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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

LKQ Corporation Announces Results for Third Quarter 2019

October 31, 2019 GMT

-- Revenue growth of 1% to $3.15 billion -- Parts and services organic revenue increased 2.3%; 0.9% on a per day basis -- Net income from continuing operations attributable to LKQ stockholders of $152 million (up 13%); adjusted net income of $189 million (up 6%) -- Diluted EPS from continuing operations attributable to LKQ stockholders of $0.49 (up 17%); adjusted diluted EPS of $0.61 (up 9%) -- Operating cash flow of $965 million (up 85%) year-to-date September 30 and free cash flow of $800 million (up 129%) -- Repurchased 3.9 million shares for $101 million in the quarter and paid down $109 million of debt -- $500 million increase to stock repurchase program announced, raising the aggregate authorization to $1 billion -- 2019 annual guidance updated

CHICAGO, Oct. 31, 2019 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq:LKQ) today reported revenue for the third quarter of 2019 of $3.15 billion, an increase of 0.8% as compared to $3.12 billion in the third quarter of 2018. For the third quarter of 2019, parts and services organic revenue increased 2.3% (0.9% on a per day basis), and acquisition revenue growth was 0.8%, while the impact of exchange rates was (2.3%), for total parts and services revenue growth of 0.8%.

Net income1 for the third quarter of 2019 was $152 million, an increase of 13% year-over-year. On an adjusted basis, net income was $189 million, an increase of 6% as compared to the $177 million for the same period of 2018. Diluted earnings per share1 for the third quarter of 2019 was $0.49 as compared to $0.42 for the same period of 2018, an increase of 17%. On an adjusted basis, diluted earnings per share for the third quarter of 2019 was $0.61, an increase of 9% as compared to $0.56 for the same period of 2018.

Dominick Zarcone, President and Chief Executive Officer of LKQ Corporation, stated: “Our focus on profitable revenue, margin expansion and cash conversion continued to yield positive results this quarter. Despite soft macroeconomic conditions in Europe and declining scrap prices, the Company was able to generate Segment EBITDA expansion, driven by a 60-basis point improvement in our North American segment. I am particularly pleased with the ongoing growth in cash flows as the Company added $327 million in operating cash flows this quarter.”

On a nine-month year-to-date basis, revenue was $9.5 billion, an increase of 7.0% from $8.9 billion for the comparable period of 2018.

Net income for the first nine months of 2019 was $400 million, a decrease of 10% as compared to $444 million for the first nine months of 2018 owing to the non-cash impairment charges in the first and second quarters of 2019. On an adjusted basis, net income for the first nine months of 2019 was $569 million, an increase of 5% as compared to the $539 million for the same period of 2018. Diluted earnings per share for the first nine months of 2019 was $1.28, a decrease of 9% as compared to $1.41 for the same period of 2018. On an adjusted basis, diluted earnings per share for the first nine months of 2019 was $1.82, an increase of 6% as compared to $1.71 for the same period of 2018.

1 References to Net Income and Diluted earnings per share, and the corresponding adjusted figures, in this release reflect amounts from continuing operations attributable to LKQ stockholders.

Cash Flow and Balance Sheet

Cash flow from operations totaled $965 million on a nine-month year-to-date basis, up 85% from a year ago. Free cash flow totaled $800 million, up 129% year-over-year. The Company paid down $109 million of borrowings during the quarter, and as of September 30, 2019, the Company’s balance sheet reflected net debt of $3.5 billion. Net leverage as defined in the credit facility decreased to 2.6x EBITDA.

During the third quarter of 2019, the Company repurchased 3.9 million shares of common stock for a total consideration of $101 million. Since initiating the share repurchase program in October 2018, the Company has repurchased 13.2 million shares for a total of $352 million. On October 25, 2019, the Board of Directors authorized a $500 million increase to the repurchase program, raising the aggregate authorization to $1 billion and thus making available an aggregate balance of $648 million for potential additional repurchases anytime through October 2022.

Company Outlook

We updated our guidance for 2019 as set forth below.

2019 Updated Guidance 2019 Previous Guidance ---------------------------------------------------- ---------------------------- ---------------------------- Organic revenue growth for parts & services 0.25% to 1.0% 0.5% to 2.0% ---------------------------------------------------- ---------------------------- ---------------------------- Net income attributable to LKQ stockholders (1) $526 million to $546 million $540 million to $565 million ---------------------------------------------------- ---------------------------- ---------------------------- Adjusted net income attributable to LKQ stockholders $718 million to $738 million $718 million to $743 million (1)(2) ---------------------------------------------------- ---------------------------- ---------------------------- Diluted EPS attributable to LKQ stockholders (1) $1.69 to $1.76 $1.73 to $1.81 ---------------------------------------------------- ---------------------------- ---------------------------- Adjusted diluted EPS attributable to LKQ $2.31 to $2.37 $2.30 to $2.38 stockholders (1)(2) ---------------------------------------------------- ---------------------------- ---------------------------- Cash flows from operations $950 million to $1.0 billion $800 million to $875 million ---------------------------------------------------- ---------------------------- ---------------------------- Capital expenditures $240 million to $260 million $225 million to $275 million ---------------------------------------------------- ---------------------------- ----------------------------

(1) Amounts reflect continuing operations.

(2) Non-GAAP measures. See the table accompanying this release that reconciles the forecasted U.S. GAAP measures to the forecasted adjusted measures, which are non-GAAP, for further details.

