Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 21, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-50404 | |
Entity Registrant Name | LKQ CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-4215970 | |
Entity Address, Address Line One | 500 West Madison Street | |
Entity Address, Address Line Two | Suite 2800 | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60661 | |
City Area Code | 312 | |
Local Phone Number | 621-1950 | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | LKQ | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 267,289,697 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001065696 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 3,349 | $ 3,348 |
Cost of goods sold | 1,977 | 1,991 |
Gross margin | 1,372 | 1,357 |
Selling, general and administrative expenses | 931 | 924 |
Restructuring and transaction related expenses | 18 | 3 |
Depreciation and amortization | 58 | 59 |
Operating income | 365 | 371 |
Other expense (income): | ||
Interest expense | 36 | 16 |
Interest income and other income, net | (9) | (1) |
Total other expense, net | 4 | 15 |
Income from continuing operations before provision for income taxes | 361 | 356 |
Provision for income taxes | 94 | 89 |
Equity in earnings of unconsolidated subsidiaries | 3 | 2 |
Income from continuing operations | 270 | 269 |
Net income from discontinued operations | 0 | 4 |
Net income | $ 270 | $ 273 |
Basic earnings per share: (2) | ||
Income from continuing operations | $ 1.01 | $ 0.94 |
Net income from discontinued operations | 0 | 0.02 |
Net income | 1.01 | 0.96 |
Diluted earnings per share: (2) | ||
Income from continuing operations | 1.01 | 0.94 |
Net income from discontinued operations | 0 | 0.02 |
Net income | $ 1.01 | $ 0.95 |
Forward Contracts | ||
Gains on foreign exchange contracts - acquisition related (1) | $ 23 | $ 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 270 | $ 273 |
Other comprehensive income (loss): | ||
Foreign currency translation, net of tax | 57 | (54) |
Net change in unrealized gains/losses on cash flow hedges, net of tax | (17) | 0 |
Other comprehensive income from unconsolidated subsidiaries | 3 | 1 |
Other comprehensive income (loss) | 43 | (53) |
Comprehensive income | $ 313 | $ 220 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) shares in Millions, $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 342 | $ 278 |
Receivables, net of allowance for credit losses | 1,257 | 998 |
Inventories | 2,733 | 2,752 |
Prepaid expenses and other current assets | 291 | 230 |
Total current assets | 4,623 | 4,258 |
Property, plant and equipment, net | 1,265 | 1,236 |
Operating lease assets, net | 1,249 | 1,227 |
Goodwill | 4,366 | 4,319 |
Other intangibles, net | 651 | 653 |
Equity method investments | 156 | 141 |
Other noncurrent assets | 198 | 204 |
Total assets | 12,508 | 12,038 |
Current liabilities: | ||
Accounts payable | 1,371 | 1,339 |
Accrued expenses: | ||
Accrued payroll-related liabilities | 214 | 218 |
Refund liability | 119 | 109 |
Other accrued expenses | 324 | 294 |
Current portion of operating lease liabilities | 190 | 188 |
Current portion of long-term obligations | 44 | 34 |
Other current liabilities | 150 | 89 |
Total current liabilities | 2,412 | 2,271 |
Long-term operating lease liabilities, excluding current portion | 1,111 | 1,091 |
Long-term obligations, excluding current portion | 2,684 | 2,622 |
Deferred income taxes | 283 | 280 |
Other noncurrent liabilities | 289 | 283 |
Redeemable noncontrolling interest | $ 24 | $ 24 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 1,000 | 1,000 |
Common Stock, Shares, Issued | 322.8 | 322.4 |
Common Stock, Shares, Outstanding | 267.6 | 267.3 |
Stockholders' equity: | ||
Common stock, $0.01 par value, 1,000.0 shares authorized, 322.8 shares issued and 267.6 shares outstanding at March 31, 2023; 322.4 shares issued and 267.3 shares outstanding at December 31, 2022 | $ 3 | $ 3 |
Additional paid-in capital | 1,510 | 1,506 |
Retained earnings | 6,852 | 6,656 |
Accumulated other comprehensive loss | $ (280) | $ (323) |
Balance as of March 31, 2023 | 55.2 | 55.1 |
Treasury stock, at cost; 55.2 shares at March 31, 2023 and 55.1 shares at December 31, 2022 | $ (2,394) | $ (2,389) |
Total Company stockholders' equity | 5,691 | 5,453 |
Noncontrolling interest | 14 | 14 |
Total stockholders' equity | 5,705 | 5,467 |
Total liabilities and stockholders' equity | $ 12,508 | $ 12,038 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 1,000 | 1,000 |
Common Stock, Shares, Issued | 322.8 | 322.4 |
Common Stock, Shares, Outstanding | 267.6 | 267.3 |
Balance as of March 31, 2023 | 55.2 | 55.1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 270 | $ 273 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 65 | 65 |
Stock-based compensation expense | 10 | 13 |
Other | 11 | (4) |
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | ||
Receivables, net of allowance for credit losses | (236) | (230) |
Inventories | 57 | (98) |
Prepaid income taxes/income taxes payable | 52 | 60 |
Accounts payable | 22 | 309 |
Other operating assets and liabilities | (5) | 21 |
Net cash provided by operating activities | 223 | 409 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (70) | (59) |
Proceeds from disposals of property, plant and equipment | 3 | 2 |
Acquisitions, net of cash acquired | (25) | 0 |
Other investing activities, net | (5) | (6) |
Net cash used in investing activities | (97) | (63) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Debt issuance costs | (19) | 0 |
Borrowings under revolving credit facilities | 1,543 | 289 |
Repayments under revolving credit facilities | (2,003) | (334) |
Borrowings under term loans | 500 | 0 |
Borrowings (repayments) of other debt, net | 1 | (8) |
Dividends paid to LKQ stockholders | (74) | (71) |
Purchase of treasury stock | (8) | (144) |
Other financing activities, net | (6) | (10) |
Net cash used in financing activities | (66) | (278) |
Effect of exchange rate changes on cash and cash equivalents | 4 | (6) |
Net increase in cash and cash equivalents, including cash classified within current assets held for sale | 64 | 62 |
Less: increase in cash classified within current assets held for sale | 0 | 9 |
Net increase in cash and cash equivalents | 64 | 53 |
Cash and cash equivalents, beginning of period | 278 | 274 |
Cash and cash equivalents, end of period | 342 | 327 |
Supplemental disclosure of cash paid for: | ||
Income taxes, net of refunds | 34 | 28 |
Interest | 24 | 6 |
Forward Contracts | ||
Supplemental disclosure of noncash investing and financing activities: | ||
Gains on foreign exchange contracts - acquisition related | $ (23) | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Treasury Stock, Common [Member] | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest |
Balance as of January 1, 2023 at Dec. 31, 2021 | 321.6 | ||||||
Balance as of January 1, 2023 at Dec. 31, 2021 | $ 5,787 | $ 3 | $ (1,346) | $ 1,474 | $ 5,794 | $ (153) | $ 15 |
Balance as of January 1, 2023 at Dec. 31, 2021 | (34.6) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 273 | 273 | |||||
Other comprehensive income | (53) | (53) | |||||
Purchase of treasury stock | (2.7) | ||||||
Purchase of treasury stock | (144) | $ (144) | |||||
Vesting of restricted stock units, net of shares withheld for employee tax | 0.4 | ||||||
Vesting of restricted stock units, net of shares withheld for employee tax | (5) | (5) | |||||
Stock-based compensation expense | 13 | 13 | |||||
Dividends declared to LKQ stockholders | (72) | (72) | |||||
Balance as of March 31, 2023 at Mar. 31, 2022 | 322 | ||||||
Balance as of March 31, 2023 at Mar. 31, 2022 | 5,799 | $ 3 | $ (1,490) | 1,482 | 5,995 | (206) | 15 |
Balance as of March 31, 2023 at Mar. 31, 2022 | (37.3) | ||||||
Balance as of January 1, 2023 at Dec. 31, 2022 | 322.4 | ||||||
Balance as of January 1, 2023 at Dec. 31, 2022 | $ 5,467 | $ 3 | $ (2,389) | 1,506 | 6,656 | (323) | 14 |
Balance as of January 1, 2023 at Dec. 31, 2022 | 55.1 | (55.1) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | $ 270 | 270 | |||||
Other comprehensive income | 43 | 43 | |||||
Purchase of treasury stock | (0.1) | ||||||
Purchase of treasury stock | (5) | $ (5) | |||||
Vesting of restricted stock units, net of shares withheld for employee tax | 0.4 | ||||||
Vesting of restricted stock units, net of shares withheld for employee tax | (6) | (6) | |||||
Stock-based compensation expense | 10 | 10 | |||||
Dividends declared to LKQ stockholders | (74) | (74) | |||||
Balance as of March 31, 2023 at Mar. 31, 2023 | 322.8 | ||||||
Balance as of March 31, 2023 at Mar. 31, 2023 | $ 5,705 | $ 3 | $ (2,394) | $ 1,510 | $ 6,852 | $ (280) | $ 14 |
Balance as of March 31, 2023 at Mar. 31, 2023 | 55.2 | (55.2) |
Interim Financial Statements
Interim Financial Statements | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interim Financial Statements | Interim Financial Statements LKQ Corporation, a Delaware corporation, is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries. We have prepared the accompanying Unaudited Condensed Consolidated Financial Statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented. Results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023 ("2022 Form 10-K"). Interest income on the Unaudited Condensed Consolidated Statements of Income was updated to conform with the 2022 Form 10-K presentation. Recently Adopted Accounting Pronouncements During the first quarter of 2023, we adopted Accounting Standards Update No. 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” ("ASU 2022-04"), which requires the buyer in a supplier finance program to disclose certain information about its program, including key terms, balance sheet presentation of amounts, outstanding amounts at the end of each period, and rollforwards of balances. We adopted the provisions of ASU 2022-04 on a retrospective basis (see Note 15, "Supply Chain Financing"), except for the disclosure of rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The adoption of ASU 2022-04 did not have a material impact on our unaudited condensed consolidated financial statements. |
Discontinued Operations and Div
Discontinued Operations and Divestitures | 3 Months Ended |
Mar. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Divestitures | Discontinued Operations and Divestitures Glass Manufacturing Business For the three months ended March 31, 2022, we recorded to discontinued operations a $4 million benefit primarily related to the reassessment of a previously recorded valuation allowance on a deferred tax asset related to our glass manufacturing business sold in 2017. Other Divestitures (Not Classified in Discontinued Operations) |
Uni-Select Acquisition
