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- **Strategic Divestiture Success**: Sold Self Service segment for $410M, reducing debt and improving balance sheet flexibility.
- **Cost Savings Progress**: Achieved $35M in cost savings toward $75M 2025 target, with Europe leading transformation.
- **Specialty Segment Recovery**: 9.4% organic growth, first positive quarter in 14 quarters, driven by improved execution and market share gains.
- **Europe Margin Improvement**: EBITDA margin rose to 10.0% (60bp sequential increase), despite 4.0% organic revenue decline.
- **Financial Strength**: Free cash flow $387M in Q3, narrowing full-year EPS guidance to $3.00-$3.15 with midpoint $3.07 (+$0.07 vs. prior).
- **Tariff Mitigation**: Passed through $35M in tariffs, maintaining service levels to outperform market in North America.


**【CEO Summary Section】**
- **Revenue Growth and Strategic Initiatives**: Q3 revenue of $3.5 billion, up 1.3% YoY. Completed sale of Self Service segment for $410M, reducing debt and strengthening balance sheet. Achieved $35M in cost savings toward $75M 2025 target, driven by European transformation. North America outperformed market with 30bp/day revenue decline vs. 6% repairable claims decline. Specialty segment grew 9.4% organically, first positive growth in 14 quarters.
- **Europe Performance**: Organic revenue down 4.0% per day, but EBITDA margin improved to 10.0% (60bp sequential increase). Focused on profitable growth, avoiding low-margin business. Rolled out common operating platform in Europe, with 30% of revenue on new system by early 2026.
- **AI and Margin Focus**: Emphasized investment in AI for long-term growth. Maintained service levels and inventory fill rates despite market challenges, gaining share with MSOs.

**【CFO Financial Commentary】**
- **Financial Highlights**: GAAP EPS $0.69, Non-GAAP EPS $0.84 (vs. $0.86 prior year). Free cash flow $387M, year-to-date $573M. Returned $118M to shareholders (1.2M shares repurchased, $78M dividend). Total debt $4.2B, leverage ratio 2.5x EBITDA.
- **Segment Performance**: Wholesale North America EBITDA margin 14.0% (down 180bp YoY due to gross margin and overhead pressures). Europe EBITDA margin 10.0% (down 20bp YoY but +60bp sequentially). Specialty EBITDA margin 7.3% (stable YoY).
- **Guidance Update**: Narrowed full-year 2025 Non-GAAP EPS to $3.00-$3.15 (midpoint $3.07, +$0.07 vs. prior). Organic revenue decline guidance narrowed to -200bp to -300bp. Free cash flow $600M-$750M, despite $75M headwind from Self Service sale.

**【Q&A Key Highlights】**
- **Europe Strategy**: Focused on profitable growth, avoiding low-margin business. New leadership driving lean operating model, with EBITDA margin improvement to 10.0%. Cars aging in Europe (average age 11.5 years) supports long-term aftermarket demand.
- **Specialty Growth**: 9.4% organic revenue growth driven by improved pricing, channel relationships, and service level maintenance. Outperformed market despite industry softness.
- **Capital Allocation**: Target leverage ratio below 2.0x. Will balance debt repayment with share buybacks as leverage improves. October 2025 debt repayment reduced variable rate debt to $1.1B.
- **Tariffs and Pricing**: Passed through $35M in tariffs, maintaining service levels to gain share with MSOs. APU (alternative parts utilization) stable at 30%, with opportunities to grow with carriers.


LKQ Corporation (LKQ) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

LKQ

LKQ fundamentals

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