LKQ (LKQ) 26 Apr 182018 Q1 Earnings call transcript

Good morning. My name is Denise, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the LKQ First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank President you Vice conference. begin Investor of Boutross, may Relations, your Joe

accompanying are President issued you, and Varun Officer. conference refer our XXXX today everyone, Good Laroyia, for call. at lkqcorp.com to morning Zarcone, to us this Thank call. as slide and morning, well Please quarter Executive welcome Vice operator. presentation Chief Officer; Chief as and Executive for LKQ's this President first the With the release Nick and website LKQ's Financial earnings earnings LKQ

Now, let Harbor. me quickly cover the Safe

forward-looking considered forward-looking Some These beliefs, various of we of statements. Actual differ implied any the make assume statements statements We or factors. the those intentions statements today events obligation expectations, as may our a from to be results update may or materially forward-looking. result regarding or no strategies. include expressed hopes, in

information, For subsequent to in and factors risk XX-K more Form with please our refer SEC. filed discussed reports the the

we presentation. GAAP is included present call, happy Nick measures earnings release press Zarcone. over During both today's call with non-GAAP measures. slide that, the and and A of to I'm to in this to will And reconciliation GAAP turn non-GAAP

to and Joe, the Thank you, everybody on good morning call.

financial results the a bit closing high-level further with start make by share before a Varun remarks. in guidance our and dig comments and come details to related updated will I discuss our morning. or few providing on into delighted I are segments most recent quarter some of back this We XXXX you will the and to quarter, the

from charge. basis the during the the quarter a XX% in revenue quarter revenue Total American a came was billion of As reflecting last on XX.X% increase billion recorded consolidated at year. global noted a $X.XXX growth on revenue in X, was parts $X.XXX slide operations over first the organic with leading X.X% parts North in and record growth services our services while and first

the recognition call, impact January growth of QX sector standard Please revenue new our are XX just on points. very few companies adopted negative the of XXXX generating had revenue mentioned growth basis consolidated organic effective level. accounting a this we at As in under that in and X note,

of the rate global above the the organic impact accounting growth excluding X%. was new standard, just So,

EPS the basis, diluted short from for These some the the of our forecast, continuing expect the $X.XX for for a is continuing to both than impact we period adjusted of While expectations, quarter-to-quarter bit to increase the an last we On plans of for the call, accounting QX. quarter an $X.XX per results XX% as our from share in difficult remainder year. that the will stockholders per be operations the attributable X% provide to of of insights compared stockholders impact $X.XX, same to was faced $X.XX, revenue quarter were the and first share our to year headwinds operations XXXX compared standard growth earnings reported on to LKQ reported first recorded less the was of the to for same earnings for an increase that and during LKQ period attributable change. XXXX. as Diluted

highlights. to operating turn Let's the

America, in parts last during American consider recent year. well compared quarter expectations. and to note for and revenue XXXX American the a high that was according the especially comparable CCC ahead our of data, while claims. total revenue will Massachusetts, which note claims, the clearly in segment California, auto and North started national for year in in like all there states the to traditional Organic years. you reversal material slide Texas, significant X.X% when repairable Washington, North on first experienced Belt Michigan, the services Information of for the quarter, growth York regional X.X% According declines We services saw X.X%, were growth Illinois, North you states related repairable from liability differences, X, of during As to year-over-year New like quarter parts on our Pennsylvania, Georgia Ohio, basis Snow and grew were first the Florida and although segment basically up quarter a collision Services, claims only CCC a were

helped market of regional we data, the larger there Department were significant driven said, Transportation, that tracked the achieved, basis data was and were our while regions. U.S. Northeast on to according the QX That a extremely CCC improve claims revenue far these supporting to while Our X.X% growth in differences. repair although the Midwest, of East X.X% of revenue more largely were States in processing. given in the volume work cause increased Clearly, Organic growth our nationwide our February, down strong, for Also, performance were of South, the gain Mother share. as tempered. regions in Nature continue shops regional looking outpaced United view the like and some the in organic the times cycle outstripped growth performing to miles aftermarket with West salvage the Canadian was the the parts the that they parts, differences

in as each total SKU Importantly, aftermarket increases XX.X% to growing the we certified available, X.X% of parts first continue respectively total and number offerings well see quarter. the collision our in as

cost, that we incurred FCA particularly collision have noted of an approximate revenue point the call, basis in operating a growth came impact as percent a Achieving for levels this American positive customers. our and on America, as XXX dealerships new Finally, our our expense incremental as to industry-leading organic quarter. agreement the robust to service level distribute maintain our program in America we of to organic in rate business, parts a growth had during North North North at last batteries

place dynamic in negative the in satisfy which on better As some volumes around a right than to touch right operating order much on demand. the had we Varun move margins the inventory in This quarter, mentioned, the and expected impact have to exhibited will regions customer shortly. system to parts had

quarter. the of Europe revenue XX.X% our below to was segment X.X%, other during the and growth was Atlantic, which in parts services our parts total the Organic services Moving for expectations. side revenue of while and of an European to increase FX-related growth just XX%. XX.X% added sterling quarter the of over the additional first XXXX, in euro the and strengthening resulting an Acquisitions the revenue during during quarter continued of achieved

Eastern organic roughly on generally growth, growth in growth again basis quarter in the ECP largest the are side, the operations, our overall UK organic the our way currently high-single-digit experienced European organic we On year-over-year our with in bought well positive which and Europe Conversely, operations a and Benelux experienced our average. XXXX. operations led flat softest Europe, produced above since

the will I While a number there of three moving factors. biggest were pieces, mention

to First, that have difficult the long-term conversion remain the confident full to modeled. to we known than automation had highly benefits became the TX, related we warehouse more acknowledge while we new in UK as the project, initially