Uni-Select Acquisition | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Uni-Select Acquisition | Uni-Select AcquisitionOn February 26, 2023, we entered into a definitive agreement to acquire all of Uni-Select Inc.'s (“Uni-Select”) issued and outstanding shares for Canadian dollar (“CAD”) 48.00 per share in cash, representing a total enterprise value of approximately CAD 2.8 billion ($2.1 billion at the March 31, 2023 exchange rate) (the "Uni-Select Acquisition"). Uni-Select is a leading distributor of automotive refinish and industrial coatings and related products in North America through its FinishMaster segment, and in the automotive aftermarket parts business in Canada through its Canadian Automotive Group segment and in the United Kingdom (“U.K.”) through its GSF Car Parts segment. This acquisition will complement our existing North American paint distribution operations and provides a scaled position in the Canadian mechanical parts space, with opportunity for future consolidation and growth. On April 27, 2023, Uni-Select's shareholders approved the proposed acquisition. The Uni-Select Acquisition is expected to be completed in the second half of 2023 and is subject to regulatory approvals and other customary closing conditions. We intend to divest the GSF Car Parts segment on or shortly after the acquisition closing date and the remaining businesses will be reported within our Wholesale - North America segment. See Note 11, "Restructuring and Transaction Related Expenses" for information related to transaction expenses related to the Uni-Select Acquisition. In order to reduce the risk related to changes in CAD foreign exchange rates for the CAD purchase price between signing and closing, we entered into foreign exchange contracts. These foreign exchange contracts do not qualify for hedge accounting, and therefore the changes in fair value are reported in Gains on foreign exchange contracts - acquisition related in the Unaudited Condensed Consolidated Statements of Income. As of March 31, 2023, we reported an asset of $23 million with a corresponding gain for the first quarter of 2023. See Note 17, "Derivative Instruments and Hedging Activities" for information related to these foreign exchange contracts. In connection with the Uni-Select Acquisition, we entered into a commitment letter for a $2.1 billion senior unsecured bridge loan facility ("Bridge Loan") with various banks. The capacity under the Bridge Loan was reduced to $1.6 billion as of March 31, 2023 upon execution of a term loan agreement as discussed below. There were no draws on the facility as of March 31, 2023. We incurred $9 million in upfront fees related to the facility and may incur additional fees and holding costs if the bridge loan facility is not canceled by specified dates. During the three months ended March 31, 2023, we amortized $3 million of these upfront fees (reported in Interest expense) with the remaining balance to be amortized over the expected term of the facility. For the permanent financing, on March 27, 2023, we entered into a new term loan credit agreement ("CAD Note") which establishes an unsecured term loan facility of up to CAD 700 million scheduled to mature three years from the date of funding. Proceeds from the CAD Note may only be used (i) to finance a portion of the aggregate cash consideration for the Uni-Select Acquisition, (ii) to refinance certain outstanding debt of Uni-Select and (iii) to pay fees, costs and expenses related to the Uni-Select Acquisition. The CAD Note is expected to fund one business day prior to the consummation of the Uni-Select Acquisition transaction and includes a non-usage fee that will be incurred through the date the proceeds are drawn on the facility. There were no borrowings against the CAD Note as of March 31, 2023. The CAD Note contains customary covenants for an unsecured term loan for a company that has debt ratings that are investment grade, such as requirements to comply with a total leverage ratio and interest coverage ratio, each calculated in accordance with the terms of the CAD Note, and limits on the Company’s and its subsidiaries’ ability to incur liens and indebtedness. The interest rate applicable to the CAD Note may be (i) a forward-looking term rate based on the Canadian Dollar Offer Rate for an interest period chosen by the Company of one or three months or (ii) the Canadian Prime Rate (as defined in the CAD Note), plus in each case a spread based on the Company’s debt rating and total leverage ratio. We anticipate funding the remainder of the purchase price with cash on hand and the issuance of senior notes. To hedge the movement of market interest rates for senior notes prior to the expected issuance date, we entered into forward-starting interest rate swaps to lock interest rates for the potential five and ten year senior notes. See Note 17, "Derivative Instruments and Hedging Activities" for information related to these interest rate instruments. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories We classify our inventory into the following categories: (i) aftermarket and refurbished products, (ii) salvage and remanufactured products, and (iii) manufactured products. Inventories consist of the following (in millions): March 31, 2023 December 31, 2022 Aftermarket and refurbished products $ 2,219 $ 2,279 Salvage and remanufactured products 464 427 Manufactured products 50 46 Total inventories $ 2,733 $ 2,752 Aftermarket and refurbished products and salvage and remanufactured products are primarily composed of finished goods. As of March 31, 2023, manufactured products inventory was composed of $29 million of raw materials, $7 million of work in process, and $14 million of finished goods. As of December 31, 2022, manufactured products inventory was composed of $26 million of raw materials, $5 million of work in process, and $15 million of finished goods. |
Allowance for Credit Losses
Allowance for Credit Losses | 3 Months Ended |
Mar. 31, 2023 | |
Credit Loss [Abstract] | |
Allowance for Credit Losses | Allowance for Credit LossesOur allowance for credit losses was $58 million and $54 million as of March 31, 2023 and December 31, 2022, respectively. The provision for credit losses was $5 million and $8 million for the three months ended March 31, 2023 and 2022, respectively. |
Noncontrolling Interest
Noncontrolling Interest | 3 Months Ended |
Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling InterestWe present redeemable noncontrolling interest on our balance sheet related to redeemable shares issued to a minority shareholder in conjunction with a previous acquisition. The redeemable shares contain (i) a put option for all noncontrolling interest shares at a fixed price of $24 million (€21 million) for the minority shareholder exercisable in the fourth quarter of 2023, (ii) a call option for all noncontrolling interest shares at a fixed price of $26 million (€23 million) for us exercisable beginning in the first quarter of 2026 through the end of the fourth quarter of 2027, and (iii) a guaranteed dividend to be paid quarterly to the minority shareholder through the fourth quarter of 2023. The redeemable shares do not provide the minority shareholder with rights to participate in the profits and losses of the subsidiary prior to the exercise date of the put option. As the put option is outside our control, we recorded a $24 million Redeemable noncontrolling interest at the put option's redemption value outside of permanent equity on our Unaudited Condensed Consolidated Balance Sheets. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible AssetsGoodwill and indefinite-lived intangible assets are tested for impairment at least annually. We performed our annual impairment test during the fourth quarter of 2022, and determined no impairment existed as all of our reporting units had a fair value estimate which exceeded the carrying value by at least 40%. The fair value estimates of our reporting units were established using weightings of the results of a discounted cash flow methodology and a comparative market multiples approach. Goodwill and indefinite-lived intangible assets impairment testing may also be performed on an interim basis when events or circumstances arise that may lead to impairment. We did not identify any indicators of impairment in the first three months of 2023 that necessitated an interim test of goodwill impairment or indefinite-lived intangible assets impairment. |
Equity Method Investments
Equity Method Investments | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The carrying value of our Equity method investments were as follows (in millions): Segment Ownership as of March 31, 2023 March 31, 2023 December 31, 2022 MEKO AB (1)(2) Europe 26.6% $ 143 $ 129 Other 13 12 Total $ 156 $ 141 (1) As of March 31, 2023, the Level 1 fair value of our investment in MEKO AB ("Mekonomen") was $178 million based on the quoted market price for Mekonomen's common stock using the same foreign exchange rate as the carrying value. (2) As of March 31, 2023, our share of the book value of Mekonomen's net assets exceeded the book value of our investment by $8 million; this difference is primarily related to Mekonomen's Accumulated Other Comprehensive Income balance as of our acquisition date in 2016. We record our equity in the net earnings of Mekonomen on a one quarter lag. |
Warranty Reserve
Warranty Reserve | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty Reserve | Warranty Reserve Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three or four year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. The changes in the warranty reserve are as follows (in millions): Warranty Reserve Balance as of December 31, 2022 $ 32 Warranty expense 19 Warranty claims (19) Balance as of March 31, 2023 $ 32 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregated Revenue We report revenue in two categories: (i) parts and services and (ii) other. Parts revenue is generated from the sale of vehicle products including replacement parts, components and systems used in the repair and maintenance of vehicles and specialty products and accessories to improve the performance, functionality and appearance of vehicles. Services revenue includes (i) additional services that are generally billed concurrently with the related product sales, such as the sale of service-type warranties, (ii) fees for admission to our self service yards, and (iii) diagnostic and repair services. For Wholesale - North America and Self Service, vehicle replacement products include sheet metal collision parts such as doors, hoods, and fenders; bumper covers; head and tail lamps; mirrors; grilles; wheels; and large mechanical items such as engines and transmissions. For Europe, vehicle replacement products include a wide variety of small mechanical products such as brake pads, discs and sensors; clutches; electrical products such as spark plugs and batteries; steering and suspension products; filters; and oil and automotive fluids. For our Specialty operations, we serve seven product segments: truck and off-road; speed and performance; recreational vehicles; towing; wheels, tires and performance handling; marine; and miscellaneous accessories. Other revenue includes sales of scrap and precious metals (platinum, palladium, and rhodium), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from furnace operations. We derive scrap metal and other precious metals from several sources in both our Wholesale - North America and Self Service segments, including vehicles that have been used in our recycling operations and vehicles from original equipment manufacturers ("OEMs") and other entities that contract with us for secure disposal of "crush only" vehicles. Revenue from the sale of hulks in our Wholesale - North America and Self Service segments is recognized based on a price per ton of delivered material when the customer (processor) collects the scrap. The following table sets forth our revenue disaggregated by category and reportable segment (in millions): Three Months Ended March 31, 2023 2022 Wholesale - North America $ 1,148 $ 1,106 Europe 1,548 1,481 Specialty 396 460 Self Service 60 57 Parts and services 3,152 3,104 Wholesale - North America 81 95 Europe 7 7 Self Service 109 142 Other 197 244 Total revenue $ 3,349 $ 3,348 Variable Consideration Amounts related to variable consideration on our Unaudited Condensed Consolidated Balance Sheets are as follows (in millions): Classification March 31, 2023 December 31, 2022 Return asset Prepaid expenses and other current assets $ 62 $ 58 Refund liability Refund liability 119 109 Variable consideration reserve Receivables, net of allowance for credit losses 99 136 Revenue by Geographic Area Our net sales are attributed to geographic area based on the location of the selling operation. The following table sets forth our revenue by geographic area (in millions): Three Months Ended March 31, 2023 2022 Revenue United States $ 1,681 $ 1,750 United Kingdom 415 425 Germany 416 386 Other countries 837 787 Total revenue $ 3,349 $ 3,348 |
Restructuring and Transaction R
Restructuring and Transaction Related Expenses | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring and Acquisition Related Expenses [Abstract] | |
