What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-24 compared with 2024-10-24 · 119 added, 374 removed, 420 unchanged (54% of the section changed)

3 unchanged sentences

(In millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Revenue $ 3,463 $ 3,703

7 unchanged sentences

Interest expense 62 64

Gains on foreign exchange contracts - acquisition related (1)

— ( 3 ) — ( 49 )

Interest income and other income, net ( 11 ) ( 6 )

Total other expense, net 51 58

Income from continuing operations before provision for income taxes 252 263 749 1,013

Income before provision for income taxes 236 231

Provision for income taxes 66 71

Equity in earnings of unconsolidated subsidiaries 3 4 3 9

Income from continuing operations 192 207 536 759

Net income from discontinued operations — 1 — 1

Net income 192 208 536 760

net income attributable to continuing noncontrolling interest 1 — 2 1

Net income attributable to LKQ stockholders $ 191 $ 208 $ 534 $ 759

Basic earnings per share:

Income from continuing operations $ 0.73 $ 0.77 $ 2.02 $ 2.84

Net income from discontinued operations — 0.01 — —

Net income 0.73 0.78 2.02 2.84

net income attributable to continuing noncontrolling interest — — — —

Net income attributable to LKQ stockholders $ 0.73 $ 0.78 $ 2.02 $ 2.84

Diluted earnings per share:

Income from continuing operations $ 0.73 $ 0.77 $ 2.02 $ 2.83

Net income from discontinued operations — 0.01 — —

Equity in losses of unconsolidated subsidiaries 1 2

Net income $ 169 $ 158

net income attributable to continuing noncontrolling interest — — 0.01 —

Net income attributable to LKQ stockholders $ 0.73 $ 0.78 $ 2.01 $ 2.83

(1) Related to the Uni-Select Inc.

("Uni-Select") acquisition.

Refer to Note 2, "Business Combinations" and Note 14, "Derivative Instruments and Hedging Activities" for further information.

Earnings per share:

Basic $ 0.65 $ 0.59

Diluted $ 0.65 $ 0.59

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 169 $ 158

net income attributable to continuing noncontrolling interest 1 — 2 1

Net income attributable to LKQ stockholders 191 208 534 759

Other comprehensive income (loss):

1 unchanged sentence

Net change in unrealized gains/losses on cash flow hedges, net of tax — 4

Other comprehensive (loss) income from unconsolidated subsidiaries ( 2 ) 8 ( 2 ) 12

Net change in unrealized gains/losses on pension plans, net of tax 1 —

Other comprehensive income (loss) from unconsolidated subsidiaries 3 ( 5 )

Other comprehensive income (loss) 104 ( 58 )

Comprehensive income $ 273 $ 100

comprehensive income attributable to continuing noncontrolling interest 1 — 2 1

Comprehensive income attributable to LKQ stockholders $ 309 $ 71 $ 579 $ 710

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions, except per share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets:

28 unchanged sentences

Stockholders' equity:

Common stock, $ 0.01 par value, 1,000.0 shares authorized, 323.6 shares issued and 261.2 shares outstanding at September 30, 2024;

Common stock, $ 0.01 par value, 1,000.0 shares authorized, 323.8 shares issued and 258.3 shares outstanding at March 31, 2025;

323.6 shares issued and 259.1 shares outstanding at December 31, 2024

3 unchanged sentences

Treasury stock, at cost;

62.4 shares at September 30, 2024 and 55.9 shares at December 31, 2023

65.5 shares at March 31, 2025 and 64.5 shares at December 31, 2024

( 2,827 ) ( 2,787 )

7 unchanged sentences

(In millions)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 169 $ 158

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 100 100

Stock-based compensation expense 8 8

Gains on foreign exchange contracts - acquisition related — ( 49 )

Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:

1 unchanged sentence

Inventories ( 86 ) ( 52 )

Other assets ( 12 ) ( 55 )

Prepaid income taxes/income taxes payable 38 47

Accounts payable 8 220

Other operating assets and liabilities 6 42

Net cash provided by operating activities 886 1,144

Other liabilities 26 43

Net cash (used in) provided by operating activities ( 3 ) 253

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Acquisitions, net of cash acquired — ( 17 )

Proceeds from settlement of foreign exchange contracts - acquisition related — 49

Other investing activities, net 4 ( 5 )

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Debt issuance costs ( 7 ) ( 32 )

Proceeds from issuance of U.S.

Notes (2028/33), net of unamortized bond discount — 1,394

Proceeds from issuance of Euro Notes (2031), net of unamortized bond discount 816 —

Repayment of Euro Notes (2024) ( 547 ) —

Borrowings under revolving credit facilities 392 392

Repayments under revolving credit facilities ( 233 ) ( 659 )

Borrowings under term loans — 1,031

Repayments of other debt, net ( 30 ) ( 12 )

Settlement of derivative instruments 9 ( 13 )

Borrowings of other debt, net 11 33

Proceeds from issuance of Euro Notes (2031), net of unamortized bond discount — 816

Repayment of Euro Notes (2024) — ( 547 )

Dividends paid to LKQ stockholders ( 78 ) ( 81 )

1 unchanged sentence

Other financing activities, net ( 12 ) ( 37 )

Net cash (used in) provided by financing activities ( 516 ) 1,391

Net cash provided by (used in) financing activities 40 ( 113 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 5 ( 7 )

Net increase in cash, cash equivalents and restricted cash 71 146

Cash and cash equivalents of continuing operations, beginning of period 299 278

Cash and cash equivalents of discontinued operations, beginning of period — —

Cash and cash equivalents of continuing and discontinued operations, beginning of period 299 278

Cash, cash equivalents and restricted cash of continuing and discontinued operations, end of period 370 424

Cash, cash equivalents and restricted cash of discontinued operations, end of period — 23

Net (decrease) increase in cash, cash equivalents and restricted cash ( 8 ) 45

Cash, cash equivalents and restricted cash, beginning of period (1)

Cash, cash equivalents and restricted cash, end of period (1)

2 unchanged sentences

Interest 60 43

(1) Refer to Note 18, "Cash, Cash Equivalents and Restricted Cash" for further information on restricted cash.

