LKQ - Earnings call transcript Q4 2024

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Operator

Hello, everyone, and welcome to LKQ Corporation's Fourth Quarter and Full Year 2024 Earnings Conference Call. My name is Lydia, and I will be your operator today.

[Operator Instructions]

I'll now hand you over to Joe Boutross to begin. Please go ahead.

Joseph Boutross

operator. you, Thank and Year everyone, LKQ's Quarter Fourth Good Earnings welcome Conference Full XXXX Call. and morning, to With us President today Executive are Justin Jude, LKQ's Rick Officer. our Financial Officer; President Galloway, Senior Chief Vice and and and Chief Please refer lkqcorp.com earnings for the issued release this as website call. morning well slide for as our this accompanying the to LKQ at presentation

Now let me quickly cover the safe harbor.

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

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

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

Justin Jude

Joe, Thank morning on to and good the you, everyone joining call. us

and it the been the humility. to after lead retirement Nick's and a has of to honor took year position know, rooted CEO maintain many I and you in team As of in July be LKQ last culture to continues an

and decisions our the and change, action, and authority make company, our the Our shareholders. confront right influence, ego. for team not to by failure our on head strive take embrace always communities employees, We leads

in surpassed navigating in years expectations In financial faced most our dynamics market seen challenges. Despite the XX automotive in I've industry. the difficult tough teams setbacks, XXXX, we

culture the of For team members prouder built. that, I our we've and incredible couldn't be

quarter, and our fourth what XXXX. things the very With areas, reflect our of excellence Before I we in I would sound and could we our focused those the LKQ returning in a we sheet, with capital trailing to businesses, led on address $XXX repurchase $XXX performance. with million coming accomplished pleased cash operational in to portfolio X And with strategy goal little we which delivered were With million balance the to control, $XXX to from like commitment to of in shareholders, of no to primarily revenue represented $XXX and margin. million dividends. Europe, our ongoing million simplify divesting XX-month on share

stable and XXXX. Fitch and Moody's our reiterated in positive outlook

the and and Board oversight and to Directors mix Our experiences ensure guidance refreshment company's skills active we strategy. of continued to provide have right Board the their effective ongoing of of

strategy operations knowledge in shareholders. have Our experience new and and enhancing long-term Board depth, sets members the business necessary skill for to our drive extensive further value

the integration muscle locations. of North of expected, with American did higher level team again the a of faster Not of validated integration with XXX than into only the in than delivered The FinishMaster LKQ their originally closing was the consolidation network planned. by XXX America North team synergies but XXXX

We Florida we this finalized River, December, began yard Crystal expansion operating acreage. in in our and expanded mega on project

in began one and one We also and X Illinois purchased Washington. land the of mega yards, in construction

further These expect yard on mega us We will growth more productivity. to recycled parts new yards XXXX. our while to expansions these allow driving open in

Europe. our North change developed X culture the on and several nondiscretionary leadership America Our management. more intellectual to changes global consistent focus European capital more a across segments, segment our a combining agile We footprint made key support and of

electrification North America, and expertise overall a remanufacturing parts of come from procurement, will our product lower I vendor a financial the growth that us development, shift cost will as hard now of such financing capital. shared to give multitude quarter. benefits, in including This will benefits and many opportunities

with good use were for had the X our start in We trading a active $XX on the Let's million. dividend capital was dividend $X.XX totaling of about declared quarterly quarter, per billion end in Board of allocation. a per share On our Board roughly October remaining payable cash February November, shares repurchasing March At is $X.XX At quarter, in of repurchasing that capital. repurchase believe XX, quarterly $XX $X.X levels, in of the authorization. million a The recent we paid shares of the share approximately million. we declared XXXX. our cash

first almost strike XXXX in Moving decline collision when repairable the revenue to of nonrecurring compared But X% day what per quarter. reported in the decline X.X% American larger our UAW was segments. storm X we parts you the quarters X% in in the the XXXX. American North benefit and out impacts decreasing to of back The of the a was than across the in U.S. QX, roughly claims revenue North

