LKQ (LKQ) 28 Oct 212021 Q3 Earnings call transcript

Good morning. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to LKQ Corporation's Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. Thank you. to of call Corporation. Investor like Boutross, to now President Vice Relations would turn over the Joe I for LKQ

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

me harbor. cover let Now quickly the safe

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

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

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

the then will the back our well related with come the will supply and record details remarks. at financial We quarter to morning, to to all significant cost This dive closing current navigating chain of the provide with comments environment. few I operating XXXX, into progress yet EPS everybody represents high-level balance as financial Joe, was fifth performance, on Varun and excellent you, were highest the and before the LKQ, I quarter, morning in respective in for quarters. Thank our quarter, a while performance another outlook of delivering This the good this in some by reported and as call. consecutive solid the their challenges quarter the driven able another execution with produce

The margin also share company. third per on the we've reflects achieve than third time and highest in able $X basis of history reflects quarter adjusted to the the earnings segment second EBITDA the an quarter more of been

EBITDA years, particularly our are margin segment exceeding We over in delivered Varun dig will highest that the X pleased XX% details its level level. the European business shortly. into

stockholders. am I our components dividend With plan morning, long-term the has drive hard recognize results as hopefully customers. existing our stock working am total my While performance more our of for and financial Directors excited pleased quarterly primarily to serve of very program effort are are issued you reflection excellence. declaration allocation, continued around quarterly the of our are than of our repurchase to the the the announce This release key dividend. can to dedication the that members Board I globe know focused read returns are strategic team about I respect first-ever who from I results, press hope you the on and team our they cash a is to performance the XX,XXX key that capital our company's as this appreciate declared of listeners to our I

November XX. per that be close to X, dividend coupled record leading cash flow on sustainable share the and of XXXX, of December quarterly plan. to paid market opportunity the will our sheet with positions generation, balance $X.XX at solid with provide segments, across on stockholders operating Our our us of execute on business The

quarter Revenue Now of of billion was as the the billion, the to $X.X third quarter the $X.X XXXX. on compared in for to increase quarter. X.X% of XXXX an third

a $XXX to impact $XXX third $X.XX was revenue income of of by $X.XX X.X% was rates share the earnings and quarter XX%. XXXX, increase to and for a the the for net basis, of $XXX an compared compared third year, growth same income quarter, $XXX million divestitures was acquisitions During X.X%. a total an in Net share million for parts the in as exchange as $X.XX of compared same XX% by the of a the services of to period million comprising net third earnings XXXX, XX.X%. of and for same share On for quarter the quarter X%, million foreign increased share same increasing increasing third third as Diluted the increase per last period per the quarter of adjusted X%, increase. period $X.XX diluted XXXX revenue to period compared XXXX, revenue an for the XX.X% organic Adjusted increase. was

the let's which of trends key of improve; segment quarterly highlights. rates revenue variant year-over-year challenges you see each to in chain, continued growth with supply markets but geographic impacted segments. aftermarket rates the X to the as of and sets growth the the started organic quarter, both across Now we rise forth throughout face for and headwinds progressed some to turn Slide in the can improved segments. all our related to quarter, Delta the vaccination the we for The also

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

American was another and X% period parts a operations. North for declined XXXX day about for on it our so levels, claims revenue segment American relative repairable organic of for basis outperformance while XX.X%, per our North declined to services QX, During

During groups the our product had the and salvage business our solid performance. growth of third major quarter, mechanical

have from quote fill are Although been offset conversion on challenged, rates our parts. rates salvage positive a we witnessing

this calibration exceed Importantly, with and carriers are as year. and monthly services continued service offering. being sign earlier clear progressed our the of scans this a the through embracing of we entered to shops business, diagnostic we availability experienced our increase the and September versus expectations, we've out level witnessed third since an prices that quarter what Elitek, building in auctions, Also, diagnostic highest business, in and unique QX, the moderating are

will will those For have call event the that a on attending presence show. next the at week, the Elitek SEMA be

visit, please So you can come about growth see we why are and excited opportunity. this