Restructuring and Transaction Related Expenses | Restructuring and Transaction Related Expenses From time to time, we initiate restructuring plans to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations. Below is a summary of our current restructuring plans: 2022 Global Restructuring Plan In the fourth quarter of 2022, we began a restructuring initiative covering all of our reportable segments designed to reduce costs, streamline operations, consolidate facilities and implement other strategic changes to the overall organization. We have incurred and expect to incur costs primarily for employee severance, inventory or other asset write-downs, and exiting facilities. This plan is scheduled to be substantially complete by the end of 2024 with an estimated total incurred cost of between $30 million and $40 million. 1 LKQ Europe Plan In 2019, we announced a multi-year plan called "1 LKQ Europe" which is intended to create structural centralization and standardization of key functions to facilitate the operation of the Europe segment as a single business. Under the 1 LKQ Europe plan, we are reorganizing our non-customer-facing teams and support systems through various projects including the implementation of a common ERP platform, rationalization of our product portfolio, and creation of a Europe headquarters office and central back office. We completed the organizational design and implementation projects in June 2021, with the remaining projects scheduled to be completed by the end of 2025 with a total incurred cost of between $30 million and $40 million. 2019/2020 Global Restructuring Plan In 2019, we commenced a cost reduction initiative, covering all of our reportable segments, designed to eliminate underperforming assets and cost inefficiencies. This plan was expanded in 2020 as we identified additional opportunities to eliminate inefficiencies, including actions in response to impacts to the business from COVID-19. We have incurred and expect to incur costs for inventory write-downs; employee severance and other expenditures related to employee terminations; lease exit costs, such as lease termination fees, accelerated amortization of operating lease assets and impairment of operating lease assets; other costs related to facility exits, such as moving expenses to relocate inventory and equipment; and accelerated depreciation of fixed assets to be disposed of earlier than the end of the previously estimated useful lives. This plan is expected to be completed in 2023 with a total incurred cost of between $108 million to $115 million. Acquisition Integration Plans As we complete the acquisition of a business, we may incur costs related to integrating the acquired business into our current business structure and systems. These costs are typically incurred within a year from the acquisition date and vary in magnitude depending on the size and complexity of the related integration activities. We expect to incur an insignificant amount of future expenses to complete any open integration plans. The following table sets forth the expenses incurred related to our restructuring plans (in millions): Three Months Ended March 31, Plan Expense Type 2023 2022 2022 Global Plan Employee related costs $ 2 $ — Facility exit costs 2 — Other costs 1 — Total $ 5 $ — 1 LKQ Europe Plan Employee related costs $ 1 $ — Total $ 1 $ — Acquisition Integration Plans Facility exit costs $ 2 $ — Total $ 2 $ — Total restructuring expenses $ 8 $ — The following table sets forth the cumulative plan costs by segment related to our restructuring plans (in millions): Cumulative Program Costs Wholesale - North America Europe Specialty Self Service Total 2022 Global Plan $ 1 $ 11 $ 2 $ 1 $ 15 2019/2020 Global Plan 43 59 2 2 106 1 LKQ Europe Plan — 8 — — 8 The following table sets forth the liabilities recorded related to our restructuring plans (in millions): 2022 Global Plan 2019/20 Global Plan 1 LKQ Europe Plan March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 Employee related costs (1) $ 1 $ 3 $ — $ 1 $ 1 $ 1 Facility exit costs (2) 4 1 3 6 — — Other costs — — 2 2 — — Total $ 5 $ 4 $ 5 $ 9 $ 1 $ 1 (1) Reported in Accrued payroll-related liabilities on our Unaudited Condensed Consolidated Balance Sheets. (2) Reported in Current portion of operating lease liabilities and Long-term operating lease liabilities, excluding current portion on our Unaudited Condensed Consolidated Balance Sheets. Transaction Related Expenses The following table sets forth the transaction related expenses incurred (in millions): Three Months Ended March 31, 2023 2022 Professional fees (1) $ 10 $ 3 Transaction related expenses $ 10 $ 3 (1) Included external costs such as legal, accounting and advisory fees related to completed and potential transactions (including Uni-Select transaction costs in 2023). |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation RSUs The following table summarizes activity related to our restricted stock units ("RSUs") under the LKQ Corporation 1998 Equity Incentive Plan (the "Equity Incentive Plan") for the three months ended March 31, 2023 (in millions, except years and per share amounts): Number Outstanding Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Unvested as of January 1, 2023 1.3 $ 41.02 Granted (2) 0.5 $ 56.99 Vested (0.3) $ 39.37 Unvested as of March 31, 2023 1.5 $ 47.30 Expected to vest after March 31, 2023 1.3 $ 47.87 3.1 $ 73 (1) The aggregate intrinsic value of expected to vest RSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of the period multiplied by the number of units) that would have been received by the holders had all the expected to vest RSUs vested. This amount changes based on the market price of LKQ’s common stock. (2) The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2022 was $48.97. The fair value of RSUs that vested during the three months ended March 31, 2023 was $16 million; the fair value of RSUs vested is based on the market price of LKQ stock on the date vested. PSUs The following table summarizes activity related to our performance-based RSUs ("PSUs") under the Equity Incentive Plan for the three months ended March 31, 2023 (in millions, except years and per share amounts): Number Outstanding Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Unvested as of January 1, 2023 0.5 $ 37.87 Granted (2) 0.1 $ 56.99 Vested (0.2) $ 32.53 Unvested as of March 31, 2023 0.4 $ 46.86 Expected to vest after March 31, 2023 0.3 $ 46.22 1.6 $ 18 (1) The aggregate intrinsic value of expected to vest PSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all the expected to vest PSUs vested. This amount changes based on the market price of LKQ’s common stock and the achievement of the performance metrics relative to the established targets. (2) Represents the number of PSUs at target payout. The weighted average grant date fair value of PSUs granted during the three months ended March 31, 2022 was $48.92. The fair value of PSUs that vested during the three months ended March 31, 2023 was $12 million; the fair value of PSUs vested is based on the market price of LKQ stock on the date vested. Stock-Based Compensation Expense Pre-tax stock-based compensation expense for RSUs and PSUs totaled $10 million and $13 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, unrecognized compensation expense related to unvested RSUs and PSUs was $71 million. Stock-based compensation expense related to these awards will be different to the extent that forfeitures are realized and performance under the PSUs dif fers from current achievement estimates. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following chart sets forth the computation of earnings per share (in millions, except per share amounts): Three Months Ended March 31, 2023 2022 Income from continuing operations $ 270 $ 269 Denominator for basic earnings per share—Weighted-average shares outstanding 267.4 285.7 Effect of dilutive securities: RSUs 0.7 0.8 PSUs 0.2 0.3 Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding 268.3 286.8 Basic earnings per share from continuing operations $ 1.01 $ 0.94 Diluted earnings per share from continuing operations (1) $ 1.01 $ 0.94 (1) Diluted earnings per share from continuing operations was computed using the treasury stock method for dilutive securities. The number of antidilutive securities was insignificant for all periods presented. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Loss The components of Accumulated Other Comprehensive Loss are as follows (in millions): Three Months Ended March 31, 2023 Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Unrealized Gain on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) Balance as of January 1, 2023 $ (333) $ — $ 11 $ (1) $ (323) Pretax income (loss) 57 (22) — — 35 Income tax effect — 5 — — 5 Other comprehensive income from unconsolidated subsidiaries — — — 3 3 Balance as of March 31, 2023 $ (276) $ (17) $ 11 $ 2 $ (280) Three Months Ended March 31, 2022 Foreign Currency Translation Unrealized Loss on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) Balance as of January 1, 2022 $ (121) $ (24) $ (8) $ (153) Pretax loss (54) — — (54) Other comprehensive income from unconsolidated subsidiaries — — 1 1 Balance as of March 31, 2022 $ (175) $ (24) $ (7) $ (206) During the three months ended March 31, 2023, we reclassified an immaterial amount of gains on our interest rate swaps to Interest expense in the Unaudited Condensed Consolidated Statements of Income. Our policy is to reclassify the income tax effect from Accumulated other comprehensive income (loss) to the Provision for income taxes when the related gains and losses are released to the Unaudited Condensed Consolidated Statements of Income. |
Supply Chain Financing
Supply Chain Financing | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Supply Chain Financing | Supply Chain Financing We utilize voluntary supply chain finance programs to support our efforts in negotiating payment term extensions with suppliers as part of our effort to improve our operating cash flows. These programs provide participating suppliers the opportunity to sell their LKQ receivables to financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreement between the suppliers and financial institutions. The financial institutions participate in the supply chain financing initiative on an uncommitted basis and can cease purchasing receivables from our suppliers at any time. Our obligation to our suppliers, including amount due and payment date, are not impacted by the supplier’s decision to sell amounts under these agreements. Our payment terms to the financial institutions, including the timing and amount of payments, are unchanged from the original supplier invoice. All outstanding payments owed under the supply chain finance programs with the participating financial institutions are recorded within Accounts payable in our Unaudited Condensed Consolidated Balance Sheets. As of March 31, 2023 and December 31, 2022, we had $240 million |
Long-Term Obligations