insurance outperformance are trends revenue North it some relative our on we any enter auto in inclement as basis. more cost XXXX weather seeing a was XX% another over American period average combined positive business. That the American household operations market our of than expenses. The increased and for decline, the collision dynamics including of ongoing of North auto benefit category insurance favorable in that said, we XXXX, U.S. other in could The

parts favorable trend to one our moderate quickly looking insurance would be lead can offering in proposition a for flex, costs expect and And of they take carriers will XXXX. which to We historically, this to out area APU. of network costs is value their insurance alternative the

to Europe. on Moving

issues and day labor revenue from the and particularly basis in Germany, for XXXX, similar moved the growth. to showed range. declined a flat I others organic the sequential in bps per Certain XXXX while with on am declined which essentially has growth, year-over-year single-digit XX was quarter, organic Our pleased markets early and healthy QX. which a reported past growth

again push cover will conditions challenging wanted contributing segment quarter. achieved certain is the some margin-related EBITDA segment highlight smaller the in majority with at in margin of last Rick I to as QX consistent quarter highest the in performance price. This to markets, the details, players EBITDA is Europe. Europe but of the the Competition XX.X% aggressively

The third level straight quarter with a the segment on dollars highest and of record. double-digit margin, full was year EBITDA the

ability completion in our expectations to environment. the our EBITDA and progress XXXX, With team are XX% margin in by complete double-digit leadership SKU our we of annual and aligned Europe, Europe with additional initiative rationalization we sustainable deliver a by objectives, of of that tremendous Related plan year-end challenging end of by an our reviewing margins XX% product performance Europe, our operating the XXXX. brands report confident to pleased a despite XXXX to am I we to of year-end review hit by with the in

SKUs and roughly with goal ultimately over Europe decrease for started this by project. SKUs expect we another had of stocking of the XXX,XXX our end stocking We XXX,XXX XX,XXX across XX,XXX scope of the our XXXX. of hitting end By more we XXXX, to stocking SKUs, and decreased XXXX, in

our on operations This network. importantly, payables procurement more the project bring side, distribution benefits simplify pan-European a to more will allow for and

accelerated that continue for with of as park has being constraints the benefits private to parts will XX% the to been to that and and margin combination further anticipated. penetration We label. the come label keep supply gross given a this post European additional As pushing age, transition recognize of grow penetration, we we initiative of number pandemic currently label a than private slower will XX% chain the vehicle EV private long-term have with that from

basis. X.X% a With SKU a we our Specialty update our offering in opportunities already We number. organic down our do management sequential private with was from label on XXX,XXX but in are is these per stocking targeted included believe progress this a plan and to SKU category on the portfolio enhancement targets posted in basis, there growth in margin QX. mind, on and increase day revenue improvement our you quarterly

in that with believes is inventories interest RV expected The RV higher interest ease. market for are consumer ongoing dealer at levels, growth in XXXX and ownership RV Association rates strong to Industry poised the

pickups vehicle X.X%, category respectively. for X.X% and up with light the U.S. XX.X% SUVs, most sales us, increased important total in QX, Additionally, in

to XXXX. of So we positive some woods, segment entered out not starting signs are see in the we our as specialty

news tariff The the Mexico they implemented. tariffs. the after current by the less extremely were on fluid hours validated administration of shift is tariffs than XX Lastly, with and halting quick Canada

the announcements on monitoring impact a various and Our is potential actively our team business.

the the unfold, things situation tariff we community accordingly. investment stabilizes As will and keep apprised

the procured only know, Rick As for from with China, Specialty Taiwan. being China, with mentioned spend U.S. review wholesale to product to in here And is guidance. the exposure is turn inventory is approximately domestic. procures now America virtually past, the some most highly XX%, from coming with I'll all you North their over and our salvage in and the as financials diversified segment call products our the XXXX of a X

Rick Galloway

to and everyone today. us joining welcome you, Justin, Thank

$XX things Uni-Select on I also we XXXX the and end exercise within the that our to synergies us like dive I annualized in the Justin completing We the to Despite FinishMaster, fourth some by throughout our to mentioned, would to quarter of accelerated increase control. integration first as helping focus the of of million. challenges, those on Before macroeconomic into continue specifics quarter, cover accomplishments XXXX.

