LKQ (LKQ) 29 Jul 212021 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the LKQ Corporation's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that this conference is being recorded. now today, hand Mr. would to conference I speaker your Instructions] like the to over [Operator Joe for LKQ Vice Corporation. Boutross, President of Investor Relations ahead. Sir, go please

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

let Now the Harbor. me cover quickly Safe

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

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

CEO, has look call, GAAP During I'm with that, of non-GAAP a which measures. Zarcone. slide and financial happy present release our in Hopefully, GAAP to earnings we're both planning reconciliation to and XX-Q today, the presentation. X-K, to everyone Nick will is chance filed press the non-GAAP A today's at with and turn we over measures file to days. few in earlier our we SEC as our to included And had normal, the call next this

would come our as our high into was with A people LKQ Varun morning prouder operating excellent I progress, few a execution closing which by our good level be another improved the This everybody during operating business and excellence, the quarter, not and period when dive I to quarter we need the I some then to a we would to back significant few improve provide XXXX processes improved call. of pivoted years performance that financial and the could the to transition team. This Thank operational conditions. Joe, be there details, before for as of morning model. in you, in we comments invest remarks. outlook well related ago to driven will will and on knew

in size that recognize structure leaner, also and be other a We this would efficiencies. would the out conditions seen realized. as more being with nimble decisions as the we We drive year, right difficult the expectation and succeed difficult Those times. to over could side have needed with like there the shift the that undertook come cost we the stronger past thrive are pandemic organization, expectations that one well during good as

and that due implementing our evidenced pricing partners among our minimize actions, per converters locations, has more we so tremendous to actively over saving payment the headcount. reducing year. underperforming in attractive waste While accident to our with cost by car, have applying approach, reduce receiving delivery accomplished, market passed I operational team permanent disciplined don't closing engaging proclaim increase I'm by driven happen not ready cash made other outstanding and harvesting believe catalytic and such past continued monitoring that Record strong and Timing we operating including expense our results and as progress receivables transition the routes ensure as actions the yield, consolidating we and vendor that are mission flow profitability a terms, policies by we've pricing to balances. delivered outcomes

details with four XXXX each quarter reported quarters On yet second Adjusted per for the in the $XXX a to compared compared for $X.XX XXX% the EBITDA an period shortly. the and over acquisitions adjusted the billion Net second X/XX of the a Revenue $X.X market quarter income quarter revenue quarter into $X.X share basis XXX%. XXXX. for organic revenue share as respective The will net of same the was and decade. $XXX reflects revenue for in income to as earnings $X.XX Varun This XXXX, same the in first the with second compared earnings in services was increase. segment impact decreased XXXX million for for million while Diluted billion, XXX%. the $XXX record of and the last foreign share another net $X second XX%. per Now revenue XXX% in of second the highest total to of Indeed of compared impact of margins onto second and compared to of increased during growth quarter, period $X.XX quarters share the million for of over quarter the as second In XXXX was creates $X.XX a annualization X% pandemic to an highest able the QX were the an produce of quarter we increased divestitures XX% per a in an was diluted the rates the represent XX%, parts the year, last increase the for million increase quarter, results same of dig XXXX increase the the organic $XXX services quarter X.X%. XXXX. per to parts QX quarter. and increase. revenue was period of XXXX period same earnings reflecting as increase of quarter by of earnings the exchange

second and most the of rates each base monthly a you revenue is still policy it economic United presentation Europe XXXX, actions potentially to variant of closely X monitoring lags variant for rapidly significantly may of with and markets are as encouraging. trends the segment vaccinations see to highlights. the quarterly increase April geographic key year-over-year sets Slide if in Now were coming of quarter, particular, quarter, our throughout although solid our a forth the like in the rates of slowing let's and many, spread. quarter States. off the the of can second the improved some vaccination the The growth for the Delta risk segments turn witnessed notable. We growth low the the in being