Long-Term Obligations | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Obligations | Long-Term Obligations Long-term obligations consist of the following (in millions): March 31, 2023 December 31, 2022 Maturity Date Interest Rate Amount Interest Rate Amount Senior Unsecured Credit Agreement: Term loans payable January 2026 6.16 % $ 500 — % $ — Revolving credit facilities January 2028 4.79 % (1) 1,335 — % — Senior Secured Credit Agreement: Revolving credit facilities January 2024 — % — 4.24 % (1) 1,786 Senior Notes: Euro Notes (2024) April 2024 3.88 % 542 3.88 % 535 Euro Notes (2028) April 2028 4.13 % 271 4.13 % 268 Notes payable Various through October 2030 3.43 % (1) 14 3.25 % (1) 16 Finance lease obligations 4.32 % (1) 61 3.69 % (1) 48 Other debt 3.03 % (1) 17 2.28 % (1) 9 Total debt 2,740 2,662 Less: long-term debt issuance costs (12) (6) Total debt, net of debt issuance costs 2,728 2,656 Less: current maturities, net of debt issuance costs (44) (34) Long term debt, net of debt issuance costs $ 2,684 $ 2,622 (1) Interest rate derived via a weighted average Senior Unsecured Credit Agreement On January 5, 2023, we and certain other subsidiaries of ours entered into a new credit agreement (the “Senior Unsecured Credit Agreement”) which establishes: (i) an unsecured revolving credit facility of up to a U.S. Dollar equivalent of $2.0 billion, which includes a $150 million sublimit for the issuance of letters of credit and a $150 million sublimit for swing line loans and (ii) an unsecured term loan facility of up to $500 million. Borrowings under the agreement bear interest at the Secured Overnight Financing Rate (i.e. "SOFR") plus the applicable spread or other risk-free interest rates that are applicable for the specified currency plus a spread. The maturity date of the term loan is January 5, 2026 and may be extended by one additional year. The term loan has no required amortization payments prior to its maturity date. The maturity date for the revolving credit facility is January 5, 2028, and may be extended by up to two additional years in one year increments. The Senior Unsecured Credit Agreement contains customary covenants for an unsecured credit facility for a company that has debt ratings that are investment grade, such as, requirements to comply with a total leverage ratio and interest coverage ratio, each calculated in accordance with the terms of the Senior Unsecured Credit Agreement, and limits on the Company’s and its subsidiaries’ ability to incur liens and indebtedness. Proceeds from the Senior Unsecured Credit Agreement were used to repay the outstanding principal amount under our prior Senior Secured Credit Agreement (the "Prior Credit Agreement"), to pay fees and expenses related to the Senior Unsecured Credit Agreement, and for other general corporate purposes. Senior Secured Credit Agreement In connection with entering into the Senior Unsecured Credit Agreement noted above, Wells Fargo Bank, National Association and the various lending parties terminated the Prior Credit Agreement and each amendment thereto resulting in an immaterial loss on extinguishment of debt. Unsecured Senior Notes Interest on the Euro Notes (2024) and Euro Notes (2028) are payable in arrears on April 1 and October 1 of each year. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and commodity prices. Under current policies, we may use derivatives to manage our exposure to variable interest rates on our debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes. Derivative Instruments Designated as Cash Flow Hedges In February 2023, we entered into interest rate swap agreements to mitigate the risk of changing interest rates on our variable interest rate payments related to borrowings under our Senior Unsecured Credit Agreement. Under the terms of the interest rate swap agreements, we pay the fixed interest rate and receive a variable interest rate based on term SOFR that matches a contractually specified rate under the Senior Unsecured Credit Agreement. The agreements include a total $400 million notional amount maturing in February 2025 with a weighted average fixed interest rate of 4.63% and a total $300 million notional amount maturing in February 2026 with a weighted average fixed interest rate of 4.23%. Changes in the fair value of the interest rate swaps are recorded in Accumulated other comprehensive loss and reclassified to Interest expense when the hedged interest payments affect earnings. The activity related to the interest rate swaps is classified in operating activities in our Unaudited Condensed Consolidated Statements of Cash Flows. In March 2023, we entered into forward starting interest rate swaps to hedge the risk of changes in interest rates related to forecasted debt issuance to finance a portion of the Uni-Select Acquisition. Under the agreements, we will receive a variable interest rate based on SOFR and pay a fixed rate for the notional amount and term of the forecasted debt issuance. We are required to terminate the swaps at September 30, 2023, and we intend to terminate the agreements upon issuance of the debt if earlier. The forward starting interest rate swaps include a total $600 million notional amount covering interest payments from September 2023 through September 2028 at a rate of 3.20%, and a total $600 million notional amount covering interest payments from September 2023 through September 2033 at a rate of 3.34%. Changes in the fair value of the interest rate swaps are recorded in Accumulated other comprehensive loss and the fair value at the termination date will be reclassified to Interest expense over the term of the debt. The activity related to the forward starting interest swaps will be classified in operating activities in our Unaudited Condensed Consolidated Statements of Cash Flows. All of our interest rate swap contracts have been executed with counterparties that we believe are creditworthy, and we closely monitor the credit ratings of these counterparties. As of March 31, 2023, the notional amounts, balance sheet classification and fair values of our derivative instruments designated as cash flow hedges were as follows (in millions) (there were no such hedges as of December 31, 2022): Notional Amount Balance Sheet Caption Fair Value - Asset / (Liability) Interest rate swap agreements $ 700 Other noncurrent liabilities $ (9) Forward starting interest rate swaps $ 1,200 Other accrued expenses $ (13) The activity related to our cash flow hedges is included in Note 14, "Accumulated Other Comprehensive Loss." As of March 31, 2023, we estimate that an insignificant amount of derivative gains (net of tax) included in Accumulated other comprehensive loss will be reclassified into our Unaudited Condensed Consolidated Statements of Income within the next 12 months. Derivative Instruments Not Designated as Hedges To manage the foreign currency exposure related to the Uni-Select Acquisition purchase price (denominated in CAD), we entered into foreign exchange contracts in March to purchase CAD 1.6 billion for approximately $1.2 billion. These contracts are set to expire on September 29, 2023. These contract do not qualify for hedge accounting, and therefore, the contracts are adjusted to fair value through the results of operations as of each balance sheet date. The fair values of these foreign exchange contracts are recorded within Prepaid expenses and other current assets on the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2023, with a corresponding amount recorded to Gains on foreign exchange contracts - acquisition related on the Unaudited Condensed Consolidated Statements of Income for $23 million. Additionally, we hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability in the cash flows related to inventory purchases denominated in a non-functional currency. We have elected not to apply hedge accounting for these transactions. The notional amount and fair value of these contracts at March 31, 2023 and December 31, 2022, along with the effect on our results of operations during the three months ended March 31, 2023 and 2022, were not material. Gross vs. Net Presentation for Derivative Instruments While certain derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge and other derivative instruments on a gross basis in our Unaudited Condensed Consolidated Balance Sheets. The impact of netting the fair values of these contracts would result in a decrease to Prepaid expenses and other current assets and Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets of $6 million at March 31, 2023. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value We use the market and income approaches to estimate the fair value of our financial assets and liabilities, and during the three months ended March 31, 2023, there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value. The tiers in the fair value hierarchy include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value (in millions): March 31, 2023 December 31, 2022 Assets: Foreign currency forward contracts (Level 2) $ 23 $ — Total Assets $ 23 $ — Liabilities: Contingent consideration liabilities (Level 3) $ 7 $ 7 Interest rate swaps (Level 2) 22 — Total Liabilities $ 29 $ 7 For contingent consideration liabilities, the current portion is included in Other current liabilities and the noncurrent portion is included in Other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The balance sheet classification of the interest rate swap agreements and foreign currency forward contracts is presented in Note 17, "Derivative Instruments and Hedging Activities." We value derivative instruments using a third party valuation model that performs discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates and current and forward foreign exchange rates. Our contingent consideration liabilities are related to our business acquisitions. Under the terms of the contingent consideration agreements, payments may be made at specified future dates depending on the performance of the acquired business subsequent to the acquisition. The liabilities for these payments are classified as Level 3 liabilities because the related fair value measurement, which is determined using an income approach, includes significant inputs not observable in the market. Financial Assets and Liabilities Not Measured at Fair Value Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. Based on market conditions as of March 31, 2023, the fair value of the Senior Unsecured Credit Agreement borrowings reasonably approximated the carrying value of $1,835 million. As of December 31, 2022, the fair value of the Prior Credit Agreement borrowings reasonably approximated the carrying value of $1,786 million. As of March 31, 2023 and December 31, 2022, the fair values of the Euro Notes (2024) were approximately $540 million and $535 million, respectively, compared to carrying values of $542 million and $535 million, respectively. As of March 31, 2023 and December 31, 2022, the fair values of the Euro Notes (2028) were $263 million and $254 million, respectively, compared to carrying values of $271 million and $268 million, respectively. The fair value measurements of the borrowings under the credit agreements are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions with similar terms and maturities. We estimated the fair value by calculating the upfront cash payment a market participant would require at March 31, 2023 and December 31, 2022 to assume these obligations. The fair values of the Euro Notes (2024) and Euro Notes (2028) are determined based upon observable market inputs including quoted market prices in markets that are not active, and therefore are classified as Level 2 within the fair value hierarchy. We have immaterial equity investments recorded in Other noncurrent assets in which we have elected to use net asset value as a practical expedient to value and thus they are excluded from the fair value hierarchy disclosure. We have deferred compensation liabilities which are recorded in Other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets. These liabilities are determined based on the values of investments in participants' phantom accounts, which is not a fair value measurement, and thus the liabilities are not included in the fair value hierarchy disclosure. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2023 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | Employee Benefit PlansWe have funded and unfunded defined benefit plans covering certain employee groups in various European countries. Local statutory requirements govern many of our European plans. The defined benefit plans are mostly closed to new participants and, in some cases, existing participants no longer accrue benefits. As of both March 31, 2023 and December 31, 2022, the aggregate funded status of the defined benefit plans was a liability of $72 million, and is reported in Other noncurrent liabilities and Accrued payroll-related liabilities on our Unaudited Condensed Consolidated Balance Sheets. Net periodic benefit cost for our defined benefit plans were insignificant for each of the three-month periods ended March 31, 2023 and 2022. The service cost component is recorded in Selling, general and administrative ("SG&A") expenses, while the other components are recorded to Interest income and other income, net on the Unaudited Condensed Consolidated Statements of Income. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings. We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes. Our effective income tax rate for the three months ended March 31, 2023 was 26.1%, compared to 25.0% for the three months ended March 31, 2022. The increase in the effective tax rate for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 is primarily attributable to the geographic distribution of income and 0.2% resulting from higher non-deductible transaction costs in 2023, mostly related to the Uni-Select Acquisition. For the three months ended March 31, 2023, the effective tax rate was decreased by 0.4% compared to the three months ended March 31, 2022, related primarily to net favorable discrete items including excess tax benefits from stock-based payments. |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information We have four operating segments: Wholesale - North America, Europe, Specialty and Self Service, each of which is presented as a reportable segment. The segments are organized based on a combination of geographic areas served and type of product lines offered. The segments are managed separately as the businesses serve different customers and are affected by different economic conditions. Wholesale - North America and Self Service have similar economic characteristics and have common products and services, customers and methods of distribution. We are reporting these operating segments separately to provide greater transparency to investors. The following tables present our financial performance by reportable segment for the periods indicated (in millions): Wholesale - North America Europe Specialty Self Service Eliminations Consolidated Three Months Ended March 31, 2023 Revenue: Third Party $ 1,229 $ 1,555 $ 396 $ 169 $ — $ 3,349 Intersegment — — 1 — (1) — Total segment revenue $ 1,229 $ 1,555 $ 397 $ 169 $ (1) $ 3,349 Segment EBITDA $ 252 $ 151 $ 31 $ 22 $ — $ 456 Total depreciation and amortization (1) 19 34 8 4 — 65 Three Months Ended March 31, 2022 Revenue: Third Party $ 1,201 $ 1,488 $ 460 $ 199 $ — $ 3,348 Intersegment — — 1 — (1) — Total segment revenue $ 1,201 $ 1,488 $ 461 $ 199 $ (1) $ 3,348 Segment EBITDA $ 218 $ 131 $ 58 $ 40 $ — $ 447 Total depreciation and amortization (1) 19 34 8 4 — 65 (1) Amounts presented include depreciation and amortization expense recorded within Cost of goods sold, SG&A expenses and Restructuring and transaction related expenses. The key measure of segment profit or loss reviewed by our chief operating decision maker, our Chief Executive Officer, is Segment EBITDA. We use Segment EBITDA to compare profitability among the segments and evaluate business strategies. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as Net Income excluding discontinued operations; depreciation, amortization; interest (which includes gains and losses on debt extinguishment); income tax expense; restructuring and transaction related expenses (which includes restructuring expenses recorded in Cost of goods sold); change in fair value of contingent consideration liabilities; other gains and losses related to acquisitions, equity method investments, or divestitures; equity in losses and earnings of unconsolidated subsidiaries; equity investment fair value adjustments; impairment charges; and direct impacts of the Ukraine/Russia conflict and related sanctions (including provisions for and subsequent adjustments to reserves for asset recoverability and expenditures to support our employees and their families). The table below provides a reconciliation of Net Income to Segment EBITDA (in millions): Three Months Ended March 31, 2023 2022 Net income $ 270 $ 273 Subtract: Net income from discontinued operations — 4 Net income from continuing operations 270 269 Add: Depreciation and amortization - SG&A 58 59 Depreciation and amortization - cost of goods sold 7 6 Interest expense, net of interest income 33 15 Loss on debt extinguishment 1 — Provision for income taxes 94 89 EBITDA 463 438 Subtract: Equity in earnings of unconsolidated subsidiaries (1) 3 2 Gains on foreign exchange contracts - acquisition related (2) 23 — Equity investment fair value adjustments (1) (1) Add: Restructuring and transaction related expenses (3) 18 3 Losses on previously held equity interests — 1 Direct impacts of Ukraine/Russia conflict (4) — 6 Segment EBITDA $ 456 $ 447 (1) Refer to Note 8, "Equity Method Investments" for further information. (2) Refer to Note 3, "Uni-Select Acquisition" and Note 17, "Derivative Instruments and Hedging Activities" for further information. (3) Refer to Note 11, "Restructuring and Transaction Related Expenses" for further information. (4) Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (receivables and inventory) and expenditures to support our employees and their families in Ukraine. The following table presents capital expenditures by reportable segment (in millions): Three Months Ended March 31, 2023 2022 Capital Expenditures Wholesale - North America $ 20 $ 29 Europe 33 23 Specialty 13 4 Self Service 4 3 Total capital expenditures $ 70 $ 59 The following table presents assets by reportable segment (in millions): March 31, 2023 December 31, 2022 Receivables, net of allowance for credit losses Wholesale - North America $ 402 $ 351 Europe 700 547 Specialty 144 92 Self Service 11 8 Total receivables, net of allowance for credit losses 1,257 998 Inventories Wholesale - North America 822 822 Europe 1,442 1,418 Specialty 416 469 Self Service 53 43 Total inventories 2,733 2,752 Property, plant and equipment, net Wholesale - North America 500 505 Europe 574 547 Specialty 101 94 Self Service 90 90 Total property, plant and equipment, net 1,265 1,236 Operating lease assets, net Wholesale - North America 545 541 Europe 472 466 Specialty 87 85 Self Service 145 135 Total operating lease assets, net 1,249 1,227 Other unallocated assets 6,004 5,825 Total assets $ 12,508 $ 12,038 We report net receivables; inventories; net property, plant and equipment; and net operating lease assets by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash and cash equivalents, prepaid expenses and other current and noncurrent assets, goodwill, other intangibles and equity method investments. Our largest countries of operation are the U.S., followed by the U.K. and Germany. Additional European operations are located in the Netherlands, Italy, Czech Republic, Belgium, Austria, Slovakia, Poland, and other European countries. Our operations in other countries include wholesale operations in Canada, remanufacturing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. The following table sets forth our tangible long-lived assets by geographic area (in millions): March 31, 2023 December 31, 2022 Long-lived assets United States $ 1,386 $ 1,371 Germany 302 290 United Kingdom 263 256 Other countries 563 546 Total long-lived assets $ 2,514 $ 2,463 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | Inventories consist of the following (in millions): March 31, 2023 December 31, 2022 Aftermarket and refurbished products $ 2,219 $ 2,279 Salvage and remanufactured products 464 427 Manufactured products 50 46 Total inventories $ 2,733 $ 2,752 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | The carrying value of our Equity method investments were as follows (in millions): Segment Ownership as of March 31, 2023 March 31, 2023 December 31, 2022 MEKO AB (1)(2) Europe 26.6% $ 143 $ 129 Other 13 12 Total $ 156 $ 141 (1) As of March 31, 2023, the Level 1 fair value of our investment in MEKO AB ("Mekonomen") was $178 million based on the quoted market price for Mekonomen's common stock using the same foreign exchange rate as the carrying value. (2) As of March 31, 2023, our share of the book value of Mekonomen's net assets exceeded the book value of our investment by $8 million; this difference is primarily related to Mekonomen's Accumulated Other Comprehensive Income balance as of our acquisition date in 2016. We record our equity in the net earnings of Mekonomen on a one quarter lag. |
Warranty Reserve (Tables)
Warranty Reserve (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability [Table Text Block] | The changes in the warranty reserve are as follows (in millions): Warranty Reserve Balance as of December 31, 2022 $ 32 Warranty expense 19 Warranty claims (19) Balance as of March 31, 2023 $ 32 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Recognition [Line Items] | |
Disaggregation of Revenue [Table Text Block] | The following table sets forth our revenue disaggregated by category and reportable segment (in millions): Three Months Ended March 31, 2023 2022 Wholesale - North America $ 1,148 $ 1,106 Europe 1,548 1,481 Specialty 396 460 Self Service 60 57 Parts and services 3,152 3,104 Wholesale - North America 81 95 Europe 7 7 Self Service 109 142 Other 197 244 Total revenue $ 3,349 $ 3,348 |
Variable Consideration | Amounts related to variable consideration on our Unaudited Condensed Consolidated Balance Sheets are as follows (in millions): Classification March 31, 2023 December 31, 2022 Return asset Prepaid expenses and other current assets $ 62 $ 58 Refund liability Refund liability 119 109 Variable consideration reserve Receivables, net of allowance for credit losses 99 136 |
Revenue from External Customers by Geographic Area | The following table sets forth our revenue by geographic area (in millions): Three Months Ended March 31, 2023 2022 Revenue United States $ 1,681 $ 1,750 United Kingdom 415 425 Germany 416 386 Other countries 837 787 Total revenue $ 3,349 $ 3,348 |
Restructuring and Transaction_2
Restructuring and Transaction Related Expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Expenses | The following table sets forth the expenses incurred related to our restructuring plans (in millions): Three Months Ended March 31, Plan Expense Type 2023 2022 2022 Global Plan Employee related costs $ 2 $ — Facility exit costs 2 — Other costs 1 — Total $ 5 $ — 1 LKQ Europe Plan Employee related costs $ 1 $ — Total $ 1 $ — Acquisition Integration Plans Facility exit costs $ 2 $ — Total $ 2 $ — Total restructuring expenses $ 8 $ — |
Restructuring Cumulative Plan Costs | The following table sets forth the cumulative plan costs by segment related to our restructuring plans (in millions): Cumulative Program Costs Wholesale - North America Europe Specialty Self Service Total 2022 Global Plan $ 1 $ 11 $ 2 $ 1 $ 15 2019/2020 Global Plan 43 59 2 2 106 1 LKQ Europe Plan — 8 — — 8 |
Restructuring Liabilities | The following table sets forth the liabilities recorded related to our restructuring plans (in millions): 2022 Global Plan 2019/20 Global Plan 1 LKQ Europe Plan March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 Employee related costs (1) $ 1 $ 3 $ — $ 1 $ 1 $ 1 Facility exit costs (2) 4 1 3 6 — — Other costs — — 2 2 — — Total $ 5 $ 4 $ 5 $ 9 $ 1 $ 1 (1) Reported in Accrued payroll-related liabilities on our Unaudited Condensed Consolidated Balance Sheets. (2) Reported in Current portion of operating lease liabilities and Long-term operating lease liabilities, excluding current portion on our Unaudited Condensed Consolidated Balance Sheets. |
Schedule of Acquisition Related Costs | The following table sets forth the transaction related expenses incurred (in millions): Three Months Ended March 31, 2023 2022 Professional fees (1) $ 10 $ 3 Transaction related expenses $ 10 $ 3 (1) Included external costs such as legal, accounting and advisory fees related to completed and potential transactions (including Uni-Select transaction costs in 2023). |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes activity related to our restricted stock units ("RSUs") under the LKQ Corporation 1998 Equity Incentive Plan (the "Equity Incentive Plan") for the three months ended March 31, 2023 (in millions, except years and per share amounts): Number Outstanding Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Unvested as of January 1, 2023 1.3 $ 41.02 Granted (2) 0.5 $ 56.99 Vested (0.3) $ 39.37 Unvested as of March 31, 2023 1.5 $ 47.30 Expected to vest after March 31, 2023 1.3 $ 47.87 3.1 $ 73 (1) The aggregate intrinsic value of expected to vest RSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of the period multiplied by the number of units) that would have been received by the holders had all the expected to vest RSUs vested. This amount changes based on the market price of LKQ’s common stock. (2) The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2022 was $48.97. |
