LKQ CORP 10-Q

Item 1. Financial Statements LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Income (In millions, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue $ 3,499 $ 3,453 $ 10,339 $ 10,597 Cost of goods sold 2,158 2,115 6,329 6,482 Gross margin 1,341 1,338 4,010 4,115 Selling, general and administrative expenses 958 931 2,865 2,873 Restructuring and transaction related expenses 14 20 33 99 Depreciation and amortization 95 88 272 257 Operating income 274 299 840 886 Other expense (income): Interest expense 55 60 170 178 Interest income and other income, net ( 4 ) ( 7 ) ( 25 ) ( 16 ) Total other expense, net 51 53 145 162 Income from continuing operations before provision for income taxes 223 246 695 724 Provision for income taxes 45 61 173 210 Equity in earnings of unconsolidated subsidiaries — ( 3 ) — ( 3 ) Income from continuing operations 178 188 522 517 Net income from discontinued operations 2 4 20 19 Net income 180 192 542 536 Less: net income attributable to continuing noncontrolling interest — 1 1 2 Net income attributable to LKQ stockholders $ 180 $ 191 $ 541 $ 534 Basic earnings per share: Income from continuing operations $ 0.69 $ 0.71 $ 2.02 $ 1.95 Net income from discontinued operations 0.01 0.02 0.08 0.07 Net income 0.70 0.73 2.10 2.02 Less: net income attributable to continuing noncontrolling interest — — — — Net income attributable to LKQ stockholders $ 0.70 $ 0.73 $ 2.10 $ 2.02 Diluted earnings per share: Income from continuing operations $ 0.69 $ 0.71 $ 2.02 $ 1.95 Net income from discontinued operations 0.01 0.02 0.08 0.07 Net income 0.70 0.73 2.10 2.02 Less: net income attributable to continuing noncontrolling interest — — — 0.01 Net income attributable to LKQ stockholders $ 0.70 $ 0.73 $ 2.10 $ 2.01 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 3 LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Comprehensive Income (In millions) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income $ 180 $ 192 $ 542 $ 536 Less: net income attributable to continuing noncontrolling interest — 1 1 2 Net income attributable to LKQ stockholders 180 191 541 534 Other comprehensive (loss) income: Foreign currency translation, net of tax ( 38 ) 124 330 46 Net change in unrealized gains/losses on cash flow hedges, net of tax — ( 4 ) 1 1 Net change in unrealized gains/losses on pension plans, net of tax — — 1 — Other comprehensive income (loss) from unconsolidated subsidiaries 5 ( 2 ) 1 ( 2 ) Other comprehensive (loss) income ( 33 ) 118 333 45 Comprehensive income 147 310 875 581 Less: comprehensive income attributable to continuing noncontrolling interest — 1 1 2 Comprehensive income attributable to LKQ stockholders $ 147 $ 309 $ 874 $ 579 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 4 LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (In millions, except per share data) September 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 289 $ 234 Receivables, net of allowance for credit losses 1,399 1,113 Inventories 3,316 3,183 Prepaid expenses and other current assets 711 328 Current assets of discontinued operations — 48 Total current assets 5,715 4,906 Property, plant and equipment, net 1,451 1,409 Operating lease assets, net 1,291 1,256 Goodwill 5,451 5,174 Other intangibles, net 1,096 1,150 Equity method investments 171 169 Other noncurrent assets 425 376 Noncurrent assets of discontinued operations — 515 Total assets $ 15,600 $ 14,955 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,905 $ 1,797 Accrued expenses: Accrued payroll-related liabilities 218 207 Refund liability 125 125 Other accrued expenses 381 346 Current portion of operating lease liabilities 238 222 Current portion of long-term obligations 537 38 Other current liabilities 177 92 Current liabilities of discontinued operations — 35 Total current liabilities 3,581 2,862 Long-term operating lease liabilities, excluding current portion 1,115 1,093 Long-term obligations, excluding current portion 3,615 4,124 Deferred income taxes 364 386 Other noncurrent liabilities 346 341 Noncurrent liabilities of discontinued operations — 117 Commitments and contingencies Stockholders' equity: Common stock, $ 0.01 par value, 1,000.0 shares authorized, 324.0 shares issued and 256.3 shares outstanding at September 30, 2025; 323.6 shares issued and 259.1 shares outstanding at December 31, 2024 3 3 Additional paid-in capital 1,574 1,556 Retained earnings 7,969 7,662 Accumulated other comprehensive loss ( 84 ) ( 417 ) Treasury stock, at cost; 67.7 shares at September 30, 2025 and 64.5 shares at December 31, 2024 ( 2,908 ) ( 2,787 ) Total Company stockholders' equity 6,554 6,017 Noncontrolling interest 25 15 Total stockholders' equity 6,579 6,032 Total liabilities and stockholders' equity $ 15,600 $ 14,955 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 5 LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (In millions) Nine Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES (1) : Net income $ 542 $ 536 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 312 300 Stock-based compensation expense 27 22 Other ( 25 ) 66 Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: Receivables ( 212 ) ( 173 ) Inventories 54 ( 48 ) Other assets ( 6 ) ( 40 ) Prepaid