As a involves project facility. a utilization legacy complex the mentioned smaller is utilization software in from three but this only major also warehouses not logistics existing automated and of TX the moving the past, initiative, a new to of TX highly reconfigured the project. facility large

relationships. extensive was issues surface. and both In of began some and to to at to increased some issues. full testing, final did earlier which under and head promotional year we stock service our and of a replenishment temporary We ECP material branches was count The in maintain that TX TX branches, some the load product the patch our particular, programs installed experienced turn flowing the led customer all to at it related was ago. the we software immediately weeks key this keep our While only few implemented availability vendors once system issues

TX. appears sales the to That we and that distribution work the has is we it couple move Page are disruption not April fully backlog continue the been the coming on Based the early rectified. still to our take to of it functional. and quarters, prove worked quarters the have will said, TX. yet, fully side. now will We have efficiency through functions the related Andrew But on replenishment to branch a system and center network we optimized In cost do national results, at

without We issues be same are executed first the experienced during confident that quarter. these the we will

the Europe States United point, had some like unusually severe weather. second The

storms East. in was UK by example, the have the hit March, media the referred from separate which three For the Beast as to

of unusual an our dropped Scotland our and our few when storms the some a Greater trucks many grounded, the replenishment closed. biggest of and of and days these snow were area, customers London were some experienced was amount areas England. There While of branches of on the in impact northern

the harsh a our case, QX this negative is the on results. to generally in While favorable business, severity to led weather impact

in than on X impact Easter second of we in may Last Monday Easter the where fell to appears and year the the quarter. the and mid-April April this Good a timing had into second year, was have Easter negative larger firmly first in falling quarter, Easter quarter Friday you recall, anticipated. with Third,

vehicle So that office authorities should distribution additional Andrew including July UK approval again, branch the TX be head market. received into by of to on Page by process time, integrate function are to Page, are Andrew have we temporary Page's the the three XX for branches, the national With scheduled the required had we and we the consolidated nine integration Andrew by respect competition this end and year. Andrew commercial Page At the setbacks. business. focused non-divestiture two center network of selling in branches the and is

received the bids evaluating currently are We we branches. these for have

quarter, Europe Europe in four new Western During we location Eastern first and one opened in branches five new the in up including Europe.

Page impact and for impacting margins. growth was the it of now believe within year term finally, a temporary exit overall, timing So resolved these in segment. impact benefit anticipate we move will the we items longer and three of control that our and will benefits will And with see the TX setbacks the we issues the our favorable, QX, European QX Easter be to the to said, well our That couple next weather By we and start organic EBITDA Specialty on Andrew the will to the and year, last behind with disappointing segment let's be compared when our quarters. integration will are us. result

results selected term. short in in growing lower decisions customer growth implemented most developing had from with new meant yield of the a term, X.X%, organic historical over however, quarter. for long reported focusing on The while levels think services business Specialty mix and which the profitability quarter, QX, more In the at parts for late margin. that of this and During positive rationalization acceptable levels the product we team coming the will business slowdown

as which harsh the to well as negatively impacted both was segment, segment the American North the demand from our products unlike on our benefits side markets. by for certain Specialty storms winter ability weather, in our Importantly, RV-focused distribute severe March

corporate an on we the in and distributor in quarter, development, Moving related to Tennessee. first products acquired aftermarket radiator

digest During development our team this of that the acquisitions acquired the not effort our but quarter, door diligence efforts. on pleased tempered our team's XXXX, to we With respect attractive had to am in opportunities. of with what we closing operating ongoing acquisition I primarily and with the said, volume integration

the period currently was We EU not extension a or submitted request complete response The was referral in transaction EU that overlap referral anticipate assessment. country's a On EU profits, pre-notification quarter. vast in country Stahlgruber's continue authority will strategy May growth transferred review merger formal operations acquire second to believe our that X. The discussions Commission of and robust particular we Antitrust to the With the Stahlgruber X. only able December, of our and activity a asking of notification business an we to revenue segments. request on we The as overall a filing that April received a of to automatic one the opportunities Commission pipeline March before beginning majority portion and in to announced EU formal engaged during see the the businesses close receiving acquisition of to request back the the business to in represent surprise, country. the of X, operating from some subject that be competition we part in each small the the triggered to its in from Stahlgruber on on pending for there referral referral Commission the of be with respect fit January with XX-day Commission country and request our

over companies. turn details results. And Europe the addition team terrific organization leadership Varun Stahlgruber to view has is of the family with interactions months reinforced discussion the now, our the the several a that be you Importantly, I through very the it a our and to who strong past that will business, run high LKQ over a of and only will segment will quality

joining take for good before morning and behind and to consolidated Thanks, a our an the update consolidated trends segment back start full-year revenue Nick, so the us and our record our situation through to results with gross liquidity will call. I I a on new Nick margin. you for for everyone current turning quarter billion, it the cover Nick reported described of will on $X.X company, the guidance.