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Equity

(In millions, except per share data)

Three Months Ended September 30, 2024

LKQ Stockholders

Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated

Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity

Shares Amount Shares Amount

Balance as of July 1, 2024 323.6 $ 3 ( 59.4 ) $ ( 2,580 ) $ 1,547 $ 7,472 $ ( 313 ) $ 15 $ 6,144

Net income — — — — — 191 — 1 192

Other comprehensive income — — — — — — 118 — 118

Purchase of treasury stock — — ( 3.0 ) ( 126 ) — — — — ( 126 )

Vesting of restricted stock units, net of shares withheld for employee tax — — — — ( 5 ) — — — ( 5 )

Stock-based compensation expense — — — — 6 — — — 6

Dividends declared to LKQ stockholders ($0.30 per share) — — — — — ( 79 ) — — ( 79 )

Balance as of September 30, 2024 323.6 $ 3 ( 62.4 ) $ ( 2,706 ) $ 1,548 $ 7,584 $ ( 195 ) $ 16 $ 6,250

Three Months Ended September 30, 2023

LKQ Stockholders

Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated

Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity

Shares Amount Shares Amount

Balance as of July 1, 2023 322.9 $ 3 ( 55.2 ) $ ( 2,394 ) $ 1,520 $ 7,059 $ ( 235 ) $ 15 $ 5,968

Net income — — — — — 208 — — 208

Other comprehensive loss — — — — — — ( 137 ) — ( 137 )

Vesting of restricted stock units, net of shares withheld for employee tax 0.2 — — — ( 2 ) — — — ( 2 )

Stock-based compensation expense — — — — 9 — — — 9

Dividends declared to LKQ stockholders ($0.275 per share) — — — — — ( 73 ) — — ( 73 )

Balance as of September 30, 2023 323.1 $ 3 ( 55.2 ) $ ( 2,394 ) $ 1,527 $ 7,194 $ ( 372 ) $ 15 $ 5,973

(1) See Note 12, "Cash, Cash Equivalents and Restricted Cash" for further information on restricted cash.

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In millions, except per share data)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

LKQ Stockholders

9 unchanged sentences

Dividends declared to LKQ stockholders ($0.30 per share) — — — — — ( 78 ) — — ( 78 )

Purchase of noncontrolling interest — — — — ( 1 ) — — — ( 1 )

Balance as of September 30, 2024 323.6 $ 3 ( 62.4 ) $ ( 2,706 ) $ 1,548 $ 7,584 $ ( 195 ) $ 16 $ 6,250

Nine Months Ended September 30, 2023

Balance as of March 31, 2025 323.8 $ 3 ( 65.5 ) $ ( 2,827 ) $ 1,558 $ 7,753 $ ( 313 ) $ 15 $ 6,189

Three Months Ended March 31, 2024

LKQ Stockholders

9 unchanged sentences

Dividends declared to LKQ stockholders ($0.30 per share) — — — — — ( 81 ) — — ( 81 )

Balance as of September 30, 2023 323.1 $ 3 ( 55.2 ) $ ( 2,394 ) $ 1,527 $ 7,194 $ ( 372 ) $ 15 $ 5,973

Balance as of March 31, 2024 323.5 $ 3 ( 56.5 ) $ ( 2,454 ) $ 1,541 $ 7,367 $ ( 298 ) $ 14 $ 6,173

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

8 unchanged sentences

These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

We have reclassified certain prior period amounts to conform to the current period presentation.

We have reclassified certain prior period amounts in the Unaudited Condensed Consolidated Statements of Cash Flows to conform to the current period presentation.

Results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year.

1 unchanged sentence

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

During the first quarter of 2023, we adopted Accounting Standards Update No.

2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations" ("ASU 2022-04"), which requires the buyer in a supplier finance program to disclose certain information about its program, including key terms, balance sheet presentation of amounts, outstanding amounts at the end of each period, and rollforwards of balances.

We adopted the provisions of ASU 2022-04 on a retrospective basis (see Note 12, "Supply Chain Financing"), except for the disclosure of rollforward information, which will be adopted prospectively in our Annual Report on Form 10-K for the year ending December 31, 2024 as required.

The adoption of ASU 2022-04 did not have a material impact on our unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We expect the adoption of this standard will not materially impact our results of operations, financial position or cash flows, but will result in additional disclosures.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." The ASU requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

The ASU will be effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

Early adoption is permitted.

The ASU is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

Business Combinations

During the nine months ended September 30, 2024, we completed acquisitions of six businesses within our Wholesale - North America segment and two businesses within our Europe segment.

These acquisitions were not material to our financial position or results of operations as of and for the three and nine months ended September 30, 2024.

Additionally, in January 2024, we paid $ 23 million (€ 21 million) to a minority shareholder to settle a put option exercised on redeemable shares issued in conjunction with a previous acquisition.

This payment was presented within Other financing activities, net in financing activities in our Unaudited Condensed Consolidated Statements of Cash Flows.

In February 2023, we entered into a plan of arrangement to acquire all of Uni-Select's issued and outstanding shares.

On August 1, 2023, we completed the acquisition of Uni-Select for an aggregate consideration paid of approximately Canadian dollar (“CAD”) 2.8 billion ($ 2.1 billion) (the "Uni-Select Acquisition").

In order to reduce the risk related to changes in CAD foreign exchange rates for the CAD purchase price, we entered into foreign exchange contracts.

These foreign exchange contracts did not qualify for hedge accounting, and therefore the changes in fair value were reported in Gains on foreign exchange contracts - acquisition related in the Unaudited Condensed Consolidated Statements of Income.

We reported Gains on foreign exchange contracts - acquisition related of $ 3 million and $ 49 million for the three and nine months ended September 30, 2023, respectively.

These foreign exchange contracts were settled in July 2023 ahead of closing of the Uni-Select Acquisition, resulting in total payments received of $ 49 million.

See Note 14, "Derivative Instruments and Hedging Activities" for information related to these foreign exchange contracts.

In addition to our acquisition of Uni-Select, we completed acquisitions of three businesses within our Wholesale - North America segment, four businesses within our Europe segment and one business in our Specialty segment, during the year ended December 31, 2023.