income taxes/income taxes payable 81 2 Accounts payable ( 44 ) 175 Other liabilities 3 41 Operating lease assets and liabilities 1 5 Net cash provided by operating activities 733 886 CASH FLOWS FROM INVESTING ACTIVITIES (1)(2) : Purchases of property, plant and equipment ( 160 ) ( 225 ) Acquisitions, net of cash acquired 2 ( 46 ) Other investing activities, net 14 ( 29 ) Net cash used in investing activities ( 144 ) ( 300 ) CASH FLOWS FROM FINANCING ACTIVITIES (1) : Borrowings under revolving credit facilities 1,214 1,122 Repayments under revolving credit facilities ( 1,384 ) ( 1,316 ) Repayments of other debt, net ( 33 ) ( 30 ) Proceeds from issuance of Euro Notes (2031), net of unamortized bond discount — 816 Repayment of Euro Notes (2024) — ( 547 ) Dividends paid to LKQ stockholders ( 234 ) ( 240 ) Purchase of treasury stock ( 119 ) ( 280 ) Other financing activities, net ( 6 ) ( 41 ) Net cash used in financing activities ( 562 ) ( 516 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 30 1 Net increase in cash, cash equivalents and restricted cash 57 71 Cash, cash equivalents and restricted cash of continuing operations, beginning of period (3) 239 299 Add: Cash and cash equivalents of discontinued operations, beginning of period — — Cash, cash equivalents and restricted cash of continuing and discontinued operations, beginning of period (3) 239 299 Cash, cash equivalents and restricted cash of continuing and discontinued operations, end of period (3) 296 370 Less: Cash and cash equivalents of discontinued operations, end of period — — Cash, cash equivalents and restricted cash, end of period (3) $ 296 $ 370 Supplemental disclosure of cash paid for: Income taxes, net of refunds $ 146 $ 219 Interest 163 153 (1) Amounts presented contain results from both continuing and discontinued operations. Refer to Note 2, "Discontinued Operations" for further information regarding cash flows associated with the results of discontinued operations. (2) Non cash investing activities for the nine months ended September 30, 2025 includes an approximately $ 390 million receivable related to the sale of Self Service . Refer to Note 2, "Discontinued Operations" for further information. (3) See Note 14, "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. 6 LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Stockholders' Equity (In millions, except per share data) Three Months Ended September 30, 2025 LKQ Stockholders Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity Shares Amount Shares Amount Balance as of July 1, 2025 323.8 $ 3 ( 66.5 ) $ ( 2,868 ) $ 1,567 $ 7,867 $ ( 51 ) $ 25 $ 6,543 Net income — — — — — 180 — — 180 Other comprehensive loss — — — — — — ( 33 ) — ( 33 ) Purchase of treasury stock — — ( 1.2 ) ( 40 ) — — — — ( 40 ) Vesting of restricted stock units, net of shares withheld for employee tax 0.2 — — — ( 3 ) — — — ( 3 ) Stock-based compensation expense — — — — 10 — — — 10 Dividends declared to LKQ stockholders ($0.30 per share) — — — — — ( 78 ) — — ( 78 ) Balance as of September 30, 2025 324.0 $ 3 ( 67.7 ) $ ( 2,908 ) $ 1,574 $ 7,969 $ ( 84 ) $ 25 $ 6,579 Three Months Ended September 30, 2024 LKQ Stockholders Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other 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 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 7 LKQ CORPORATION AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Stockholders' Equity (In millions, except per share data) Nine Months Ended September 30, 2025 LKQ Stockholders Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity Shares Amount Shares Amount Balance as of January 1, 2025 323.6 $ 3 ( 64.5 ) $ ( 2,787 ) $ 1,556 $ 7,662 $ ( 417 ) $ 15 $ 6,032 Net income — — — — — 541 — 1 542 Other comprehensive income — — — — — — 333 — 333 Purchase of treasury stock — — ( 3.2 ) ( 121 ) — — — — ( 121 ) Vesting of restricted stock units, net of shares withheld for employee tax 0.4 — — — ( 9 ) — — — ( 9 ) Stock-based compensation expense — — — — 27 — — — 27 Dividends declared to LKQ stockholders ($0.90 per share) — — — — — ( 234 ) — — ( 234 ) Acquisition of a subsidiary with noncontrolling interest — — — — — — — 9 9 Balance as of September 30, 2025 324.0 $ 3 ( 67.7 ) $ ( 2,908 ) $ 1,574 $ 7,969 $ ( 84 ) $ 25 $ 6,579 Nine Months Ended September 30, 2024 LKQ Stockholders Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Stockholders' Equity Shares Amount Shares Amount Balance as of January 1, 2024 323.1 $ 3 ( 55.9 ) $ ( 2,424 ) $ 1,538 $ 7,290 $ ( 240 ) $ 14 $ 6,181 Net income — — — — — 534 — 2 536 Other comprehensive income — — — — — — 45 — 45 Purchase of treasury stock — — ( 6.5 ) ( 282 ) — — — — ( 282 ) Vesting of restricted stock units, net of shares withheld for employee tax 0.5 — — — ( 11 ) — — — ( 11 ) Stock-based compensation expense — — — — 22 — — — 22 Dividends declared to LKQ stockholders ($0.90 per share) — — — — — ( 240 ) — — ( 240 ) 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 The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements. 