LKQ (LKQ) - 2025 Q1 - Quarterly Report

Revenue Performance - Total revenue for the three months ended March 31, 2025, was $3,463 million, a decrease of$240 million or 6.5% compared to $3,703 million in the same period of 2024[84] - Parts and services revenue decreased by$240 million, or 6.8%, driven by a decline in segment revenue across Europe (down 7.4%), Wholesale - North America (down 6.0%), Specialty (down 6.8%), and Self Service (down 5.7%)[84] - Total third-party revenue decreased by $240 million, or 6.5$3,463 million for the three months ended March 31, 2025, compared to $3,703 million in 2024[91] - Organic parts and services revenue decreased by$151 million, or 4.3%, with a 3.1% decrease on a per day basis[84] Cost and Expenses - Cost of goods sold decreased by $165 million, or 7.3$2,086 million, with a reduction in cost of goods sold as a percentage of revenue from 60.8% to 60.2%[86] - Selling, general and administrative expenses decreased by $55 million, or 5.3$989 million, with SG&A as a percentage of revenue increasing from 28.2% to 28.6%[87] Net Income and Tax - Net income for the three months ended March 31, 2025, was $170 million, representing 4.9$86 million, or 6.0%, to $1,336 million, primarily due to a reduction in repairable claims and one fewer selling day[93] - Europe segment revenue decreased by$122 million, or 7.4%, to $1,515 million, driven by difficult economic conditions and heightened competition[94] - Specialty segment revenue decreased by$29 million, or 6.8%, to $393 million, attributed to demand softness in automotive and RV product lines[95] - Self Service segment revenue remained relatively stable, decreasing by$1 million to $136 million, with gross margin increasing by$4 million, or 6.4%, to $64 million[96] - Segment EBITDA for Wholesale - North America decreased by$22 million, or 9.0%, to $222 million, with a margin of 15.7$2 million, or 1.4%, to $141 million, with a margin of 9.3$6 million, or 22.2%, to $21 million, with a margin of 5.4$4 million, or 25.0%, to $20 million, with a margin of 14.6$3 million, compared to net cash provided of $253 million for the same period in 2024[113] - Free cash flow for the three months ended March 31, 2025, was$(57) million, compared to $187 million for the same period in 2024[115] - Total liquidity as of March 31, 2025, was$1,289 million, a decrease of $167 million from December 31, 2024, primarily due to increased borrowings of$160 million[98] Capital and Financing - The company believes it has sufficient access to capital markets to support future growth objectives, utilizing cash flows from operations and various forms of debt financing for acquisitions[97] - The company had outstanding borrowings of $1,811 million under revolving credit facilities and term loans as of March 31, 2025[108] - The maximum total leverage ratio covenant was 4.00:1.00, with an achieved ratio of 2.5 as of March 31, 2025[105] - The overall weighted average interest rate on borrowings was 5.2$0.30 per share on April 22, 2025, payable on May 29, 2025[101] - The company intends to continue evaluating markets for potential growth through internal development and selected business acquisitions[116] - The company’s acquisition strategy focuses on highly accretive tuck-in acquisitions with significant synergies, with no large platform acquisitions expected[76] Current Assets - Current assets increased to $2,497 million as of March 31, 2025, from$2,321 million as of December 31, 2024[119]