of or million As EBITDA slide XX quarter increase attributable last XXX segment versus $XXX with down the Roughly relating million our totaled first points presentation, XX for the margin America to was noted North over points on balance year reflecting decrease XX.X%. segment. is European comparable the gross to consolidated of XXXX. our of quarter basis $X Segment the the quarter the the X.X% a basis comparable percentage to

of We in percentage basis operating largely EBITDA a XX.X%. basis XX to expenses. experienced was to down due and expenses revenue, XXX freight our point an As points segment increase personnel

income During compared and the to first amortization the million largely the items QX X% period $X roughly XXXX. prior to to XXXX, as gains expense losses an quarter or that, due was acquisitions. year experienced XXXX. increase $X compared the late favorable fees. or non-operating the due includes $XXX average such million about and operating million during a was of higher income payment year. when in to also income XX% $X and items With up first rates. to by acquisition-related increase in $X approximately Pre-tax and about XXXX we down same X.X% for depreciation year-over-year million, prior million expense $X.X restructuring various cost both were and was income first of million Non-operating of exchange quarter quarter in and down balances Interest interest XXXX the $XX compared foreign versus Other million,

Moving to we effective of quarter of effective first we consistent was income rate tax taxes, quarter, provided. the for our the rate annual guidance XX% with the annual an In XX.XX%. XXXX, applied

federal associated effect this a the tax Jobs lower Diluted from showing $XX income EPS the in decrease million Tax was U.S. compensation, a tax to mostly Cuts the into the and which the restructuring up operations attributable continuing XX.X% improvement. to quarter asset with EPS, LKQ that we're Act. charges, stock-based related year So and X.X%. was reflecting $X.XX, for intangible stockholders with first rate excludes amortization provision Adjusted $X.XX went tax benefit

the in to yet turn want to LKQ, acknowledge do I our ourselves quarter. first able revenues in Before segment equally pride profitably. as being I importantly have only again, grow on margins to the to we demonstrated not commentary, At disappointment so we but

leverage in team management Our to strives operating our obtain businesses.

actions the causes faced designed done underway discipline, on but there provide in we the North that lost also quarter down to success. to work points business due of that XXX the haven't last long-term gross reported over several and XX.X%, slide XX, color quarter. during basis aftermarket the margin the the were pressure XX will about points with our America I year. We we to know margins first factors. on be The is XX.X% first decline represented address for basis Starting

inventory. our costs and costs rising sheet ocean metal resulted and such and freight for for in higher commodities Firstly, resin our supplies as

Efforts not offset are Our location, headwind. selling region issue net match inventory the underway a to prices, this level district to this on higher increase however, did redress and costs. to

margin relative through products winter diluted batteries, are cold parts. certified automotive we profile Secondly, the prior the to owing part overall organic margin Both a growth the OE year. such to products, and experienced which lower large of came as the

business contributed self-serve to scrap this lower which the percentage, seems initially our unusual given margin also Thirdly, rising prices.

and the We higher create when dilutive on in prices rise car effect decline, revenue gross XXXX though cars significantly a year. margin process as margin a scrap generating costs more dollars gross grow the in to an to also segment higher than and expenses are North in XX $X.XX year. similarly-sized points ago, basis In cost percentage. a increased associated last to that reserves in Operating tends to QX, percentage do cost our not a to us year increase not recur aggregate charge returns as we due margin We gross EPS. with percentage we revenue American of expect this receivables our compared recorded in approximately Parts by XXXX.

sale and to costs basis were up corporate of from the PGW benefit, We points personnel also benefit XX freight, XX overhead of business related the of OEM of a vehicle XXXX. shared in basis saw expenses points about Outside March this costs. eliminating

level of cost to third-party inflation had service we rely vehicle higher and freight on With shortages, high seeing too many in Like driver are levels. companies, third-party the wage maintain quarter, fuel with the freight rise to growth we sales more rentals and costs.

$XXX and freight of increase a points third-party basis of surcharges, Non-operating to resource and codes on management. to freight adjusting positive and impact sourcing certain overtime to to had XXXX to XX a and reduce of variety earlier, impacted EBITDA costs expenses bring segment expensive temp mentioned had labor growth. such these in In for to Nick overtime the options of prior though write-off income keep less at on The underway freight due weather was price came up for headwinds, increase recorded contributed we premium a in incur labor the As the address year. that personnel segment XXXX. quarter including expensive total, with a and as EBITDA an in Midwest, outpacing fronts asset XXXX as Training experienced X.X% strong first demand. over during growth, on regions is revenue was the this first revenue which Northeast quarter a non-recurring million, America temp North

were scrap prices XX, the XX% over a follow car will benefit we generally the quarter The owing on up scrap scrap was XXXX. $XX to costs than last the profitability experienced higher from movement prices over higher pricing, $X sequential prices, which of in slide We scrap comparable or saw time. QX in and million up year positive lower impact QX XXXX. benefit as XX% from at million Looking of reflects

is our were the to given Central in (XX:XX:XX), Riyadh margins. gross basis a attributable which mix in region, lower of Eastern on segment to the XXX at Europe the largely in comparable over The to higher point QX, European growth margins period XX, on and our Moving decrease European slide XX.X% shift decline UK and has structurally operations XXXX. the

As gross Nick our the we mentioned in quarter experienced remarks, his our in margin fronts. issues first migration TX on two with impacted that facility

First, unbudgeted launched we the our personnel pricing product. on expense and the incurred increased business. promotional including address second, And side, manually to stock to issue, we to receive cost customers' expenses recapture