8 LKQ CORPORATION AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Interim Financial Statements LKQ Corporation, a Delaware corporation, is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," the "Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries. We have prepared the accompanying Unaudited Condensed Consolidated Financial Statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented. We have reclassified certain prior period amounts in the Unaudited Condensed Consolidated Statements of Cash Flows to conform to the current period presentation and in the Unaudited Condensed Consolidated Statements of Income and on the Unaudited Condensed Consolidated Balance Sheets for the presentation of discontinued operations as a result of the sale of our Self Service segment as discussed in Note 2, "Discontinued Operations." Results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 20, 2025 ("2024 Form 10-K"). Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 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 is effective for fiscal years beginning after December 15, 2024, and can be adopted prospectively or retrospectively. The adoption of this ASU is expected to impact the tax disclosure with no impact to the consolidated balance sheets, statements of income, statements of cash flows, and statements of comprehensive income and will be adopted prospectively. In November 2024, the FASB issued ASU 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. In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." This ASU removes references to software development project stages to better align with current software development methods. Under the ASU, an entity will begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. This update is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, though early adoption is permitted. The ASU can be adopted either prospectively, retrospectively, or utilizing a modified transition approach. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements. 9 Note 2. Discontinued Operations In accordance with FASB Accounting Standards Codification 205-20, "Presentation of Financial Statements - Discontinued Operations" ("ASC 205-20"), we classify operations as discontinued when they meet all the criteria to be classified as held for sale and when the sale represents a strategic shift that will have a major impact on our financial condition and results of operations. In determining if a disposal constitutes a strategic shift, we evaluate various qualitative and quantitative factors, an example of which is the impact to segment reporting. We generally consider the disposal of an entire reportable segment to constitute a strategic shift. When operations are identified for discontinued operations reporting, results of operations for all periods presented are reclassified as discontinued operations in the c onsolidated statements of income , assets and liabilities of the operations are reported as discontinued operations on the consolidated balance sheets, and information is recast throughout the notes to the consolidated financial statements to exclude the results of the discontinued operations. Furthermore, ASC 205-20 defines what activities may be classified as discontinued operations with general corporate overhead generally not being allocable to discontinued operations . On August 25, 2025, we entered into a definitive agreement to sell our Self Service segment to an affiliate of Pacific Avenue Capital Partners, LLC for an enterprise value of $ 410 million, subject to customary purchase price adjustments. The sale of the Self Service segment reflects our continued efforts to simplify our portfolio of businesses by exiting an asset-intensive business heavily affected by changes in commodity prices. The sale was completed on September 30, 2025. On October 1, 2025, we received the pretax net pro ceeds from the sale and used these proceeds to repay approximately $ 390 million of revolving credit facility borrowings. Accordingly, interest expense attributable to the repaid borrowings has been included in discontinued operations for all periods presented . Additionally, general corporate overhead costs that were historically allocated to the Self Service segment remain within continuing operations for all periods presented. The pretax net proceeds receivable are recorded within Prepaid expenses and other current assets on the Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025. In connection with the transaction, we also entered into a transition services agreement to provide certain post-close support services. These support services, most of which last for up to nine months from the closing date of the sale, are in the areas of human resources, tax, finance, information technology, and operations, among others. The following table summarizes the comparative financial results of discontinued operations which are presented in Net income from discontinued operations in the Unaudited Condensed Consolidated Statements of Income (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue $ 130 $ 131 $ 395 $ 401 Cost of goods sold 68 76 213 230 Gross margin 62 55 182 171 Impairment on assets held for sale (1) 12 — 12 — Selling, general and administrative expenses 43 40 123 118 Depreciation and amortization 2 4 9 11 Operating income 5 11 38 42 Other expense (income): Interest expense 5 6 15 18 Interest income and other income, net — ( 1 ) ( 1 ) ( 1 ) Total other expense, net 5 5 14 17 Income from discontinued operations before provision for income taxes — 6 24 25 (Benefit) provision for income taxes ( 2 ) 2 4 6 Net income from discontinued operations $ 2 $ 4 $ 20 $ 19 (1) During the three and nine months ended September 30, 2025, we recorded an impairment to write down the carrying value of Self Service to its fair value less costs to sell. 10 The major classes of Assets of discontinued operations and Liabilities of discontinued operations for Self Service as of December 31, 2024 stated on the Unaudited Condensed Consolidated Balance Sheets are as follows (in millions): December 31, 2024 Assets Current assets: Receivables, net of allowance for credit losses $ 9 Inventories 37 Prepaid expenses and other current assets 2 Total current assets of discontinued operations 48 Property, plant and equipment, net 108 Operating lease assets, net 132 Goodwill 274 Other noncurrent assets 1 Total noncurrent assets of discontinued operations 515 Total assets of discontinued operations $ 563 Liabilities Current liabilities: Accounts payable $ 4 Accrued expenses: Accrued payroll-related liabilities 7 Refund liability 1 Other accrued expenses 6 Current portion of operating lease liabilities 15 Other current liabilities 2 Total current liabilities of discontinued operations 35 Long-term operating lease liabilities, excluding current portion 114 Long-term obligations, excluding current portion 3 Total noncurrent liabilities of discontinued operations 117 Total liabilities of discontinued operations $ 152 The following table summarizes the significant non-cash operating activities and capital expenditures of the Company’s discontinued operations related to the Self Service segment (in millions): Nine Months Ended September 30, 2025 2024 Depreciation and amortization $ 9 $ 11 Impairment on assets held for sale 12 — Purchases of property, plant and equipment 5 7 Note 3. Allowance for Credit Losses Our allowance for credit losses was $ 54 million and $ 56 million as of September 30, 2025 and December 31, 2024, respectively. The provision for credit losses was $ 7 million for both the three months ended September 30, 2025 and 2024 and $ 14 million and $ 11 million for the nine months ended September 30, 2025 and 2024, respectively. Note 4. Intangible Assets Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. We performed our annual impairment test during the fourth quarter of 2024, and determined no impairment existed as each of our reporting units had a fair value estimate which exceeded the carrying value by at least 10 %. The fair value estimates of our reporting units were established using weightings of the results of a discounted cash flow methodology and a comparative market multiples approach. Goodwill and indefinite-lived intangible assets impairment testing may also be performed on an interim basis when 11 events or circumstances arise that may lead to impairment. We did not identify any indicators of impairment in the first nine months of 2025 that necessitated an interim test of goodwill impairment or indefinite-lived intangible assets impairment for our continuing operations. Note 5. Revenue Recognition Disaggregated Revenue We report revenue in two categories: (i) parts and services and (ii) other. Parts revenue is generated from the sale of vehicle products including replacement parts, components and systems used in the repair and maintenance of vehicles and specialty products and accessories to improve the performance, functionality and appearance of vehicles. Services revenue includes additional services that are generally billed concurrently with the related product sales, such as the sale of service-type warranties, and diagnostic and repair services. For Wholesale - North America, vehicle replacement products include sheet metal collision parts such as doors, hoods, and fenders; bumper covers; head and tail lamps; mirrors; grilles; wheels; and large mechanical items such as engines and transmissions. For Europe, and to a lesser extent for Wholesale - North America, vehicle replacement products include a wide variety of small mechanical products such as brake pads, discs and sensors; clutches; electrical products such as spark plugs and batteries; steering and suspension products; filters; and oil and automotive fluids. Additionally, in both our Wholesale - North America and Europe segments, we sell paint and paint related consumables for refinishing vehicles. For our Specialty operations, we serve seven product segments: truck and off-road; speed and performance; recreational vehicles ("RV"); towing; wheels, tires and performance handling; marine; and miscellaneous accessories. Other revenue includes sales of scrap and precious metals (platinum, palladium, and rhodium), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from furnace operations. We derive scrap metal and other precious metals from several sources in our Wholesale - North America segment, including vehicles that have been used in our recycling operations and vehicles from original equipment manufacturers ("OEMs") and other entities that contract with us for secure disposal of "crush only" vehicles. Revenue from the sale