During the nine months ended September 30, 2024, there have been no significant adjustments to the preliminary purchase price allocations from those disclosed in our December 31, 2023 Consolidated Financial Statements.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the effect of the businesses acquired during the nine months ended September 30, 2024 as though the businesses had been acquired as of January 1, 2023, and the businesses acquired during the year ended December 31, 2023 as though they had been acquired as of January 1, 2022.

The unaudited pro forma financial information is based upon accounting estimates and judgments that we believe are reasonable.

The unaudited pro forma financial information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value, adjustments to depreciation on acquired property, plant and equipment, adjustments to rent expense for above or below market leases, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects.

These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results.

The unaudited pro forma financial information is as follows (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Revenue $ 3,585 $ 3,714 $ 11,022 $ 11,382

Income from continuing operations 192 201 537 685

The pro forma impact of our acquisitions also reflects the elimination of acquisition related expenses (net of tax) of $ 3 million and $ 17 million for the three and nine months ended September 30, 2023, respectively, and gains on foreign exchange contracts - acquisition related of $ 3 million and $ 49 million for the three and nine months ended September 30, 2023, respectively.

Refer to Note 9, "Restructuring and Transaction Related Expenses" for further information regarding our acquisition related expenses.

Discontinued Operations

As part of the Uni-Select transaction, we were required to divest its United Kingdom ("U.K.") subsidiary, GSF Car Parts, to comply with the U.K.'s Competition and Markets Authority regulatory ruling.

Since the GSF Car Parts business was held separate and never integrated into our business, we classified the business as discontinued operations upon acquisition.

In October 2023, we completed the divestment of GSF Car Parts resulting in an immaterial loss on sale.

In order to manage our exposure to variability in the cash flows related the sale of GSF Car Parts, we entered into a foreign exchange forward contract to fix the amount of USD we received upon completion of the sale.

This foreign exchange contract was settled in October 2023.

We classify our inventory into the following categories:

(i) aftermarket and refurbished products, (ii) salvage and remanufactured products, and (iii) manufactured products.

Inventories consist of the following (in millions):

September 30, 2024 December 31, 2023

Aftermarket and refurbished products $ 2,576 $ 2,556

Salvage and remanufactured products 503 510

Manufactured products 53 55

Total inventories $ 3,132 $ 3,121

Aftermarket and refurbished products and salvage and remanufactured products are primarily composed of finished goods.

As of September 30, 2024, manufactured products inventory was composed of $ 26 million of raw materials, $ 7 million of work in process, and $ 20 million of finished goods.

As of December 31, 2023, manufactured products inventory was composed of $ 26 million of raw materials, $ 7 million of work in process, and $ 22 million of finished goods.

In November 2024, the FASB issued Accounting Standards Update 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” The ASU requires disclosure of specific expense categories within relevant income statement captions.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The ASU can be adopted prospectively or retrospectively and early adoption is permitted.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

Allowance for Credit Losses

Our allowance for credit losses was $ 61 million as of both September 30, 2024 and December 31, 2023.

The provision for credit losses was $ 7 million and $ 1 million for the three months ended September 30, 2024 and 2023 and $ 11 million and $ 7 million for the nine months ended September 30, 2024 and 2023, respectively.

Our allowance for credit losses was $ 52 million and $ 56 million as of March 31, 2025 and December 31, 2024, respectively.

The provision for credit losses was $ 5 million and $ 3 million for the three months ended March 31, 2025 and 2024, respectively.

Intangible Assets

3 unchanged sentences

Goodwill and indefinite-lived intangible assets impairment testing may also be performed on an interim basis when events or circumstances arise that may lead to impairment.

We did not identify any indicators of impairment in the first nine months of 2024 that necessitated an interim test of goodwill impairment or indefinite-lived intangible assets impairment.

Equity Method Investments

The carrying value of our Equity method investments were as follows (in millions):

Segment Ownership as of September 30, 2024

September 30, 2024 December 31, 2023

Europe 26.6 % $ 147 $ 145

Total $ 159 $ 159

(1) As of September 30, 2024, the Level 1 fair value of our investment in MEKO AB ("Mekonomen") was $ 202 million based on the quoted market price for Mekonomen's common stock using the same foreign exchange rate as the carrying value.

Our share of the book value of Mekonomen's net assets exceeded the book value of our investment by $ 10 million;

this difference is primarily related to Mekonomen's Accumulated Other Comprehensive Income balance as of our acquisition date in 2016.

We record our equity in the net earnings of Mekonomen on a one quarter lag.

We did not identify any indicators of impairment in the first three months of 2025 that necessitated an interim test of goodwill impairment or indefinite-lived intangible assets impairment.

Revenue Recognition

16 unchanged sentences

speed and performance;

recreational vehicles;

recreational vehicles ("RV");

wheels, tires and performance handling;

4 unchanged sentences

The following table sets forth our revenue disaggregated by category and reportable segment (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Wholesale - North America $ 1,336 $ 1,422

4 unchanged sentences

Wholesale - North America 76 78

Europe 4 3 17 15

Self Service 85 83

3 unchanged sentences

Amounts related to variable consideration on our Unaudited Condensed Consolidated Balance Sheets are as follows (in millions):

Classification September 30, 2024 December 31, 2023

Classification March 31, 2025 December 31, 2024

Return asset Prepaid expenses and other current assets $ 68 $ 67

4 unchanged sentences

The following table sets forth our revenue by geographic area (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

United States $ 1,681 $ 1,795

9 unchanged sentences

This initiative includes exiting businesses and markets that do not align with our strategic objectives and executing on opportunities to reduce costs, streamline operations and consolidate facilities.

As we move forward with our plan, we will incur impairments and other charges related to the disposal of long-lived assets, inventory, and other assets;

As we continue to move forward with our plan, we have incurred and expect to incur impairments and other charges related to the disposal of long-lived assets, inventory, and other assets;

costs for employee severance;

2 unchanged sentences

We expect that the largest portion of the activity will come from the Europe segment.

In the second quarter of 2024, we divested our operations in Slovenia.

In the third quarter of 2024, we divested our operations in Poland to Mekonomen, an equity method investment of which we own 26.6 %, which closed in July 2024 and we divested our operations in Bosnia, which closed in September 2024.