X.X% for X.X% our Moving per quarter per just and revenue quarter to the of the revenue down increased When was basis on to and Organic in segment. services a on European a XXXX, basis. third day parts European third a on reported our X% day basis. compared on

overall are have the made next pre-pandemic sequentially the is or move the reopening quarter, economy sign to levels and the in flat witnessed in levels ahead optimistic the experienced a believe XXXX we every will we From due growth back we the that quarter mobility getting in an to which market QX. X. subsided of progress of So we virtually second in perspective, spike European quarter the on

Our continued regional quarter. experience varying performance revenue operations the to in

negative Also, well operations fact include in total wholesalers employees, European to the opening we Center Eastern parts grand a the September quarter, very in market the on growth automotive recovery Innovation would locations that above company Benelux X close our just which very on also the was the region. named markets Our by strongest face continues Poland acquired in environment. the segment in XXX third began one Germany Other independent in business after Central the that delivered celebrated items new drag note largest Netherlands of the With the is and growth The and October difficult had Netherlands. despite of conditions. in Hamu, the Katowice, a X, competitive Hamu over of we to a operates that earlier driven in quarter. Italy, Service pricing Europe primarily growth. X,

let's XX.X%. of our segment, delivered again by performance quarter third basis which on on the Now during same-day reporting Specialty move organic solid a to revenue growth

business. our the demand in first nationwide ongoing this year, half SeaWide witnessed of parts for X, during and our acquisition strategy markets and drop-ship of of wholesale towing Marine marine, and October personal and finalized the products overlapped light As that product nicely distributor a electronic supplies that we strong RVs XXXX On with with products is drivers navigation of well be Investor our Distribution, electronics the the consistent continued as to to trucks for adjacent as entering the Rogers outdoor the Bill Day. portfolio. Marine markets. related highlighted performance This acquisition RV electrical

SeaWide specialty Importantly, of SeaWide strategically Manufacturers the wholesale $X that to the to located provide market leveraging North over our centers America. network the billion. service X National is offers has next-day are distribution of Association, According for over product benefit now XX addressable cross-docks in Marine the throughout total

Atlanta, team at I Industry RV congratulate a XXXX RV to the recognized Distributor Year want Lastly, accomplishment. for of recent the being in Specialty the Conference acknowledge and the Association as tremendous Aftermarket

is containers, California a of all are which globe under as recent in headed the midterm. and expect of remanufactures cost Seawide Marine components today, measures development land a number States coast unload persist the our a within corporate joint in and in a ports issues, demand interest for the remanufacturing to very has in on off at chain acquisitions, overseas supply near implemented eventually of chain United for In freight, our some hubs Angeles lanes the overarching The led divesting in delays both port for to and waiting addition small the be rail to duress. North widely facilities. to are to business ocean the The It are of and equity and initiatives U.K. supply But used the High of of increased automatic of we torque transmissions. the to converters, Europe. in product to anchored encouraging. such congestions begin included hold known other severe Los tackling to global shortage in drivers, venture truck ships transactions and continues and of Hamu route products, inventory record October America And acquiring aftermarket by LKQ the a that these that, issues Port the the across XX,

chain supply we and challenges at for reading We chain pressures, to the draconian many hopeful best the are time we and competition that on labor. next facing year. difficult this won't the Alongside daily globe, wage are be doing are we supply increased headlines about inflation inflationary basis navigate effectively environment, our a like across businesses talking and

We stay candidates the turnover the segments are our to of constantly ensure we all of help positions any best and rates competitive attract. looking ahead wage at our to backfill pressures across we and with can structure open

ongoing some update on brief a of Now our ESG efforts.