of hulks in our Wholesale - North America segment is recognized based on a price per ton of delivered material when the customer (processor) collects the scrap. The following table sets forth our revenue disaggregated by category and reportable segment (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Wholesale - North America $ 1,343 $ 1,349 $ 4,041 $ 4,169 Europe 1,615 1,609 4,731 4,879 Specialty 456 417 1,313 1,305 Parts and services 3,414 3,375 10,085 10,353 Wholesale - North America 80 74 236 227 Europe 5 4 18 17 Other 85 78 254 244 Total revenue $ 3,499 $ 3,453 $ 10,339 $ 10,597 Variable Consideration Amounts related to variable consideration on our Unaudited Condensed Consolidated Balance Sheets are as follows (in millions): Classification September 30, 2025 December 31, 2024 Return asset Prepaid expenses and other current assets $ 67 $ 66 Refund liability Refund liability 125 125 Variable consideration reserve Receivables, net of allowance for credit losses 165 136 12 Revenue by Geographic Area Our net sales are attributed to geographic area based on the location of the selling operation. The following table sets forth our revenue by geographic area (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue United States $ 1,583 $ 1,548 $ 4,728 $ 4,842 Germany 474 444 1,367 1,314 United Kingdom 432 430 1,267 1,298 Other countries 1,010 1,031 2,977 3,143 Total revenue $ 3,499 $ 3,453 $ 10,339 $ 10,597 Note 6. Restructuring and Transaction Related Expenses From time to time, we initiate restructuring plans to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations. Below is a summary of our current restructuring plans: 2024 Global Restructuring Plan In the first quarter of 2024, we began a global restructuring initiative focused on enhancing profitability. 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 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; lease termination charges and facility closure costs; and other contract termination charges. We expect that the largest portion of the activity will come from the Europe segment. 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. 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 divestitures of Slovenia, Poland, and Bosnia. This plan is scheduled to be substantially complete by the end of 2025 with an estimated total incurred cost of approximately $ 140 million. 1 LKQ Europe Plan In 2019, we announced a multi-year plan called "1 LKQ Europe" which is intended to create structural centralization and standardization of key functions to facilitate the operation of the Europe segment as a single business. Under the 1 LKQ Europe plan, we are reorganizing our non-customer-facing teams and support systems through various projects including the implementation of a common Enterprise Resource Planning platform, rationalization of our product portfolio, and creation of a Europe headquarters office and central back office. 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. 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. Acquisition Integration Plans 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. There are no material acquisition integration plans as of September 30, 2025. 13 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, Plan Expense Type 2025 2024 2025 2024 2024 Global Plan Employee related costs $ 2 $ 10 $ 13 $ 13 Facility exit costs 3 4 8 4 Inventory related costs (1) — — — 14 Asset impairments (2) — — — 46 Other (benefits) costs 1 — 1 7 Total $ 6 $ 14 $ 22 $ 84 2022 Global Plan Employee related costs $ — $ — $ — $ 1 Facility exit costs — 1 — 2 Total $ — $ 1 $ — $ 3 1 LKQ Europe Plan Employee related costs $ — $ — $ 1 $ 2 Facility exit costs — — — 1 Inventory related costs (1) — 1 — 1 Total $ — $ 1 $ 1 $ 4 Acquisition Integration Plans Employee related costs $ — $ — $ — $ 4 Facility exit costs 2 4 3 13 Other (benefits) costs 1 — 1 3 Total $ 3 $ 4 $ 4 $ 20 Total restructuring expenses $ 9 $ 20 $ 27 $ 111 (1) Recorded to Cost of goods sold in the Unaudited Condensed Consolidated Statements of Income. (2) Related to impairment of assets in Property, plant and equipment, net and Prepaid expenses and other current assets on the Unaudited Condensed Consolidated Balance Sheets. The following table sets forth the cumulative plan costs by segment related to our restructuring plans (in millions): Cumulative Program Costs Wholesale - North America Europe Specialty Total 2024 Global Plan $ 25 $ 108 $ — $ 133 1 LKQ Europe Plan — 16 — 16 Transaction Related Expenses During the three months ended September 30, 2025 and 2024, we incurred expenses totaling $ 5 million and $ 1 million, respectively, and during the nine months ended September 30, 2025 and 2024, we incurred expenses totaling $ 6 million and $ 3 million, respectively, for legal, accounting and advisory services related to completed and potential transactions. 14 Note 7. 