X, to American Turning quarter liability repairable and on quarter, to that the above second When consumption and America, and U.S. XXXX. will Department of the organic XXXX. X% was the claims prior quarter below revenue From North quarter for according basis. for XX% to quarter year XXXX, significant the segment services year-over-year performance our in aberrations comparison the North the note looking to Energy, the second second the in data in XX.X% fuel believe increased for Slide a parts most relative you is with of given relevant we of the at associated our collision swings the

strategy revenue decline more team relative a organic of American X% initiatives. the American highlight period and to initiated our for the repairable North so North American XX%, of QX XXXX XXXX, declined segment while During parts outperformance less. with operational North about continues per In couple principle push lean to day doing to team claims based I of our operating American of operations. a for for North excellence examples services how the on another want basis on a our

pandemic, this what simple early we winning question unify of the immediately the the and first answers like? were to the look several the does team and in strategy allowed performance prior indicators The to step team XXXX to that develop positive question, results. During that generated asked key deployed

systematically a We are optimize second the this those lean implementing strategy roadmap to is in now phase KPIs. which of

algorithms We team team corrective while optimize of salvage QX our the quality, root salvage on a advance be determine uses to communication to processes vehicle customers. and auction. accountability further the along can the part delivery, on our which we computer each part. and management the bid utilizing reason specific began vision, the procurement driving and practices. with intelligence actions yield sharing cause a are images vehicles human system damage sustainable our to to artificial our per of best improve based is technology quality our and technology intelligence recycled enhances This In of procurement that each of parts This safety, allows at element transitioning to daily system vehicle artificial and addresses procurement the standards to reused. which on This improving to and assess

programming. business to diagnostics Additionally, and its during the services and remote our automotive expanded beyond Letech quarter, diagnostics [ph] remote also mobile on-site include repair

for to about Moving a basis. reported compared a organic quarter basis. European When segment, in on day per day second same on basis the our a revenue to revenue parts and XX.X% our X% a down increased on XXXX, on XX.X% European was services

basis. [indiscernible] market performance experience positive but to was and a continued on regional Our the quarter, operations year-over-year in each revenue

by we and that it are continues for UK revenue competition Italy, and pandemic, the market margins our impacted had on confident I'm the largely the due some witnessing favorable we the availability say drag strongest market. in in to segment. dramatically the remain that to gaining also are business UK modest the a we share was Our are pleased but recovery recovery, to to market a relative overall growth inventory

points pan margins the quarter components XXXX the One quarter creating As European been European first the from when to of we functional second XXXX. about September program. Since have effort. structure. this X relates making you and In XXX margins, can have LKQ two fully to our of progress centralized excellent in in announced X.X% there Europe team distinct on organizational second the reality, expansion basis significant see and XXXX, XX.X%in increased to a leadership European the is from the are EBITDA we program,

as which local prior initiatives and procurement, outlined The on communications, such other key execution is related, in logistics the projects. focuses

and that The driving items transformation. the would the few years a X. have in and July am structure come. in factor group behind single during on the about and Poland. Rhiag on-boarding employees seats opposed Over we Innovation Centre first simultaneously. as XXXX. to CDC of announce collection completed we reflects forever have in ERP will in people improvements our a the the for the on us the be now a execution in other July with track at A And major Europe right have for Katowice, independent working element planned components right I continued streamlined to Fource operation And few began both the that The the note Netherlands to of warehouse live Italy be happy of that businesses. We will in week been organizational include business the is the in XX to years went productivity past we implementation Service of project two March that our start all remains

the XX, by and greener the commission July compared Some on by at XX details proposal, for in came plans forward for European net which with emissions XXXX have reducing to XX% of XXXX. and least accelerates you may known that Fit Europe a economy

circular the embraces in leader emissions. parts [ph] economy a the reduce largest and LKQ As to global effort worldwide, vehicle the COX recycler and

European Europe, a to not have specific the rational are zero our role Association banning need forward segment we XX% customers transition service in to also the including sole to and of Mekonomen, way Manufacturing the Automobile movers engines combustion repair and play electrical supporting and hybrid According where is technology a stake, hybrids emissions. vehicles. internal a for -- Our and and first ACEA manufacturing of in

quarter the quarter our ball of dollars and segment, knocked move of off in reporting cover EBITDA let’s organic terms had by specialty revenue a Specialty on Now second record-breaking which to during growth revenue, percentages. the again XX.X%. EBITDA the

related trucks, be light RVs strong this to QX, continued in disciplined to performance demand the approach drivers combined controlling witnessed parts ongoing for cost. the with very a and As of tremendous to

level and that We are The stimulus all the lines. also chain scarcity These chain most the facing competition freight we very been product in disruptions the have and like in generating inflationary all as segments, pricing businesses by pressures, inflation inflation we years. are product supply meaningful certain of Across the availability we've performance. disruptions. margin are which seen of witnessed out delays pressures benefited globe, driving our in wage business some many chain are we our along these specialty is across in shortages environment and robust in product supply of also for believe labor. turn Across that Alongside the increased quarter. challenges are creating segments costs supply in checks passing experiencing resulting effective