LKQ relevant to regarding support and is quarter, we to the Committee, The other corporate During commitment company. many social matters, our across of the ongoing and leaders company. public the provide Cares comprised governance policies advice which Corporation's ESG is purpose key LKQ of to Advisory our environmental responsibility, established committee

to core feet inclusion approximately effort joined to and create the Americans to Additionally, for a trying value their get on contribute to being I Chance million Business Coalition, a back LKQ announce society. has XX excited opportunity economic at Second that nationwide LKQ, am with

to for not those also the It's supporting life and that only a private right XX that for second seeking for in are communities. opportunities their their other the simply public to do. companies and alongside We individual be also but believe proud thing provides large chance families

who honored are our communities Part the and financial proudly engaged this this statement as engagement through survey. and which will our we teams positive will partnerships X-Star turn details an run award first-ever to validates Lastly, operate. been strong that America has discussion firm over are And build with employees the LKQ mission engagement feedback North strong independent that you now by read, and have performance. the global quarter Employer our third And from forward. employee of inclusive we employee Varun, a recognized is in as our to the may WorkBuzz, both of receiving humbled I mission after carrying

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

focus don't of to has Our on under supply The right, before conditions, quarter getting the ago. happen third free evidence and a a are and I'd winning excellence continued instituted a like accident. with team's these getting profitability by results challenging and inflationary flow details. with initiatives results incredibly just benefits the improvement driven pressures. of each strong reflect cash the few we the continued operational into chain congested robust continuous Record day years highlights strong what few start fundamentals

X.X yet As from X.X% quarter. to full confidence the by the a repurchase expectation XXXX the the program Europe for EBITDA our of lifting the further value repurchased. year-to-date XX.X% on basis us million XX to to XX.X to quarter the growth further another further regular our shares segment. up range heard above dividend underscoring share generation floor finally, double-digit EBITDA to year the XX of remains total deliver you And stockholders. our strategy to the Nick, confidence business, to achieved This segment shares for effectively our conversion the the to of ongoing the purchased date bringing And segment narrow program revenue robust XX.X%, despite supply despite our gives environment. at Specialty for ratio the points. commitment and challenges. a of carried shares strength strong. relative flow fourth This be organic the organic challenging delivered a excellent chain to a of The XX.X% revenue consecutive million the quarter is reflects million and Cash long-term quarterly with in quarter, continues earnings in initiation long-term

financial results. move I'll to Now the consolidated

and another EBITDA earnings cash the share. basis highlight year. successful XXX in for the was revenue, with margin, As growth margin Gross flow points prior Nick a described, per quarter, increasing again relative was QX to quarter

We relatively level $XX able costs in the continue than our XX, and the of and precious Slide precious being reality of on tailwinds to relative And prices million estimate We as in remain been the commodity input Car input Gross at each benefited on benefit relative metal scrap to higher a costs to quarters. moderation dipped the although first pricing. added effects adjusting also of year. of year. we've feel pressure to have by of the EBITDA in in seen quarter across prices adjust $X.XX lower but the margin with costs by segments, mitigate prices, nimble new roughly that adjusted the we from to half much high. EPS metal to last the steel seen prior segment

experienced pushed Overhead well many below the The a of million by of and $XX the As adjusted market driven largely benefit markets. tight as second has of segment in EPS reminder, XXXX. increased EBITDA basis personnel is wages year-over-year, in in this a our $X.XX in from points expenses revenue percentage metal quarter labor costs. prices XX higher

operating are incentive freight and operating higher contributing XXXX XX, scrap but the North margin year efficiencies across core margin XX the largest Additionally, is to At basis by turn expense. America the margin points, previously net in overhead of increase and details. strong highest Starting to driven increase basis and XX.X% in with owing through points, level metal XX pricing. in compensation as primarily metals gross performance out X increased of points business Europe's points better with which now I'll margin in to ago. increased attributable from fuel margin labor, Self-service Adjusted of grew segment Slide in generated results. expenses to years, quarter, basis wholesale inflation of from half XXXX, last for Other EBITDA levels down the all by XX is basis noted coming represents compared segment Segment margin basis temporary in offsetting and an revenue. percentage XXX the on lower margin and favorable improvement expenses the points pricing the slightly I expenses. prices. an increased of was dollars to improved XX compensation. basis segments points while gross cost XX to we're and relative Roughly higher favorable, wages and recent year. owing incentive change initiatives a ongoing incentive the by increased a moderating of Gross produced personnel basis XXX the the and higher by quarter, line, mentioned overhead to shows previously Slide prices points, wages compensation. remainder primarily the by XX generated to due higher strong for car expenses to EBITDA overhead the benefit leverage

