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Item 1. Business

2026-02-19 compared with 2025-02-20 · 182 added, 208 removed, 72 unchanged (84% of the section changed)

LKQ Corporation ("LKQ," the "Company" or "we"), a member of the Standard & Poor's 500 Stock In dex ("S&P 500 Index") , is a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, and specialty aftermarket products and accessories to improve the performance, functionality and appearance of vehicles.

Buyers of vehicle replacement products have the option to purchase from primarily five sources:

LKQ Corporation ("LKQ," the "Company" or "we") is a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, and specialty aftermarket products and accessories to improve the performance, functionality and appearance of vehicles.

Buyers of vehicle replacement products have the option to purchase from primarily four sources:

new products produced by original equipment manufacturers ("OEMs");

new products produced by companies other than the OEMs, which are referred to as aftermarket products;

recycled products obtained from salvage and total loss vehicles;

recycled products that have been refurbished;

and recycled products that have been remanufactured.

We distribute a variety of products to collision and mechanical repair shops, including aftermarket collision and mechanical products;

recycled collision and mechanical products;

refurbished collision products such as wheels, bumper covers and lights;

and remanufactured engines and transmissions.

Collectively, we refer to the four sources that are not new OEM products as alternative parts.

Our Wholesale - North America segment is a leading provider of alternative vehicle collision replacement products, paint and related body repair products, and alternative vehicle mechanical replacement products, with our sales, processing, and distribution facilities reaching most major markets in the United States and Canada.

salvaged products taken from total loss vehicles;

and reconditioned products that have been refurbished or remanufactured.

Collectively, we refer to the three sources that are not new OEM products as alternative parts.

We sell a variety of alternative replacement and maintenance parts including collision parts, which are typically exterior components used in the collision repair process to restore a vehicle's appearance and safety, such as bumper covers, fenders, paint and related body repair products, and lights;

hard parts, which are typically internal components that are either mechanical in nature, such as alternators, starters, and clutches, or functional components that are replaced as part of routine maintenance, such as brake pads, discs and sensors, filters and batteries;

and major mechanical parts, such as engines and transmissions.

We also sell specialty products and accessories, which are vehicle products that improve the performance, functionality and appearance of vehicles.

We are organized into three operating segments:

North America (formerly known as ("f/k/a") Wholesale - North America);

and Specialty, each of which is presented as a reportable segment.

Refer to Note 12, "Revenue Recognition" and Note 26, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for financial information by reportable segment and by geographic region.

Our North America segment is a leading provider of alternative vehicle collision replacement products, paint and related body repair products, and alternative vehicle mechanical replacement and maintenance products, with our sales, processing, and distribution facilities reaching most major markets in the United States ("U.S.") and Canada.

Our Europe segment is a leading provider of alternative vehicle replacement and maintenance products in Germany, the United Kingdom ("U.K."), the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic, Austria, Slovakia, France and various other European countries.

Our Specialty segment is a leading distributor of specialty vehicle aftermarket equipment and accessories reaching most major markets in the U.S.

Our Self Service segment operates self service retail facilities across the U.S.

that sell recycled automotive products from end-of-life-vehicles.

In 2023, we acquired Uni-Select Inc.

("Uni-Select"), a leading distributor of automotive refinish and industrial coatings and related products in North America through its FinishMaster business and a leading distributor of automotive maintenance parts and accessories serving the Canadian market through its Canadian Automotive Group business.

This acquisition complemented our existing North American paint distribution operations and provided a scaled position in the Canadian replacement and maintenance parts market, with opportunity for future consolidation and growth.

We are organized into four operating segments:

Wholesale - North America;

and Self Service, each of which is presented as a reportable segment.

See Note 25, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for financial information by reportable segment and by geographic region.

Our Specialty segment is a leading distributor of specialty vehicle aftermarket products and accessories reaching most major markets in the U.S.

On September 30, 2025, we completed the sale of our Self Service segment to an affiliate of Pacific Avenue Capital Partners, LLC.

We have made certain reclassifications to the prior period financial information to reflect discontinued operations presentation as a result of the sale of our Self Service segment.

Refer to Note 4, "Discontinued Operations and Divestitures" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Our mission is to be the leading global value-added and sustainable distributor of vehicle parts and accessories by offering our customers the most comprehensive, available and cost-effective selection of parts and service solutions while building strong partnerships with our employees and the communities in which we operate.

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Capitalizing on profitable growth opportunities

We are dedicated to building competitive advantages and maintaining our leadership positions in the markets in which we operate.

We focus on driving profitable growth and increasing free cash flow while maintaining a strong balance sheet.

We foster an entrepreneurial and employee-centric culture that enables agility and innovation, empowering our businesses to succeed in the markets they serve.

To continuously enhance the quality of our portfolio, our growth strategy is driven by organic investments in automation, productivity improvements, talent development, and strategic acquisitions.

Expanding our lean operating model

We are dedicated to building competitive advantages, widening the moats around each of our operating segments, and maintaining our leadership positions in the markets in which we operate.

We focus on profitable growth and increasing free cash flow while maintaining a resilient, investment grade balance sheet.

We foster an entrepreneurial and employee-centric culture that enables agility and innovation, empowering our businesses to succeed in the markets they serve with a compensation structure that is aligned with our strategy to deliver long-term total shareholder returns.

To continuously enhance the quality of our portfolio, our growth strategy is driven by organic investments in automation, productivity improvements, talent development, and strategic acquisitions that are aligned with the ongoing evolution of the car parc.

Drive lean operating model globally

We are committed to generating sustainable returns on invested capital by driving operational excellence and lean management across our businesses.

We continuously evaluate and pursue opportunities to improve efficiency, margins and returns on invested capital.

Through targeted productivity initiatives and a disciplined approach to cost management, we drive performance across key metrics, such as free cash flow generation, organic growth and profit margins.

Our current initiatives include optimizing working capital through expansion of our vendor financing program, enhancing margins through our inventory optimization efforts and reducing selling, general and administrative costs through streamlining our footprint and reducing complexity across our business.