We operations and streamline in that and in our XXXX reduction our plan objectives In exiting increasing our restructuring businesses do exiting markets Europe, strategic a and and on the the not costs. opportunities initiated executing operations certain and of footprint, efficiency objectives align the of models. logistics with overhead facilities logistics in with resulting resulted that to

by our customer to we base. costs with serve cost our on rationalizing structure North focused In demand America, overhead most efficiently aligning

necessary operating simplification Investor the improving strategic portfolio, were at these and increasing shareholder discussed globally and order our to total Day, maximize in business align actions were including model returns. imperatives our lean with challenging, While margins to they we tackle the of

drive have We actions beyond. our are will in and we success XXXX confident the taken

guidance. legal a fourth a with XX quarter improvement to on was settlement, another and the onetime line Specialties Canada. expectations EBITDA due and of demand. fourth record a in despite QX macroeconomic percentage. quarter percentage segment results America expectations with by exceeded in pressure incident Europe's highlight, Now EBITDA challenging performed our despite year-over-year with losses Overall, its to remained performance improved delivered Self under quarter. in the a brief dollars Service revenue dollars as from points results conditions. EBITDA soft cyber margin basis North and

quarter due favorable fourth in European results strong quarter some fourth Specialty performance consolidated the items. to and and results. in Europe, expectations Despite stronger affecting the U.S. to challenges now dollar North Turning our America exceeded nonrecurring

per earnings latter diluted of reported For the we in range per share toward end was the higher October, of diluted but which $X.XX adjusted of the compared year, a $X.XX, of to back per XXXX. share the full share decrease discussed earnings and guidance $X.XX we of

The prices attributed to rates. per share foreign in per and primarily EPS $X.XX share $X.XX taxes by additional with decrease decline $X.XX a an interest impact from combined adjusted influenced was exchange commodity and

Despite goods inflationary and sold, the capital in in our overhead efforts contribution challenges positive allocation of significant cost on and $X.XX full strategic year. a macroeconomic for pressures the have and of resulted simplification

reported EPS prior For a figure. adjusted year and $X.XX the from the quarter, diluted $X.XX, we EPS of $X.XX fourth of decrease diluted

year-over-year year, recall, resulting tax items, XXXX not were results included from some in favorable onetime As this $X.XX in discrete our repeated which you taxes. a QX QX decrease may

In and movements price $X.XX addition, a metals further decline. FX to rates contributed lower unfavorable

performance the $X.XX share and remaining The share Europe net ongoing our lower North favorable by year-over-year items EPS improvement improved repurchase On to approximately by side, in reflected due adjusted strong count the $X.XX. America. positive nonrecurring program,

Now for segment results.

Slide a point margin X. increase XX North year. to segment last a to posted America of XX.X%, EBITDA relative Going basis

of This incident. a quarter. reduced revenue, mix collision aftermarket business adversely our revenue as the was organic due reported aftermarket margin XX.X%, a included discussed also other slightly The lines. to higher above wholesale partially margins we during year, expectations in impacted yields our offset we nonrecurring settlement claim to our due related counts, full the legal within Canadian decline compared effect last to For margins EBITDA on margins gross the quarter a cyber that repairable typically especially favorable by segment

down in reflecting quarter, commodity cost unfavorable XXXX. in vehicle trends and margins were in also prices revenue, movement Salvage the

favorability reflecting other legal XXX the overhead On from points America, primarily expenses personnel lower improved related lower basis hand, costs, to North incentive settlement onetime the compensation. in and

The decline. Uni-Select largely effect synergies organic and significant the pressures revenue the productivity initiatives of offset leverage inflationary and

to for that margins margins continue claims with While EBITDA on low XXXX expect and the in first estimate we of adjusting due in after items. particularly year, the factors nonrecurring will half we the the North repairable the be mentioned, the headwinds I've consistent America's salvage to XXXX XXs in