Schedule of Nonvested Performance-based Units Activity | The following table summarizes activity related to our performance-based RSUs ("PSUs") under the Equity Incentive Plan for the three months ended March 31, 2023 (in millions, except years and per share amounts): Number Outstanding Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Unvested as of January 1, 2023 0.5 $ 37.87 Granted (2) 0.1 $ 56.99 Vested (0.2) $ 32.53 Unvested as of March 31, 2023 0.4 $ 46.86 Expected to vest after March 31, 2023 0.3 $ 46.22 1.6 $ 18 (1) The aggregate intrinsic value of expected to vest PSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all the expected to vest PSUs vested. This amount changes based on the market price of LKQ’s common stock and the achievement of the performance metrics relative to the established targets. (2) Represents the number of PSUs at target payout. The weighted average grant date fair value of PSUs granted during the three months ended March 31, 2022 was $48.92. |
Earnings Per Share Schedule of
Earnings Per Share Schedule of Earnings Per Share, Basic and Diluted (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table] | The following chart sets forth the computation of earnings per share (in millions, except per share amounts): Three Months Ended March 31, 2023 2022 Income from continuing operations $ 270 $ 269 Denominator for basic earnings per share—Weighted-average shares outstanding 267.4 285.7 Effect of dilutive securities: RSUs 0.7 0.8 PSUs 0.2 0.3 Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding 268.3 286.8 Basic earnings per share from continuing operations $ 1.01 $ 0.94 Diluted earnings per share from continuing operations (1) $ 1.01 $ 0.94 (1) Diluted earnings per share from continuing operations was computed using the treasury stock method for dilutive securities. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Cash Flow Hedges Reclassified to Interest Expense [Line Items] | |
Accumulated Other Comprehensive Income (Loss) | The components of Accumulated Other Comprehensive Loss are as follows (in millions): Three Months Ended March 31, 2023 Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Unrealized Gain on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) Balance as of January 1, 2023 $ (333) $ — $ 11 $ (1) $ (323) Pretax income (loss) 57 (22) — — 35 Income tax effect — 5 — — 5 Other comprehensive income from unconsolidated subsidiaries — — — 3 3 Balance as of March 31, 2023 $ (276) $ (17) $ 11 $ 2 $ (280) Three Months Ended March 31, 2022 Foreign Currency Translation Unrealized Loss on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) Balance as of January 1, 2022 $ (121) $ (24) $ (8) $ (153) Pretax loss (54) — — (54) Other comprehensive income from unconsolidated subsidiaries — — 1 1 Balance as of March 31, 2022 $ (175) $ (24) $ (7) $ (206) |
Long-Term Obligations (Tables)
Long-Term Obligations (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule Of Long-Term Obligations | Long-term obligations consist of the following (in millions): March 31, 2023 December 31, 2022 Maturity Date Interest Rate Amount Interest Rate Amount Senior Unsecured Credit Agreement: Term loans payable January 2026 6.16 % $ 500 — % $ — Revolving credit facilities January 2028 4.79 % (1) 1,335 — % — Senior Secured Credit Agreement: Revolving credit facilities January 2024 — % — 4.24 % (1) 1,786 Senior Notes: Euro Notes (2024) April 2024 3.88 % 542 3.88 % 535 Euro Notes (2028) April 2028 4.13 % 271 4.13 % 268 Notes payable Various through October 2030 3.43 % (1) 14 3.25 % (1) 16 Finance lease obligations 4.32 % (1) 61 3.69 % (1) 48 Other debt 3.03 % (1) 17 2.28 % (1) 9 Total debt 2,740 2,662 Less: long-term debt issuance costs (12) (6) Total debt, net of debt issuance costs 2,728 2,656 Less: current maturities, net of debt issuance costs (44) (34) Long term debt, net of debt issuance costs $ 2,684 $ 2,622 (1) Interest rate derived via a weighted average |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments [Table Text Block] | As of March 31, 2023, the notional amounts, balance sheet classification and fair values of our derivative instruments designated as cash flow hedges were as follows (in millions) (there were no such hedges as of December 31, 2022): Notional Amount Balance Sheet Caption Fair Value - Asset / (Liability) Interest rate swap agreements $ 700 Other noncurrent liabilities $ (9) Forward starting interest rate swaps $ 1,200 Other accrued expenses $ (13) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value (in millions): March 31, 2023 December 31, 2022 Assets: Foreign currency forward contracts (Level 2) $ 23 $ — Total Assets $ 23 $ — Liabilities: Contingent consideration liabilities (Level 3) $ 7 $ 7 Interest rate swaps (Level 2) 22 — Total Liabilities $ 29 $ 7 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule Of Financial Performance By Reportable Segment | The following tables present our financial performance by reportable segment for the periods indicated (in millions): Wholesale - North America Europe Specialty Self Service Eliminations Consolidated Three Months Ended March 31, 2023 Revenue: Third Party $ 1,229 $ 1,555 $ 396 $ 169 $ — $ 3,349 Intersegment — — 1 — (1) — Total segment revenue $ 1,229 $ 1,555 $ 397 $ 169 $ (1) $ 3,349 Segment EBITDA $ 252 $ 151 $ 31 $ 22 $ — $ 456 Total depreciation and amortization (1) 19 34 8 4 — 65 Three Months Ended March 31, 2022 Revenue: Third Party $ 1,201 $ 1,488 $ 460 $ 199 $ — $ 3,348 Intersegment — — 1 — (1) — Total segment revenue $ 1,201 $ 1,488 $ 461 $ 199 $ (1) $ 3,348 Segment EBITDA $ 218 $ 131 $ 58 $ 40 $ — $ 447 Total depreciation and amortization (1) 19 34 8 4 — 65 (1) Amounts presented include depreciation and amortization expense recorded within Cost of goods sold, SG&A expenses and Restructuring and transaction related expenses. |
Reconciliation Of Segment EBITDA To Net Income Table | The table below provides a reconciliation of Net Income to Segment EBITDA (in millions): Three Months Ended March 31, 2023 2022 Net income $ 270 $ 273 Subtract: Net income from discontinued operations — 4 Net income from continuing operations 270 269 Add: Depreciation and amortization - SG&A 58 59 Depreciation and amortization - cost of goods sold 7 6 Interest expense, net of interest income 33 15 Loss on debt extinguishment 1 — Provision for income taxes 94 89 EBITDA 463 438 Subtract: Equity in earnings of unconsolidated subsidiaries (1) 3 2 Gains on foreign exchange contracts - acquisition related (2) 23 — Equity investment fair value adjustments (1) (1) Add: Restructuring and transaction related expenses (3) 18 3 Losses on previously held equity interests — 1 Direct impacts of Ukraine/Russia conflict (4) — 6 Segment EBITDA $ 456 $ 447 (1) Refer to Note 8, "Equity Method Investments" for further information. (2) Refer to Note 3, "Uni-Select Acquisition" and Note 17, "Derivative Instruments and Hedging Activities" for further information. (3) Refer to Note 11, "Restructuring and Transaction Related Expenses" for further information. (4) Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (receivables and inventory) and expenditures to support our employees and their families in Ukraine. |
Schedule Of Capital Expenditures By Reportable Segment | The following table presents capital expenditures by reportable segment (in millions): Three Months Ended March 31, 2023 2022 Capital Expenditures Wholesale - North America $ 20 $ 29 Europe 33 23 Specialty 13 4 Self Service 4 3 Total capital expenditures $ 70 $ 59 |
Schedule Of Assets By Reportable Segment | The following table presents assets by reportable segment (in millions): March 31, 2023 December 31, 2022 Receivables, net of allowance for credit losses Wholesale - North America $ 402 $ 351 Europe 700 547 Specialty 144 92 Self Service 11 8 Total receivables, net of allowance for credit losses 1,257 998 Inventories Wholesale - North America 822 822 Europe 1,442 1,418 Specialty 416 469 Self Service 53 43 Total inventories 2,733 2,752 Property, plant and equipment, net Wholesale - North America 500 505 Europe 574 547 Specialty 101 94 Self Service 90 90 Total property, plant and equipment, net 1,265 1,236 Operating lease assets, net Wholesale - North America 545 541 Europe 472 466 Specialty 87 85 Self Service 145 135 Total operating lease assets, net 1,249 1,227 Other unallocated assets 6,004 5,825 Total assets $ 12,508 $ 12,038 |
Schedule Of Tangible Long-Lived Assets By Geographic Area | The following table sets forth our tangible long-lived assets by geographic area (in millions): March 31, 2023 December 31, 2022 Long-lived assets United States $ 1,386 $ 1,371 Germany 302 290 United Kingdom 263 256 Other countries 563 546 Total long-lived assets $ 2,514 $ 2,463 |
Discontinued Operations and D_2
Discontinued Operations and Divestitures (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net income from discontinued operations | $ 0 | $ 4 | |
PGW | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from disposals of businesses | $ 361 |
Uni-Select Acquisition (Details
Uni-Select Acquisition (Details) $ / shares in Units, $ in Millions, $ in Millions | 3 Months Ended | 36 Months Ended | ||||
Mar. 31, 2023 CAD ($) $ / shares | Mar. 31, 2023 USD ($) | Mar. 27, 2026 | Mar. 31, 2023 USD ($) | Mar. 27, 2023 CAD ($) | Feb. 26, 2023 USD ($) | |
Business Combination and Asset Acquisition [Abstract] | ||||||
Bridge Loan | $ 1,600 | $ 2,100 | ||||
Business Combination, Separately Recognized Transactions [Line Items] | ||||||
Debt Instrument, Maturity Date, Description | three years | |||||
Forward Contracts | ||||||
Business Combination, Separately Recognized Transactions [Line Items] | ||||||
Foreign Currency Contract, Asset, Fair Value Disclosure | 23 | |||||
Uni-Select Inc. | ||||||
Business Combination, Separately Recognized Transactions [Line Items] | ||||||
Business Acquisition, Share Price | $ / shares | $ 48 | |||||
Business Combination, Price of Acquisition, Expected | $ 2,800 | $ 2,100 | ||||
Debt Issuance Costs, Gross | $ 9 | |||||
Amortization of Debt Issuance Costs | $ 3 | |||||
Uni-Select Inc. | Term Loan Facility | ||||||
Business Combination, Separately Recognized Transactions [Line Items] | ||||||
Term loans payable | $ 700 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory [Line Items] | ||
Inventories | $ 2,733 | $ 2,752 |
AftermarketAndRefurbishedProducts [Member] | ||
Inventory [Line Items] | ||
Inventories | 2,219 | 2,279 |
SalvageAndRemanufacturedProducts [Member] | ||
Inventory [Line Items] | ||
Inventories | 464 | 427 |
ManufacturedProducts [Member] | ||
Inventory [Line Items] | ||
Inventories | 50 | 46 |
Inventory, Raw Materials and Supplies, Gross | 29 | 26 |
Inventory, Work in Process, Gross | 7 | 5 |
Inventory, Finished Goods, Gross | $ 14 | $ 15 |
Allowance for Credit Losses (De
Allowance for Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Credit Loss [Abstract] | |||
Accounts Receivable, Allowance for Credit Loss | $ (58) | $ (54) | |
Accounts Receivable, Credit Loss Expense (Reversal) | $ 5 | $ 8 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) € in Millions, $ in Millions | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2019 EUR (€) |
Noncontrolling Interest [Abstract] | ||||
Reedemable NCI, Put Option | $ 24 | € 21 | ||
Redeemable NCI, Call Option | $ 26 | € 23 | ||
Redeemable noncontrolling interest | $ 24 | $ 24 |
Intangible Assets (Details)
Intangible Assets (Details) | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount | 40% |
Equity Method Investments (Deta
Equity Method Investments (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 156 | $ 141 |
Mekonomen [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 143 | 129 |
Equity Method Investment, Ownership Percentage | 26.60% | |
Equity Method Investments, Fair Value Disclosure | $ 178 | |
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | (8) | |
Other | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 13 | $ 12 |
Warranty Reserve (Details)
Warranty Reserve (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Standard Product Warranty Accrual | $ 32 | $ 32 |
Warranty expense | 19 | |
Warranty claims | $ (19) |
Revenue Recognition Disaggregat