Our guidance for the full year 2019 is based on current conditions (including acquisitions completed through October 31, 2019), and assumes no material disruptions associated with the United Kingdom’s potential exit from the European Union. The guidance for the full year 2019 is based on scrap prices remaining at current levels and exchange rates for our primary currencies holding near current levels. Changes in these conditions may impact our ability to achieve the guidance. Adjusted figures exclude (to the extent applicable) the impact of restructuring and acquisition related expenses; amortization expense related to acquired intangibles; excess tax benefits and deficiencies from stock-based payments; gains and losses on debt extinguishment; impairment charges; and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities).

Non-GAAP Financial Measures

This release contains, and management’s presentation on the conference call will refer to, non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included with this release and in the earnings slide presentation are reconciliations of each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP.

Conference Call Details

LKQ will host a conference call and webcast on October 31, 2019 at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) with members of senior management to discuss the Company’s results. To access the investor conference call, please dial (833) 236-5754. International access to the call may be obtained by dialing (647) 689-4182. The investor conference call will require you to enter conference ID: 4994316#.

Webcast and Presentation Details

The audio webcast and accompanying slide presentation can be accessed at (www.lkqcorp.com) in the Investor Relations section.

A replay of the conference call will be available by telephone at (800) 585-8367 or (416) 621-4642 for international calls. The telephone replay will require you to enter conference ID: 4994316#. An online replay of the audio webcast will be available on the Company’s website. Both formats of replay will be available through November 14, 2019. Please allow approximately two hours after the live presentation before attempting to access the replay.

About LKQ Corporation

LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Forward Looking Statements

Statements and information in this press release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act.

Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors including those identified below.

All forward-looking statements are based on information available to us at the time the statements are made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should not place undue reliance on our forward-looking statements. Actual events or results may differ materially from those expressed or implied in the forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual events or results to differ from the events or results predicted or implied by our forward-looking statements include the factors set forth below, and other factors discussed in our filings with the SEC, including those disclosed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2018 and in our subsequent Quarterly Reports on Form 10-Q. These reports are available on our investor relations website at lkqcorp.com and on the SEC website at sec.gov.

These factors include the following (not necessarily in order of importance):

-- changes in economic and political activity in the U.S. and other countries in which we are located or do business, including the U.K. withdrawal from the European Union (also known as Brexit), and the impact of these changes on our businesses, the demand for our products and our ability to obtain financing for operations; -- increasing competition in the automotive parts industry (including the potential competitive advantage to original equipment manufacturers (“OEMs”) with “connected car” technology); -- fluctuations in the pricing of new OEM replacement products; -- changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and vehicle repairers; -- changes to our business relationships with insurance companies or changes by insurance companies to their business practices relating to the use of our products; -- our ability to identify sufficient acquisition candidates at reasonable prices to maintain our growth objectives; -- our ability to integrate, realize expected synergies, and successfully operate acquired companies and any companies acquired in the future, and the risks associated with these companies; -- the implementation of a border tax or tariff on imports and the negative impact on our business due to the amount of inventory we import; -- restrictions or prohibitions on selling certain aftermarket products through enforcement by OEMs of intellectual property rights; -- restrictions or prohibitions on importing certain aftermarket products by border enforcement agencies based on, among other things, intellectual property infringement claims; -- variations in the number of vehicles manufactured and sold, vehicle accident rates, miles driven, and the age profile of vehicles in accidents; -- the increase of accident avoidance systems being installed in vehicles; -- the potential loss of sales of certain mechanical parts due to the rise of electric vehicle sales; -- fluctuations in the prices of fuel, scrap metal and other commodities; -- changes in laws or regulations affecting our business; -- higher costs and the resulting potential inability to service our customers to the extent that our suppliers decide to discontinue business relationships with us; -- price increases, interruptions or disruptions to the supply of vehicle parts from aftermarket suppliers and vehicles from salvage auctions; -- changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns; -- the risks associated with operating in foreign jurisdictions, including foreign laws and economic and political instabilities; -- declines in the values of our assets; -- additional unionization efforts, new collective bargaining agreements, and work stoppages; -- our ability to develop and implement the operational and financial systems needed to manage our operations; -- interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems; -- costs of complying with laws relating to the security of personal information; -- product liability claims by the end users of our products or claims by other parties who we have promised to indemnify for product liability matters; -- costs associated with recalls of the products we sell; -- potential losses of our right to operate at key locations if we are not able to negotiate lease renewals; -- inaccuracies in the data relating to our industry published by independent sources upon which we rely; -- currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies; -- our ability to obtain financing on acceptable terms to finance our growth; -- our ability to satisfy our debt obligations and to operate within the limitations imposed by financing arrangements; -- changes to applicable U.S. and foreign tax laws, changes to interpretations of tax laws, and changes in our mix of earnings among the jurisdictions in which we operate; and -- disruptions to the management and operations of our business and the uncertainties caused by activist investors.