Our decision to exit these markets constituted a triggering event to evaluate certain long-lived assets for impairment, and as a result, we incurred impairment charges with the divestiture of Slovenia, Poland, and Bosnia.

In 2024, we divested our operations in Slovenia and Bosnia to third parties and, certain operations in Poland to MEKO AB, an equity method investment of which we own 26.6 %, and received a combination of cash and notes receivable.

This plan is scheduled to be substantially complete by the end of 2025 with an estimated total incurred cost of between $ 130 million and $ 140 million.

In the future, we may identify additional initiatives under the plan that may result in additional expenditures, although we are currently unable to estimate the range of charges for such potential future initiatives.

2022 Global Restructuring Plan

In the fourth quarter of 2022, we began a restructuring initiative covering all of our reportable segments designed to reduce costs, streamline operations, consolidate facilities and implement other strategic changes to the overall organization.

We have incurred and expect to incur costs primarily for employee severance, inventory or other asset write-downs, and exiting facilities.

This plan is scheduled to be substantially complete by the end of 2024 with an estimated total incurred cost of approximately $ 30 million.

1 LKQ Europe Plan

1 unchanged sentence

Under the 1 LKQ Europe plan, we are reorganizing our non-customer-facing teams and support systems through various projects including the implementation of a common Enterprise Resource Planning platform, rationalization of our product portfolio, and creation of a Europe headquarters office and central back office.

We completed the organizational design and implementation projects in June 2021, with the remaining projects scheduled to be completed by the end of 2027 with a total incurred cost of between $ 30 million and $ 40 million.

This plan is scheduled to be substantially complete by the end of 2027 with an estimated total incurred cost of between $ 30 million and $ 40 million.

Acquisition Integration Plans

As we complete the acquisition of a business, we may incur costs related to integrating the acquired business into our current business structure and systems.

After completing the acquisition of a business, we may incur costs related to integrating the acquired business into our current business structure and systems.

These costs are typically incurred within a year from the acquisition date and vary in magnitude depending on the size and complexity of the related integration activities.

We expect to incur additional expenses of approximately $ 2 million by the end of 2024 to substantially complete the integration plan related to the Uni-Select Acquisition in our Wholesale - North America segment.

There are no material acquisition integrations plans as of March 31, 2025.

The following table sets forth the expenses incurred related to our restructuring plans (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Plan Expense Type 2025 2024

5 unchanged sentences

Total $ 10 $ 27

2022 Global Plan Employee related costs $ — $ 1 $ 1 $ 3

Facility exit costs 1 2 2 5

Inventory related costs (1)

Other costs — 1 — 3

2022 Global Plan Facility exit costs $ — $ 1

Total $ — $ 1

1 unchanged sentence

Facility exit costs — 1

Inventory related costs (1)

Total $ — $ 2

10 unchanged sentences

2024 Global Plan $ 17 $ 104 $ — $ — $ 121

2022 Global Plan 2 19 4 3 28

1 LKQ Europe Plan — 15 — — 15

Transaction Related Expenses

During the three months ended September 30, 2024 and 2023, we incurred expenses totaling $ 1 million and $ 3 million, respectively, and during the nine months ended September 30, 2024 and 2023, we incurred expenses totaling $ 3 million and $ 19 million, respectively, for legal, accounting and advisory services related to completed and potential transactions.

During the three months ended March 31, 2025 and 2024, we incurred expenses totaling an insignificant amount and $ 2 million, respectively, for legal, accounting and advisory services related to completed and potential transactions.

Earnings Per Share

The following chart sets forth the computation of earnings per share (in millions, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Income from continuing operations $ 192 $ 207 $ 536 $ 759

Three Months Ended March 31,

Net Income $ 169 $ 158

Denominator for basic earnings per share—Weighted-average shares outstanding 259.1 267.1

3 unchanged sentences

Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding 259.6 267.7

Basic earnings per share from continuing operations $ 0.73 $ 0.77 $ 2.02 $ 2.84

Diluted earnings per share from continuing operations (1)

Basic earnings per share $ 0.65 $ 0.59

Diluted earnings per share (1)

$ 0.65 $ 0.59

(1) Diluted earnings per share from continuing operations was computed using the treasury stock method for dilutive securities.

(1) Diluted earnings per share was computed using the treasury stock method for dilutive securities.

Accumulated Other Comprehensive Income (Loss)

The components of Accumulated Other Comprehensive Income (Loss) are as follows (in millions):

Three Months Ended September 30, 2024

Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Unrealized Gain on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss)

Balance as of July 1, 2024

$ ( 321 ) $ ( 6 ) $ 6 $ 8 $ ( 313 )

Pretax income (loss) 122 ( 4 ) — — 118

Income tax effect — 1 — — 1

Reclassification of unrealized gain — ( 1 ) — — ( 1 )

Disposal of business 2 — — — 2

Other comprehensive loss from unconsolidated subsidiaries — — — ( 2 ) ( 2 )

Balance as of September 30, 2024

$ ( 197 ) $ ( 10 ) $ 6 $ 6 $ ( 195 )

Three Months Ended September 30, 2023

Balance as of July 1, 2023 $ ( 242 ) $ ( 7 ) $ 11 $ 3 $ ( 235 )

Pretax (loss) income ( 147 ) 4 — — ( 143 )

Income tax effect — ( 1 ) — — ( 1 )

Reclassification of unrealized gain — ( 1 ) — — ( 1 )

Other comprehensive income from unconsolidated subsidiaries — — — 8 8

Balance as of September 30, 2023 $ ( 389 ) $ ( 5 ) $ 11 $ 11 $ ( 372 )

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Unrealized Gain (Loss) on Pension Plans Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss)

Balance as of January 1, 2025

$ ( 411 ) $ ( 9 ) $ ( 1 ) $ 4 $ ( 417 )

Pretax income 100 — — — 100

Income tax effect — ( 1 ) — — ( 1 )

Reclassification of unrealized gain — ( 4 ) — — ( 4 )

Reclassification of deferred income taxes — — 1 — 1

Disposal of business 2 — — — 2

Other comprehensive loss from unconsolidated subsidiaries — — — ( 2 ) ( 2 )