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, 2025 2024 2025 2024 Income from continuing operations $ 178 $ 188 $ 522 $ 517 Denominator for basic earnings per share—Weighted-average shares outstanding 257.1 262.3 258.1 264.9 Effect of dilutive securities: Restricted stock units ("RSUs") 0.2 0.2 0.3 0.3 Performance-based RSUs ("PSUs") — 0.1 — 0.1 Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding 257.3 262.6 258.4 265.3 Basic earnings per share from continuing operations $ 0.69 $ 0.71 $ 2.02 $ 1.95 Diluted earnings per share from continuing operations (1) $ 0.69 $ 0.71 $ 2.02 $ 1.95 (1) Diluted earnings per share from continuing operations was computed using the treasury stock method for dilutive securities. Note 8. Accumulated Other Comprehensive Income (Loss) The components of Accumulated Other Comprehensive Income (Loss) are as follows (in millions): Three Months Ended September 30, 2025 Foreign Currency Translation Unrealized Gain (Loss) on Cash Flow Hedges Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries Accumulated Other Comprehensive Income (Loss) Balance as of July 1, 2025 $ ( 43 ) $ ( 8 ) $ — $ ( 51 ) Pretax loss ( 38 ) — — ( 38 ) Other comprehensive income from unconsolidated subsidiaries — — 5 5 Balance as of September 30, 2025 $ ( 81 ) $ ( 8 ) $ 5 $ ( 84 ) Three Months Ended September 30, 2024 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 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 ) 15 Nine Months Ended September 30, 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 330 1 — — 331 Income tax effect — ( 1 ) — — ( 1 ) Reclassification of unrealized loss — 1 — — 1 Reclassification of deferred income taxes — — 1 — 1 Other comprehensive income from unconsolidated subsidiaries — — — 1 1 Balance as of September 30, 2025 $ ( 81 ) $ ( 8 ) $ — $ 5 $ ( 84 ) Nine Months Ended September 30, 2024 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, 2024 $ ( 243 ) $ ( 11 ) $ 6 $ 8 $ ( 240 ) Pretax income 44 5 — — 49 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 $ ( 197 ) $ ( 10 ) $ 6 $ 6 $ ( 195 ) Our policy is to reclassify the income tax effect from Accumulated other comprehensive income (loss) to the Provision for income taxes when the related gains and losses are released to the Unaudited Condensed Consolidated Statements of Income. Note 9. Supply Chain Financing We utilize voluntary supply chain finance programs to support our efforts in negotiating payment term extensions with suppliers as a part of our goal to improve our operating cash flows. As of September 30, 2025 and December 31, 2024, we had $ 450 million and $ 416 million of Accounts payable outstanding under the arrangements, respectively. 16 Note 10. Long-Term Obligations Long-term obligations consist of the following (in millions): September 30, 2025 December 31, 2024 Maturity Date Interest Rate Amount Interest Rate Amount Senior Unsecured Credit Agreement: Term loan payable January 2027 5.64 % $ 500 5.83 % $ 500 Revolving credit facilities (2) January 2028 7.21 % (1) 498 5.86 % (1) 664 Senior Unsecured Term Loan Agreement: Term loan payable July 2026 4.21 % 503 4.98 % 487 Unsecured Senior Notes: U.S. Notes (2028) June 2028 5.75 % 800 5.75 % 800 U.S. Notes (2033) June 2033 6.25 % 600 6.25 % 600 Euro Notes (2028) April 2028 4.13 % 293 4.13 % 259 Euro Notes (2031) March 2031 4.13 % 880 4.13 % 777 Notes payable Various through October 2030 4.57 % (1) 4 3.07 % (1) 10 Finance lease obligations 4.82 % (1) 102 4.96 % (1) 97 Other debt 4.24 % (1) 1 4.58 % (1) 1 Total debt 4,181 4,195 Less: long-term debt issuance costs and unamortized bond discounts ( 29 ) ( 33 ) Total debt, net of debt issuance costs and unamortized bond discounts 4,152 4,162 Less: current maturities, net of debt issuance costs ( 537 ) ( 38 ) Long-term debt, net of debt issuance costs and unamortized bond discounts $ 3,615 $ 4,124 (1) Interest rate derived via a weighted average. (2) Higher rate borrowings on the revolving credit facility of approximately $ 390 million at an interest rate of 7.63 % were repaid on October 1, 2025 with the pretax net proceeds from the sale of our Self Service segment. Refer to Note 2, "Discontinued Operations" for additional information. Senior Unsecured Credit Agreement In the second quarter of 2025, we entered into Amendments No. 2 and No. 3 to the Senior Unsecured Credit Agreement and Amendment No. 2 to the Senior Unsecured Term Loan Agreement. These amendments extended the maturity date of the Senior Unsecured Credit Agreement term loan facility from January 5, 2026 to January 5, 2027 as well as provided certain other immaterial modifications. Note 11. Derivative Instruments and Hedging Activities We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and commodity prices. Under current policies, we may use derivatives to manage our exposure to variable interest rates on our debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes. Derivative Instruments Designated as Cash Flow Hedges In 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 17 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, 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): September 30, 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 — 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 8, "Accumulated Other Comprehensive Income (Loss)." As of September 30, 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. Note 12. 