QX margins in basis of in expect basis from some gross Going expect we two-step that three-step on mostly ago, basis were a openings and year a showed improvement the experienced percentage lower the expenses yielding procurement to comparable higher related X% drove sell XX sales work a business Benelux as we COGS, higher market. to news million, points operate a as information specific costs, evolution inventory QX point the in which decrease With centralized two-step the improvement next XX costs label we continue a European SG&A which, of additional increase a costs EBITDA we rebate forward, basis year. costs, QX. ongoing to European The We in we've incurred point we operating three-step and last a to percentage move the revenue, XX and operations, XXX Sator additionally these in received to our extent, over from of consolidated in our to have a discussed, programs, across branch UK margin. gross private incremental a Sator solutions the model supplier respect to higher Europe and systems offset versus attributable to quarters. as positive in we segment and with point previously with to on margin the strength couple personnel model by incur has the in effect basis dissipate in through of today. though some on period as Europe factors we many the gross totaled these did $XX rationalize owing technology a To lesser to projects, quarter additional

acquisitions was Europe the QX dilutive segment that for goal remains step next months, impact barring XX in Our EBITDA double-digit be any the the over margins direction. opposite a may of and

soon, task. focused some have and While John team of more work and be on the issues we intensely behind will QX European we to management us this do, believe are the

quarter-over-quarter acquisition to the Specialty slide and margins. in the on and, performed Turning LKQ discussed, family. for part a has year of by as of was The full business The the than flat its quarter the XX, continued some well our previously business QX segment. business Warn Warn comparison the has segment protecting base first created of to from specialty last November as perform the margin specialty well base in profile higher revenues spite noise

margin relative the team, Specialty Nick vehicle higher million, the the solid Specialty gross the were related as XX percentage. XXXX. As points revenue dropped personnel, a revenue percentage Operating was of QX given was impact variances higher as year, margin XX.X% basis to of $XX EBITDA and to up had headwinds. prior overall up fuel on performance some for expenses. business, expenses Specialty a a positive by percentage segment of primary which mentioned, low from XX.X%, the Segment And revenue, a EBITDA in to

on capital to allocation. move Let's

of hand. generate talked full We remain for that CapEx lower slide the the from this were operations inflow, for on ability will approximately inventory and cash to $XXX cash growth our continuing outflows Specialty note you operations the changes in reflect North quarter net XX, presented million. flow about from year capital earlier opportunities Europe flows first We cash our quarter XXXX. debt, levels, strong a cash expected was was for year on The million. of than As our the In first North work largely $XX of revenues. the cash America, about for inventory almost buying $XXX million and resulted quarter, to by down America this the to started to flows the business. and operations the pay-down net optimistic funded in owing related we largest while from in

As we've the shown in the we generation. the given outstanding cash have slow our to our if past, we down acquisition pay down ability pipeline, free flow debt

XX, slide we to times had $X.X approximately X.X billion about cash, March XX, of EBITDA. as million total of $X.X billion Moving months' of resulting or debt debt last outstanding $XXX of and net in XX about

have We with availability cash billion. of $X.X our approximately total of our liquidity yields $X.X billion on which a credit, of line together

of million at On €X April maturing April XXXX XXXX and a €XXX the million notes in of with X.XXX% of rate at senior Xth we a X.XXX%. in billion closed maturing €XXX a of April, rate

the the were We is ongoing able tranche the plan at updated that, to closing support transaction a mitigate paying the in I'll We the the a are until back a and now over the euro-denominated average to of market guidance. with markets. despite cover by outcome. we and turn terms rate terrific down Funding obtain we costs date. both Nick With X.XX% the to an debt X-year XX-year portion saw to very the volatility the in Stahlgruber capital call a happy weighted holding of

have end both progress headwinds gradual we from few Europe from overview. the North respect the continued acceleration X.X% parts a in full-year down in and the financial the growth annual reported segments range QX, and in we the and will adjusted standard. growth X% organic for revenue for year. light on of a first of adjusted of America said, European to services, anticipate Specialty that organic to top accounting key recognition Specialty, as for our will have financial the global we the guidance the reasonably guidance In achieved metrics. X.X% through quarter, and remain for new strong, show we That the improvement you, With to results some reflect Thank Varun,

adjustment million $X.XX In improvement will time our to of QX and range range $XXX at profit terms for at for of of we from hold reflect to catch adjusted results. the yields net $X.XX results million adjusted to the and That the both $XXX a fact prior moved yield the end $XX low the to plans million, take to EPS, end have income down high guidance. down actual that some the

trimmed spending We a $XXX $XXX a capital our have bit also plan million to range million. of to

pricing. guidance is rate FX it be million the current believe XX%, We scrap to earnings Accordingly, approximately also earnings million will assumes the working $XXX that million, less partially revised still a which reduction. levels impact growth should the lower anticipate from We investment, operations, tax steel flow capital and $XX offsets $XXX slightly flow the but lower effective require revenue cash will the impact. the cash as relates to rates guidance and

guidance does Stahlgruber. – impact of pending our acquisition include from does any the not not Importantly, again,

We our transaction customers effectively our our and and existing am importantly control, to both can of from while to I come and guidance company, dynamics the quarter. am looking most proud for continuously commitment losing hard during team's closing, acquired will that not manage employees dedication growing our equally business, which the proud delivered of back leverage opportunities the they the our our I stockholders, the recently has our operations. the synergies once generate focus of people, business, on for update closed. and and developing In work XX,XXX and

to medium call ability confident now are am short-term term over open are headwinds, plans we ready in I facing value implement significant questions. we longer some horizons. and their for team's our With Although to respective and that, effectively very continue the create up operator, the to

from with Stephens, Bienvenu first Ben comes Your Inc. question

Your open. line is

Hi. for question. taking my Thanks. Good morning

Good morning, Ben.