Looking point at XX.X%, EBITDA third a points while operations efforts the quarter points and in than ongoing segment improvement the margins. prior reported XXX well pressures. year related year, row simplify to last relates X. offset EBITDA year-over-year over basis charges margin the XX Europe to the a of inflationary The Slide of improvement a consists nonrecurring in double-digit that portfolio as with its productivity efforts and more basis to XXX as remaining basis

stand believe actions is which improvements, the we've we margins with we last year our expect expected double stated to I to gains full upon can the be be From call, on our landed. As recent to Europe in to where today the we margins Xs, we for in expected mid- we where EBITDA high productivity, digits build in XXXX. and deliver address and to taken EBITDA

to the on vehicle overhead pressures primarily and by driven margin a business. EBITDA XXX pricing decline Demand resulting for product softness light X.X%, X. effect Moving of basis revenue challenges points lines organic costs. prior Specialties and in the leverage competitive below remain year, in the and RV Slide

For full largely year, were EBITDA X.X%, related softness. the to revenue margins our expectations, the but segment below

markets signs our indicate stabilized. of Early some have

inconsistent to QX, In is X% expect year. EBITDA last year a basis in by unlikely terms, to rapid for to EBITDA recovery. around a segment improve an $X point X% rebound XXXX. However, generated EBITDA is dollar Service in full segment Self to margin we segment million. X.X% margins the increased improvement Thus, XXXX from due XXX which

quarterly free bringing controls drive North expectations, cash steel movements American balance We in produced our in million. Shifting procurement, $XXX anticipating to year-over-year sheet. in total in QX strikes the improvement year-to-date the and $XXX with to flows helped million port overhead and cost consecutive our scrap invested below tariffs. vehicle overcame combined quarter, flow Though Disciplined slightly inventory, during we possible the to unfavorable cash profitability. and prices third

allocating We in over dedicated through $XX remain delivering value to and million shareholders, million to million $XXX repurchases share dividends. our in $XX

free shareholders. allocating cash towards at presented least committed of As to we during returning our XX% Investor value Day, to flow our our

commitment announce to pleased are We this XXXX. that we exceeded in

full can As free for year, over see on cash flow. share $XXX Slide for dividends, we deployed repurchases million the you XX, representing and our XX% of

$X fourth million We X the tuck-in in approximately including in in also acquisitions one in one Canada and invested both in quarter, the America, U.S. North

quarter. $XX approximately accretive we $XX businesses. year, highly in on the million XX spent debt down tuck-in acquiring For approximately We in the paid outstanding million

our level total rating. prior investment-grade of manageable debt of maintaining with As the had we leverage XX, of ratio from December total in a remain improvement debt billion to committed EBITDA, quarter. $X.X a an We X.Xx

As $XX due QX term but were have in of we million December loan XX, XXXX, coming million, our a $XXX XXXX. current maturities

practice, we our we actively XXXX determine structure are manage evaluating As our to to the capital optimal options loan and term normal currently address pending maturity. solution our

effective at the of rate lowered slightly a of interest benchmark QX Our recently X.X% as rates. QX, down was end result from

of which swaps, of rate billion interest debt. rate debt, has our over fixed $X.X in been on with effectively have rate variable We fixed a which $XXX variable million provides XX%

close XXXX I XX. as on on our with will guidance, Slide shown thoughts

and our hold prices, precious from based impact XXXX is metal near the rate XX.X%, foreign dollar guidance Our The tariffs. the $X.XX. exchange, includes no Canadian market and rates, pound fourth On recent and and assume trends sterling is at current our including is $X.XX, to the conditions, scrap quarter guidance at on tax prices which at comparable global euro $X.XX at recent rate. material