Contact:Joseph P. BoutrossVice President, Investor RelationsLKQ Corporation(312) 621-2793jpboutross@lkqcorp.com

LKQ CORPORATION AND SUBSIDIARIESUnaudited Condensed ConsolidatedStatements of Income, with Supplementary Data(In thousands, except per share data)

Three Months Ended September 30, 2019 2018 % of % of Revenue Revenue $ Change % Change (1) (1) Revenue $ 3,147,773 100.0 % $ 3,122,378 100.0 % $ 25,395 0.8 % Cost of goods sold 1,930,146 61.3 % 1,925,180 61.7 % 4,966 0.3 % Restructuring expenses - cost of goods 17,298 0.5 % — 0.0 % 17,298 n/m sold Gross margin 1,200,329 38.1 % 1,197,198 38.3 % 3,131 0.3 % Selling, general and administrative 892,124 28.3 % 879,150 28.2 % 12,974 1.5 % expenses Restructuring and acquisition related 8,929 0.3 % 6,614 0.2 % 2,315 35.0 % expenses Impairment of net assets held for sale (3,601 ) (0.1 %) — 0.0 % (3,601 ) n/m Depreciation and amortization 71,513 2.3 % 76,701 2.5 % (5,188 ) (6.8 %) ----------- - ----- -- ----------- - ----- -- -------- - Operating income 231,364 7.4 % 234,733 7.5 % (3,369 ) (1.4 %) Other expense (income): Interest expense, net of interest 31,976 1.0 % 40,860 1.3 % (8,884 ) (21.7 %) income Other income, net (5,939 ) (0.2 %) (6,959 ) (0.2 %) 1,020 (14.7 %) ----------- - ----- -- ----------- - ----- -- -------- - Total other expense, net 26,037 0.8 % 33,901 1.1 % (7,864 ) (23.2 %) ----------- - ----- -- ----------- - ----- -- -------- - Income from continuing operations 205,327 6.5 % 200,832 6.4 % 4,495 2.2 % before provision for income taxes Provision for income taxes 57,747 1.8 % 46,068 1.5 % 11,679 25.4 % Equity in earnings (losses) of 4,232 0.1 % (20,284 ) (0.6 %) 24,516 n/m unconsolidated subsidiaries ----------- - ----- -- ----------- - ----- -- -------- - Income from continuing operations 151,812 4.8 % 134,480 4.3 % 17,332 12.9 % Net income from discontinued operations 781 0.0 % — 0.0 % 781 n/m ----------- - ----- -- ----------- - -------- - Net income 152,593 4.8 % 134,480 4.3 % 18,113 13.5 % Less: net (loss) income attributable to (46 ) (0.0 %) 378 0.0 % (424 ) n/m continuing noncontrolling interest Less: net income attributable to 376 0.0 % — 0.0 % 376 n/m discontinued noncontrolling interest ----------- - ----------- - -------- - Net income attributable to LKQ $ 152,263 4.8 % $ 134,102 4.3 % $ 18,161 13.5 % stockholders - --------- - ----- -- - --------- - ----- -- - ------ - Basic earnings per share: (2) Income from continuing operations $ 0.49 $ 0.42 $ 0.07 16.7 % Net income from discontinued operations 0.00 — 0.00 n/m ----------- - ----------- - -------- - Net income 0.50 0.42 0.08 19.0 % Less: net (loss) income attributable to (0.00 ) 0.00 (0.00 ) n/m continuing noncontrolling interest Less: net income attributable to 0.00 — 0.00 n/m discontinued noncontrolling interest ----------- - -------- - Net income attributable to LKQ $ 0.50 $ 0.42 $ 0.08 19.0 % stockholders - --------- - - --------- - - ------ - Diluted earnings per share: (2) Income from continuing operations $ 0.49 $ 0.42 $ 0.07 16.7 % Net income from discontinued operations 0.00 — 0.00 n/m ----------- - ----------- - -------- - Net income 0.50 0.42 0.08 19.0 % Less: net (loss) income attributable to (0.00 ) 0.00 (0.00 ) n/m continuing noncontrolling interest Less: net income attributable to 0.00 — 0.00 n/m discontinued noncontrolling interest ----------- - -------- - Net income attributable to LKQ $ 0.49 $ 0.42 $ 0.07 16.7 % stockholders - --------- - - --------- - - ------ - Weighted average common shares outstanding: Basic 307,230 318,082 (10,852 ) (3.4 %) ----------- - ----------- - -------- - Diluted 307,960 319,402 (11,442 ) (3.6 %) ----------- - ----------- - -------- - (1)The sum of the individual percentage of revenue components may not equal the total due to rounding. (2)The sum of the individual earnings per share amounts may not equal the total due to rounding.

LKQ CORPORATION AND SUBSIDIARIESUnaudited Condensed ConsolidatedStatements of Income, with Supplementary Data(In thousands, except per share data)