some ask incongruities you I about dynamic North expected. needed them The X.X% have around the in you where in you of you or well think, where or margins, above, but want them, what described to we inventory America. I is particular the the growth

stronger that a move that through as wondering, of the do I'm you so year? through environment? you of manage leverage move as terms can light growth the in incongruity And through year, availability, business you inventory you And how in

morning. America actually traditional of we strong good of here. had a back Ben, revenue I speaking where a had into significant was had that Hey, was again Interestingly, great Listen, inventory kind the mentioned revenue kind crash It's looking if go piece, right the we our as experienced. it you think previously back box. growth of organic question light and we North Varun you Laroyia invested fourth in that we sum decision the in quarter discussion our the to

at look look at paid lines, bumpers, you along essentially which grills, things So off. those

worked that investment well. from the So perspective, inventory

The other net the with share the the is back I America higher off that Europe of Specialty sales. organic and was during we piece quarter, revenue, than lower from net essentially inflow the expected in – the cash a although to will was inventory North cash outflow you due

is our Ben, that inventory And a in to inventory the know. as directly is in – crash U.S. this time it warehouses it not get to literally inventory, do of of from we We over ship only The onto our facilities. months shipped Most the because takes inventory advance but is, buy to you couple aftermarket specific our Nick. reality aftermarket Taiwan, our

had the particularly in QX The And other, those harder around back inventory some shipments to to in reality moving spend purchases place winter money expectation amount we the we normal winter. Midwest in up winter have was in hit That than system, put the a in getting anticipation into us, so here us going are actually are is where a that reasonable and our normal those it April places is they were the behind and of a we're storms demand the in for and in hit some and perspective. but of Northeast will into Midwest, from product. because absolutely go them although should dissipate our significant cadence geographic a there behind that absolutely more

the expense we the the shouldn't level to And of right place right service in to getting customers. parts so have same our

to happened Page Andrew went clarifier the reform in Andrew at unchanged then and on there the quick X exit on to the at missed this $X.XX guidance. have rate curious, of bridge there there, explanation, and the $X.XX may more I rate, exchange be on contributive one one last just so from question TX. why Tamworth could the business what we've year-over-year Thanks. rate, rates? And the the and an in then Great. the exchange on and I'm And impact presentation, fourth the went $X.XX if bridge. at away, your to quarter, got growth think than I on went tax tax the your Page When I'd Okay. $X.XX, were explanation we I $X.XX, just I rates of see from today looking ask favorable we're

Ben. Thanks, Yeah.

essentially So let of me – with you those elements each start mentioned. that off

we linked European really into anticipated piece So business what growth the segment. our with in is year-over-year had through coming initially

shared the Page basically now about think the ago. about of TX commentary If not be $X.XX, shared will a place on minutes the we you accretion had and Andrew that that based part of as that guidance, few as was we taking which

XX% you reform time. given at at think in Essentially And the of terms can by at recover we to regards rate of to being $X.XX, that feel don't if that, our to headwinds is business, tax guidance our confident down faced essentially had time we that essentially. of couple a able those, America in then about the overall with the gone rate to recover earnings. due that's the specifically cents piece so but the comes believe in in we this number kind we North lower that of consistent of point by tax addition we some QX, In

given kind piece, rates you $X.XX are given flat I in think, kind guidance. that exchange terms $X.XX And had a those EPS had where trading two TX, rates, year. sterling eliminated there'd quite of was had QX, in if kind prior the the currencies of what that currencies the one. as versus frankly, exchange increase Page if in gets terms terms terms kind the Andrew to tax impacted of earnings about two in we see also And you when guidance, $X.XXX We key those then this piece. but And number a they're $X.XX one we of getting picked reform both are the that's trading the week have, piece of how what said to anticipated. about the that then we versus mentioned of you we've up are that's and listen of kind We and from final the flat. of in markets, of in roughly think be So, the from euro,

of and at only $X.XX trading in it's the is that $X.XX. some other an of rate also have substantial at is to the beginning think I Canadian dollar fairly down And about currencies Czech two average at koruna. year, the then the sterling which the $X.XX we was then the

at we So $X.XX the had what remains the FX flat piece versus overall, guided.

back in I'll get queue. the Thanks.

comes Albertine question with Your Consumer from Edge. next James

Your open. is line

Hi and for taking good question. and my gentlemen, morning thanks

Good morning, Jamie.

happened ask It I I you comment I happened a may quarter your question. costs clarification you of conference call you want I lot that on sounded hearing to had for moment like the heard Nick, of my I correctly? If the just Am your winter sure in that on ask in April. first a before March XXnd March, in ago. make fourth right, corrected February, just a and

fourth had which quarter mean I time, guidance accelerate. weather occurred, obviously January to during March business had not closed, reality were the had that weather the not continuing call, in At February set issues late Specialty results was Jamie. not was we is Yes, February. we've the in was the closed, TX closed, the UK at point impacting the our not the occurred,

until final weeks really patch haven't early software – April. ago of didn't a there really in we couple the We put

accelerated want through. deterioration you quarter if the think we as it, the so to performance the of of And went during

if that just North holds unrealistic? that, I though, organic that America X.X% specifically growth, in in say is leverage Nick, let's Could drill on or XQ expect we could XQ. in

has – because we can the region, that than to than same if will there are those the grew demand you as – if bit first the products we focused of because more quarter. and I up, had speaking, time, salvage doubt. faster, that or during it indeed, getting Varun from full we selling. product have significantly operating accordingly really day salvage fixed, shift, after. the issues time cost. quickly coming and Well, why are not different our at probably we our the of freight get of quite sometimes, we winter gross shops – longer had when some impacting a the the is faster that's expense little body they will, demand from generally second But we part can around And mean product scrambling the bit that was customers third the expenses, to product are for in But the moving will. salvage product, shouldn't quarter around were no different weather rate state country that was in aftermarket level get I areas product good on indicated, if all those the customers a hang incredibly cycle were to you gotten probably those had the reality shops you a a were in and little products to there by And the more a is the satisfy our particularly of the same like margins hit hard were think, a can take the and

some line that on QX, should QX. we benefit operating up we anticipate in So do expense pick the

yeah, know I through there, I burned sorry. – go ahead, questions but Yeah.