Balance as of September 30, 2024

Other comprehensive income from unconsolidated subsidiaries — — — 3 3

Balance as of March 31, 2025

$ ( 311 ) $ ( 9 ) $ — $ 7 $ ( 313 )

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance as of January 1, 2024 $ ( 243 ) $ ( 11 ) $ 6 $ 8 $ ( 240 )

Pretax loss ( 56 ) ( 4 ) — — ( 60 )

Pretax (loss) income ( 57 ) 6 — — ( 51 )

Income tax effect — ( 1 ) — — ( 1 )

Reclassification of unrealized gain — ( 1 ) — — ( 1 )

Other comprehensive income from unconsolidated subsidiaries — — — 12 12

Balance as of September 30, 2023

Other comprehensive loss from unconsolidated subsidiaries — — — ( 5 ) ( 5 )

Balance as of March 31, 2024

$ ( 300 ) $ ( 7 ) $ 6 $ 3 $ ( 298 )

2 unchanged sentences

We utilize voluntary supply chain finance programs to support our efforts in negotiating payment term extensions with suppliers as part of our effort to improve our operating cash flows.

These programs provide participating suppliers the opportunity to sell their LKQ receivables to financial institutions at the sole discretion of both the suppliers and the financial institutions.

We are not a party to the agreement between the suppliers and financial institutions.

The financial institutions participate in the supply chain financing initiative on an uncommitted basis and can cease purchasing receivables from our suppliers at any time.

Our obligation to our suppliers, including amount due and payment date, are not impacted by the supplier’s decision to sell amounts under these agreements.

Our payment terms to the financial institutions, including the timing and amount of payments, are unchanged from the original supplier invoice.

All outstanding payments owed under the supply chain finance programs with the participating financial institutions are recorded within Accounts payable on our Unaudited Condensed Consolidated Balance Sheets.

As of September 30, 2024 and December 31, 2023, we had $ 451 million and $ 411 million of Accounts payable outstanding under the arrangements, respectively.

As of March 31, 2025 and December 31, 2024, we had $ 418 million and $ 416 million of Accounts payable outstanding under the arrangements, respectively.

Long-Term Obligations

Long-term obligations consist of the following (in millions):

September 30, 2024

March 31, 2025

December 31, 2024

10 unchanged sentences

Euro Notes (2028) April 2028 4.13 % 270 4.13 % 259

Euro Notes (2028) April 2028 4.13 % 278 4.13 % 276

Euro Notes (2031) March 2031 4.13 % 811 4.13 % 777

Notes payable Various through October 2030 2.55 % (1)

19 3.85 % (1)

Finance lease obligations 4.91 % (1)

1 unchanged sentence

Other debt 3.66 % (1)

23 4.58 % (1)

Total debt 4,429 4,198

4 unchanged sentences

(1) Interest rate derived via a weighted average

Senior Unsecured Credit Agreement

Our Senior Unsecured Credit Agreement consists of (i) an unsecured revolving credit facility of up to a U.S.

Dollar equivalent of $ 2.0 billion, which includes a $ 150 million sublimit for the issuance of letters of credit and a $ 150 million sublimit for swing line loans and (ii) an unsecured term loan facility of up to $ 500 million.

Borrowings under the agreement bear interest at the Secured Overnight Financing Rate ("SOFR") plus the applicable spread or other risk-free interest rates that are applicable for the specified currency plus a spread based on the Company's debt rating and total leverage ratio.

On June 5, 2024, we entered into Amendment No.

1 to the Senior Unsecured Credit Agreement which replaced the Canadian Dollar Offer Rate ("CDOR") with the Canadian Overnight Repo Rate Average ("CORRA") for CAD denominated borrowings.

Senior Unsecured Term Loan Credit Agreement

The Senior Unsecured Term Loan Credit Agreement ("CAD Note") established an unsecured term loan facility of up to CAD 700 million maturing in July 2026.

On June 12, 2024, we entered into Amendment No.

1 to the CAD Note which replaced CDOR with CORRA.

The variable interest rate applicable to the CAD Note may be (i) a forward-looking term rate based on CORRA for an interest period chosen by the Company of one or three months or (ii) the Canadian Prime Rate (as defined in the CAD Note), plus in each case a spread based on the Company’s debt rating and total leverage ratio.

Unsecured Senior Notes

On March 13, 2024, LKQ, together with its indirect, wholly-owned subsidiary, LKQ Dutch Bond B.V., a private company with limited liability, completed an offering and sale of € 750 million aggregate principal amount of its 4.125 % Notes due March 13, 2031 (“Euro Notes (2031)”).

The Euro Notes (2031) bear interest at a rate of 4.125 % per year.

Interest on the Euro Notes (2031) is payable annually on each March 13, commencing on March 13, 2025.

The Euro Notes (2031) will be initially fully and unconditionally guaranteed on a senior unsecured basis (the “Guarantees”) by the Company and each of its wholly owned U.S.

subsidiaries that are guarantors under our Senior Unsecured Credit Agreement and our CAD Note.

The Euro Notes (2031) will also be guaranteed by each of the Company’s U.S.

subsidiaries that in the future agrees to guarantee the Company’s obligations under the Senior Unsecured Credit Agreement, the CAD Note, any other Credit Facility Debt or any Capital Markets Debt (both as defined in the Company’s preliminary prospectus supplement filed with the SEC on February 28, 2024).

Prior to December 13, 2030 (the "Par Call Date"), the Euro Notes (2031) are redeemable, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of:

(1)(a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming that the Euro Notes (2031) matured on the Par Call Date) on an annual (ACTUAL/ACTUAL (ICMA)) basis at a rate equal to the Comparable Government Bond Rate (as defined in the Indenture, dated March 13, 2024 (the "Euro Notes (2031) Indenture")) plus 30 basis points, less (b) interest accrued to the date of redemption;

and (2) 100 % of the principal amount of the Euro Notes (2031) to be redeemed;

plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date.

On or after the Par Call Date, we may redeem the Euro Notes (2031), in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the Euro Notes (2031) being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.

The Euro Notes (2031) and the Guarantees have been registered under the United States Securities Act of 1933 under the Registration Statement on Form S-3 (File No.