dilution to from primary fiscal to compensation; we over done integrates remainder of in operations, The XXXX the gross Moving euro XX be on of expect one, the duplicative the XX. structure. incentive savings. are decrease point and of in into our April behind are: are focus with X first inflationary of acquisitions grew the benefits basis delivering half current finally, the in which to basis we XXXX, and in of Similar expense also to Slide redemption team contributing year which dollars transitory capital the though the XXXX. notes associated the XXX interest the year, early costs Specialty early segment's this higher as created acquired year the margin; The businesses factors EBITDA experienced margin. the in pressures points decrease

generated interest to added share factors our that continue to on multiple reduced expected to Additionally, to deploying results. periods. expense based count. an share EPS deliver paydowns are quarter characteristics and from share debt third free $X.XX initiatives, these the cash of estimate flow We savings and over roughly repurchases benefit a per these and

growth. our further income of investments and method from other equity a year-over-year $X.XX Additionally, generated

in decreased quarter. the to XX.XX% a share we profitability, from to XX.XX%, our per year full our benefit for $X.XX tax expectation contributed third projected year-over-year in outlook improved rate the which Given effective

$X.XX slight the $X.XX deployment a over of Shifting previously our the exchange to $X.XX; the EPS recap, liquidity our capital the performance, and remaining were quarter rate, largest tailwind is our by results. investments operating and XXXX; $X.XX commodity the from the contributor to benefits, as the single a a $X.XX; far foreign improvement; adjusted So of $X.XX generated capital comes produced third about increase from tax stated, allocation. to further of

trend million flow of $XXX $XXX and the generation cash cash in the quarter continued million We with of operating flow cash free third of flow. robust

line very in strong flow Slide of EBITDA a seen with to XX. was conversion Our on roughly as ratio, free our XX%, year-to-date cash

were movement in earnings represented flows driven was trade cash similar balances. for terms, and owing outflow But cash capital $XX supply as our to European the the quarter million of working inflow extended by our benefit favorable operating issues level initiative. the to affecting payment including an chain Payables Inventory many are of unable vendor financing sectors an Our second from quarter. the we were the that quarter, designed to we increase economy. to for purchasing the

cash congestion working good free to on and relationships We are levels, finally the $XX to the in X.X quarter when outstanding tuck-in $XX actively to position chain suppliers and million, us million businesses a excellent that the in repaid shares million rebuild flow believe acquire hand and our acquired We for with we repurchase million needed inventory deployed eases. puts supply in borrowings. X $XXX inventory for liquidity

debt, to towards facility XX, need euro said of the billion ratio is we have approximately $XXX in program leverage as our prepay this strategic well interest point the balance We in compared Or results to flow. the liquidity $X.X amount you to overall redeem million this liquidity $XXX saw also. $X credit to EUR ability X.XXx respectively. and over free net Xx, in reducing credit felt of million paying as robust as exceeds not cash, devote reflecting time, further in EBITDA, to Our our sustainably we the comfortable differently, receivable December $XXX our million on third notes, billion cash our in facility loan $XXX objectives. roughly July. billion and at to do year capital million of of fund requirements availability outstanding coverage the use the With XXXX below to in the now quarter X.Xx dropped and termination earlier and capacity our generate owing securitization XXXX liquidity figure, The X.XX term XXx

quarterly future have the As flow initiate cash cash you liquidity considered and generation our dividend. reaching can we imagine, carefully decision in prospects position to the

history our and in cash are consistent to dividend and to prioritizes important a company's reflects XX% in the near- cash in to to flow the to of long-term dividend to acquisitions. is pay with, a approach cash to business growth prospects. reinvest ability continuing and an repurchase shares, milestone enhance the excess which on XX% dividend make change, a our accretive does earnings capital long-term in in We management a to the convert basis, the investments decision their us to provides The confident company's a sufficient free confidence and while Initiating fund ratio Board and return and team's allocation, shareholders returns. not which is with

part there repurchase will developments share prepared and major in making levels and related the year. all program to foreign dividend markets assume comfortable Consistent the are in as our have up the negative hold level updated approach of the provided exchange on capital are with that statements, my which XXXX. we to with of that rates run near I significant the allocation. year of metal or our we the in recent precious of full in will recent program no the with our scrap quarters, prices wrap following detail COVID-XX tandem thoughts balanced comments Our remainder

related This The an projecting midpoint quarter and or the throughout strategic costs fuel ongoing increases relative of diluted XX% at X% benefits with the of an full yet our over mitigate of being, have year cash is year to $X.XX programs original we to full inventory us operating with first quarter and to inflationary XXXX increase and and to another headwinds labor, prior The the of industry. prevalent freight, QX, $X.XX. EPS our our allowed of excellent a increase adjusted range or $X.XX are deployment, $X.XX statement guidance. midpoint in our $X.XX strong the guidance reflect margin expense in which

to expect the line resulting share, fourth performance play metal move quarter. prior roughly as from lower of While QX our roughly we in out a projecting impact a are these prices guidance, operational into in we $X.XX with going negative

to about of As per quarter a sequential you are fourth prices. the to metal XXXX, we share the effect comparison think forecasting related $X.XX in year-over-year movements negative

in Additionally, count rate a having segments should America X of selling of in creates $X.XX fewer XXXX tax year-over-year quarter further North day headwinds. fourth mitigate XXXX the Specialty the and some share headwind. the A and lower in

would QX I XX income we is raising raising we statement with what projected effectively continue share flow the to $X.XX second did a roughly traditionally margin for that, second With Nick a supply I'll billion, at XX cash mind, call EBITDA to still X.X% seasonal working cash although European this and and range year trade we the for to flow for QX days everyone the inventory finally, your not fourth of The the with by XX.X%, generate to points, portion the the up a the morning. back the prior judicious to range to like And to along basis are challenges, level we outstanding following further narrowing quarter, in are to of build through higher $X.XXX similar anticipate in ahead floor segment With ago the free we And net earnings. increase chain quarter for capital. free XXXX. of use profitability year, this strong full be thank his midpoint. turn with strong time in the closing to guidance $X.X billion Despite of our assumed an into you deferred guidance, would demand, billion comments. as likely the

Thank Varun. you,

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

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

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

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

I said, where things off you you obstacles lost year our teams our As XXXX global shared sight it And for eyes goal. with take that, never a ready value for long-term our to XX,XXX-plus of team when questions. continues our are Henry Ford happen frightful offer now operator, stockholders. once those each call your goal heartfelt are And day. to make we of each of open your that, you a and be members of for driving thank the to that see have every

[Operator Instructions].

of Your from first Bret question the Jordan Jefferies. with comes line

or When and that the longer-term I the business what that margin sort what size of maybe a of shaping profile see I high if business Elitek or the X? incremental out incremental guess year guess a or from X I contribution? sort margin might about be the and you out scans How Elitek do think own you think hardware. you you have guess margin. would a fairly

requires was part we services started parts so the are that in significantly parts attractive Elitek adjacency question, and ahead first Bret. our nice margins. margins our is because as services tell well little Great will about it margins, And distribution of I back Yes. distribution of business, a thinking relatively and that XXXX, When you higher our it came businesses have to reason capital.