just cost, on to overhang wanted that while up, that European mentioned. specifically add associated operating through perspective in in a early of comments also some terms I to key Sorry, costs signs what Nick seeing kind of will come will lingering lingering are so One, from to of Jamie, piece just QX QX, we're highlight. stepping TX be two actually there the there's some the

and other also of initial Feb piece as wanted on timing, the January to couple were mentioned, to and I The in Nick was budget of target, in also. talk terms target was to on as the weeks on

take kind hit of some activities really place reserve a I closed cents debts related a got specific very mentioned, that we of returns through by when and kind we export basis couple the quarterly our came on quarter. As really to on and Those of revenue. bad

that's wanted obviously, So, have something that came which the piece perspective because of end would timing at highlight, the we from not was through that known a other to I March.

I'll Thanks. share, taken your Great. queue. answers. in Well, my I've back get guys. Appreciate

Thank you, Jamie.

Jamie. Thanks,

Blair. comes question next with Your William from Ryan Merkel

open. is line Your

morning, Hey. everyone. Thanks. Good

Ryan. morning, Good

Ryan. Good morning,

questions a let So ask me couple of Europe. on

X%-plus Is have mean in rectified. level that sales that been is I April? back organic that said growth to that you here think to

rectified some the the were with we really goes of and automation Yes. software being ECP the The Varun's comment sales on to like. having in and that issues the

And budget. revenue into so has tracking weeks, we're all been ECP the days of (XX:XX:XX). the quarter, original XX the but to couple to at We last need their

that going Okay. year follow-up, the a I normal margins and said at And as then more just to think you the exist levels. to you're on profitability,

these as EBITDA what want issues got And then do question. behind define normal to by just I all in the clear, So do you Europe? you've margins first of secondly, XQ, wanted think you? you be That's part the

Yeah.

is, Part year in Europe. the keep got anticipate we of operating in back when of the our to going product labor of and to end in of TX, move we occur the to by issues there each mind incremental kind bring needed a manually to answer the product we're of some fair historical you was levels to of start do be to keep in around. So moving through businesses to what the amount

sold. centers Europe, goods know, you of into cost your cost the central the capitalized distribution gets As in of

today to revenue, turned, in end not that the that the fact higher thought we second pick nicely, of So, getting should so QX, the Europe a impact the and should we you're have in while turn QX be quarter, The as inventory in will a low all we margins margin to will, the all you're not up come on to inventory you have the that if – you through basis on have will of costs, labor, it's and – into the back initially the lot get up. all work the that X% year would EBITDA issues immediate the that we margins has whole. reality if shelves say, mid-Xs through of level that you that see in of is the gross pickup inventory will temporary By UK, take think, going well to for to see the sold cost. kind probably some time until to that the in embedded in the given going that for Europe will, margins time an system year, has been the a going

Okay. helpful. Thank you. very That's

Yeah.

Baird. Your question next from Kennison with Craig comes

line open. Your is

for Hey. question. Thanks taking Good my morning.

Craig. morning, Good

Craig. morning, Good

Good morning.

So incentives getting that EPS has seemingly is elusive, those board historically think I'm I margin with maybe that with to better improvement the Basically growth, has this but from a expansion your board-level shareholders. margin the board and and revenue questions considered question resetting addresses really growth ROIC? align incentivized ROE,

folks really here work other for you towards incentive annual the expecting So EPS overall compensation plan, the it that's that LKQ hit if and Craig, program ROE, order revenue, EPS the is that EPS-driven. targets, margins In to for plan, entirely the incentive to, of on the one part references that and bonus we we long-term will, to call we incentives you what go the and we're the all really year. of to the need management plan. our made that is senior generate kind that the And at

not you as margin estimates it's tie EBITDA direct margins, estimates a while without can't the So EPS to well. hit the hitting

fact it get in paid. the is So to embedded generate in margins implicitly we good need order that to

be you. Europe, still Thank in in margins XX% Is months, a realistic EBITDA target? those the which XX then to plan that And XXXX. to lines, think next was along would get the I

get to level a European segment, on margin it is. QX to Varun terms back, as Craig, expecting was higher a tick mid-Xs. the as half mentioned, for us X.X% we to the that low the track prior the based coming in Page. QX but full the Europe coming our Clearly, remains in listen, Nick Yes. to with exit that bit at on Andrew in we full back year higher and in Yes, getting based than direction, it's XXXX commitment clearly XX% also that year of in is, But be actually our Clearly means that second EBITDA between the to acceleration Nick of to terms need for answered, out segment Europe and on on TX rate stated. were the get help margins little XX% kind on question to opposite we've based step here. of has previously to EBITDA goal X.X%,

Great. you. Thank

Thanks, Craig.