we Fabtech trucks and Warn brands, premium are road offerings include a these shocks of of and Dirt performance to products. open segments at Industries, and and recognized represent my leading Battery, backfill constantly ongoing racing of turnover hybrid tuck-in to business to our best segments taking robust the reconditioner corporate which can the compliment the suspensions widely second all our any structure and attract. our to positions acquired Fabtech effort existing manufacturer small deeper installer. in Logic, development Both perspective, quarter, wage SUVs. line evolve stay segments and QX, help sell customers. we We a Bean are ahead we Warn rates Also and the competitive Stealth are aftermarket our offerings off the battery of car leverage in to prospective into in networks From product pressures part in looking changes to assets acquired for acquisitions the place the Green across across with all of candidates our of and light a and match and assure our tremendous

Lastly, LKQ's ESG two increase which MSCI in rating and our details you this the quarter second from new to Slide ISS, QuickScore Varun, years. am index XX% who Please to the the of to quarter. the the This And environmental which the during proud that XX, A stewardship social us I will run our is increased in group. announce will ratings. in quarter, our earlier top the Also, governance turn to second of AA rating AA, I highlights the month, increased now significantly over strong second past performance. through discussion places refer

everyone Thank today. joining and us good morning you, to Nick

results, financial a related and over highlight allocation the the our accomplishments recent of to I past. number want capital cover events I significant Before to

Fitch grade we've strategy remarkable opportunities. very cash a XXXX, and position placed investment metrics. rating leverage measures on capital May that grade deploying progress to getting organization. pleased generating made free With in excellence capital the for maintaining highest emphasis investment the credit strong, sheet to allocation flow, operational I'm an achievement balance all from return to pivot our and approach an sustainable the past towards the This on and moved is conservative tremendous a of to report validation this targeting

in a the the just we free $X.X flow to at last after relative EBITDA XX% starting months, XX conversion billion operating have acquisition, rate shown produced supports flow, back cash we Stahlgruber Looking of nearly cash completed which on As billion X.X used we've balance these sheet resulted funds of XXXX which presentation of in to X.X repay as the June of XXXX. to $X.X the leverage as of of debt, XX times net Slide a times delevering June from

of over Additionally, price of an price. LKQ $XXX we have million share repurchased stock at or $XX per below share approximately XX% roughly current average the

or not high of acquisitions synergies $XXX have period, that we support our consolidation the more to part though efficiently. tuck-in allocation, to evolution, critical expenditures business during phase company's with targeted of small this of the in a remain sacrificed operate deliver million from Transitioning capabilities. and invested investment capital acquisitions have relatively capital committed roughly been the We the growth

last position, have us has in complete liquidity the the which put the Our quarter. actions second years following allowed a very three company strong during over to the

First, XX% $XXX remaining available and on We we schedule, with quarters into our further cash $XXX smaller hand, X, date be lower liquidity date. our eliminated operating from term cash of even the of we've a the revolver, revolver, full flow transactions, debt again purchases of by from stock, redeemed will $X can revolver. reduced flows the million With ahead as quarterly amount term needs LKQ approximately of the which billion loan overall the We capacity revolver as and million converted of euros, level we cost euro hand. the by so on million to repaid as three EBITDA redemption to repurchased earliest supported we well in believe cash future funds highest XXXX cash. moved notes utilizing We facility, funds borrowing available the a on on and further. more $XXX costs turn in lower the cash our funds of our of loan using April delivered we

believe good and shares LKQ to reflect We continue our that belief. repurchases represent that value

of to Slide plan through to in XXbX-X have October through repurchase were $X an Board Directors authorization and shown the the nearing increase further we our $XXX for $X total continued XX, Board The now million billion. billion Since additional the we went invested have expansion, $X to under with we last As shares an a to repurchase billion authorization, XXXX. on approved we a July, our ability Friday. in

to the I'll results. move Now financial

margin leverage. coming relative points a more adjusted revenue for XXX noteworthy, QX in described, or each from successful highlight to to of gross disciplined basis benefited expansion, from the and was the pricing, margin coming basis. contributions year quarter in through from We tailwinds across with an prior rose been expense a of margin higher we commodity able Nick increasing XXX as improvement as on our and was margin the it which pass input came As the Gross period growth, very have is a The basis operating our quarter, in a Gross positive distributor, the remain also chain. segments. prices. input costs supply points costs

benefits been XX, $X.XX in EPS over million roughly metal diluted precious you We steel precious prices, metal have share this approximately last scrap quarter. scrap steel to can on see $XX EBITDA, which added mostly relative per provided that last As adjusted and estimate in segment Slide prices and favorable additional and year. year,