We continuously evaluate and pursue initiatives to improve operating efficiencies, enhance margins and leverage the intellectual capital opportunities that exist across our operating segments.

Through targeted productivity efforts and a disciplined approach to cost management, we target specific performance metrics including free cash flow generation, organic growth and margins.

Our current initiatives include optimizing working capital, enhancing margins through our inventory optimization efforts and reducing selling, general and administrative costs through streamlining our footprint and reducing complexity across our business.

Disciplined capital allocation and portfolio simplification

We are focused on maximizing return on investment though efficient allocation of capital.

We seek to deploy capital for acquisitions in attractive growth areas.

We apply strict criteria, targeting accretive tuck-in acquisition opportunities with high synergies that align with the core businesses in our strategic framework.

We proactively divest businesses that no longer align with our strategic vision, financial objectives or have limited long-term value potential, as demonstrated by our divestment of certain of our operations in Poland in 2024.

Finally, we maintain a prudent and disciplined financial policy that prioritizes returning cash to shareholders through dividends and share repurchases, while maintaining our investment grade credit rating.

WHOLESALE - NORTH AMERICA SEGMENT

Our Wholesale - North America segment, which consists of aftermarket and salvage operations, sells five product types (aftermarket, OEM recycled, OEM remanufactured, OEM refurbished and, to a lesser extent, new OEM parts) to professional collision and mechanical vehicle repair businesses, which represents the source of the majority of the revenue generated by the segment.

As the profile and complexity of vehicles being repaired evolves, we have expanded and continue to expand our offerings to customers.

In recent years, we have begun to offer on-site mobile and remote diagnostics services through our brand known as Elitek Vehicle Services.

Additiona lly, we began offering proprietary hybrid battery reconditioning and installation services which create a more reliable hybrid battery while also extending the battery's useful life.

We expect these areas, as well as our overall product and service offerings, to grow in the coming years as the number of technological comp onents in vehicles increases.

In August 2023, we acquired Uni-Select, including Canadian Automotive Group, a leading distributor of automotive parts and accessories serving the Canadian market, which provided entry to the Canadian mechanical parts space;

and FinishMaster, a leading distributor of paint and related products and supplies, which expanded our existing North American paint business, collectively now branded as LKQ Refinish.

Our aftermarket products encompass items commonly prone to damage in a collision, including bumper covers, automotive body panels, and lights, as well as paint and paint related consumables for refinishing vehicles.

Additionally, through the acquisition of Canadian Automotive Group, we have broadened our product offerings to include a range of mechanical automotive parts and accessories.

Platinum Plus is our exclusive product line offered under the Keystone brand of aftermarket products.

We also offer a product line called "Value Line" for more value conscious, often self-pay, consumers.

We receive certifications on certain of our products from Certified Automotive Parts Association, an independent organization that evaluates the quality of our parts compared to OEM collision replacement products.

We are focused on maximizing return on invested capital through an efficient capital allocation strategy.

We apply strict criteria, targeting accretive tuck-in acquisitions with high synergies that align with the core businesses and strategy.

Additionally, in 2025, aligning with our ongoing strategy to simplify our portfolio and concentrate on our core segments, we commenced a process to explore the potential sale of our Specialty segment.

Finally, we maintain a prudent and disciplined financial policy that prioritizes returning cash to shareholders through share repurchases and dividends, while maintaining our investment grade credit rating.

In addition to the above, on January 26, 2026 our Board of Directors (the "Board") announced it has initiated a comprehensive review of strategic alternatives to enhance shareholder value.

As part of the review, the Board is working with its advisors to evaluate our strategic alternatives, including a potential sale of the Company.

BUSINESS TRANSFORMATION

As part of executing our strategy to deliver profitable growth, drive a lean operating model and maximize returns on invested capital, we will, from time to time, engage in restructuring and business transformation initiatives.

These initiatives can range in scope from broad changes such as centralizing and standardizing non-customer facing teams and divesting non-strategic assets, to targeted changes such as, consolidating underutilized facilities and closing underperforming locations.

Executing on these initiatives can take a few months to several years to fully implement depending on the scope and complexity of the initiative.

Additionally, initiatives can change or expand based on the information obtained while executing on the initiative and when additional initiative activities are identified.

See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges related to these initiatives.

NORTH AMERICA SEGMENT

Our North America segment operates in the U.S., Canada, and Mexico.

and Canada, we primarily sell aftermarket, salvage and reconditioned collision parts;

aftermarket and salvage hard parts;

and salvage and reconditioned major mechanical parts through our businesses, including Keystone and Bumper to Bumper (f/k/a Canadian Automotive Group), amongst others.

We also, to a lesser extent, provide services for vehicles including mobile and remote diagnostics services and hybrid battery reconditioning and installation services through our businesses, including Elitek Vehicle Services and Green Bean Battery, amongst others.

In Mexico, we remanufacture engines and transmissions for sale in the U.S.

Our aftermarket products encompass items commonly prone to damage in a collision, including bumper covers, fenders, paint and paint related body repair products, and lights, as well as mechanical automotive parts and accessories.

Our private label products include the Platinum Plus line which is marketed under the Keystone brand and the “Value Line” product category designed for value‑oriented, often self‑pay, consumers.

Certain products receive certifications from the Certified Automotive Parts Association, an independent organization that evaluates the quality and performance of aftermarket parts relative to OEM collision replacement products.

Our salvage products include both mechanical and collision parts, including engines;

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and bumper assemblies.

The aftermarket products we distribute are purchased from independent manufacturers and distributors located primarily in North America and Asia, principally Taiwan.

In 2024, approximately 49% of our aftermarket purchases were made from our top six vendors, with our largest vendor providing approximately 19% of our annual inventory purchases for the Wholesale - North America segment.

This is primarily related to our acquisition of FinishMaster, where we obtained a strategic relationship with a supplier for paint and related products.

This partnership will continue to play a key role in the expansion of our offerings for paint and related products.

We believe we are one of the largest customers of each of these suppliers.

Outside of this group, no other supplier provided more than 4% of our supply of aftermarket products in 2024.