We Services expect have between less Please and XXXX. note Parts revenue and X%. Organic selling in X% we day one growth

roughly revenue flat expect we basis. a America, day be per North In to on

year. Given favorable challenging Europe in until is believe continent. won't did to an across backdrop macroeconomic they We of the mentioned in full claims despite ongoing a a bit some rebound and from revenue trends the repairable perform the we realize better than benefit the in perspective don't Justin later the poised expect of immediate XXXX

we organic expect indicators seeing. Specialty, are we digits growth revenue given single low For macroeconomic for the

of result revenue adjusted a in we our As growth are expectations, estimating the $X.XX diluted be range to of EPS $X.XX. to

headwinds can as prices, interest as from depreciation lower exchange benefits rates, As Slide you amortization and guidance from and anticipates our see XX, offset EPS earlier, onetime the items taxes. well metals on partially discussed by foreign

and can efforts results, control of items the negative from the productivity on than on of from items focusing through be anticipate million. is the our to benefit measures offsetting those those continued our capital carryover and allocation. focus which $XXX net operating million disciplined benefits we Free the range to impact flow and We XXXX, we improved simplification took cash are more in $XXX reflect the expected in

to fund continue beyond. expenditure for our capital to and strategic and XXXX working trade balance objectives will needs We capital growth our

for will now Thanks time. the turn comments. call Justin his I back your closing to for

Justin Jude

Rick, Thanks, commentary. financial the for

we our enter want XXXX, we enterprise drive sustained, shareholder strategic as reaffirm my priorities total long-term returns. for I As to global

are market. above sure the growing make First, we

margins our we and by is lean owners. best Simplify the do to ensuring ensure thinking in we're our businesses to operations markets simplify across our simplify. enhance Next, everything portfolio our and

combination dividends. and moratorium and balance cash large invest of share allocation capital small sheet, profitably growth returning strategy acquisitions, and flow free synergistic any our via highly a by our around platform and capital growing with our continued shareholders tuck-ins on focus Improve in strengthening organically and through repurchases to the

well for deliver operating challenges all industry-leading with stakeholders. place, to positioned With ahead in of strong navigate these teams, results our our the priorities we are coupled and

want team the I Time advancing time thank of always, growth driving XX,XXX-plus and for and again, mission and no their the forward, matter LKQ commitment the each themselves both shown has these business for to As for are day obstacles. to opportunities members organization. challenges team our overall dedicated our our

we are ready to call operator, that, questions. the With for open

Operator

[Operator Instructions]

from Our Baird. first question Kennison today Craig with comes

Craig Kennison

It in rationalization to project SKU really the Europe. goes

concern think most on you quarter It by in you than some from had comp your benefit been better terms. peers. vendor better you brands, revenue looks like a but that miss reducing the had of opportunities, I the might

So maybe you're actually not losing revenue.

Just on decision? impact revenue curious any you if from that comment can

if beneficial on consolidating related you I note, remaining that on, your you could then a vendors? And comment earned the guess, by the business terms with

Justin Jude

number of although part SKU model goal warehouses, to actual couple On months. the year X we're track a biggest concern far, to that applications, concern, yes, point SKU by type, reasons we're in is very we taking rationalization, not fast we're because It's say, numbers X- do your specific a so the approach. to yes, we have When -- this meaning say, reducing cautious trying the customer making the making to not. brand. sure be rationalization, really a stock and We're a regardless have when A to increasing our we able ability don't a a have why? has of that project next isn't our X-year the the is the we've of a our and our actual -- just to in brand, goal revenue

allowing I price. adding compete conscious the is my as we're into little a customers a -- on market in mentioned bit little us that's Additionally, -- different are script. where And to price label, private more a bit more more in

chain that impact impact far, it concerns. any mean, people, the on The So make to that sure have revenue we don't group has operations, working we I haven't the so sales supply and revenue. business this, we seen

side, expect term that terms, cost gone On in a of do but haven't through the to everything we improvement see we quantified goods, slight haven't we better yet.

Operator

comes question next Patwa JPMorgan. with Jash from Our

Jash Patwa

vehicles. company's meaningful claims cohort to have share you We're to are expected I'm in is years. SAAR younger the couple of trends new could than cycle of around Any sweet market which distribution old that the the age if the pockets, impacts impact on population of of curious XX-year of the to bigger across and lower normalized XXXX likely the repairable picture the meaningful to color spot here. -- vehicle would vehicle of of Just this X- to one starting levels a question. impact XXXX age in reduce gauge now be over the next vehicles

Justin Jude

the Yes, market. good new We monitor question. obviously car sales into production