Nine Months Ended September 30, 2019 2018 % of % of Revenue Revenue $ Change % Change (1) (1) Revenue $ 9,496,249 100.0 % $ 8,873,893 100.0 % $ 622,356 7.0 % Cost of goods sold 5,823,171 61.3 % 5,460,845 61.5 % 362,326 6.6 % Restructuring expenses - cost of goods 17,298 0.2 % — 0.0 % 17,298 n/m sold ----------- - ----- -- ----------- - ----- -- --------- - Gross margin 3,655,780 38.5 % 3,413,048 38.5 % 242,732 7.1 % Selling, general and administrative 2,687,024 28.3 % 2,472,085 27.9 % 214,939 8.7 % expenses Restructuring and acquisition related 20,613 0.2 % 26,546 0.3 % (5,933 ) (22.3 %) expenses Impairment of net assets held for sale 44,919 0.5 % — 0.0 % 44,919 n/m Depreciation and amortization 213,349 2.2 % 196,322 2.2 % 17,027 8.7 % ----------- - ----- -- ----------- - ----- -- --------- - Operating income 689,875 7.3 % 718,095 8.1 % (28,220 ) (3.9 %) Other expense (income): Interest expense, net of interest 103,949 1.1 % 107,647 1.2 % (3,698 ) (3.4 %) income Other income, net (15,523 ) (0.2 %) (9,414 ) (0.1 %) (6,109 ) 64.9 % ----------- - ----- -- ----------- - ----- -- --------- - Total other expense, net 88,426 0.9 % 98,233 1.1 % (9,807 ) (10.0 %) ----------- - ----- -- ----------- - ----- -- --------- - Income from continuing operations 601,449 6.3 % 619,862 7.0 % (18,413 ) (3.0 %) before provision for income taxes Provision for income taxes 165,122 1.7 % 156,427 1.8 % 8,695 5.6 % Equity in losses of unconsolidated (33,745 ) (0.4 %) (18,326 ) (0.2 %) (15,419 ) 84.1 % subsidiaries ----------- - ----- -- ----------- - ----- -- --------- - Income from continuing operations 402,582 4.2 % 445,109 5.0 % (42,527 ) (9.6 %) Net income from discontinued 1,179 0.0 % — 0.0 % 1,179 n/m operations ----------- - ----- -- ----------- - ----- -- --------- - Net income 403,761 4.3 % 445,109 5.0 % (41,348 ) (9.3 %) Less: net income attributable to 2,321 0.0 % 1,040 0.0 % 1,281 n/m continuing noncontrolling interest Less: net income attributable to 568 0.0 % — 0.0 % 568 n/m discontinued noncontrolling interest ----------- - Net income attributable to LKQ $ 400,872 4.2 % $ 444,069 5.0 % $ (43,197 ) (9.7 %) stockholders - --------- - ----- -- - --------- - ----- -- - ------- - Basic earnings per share: (2) Income from continuing operations $ 1.29 $ 1.42 $ (0.13 ) (9.2 %) Net income from discontinued 0.00 — 0.00 n/m operations ----------- - ----------- - --------- - Net income 1.30 1.42 (0.12 ) (8.5 %) Less: net income attributable to 0.01 0.00 0.01 n/m continuing noncontrolling interest Less: net income attributable to 0.00 — 0.00 n/m discontinued noncontrolling interest ----------- - ----------- - --------- - Net income attributable to LKQ $ 1.29 $ 1.42 $ (0.13 ) (9.2 %) stockholders - --------- - - --------- - - ------- - Diluted earnings per share: (2) Income from continuing operations $ 1.29 $ 1.41 $ (0.12 ) (8.5 %) Net income from discontinued 0.00 — 0.00 n/m operations ----------- - ----------- - --------- - Net income 1.29 1.41 (0.12 ) (8.5 %) Less: net income attributable to 0.01 0.00 0.01 n/m continuing noncontrolling interest Less: net income attributable to 0.00 — 0.00 n/m discontinued noncontrolling interest Net income attributable to LKQ $ 1.28 $ 1.41 $ (0.13 ) (9.2 %) stockholders - --------- - - --------- - - ------- - Weighted average common shares outstanding: Basic 311,360 313,417 (2,057 ) (0.7 %) ----------- - ----------- - --------- - Diluted 312,204 314,951 (2,747 ) (0.9 %) ----------- - ----------- - --------- - (1)The sum of the individual percentage of revenue components may not equal the total due to rounding. (2)The sum of the individual earnings per share amounts may not equal the total due to rounding.

LKQ CORPORATION AND SUBSIDIARIESUnaudited Condensed Consolidated Balance Sheets(In thousands, except share and per share data)

September 30, December 31, 2019 2018 -------------- -------------- Assets Current assets: Cash and cash equivalents $ 433,391 $ 331,761 Receivables, net 1,223,197 1,154,083 Inventories 2,582,188 2,836,075 Prepaid expenses and other current assets 245,082 199,030 Total current assets 4,483,858 4,520,949 Property, plant and equipment, net 1,184,188 1,220,162 Operating lease assets, net 1,303,260 — Intangible assets: Goodwill 4,309,822 4,381,458 Other intangibles, net 837,272 928,752 Equity method investments 144,009 179,169 Other noncurrent assets 149,281 162,912 ------------ - ------------ - Total assets $ 12,411,690 $ 11,393,402 - ---------- - - ---------- - Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 997,874 $ 942,398 Accrued expenses: Accrued payroll-related liabilities 162,152 172,005 Refund liability 100,327 104,585 Other accrued expenses 326,634 288,425 Other current liabilities 113,349 61,109 Current portion of operating lease liabilities 225,572 — Current portion of long-term obligations 128,143 121,826 Total current liabilities 2,054,051 1,690,348 Long-term operating lease liabilities, excluding current portion 1,129,423 — Long-term obligations, excluding current portion 3,737,112 4,188,674 Deferred income taxes 296,199 311,434 Other noncurrent liabilities 322,205 364,194 Commitments and contingencies Stockholders’ equity: Common stock, $0.01 par value, 1,000,000,000 shares authorized, 319,598,334 shares issued and 306,402,419 shares outstanding at September 30, 2019; 3,196 3,184 318,417,821 shares issued and 316,146,114 shares outstanding at December 31, 2018 Additional paid-in capital 1,427,382 1,415,188 Retained earnings 3,999,748 3,598,876 Accumulated other comprehensive loss (260,746 ) (174,950 ) Treasury stock, at cost; 13,195,915 shares at September 30, 2019 and 2,271,707 (351,813 ) (60,000 ) shares at December 31, 2018 ------------ - Total Company stockholders’ equity 4,817,767 4,782,298 Noncontrolling interest 54,933 56,454 ------------ - Total stockholders’ equity 4,872,700 4,838,752 ------------ - Total liabilities and stockholders’ equity $ 12,411,690 $ 11,393,402 - ---------- - - ---------- -