to enacted of quarter. that benefit the reductions there we in incremental an still cost permanent started we our some in was XXXX, While second analyze

prices, with as the XX.X%. been segment this QX actions better XX.X% now related ongoing commodity the in Even the year-over-year initiatives share to or cost showed to continued the is than leverage America performance performance. highest segment largest revenue our tailwinds the I'll in the few consecutive revenue benefit to growth, last North EBITDA with increase XX, Starting similar diluted expenses margin primary to adjusted make quarter margin the quarter XXXX. produced its cost behind at as turn that improvement effects highlights. basis segment percentage factors reductions. the other the to QX Our quarters Slide from XXX points related and operating able EPS and of company's permanent favorable of SG&A in to the to the history dropping gross The operating statement. are we've a of fourth on that the of

We are and still a currently permanent relative the cost driving $XX million $XXX to be costs Day the in last we business, increase out the figure shared of Investor presentation. million, September's savings estimate to

pricing and North drive operating American seen to the benefits are here, our helping Additionally, margins earlier, gross on above expectation. margin mentioned I the long-term commodity leverage,

represented As actions margin a over revenue segment point reported a XXX seen a year. and Europe goals. cost Slide track deliver our on improved to in margin of benefiting recovery, pricing, year-to-date which last is EBITDA basis taken from Europe With XX, we containment on XX.X%, net year. margin, improvement XX.X% the on last are the

Moving continues the operating XXXX. Similar business highest to The and quarterly well. XX, acquired manage the sacrificing in to continued generated expenses. EBITDA significant growth Specialty to is operating figure since was execute extremely quarter, its QX, revenue XX.X% in effectively without Specialty the of segment Slide margin plan to margin

of share savings second added notes euro our free our structure. from and interest EPS and results. We per are expense repurchase flow that created also factors savings the We from to generated $X.XX experience to the reduced redemption interest quarter pay these share on benefit savings approximately count. downs The our additionally estimate an share focus early deploying XXXX meaningful cash debt delivering capital

year-over-year Additionally, generated income of Mekonomen's and growth. solid investment other another improvement performance $X.XX

expectation improved from projected outlook full-year the our rate had XX.XX% we XX.X% of the on to effective decreased which nominal Given tax benefit profitability, our in a quarter.

And tailwind The of our the given improvement. low increases recap, attributable which to from when mobility slight margins of year. controlling place recent our with tax to XXXX. comparable of The deployment, QX is exchange, $X.XX comments in this quarters, level remaining along are which the I Consistent commodity increase produced detail on investments, the are following not restrictions $X.XX be updated comes enhancing a XXXX growth, what all we additional quarter provided implemented the foreign was profitable gross should in a wrap about comfortable $X.XX takeaway impact the focusing considering EPS prepared overhead statements, a with and our the capital pronounced $X.XX operating of our adjusted we have in the results. of So markets. last COVID benefits, and making from revenue the our on rate, assume key with major up performance from talks costs. will second our are beyond that my currently

second we a recent Foreign to XXXX of segments and half and our parts mobility from vaccination second as exchange trend year metal on year. will level further precious than rates. rates the in progress that trends revenue lower prices we and will the and hold the half full-year the believe one, benefit higher near basis continue services America North recover of scrap our be Number on in in European core and

pandemic severe most expect in effects our the of second XXXX We to decline quarter as what were the in the for business. to reported half as second not rates relative recent we the growth half

products, due seasonality demand than lower While strong. our and for remain the the specialty second be end half stimulus we half the program. We to growth the to the the expect first rates year of expected anticipated we of

overall to in two in will days one second for As in from discussed the shifting fourth and with America Europe the in having previously, QX. QX into quarter QX the XXXX have occurred one is year day while with North occur we flat fewer selling