So LKQ, piece. on far, is the in we impact huge repairable good on That's model park our whether the it it's lines hasn't side, aging. on on always Obviously, the vehicle collision claims. or a the mechanical for car -- been sell product

transmissions Obviously, than items one. we a a engines a lot uses newer more, aging of and sell and obviously, fleet that lot those

your So impact going it we the SAAR really monitoring impact? a haven't see if depend there's next and meaningful a years currently, basis. on the to go-forward we're to seen It is point to of on over any couple on, sales longer-term

Rick Galloway

XX And our X to to bit years. is closer a spot sweet little Jash,

it's about. further going talked good is little that recently information to used started have last So prices XX than car been see we a news months. indicates Manheim some few you the up that have The bit

good that's thing a us. So for

Jash Patwa

super helpful. Understood. That's

the comparison and supply a some you to differentiated from potential European I in was if transitory provide are advantage. shocks be North precedence trajectory economic peers organic around American revenue Just super helpful? the that in tariffs growth LKQ's of meaningfully Any a could chain industry curious as share could historical amidst competitive would follow-up, local LKQ's company your

Justin Jude

The more Yes. headlines China, Mexico, come. Obviously, to tariffs. maybe your about all there's question Canada obviously, and on

countries, X not risk so into of less a as U.S. purchases, we from our you Just quantify guys from total real meaningful. if understand, import X% what than it's the we those standpoint,

a else that's consumers, Overall, it to are always to details. as is cost there If more on that the customers. a opportunity obviously, an much been lot in competitive on through doesn't that the details competition, and the there's a a or it of saving to whether as we've it's more lot OEM unknowns our devil standpoint. us advantage out something LKQ Historically, pass work not. tariffs figure impacts that that able our for But if impact to whether from impact necessarily or

Operator

Stember Capital. The next Scott ROTH with question from comes

Scott Stember

talk in to be some looking early Could the really future progressing for how KPIs you front? about the guys gauge things returns could and yards, mega we some on that that are

Justin Jude

Yes. of explanation From a and Obviously, level, just across definition we've XXX-plus North high America. mega yards yards. the got

move yard, consolidate can it Some mega of where yard, those landlocked or X gives mega to potentially are it more dismantle expand. into It's a gives a a but When produce over that we for cars. or several we new yards more also us years. to last into us the initiative ability capacity local X cars had to the couple us. We've

those the in reasons. car we X a more X returns opportunity our managers Scott, of for a We multiple vehicles One, baked-in we if you about buy can sell great if think to on is one. general parts necessarily have see big long-term no management. cost matter to couple what. vehicle. model more cars have giving goods we of consolidate for $X,XXX, hold $X,XXX don't those longer, we that with yards can our So of produce same a the We off

off for vehicle opportunities longer we that -- the to more off vehicle. of So creates that sell those sell hold can

several we've these, these So we see a the of But created last in few on in only great of returns years. most future. it the

So...

Scott Stember

how looking positive there one we going then following for the them. weather midpoint, Can were at North some recovery commentary some that, of the look cadence then And guidance, the just on America, year? about we things on, about if a I was up for And talk at -- just you was that? it. throughout Got should guess,

Justin Jude

first to Yes, Scott the I I'll take it Rick. part and over of that, turn

months the pricing we've the couple we've a had claims Rick starting to of the we've some car repairable inclement positives we're that just used Also, that of issues kind increase. kind some obviously, and of side, seen, had. flattening weather. of anniversarying of the mentioned of On off are

car So with choice with prices the from and vehicle increases premiums, consumers' repairable impacting insurance to was that used impacting large their an fix the claims. dropping,

see most states starting used we're But level there to the pricing that the premiums increases. the part, car larger that increased passed are are to those necessarily premiums still some Now haven't to for states increase. majority off, allowed of

anniversarying of into And to kind have Rick so baked about how talk can throughout XXXX. the And we're be that kind that guidance. of we going