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, 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: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following 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, 2025 and December 31, 2024 (in millions): September 30, 2025 December 31, 2024 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Investments - debt securities $ 62 $ — $ — $ 62 $ 53 $ — $ — $ 53 Investments - equity securities 18 — — 18 14 — — 14 Total Assets $ 80 $ — $ — $ 80 $ 67 $ — $ — $ 67 Liabilities: Interest rate swaps $ — $ — $ — $ — $ — $ 1 $ — $ 1 Contingent consideration liabilities — — 3 3 — — 3 3 Total Liabilities $ — $ — $ 3 $ 3 $ — $ 1 $ 3 $ 4 18 Investments in debt and equity securities relate to our captive insurance subsidiary and are included in Other noncurrent assets on the Unaudited Condensed Consolidated Balance Sheets. The balance sheet classification of the interest rate swap agreements is presented in Note 11, "Derivative Instruments and Hedging Activities." For contingent consideration liabilities, the entire portion is current at September 30, 2025 and is included in Other current liabilities, while at December 31, 2024, the current portion was included in Other current liabilities and the noncurrent portion was included in Other noncurrent liabilities on the Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. We value derivative instruments using a third party valuation model that performs discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates and current and forward foreign exchange rates. Our contingent consideration liabilities are related to our business acquisitions. Under the terms of the contingent consideration agreements, payments may be made at specified future dates depending on the performance of the acquired business subsequent to the acquisition. The liabilities for these payments are classified as Level 3 liabilities because the related fair value measurement, which is determined using an income approach, includes significant inputs not observable in the market. Financial Assets and Liabilities Not Measured at Fair Value Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. 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, 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 September 30, 2025 and December 31, 2024, the fair value of the borrowings under the Senior Unsecured Credit Agreement reasonably approximated the carrying values of $ 998 million and $ 1,164 million, respectively. As of September 30, 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 values of $ 503 million and $ 487 million, respectively. The following table provides the carrying and fair value for our other financial instruments as of September 30, 2025 and December 31, 2024 (in millions): As of September 30, 2025 As of December 31, 2024 Carrying Value Fair Value Carrying Value Fair Value U.S. Notes (2028) $ 800 $ 827 $ 800 $ 814 U.S. Notes (2033) 600 641 600 620 Euro Notes (2028) 293 295 259 261 Euro Notes (2031) 880 899 777 796 Note 13. Income Taxes At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings. We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes. 19 Our effective income tax rate for the nine months ended September 30, 2025 was 24.8 %, compared to 29.0 % for the nine months ended September 30, 2024. The decrease in the effective tax rate for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 is primarily attributable to discrete tax benefits, including a $ 10 million reduction to deferred tax liabilities related to tax rate changes enacted in Germany during the third quarter of 2025 and the nonrecurring unfavorable tax effects of the Global Restructuring Plan impairments in the prior year. See Note 6, "Restructuring and Transaction Related Expenses" for further information on the impairments. On July 4, 2025, new U.S. tax legislation was signed into law, commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA includes the acceleration of fixed asset depreciation, modifications to the capitalization of domestic research and development expenses, modifications to the limitations to the deductibility of interest expense, and modifications to certain international provisions. These new provisions take effect starting in 2025 through 2027. The Company has evaluated the OBBBA enacted during the quarter and estimated its impact on the consolidated financial statements to be immaterial. We will continue to evaluate the full impact of these legislative changes as additional guidance becomes available. Note 14. Cash, Cash Equivalents and Restricted Cash 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, 2025 December 31, 2024 Cash and cash equivalents $ 289 $ 234 Restricted cash included in Other noncurrent assets (1) 7 5 Cash, cash equivalents and restricted cash $ 296 $ 239 (1) Represents cash held with our captive insurance subsidiary for payments on self-insured claims. 