We purchased approximately 56% of our aftermarket products in 2024 from vendors located in the U.S.;

however, we believe the majority of these products were manufactured in Taiwan, Mexico or other foreign countries, with the remaining aftermarket products being purchased directly from manufacturers in Taiwan and other Asian countries.

Within our wholesale operations, we focus our procurement on products that are in the most demand, based on a number of factors such as historical sales records of vehicles by model and year, customer requests, and projections of future supply and demand trends.

Because lead times may be 40 days or more on imported aftermarket products, sales volumes and in-stock inventory are important factors in the procurement process.

We procure recycled products for our wholesale operations by dismantling total loss vehicles, typically acquired at regional salvage auctions, and inventorying the parts.

The availability and pricing of the salvage vehicles we procure for our wholesale recycled products operations may be impacted by a variety of factors, including the production level of new vehicles and the percentage of damaged vehicles declared total losses.

Our bidding specialists are equipped with a proprietary software application that allows them to compare the vehicles at salvage auctions against our current inventory levels, historical demand, and recent average selling prices to arrive at an estimated maximum bid.

Scrap and Other Materials

We prioritize procurement of products with the highest expected demand, based on factors such as historical vehicle sales by model and year, customer requests, and projected supply and demand trends.

Because lead times for imported aftermarket products may extend to 40 days or more, sales volumes and inventory levels are key considerations in our procurement planning.

We source our aftermarket products from independent manufacturers and distributors located primarily in North America and Asia, with a significant concentration in Taiwan.

In 2025, approximately 44% of our aftermarket purchases were made from our top six vendors, with our largest vendor accounting for approximately 13% of our annual inventory purchases for the North America segment.

This concentration is largely attributable to our paint, body and equipment ("PBE") business, through which we established a strategic relationship with a key supplier of paint and related products.

This partnership is expected to remain an important contributor to our paint‑related offerings.

We believe we are among the largest customers of each of these suppliers.

Outside of this group, no other supplier accounted for more than 4% of our aftermarket product purchases in 2025.

Approximately 49% of our aftermarket products in 2025 were purchased from vendors located in the U.S.;

however, we believe that most of these products were manufactured in Taiwan, Mexico, or other foreign countries.

The remaining aftermarket products were purchased directly from manufacturers in Taiwan and other foreign countries.

We procure salvage products by dismantling total loss vehicles, which we typically acquire through regional salvage auctions.

The availability and pricing of total loss vehicles used in our salvage products operations are influenced by several factors, including new vehicle production levels and the overall availability of total loss vehicles.

We utilize a proprietary software application to analyze current inventory, historical demand, and recent average selling prices to help determine bid prices for available salvage vehicles.

We sell our products to wholesale customers, including collision and mechanical repair shops and new and used car dealerships, as well as to retail customers.

These customers represent the primary source of revenue for the segment.

While our distribution generally follows a two‑step model, our Bumper to Bumper business utilizes a combination of a two‑step model (direct sales to repair shop customers) and a three‑step model (sales to distributors who then sell to repair shop customers).

Automobile insurance companies influence demand for our collision products.

Although insurers do not purchase our products directly, they ultimately bear repair costs for insured vehicles above the deductible amount and therefore often influence the types of products used in repairs.

The use of our alternative parts that offer comparable quality and performance to new OEM products provides insurers with direct benefits, including lower repair costs, reduced repair times and lower associated rental‑car expenses.

During the process of a sale, our sales staff can supply either aftermarket, salvaged or reconditioned parts to meet customer demand.

Additionally, certain customers have access to a full suite of e‑commerce tools designed to improve order accuracy, reduce return rates and integrate more effectively with customer workflows.

Through these tools, customers can search, price and order products directly within their own operating systems.

Our salvage operations generate scrap metal and other materials that we sell to metals recyclers.

Vehicles that have been dismantled for recycled products and "crush only" end-of-life vehicles acquired from other companies are typically crushed using equipment on site.

Vehicles that have been dismantled for salvage products and "crush only" end-of-life vehicles acquired from other companies are typically crushed using equipment on site.

In other cases, we will hire mobile crushing equipment to crush the vehicles before they are transported to shredders and scrap metal processors.

Damaged and unusable wheel cores are melted in our aluminum furnace and sold to consumers of aluminum ingots and sows for the production of various automotive products, including wheels.

We also sell the precious metals contained in certain of our recycled parts such as catalytic converters.

We sell our products to wholesale customers that include collision and mechanical repair shops and new and used car dealerships, as well as to retail customers.

The majority of these customers tend to be individually-owned small businesses, although the number of independent and dealer-operated repair facilities has declined over the last decade as a result of consolidation.

While the majority of our distribution is done through a two-step model, our Canadian Automotive Group business utilizes a mix of both a two-step (i.e., direct sales to repair shop customers) and three-step model (i.e., sales to distributors who in turn sell to repair shop customers).

Automobile insurance companies affect the demand for our collision products;

while insurance companies do not pay for our products directly, they ultimately pay for the repair costs of insured vehicles in excess of any deductible amount.

As a result, insurance companies often influence the types of products used in a repair.

The use of our alternative parts instead of new OEM products provides a direct benefit to insurance companies by lowering the cost of repairs, by decreasing the repair time and thus the time the vehicle's owner is without a vehicle, and by providing a replacement product that is of similar quality and comparable performance to the part being replaced.

Since we have comparable options from both our aftermarket and recycled parts stock, our sales staff can access both sales systems and fill requests by cross selling if the desired part is not in stock.

To better serve our customers, we take a consolidated approach to the electronic sale of wholesale products in our Wholesale - North America segment.

A full suite of e-commerce services is available to approved partners that helps us improve order accuracy, reduce return rates and better fit our customer workflow.

Using these services in coordination with our partners, products can be searched, priced and ordered without leaving the customers' own operating systems.

We believe our Wholesale - North America segment has the largest distribution network of alternative vehicle parts and accessories for the vehicle collision and mechanical repair market in North America.

We have a distribution network of warehouses and cross dock facilities, which allows us to develop and maintain our service levels with local repair shops while providing industry leading fulfillment rates that are made possible by our nationwide presence.