Rick Galloway

Scott. Yes,

back So then X.X%. half round same consolidated be -- to roughly kind the positive we're XXXX, just where for then if around in will exact down, specifically We'll expecting talking works for America, around went flat of day year-over-year We're year. numbers. through to year it little in down, X.X%, year year. at side the North the about the the look about were of numbers that the year down bit corporate this to you per and you're first a opposite happen in if the numbers, be half of the last X% But X% then using

low year numbers. organic a at So throughout the growing think of then you the QX in that point starting and when look off in

Operator

next Our with Butler Stifel. comes from Brian question

Brian Butler

when portfolio a maybe I know some think just additional from this was on be kind September. here time be to one, going First started there of the review from line the we color Maybe perspective. that made? opportunities some back forward strategic are may and decision just on in you where

Justin Jude

a I not to kind I the line, done. with Obviously, XXXX, of occur. done. is tell no I there's going -- any -- it done. we're always not mentioned X Brian, doing, There's revenue And you review really to ongoing. time the market, just, guy profit. a it still is in businesses, of want you September, we little you we're in just that's before state But to guess, primarily not product that but our I'll $XXX It we're of again, exit clear, It divest I'm business, a started what portfolio. variables million once to did can be show that would Europe, totaling once

more. expect and ongoing is it So

Brian Butler

a should been Okay. When that term, Is I or continue in improvements? out And to margin do of great the margin it opportunity you eke follow-up road there guess, then which level that think you're success. somewhere XXXX? digit, in How is opportunity kind beyond here Europe. XX%? some longer you down double improve, where an Or on reach has you the a XX.X% really this

Rick Galloway

we basis numbers but number competitors, So several about at quoted you, that several continue the we XX I of think What can years. take Brian, put and exactly can about can we business. wouldn't I business about where many hundred for market very go a very, But XX%, European can above to XX.X%. that the we where basis we each are. years. I'll talked clearly on think our and bullish Justin The are next next that cap year go one. in that We're several tell I haven't grow for points we XX to points think the our is the

portfolio European X to well that's management the and I that to can think management that done on we least work the as at probably category start thinking overall grow X about being over doing business. as next in X our as years number continue we're the the

next solid for 'XX, several double continues is So I it grow and the for to pretty nicely digits years. think

Operator

Our comes Research. Gary from next question Barrington with Prestopino

Gary Prestopino

get to want North the and America here on margins in Europe. just I some clarification

what of gain adjusted How contributed point the quarter. a was that legal the in nonrecurring EBITDA XX You basis in margin? increase said to onetime there much

Rick Galloway

Yes.

cyber directionally, what legal we're specifically between have but talk Gary, outage. and did settlement, a the to I'll the give about going settlement, is we you legal combined not brief So

margins If you the for year, year. for basis look XX America's the about there's points North at

for the full consider to coming around bring that, basis year. us down a ended number full About points XX.X%. of So up XX.X% we nonrecurring, XX would we year around

Gary Prestopino

in you XXX in tax And of the impact Okay. outline Was a Europe then did was tax there Was year? -- last issue basis Italy? on point that that QX. the

Rick Galloway

had. some had nonrecurring a up, we and No. some VAT There that in other of items we severance the was XXXX and couple that items issue showed that costs

about talked points between and in Some points. much XX good of mix pretty the doing operations. prepared of XXX XXX the is portfolio of work then on there's points the nonrecurring. And remarks, actions those the team is about basis was I XX-XX about that basis the simplifying It basis

Gary Prestopino

is just you channel side. anything repair doing then on the early of EV in these parts areas parts? a But terms side, EV the it's take salvage recycled where can And I mean EVs and mostly the them into realize body it on off you're you I or for other are collision stages. put question very seeing

Justin Jude

Yes.

we side, that different On are couple underway. the EV a of initiatives are

batteries. the First, you got remanufacturing recycling if hybrid we of remember, or into

and of think to the technology obviously, nickel-metal then, lithium-ion. over migrated So hydride

now. battery We investing right remanufacturing electric we're in testing are the the process and couple in We've vehicles. full also have of had of that completed, been a

question road many as vehicles fed electric X shredded and there's we it getting back bring today addition are to those and on I your vehicle are not in, And can electric In collision around mean off typically we recycled Most obviously, addition, the salvage parts the that in there's a of battery years. that. a and that that's batteries X, sell percentage. obviously, batteries of getting new lasting into a production.

So a lot won't and there's of years. for not demand several be there

But that the to again, when we're sure a an there it bets make and that is once placing opportunity headwind not for opportunity are that, out, comes things us.

Gary Prestopino

more if lastly, just could then And in. Okay. I sneak one

Yes, takes being about just go couple in claims. collision were X% down claims a but QX, something you certain collision claims, that? the that. mentioned CCC's amount around a of puts was there Could repairable over You and

were there to business? mentioned some puts You it your takes regard as and

Justin Jude

they were about kind on X% Specific we takes. some puts of to claims, QX. roughly the talking of I guess down for were and yes,

positive. -- of were we're gone. slowdown have They in We January XXXX. and flatten were some headwinds pricing those we're that that the that facing of was slowing rolled down hasn't those go a to the things seeing in that car see out sudden, just are on -- the the decline those we of anticipate softening, and haven't that headwinds of used all XXXX, and Some around X continued starting a

increase of are in anniversarying large insurance were in done In XXXX that addition, out. the rates kind

So we'll in as that the of see start some mentioned. to half the should Rick back improvements year, moderate and hopefully,

Rick Galloway

about. we UAW don't he going if to strike, What about the year-over-year for you're the right talked exactly -- forget right positive not in Justin remarks volumes. yes, was if the got going that -- a prepared XXXX to Gary, the And talking benefit you're on volumes

the he we happened XXXX. the when saying then So that And hurricanes UAW to you're early was also a have some down and of takes about we would puts talking the in the year-over-year strike. related a -- had hit

items revenues of couple impacted there's as So well. year-over-year a that

Operator

[Operator Instructions]

We have Jefferies. Bret a Jordan from question with

Bret Jordan

CCC Is followup fourth a in questions. the moderating? total us give you loss quarter? change on the have the year-over-year Could that rate I

Justin Jude

used in driven don't me. front number used I have once while. going in long-term in the loss the by up moderate our slightly a loss the to of know did total car Bret, forward. opinion the growth go starting and again, the But that In rates alter should our loss moderate car for pricing have pricing. rates XXXX increase, as total exact primarily I a with model, we and total

factored of the thesis still term. kind is long our business good that's So long-term us for into that collision

Bret Jordan

Okay. And the Europe. on private label then program a question in

I the think margin revenues? about is could us What give product? to percent color some gross And maybe versus as as a is private difference national of talked what you in it you your label brand use. percentages

Justin Jude

the of percentage XX%. is The Yes. grow We circa that XX%. revenue to see opportunity to

we've than Bret. the if We bit mean in in more have I XX%, seen a XX% -- not are that that, little margin. a some we increase today historically, markets Historically, think at

it factor up a should it's to XX%, increase XX%, but a XX% use to it it's in apply typically XX%, XX% actual number, better I So gross -- if see the rate. goes percentage the goes meaning percentage, we actual margin if to

Bret Jordan

and with out X% a the I tariffs. Mexico, percentage collision. OE or of coming OE just sold your of happens of China. What said number. knows you then if what of And guess out the North you percentage What less in housekeeping is Mexico who tariffs at Canada, look than product America product in when Canada? coming But parts are

Justin Jude

have there, domestically, headlight, in definitely they know they China or hoods answer they mean vehicle, produced an produce engine, but fenders. or don't than percentage-wise, I to is we percentage the do -- what full necessarily Canada that's that. down when I never break parts or mark they There a what Mexico produce I whether is more I on would say.

those we So it's impacts countries, all if it actually from X benefit. a think imports

Operator

no have questions. further We

So I'll to you closing any for pass comments. back Justin

Justin Jude

look April Thank speaking to for you a we this report thank call the and and everyone, forward good in on quarter to we you when first Thanks, morning, operator, our results. joining you, have afternoon. and XXXX

Operator

call. today's Thank you concludes joining. This for

You disconnect now may your lines.

LKQ (LKQ) 20 Feb 252024 Q4 Earnings call transcript