20 Note 15. Segment and Geographic Information We have three operating segments: Wholesale - North America; Europe; and Specialty, each of which is presented as a reportable segment. The segments are organized based on a combination of geographic regions served and the types of product lines offered. They are managed separately, as each business serves distinct customer bases and is impacted by different economic conditions. The following tables present our financial performance by reportable segment for the periods indicated (in millions): Wholesale - North America Europe Specialty Eliminations Consolidated Three Months Ended September 30, 2025 Revenue: Third Party $ 1,423 $ 1,620 $ 456 $ — $ 3,499 Intersegment — — 1 ( 1 ) — Total segment revenue $ 1,423 $ 1,620 $ 457 $ ( 1 ) $ 3,499 Less: (1) Cost of goods sold 825 991 343 Selling, general and administrative expenses 401 474 83 Other segment items (2) ( 2 ) ( 7 ) ( 3 ) Segment EBITDA $ 199 $ 162 $ 34 $ — $ 395 Total depreciation and amortization (3) $ 49 $ 48 $ 8 $ — $ 105 Three Months Ended September 30, 2024 Revenue: Third Party $ 1,423 $ 1,613 $ 417 $ — $ 3,453 Intersegment — — 2 ( 2 ) — Total segment revenue $ 1,423 $ 1,613 $ 419 $ ( 2 ) $ 3,453 Less: (1) Cost of goods sold 814 993 310 Selling, general and administrative expenses 389 461 81 Other segment items (2) ( 4 ) ( 6 ) ( 3 ) Segment EBITDA $ 224 $ 165 $ 31 $ — $ 420 Total depreciation and amortization (3) $ 49 $ 39 $ 8 $ — $ 96 21 Wholesale - North America Europe Specialty Eliminations Consolidated Nine Months Ended September 30, 2025 Revenue: Third Party $ 4,277 $ 4,749 $ 1,313 $ — $ 10,339 Intersegment — — 3 ( 3 ) — Total segment revenue $ 4,277 $ 4,749 $ 1,316 $ ( 3 ) $ 10,339 Less: (1) Cost of goods sold 2,433 2,910 989 Selling, general and administrative expenses 1,217 1,407 241 Other segment items (2) ( 13 ) ( 22 ) ( 8 ) Segment EBITDA $ 640 $ 454 $ 94 $ — $ 1,188 Total depreciation and amortization (3) $ 148 $ 131 $ 24 $ — $ 303 Nine Months Ended September 30, 2024 Revenue: Third Party $ 4,396 $ 4,896 $ 1,305 $ — $ 10,597 Intersegment 1 — 3 ( 4 ) — Total segment revenue $ 4,397 $ 4,896 $ 1,308 $ ( 4 ) $ 10,597 Less: (1) Cost of goods sold 2,477 3,034 975 Selling, general and administrative expenses 1,222 1,410 241 Other segment items (2) ( 16 ) ( 30 ) ( 7 ) Segment EBITDA $ 714 $ 482 $ 99 $ — $ 1,295 Total depreciation and amortization (3) $ 146 $ 118 $ 25 $ — $ 289 (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 6, "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 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. 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. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as Net Income excluding net income and loss attributable to noncontrolling interest; income and loss from discontinued operations; depreciation; amortization; interest; gains and losses on debt extinguishment; income tax expense; restructuring and transaction 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; equity investment fair value adjustments; impairment charges; and direct impacts of the Ukraine/Russia conflict. 22 The table below provides a reconciliation of Net Income to Segment EBITDA (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income $ 180 $ 192 $ 542 $ 536 Less: net income attributable to continuing noncontrolling interest — 1 1 2 Net income attributable to LKQ stockholders 180 191 541 534 Less: net income from discontinued operations 2 4 20 19 Net income from continuing operations attributable to LKQ stockholders 178 187 521 515 Adjustments: Depreciation and amortization 105 96 303 289 Interest expense, net of interest income 53 58 158 168 Provision for income taxes 45 61 173 210 Equity in earnings of unconsolidated subsidiaries — ( 3 ) — ( 3 ) Equity investment fair value adjustments — — ( 1 ) 2 Restructuring and transaction related expenses (1) 14 20 33 99 Restructuring expenses - cost of goods sold (1) — 1 — 15 Direct impacts of Ukraine/Russia conflict (2) — — 1 — Segment EBITDA $ 395 $ 420 $ 1,188 $ 1,295 (1) See Note 6, "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, 2025 2024 2025 2024 Capital Expenditures Wholesale - North America $ 20 $ 47 $ 58 $ 120 Europe 26 24 85 82 Specialty 5 7 12 16 Total capital expenditures $ 51 $ 78 $ 155 $ 218 We re port net receivables; inventories; net property, plant and equipment; and net operating lease assets by segment as that information is used by the CODM in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash and cash equivalents, prepaid expenses and other current and noncurrent assets, goodwill, other intangibles, and equity method investments. The following table presents assets by reportable segment (in millions): 23 September 30, 2025 December 31, 2024 Receivables, net of allowance for credit losses Wholesale - North America $ 521 $ 483 Europe 701 528 Specialty 177 102 Total receivables, net of allowance for credit losses 1,399 1,113 Inventories Wholesale - North America 1,416 1,411 Europe 1,454 1,323 Specialty 446 449 Total inventories 3,316 3,183 Property, plant and equipment, net Wholesale - North America 657 675 Europe 684 619 Specialty 110 115 Total property, plant and equipment, net 1,451 1,409 Operating lease assets, net Wholesale - North America 637 668 Europe 537 467 Specialty 117 121 Total operating lease assets, net 1,291 1,256 Other unallocated assets 8,143 7,994 Total assets $ 15,600 $ 14,955 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, 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, 2025 December 31, 2024 Long-lived assets United States $ 1,291 $ 1,350 Germany 364 312 United Kingdom 322 296 Other countries 765 707 Total long-lived assets $ 2,742 $ 2,665 24