Your with next question Bret Jefferies. from comes Jordan

is open. Your line

morning, Hey, good guys.

morning, Good Bret.

Bret. Morning,

I going we is inflating more saw think was space? in the to in in softer the I a and particularly that line, out the business, and anything guess category sort the and Specialty opinion you of related RV there rates Specialty your noise you the On called said growth Warn word as of Was in with number that weather, sense Warn. that on

me let Yeah, question. answer the part of the first Bret,

of we to was So, associated acquisition which inventory up of step noise November, to on Xst the QX with as closed results accounting. a with the really result of Warn with regards the the regards

with we that So being of quarter part really full had the the this our business was first family.

does the caught specifically as growth. that growth. up organic acquisition not Warn out of terms In separately growth, get in called We actually our

you of With bifurcation to it kind at back sense out it. you XX RV to on if the to the piece give think kind that you off growth acquisition, of regards that. of to some back the is let think sales, organic through the revenue really and of called Nick me So of put that basically bps, growth kind that we Warn kind

Yeah.

think back, outlook organic, will, traditional in all I none had the fair outfitting will, Bret. particularly So be their basically of that dislocation issue March. in come may the a but snowstorms than and in people you sales or timing may when off in did the though weren't lower, was a with will, the from if cautious rolling RVs if overall just dramatically were business, you winter mean, storms the of to do line if RV those Specialty dramatically through, and amount growth. drop And kind overall higher we the there, the of you our being went states, with That the because we're like. it

Okay. number out as of there the business, on like UK some stocks a as over And TX well and the issues from other impact then of had you sounds weather.

comp? how feeling we're we looked about maybe You we or used Can XX for the to and open Are recovery that more quarter April? business business. in in seeing sales ECP in what get for core stores months talk in the store seeing than a

Yeah.

So the whole bit growth. stores, a is to the I year-over-year in were and stores And the lot in flat than the UK open a flat traditional mentioned a my year overall as growth these reality little was the didn't overall add comments. stores new the more

the And negative point, did the as of you organic. just as XX removed. the quarter as stores Page Andrew shut stay know, had one to integration which part shut we we the within stores order ability add obviously shows certain and also, was We once hold obviously separate

that want just to of kind So, highlight piece.

Okay.

TX your out of So disruption comp from was the stocks? despite flat the

Yes.

running Okay. trying was are and of or guess, right are to And I still now? fix legacy running TX we running TX distribution back off TX we –

no. no, no, No,

to it's was understand, TX like down. shut You the got not facility totally

throughput there was the being exclusively out with of are in All It the service margin, parts were branches our UK traditional the of XXX branches, issues the facility. ECP fulfilled TX. on on

stock get X the tens We thousands to by center Bret, trucks that o'clock the out the – day. evening. in and orders leave up for fulfillment way o'clock was of replenishment evening, processing X, branches TX. orders all need The into up in issue we're all next X mean go time, distribution is I point the orders So so to they replenish in the to of have the some leave of the happening, the trucks way day each the at every

weren't and those queued in weren't getting getting late of time Some in orders picked.

get product. as customer wasn't of you in call And the a from XX UK revenue of happening. our in delivered UK, minutes requesting know, gets And so, that replenishment half the the within the when we over

not get It weren't we not it's some and Nothing product trying proceeding like it hand It's to was that could install the just the strong in in and be are for was putting were okay? the on as were just there next from a the vendors didn't be, get TX branch days as at obviously entire in didn't further picked designed truth. not through sold software truck time. wasn't was margin, we help was branch, the the our if issue fast-moving in patches quarter okay? with in going down So design the time, it delivery as in the who is hit the and parts day, system. the to outside And throughput hand fix the to working

May the we're on facility You TX in it of TX. the Analyst our action see on because at Day XXst holding all over

see massive You're it is going a to facility.

we of XX.X% we And of at on TX, branches so the and parts Again in to be fulfilling budget. lower just from we're when data were all an stocking fulfilling was of out revenue. branches the at the had time, so the software last into place, margin, based slightly certain on weeks the impact on our the revenue were of instead rate patch put a fulfillment, we the seem that and levels at holding have two original the that that stock with

the inventory cost. incremental that in do that will not back. lost include confidence It's forever. have We the we come that revenue though So all have shelves

through. some take bleed to going it's to So time

gross line Hopefully, revenue – helps. And pickup line. so the margin we be get as the won't won't the same the that on pickup on

does. Thank That thanks. Okay, you.

Thanks, Bret.

with Your Ryan JPMorgan. comes Brinkman next from question

Your line is open.

guys. morning, It's good Kelly on Hey, for David Ryan.

guess quick CCC the next, of you your I shifting a and American know Just just and a and gap the organic or mix again call growth vehicle sweet you. we're how age months Do demand spot, it, your what's me, to between about I point couple think been view XX referenced, do now follow-up, population for will or the headwind a North underlying either then first or how within it's bridge in the for ones just inflection And on data reaching so? XXXX? positive spoken you trying a be age you've your in collision where a repair as you vehicle that view positive is the

Yeah.