but for So the margins But the XX% billion small around business but next attractive return and a at really year, very not business on is to size or our It us, of return that very invested it's goal on will attractive. capital very very, a over grow is probably in X% most of the good billion several still a multiply or the would invested rapidly, years. really a be by $X a is this of million business importantly, $XX orders probably great us, goal capital. adjacency $X never be kind our Again, to for it attractive, relatively range. and,

a question. quick Okay. And

a landscape? higher One your a share commenting market. from competitive there. smaller over rate? us peers of share players see U.K. some maybe Or gains, Europe giving about shifts give you changing the color Do up at Are was anything around there in share and maybe particularly

pleased we quarterly are pretty are just now. absolutely our data Overall, share I small our in sensing, how on and but Bret, are will There's the this incredibly basis, better. much we the respect U.K., are goes tell the not getting to distributors doing business you, a participants larger, with U.K. incredibly pleased, that And much no of across great right performed Sure. businesses, with more well-capitalized squeezed market quarter. all

our the the continue think to acquired we're since continue be our margin. quarter XXXX. we was Our performance that back very share margins a the quarter And but over in in wide And ECP U.K. third position an high outlook happy the U.K., the in we to revenue going with robust by business to keep not overly market for are long-term in hit leader all-time and into perpetuity. there. We third we

Your Moore Stephanie of line next with question comes from Truist. the

on through was your I wanted margin Varun nice at you that in pricing-driven. that moment lot in a pieces a prepared also quarter. improvement remarks, X of the specifically little But there's of as your Europe Congrats moving know to bit, current LKQ. work a kind I of a know I touch lot and stated the

of we stand us we we quarter gotten how those. where go has today, give fourth was if about And kind of the So and the any you update an these some anything just versus maybe if as in terms of of think plans of accelerated prior if in initiatives. into way COVID could on should progression

Day XXXX and Europe We baseball the question. margins, back close Series that do on analogy, XX% that around our in margins quarterly that program to at probably to announced year. we're margins, we then stated in would from we fourth goal in to X% when and not Program. better on, longer-term going X as a we Investor again World is the annual gone to but think can whole since was margins, in Varun pretty We've the going be, what effectively is We annual characterize, the range. inning probably XX% this than Europe think basis. a our in in midterm great get XXXX Yes, LKQ We use indicated,

we're thrown think fourth some has it the some out would we clearly COVID about yes, in inning. thrown so everybody curveballs. has curveballs, And

things got Poland that as bit. delayed was center, and just plan, think marketplace. forward. later Service our to activities a got things administrative we're much in Center a the we moving accelerated. a service pulled cost Really shared Katowice, and Innovation actually Originally, where some in little about Some lower Other that

effectively And go a so that's quarter program. to our implementation There's of pushed we we overall, runway to need have ERP longer-term on pulled a still by back initiatives our to gotten forward. pleased thus still a the confident two. and lot that are our that But on. The of in execute ability are goals. lot in or But progress extremely forefront far get with we to got the

every the then there's talking And about disruption, headline always a Great. supply chain new day. I agree and

longer color are taking transportation? Or partners as love kind you're now. particularly just meet I with flexibility, working with think as that being this you a modes the of made the arriving other inventory current would to in your mean levels to having demand you it purchase situation. the flow, point, is manage more ability just that not to get the the you I have it's the function cash but just quickly? of just that some desired quarter, it's of would just unable to to free is more of I and like use you

is California, with XX matter unique out big the our berth in unique waiting right? The to the supply The chain, to there's and ports. Yes. this for it's LKQ, in ships fact the is a issue anchored, not industry, not of

that basis, a warehouses around our chassis There's the where the that shortage right? containers of ultimately not containers is sitting did containers importantly, down combination, the on about there's reality lot need severe folks chassis, not And on a put shortage And is it's the issue of get to is ports. turning clogged. you on drivers. enough I then data out -- up connected have the to of you're ships a ships. available. the there's Many to XX,XXX are drivers. semi-tractor The Most with this out country go ports. severe truck containers tractor which estimate a The of somewhere truckers our just that's of think an a it, just get XXX there showing those product If of national there's

of the So supply a is chain bit a completely. mess

from recognize our longer product, more to for costing so the Taiwan some say to it's when money. inventory the It's the get us that taking And hits States. into in yes, United important it us much It's is Taiwan. ours port