Our delivery fleet utilizes a third party software provider to optimize delivery routes and to track the progress of delivery vehicles throughout their runs.

This third party software connects into each of our wholesale systems to allow a single interface for our management team to facilitate a single delivery to our customer, regardless of the product line or operating system.

Our local presence allows us to provide a responsive and predictable experience, delivering daily if required and using consistent drivers each delivery.

Our sales force and local delivery drivers develop and maintain critical personal relationships with the local repair shops, which benefit from access to our wide selection of products that we are able to offer as a result of our regional inventory network.

We operate a delivery fleet of trucks and vans, which deliver multiple product types on the same delivery routes to minimize distribution costs, improve customer service and reduce environmental impacts.

Damaged and unusable wheel cores are melted in our aluminum furnace and sold to consumers of aluminum ingots and sows for use in the production of various automotive products.

We also sell the precious metals recovered from certain recycled parts, such as catalytic converters.

We believe our North America segment operates the largest distribution network of alternative vehicle parts and accessories serving the vehicle collision and mechanical repair markets in North America.

Our network of warehouses and cross‑dock facilities enables us to maintain high service levels for local repair shops and to provide industry‑leading fulfillment rates supported by our nationwide footprint.

We operate a fleet of trucks and vans that deliver multiple product types on shared routes, which helps reduce distribution costs, enhance customer service, and lower environmental impacts.

Our delivery fleet uses third‑party software to optimize routing and monitor delivery progress.

This software integrates with each of our wholesale systems, providing a single interface that allows our management team to coordinate deliveries to customers regardless of product line or operating system.

Our local presence supports a responsive and predictable customer experience, including the ability to deliver daily when required and to use consistent drivers for each route.

Our sales force and local delivery personnel cultivate and maintain key relationships with repair shops, which benefit from access to the broad product assortment made possible by our regional inventory network.

We consider all suppliers of vehicle collision and mechanical products to be competitors, including aftermarket suppliers, recycling businesses, refurbishing operations, parts remanufacturers, OEMs and internet‑based suppliers.

We compete with alternative parts distributors on the basis of our nationwide distribution system, our product lines and inventory availability, customer service, our relationships with insurance companies, and to a lesser extent, price;

we compete with OEMs primarily on the basis of price and, to a lesser extent, on service and product quality.

In the U.S., we do not consider retail chains that focus on the do-it-yourself market to be our direct competitors because many of our wholesale product sales are influenced by insurance companies, who ultimately pay for the repair costs of insured vehicles in excess of any deductible amount, rather than the end user, and there is limited overlap in the products that we sell.

We compete with alternative parts distributors utilizing our nationwide distribution system, the breadth, depth and availability of our product lines, our customer service and relationships with insurance companies, and, to a lesser extent, price.

We compete with OEMs primarily on the basis of price and, to a lesser extent, service and product quality.

Information Technology Systems

In our aftermarket operations, we use a third party enterprise management system along with other third party software packages to enhance our online business-to-business platforms - OrderKeystone.com and Keyless.

The FinishMaster business (now included within LKQ Refinish) was fully integrated onto our aftermarket systems in 2024, while Canadian Automotive Group remains on its existing, separate, enterprise management system.

Our wholesale recycled product locations in North America operate an internally-developed, proprietary enterprise management system called LKQX.

We believe that the use of a single system across a majority of our wholesale recycled product operations helps facilitate the sales process;

allows for continued implementation of standard operating procedures;

and improves training efficiency, employee transferability, access to our national inventory database, management reporting and data storage.

The system also supports an electronic exchange process for identifying and locating parts at other select recyclers and facilitates brokered sales to fill customer orders for items not in stock.

We also use other third party software packages, such as a data warehouse and integrated budgeting system, to leverage centralized data and information to conduct enhanced analytics and reporting.

Across our aftermarket operations, we use a third‑party enterprise management system along with other third‑party software packages to support and enhance our online business‑to‑business platforms, including OrderKeystone.com and Keyless, while Bumper to Bumper continues to operate on its existing, separate enterprise management system.

Our wholesale salvage product locations in North America use LKQX, an internally-developed, proprietary enterprise management system.

Operating on a single platform across most of our wholesale salvage product operations streamlines the sales process, supports standard operating procedures, strengthens training efficiency and employee mobility, and facilitates access to our national inventory database, management reporting, and data storage.

LKQX also enables electronic part-exchange capabilities with select recyclers and supports brokered sales to fulfill customer orders for items not in stock.

In addition, we utilize other third party software solutions, including a data warehouse and an integrated budgeting system, to centralize information and enable more advanced analytics and reporting.

EUROPE SEGMENT

Our Europe segment operates in approximately 20 countries and was built up through a series of acquisitions.

Our businesses consist primarily of aftermarket operations, but we have begun expanding into wholesale recycling operations through the acquisition of businesses with salvage and vehicle repair facilities in Sweden and Norway in 2014, remanufacturing in Tunisia in 2018, and remanufacturing and salvage in the Netherlands and Poland in 2023.

We divested certain operations in Slovenia, Poland and Bosnia in 2024 as these operations did not align with our strategic objectives.

Our inventory is primarily composed of mechanical aftermarket parts for the repair of vehicles 3 to 15 years old.

Our top selling products include brake pads, discs and sensors, clutches, electrical products such as spark plugs and batteries, steering and suspension products, filters, and oil and automotive fluids.

Our inventory is comprised of over 900,000 SKU's , of which, parts related to common passenger vehicles represents the largest group.

We are committed to simplifying our business by optimizing our product offerings.

Our current efforts are focused on evaluating the product mix and market demand for common passenger vehicles parts to identify opportunities for streamlining - including reducing the number of SKU's offered, consolidating suppliers and increasing private label penetration.

This evaluation is over halfway complete, with a target of reaching 80% by the end of 2025.

Implementation actions are planned for 2025 through 2027.

In 2024, our top supplier represented 9% of our aftermarket inventory purchases for our Europe segment.

No other suppliers comprised more than 4% of our purchases.

Further, we purchased 91% of our products from companies in Europe, and 73% and 18% of our total inventory purchases were made in euros and pounds sterling, respectively, in 2024.