In cash our a we the to offset finally, that We guidance build have payables $X cash that, customers. Thank our again increase another full-year expense free significant of in inventory the the our $XXX quarter. million And million related This in began $XX we the flow. strategic anticipated traditionally on $X.XX we in expertly continue ongoing on in year best the the of are closing in impact the strong will once Second, to billion costs parts from to raising $X of the comments partially remains of the program recent call the my our margin addition to turn Nick EPS QX with programs, back the labor, for track support an of the the generation excellent our flow most prior in vendor and build $X.XX with year the for the range the of navigate interim, increase are in European to quarter billion midpoint midpoint $X.XX the the to ahead still demand. partners projecting QX, time right half optimization is higher range inventory seasonal active This morning, in QX at diluted XX% the benefits to with second adjusted $X.XX. results expect help guidance. as of outperformance serve this to QX our reflects you half situation over or places throughout by experienced midpoint. and fuel to mind, to our this inventory with I'll and strong And industry. projected the and right and an second inflationary comments. being of teams, your year, with with the outweighed in headwinds operating at I strategy, back we cash for and and outstanding anticipate third, our freight, deployment With ensure noting along the made capital including flow progress allocation we net income of on the his cash higher to the the

the financial Thank you, overview. Varun for

continue our to to our and Let me initiatives, culture central restate objectives. key which our be

we model. continue operating will simplify and the First, integrate businesses our to

Second, we will revenue profitable continue sustainable expansion. to growth margin focus on and

which Third, us will continue allocation strategy; and flow, levels to the of maintain to we future. fourth, a drive give high to continue we flexibility in balanced capital our invest in turn will cash

executed XX,XXX in really the And happen and for of I these tremendous and questions. means plus can with from across that each be initiatives make results, that company we each proud. on you to the of globe our each quarter team our it members operator, thank to second what call see open you LKQ offer define As that our every for ready are it now the day, a to

Thank Kennison Baird. [Operator first you, the question of from from sir. our have line Instructions] We Craig

are open. lines Your

on of good taking on I'll questions. payable immediate change Varun morning. Fitch Fitch of work Lots Thanks are you, to I'm your vendors Hey, focus the from profile any wondering to the with cause implications terms? for I the what goodness vendor guess, rating grade decision my investment for cash will for an flow? would terms your positive your key credit cash and but a flow, of which be implications

were revenue margin cash goals early all cylinders, drop credit you go and us morning, the across rating, facility also two make means firing a one the you. of can Craig. Good is the company of free agreement, coming the way and But to of With Great the have we question through the our agencies becomes matter facility, this for change great that $X Fitch, question itself you to is rating in from know initiation through standard billion flow number the deployed go it a unsecured. as hear piece by Yes, then facility that links so incredibly conversion grade our with pleased and have is fee off senior to year's which significant last specific public about you which award the clause and and if within rating terms. named and that credit back, or credit LKQ if and vendor award investment -- either where grade piece our a them document, no currently facility it. drop that recent makes on a it states investment essentially course secured our we prewired off in imagine that's one of

is, piece within indebtedness days. exceed we have our grade second feeling The that for cannot through the payables facility XXX credit a current

of of one anything decision recap, to of agencies just out again, one the no three not if, being there, ongoing rating change doubt two Fitch question given view does clearly the the of I in a this discussions too when. has So itself around. us, will more other it's today, them have the with don’t key rating come believe I they it's that agencies, question of a but

Got one of clear, in changes a other of you to your change it, I'm two make just order so need in some contracts? so to trigger the those

That is correct.

thank you. Awesome,

next from line ahead. of from go one Imbro Daniel Please The Inc. you. Thank is the Stephens

Yes, good morning guys.

morning, Good Daniel.

the on strong by of start part to strong headcount? want as been metal. about handled Have that can really the to and North you you it with I growth But in give hiring keep backdrop? need him was been out of you many that Varun, talk the have you America gross team that the margin is And when any expenses obviously, to employment revenue the lower there how driven hiccups anticipated? able

good Varun Yes, morning. it it's Daniel, question. Laroyia an excellent listen, is and

get of branch yard, associates a the to I sure teams to XXXX a shout globally of have warehouse of specifics given I to just that dismantling XX are question, Before has to what done a answering all make been phenomenal. globally, your nothing field short out, our big just want our plus from

or And what north metals Slide Even been, regards is have in the still of in and in of deck, not metal this America now with if go XX.X% benefit. exceeding of North roughly business and expectations points. attributable my the has to a earnings our long-term to company is points prices our that both ones record than the come been of terms right, been another you in that higher metal quarter and to XX margins success And you're metal in XX.X% directly has along. actually put trading. everyone's QX, this estimate they Precious the get Our you XX.X% success, teams. have recently, been level North estimate the quarter. we to well is what last prices. basis field up scrap humming through, precious and have putting has months But attributable And really America we've quarter, we And these and has current the benefit kept scrap transparency at XX, see clear, XX is out, first easy. XXX yet LKQ's precious directly if comments. XX prepared very been in expectation have to really how are were most delivered that Yes, margin given

higher has be in so gives costs, find. not labor, United but labor. but whether there or us that But say to I'd perhaps, has labor, biggest to LKQ, drivers And are of this that the industry full here be been States point it essentially, delivery is a challenge difficult inflationary freight could why really is say piece. to key availability, cost it'd been that's what it's I congestion leading have circle. the to of I'd and the whether It because leading ports, are at get that And come single incredibly pressures, better, the back time, just lot we the done across at for entire comfort,

have out running In massive availability. we with to our field shout terms teams, regards of giving a to labor short been

we sure part continue that market heard wages and make the that because really have also, that want serve of are DNs procedures got just have sure have want to clear make that while we make But fee we up is loud customers. customers, to our business to right and and outstanding. sure don't we Without our and branch we right place, a managers, competitive. managers, we just going deliveries have the We taken plant making to

color via That’s what's COGS of the North obviously North looked in metal service raising XX%. think out is drove your then $XX also part that right, was salvage this But the million prices, and your I helpful American I America? great. called If vehicle an at XX%, EBITDA. Really self the up margin, on you a cost up follow just thing,

that auction acquire metal roll go some if natural as offset to as at prices well? should your over, be there cost So would in vehicles down

yes. absolutely, Yes,

do salvage call earnings so that's been for I been partly the some have in that high kind think time. prices creating. dollar has we've said with But running the it's again, what of where to quite pretty

of lots place. has So trade export taking been

sales we there's come chips and OEM have As so a been down. of know shortage

metals that also. our our There result, flowing prices it. through around huge certainly precious cut is COGS doubt a As about no is in

luck best forward. and of going much Great. Thanks so guys

Thank you, Daniel.

Thank you. from one, have we next The Stifel. Brian Butler

open. line Your now is

morning, thanks my for question. taking Good

Brian. morning Good

of that that freight it? inflation and fall kind does just could mean, on perspective kind kind you in labor just maybe and below magnitude, the one see labor of the on pressures? on kind of point I of where of at on the First but and fuel where put is you rank inflation, looks we're like top,

portion have put order expenses, of the, the people, to ultimately that operating labor in expense. the P&L that Because Yes, first. back I biggest over would that come you our remember it's to biggest on the XX% probably of

number we people the and globe, that's around XX,XXX so, have And plus one. so

freight. be The they've some but relates up part ocean would the significantly, and freight, that whether separate prices, not in freight, fuel oil people is in we been up side put obviously, track as sorts I'd of And our and the which on as know, of you which if the has people U.S. domestic or try have then, of Page savings the and you only to finally Europe, so. be it over of the saved year second facilities well. freight, and like. to then X the where out, on can money we kind the point also, most and out been And delivery secondly kind or deck, then past side of you it

it then So, again, about I that would and put people, fuel. think freight, order; in

might on looking in color what up. or operational M&A still my little that's give M&A think When about pipeline, your excellence, you're be you can assets follow at? And helpful. a pipeline the kind focus on of been two has targeted Okay, year next you then the or stand and where what recently that and just the

Absolutely.

So there. a the or comes we've last I on made to new the and building and lines up focus is from Obviously, comes sets. don't mean, our we number product we a So whether year very it currently whole of organization a whether acquisitions ways skill new we're space. geographies in kind diagnostics are of business where calibration And to nice newer strength the acquiring in over new in presence, technologies. that add acquiring have looking Right? always as for our

acquisition in mentioned that QX, know, ultimately again, expect important, with that EV As the And, investment that and going and we know in is so you technologies. you battery battery should all additional call, area. whether relates we've to being battery hybrids Green batteries to deal vehicle or in the batteries, electric Bean become it's service able to

do to our service and can car to of the going and we there, a relative anything set evolve product what component evolution do. the key is we're services So the to that's park,

companies expect are should And these big additional in so, probably see that will because smaller, there there newer buy. to acquisitions, you no particularly technologies, you out

again, So that we on what it customers. cutting sure as relates we are to we make can, can provide the edge our

this different, M&A, really, been the Yes, is about hunting. not and we've for what at the some going rather has Day Brian seem talking time, focus may while M&A really our pace Investor that consistent has whale quite with of been very down, including that, than slowed it

on remains. has European been tuck-ins up, capabilities and high the as synergy and As focus was critical that segment Nick said, the the really focus has building been focus built

in thank I’ll the Great, get queue. you. back

from one Bret is Thank from next Jordan you. The Jefferies.