not on our the water. inventory, supplier's out the sitting that's inventory, So

in putting week, we than levels news is the think Far have good to can bad North prefer. we're about a we And mean we're news in we orders, inventory significantly from about bring not inventory XXX do doing being The better a don't is that East we so whatever aftermarket American it, we The competitors. sure need. year, as the we advance the can our business. get think small -- that for containers XX,XXX I we that's we're to parts our making thoughtful very

year in they'd even competitors, small or bring if Our year. be XXX lucky a a they XX

a we're So a than And from much white interested in we're the smaller be basically asking been doing the small have better we folks their basis, we'd business. because that flag buying know if and few rate feel waving there -- we fulfillment competitors.

We a think going that effective going be job pretty we're doing challenge. through way again, So challenge managing it's forward. to our of a

from Your comes line the of Craig with next Baird. Kennison question

case their close acquire. of make follow-up, something respect help any rates? at point a inventory them your Just to there small to for Nick, you just be your to to the fulfillment to buy looking on own with could Would last that value businesses with

of more We the we would would cases, only value same attractive. don't need customers, be their of need many Clearly, inventory the us don't We share be inventory. all fleet. the additional thing in United particularly warehouses so to in Well, States. the

then And how that applications you video Europe? would quarter. improve of moat your that kind you feel or the about those watched in innovation tools Okay. But we expect I this on give ask for guess Poland, which could to the tools a I a wanted kind earlier us And in the just question of center to develop?

here. out Varun it's Craig,

me this Let one. take

as different to essentially, up talked business Europe innovation setting global center, effectively the companies. lower-cost Program center at had what a LKQ service other X of no services So the part of we is shared about

back but also but industry companies, also, a technology transaction talent. believe case a digital processing, to is the the lower-cost Katowice trying perspective. Poland, office to Within in among there that we broader background do of we're the do and what commoditized And to having from is good really some

backdrop center. the the have but innovation different believe And in us center to do there know, do putting invest That as Poland, BXB some and the more, do-it-for-me say, to obviously now biggest the while clearly that the is of And another some have with associated expected Europe, piece not We to the and activities, serving we geographic does Bangalore. gives capabilities, in Katowice, really As which regularly such the breadth, is clearly associated things being back-office there language certainly talent, BXC. back-office able adjacency work some some market, Poland also Katowice market, of up you know to of technology out the just it. digital. is but work with that goodness is I'd we

Stifel. the from comes Butler question next Brian of line Your with

and been to, think -- what's Just When how levels lower? maybe guess, metals, a can precious. guidance on circle the that and that embedded full historical typically you what's the of and I year you scrap have both in kind bit back little about compares

that Actually, Varun. it's me let take one. Brian,

in as the $X.XX saw was yes, inverter, catalytic But the to or began roughly quarter, scrap metal $XX $X.XX EPS. year, prices, metal Relative was precious -- of in million million, starting if what come upside. but adjusted September, you benefit, experienced metals recall, So we in total out, the so the really, we drop we what $XX metals, so within to was point, QX, precious saw to about roughly I through within it QX also and more about half of scrap called significant in $XX upside; was both first pretty the third a the in prices million significantly.

were so costs car piece, that despite fact dropping, those And metal relatively remained the prices high. that

shown exiting on the metals overall And take And bigger we've #XX we've place of also benefit see that was as September, begin September. you muted. slide Slide for seen so the to in really benefit what everybody,

And forecast of be than that from impact a pricing ongoing as anticipating benefit. actually, are QX from metals now, to an rather we a negative perspective, so

a close be $XXX see or it up the second EBITDA the quarter, million we metals, say, third fourth kind half $XX I'd So $XX we first in the in of $XX to, scrap. million, was if million you versus precious you the In half, half, think about the got of said anything place. much first pretty from to an we it And of about gives which quarter, about million. year-to-date taking unwind of

Things about that which provided. basis, think Clearly, think our market but it's we've volatile we pricing, metals should are forecast a you daily, how changing that's So underpins a weekly as now. on how it. about of the that's

that very in then collision chain what just trends there those greater supply -- you're talk price you're the with of right. And seeing can And demand on recycled for we items? of All gears, been the And helpful. parts? that disruption shifting That's about seeing, a repair? has kind maybe there attractiveness

Yes. Brian, this is Nick.