LKQ CORPORATION AND SUBSIDIARIESUnaudited Condensed Consolidated Statements of Cash Flows(In thousands)

Nine Months Ended September 30, 2019 2018 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 403,761 $ 445,109 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 230,239 210,977 Impairment of Mekonomen equity method investment 39,551 22,715 Impairment of net assets held for sale 44,919 — Stock-based compensation expense 20,837 17,544 Other (13,320 ) (7,187 ) Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: Receivables, net (102,381 ) (70,797 ) Inventories 148,237 (71,058 ) Prepaid income taxes/income taxes payable 40,711 7,262 Accounts payable 90,879 (71,997 ) Other operating assets and liabilities 61,738 38,599 --------- - --------- - Net cash provided by operating activities 965,171 521,167 --------- - --------- - CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (165,551 ) (171,763 ) Acquisitions, net of cash acquired (14,517 ) (1,206,067) Proceeds from disposal of businesses 19,505 — Investments in unconsolidated subsidiaries (6,894 ) (11,066 ) Receipts of deferred purchase price on receivables under factoring arrangements — 9,410 Other investing activities, net 7,368 7,970 --------- - --------- - Net cash used in investing activities (160,089 ) (1,371,516) --------- - --------- - CASH FLOWS FROM FINANCING ACTIVITIES: Debt issuance costs — (16,938 ) Proceeds from issuance of Euro Notes (2026/28) — 1,232,100 Purchase of treasury stock (291,813 ) — Borrowings under revolving credit facilities 390,275 1,025,496 Repayments under revolving credit facilities (613,758 ) (1,110,035) Repayments under term loans (6,563 ) (114,800 ) Borrowings under receivables securitization facility 36,600 — Repayments under receivables securitization facility (146,600 ) — Payment of notes issued from acquisitions (19,123 ) — Repayments of other debt, net (31,587 ) (38,695 ) Other financing activities, net (7,125 ) 2,186 --------- - --------- - Net cash (used in) provided by financing activities (689,694 ) 979,314 --------- - --------- - Effect of exchange rate changes on cash, cash equivalents and restricted cash (9,702 ) (67,385 ) --------- - --------- - Net increase in cash, cash equivalents and restricted cash 105,686 61,580 Cash, cash equivalents and restricted cash of continuing operations, beginning of 337,250 279,766 period --------- - --------- - Cash, cash equivalents and restricted cash of continuing and discontinued operations, 442,936 341,346 end of period Less: Cash and cash equivalents of discontinued operations, end of period 4,328 — --------- - --------- - Cash, cash equivalents and restricted cash, end of period $ 438,608 $ 341,346 - ------- - - ------- -

The following unaudited tables compare certain third party revenue categories:

Three Months Ended September 30, -------------------------- 2019 2018 $ Change % Change ------------ ------------ ---------- ------- (In thousands) Included in Unaudited Condensed Consolidated Statements of Income of LKQ Corporation North America $ 1,145,402 $ 1,109,067 $ 36,335 3.3 % Europe 1,446,392 1,464,049 (17,657 ) (1.2 %) Specialty 394,204 388,865 5,339 1.4 % Parts and services 2,985,998 2,961,981 24,017 0.8 % Other 161,775 160,397 1,378 0.9 % Total $ 3,147,773 $ 3,122,378 $ 25,395 0.8 %

Revenue changes by category for the three months ended September 30, 2019 vs. 2018:

Revenue Change Attributable to: --------------------- Organi Acquis Foreign Total c ition Exchange Change (1) ----- ----- ------- ------- North America 2.9 % 0.4 % (0.1 %) 3.3 % Europe 2.1 % 1.3 % (4.6 %) (1.2 %) Specialty 1.5 % — % (0.1 %) 1.4 % Parts and services 2.3 % 0.8 % (2.3 %) 0.8 % Other 0.0 % 1.1 % (0.3 %) 0.9 % Total 2.2 % 0.8 % (2.2 %) 0.8 %

The following unaudited tables compare certain third party revenue categories:

Nine Months Ended September 30, 2019 2018 $ Change % Change ------------ ------------ ----------- ------- (In thousands) Included in Unaudited Condensed Consolidated Statements of Income of LKQ Corporation North America $ 3,466,582 $ 3,447,074 $ 19,508 0.6 % Europe 4,398,185 3,781,091 617,094 16.3 % Specialty 1,157,023 1,151,172 5,851 0.5 % ----------- ----------- --------- - Parts and services 9,021,790 8,379,337 642,453 7.7 % Other 474,459 494,556 (20,097 ) (4.1 %) ----------- ----------- --------- - Total $ 9,496,249 $ 8,873,893 $ 622,356 7.0 % - --------- - --------- - ------- -

Revenue changes by category for the nine months ended September 30, 2019 vs. 2018:

Revenue Change Attributable to: Acquisi Foreign Total Organic tion Exchange Change (1) ------- ------ ------- ------- North America 0.4 % 0.4 % (0.2 %) 0.6 % Europe (0.3 %) 22.2 % (5.6 %) 16.3 % Specialty 0.8 % — % (0.3 %) 0.5 % Parts and services 0.1 % 10.2 % (2.7 %) 7.7 % Other (5.0 %) 1.2 % (0.3 %) (4.1 %) Total (0.1 %) 9.7 % (2.5 %) 7.0 %

(1) The sum of the individual revenue change components may not equal the total percentage change due to rounding.