Revenue Recognition Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | $ 3,349 | $ 3,348 |
Other Revenue [Member] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 197 | 244 |
Wholesale - North America Segment | Other Revenue [Member] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 81 | 95 |
Europe | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 1,555 | 1,488 |
Europe | Other Revenue [Member] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 7 | 7 |
Specialty [Member] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 397 | 461 |
Self Service Segment | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 169 | 199 |
Self Service Segment | Other Revenue [Member] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 109 | 142 |
Parts and Services [Domain] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 3,152 | 3,104 |
Parts and Services [Domain] | Wholesale - North America Segment | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 1,148 | 1,106 |
Parts and Services [Domain] | Europe | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 1,548 | 1,481 |
Parts and Services [Domain] | Specialty [Member] | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | 396 | 460 |
Parts and Services [Domain] | Self Service Segment | ||
Revenue Recognition Disaggregation of Revenue [Line Items] | ||
Revenues | $ 60 | $ 57 |
Variable Consideration (Details
Variable Consideration (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Revenue Recognition and Deferred Revenue [Abstract] | ||
Contract with Customer, Right to Recover Product | $ 62 | $ 58 |
Refund liability | 119 | 109 |
Revenue, Variable Consideration Reserve | $ 99 | $ 136 |
Revenue from External Customers
Revenue from External Customers by Geographic Areas (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue from External Customer [Line Items] | ||
Revenue | $ 3,349 | $ 3,348 |
UNITED STATES | ||
Revenue from External Customer [Line Items] | ||
Revenue | 1,681 | 1,750 |
UNITED KINGDOM | ||
Revenue from External Customer [Line Items] | ||
Revenue | 415 | 425 |
GERMANY | ||
Revenue from External Customer [Line Items] | ||
Revenue | 416 | 386 |
Other countries | ||
Revenue from External Customer [Line Items] | ||
Revenue | $ 837 | $ 787 |
Restructuring and Transaction_3
Restructuring and Transaction Related Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||
Business Combination, Acquisition Related Costs | $ 10 | $ 3 | |
Restructuring Costs | 8 | 0 | |
Professional Fees | |||
Restructuring Cost and Reserve [Line Items] | |||
Business Combination, Acquisition Related Costs | 10 | 3 | |
1 LKQ Europe Program [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 1 | 0 | |
Restructuring and Related Cost, Cost Incurred to Date | 8 | ||
Restructuring Reserve | 1 | $ 1 | |
1 LKQ Europe Program [Member] | Employee related costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 1 | 0 | |
Restructuring Reserve | 1 | 1 | |
1 LKQ Europe Program [Member] | Facility Closing | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 0 | 0 | |
1 LKQ Europe Program [Member] | Other Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 0 | 0 | |
1 LKQ Europe Program [Member] | Maximum | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 40 | ||
1 LKQ Europe Program [Member] | Minimum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 30 | ||
2022 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 5 | 0 | |
Restructuring and Related Cost, Cost Incurred to Date | 15 | ||
Restructuring Reserve | 5 | 4 | |
2022 Global Restructuring | Employee related costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 2 | 0 | |
Restructuring Reserve | 1 | 3 | |
2022 Global Restructuring | Facility Closing | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 2 | 0 | |
Restructuring Reserve | 4 | 1 | |
2022 Global Restructuring | Other Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 1 | 0 | |
Restructuring Reserve | 0 | 0 | |
2022 Global Restructuring | Maximum | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 40 | ||
2022 Global Restructuring | Minimum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 30 | ||
2019/2020 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 106 | ||
Restructuring Reserve | 5 | 9 | |
2019/2020 Global Restructuring | Employee related costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 0 | 1 | |
2019/2020 Global Restructuring | Facility Closing | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 3 | 6 | |
2019/2020 Global Restructuring | Other Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 2 | $ 2 | |
2019/2020 Global Restructuring | Maximum | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 115 | ||
2019/2020 Global Restructuring | Minimum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 108 | ||
Acquisition integration plans | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 2 | 0 | |
Acquisition integration plans | Facility Closing | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | 2 | $ 0 | |
Specialty [Member] | 1 LKQ Europe Program [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 0 | ||
Specialty [Member] | 2022 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 2 | ||
Specialty [Member] | 2019/2020 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 2 | ||
Europe | 1 LKQ Europe Program [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 8 | ||
Europe | 2022 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 11 | ||
Europe | 2019/2020 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 59 | ||
Self Service Segment | 1 LKQ Europe Program [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 0 | ||
Self Service Segment | 2022 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 1 | ||
Self Service Segment | 2019/2020 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 2 | ||
Wholesale - North America Segment | 1 LKQ Europe Program [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 0 | ||
Wholesale - North America Segment | 2022 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 1 | ||
Wholesale - North America Segment | 2019/2020 Global Restructuring | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | $ 43 |
Stock-Based Compensation Schedu
Stock-Based Compensation Schedule of Unvested Restricted Stock Units Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
RSUs | |||
Shares Outstanding [Abstract] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 1.5 | 1.3 | |
RSUs granted, shares | 0.5 | ||
RSUs vested, shares | (0.3) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expected To Vest, Number | 1.3 | ||
lkq_expected_to_vest_other_than_options_weighted_average_per_share | $ 47.87 | ||
Weighted Average Fair Value [Abstract] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | 47.30 | $ 41.02 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 56.99 | $ 48.97 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 39.37 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 3 years 1 month 6 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Vested | $ 73 | ||
Fair value of RSUs vested during the period | $ 16 | ||
Performance Based RSU [Member] | |||
Shares Outstanding [Abstract] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 0.4 | 0.5 | |
RSUs granted, shares | 0.1 | ||
RSUs vested, shares | (0.2) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Expected To Vest, Number | 0.3 | ||
lkq_expected_to_vest_other_than_options_weighted_average_per_share | $ 46.22 | ||
Weighted Average Fair Value [Abstract] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | 46.86 | $ 37.87 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 56.99 | $ 48.92 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 32.53 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 1 year 7 months 6 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Vested | $ 18 | ||
Fair value of RSUs vested during the period | $ 12 |
Schedule of Stock-Based Compens
Schedule of Stock-Based Compensation Expense Expected to be Recognized (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation expense | $ 10 | $ 13 |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | 71 | |
Stock-based compensation expense | 10 | 13 |
Additional Paid-In Capital | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock-based compensation expense | $ 10 | $ 13 |
Earnings Per Share, Basic and D
Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Schedule of Earnings Per Share, Basic and Diluted [Line Items] | ||
Income from continuing operations | $ 270 | $ 269 |
Denominator for basic earnings per share—Weighted-average shares outstanding | 267.4 | 285.7 |
Effect of dilutive securities: | ||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding | 268.3 | 286.8 |
Basic earnings per share from continuing operations | $ 1.01 | $ 0.94 |
Diluted earnings per share from continuing operations | $ 1.01 | $ 0.94 |
RSUs | ||
Effect of dilutive securities: | ||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0.7 | 0.8 |
Performance Based RSU [Member] | ||
Effect of dilutive securities: | ||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0.2 | 0.3 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Pretax income (loss) | $ 35 | $ (54) | ||
Income tax effect | 5 | |||
Other comprehensive income (loss) from unconsolidated subsidiaries | 3 | 1 | ||
Accumulated other comprehensive loss | (280) | (206) | $ (323) | $ (153) |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Pretax income (loss) | 57 | (54) | ||
Other comprehensive income (loss) from unconsolidated subsidiaries | 0 | 0 | ||
Accumulated other comprehensive loss | (276) | (175) | (333) | (121) |
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Pretax income (loss) | (22) | |||
Income tax effect | 5 | |||
Accumulated other comprehensive loss | (17) | |||
Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Pretax income (loss) | 0 | 0 | ||
Other comprehensive income (loss) from unconsolidated subsidiaries | 0 | 0 | ||
Accumulated other comprehensive loss | 11 | (24) | 11 | (24) |
Accumulated Gain (Loss) from Unconsoldated Subsidiaries [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Pretax income (loss) | 0 | 0 | ||
Other comprehensive income (loss) from unconsolidated subsidiaries | 3 | 1 | ||
Accumulated other comprehensive loss | $ 2 | $ (7) | $ (1) | $ (8) |
Supply Chain Financing (Details
Supply Chain Financing (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accounts Payable, Supply Chain Financing | $ 240 | $ 248 |
Schedule of Long-Term Obligatio
Schedule of Long-Term Obligations (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Jan. 05, 2023 | Dec. 31, 2022 |
Debt Instrument | |||
Finance lease obligations | $ 61 | $ 48 | |
Total debt | 2,740 | 2,662 | |
Less: long-term debt issuance costs | (12) | (6) | |
Total debt, net of debt issuance costs | 2,728 | 2,656 | |
Less: current maturities, net of debt issuance costs | (44) | (34) | |
Long-term obligations, excluding current portion | 2,684 | 2,622 | |
Borrowings Under Credit Facility | 1,835 | 1,786 | |
Term loans payable | |||
Debt Instrument | |||
Term loans payable | $ 500 | $ 0 | |
Interest rate | 6.16% | 0% | |
Senior Unsecured Credit Agreement | |||
Debt Instrument | |||
Revolving credit facilities | $ 1,335 | $ 0 | |
Weighted average interest rates | 4.79% | 0% | |
Senior Secured Credit Agreement - Revolving Credit Facilities | |||
Debt Instrument | |||
Revolving credit facilities | $ 0 | $ 1,786 | |
Line of Credit Facility, Interest Rate at Period End | 0% | 4.24% | |
Euro Notes (2024) | |||
Debt Instrument | |||
Long-term Debt | $ 542 | $ 535 | |
Interest rate | 3.88% | 3.88% | |
Euro Notes 2028 | |||
Debt Instrument | |||
Long-term Debt | $ 271 | $ 268 | |
Interest rate | 4.13% | 4.13% | |
Other Debt [Member] [Member] | |||
Debt Instrument | |||
Other Debt | $ 17 | $ 9 | |
Weighted average interest rates | 3.03% | 2.28% | |
Notes Payable [Member] | |||
Debt Instrument | |||
Notes Payable | $ 14 | $ 16 | |
Weighted average interest rates | 3.43% | 3.25% | |
Senior Unsecured Credit Agreement | Revolving Credit Facility [Member] | |||
Debt Instrument | |||
Sublimit for the Issuance of Letters of Credit | $ 150 | ||
Line of Credit Facility, Maximum Borrowing Capacity | 2,000 | ||