We are expanding the distribution of our private label products, which include Optimal, ERA and MPM Oils.

In our salvage operations, we purchase severely damaged or total loss vehicles from insurance companies and auctions, which are transferred to our dismantling facilities or sold to other third party dismantlers.

We primarily operate a two-step (i.e., direct sales to repair shop customers) distribution model in Europe, although certain businesses located in Italy, the Netherlands, Germany, Switzerland, and Hungary operate partially a three-step (i.e., sales to distributors who in turn sell to repair shop customers) distribution model.

In our two-step operations, we sell the majority of our products to commercial customers primarily consisting of professional repairers, including both independent mechanical repair shops and collision repair shops.

Our Europe segment operates in approximately 20 countries throughout continental Europe and the U.K.

In these countries, we primarily sell aftermarket hard parts through our various businesses such as LKQ Euro Car Parts, LKQ Rhiag Group, and LKQ Stahlgruber, among others.

In certain countries, we also sell, to a lesser extent, aftermarket and salvaged collision products, salvaged and reconditioned hard parts, and provide certain repair services.

Our aftermarket hard part offerings consist mainly of parts used in the repair of vehicles between 3 and 15 years old.

We also offer a number of private label products under our Optimal, ERA, and MPM Oils brands.

Our top‑selling products include brake pads, discs and sensors, clutches, electrical components such as spark plugs and batteries, steering and suspension parts, filters, oil and automotive fluids, and paint and paint related consumables.

We maintain an inventory of more than 900,000 SKUs, with parts for common passenger vehicles representing the largest category.

We remain focused on simplifying our business by optimizing our product assortment.

Current initiatives include evaluating product mix and market demand for common passenger vehicle parts to identify opportunities for streamlining, such as reducing the number of SKUs offered, consolidating suppliers, and increasing private‑label penetration.

We have evaluated approximately 87% of our passenger vehicle portfolio and started implementation actions on this population.

The remainder of the passenger vehicle portfolio review is on track to be finished in 2026 with further implementation actions to follow.

In 2025, our largest supplier accounted for 7% of aftermarket inventory purchases within our Europe segment, and no other supplier represented more than 5% of purchases.

During the year, 93% of our products were sourced from companies located in Europe, and 74% and 17% of our total inventory purchases were denominated in euros and pounds sterling, respectively.

We procure salvaged products from dismantling total loss vehicles, which we typically acquire from insurance companies and auctions.

These vehicles are either transferred to our dismantling facilities for processing or sold to third‑party dismantlers.

We primarily operate a two‑step distribution model in Europe, under which we sell directly to repair shop customers.

Certain businesses in Italy, the Netherlands, Germany, Switzerland and Hungary also operate elements of a three‑step model, in which we sell to distributors who then sell to repair shop customers.

In our two‑step operations, we sell the majority of our products to commercial customers, primarily professional repairers, including independent mechanical repair shops and collision repair shops.

In our three‑step operations, we sell products to wholesale distributors or jobbers.

In addition to our sales to repair shops and wholesale distributors, we generate a portion of our revenue through sales to retail customers from e-commerce platforms and from point of sale transactions at branch locations.

We currently have operations in approximately 20 different European countries, which we believe represents the broadest and largest footprint in the aftermarket industry in Europe with a distribution network larger than those of any of our principal competitors.

Our European operations employ a distribution model in which inventory is stored at national or international distribution centers or regional hubs, with fast moving product stored at branch locations.

The large distribution centers regularly restock the smaller branches and hubs and hold slower moving items, helping us to improve fulfillment rates.

Product is moved through the distribution network on our trucks, vans or via common carriers.

We have major international central distribution centers in Tamworth, England, Sulzbach-Rosenberg, Germany, and Berkel en Rodenrijs, the Netherlands, that have allowed us to consolidate multiple regional distribution centers while maintaining local distribution centers as necessary to support our businesses.

We view all suppliers of replacement repair products as our competitors, including other alternative parts suppliers and OEMs and their dealer networks.

We face significant competition in many markets where even smaller competitors can compete on price and service, and the OEMs compete via ties to brand loyalty of the consumer while also remaining competitive on price, service and availability.

We believe we have been able to distinguish ourselves from other alternative parts suppliers primarily through our distribution network, efficient inventory management systems and proprietary technology, which allows us to deliver our products quickly, reliably, and at competitive prices.

In addition to sales to repair shops and wholesale distributors, we generate a portion of our revenue from sales to retail customers through e‑commerce platforms and point‑of‑sale transactions at branch locations.

Demand for collision related products, which are an overall smaller component of revenue for this segment, are influenced by insurance companies.

Although insurance companies are not direct customers, they ultimately bear the repair costs for insured vehicles above the deductible amount and therefore often influence the types of products used in repairs.

We believe our Europe segment operations represent the broadest and largest footprint in the European aftermarket industry and include a distribution network that exceeds those of our principal competitors.

We operate a distribution model which utilizes a combination of large distribution centers, regional hubs and branch sales locations to fulfill customer demand.

Our larger distribution centers are located in Tamworth, England;

Sulzbach‑Rosenberg, Germany;

and Berkel en Rodenrijs, the Netherlands;

and regularly replenish the smaller branches and hubs through our distribution network via our fleet of trucks and vans or through common carriers.

We consider all suppliers of replacement repair products to be competitors, including other alternative parts suppliers as well as OEMs and their dealer networks.

We face significant competition across many of our markets, where even smaller participants can compete effectively on price and service, and OEMs benefit from consumer brand loyalty while also remaining competitive on price, service, and product availability.

We believe we differentiate ourselves from other alternative parts suppliers through the scale of our distribution network, the efficiency of our inventory management systems, and our proprietary technology, which together enable us to deliver products quickly, reliably, and at competitive prices.

Information Technology Systems

Our aftermarket operations in Europe use various information technology ("IT") systems.

Our systems are complex and designed to perform a variety of tasks (depending on the market), including but not limited to customer orders, inventory management, budgeting, analytics, warehouse and logistics, data warehousing, and financial reporting.