The following unaudited table reconciles consolidated revenue growth for parts & services to constant currency revenue growth for the same measure:

Three Months Nine Months Ended Ended September 30, September 30, 2019 2019 Consolid Europe Consolid Europe ated ated Parts & Services Revenue growth as reported 0.8 % (1.2 %) 7.7 % 16.3 % Less: Currency impact (2.3 %) (4.6 %) (2.7 %) (5.6 %) ---- -- ---- -- ---- -- ---- -- Revenue growth at constant currency 3.1 % 3.4 % 10.4 % 21.9 % ---- -- ---- -- ---- -- ---- --

We have presented the growth of our revenue on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP financial measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency revenue information provides valuable supplemental information regarding our growth, consistent with how we evaluate our performance, as this statistic removes the translation impact of exchange rate fluctuations, which are outside of our control and do not reflect our operational performance. Constant currency revenue results are calculated by translating prior year revenue in local currency using the current year’s currency conversion rate. This non-GAAP financial measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-named measures by other issuers due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. In addition, not all companies that report revenue growth on a constant currency basis calculate such measure in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

The following unaudited table compares revenue and Segment EBITDA by reportable segment:

Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (In thousands) % of % of % of % of Revenue Revenue Revenue Revenue Revenue North America $ 1,302,147 $ 1,262,799 $ 3,926,222 $ 3,927,808 Europe 1,451,483 1,470,856 4,413,264 3,795,439 Specialty 395,314 390,061 1,160,687 1,154,726 Eliminations (1,171 ) (1,338 ) (3,924 ) (4,080 ) ----------- - ----------- - ----------- - ----------- - Total revenue $ 3,147,773 $ 3,122,378 $ 9,496,249 $ 8,873,893 - --------- - - --------- - - --------- - - --------- - Segment EBITDA North America $ 166,310 12.8 % $ 154,049 12.2 % $ 532,994 13.6 % $ 506,772 12.9 % Europe 124,712 8.6 % 129,358 8.8 % 346,291 7.8 % 315,785 8.3 % Specialty 45,464 11.5 % 42,937 11.0 % 135,790 11.7 % 140,974 12.2 % ----------- - ----------- - ----------- - ----------- - Total Segment EBITDA $ 336,486 10.7 % $ 326,344 10.5 % $ 1,015,075 10.7 % $ 963,531 10.9 % - --------- - - --------- - - --------- - - --------- -

We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses, 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, and impairment charges. EBITDA, which is the basis for Segment EBITDA, is calculated as net income, less net income (loss) attributable to continuing and discontinued noncontrolling interest, excluding discontinued operations and discontinued noncontrolling interest, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense. Our chief operating decision maker, who is our Chief Executive Officer, uses Segment EBITDA as the key measure of our segment profit or loss. We use Segment EBITDA to compare profitability among our segments and evaluate business strategies. This financial measure is included in the metrics used to determine incentive compensation for our senior management. We also consider Segment EBITDA to be a useful financial measure in evaluating our operating performance, as it provides investors, securities analysts and other interested parties with supplemental information regarding the underlying trends in our ongoing operations. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment’s percentage of consolidated revenue. Refer to the table on the following page for a reconciliation of net income to EBITDA and Segment EBITDA.

The following unaudited table reconciles Net Income to EBITDA and Segment EBITDA:

Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ----------- ----------- ------------- ----------- (In thousands) Net income $ 152,593 $ 134,480 $ 403,761 $ 445,109 Less: net (loss) income attributable to continuing (46 ) 378 2,321 1,040 noncontrolling interest Less: net income attributable to discontinued 376 — 568 — noncontrolling interest --------- - --------- - ----------- - --------- - Net income attributable to LKQ stockholders 152,263 134,102 400,872 444,069 Subtract: Net income from discontinued operations 781 — 1,179 — Net income attributable to discontinued noncontrolling (376 ) — (568 ) — interest --------- - --------- - ----------- - --------- - Net income from continuing operations attributable to LKQ 151,858 134,102 400,261 444,069 stockholders Add: Depreciation and amortization 71,513 76,701 213,349 196,322 Depreciation and amortization - cost of goods sold 5,223 4,772 15,748 14,655 Depreciation and amortization - restructuring expenses - 168 — 168 — cost of goods sold Depreciation and amortization - restructuring expenses 974 — 974 — Interest expense, net of interest income 31,976 40,860 103,949 107,647 Provision for income taxes 57,747 46,068 165,122 156,427 --------- - --------- - ----------- - --------- - Earnings before interest, taxes, depreciation and 319,459 302,503 899,571 919,120 amortization (EBITDA) Subtract: Equity in earnings (losses) of unconsolidated 4,232 (20,284 ) (33,745 ) (18,326 ) subsidiaries Fair value gain on Mekonomen derivative instrument — 2,509 — 2,509 Gains on bargain purchase — — — 328 Add: Restructuring and acquisition related expenses (1) 7,955 6,614 19,639 26,546 Restructuring expenses - cost of goods sold 17,130 — 17,130 — Inventory step-up adjustment - acquisition related — — — 403 Impairment of net assets held for sale (3,601 ) — 44,919 2,438 Change in fair value of contingent consideration (225 ) (548 ) 71 (465 ) liabilities --------- - ----------- - Segment EBITDA $ 336,486 $ 326,344 $ 1,015,075 $ 963,531 - ------- - - ------- - - --------- - - ------- - Net income from continuing operations attributable to LKQ 4.8 % 4.3 % 4.2 % 5.0 % stockholders as a percentage of revenue EBITDA as a percentage of revenue 10.1 % 9.7 % 9.5 % 10.4 % Segment EBITDA as a percentage of revenue 10.7 % 10.5 % 10.7 % 10.9 % (1)Excludes $1 million of depreciation expense that is reported in Restructuring and acquisition related expenses in the Unaudited Condensed Consolidated Statements of Income.

We have presented EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our operating performance and the value of our business. We calculate EBITDA as net income, less net income (loss) attributable to continuing and discontinued noncontrolling interest, excluding discontinued operations and discontinued noncontrolling interest, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense. EBITDA provides insight into our profitability trends and allows management and investors to analyze our operating results with the impact of continuing noncontrolling interest and without the impact of discontinued noncontrolling interest, discontinued operations, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense. We believe EBITDA is used by investors, securities analysts and other interested parties in evaluating the operating performance and the value of other companies, many of which present EBITDA when reporting their results.

We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses, 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 and impairment charges. Our chief operating decision maker, who is our Chief Executive Officer, uses Segment EBITDA as the key measure of our segment profit or loss. We use Segment EBITDA to compare profitability among our segments and evaluate business strategies. This financial measure is included in the metrics used to determine incentive compensation for our senior management. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment’s percentage of consolidated revenue.

EBITDA and Segment EBITDA should not be construed as alternatives to operating income, net income or net cash provided by operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA or Segment EBITDA information calculate EBITDA or Segment EBITDA in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

The following unaudited table reconciles Net Income and Diluted Earnings per Share to Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders, respectively:

Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ----------- ----------- ----------- ----------- (In thousands, except per share data) Net income $ 152,593 $ 134,480 $ 403,761 $ 445,109 Less: net (loss) income attributable to continuing (46 ) 378 2,321 1,040 noncontrolling interest Less: net income attributable to discontinued 376 — 568 — noncontrolling interest --------- - --------- - --------- - --------- - Net income attributable to LKQ stockholders 152,263 134,102 400,872 444,069 Subtract: Net income from discontinued operations 781 — 1,179 — Net income attributable to discontinued noncontrolling (376 ) — (568 ) — interest --------- - --------- - --------- - --------- - Net income from continuing operations attributable to LKQ 151,858 134,102 400,261 444,069 stockholders Adjustments - continuing operations attributable to LKQ stockholders: Amortization of acquired intangibles 31,176 38,994 94,111 88,924 Restructuring and acquisition related expenses 8,929 6,614 20,613 26,546 Restructuring expenses - cost of goods sold 17,298 — 17,298 — Inventory step-up adjustment – acquisition related — — — 403 Change in fair value of contingent consideration (225 ) (548 ) 71 (465 ) liabilities Gains on bargain purchase — — — (328 ) Gain on debt extinguishment (128 ) — (128 ) — Impairment of net assets held for sale (3,601 ) — 44,919 2,438 Impairment of Mekonomen equity method investment — 22,715 39,551 22,715 Fair value gain on Mekonomen derivative instrument — (2,509 ) — (2,509 ) U.S. tax law change 2017 — (9,581 ) — (9,581 ) Excess tax benefit from stock-based payments (1,055 ) (793 ) (1,333 ) (3,985 ) Tax effect of adjustments (15,511 ) (11,701 ) (46,438 ) (28,805 ) --------- - --------- - --------- - --------- - Adjusted net income from continuing operations attributable $ 188,741 $ 177,293 $ 568,925 $ 539,422 to LKQ stockholders - ------- - - ------- - - ------- - - ------- - Weighted average diluted common shares outstanding 307,960 319,402 312,204 314,951 Diluted earnings per share from continuing operations attributable to LKQ stockholders Reported $ 0.49 $ 0.42 $ 1.28 $ 1.41 Adjusted $ 0.61 $ 0.56 $ 1.82 $ 1.71

We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders as we believe these measures are useful for evaluating the core operating performance of our continuing business across reporting periods and in analyzing our historical operating results. We define Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders as Net Income and Diluted Earnings per Share adjusted to eliminate the impact of continuing and discontinued noncontrolling interest, discontinued operations, restructuring and acquisition related expenses, amortization expense related to all acquired intangible assets, gains and losses on debt extinguishment, the change in fair value of contingent consideration liabilities, other gains and losses related to acquisitions, equity method investments, or divestitures, impairment charges, excess tax benefits and deficiencies from stock-based payments, adjustments to the estimated tax reform provisions recorded in 2017 and any tax effect of these adjustments. The tax effect of these adjustments is calculated using the effective tax rate for the applicable period or for certain discrete items the specific tax expense or benefit for the adjustment. Given the variability and volatility of the amount and frequency of costs related to acquisitions, management believes that these costs are not normal operating expenses and should be adjusted in our calculation of Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders. Our adjustment of the amortization of all acquisition-related intangible assets does not exclude the amortization of other assets, which represents expense that is directly attributable to ongoing operations. Management believes that the adjustment relating to amortization of acquisition-related intangible assets supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. The acquired intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. These financial measures are used by management in its decision making and overall evaluation of our operating performance and are included in the metrics used to determine incentive compensation for our senior management. Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders should not be construed as alternatives to Net Income or Diluted Earnings per Share as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report measures similar to Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders calculate such measures in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

The following unaudited table reconciles Forecasted Net Income and Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders to Forecasted Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders, respectively:

Forecasted Fiscal Year 2019 Minimum Maximum Guidance Guidance -------- -------- (In millions, except per share data) Net income from continuing operations attributable to LKQ stockholders $ 526 $ 546 Adjustments: Amortization of acquired intangibles 125 125 Restructuring expenses - cost of goods sold 17 17 Restructuring and acquisition related expenses 21 21 Impairment of net assets held for sale 45 45 Impairment of Mekonomen equity method investment 40 40 Other (1 ) (1 ) Tax effect of adjustments (55 ) (55 ) Adjusted net income from continuing operations attributable to LKQ stockholders $ 718 $ 738 - ---- - - ---- - Weighted average diluted common shares outstanding 311 311 Diluted earnings per share from continuing operations attributable to LKQ stockholders: U.S. GAAP $ 1.69 $ 1.76 Non-GAAP (Adjusted) $ 2.31 $ 2.37

We have presented forecasted Adjusted Net Income and forecasted Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders in our financial guidance. Refer to the discussion of Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders for details on the calculation of these non-GAAP financial measures. In the calculation of forecasted Adjusted Net Income and forecasted Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders, we included estimates of income from continuing operations attributable to LKQ stockholders, amortization of acquired intangibles for the full fiscal year 2019 and the related tax effect; we included for all other components the amounts incurred through September 30, 2019.

The following unaudited table reconciles Net Cash Provided by Operating Activities to Free Cash Flow:

Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ---------- ---------- ---------- ---------- (In thousands) Net cash provided by operating activities $ 326,767 $ 192,498 $ 965,171 $ 521,167 Less: purchases of property, plant and equipment 64,283 56,342 165,551 171,763 --------- Free cash flow $ 262,484 $ 136,156 $ 799,620 $ 349,404 - ------- - ------- - ------- - -------

We have presented free cash flow solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our liquidity. We calculate free cash flow as net cash provided by operating activities, less purchases of property, plant and equipment. Free cash flow provides insight into our liquidity and provides useful information to management and investors concerning our cash flow available to meet future debt service obligations and working capital requirements, make strategic acquisitions and repurchase stock. We believe free cash flow is used by investors, securities analysts and other interested parties in evaluating the liquidity of other companies, many of which present free cash flow when reporting their results. This financial measure is included in the metrics used to determine incentive compensation for our senior management. Free cash flow should not be construed as an alternative to net cash provided by operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report free cash flow information calculate free cash flow in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly-named measures of other companies and may not be an appropriate measure for liquidity relative to other companies.

The following unaudited tables reconcile Gross Margin to Adjusted Gross Margin:

Consolidated Adjusted Gross Margin Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ------------- ------------- ------------- ------------- (In thousands) Gross margin $ 1,200,329 $ 1,197,198 $ 3,655,780 $ 3,413,048 Add: Restructuring expenses - cost of goods sold 17,298 — 17,298 — Adjusted gross margin $ 1,217,627 $ 1,197,198 $ 3,673,078 $ 3,413,048 - --------- - - --------- - - --------- - - --------- - Gross margin % 38.1 % 38.3 % 38.5 % 38.5 % Adjusted gross margin % 38.7 % 38.3 % 38.7 % 38.5 %

Europe Adjusted Gross Margin Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ----------- ----------- ------------- ------------- (In thousands) Gross margin $ 512,756 $ 538,335 $ 1,590,292 $ 1,373,239 Add: Restructuring expenses - cost of goods sold 16,987 — 16,987 — Adjusted gross margin $ 529,743 $ 538,335 $ 1,607,279 $ 1,373,239 - ------- - - ------- - - --------- - - --------- - Gross margin % 35.3 % 36.6 % 36.0 % 36.2 % Adjusted gross margin % 36.5 % 36.6 % 36.4 % 36.2 %

We have presented adjusted gross margin solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our operating performance of our continuing business across reporting periods and in analyzing our historical operating results. We calculate adjusted gross margin as gross margin plus restructuring expenses recorded in cost of goods sold. Adjusted gross margin provides insight into our operating performance and provides useful information to management and investors concerning our gross margins. We believe adjusted gross margin is used by investors, securities analysts and other interested parties in evaluating the operating performance of other companies, many of which present adjusted gross margin when reporting their results. Adjusted gross margin should not be construed as an alternative to gross margin, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report adjusted gross margin information calculate adjusted gross margin in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly-named measures of other companies and may not be an appropriate measure for performance relative to other companies.