Sublimit for the Issuance of Swing Line Loans | 150 | ||
Unsecured Term Loan Facility | $ 500 |
Schedule of Long-Term Obligat_2
Schedule of Long-Term Obligations (Parenthetical) (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument | ||
Finance Lease, Weighted Average Discount Rate, Percent | 4.32% | 3.69% |
Other Debt [Member] [Member] | ||
Debt Instrument | ||
Weighted average interest rates | 3.03% | 2.28% |
Notes Payable [Member] | ||
Debt Instrument | ||
Weighted average interest rates | 3.43% | 3.25% |
Euro Notes 2028 | ||
Debt Instrument | ||
Interest rate | 4.13% | 4.13% |
Euro Notes (2024) | ||
Debt Instrument | ||
Interest rate | 3.88% | 3.88% |
Term loans payable | ||
Debt Instrument | ||
Interest rate | 6.16% | 0% |
Term loans payable | $ 500 | $ 0 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Details) $ in Millions, $ in Millions | 3 Months Ended | |||||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Mar. 31, 2023 CAD ($) | Mar. 15, 2023 USD ($) | Mar. 14, 2023 USD ($) | Feb. 17, 2023 USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Effect of Netting Derivative Instruments | $ 6 | |||||
Forward Contracts | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | 1,200 | $ 1,600 | ||||
Gains on foreign exchange contracts - acquisition related | (23) | $ 0 | ||||
Derivative Asset, Current - Prepaid expenses and other current assets | 23 | |||||
Interest Rate Swap [Member] | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | 700 | |||||
Derivative Liability, Noncurrent | (9) | |||||
Interest Rate Swap Maturing in February 2026 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | $ 300 | |||||
Derivative, Average Fixed Interest Rate | 4.23% | |||||
Interest Rate Swap Maturing in February 2025 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | $ 400 | |||||
Derivative, Average Fixed Interest Rate | 4.63% | |||||
Interest Rate Swap Maturing in September 2028 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | $ 600 | |||||
Derivative, Average Fixed Interest Rate | 3.20% | |||||
Interest Rate Swap Maturing in September 2033 | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | $ 600 | |||||
Derivative, Average Fixed Interest Rate | 3.34% | |||||
Forward starting interest rate swaps | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Derivative, Notional Amount | 1,200 | |||||
Derivative Liability, Current | $ (13) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Long-term Line of Credit | $ 1,835 | $ 1,786 |
Forward Contracts | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 23 | |
Fair Value, Recurring [Member] | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 29 | 7 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Contingent Consideration Liabilities [Member] | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 7 | 7 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 23 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member] | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | 22 | 0 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Forward Contracts | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 23 | 0 |
Euro Notes (2024) | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Long-term Debt | 542 | 535 |
Long-term Debt, Fair Value | 540 | 535 |
Euro Notes 2028 | ||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||
Long-term Debt | 271 | 268 |
Long-term Debt, Fair Value | $ 263 | $ 254 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
Defined Benefit Plan, Funded (Unfunded) Status of Plan | $ 72 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Effective Income Tax Rate Reconciliation, Percent | 26.10% | 25% |
Effective Income Tax Rate Reconciliation, Change as a result of the Discrete Items, Percent | 0.40% | |
Effective Income Tax Rate Reconciliation, Change as a result of non-deductible transaction costs, Percent | 0.20% | |
Effective Income Tax Rate Reconciliation, Change as a result of non-deductible transaction costs, Percent | 0.20% | |
Inflation Reduction Act | ||
Inflation Reduction Act Corporate Minimum Tax | 15% | |
Inflation Reduction Act Excise Tax on Share Repurchases | 1% |
Segment and Geographic Inform_3
Segment and Geographic Information - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | |
Segment Reporting Information | ||
Revenue | $ 3,349 | $ 3,348 |
Segment EBITDA | 456 | 447 |
Depreciation and amortization | $ 65 | 65 |
Number of operating segments | 4 | |
Third Party [Member] | ||
Segment Reporting Information | ||
Revenue | $ 3,349 | 3,348 |
Intersegment [Member] | ||
Segment Reporting Information | ||
Revenue | 0 | 0 |
North America | ||
Segment Reporting Information | ||
Revenue | 1,229 | 1,201 |
Segment EBITDA | 252 | 218 |
Depreciation and amortization | 19 | 19 |
North America | Third Party [Member] | ||
Segment Reporting Information | ||
Revenue | 1,229 | 1,201 |
North America | Intersegment [Member] | ||
Segment Reporting Information | ||
Revenue | 0 | 0 |
Europe | ||
Segment Reporting Information | ||
Revenue | 1,555 | 1,488 |
Segment EBITDA | 151 | 131 |
Depreciation and amortization | 34 | 34 |
Europe | Third Party [Member] | ||
Segment Reporting Information | ||
Revenue | 1,555 | 1,488 |
Europe | Intersegment [Member] | ||
Segment Reporting Information | ||
Revenue | 0 | 0 |
Specialty [Member] | ||
Segment Reporting Information | ||
Revenue | 397 | 461 |
Segment EBITDA | 31 | 58 |
Depreciation and amortization | 8 | 8 |
Specialty [Member] | Third Party [Member] | ||
Segment Reporting Information | ||
Revenue | 396 | 460 |
Specialty [Member] | Intersegment [Member] | ||
Segment Reporting Information | ||
Revenue | 1 | 1 |
Self Service Segment | ||
Segment Reporting Information | ||
Revenue | 169 | 199 |
Segment EBITDA | 22 | 40 |
Depreciation and amortization | 4 | 4 |
Self Service Segment | Third Party [Member] | ||
Segment Reporting Information | ||
Revenue | 169 | 199 |
Self Service Segment | Intersegment [Member] | ||
Segment Reporting Information | ||
Revenue | 0 | 0 |
us-gaap_IntersegmentEliminationMember | ||
Segment Reporting Information | ||
Revenue | (1) | (1) |
Segment EBITDA | 0 | 0 |
Depreciation and amortization | 0 | 0 |
us-gaap_IntersegmentEliminationMember | Third Party [Member] | ||
Segment Reporting Information | ||
Revenue | 0 | 0 |
us-gaap_IntersegmentEliminationMember | Intersegment [Member] | ||
Segment Reporting Information | ||
Revenue | $ (1) | $ (1) |
Schedule of Financial Performan
Schedule of Financial Performance by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information | ||
Revenues | $ 3,349 | $ 3,348 |
Segment EBITDA | 456 | 447 |
Depreciation and amortization | 65 | 65 |
North America | ||
Segment Reporting Information | ||
Revenues | 1,229 | 1,201 |
Segment EBITDA | 252 | 218 |
Depreciation and amortization | 19 | 19 |
Europe | ||
Segment Reporting Information | ||
Revenues | 1,555 | 1,488 |
Segment EBITDA | 151 | 131 |
Depreciation and amortization | 34 | 34 |
Specialty [Member] | ||
Segment Reporting Information | ||
Revenues | 397 | 461 |
Segment EBITDA | 31 | 58 |
Depreciation and amortization | 8 | 8 |
Self Service Segment | ||
Segment Reporting Information | ||
Revenues | 169 | 199 |
Segment EBITDA | 22 | 40 |
Depreciation and amortization | 4 | 4 |
us-gaap_IntersegmentEliminationMember | ||
Segment Reporting Information | ||
Revenues | (1) | (1) |
Segment EBITDA | 0 | 0 |
Depreciation and amortization | 0 | 0 |
Third Party [Member] | ||
Segment Reporting Information | ||
Revenues | 3,349 | 3,348 |
Third Party [Member] | North America | ||
Segment Reporting Information | ||
Revenues | 1,229 | 1,201 |
Third Party [Member] | Europe | ||
Segment Reporting Information | ||
Revenues | 1,555 | 1,488 |
Third Party [Member] | Specialty [Member] | ||
Segment Reporting Information | ||
Revenues | 396 | 460 |
Third Party [Member] | Self Service Segment | ||
Segment Reporting Information | ||
Revenues | 169 | 199 |
Third Party [Member] | us-gaap_IntersegmentEliminationMember | ||
Segment Reporting Information | ||
Revenues | 0 | 0 |
Intersegment [Member] | ||
Segment Reporting Information | ||
Revenues | 0 | 0 |
Intersegment [Member] | North America | ||
Segment Reporting Information | ||
Revenues | 0 | 0 |
Intersegment [Member] | Europe | ||
Segment Reporting Information | ||
Revenues | 0 | 0 |
Intersegment [Member] | Specialty [Member] | ||
Segment Reporting Information | ||
Revenues | 1 | 1 |
Intersegment [Member] | Self Service Segment | ||
Segment Reporting Information | ||
Revenues | 0 | 0 |
Intersegment [Member] | us-gaap_IntersegmentEliminationMember | ||
Segment Reporting Information | ||
Revenues | $ (1) | $ (1) |
Reconciliation Of Segment EBITD
Reconciliation Of Segment EBITDA To Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of Segment Earnings Before Interest Taxes Depreciation And Amortization to Net Income Table [Line Items] | ||
Net income | $ 270 | $ 273 |
Net income from discontinued operations | 0 | (4) |
Income from continuing operations | 270 | 269 |
Depreciation and amortization - SG&A | 58 | 59 |
Depreciation and amortization - cost of goods sold | 7 | 6 |
Interest expense, net of interest income | 33 | 15 |
Loss on debt extinguishment | 1 | 0 |
Provision for income taxes | 94 | 89 |
EBITDA | 463 | 438 |
Equity in earnings of unconsolidated subsidiaries (1) | (3) | (2) |
Equity investment fair value adjustments | (1) | (1) |
Restructuring and transaction related expenses (3) | 18 | 3 |
Losses on previously held equity interests | 0 | 1 |
Direct impacts of Ukraine/Russia conflict (4) | 0 | 6 |
Segment EBITDA | 456 | 447 |
Forward Contracts | ||
Reconciliation of Segment Earnings Before Interest Taxes Depreciation And Amortization to Net Income Table [Line Items] | ||
Gains on foreign exchange contracts - acquisition related (2) | $ 23 | $ 0 |
Schedule of Capital Expenditure
Schedule of Capital Expenditures by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information | ||
Capital Expenditures | $ 70 | $ 59 |
North America | ||
Segment Reporting Information | ||
Capital Expenditures | 20 | 29 |
Europe | ||
Segment Reporting Information | ||
Capital Expenditures | 33 | 23 |
Specialty [Member] | ||
Segment Reporting Information | ||
Capital Expenditures | 13 | 4 |
Self Service Segment | ||
Segment Reporting Information | ||
Capital Expenditures | $ 4 | $ 3 |
Schedule of Assets by Reportabl
Schedule of Assets by Reportable Segment (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Segment Reporting Information | ||
Receivables, net of allowance for credit losses | $ 1,257 | $ 998 |
Inventories | 2,733 | 2,752 |
Property, plant and equipment, net | 1,265 | 1,236 |
Operating lease assets, net | 1,249 | 1,227 |
Other unallocated assets | 6,004 | 5,825 |
Total assets | 12,508 | 12,038 |
Wholesale - North America Segment | ||
Segment Reporting Information | ||
Receivables, net of allowance for credit losses | 402 | 351 |
Inventories | 822 | 822 |
Property, plant and equipment, net | 500 | 505 |
Operating lease assets, net | 545 | 541 |
Europe | ||
Segment Reporting Information | ||
Receivables, net of allowance for credit losses | 700 | 547 |
Inventories | 1,442 | 1,418 |
Property, plant and equipment, net | 574 | 547 |
Operating lease assets, net | 472 | 466 |
Specialty [Member] | ||
Segment Reporting Information | ||
Receivables, net of allowance for credit losses | 144 | 92 |
Inventories | 416 | 469 |
Property, plant and equipment, net | 101 | 94 |
Operating lease assets, net | 87 | 85 |
Self Service Segment | ||
Segment Reporting Information | ||
Receivables, net of allowance for credit losses | 11 | 8 |
Inventories | 53 | 43 |
Property, plant and equipment, net | 90 | 90 |
Operating lease assets, net | $ 145 | $ 135 |
Schedule of Tangible Long-Lived
Schedule of Tangible Long-Lived Assets by Geographic Area (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Long-Lived Assets | ||
Long-Lived Assets | $ 2,514 | $ 2,463 |
UNITED STATES | ||
Long-Lived Assets | ||
Long-Lived Assets | 1,386 | 1,371 |
GERMANY | ||
Long-Lived Assets | ||
Long-Lived Assets | 302 | 290 |
UNITED KINGDOM | ||
Long-Lived Assets | ||
Long-Lived Assets | 263 | 256 |
Other countries | ||
Long-Lived Assets | ||
Long-Lived Assets | $ 563 | $ 546 |