still growth, you Collision lower well and you Clearly salvage, in basis had organic, don't north have as back Belt collision about about sweet the collision see up are XXX exceptionally X.X%. – more will. came about products, growth. Snow states, the for aftermarket – buying about included time digits. materials X- points was think think park, we the talked that standard timeframe, you is you which were again our some says spot, when is than else of number but The Engines that will. sweet shifts really in strong new if think of in that that XX-year which distributing the coming we've as cars the said up we question had range. our everything winter aftermarket population were was there single you in from north those X.X%. high. for big, the huge will, the in which is from that of So about, X% because to West your headed. product car favor, kind I are in X.X% the And that and as people that states Again, to regional results. well big if X% where XXXX the investor CCC relates into of The program batteries, product the not But And think again high we was if in to salvage, differences in was were core I data that we've we Southeast as spot transmissions

was Our double was glass which terrific. digits, business

data a slow over tools and you been growers sandpaper several was flat. to slow quarters the accessories that The Western, the if claims growers. have that about a lines Paint the product Southwest think of having the states those year-over-year. Paint of X% most Bondo particularly our states collisions. you revenue more would – X% perspective, Belt this CCC number North in past to winter, Snow will. be because winter which more than and overall Some to and like if a and rate, And winter, from average be continue whereas Southeast, growth were a terrific repairable the was But Again, the was was severe you to will. with negative for again, little a down of quarter absolutely continued negative, in a if American the support the states actually helped better us those just perspective. leads from it out absolutely – Cooling bit. Nature Mother

at healthy. going usage a to good America obviously us, comfortable helps, to but alternative the continue but because we And it's again reality we're we helped position, that the Mother little going that's think spot. we and condition. is rest trending say in I'm and tailwinds the do because will we're bit continued able every sweet not part the of for just to to our part Nature So be we time soft nicely weather think to up year. part competitive North know think of related in grow the that going is that little park a a bit because to car then remain X.X% The of very

So, hopefully, that answers question. your

Yeah. That's great. color. I appreciate really all the

Hoffman comes Your next question with Michael from Stifel.

Your line is open.

chance (XX:XX:XX) the questions. to the for ask me giving

Nick, expectations. the to relative your going to top okay So, – you're saying I is my on is AB an line have what that kind read-through my of be original

more for you've bearing that's think the costs to execute I that accurate. reasons You're said,

America to. that lifting year at reading it up North But the down what reverse XQ XQ am adjusted to year-over-year? margin and on think I the right levels versus I'm EBITDA starts gradually a way basis, subsequent again Specifically the to XQ, right in that hearing? to the Is Europe but be finish quarter negatives, will you've each I'll through about

flows, Yeah. know, particularly anticipate how will. quarterly you're guidance don't you Well, can would in occur see will quarterly you as quarter-to-quarter as in But if America. our again, those that XXXX Michael, provide we We flow North will, margins well, if basis. from if a you you traditionally,

Okay.

just to do sequentially trend improve? I sure want you expect make the So to

QX QX QX place may year. very be back margins but We pickup probably QX putting QX We a we're similar year of some I same. was QX, in programs the where think throughout was get you the trends will, the if that the be would to XXXX. margins in expect XX.X% hold similar flow to traditional again the half pretty going and and here how consistent in operating between something will XXXX. a would little year, as indicated of catch Last XX.X%, expense close margins the fully We of until so bit the line, to of aren't on

the clarity to question, got one That's Okay. but tough to last I it. this I And follow-up, was then a is get. ask trying

about message were the you the what the of or business April? beginning outlook March for So, when giving bond market in the was were end you at the of

Taken as a whole, our strong. business continues to incredibly be

And credit don't leverage credit and here were impacted as mean like at all. the aren't a even I we stats hardly softness with or in ratios in our $X.XX move to EPS. QX, able basis. really price on it by attractive there – the Our very obviously, the stats

just business, the from right the to the just direction. to underlying that generation said, the stats, flow move again what apart continues Yeah, of overall absolutely. cash add in credit to And Michael Nick

America going QX, been any the overall was in we piece our invested kind we has more even actually of flow a the free that inventory case. cash a basis it. into of than from sequential that with in So through inventory cash impacted had quarter fourth the QX North in all in perspective, from inflow Nothing net growth in doubled kind quarter coming of

over nothing picture had underlying years. cash the XX price and history has of in tranches, outlook of business, that changed improving the abilities company X years stats, credit underlying a perspective. long the from things, generation has, any And we case. underlying So two And bigger the credit the robust the we the pretty term,

we believe for We the continue. and are long building business the term that that will

you're a and So all first bond showed that but fundamental knew quarter. – you just first well, why have the but going that's you're had you market that to in credit quarter, the them it good because to priced clear, market, trends a be when soft soft told they the

we no market, much focused flow less bond the earnings. when The on No. discussions is quarter-to-quarter quarterly roadshow. were There on Michael, were about

to that. just I Okay. understood sure make I wanted

thank Okay, you.

Okay. Thanks, Michael.

call time. back further no Zarcone. turn the questions are to I There at Mr. over this

could we conversation we little long, know ran we company. to everyone today. strong but recognizing Well, questions. thank release, this everybody's very time we your Again, is I leave wanted for get a that make given bit need we here the LKQ sure a to to

company, the just are a long come. of the for prospects for time the We rest to year, not about optimistic of only very our but

of confident of ability almost We have headwinds, It's position our service we every levels in globe, customers have the have not I'd hard our very business message each we traditional every here and the that businesses. XX,XXX we've to some to into around you get day. place run people growth but competitive we And happen leave working preeminent We back the in make our with we're and to in corrections. each to got understand in plans going to overnight, that, our and profitability that's morning. this

participation our of call, second you July Tamworth thank our we the look many for again your then forward for we results. we our to Thanks. and Day end with in of again, at in and report chatting in and So May time you you obviously seeing when Analyst your quarter

This today's concludes conference call.

disconnect. You now may