing a slight increase of 0.4% year-over-year [5] - 'Revenue- Parts and Services- Wholesale - North America' is estimated at $1.32 billion, indicating a decline of 5.1% year-over-year [5] - 'Revenue- Parts and Services- Self Service' is expected to be $48.40 million, down 5.1% from the year-ago quarter [5] - 'Revenue- Europe' is projected at $1.54 billion, reflecting a decrease of 0.7% year-over-year [6] - 'Revenue- Specialty' is expected to reach $338.36 million, indicating a year-over-year decline of 8.8% [6] - 'Revenue- Other- Self Service' is forecasted at $61.26 million, down 8.6% from the previous year [6] - 'Revenue- Other- Europe' is expected to be $5.30 million, showing an increase of 6% year-over-year [7] Organic Growth Estimates - 'Organic Growth - Parts and services - Wholesale - North America' is projected at -6.3%, compared to 5.3% reported in the same quarter last year [7] - 'Organic Growth - Parts and services - Europe' is expected to be 0.3%, down from 3.9% reported in the previous year [8] Stock Performance - Over the past month, LKQ shares have returned +1.7%, while the Zacks S&P 500 composite has returned +4.7% [8]

LKQ Corporation (NASDAQ: LKQ ) is a relatively larger player in the automotive parts and services industry, known for its wide range of product offerings and robust operational network. In this note, we’ll take a deep dive into LKQ's businessAs a value investor with over a decade of market experience, I've discovered that success in equity markets comes not from supernatural trading abilities, but from finding an investment approach that aligns with one's personality and analytical strengths. My Investment ...

Core Viewpoint - LKQ Corporation has appointed two new independent directors and formed a Finance Committee, entering into a Cooperation Agreement with Ancora and Engine Capital to enhance corporate governance and drive shareholder value [2][4][5]. Company Enhancements - The newly appointed independent directors are Sue Gove and Michael Powell, both bringing extensive experience in the automotive and insurance industries [3][9]. - The Finance Committee will consist of three existing directors along with the new appointees, focusing on capital allocation strategy and business portfolio recommendations [4]. Cooperation Agreement - The Cooperation Agreement with Ancora and Engine Capital includes standard provisions such as standstill and voting rights, aimed at fostering collaboration for the benefit of LKQ's shareholders [5]. Leadership Statements - LKQ's Chairman expressed confidence that the new directors will complement the board's expertise and support the company's strategy for operational excellence and value generation [4]. - Ancora's leadership emphasized their belief in the potential value of LKQ and the positive impact of the new directors on the company's future [4]. Company Profile - LKQ Corporation is a leading provider of alternative and specialty parts for vehicles, with operations in North America, Europe, and Taiwan, offering a wide range of recycled and aftermarket parts [11].

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are unde ...