Certain of our IT systems can interface with the respective IT systems of our repair shop customers, which enables our customers to identify and order the part required for the repair.

As part of our efforts to integrate the operations, we are executing a multi-year plan to develop and implement a European wide ERP system, which has reduced and will continue to reduce the number of IT systems we operate through its projected completion date in 2027.

Across our aftermarket operations, we utilize various information technology ("IT") systems that support the diverse needs of our markets.

These systems are designed to manage a broad set of functions, including customer ordering, inventory management, budgeting, analytics, warehouse and logistics activities, data warehousing, and financial reporting.

Several of our IT platforms can interface directly with the systems used by our repair shop customers, enabling them to identify and order the appropriate parts required for their repairs.

Similarly, across our salvage operations, we utilize IT systems to facilitate vehicle acquisition.

These systems allocate cars obtained from insurance companies to our salvage operations.

Once cars are dismantled, the parts are entered into the system as available for sale stock.

These systems also then sync with estimating systems at repair shops to allow for the selection and quotation of parts necessary to complete a repair.

As part of our broader integration efforts, we are executing a multi-year plan to develop and deploy a European-wide Enterprise Resource Planning ("ERP") system.

This plan has already reduced, and is expected to continue reducing, the number of IT systems we operate.

SPECIALTY SEGMENT

Our Specialty segment was formed in 2014 with our acquisition of Keystone Specialty, a leading distributor and marketer of specialty vehicle aftermarket products and accessories in North America.

We subsequently expanded through acquisitions within the core business and adjacent markets, including high performance vehicle equipment and electrical marine products.

Our Specialty operations reach most major markets in the U.S.

and Canada and serve the following seven product segments:

Our Specialty segment is a leading distributor and marketer of specialty vehicle aftermarket products and accessories in the U.S.

We primarily sell aftermarket parts and accessories under seven key product categories:

recreational vehicle ("RV");

truck and off-road;

speed and performance;

wheels, tires and performance handling;

and miscellaneous accessories.

The specialty vehicle aftermarket equipment and accessories we distribute and raw materials for products we manufacture are purchased from suppliers located primarily in the U.S., Canada, and China.

Our top selling products are recreational vehicles ("RV") appliances and air conditioners, towing hitches, truck bed covers, vehicle protection products, marine electronics, cargo management products, and wheels, tires, and suspension products.

Our 2017 acquisition of Warn Industries, Inc.

("Warn") gave us internal capabilities to manufacture and source aftermarket winches, hoists, and bumpers.

Specialty aftermarket suppliers are typically small to medium-sized, independent businesses that focus on a narrow product or market niche.

Due to the highly fragmented supplier base for specialty vehicle aftermarket products, we have limited supplier concentration.

In 2024, approximately 21% of our specialty vehicle aftermarket purchases were made from our top three suppliers to this segment, with our largest supplier providing approximately 12% of our annual inventory purchases.

No other suppliers comprised more than 4% of our purchases during 2024.

Overall, the specialty vehicle aftermarket parts and accessories market serves a fragmented customer base composed of RV, marine, and specialty automotive dealers, installers, jobbers, builders, parts chains, and mail-order businesses.

Our customers are principally small, independent businesses.

These customers depend on us to provide a broad range of products, rapid delivery, marketing support and technical assistance.

In addition to traditional customers, we sell to several large parts and accessory online retailers.

Our Specialty segment also operates retail stores in northeast Pennsylvania.

We promote our products to customers through marketing programs, which include:

(i) catalogs, advertising, sponsorships and promotional activities, (ii) product level marketing and merchandising support, and (iii) online and digital marketing initiatives.

We stage in-person and/or virtual trade shows across the U.S., which provide an opportunity to improve sales through the showcasing of new and innovative products from our vendors to our customers.

Online sales, which represent the majority of our sales, of our Specialty products take place primarily through our ekeystone.com, viantp.com, and SeaWideB2B.com sites and our mobile app.

These sites provide customers (i) the ability to match products with the make and model of vehicle thus allowing the customer to order the correct part, (ii) product information (e.g., pictures, attributes) available for review and (iii) the convenience of searching inventory availability and ordering the product on the site.

Additionally, these sites can provide sales opportunities by suggesting other parts to purchase based on an inquiry submitted by the customer.

Our Specialty segment operations employ a hub-and-spoke distribution model that enables us to transport products from our primary distribution centers to our non-inventory stocking cross docks, some of which are co-located with our Wholesale - North America operations and provide distribution points to key regional markets and synergies with our existing infrastructure.

We believe this provides added value to our customers through a broader product offering and more efficient distribution process.

We use our delivery routes to provide delivery and returns of our products directly to and from our customers in all 48

continental U.S.

states and 9 Canadian provinces, and we ship globally to customers in other countries.

Our delivery fleet utilizes a third party software provider to optimize delivery routes, and to track the progress of delivery vehicles.

Industry participants have a variety of supply choices.

Vendors can deliver products to market via warehouse distributors and mail order catalog businesses, or directly to retailers and/or consumers.

wheels and tires;

and miscellaneous accessories through our brands such as TrailFX, Fabtech, Fab Fours, and Warn.

We source the specialty vehicle aftermarket products and accessories we distribute, as well as the raw materials used in our manufacturing operations, from suppliers located primarily in the U.S., Canada, and China.

Our top-selling products include RV appliances and air conditioners;

towing hitches;

truck bed covers;

vehicle protection products;

marine electronics;

cargo management products;

wheels, tires, and suspension components;

Our suppliers are generally small to medium‑sized independent businesses that concentrate on specific product categories or market niches.

As a result of this highly fragmented supplier base, our supplier concentration within this segment is limited.

In 2025, approximately 19% of our specialty vehicle aftermarket purchases were made from our top three suppliers, with our largest supplier accounting for approximately 10% of our annual inventory purchases.

No other supplier represented more than 4% of our purchases during 2025.

Our customers are principally small, independent businesses that rely on us to provide a broad range of products, rapid delivery, marketing support and technical assistance.

In addition to these traditional customers, we also sell to several large online retailers of parts and accessories.