333-277267) filed by the Company with the SEC on February 22, 2024, as supplemented by the prospectus supplement filed by the Company with the SEC on March 1, 2024.

In April 2024, the Euro Notes (2031) were approved for listing and registration on the Nasdaq.

Related to the offering and sale of the Euro Notes (2031) in March 2024, we incurred $ 7 million of fees, which were capitalized as an offset to Long-Term Obligations and are amortized over the term of the Euro Notes (2031).

We used the net proceeds from this offering to (i) pay outstanding indebtedness, including all of the outstanding € 500 million aggregate principal amount of the 3.875 % senior notes due 2024 (the “Euro Notes (2024)”) issued by the Company’s indirect wholly-owned subsidiary, LKQ Italia Bondco di LKQ Italia Bondco GP S.r.l e C.S.A.P.A.

(f/k/a LKQ Italia Bondco S.p.A.), and (ii) pay accrued interest and related fees, premiums and expenses.

The Euro Notes (2031) are governed by the Euro Notes (2031) Indenture, dated as of March 13, 2024.

Interest on the U.S.

Notes (2028/33) is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023.

Interest on our 4.13 % senior notes due April 2028 (the "Euro Notes (2028)") is payable in arrears on April 1 and October 1 of each year.

Derivative Instruments and Hedging Activities

3 unchanged sentences

Derivative Instruments Designated as Cash Flow Hedges

In February 2023, we entered into interest rate swap agreements to mitigate the risk of changing interest rates on our variable interest rate payments related to borrowings under our Senior Unsecured Credit Agreement.

Under the terms of the interest rate swap agreements, we pay the fixed interest rate and receive a variable interest rate based on term SOFR that matches a contractually specified rate under the Senior Unsecured Credit Agreement.

The agreements include a total $ 400 million notional amount maturing in February 2025 with a weighted average fixed interest rate of 4.63 % and a total $ 300 million notional amount maturing in February 2026 with a weighted average fixed interest rate of 4.23 %.

Changes in the fair value of the interest rate swaps are recorded in Accumulated other comprehensive loss and reclassified to Interest expense when the hedged

interest payments affect earnings.

The activity related to the interest rate swaps is classified in operating activities in our Unaudited Condensed Consolidated Statements of Cash Flows as the activity relates to normal recurring settlements to match interest payments.

In March 2023, we entered into forward starting interest rate swaps to hedge the risk of changes in interest rates related to forecasted debt issuance to finance a portion of the Uni-Select Acquisition.

These swaps were settled in May 2023 upon issuance of the U.S.

Notes (2028/33), resulting in total payments of $ 13 million.

Changes in the fair value of the interest rate swaps were recorded in Accumulated other comprehensive loss and the fair value at the termination date is being reclassified to Interest expense over the term of the debt.

In March 2025, we entered into an interest rate swap agreement to mitigate the risk of changing interest rates on our variable interest rate payments related to borrowings under our Senior Unsecured Credit Agreement.

Under the terms of the interest rate swap agreement, we pay the fixed interest rate and receive a variable interest rate based on term Secured Overnight Financing Rate ("SOFR") that matches a contractually specified rate under the Senior Unsecured Credit Agreement.

The March 2025 agreement replaced the agreements that matured in February 2025 and include a total $ 400 million notional amount maturing in November 2025 with a fixed interest rate of 4.11 %.

Changes in the fair value of the interest rate swaps are recorded in Accumulated other comprehensive loss and reclassified to Interest expense when the hedged interest payments affect earnings.

The activity related to the interest rate swaps is classified in operating activities in our Unaudited Condensed Consolidated

Statements of Cash Flows as the activity relates to normal recurring settlements to match interest payments.

All of our interest rate swap contracts have been executed with counterparties that we believe are creditworthy, and we closely monitor the credit ratings of these counterparties.

As of September 30, 2024 and December 31, 2023, the notional amounts, balance sheet classification and fair values of our derivative instruments designated as cash flow hedges were as follows (in millions):

September 30, 2024

As of March 31, 2025 and December 31, 2024, the notional amounts, balance sheet classification and fair values of our derivative instruments designated as cash flow hedges were as follows (in millions):

March 31, 2025

Notional Amount Balance Sheet Caption Fair Value - Asset / (Liability)

Interest rate swap agreement $ 400 Other accrued expenses $ —

Interest rate swap agreements 300 Other accrued expenses ( 1 )

Interest rate swap agreements 300 Other noncurrent liabilities ( 3 )

December 31, 2024

Notional Amount Balance Sheet Caption Fair Value - Asset / (Liability)

Interest rate swap agreements $ 400 Other accrued expenses $ —

Interest rate swap agreements 300 Other noncurrent liabilities ( 1 )

The activity related to our cash flow hedges is included in Note 11, "Accumulated Other Comprehensive Income (Loss)." As of September 30, 2024, we estimate that $ 2 million of derivative losses (net of tax) included in Accumulated other comprehensive loss will be reclassified into our Unaudited Condensed Consolidated Statements of Income within the next 12 months.

Derivative Instruments Not Designated as Hedges

To manage the foreign currency exposure related to the Uni-Select Acquisition purchase price (denominated in CAD), we entered into foreign exchange contracts in March 2023 to purchase CAD 1.6 billion for approximately $ 1.2 billion.

These contracts did not qualify for hedge accounting, and therefore, the contracts were adjusted to fair value through the results of operations as of each balance sheet date.

We reported Gains on foreign exchange contracts - acquisition related of $ 3 million and $ 49 million for the three and nine months ended September 30, 2023, respectively.

These contracts were settled in July 2023 resulting in total payments received of $ 49 million.

To manage our foreign currency exposure on other non-functional currency denominated intercompany loans, we enter into short-term foreign currency forward contracts from time to time.

We have not elected to apply hedge accounting for these transactions, and therefore the contracts are adjusted to fair value through our results of operations as of each balance sheet date.

The effect on our results of operations for these contracts during the three and nine months ended September 30, 2024 and 2023, were not material.

The fair values of these short-term derivative instruments that remained outstanding as of September 30, 2024 were recorded in either Prepaid expenses and other current assets or Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets and were not material at September 30, 2024 and December 31, 2023.