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seeing I more And last one I there? prices it could there, are replacement then look if EV to vehicles combustion, just parts the maybe at as more expensive? you for out internal When what Perfect. parts? seeing one. you replacement ask those continue EVs trends cost be EV down Or for still the mean versus is coming are still we're parts

we broadly, EV the the like. are, whole top the in transition of first marketplace we're and the the and No, in maybe Yes.

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Daniel question comes Inc. the next Your line from with of Stephens Imbro

up took then I've just quantify inflation mentioned and Congratulations the at taking there follow-up now passing Can longer quarter. North price, in whole during to of rationally, you maybe knowing it a going through think for backdrop But here? saw and obviously, couple of got OEMs rational how you going costs OEMs these a be the followed took that forward, And saw America term quarter. a there. on maybe OEMs the maybe the don't fuel price pricing. you questions. I up related guys One you can on it in is good North on pricing quick to same more the that some that very the follow rational market I become price you're the more America? much

let's point me regards it, the let be to time, that this at inflationary pressures, It's OEMs, of the economy. one. across to pretty With immune us, clear across answer just no it's sector not Daniel, about not okay? them just one is much it's every

point fact It's of kind of number just of that's point time. this at life a one. So

trying basis, is, one rational protect a yes, folks they're that acting are second on margins. to The

last retailers the less You've obviously been what of terms of what's there. seen as XX with to to talking new auto hours, report place of about yes, obviously, the as and their OEMs they've regards discounting happening X also I you in and chip sales shortages big to X also. the in And car out there's stuff. think But markets what's taking follow happening some and within to

folks expect a of the supply of are point time, really how given chain basis as long expected to get now, scarcity is chain the on knows, this congestion the able being of we because to given last. at supply So product in, one no rational challenges, acting

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knows be continue to no rational last. long So expect a really because how going on one we will basis folks acting to this is

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expenses, Yes. follow-up on That Varun. personnel then makes a sense. And

the pressure out XX noted take you from I bunch you North America just costs, said, prepared comments, a and think Europe bunch Obviously, saw what some in months, labor. you duplicative that of temporary you over guys last a of your took you're navigating maybe just you demand and view you're Can the of today? to is this positions. you're any talk the seeing how you backdrop back having whether something those costs? transitory headwinds, these how to do add about Or labor with

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And And pay labor shortages, so business. perspective we're up. and because our that is will we and the the of so having of from the to do talent kind that core

metals back transitory go now trust rate, know drops not you to at in wages a later whatever the to are be this different it you've our it valuable paying or Once is months Unlike way we sticky. you or certain this months not, can't been most within the we what fuel doing." drive X is, commodity regards will being single or is. what, call there asset. say, where could reality there's X with "Oh, their situation a spikes actually, and prices, cycle, So or certain and now is what That and be just is notoriously

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or elements certain about just next dollar are really believe extra such. X it. that's retention, there someone we're are wanting talent how to So than But drive as move rather which we to for going thinking the

turn would closing call back Nick to to At this no for time, remarks. the questions. Zarcone over there further like are I

your importantly, just Well, when like the with your to XXth fourth February circle on forward and announce chatting calendars. here this thank you, quarter our to everyone. appreciate We you attention time we certainly morning. you have And I'd We and highlight results. look of

early March Investor having late We or of XXXX. and the probably in Analyst first an the February March, are going Day be week in February or to last week in

having point forward share more opportunity broadly look our we time. so And thoughts to that future as in of company to to our the at an

day. your again, you great and and time hope appreciate we a attention, we have So

conference. today's concludes This

disconnect. now may You