We promote our products through a range of marketing programs, including (i) catalogs, advertising, sponsorships and promotional activities, (ii) product‑level marketing and merchandising support, and (iii) online and digital marketing initiatives.

We also stage in‑person and/or virtual trade shows across the U.S., which provide opportunities to increase sales by showcasing new and innovative products from our vendors to our customers.

Customers can place orders for our products through our ekeystone.com, viantp.com and SeaWideB2B.com platforms, as well as through our mobile application.

These platforms allow customers to match products to specific vehicle makes and models, review product information such as images and attributes, and search inventory availability before placing orders.

In addition, these platforms can generate incremental sales opportunities by suggesting complementary products based on customer inquiries.

Our Specialty segment operates under a hub‑and‑spoke distribution model that enables the movement of products from our primary distribution centers to our non‑inventory‑stocking cross‑dock locations.

Several of these cross docks are co‑located with our North America operations, providing distribution points to key regional markets and creating synergies with our existing infrastructure.

We believe this model enhances the value we provide to customers by supporting a broader product offering and a more efficient distribution process.

We utilize our delivery routes to manage both deliveries and returns directly to and from customers across all 48 continental United States and 9 Canadian provinces, and we also ship products globally to customers in other countries.

Our delivery fleet uses third‑party software to optimize routing and monitor the progress of delivery vehicles.

Industry participants have a variety of supply options.

Vendors may deliver products through warehouse distributors and mail order catalog businesses, or directly to retailers and/or consumers.

We view all distributors of specialty vehicle aftermarket equipment and accessories as our competitors.

We believe we have been able to distinguish ourselves from other specialty vehicle aftermarket parts and equipment distributors primarily through our broad product selection, which encompasses both popular and hard-to-find products, our national distribution network, and our efficient inventory management systems, as well as through our service.

We compete on the basis of product breadth and depth, rapid and dependable delivery, marketing initiatives, support services, and price.

Information Technology Systems

Most of our Specialty operations utilize an internally developed inventory management and order entry system that interfaces with third party software systems for accounting, transaction processing, inventory and warehouse management, data analytics, and reporting.

By utilizing an internally developed system, real-time updates, improvements, and developments can be programmed to fit the business’s ongoing and changing needs.

SELF SERVICE SEGMENT

Our Self Service segment consists of retail operations, most of which operate under the name “LKQ Pick Your Part,” and allows consumers to come directly to the yard to pick parts off of salvage vehicles.

We also sell scrap metal and other materials to recyclers from cars that are no longer available for customers in the yard.

In addition to revenue from the sale of parts, cores, scrap steel and other metals, we charge a nominal admission fee to access the property.

We acquire salvage vehicles for our self service retail product operations from a variety of sources, including but not limited to towing companies, vehicle auctions, the general public, municipality sales, insurance carriers, and charitable organizations.

The salvage vehicles we procure are generally older and priced lower than the salvage vehicles we purchase for our wholesale recycled product operations.

Vehicles are delivered to our locations by the seller, or we arrange for transportation.

Once on our property, minimal labor is required to process the vehicle other than removing the battery, fluids, refrigerants, catalytic converters and hazardous materials.

The extracted fluids are stored in bulk and subsequently sold to recyclers.

Vehicles are then placed in the yard for customers to remove parts.

In our self service business, availability of a specific part will depend on which vehicles are currently at the site and to what extent parts may have been previously sold.

We usually keep a vehicle at our facility for 30 to 120 days, depending on the capacity of the yard and the number of customers serviced, before it is crushed and sold to scrap metal processors.

Scrap and Other Materials

Our self service operations generate scrap metal, alloys and other materials that we sell to recyclers.

Vehicles that we no longer make available to the public and "crush only" vehicles acquired from other companies, including OEMs, are typically crushed using equipment on site.

Damaged and unusable wheel cores are melted in our aluminum furnace and sold to consumers of aluminum ingots and sows for the production of various automotive products.

We also extract and sell the precious metals contained in certain of our recycled parts such as catalytic converters.

The customers of our self service yards are frequently do-it-yourself mechanics, small independent repair shops servicing older vehicles, auto rebuilders, and resellers.

The scrap from vehicle hulks is sold to metals recyclers, with whom we may also compete when procuring salvage vehicles for our operations.

There are competitors operating self service businesses in all of the markets in which we operate.

In some markets, there are numerous competitors, often operating in close proximity to our operations.

We try to differentiate our business by the quality of the inventory, the size and cleanliness of the property, and digital marketing initiatives, including our mobile app.

The mobile app allows customers to receive daily push notifications when vehicles they have identified an interest in are placed into their favorite yards and also allows them to input search parameters, including specific parts and the year, make, and model of their vehicle, to show which compatible parts are available in a specific yard.

We do not consider retail chains that focus on the do-it-yourself market to be our direct competitors, as there is limited overlap in the products that we sell.

We believe we differentiate ourselves from other specialty vehicle aftermarket parts and equipment distributors primarily through our broad product selection, which encompasses both widely used and hard-to-find products, our national distribution network, our efficient inventory management systems, and the quality of our service.

We compete on the basis of product breadth and depth, rapid and reliable delivery, marketing initiatives, support services, and price.

Information Technology Systems

In our self service business, we operate two internally-developed, proprietary enterprise management systems.

The point of sale system is used to record retail sales transactions and reporting.

The Carbuy system is used for the purchasing and inventorying of vehicles.

We also use a module within the Carbuy system to record all sales transactions of scrap and other materials.

Most of our Specialty operations use an internally developed inventory management and order entry system that integrates with third party software solutions supporting accounting, transaction processing, inventory and warehouse management, data analytics, and reporting.

Leveraging an internally developed platform allows us to implement real-time updates, enhancements, and new capabilities that align with the business's evolving operational needs.

HUMAN CAPITAL

At LKQ, our team members are at the heart of everything we do.

As of December 31, 2024, we employ approximately 47,000 people globally, of which approximately 19,000 were based in North America, 26,000 based in Europe and 2,000 based in Asia.

Of our employees in North America, approximately 1,000 were represented by unions.