Your line open. is now

Hey, good morning, guys

Bret. morning, Good

the to Hey, think would to grade? see to if your of term inventory, XX% shorter you you a kind what a if you're would get do impact? investment rating up but what close to I second you agency payables sort tip got of way, payable accounts on step be

European Four parc Bret. how really that the question, we here The be Big in optimization just April's and biggest from to will North And say the America. given Great site compare our business. uplift car relative nature from of the business European program on

of where of think some get we if further full whether see model. the opportunity the half size the European business business is fact American time. per But the some if serve, that North scale which salvage think you point roughly business, of we and different business, just and down is, time at self we with that a point a have investment Our company, this you the So or upside Right? about there's that opportunity. se, certainly rating serve, grade just the there, at is not would is really of

so our to part had obviously supplier team terms. overall also more down And really an team how making vendor what XX prices, that the at that's active go believe day, piece, of basis with discussions the attractive rationalization more tactical It's we as calls been our of lifted, continues the but of convention continue sure get partners. The to discussions, on the but continues. number get as we ongoing a XXX had gets focus market let's and to ceiling to that then chain, the top further the be a

now inventory for less are and guess quick repairs anything guess chain. you're always actually the alternative in available, Okay, others I that as what thanks. or you on And positive anecdotal of supply Is percentage of are maybe and a I question on disruption give parks sort availability gaining North sense America? share the in

at just under supply moment. but is not industry, duress question. in Obviously, Great industries chain in our most the the Yes.

because the here. impact, And salvage, is the, For platform. there's no the options. and because the products business Like us, it to Actually, across get there's LKQ all really significant easy product us that for depends. line, it's differences at in

wherever there's our the drivers around. of shortage the meaning a And of Our have a from for And the cans need the do actually aftermarket warehouses them in locations. There's the I Tampa the parts. to going waiting unloaded. warehouses it's what's on most the products issue ships. to Taiwan within related Toledo ships dredge just industry, to business the comes issue major The getting There's in from the and issue. get ours water, in a us or to ports be ability Port everyone the just here an whole Topeka, the moving The got a unload to shortage to we've the or the knows capacity US. to Taiwan out stamp we the then manufacturers here lack ability capacity; not trucking containers however, issues on mean, out capacity ports that product. is the or congestion container of it not related of aftermarket sitting to is procure the to collision of to our

get contract. We're containers as you majority And for a us our are to a money. good the little which the news it the up least we're of ocean importing So And want at many extending it's The good XX,XXX I XX know, more year, of what's XXX of to that's our timeframe is week. vast going into in that is, is under it's now time smaller rates, bring again Spot with. product. a how doing, news long contract, a eight costing be some containers competitors anywhere to a freight under takes bit are containers and The future. that's six from wouldn't year, or year, company fold. a XXX containers quite dealing

players better marketplace. position So have than clearly, the that out but we we we we're the inventory can work. most we the And want, it a in small don't in we're -- making think of

products We the product at in was over as well, with the within aftermarket doing would much the Europe Now are largest We've And group. tight with in America. do less lost quarter they again, products mean, demand. America. same and North manufacturers we this from some the more I as smaller have least EU. they from in as within the in shelves. Bret. inventory our issues capacity the produced exact product different. reality are of we and cannot dealing But past import the But there certain to real competitors. business. that quarters, we domestically the do, our the source it's have on probably simply true and But then the better products experiencing specialty, than distributor they than we've what we American we're you also because is is, Asia collision also are North supplies between are majority bring said the North And their up issues, in and move East they the or or Far specialty the who the like Yes, some in keep in on somewhere some revenue

So it's good we're pretty think issues, we but job a managing doing through. of creating

you. thank Great,

have Stephanie we Thank you. Truist. from Moore The next one,

open. Your is line

hi Varun, Hi, hi morning. Nick, good Joe. Hi,

Good morning. Good morning.

and kind for wanted implied record to kind the it year, results. tremendous improvement a margin of XQ on expectations But just into of half if of you nice and back your in does the but as of bit second XQ obviously a half touch [indiscernible] the slowdown admittedly, the performance account levels, guidance, updated back off even the the year-over-year. I European of

back I'd are you. love of some So to as some get just there updated what for your in half Thank helpful? should And quarter, second takes thoughts any performance. color the why guidance, the terms of puts be be kind just you slowdown of your from kind there the and margin would

let that Varun here, take Stephanie. question. out It's and morning, Good me

with business to how European perform. first continues pleased all, really So of our