Additionally, we hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability in the cash flows related to inventory purchases denominated in a non-functional currency.

We have not elected to apply hedge accounting for these transactions.

The notional amount and fair value of these contracts at September 30, 2024 and December 31, 2023, along with the effect on our results of operations during the three and nine months ended September 30, 2024 and 2023, were not material.

The fair values of these contracts were recorded in either Prepaid expenses and other current assets or Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets.

Net Presentation for Derivative Instruments

While certain derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge and other derivative instruments on a gross basis on our Unaudited Condensed Consolidated Balance Sheets.

The impact of netting the fair values of these contracts would result in an immaterial decrease to Prepaid expenses and other current assets and Other accrued expenses on our Unaudited Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023.

The activity related to our cash flow hedges is included in Note 7, "Accumulated Other Comprehensive Income (Loss)." As of March 31, 2025, we estimate that $ 2 million of derivative losses (net of tax) included in Accumulated other comprehensive loss will be reclassified into our Unaudited Condensed Consolidated Statements of Income within the next 12 months.

Fair Value Measurements

Financial Assets and Liabilities Measured at Fair Value

We use the market and income approaches to estimate the fair value of our financial assets and liabilities, and during the three and nine months ended September 30, 2024, there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value.

We use the market and income approaches to estimate the fair value of our financial assets and liabilities, and during the three months ended March 31, 2025, there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value.

The tiers in the fair value hierarchy include:

2 unchanged sentences

and Level 3, defined as significant unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table presents information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of September 30, 2024 and December 31, 2023 (in millions):

September 30, 2024 December 31, 2023

The following table presents information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of March 31, 2025 and December 31, 2024 (in millions):

March 31, 2025 December 31, 2024

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

14 unchanged sentences

The fair value measurements of the borrowings under the credit agreement are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions with similar terms and maturities.

We estimated the fair value by calculating the upfront cash payment a market participant would require at September 30, 2024 and December 31, 2023 to assume these obligations.

The fair values of the U.S.

Notes (2028), U.S.

(2033), Euro Notes (2024), Euro Notes (2028) and Euro Notes (2031) are determined based upon observable market inputs including quoted market prices in markets that are not active, and therefore are classified as Level 2 within the fair value hierarchy.

Based on market conditions as of September 30, 2024 and December 31, 2023, the fair value of the borrowings under the Senior Unsecured Credit Agreement reasonably approximated the carrying values of $ 1,213 million and $ 1,414 million, respectively.

As of September 30, 2024 and December 31, 2023, the fair value of the borrowings under the CAD Note reasonably approximated the carrying values of $ 518 million and $ 529 million, respectively.

The following table provides the carrying and fair value for our other financial instruments as of September 30, 2024 and December 31, 2023 (in millions):

As of September 30, 2024

We estimated the fair value by calculating the upfront cash payment a market participant would require at March 31, 2025 and December 31, 2024 to assume these obligations.

The fair values of the 5.75% senior notes due June 2028 (the "U.S.

Notes (2028)"), the 6.25% senior notes due June 2033 (the "U.S.

Notes (2033)" and together with the U.S.

Notes (2028), the "U.S.

Notes (2028/2033)"), the 4.13% senior notes due April 2028 (the "Euro Notes (2028)") and the 4.13% senior notes due March 2031 (the "Euro Notes (2031)") are determined based upon observable market inputs including quoted market prices in markets that are not active, and therefore are classified as Level 2 within the fair value hierarchy.

Based on market conditions as of March 31, 2025 and December 31, 2024, the fair value of the borrowings under the Senior Unsecured Credit Agreement reasonably approximated the carrying values of $ 1,324 million and $ 1,164 million, respectively.

As of both March 31, 2025 and December 31, 2024, the fair value of the borrowings under the Senior Unsecured Term Loan Credit Agreement ("CAD Note") reasonably approximated the carrying value of $ 487 million.

The following table provides the carrying and fair value for our other financial instruments as of March 31, 2025 and December 31, 2024 (in millions):

As of March 31, 2025

As of December 31, 2024

4 unchanged sentences

Euro Notes (2031) 811 820 777 796

Euro Notes (2031) 835 848 — —

Employee Benefit Plans

We have funded and unfunded defined benefit plans covering certain employee groups in various European countries and Canada.

Local statutory requirements govern many of our European and Canadian plans.

The defined benefit plans are mostly closed to new participants and, in some cases, existing participants no longer accrue benefits.

As of September 30, 2024 and December 31, 2023, the aggregate funded status of the defined benefit plans was a net liability of $ 84 million and $ 83 million, respectively, and is reported in Other noncurrent assets, Other noncurrent liabilities and Accrued payroll-related liabilities on our Unaudited Condensed Consolidated Balance Sheets.

Net periodic benefit cost for our defined benefit plans were not material for each of the three and nine months ended September 30, 2024 and 2023.

The service cost component is recorded in Selling, general and administrative ("SG&A") expenses, while the other components are recorded to Interest income and other income, net on the Unaudited Condensed Consolidated Statements of Income.

At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings.

We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year.

The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes.

Our effective income tax rate for the nine months ended September 30, 2024 was 28.8 %, compared to 25.9 % for the nine months ended September 30, 2023.

The increase in the effective tax rate for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 is primarily attributable to a 2.9 % year over year unfavorable impact of discrete items, mostly related to the unfavorable tax effects of the 2024 Global Restructuring Plan impairments in the current year and the favorable tax effects from the Uni-Select Acquisition foreign exchange forward contract gain in the prior year.

Refer to Note 9, "Restructuring and Transaction Related Expenses" for further information on the impairments and Note 14, "Derivative Instruments and Hedging Activities" for further information on the foreign exchange forward contracts.

The Organisation for Economic Co-operation and Development ("OECD") released a framework, referred to as Pillar Two, to implement a global minimum corporate tax rate of 15 % on certain multinational enterprises.

Certain countries have enacted legislation to adopt the Pillar Two framework while several countries are considering or still announcing changes to their tax laws to implement the minimum tax directive.