Outside of North America, we have government-mandated collective bargaining agreements and union contracts in certain countries, particularly in Europe where many of our employees are represented by unions and/or works councils.

As of December 31, 2025, we employ approximately 44,000 people globally, of which approximately 17,000 are based in North America, 25,000 based in Europe and 2,000 based in Asia.

Of our employees in North America, approximately 1,000 are represented by unions.

Outside of North America, we have government-mandated collective bargaining agreements and union contracts in certain countries, particularly in Europe where approximately 7,000 of our employees are represented by unions and/or works councils.

Health and Safety

We are dedicated to ensuring a safe and secure work environment for all team members, where unnecessary risks are minimized, and safety is a shared priority.

We are dedicated to ensuring a safe and secure work environment for all team members, where risks are minimized, and safety is a shared priority.

Our proactive approach includes implementing a range of programs and practices aimed at preventing accidents and fostering a culture of safety throughout our organization.

Employee Engagement and Empowerment

Employee Empowerment

We strive to create an environment where creativity thrives, and team members are empowered to make decisions that are best for their teams and the business.

One example of this practice is our global employee engagement survey, which provides an opportunity to listen to our organization, understand what we are doing well, and identify areas for improvement.

One example of this practice is our global employee engagement survey, which provides an opportunity for us to listen to our organization, understand what we are doing well, and identify areas for improvement.

As a result of feedback from this survey, we launched the Inspired to Thrive global initiative, which reinforces our commitment to fostering an inclusive culture where every team member feels valued, respected, and empowered to contribute their unique perspectives and talents.

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Each of these pillars is supported by robust programs that enable our team members to lead fulfilling lives both in and outside of the workplace.

And through this initiative, we prioritize the well-being, development, and engagement of our workforce, recognizing that a diverse and inclusive environment drives both innovation and success.

Through this initiative, we prioritize the well-being, development, and engagement of our workforce, recognizing that an inclusive environment drives both innovation and success.

Commitment to Values and Ethics

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INTELLECTUAL PROPERTY

We own and have the right to use various intellectual property, including intellectual property acquired as a result of past acquisitions, such as intellectual property related to winches manufactured by Warn.

We own and have the right to use various intellectual property, including intellectual property acquired as a result of past acquisitions.

In addition to trade names, trademarks and patents, we also have technology-based intellectual property that has been both internally developed and obtained through license agreements and acquisitions.

We do not believe that our business is materially dependent on any single item of intellectual property, or any single group of related intellectual property, owned or licensed, nor would the expiration of any particular item or related group of intellectual property, or the termination of any particular intellectual property license

agreement, materially affect our business.

See the risk factor " Intellectual property claims relating to aftermarket products could adversely affect our business.

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Our operating results are subject to quarterly variations based on a variety of factors, including, but not limited to, seasonal weather patterns and events.

For our Wholesale - North America segment, we tend to see higher demand for our collision related products during periods of cold inclement weather, which creates a higher likelihood of increased collision frequency and repairable claims.

For our North America segment, we tend to see higher demand for our collision related products during periods of inclement weather, which creates a higher likelihood of increased collision frequency and repairable claims.

For our Europe segment, many of our aftermarket service-related products are impacted by weather patterns.

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Profitably Delivering Sustainable Solutions

LKQ's North American and European operations purchase used vehicles and remove certain components for reuse in the repair of vehicles which helps reduce the use of raw materials and contributes to a circular economy.

Once the parts are removed from end-of-life vehicles, some of the remaining valuable materials are collected and repurposed for use in the manufacturing of new basic materials such as steel, aluminum, plastic, and rubber.

Our mission statement of being a leading global value-added and sustainable distributor of vehicle parts and accessories is supported by our recycling expertise and efforts as well as our hard parts, aftermarket collision, paint, and diagnostics businesses across our North American and European operations.

LKQ purchases end-of-life vehicles and removes certain components for reuse in the repair of vehicles which helps reduce the use of raw materials and contributes to a circular economy.

Once the parts are removed from purchased vehicles, some of the remaining valuable materials are collected and repurposed for use in the manufacturing of new basic materials such as steel, aluminum, plastic, and rubber.

Additionally, we extract fluids, some of which are recycled or utilized in our own operations, such as fuel to run our own on- and off-site fleet, and washer fluid.

Our recycling expertise and efforts are a key pillar of our mission statement of being a leading global value-added and sustainable distributor of vehicle parts and accessories.

Our recycling efforts preserve natural resources, reduce the demand for scarce landfill space, and help decrease air and water pollution, the latter attributed to the avoidance of new manufacturing activities that would otherwise be required.

Our recycling and remanufacturing efforts preserve natural resources, reduce the demand for scarce landfill space, and help decrease air and water pollution, the latter attributed to the avoidance of new manufacturing activities that would otherwise be required.

People-led Performance

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We are committed to maintaining a physically and psychologically safe and inclusive environment, free from bullying and harassment, in alignment with our core values.

And in furtherance of our mission, in 2020 we established the LKQ Community Foundation, which is committed to supporting charitable organizations that help the communities where our employees live and LKQ operates.

And in furtherance of our mission, we established the LKQ Community Foundation, which is committed to supporting charitable organizations that help the communities where our employees live and LKQ operates.

Strong Governance and Ethical Practices

Our Board of Directors (the “Board") refreshment process has resulted in over half of our current Board being added since August 2018, and currently, 38% of our Board is comprised of persons from underrepresented groups.

Additionally, eleven of our thirteen directors are independent.

Our Board refreshment process has resulted in over half of our current Board being added since May 2024, and currently, 22% of our Board is comprised of persons from underrepresented groups.

Additionally, eight of our nine directors are independent.

We have adopted “proxy access,” which permits an eligible stockholder to nominate and include in our proxy materials director nominees (subject to the terms set forth in our Bylaws).

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It is available in 17 languages through our website.

More information on our Sustainability initiatives can be found in our 2023 Sustainability Report on our Website.

More information on our Sustainability initiatives can be found in our most recent Sustainability Report on our website.

The Sustainability Report is not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.

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-K

Item 1. Business