in relatively for one a but initiated navigated of for we double time, at these number see team terms at needed, measure also, least out, there European business has LKQ the margins But actually strong. of our future then gave QX pandemic program XXXX back with incredibly choppy we Not of in our If the the European and backwards new there, as if that you end and you the we because when slowdown this was the phenomenal, with really the how pleased out that you specific leaders question it's of fast the the made for more short times, about the is XXXX. about in digit a seasonally historically, have QX, still strong relatively nothing go But are now of or if typically, point and go three-year out way we point continuing. half. turbulent we the there back targets. QX six is have your team and drill thrown pandemic in weakest journey. the last Europe Amazing also obviously point a in of and September XXXX QX months and have And about good exiting second historically, typically been has optimistic goes out take call here, business. also. the the do really, sustainable obviously very by, margin that talent being But of basically are really, We you time to back the formally

margin segment European final at reporting And way to gives – to what's X.X by But transformation piece, points kind about to roughly pieces, the these executing, year is open our our and we else, you obviously tells welcomed measures now. terms had the also held to one the So There say taking the it's that those you opens, we XX not. terms But know conference is out be it team the to that to all the country on up overall, our were X/X include continues European drag. kind been on again, European that double of UK the of of travelers And knows, about continent how us also anything in jab a it's morning, leaders that or country, than that quarantine, floor have more that place United the that how really as of to that as expenses. confidence said into seasonal is would weeks about XX the are, is of able Kingdom a European what was that the the be me essentially, but up whether numbers there. about platform And forecasting never And have thinking a are of one held is yesterday of we business it. easy coming in a a the XX.X% leadership U.S. program points what the our of flip basis to business. let good About headquarters not way flop leadership just lift lot the of that four ago, in EBITDA along, XX/X for feel happening full team. it. XX is as it is EU we exception virtually, basis we did without make with Switzerland, times, overlook are just

efforts that the number And, obviously that includes half take I can we in XX least drag, at So expect that just transformation the to you the do clearly half. second quoted, in first of points away. accelerate basis

Great.

of seasonality down, people some just to really are to this a And And holidays, the things Europe. be then shut really once month holiday half vacation in you tend patterns. in as goes Obviously, industry with December. pretty Stephanie of on the August the soft along to the get second very after close

time. makes Great for much sense. Thank and so that you your

you. Thank

you. Thank

Gary is from Barrington Prestopino ahead. one Please Research. go Next

morning, good Hey, everyone.

Gary. morning, Good

Gary.

Nick, claims enough, quarter statistics write in it collision down you CCC? those from give fast that? have the could I on you do couldn't the me

Absolutely.

to down comparing is claims So mean, XXXX we XX% given normal compare that of year at and think the XXXX it was organic collision total to XXXX, actually XXXX I in was was a down look disruption the to for second when X%. CCC because quarter LKQ our best XX%, in the growth the which organic way

starts in Okay, getting X%. normal. done at down return more that things lot little, you can as in a more Thank mode, say to Then, you or holding run mean, people? got somewhat as the work personnel the of business terms guys add I business a of while you've X% XX.X% of on can expenses you to X% growing a OpEx a grow, sales have you. of growth percent when in run do the again, a just like great you the

more and But expense my but revenue to the see direct doubt, warehouse. prior really, pretty grow a in personnel all trucks revenue real add to any that reports more rebound means, the headcount. no with and people that deliveries, not any back straightforward just we can't overall we back more need on road, from bringing as onto of there's grow been Well, We any the adding I've than dollar P&L. perspective or the

we And basis, take And so, if XXXX, XXXX. you in recall, margins high -- we ongoing America, on think we've our the sustainable X XX, are XXs. reset set North that

high XX, a the take XXs are north related to Day ancillary basis. XXXX. them to -- addressing we We on out you low permanent term our Analysts the [indiscernible] Last and people in ups is and quarter, at be good X here like We told people in of Long downs when XX. all people on XXs that a what's target.

bring the grow that back us our we're and to base. so we have to to going to of some level And anticipate expense capacity have allow to revenue

thank I it. Okay, very much. you appreciate

this time. Thank no further Nick Mr. please at are you. There questions continue. Zarcone,

Well, attention here appreciate morning. this time we and certainly your

look interest LKQ Your lot of another in you in We'd report October. results end forward at the our having about with we us. XX a third means conversation days to to when quarter

So we'll again, appreciate come to talk out point to we work LKQ. interest at everybody shout folks big day in to once that but at every and again, who XX,XXX the your time, a

you. Thank really You make magic the happen.

for Thank call. you. conference Thank This concludes participating. today's you

now may a day. great disconnect. You Have