While we do not currently estimate Pillar Two to have a material impact on our effective tax rate, our analysis will continue as the OECD continues to release additional guidance and countries implement legislation.

Cash, Cash Equivalents and Restricted Cash

Our policy is to reclassify from Cash and cash equivalents any cash that is legally or contractually restricted as to withdrawal or usage.

The following table provides a reconciliation of Cash and cash equivalents as reported in the Unaudited Condensed Consolidated Balance Sheets to Cash, cash equivalents and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows (in millions):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and cash equivalents $ 227 $ 234

12 unchanged sentences

Wholesale - North America Europe Specialty Self Service Eliminations Consolidated

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

Third Party $ 1,412 $ 1,522 $ 393 $ 136 $ — $ 3,463

1 unchanged sentence

Total segment revenue $ 1,412 $ 1,522 $ 394 $ 136 $ ( 1 ) $ 3,463

Segment EBITDA $ 228 $ 165 $ 31 $ 10 $ — $ 434

Total depreciation and amortization (1)

Cost of goods sold 785 931 299 72

Selling, general and administrative expenses 410 459 76 44

Other segment items (2)

( 5 ) ( 9 ) ( 2 ) —

Three Months Ended September 30, 2023

Third Party $ 1,387 $ 1,584 $ 456 $ 141 $ — $ 3,568

Intersegment — — 1 — ( 1 ) —

Total segment revenue $ 1,387 $ 1,584 $ 457 $ 141 $ ( 1 ) $ 3,568

Segment EBITDA $ 222 $ 141 $ 21 $ 20 $ — $ 404

1 unchanged sentence

$ 49 $ 39 $ 8 $ 4 $ — $ 100

Wholesale - North America Europe Specialty Self Service Eliminations Consolidated

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

Third Party $ 1,500 $ 1,644 $ 422 $ 137 $ — $ 3,703

1 unchanged sentence

Total segment revenue $ 1,500 $ 1,644 $ 423 $ 137 $ ( 1 ) $ 3,703

Segment EBITDA $ 728 $ 482 $ 99 $ 39 $ — $ 1,348

Total depreciation and amortization (1)

Cost of goods sold 837 1,021 317 77

Selling, general and administrative expenses 426 493 81 44

Other segment items (2)

( 7 ) ( 13 ) ( 2 ) —

Nine Months Ended September 30, 2023

Third Party $ 3,815 $ 4,777 $ 1,294 $ 479 $ — $ 10,365

Intersegment — — 3 — ( 3 ) —

Total segment revenue $ 3,815 $ 4,777 $ 1,297 $ 479 $ ( 3 ) $ 10,365

Segment EBITDA $ 244 $ 143 $ 27 $ 16 $ — $ 430

1 unchanged sentence

$ 49 $ 39 $ 8 $ 4 $ — $ 100

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker ("CODM").

Intersegment expenses are included within the amounts shown.

(2) Amounts primarily represent other non operating income and expenses within each segment, as well as reconciling items to remove depreciation - cost of goods sold and restructuring - cost of goods sold, which are excluded from the calculation of Segment EBITDA.

See Note 5, "Restructuring and Transaction Related Expenses" for additional information on the restructuring charges.

(3) Amounts presented include depreciation and amortization expense recorded within Cost of goods sold, SG&A expenses and Restructuring and transaction related expenses.

The key measure of segment profit or loss reviewed by our CODM, our Chief Executive Officer, is Segment EBITDA.

We use Segment EBITDA to compare profitability among the segments and evaluate business strategies.

The CODM uses Segment EBITDA to compare profitability among the segments and evaluate business strategies.

Segment EBITDA includes revenue and expenses that are controllable by the segment.

14 unchanged sentences

The table below provides a reconciliation of Net Income to Segment EBITDA (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 169 $ 158

net income attributable to continuing noncontrolling interest 1 — 2 1

Net income attributable to LKQ stockholders 191 208 534 759

net income from discontinued operations — 1 — 1

Net income from continuing operations attributable to LKQ stockholders 191 207 534 758

Depreciation and amortization 100 100

Interest expense, net of interest income 57 61

Loss on debt extinguishment — — — 1

Provision for income taxes 66 71

Equity in earnings of unconsolidated subsidiaries (1)

( 3 ) ( 4 ) ( 3 ) ( 9 )

Gains on foreign exchange contracts - acquisition related (2)

— ( 3 ) — ( 49 )

Equity in losses of unconsolidated subsidiaries

Equity investment fair value adjustments ( 1 ) —

1 unchanged sentence

Restructuring expenses - cost of goods sold (1)

Gains on previously held equity interests — ( 4 ) — ( 4 )

Direct impacts of Ukraine/Russia conflict (2)

Segment EBITDA $ 404 $ 430

(1) Refer to Note 7, "Equity Method Investments" for further information.

(2) Refer to Note 2, "Business Combinations" and Note 14, "Derivative Instruments and Hedging Activities" for further information.

(3) Refer to Note 9, "Restructuring and Transaction Related Expenses" for further information.

(1) See Note 5, "Restructuring and Transaction Related Expenses" for further information.

(2) Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (primarily receivables and inventory).

The following table presents capital expenditures by reportable segment (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Capital Expenditures

Wholesale - North America

$ 47 $ 39 $ 120 $ 75

Europe 24 47 82 103

Specialty 3 4

2 unchanged sentences

The following table presents assets by reportable segment (in millions):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Receivables, net of allowance for credit losses

23 unchanged sentences

Total assets $ 15,469 $ 14,955

We report net receivables;

We re port net receivables;

net property, plant and equipment;

3 unchanged sentences

Our largest countries of operation are the U.S., followed by Germany and the U.K.

Additional European operations are located in the Netherlands, Italy, Czech Republic, Belgium, Austria, Slovakia, and other European countries.

As a result of the Uni-Select Acquisition, we further expanded our wholesale operations in Canada.

Our operations in other countries include remanufacturing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India.

Additional European operations are located in the Netherlands, Italy, Czech Republic, Belgium, Austria, Slovakia, France and other European countries.

Our operations in other countries include wholesale operations in Canada, remanufacturing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India.

The following table sets forth our tangible long-lived assets by geographic area (in millions):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Long-lived assets

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements