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Item 7. Management’s Discussion and Analysis

2026-02-19 compared with 2025-02-20 · 131 added, 256 removed, 268 unchanged (59% of the section changed)

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We are 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:

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

new products produced by 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.

We are organized into four operating segments:

Wholesale - North America;

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

Our Wholesale - North America segment is a leading provider of alternative vehicle collision replacement products, paint and body repair related 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 are organized into three operating segments:

North America;

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

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.

See 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.

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.

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 U.S.

Our Europe segment is a leading provider of alternative vehicle replacement and maintenance products in Germany, the U.K., the Benelux region, 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.

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

Our operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control.

Please refer to the factors referred to in Special Note on Forward-Looking Statements and Risk Factors above.

Please refer to the factors referred to in the Special Note on Forward-Looking Statements and Risk Factors above.

Due to these factors and others, which may be unknown to us at this time, our operating results in future periods can be expected to fluctuate.

Accordingly, our historical results of operations may not be indicative of future performance.

Acquisitions and Investments

Since our inception in 1998, we have pursued a growth strategy through both organic growth and acquisitions.

Our current acquisition strategy focuses on highly accretive tuck-in acquisitions with significant synergies or critical capabilities and no large platform acquisitions are expected.

Additionally, from time to time, we make investments in various businesses to advance our strategic objectives.

Portfolio Management

We continuously manage and assess the businesses and investments we own and the markets in which we operate.

Our acquisition strategy is to target highly accretive tuck-in acquisitions with significant synergies or critical capabilities.

See Note 3, "Business Combinations" and Note 10, "Equity Method Investments" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to our acquisitions and investments.

Additionally, from time to time, we have sold or divested businesses that do not align with our strategic vision, financial objectives or have limited long-term value potential.

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.

See 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 related to our divestitures.

In addition to the above, on January 26, 2026 our 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.

Sources of Revenue

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(i) parts and services and (ii) other.

Our 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 used to improve the performance, functionality and appearance of vehicles.

Our service revenue is generated primarily from the sale of service-type warranties, fees for admission to our self service yards, and

diagnostic and repair services.

Our parts revenue is generated from the sale of alternative parts and vehicle products including collision parts, which are typically exterior components used in the collision repair process to restore a vehicle's appearance and safety;

hard parts, which are typically internal components that are either mechanical in nature or functional components that are replaced as part of routine maintenance;

major mechanical parts;

and specialty products and accessories, which are vehicle products that 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.

During the year ended December 31, 2025, parts and services revenue represented 97.5% of our consolidated revenue.

Revenue from other sources includes sales of scrap and other metals (including precious metals - platinum, palladium and rhodium - contained in recycled parts such as catalytic converters), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations.

Other revenue includes sales of scrap and other metals (including precious metals - platinum, palladium and rhodium - contained in recycled parts such as catalytic converters), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations;

all of which are typically acquired as byproducts of our salvage operations.

Other revenue will vary from period to period based on fluctuations in commodity prices and the volume of materials sold.

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Goodwill is not amortized but instead tested for impairment annually or sooner if events indicate that an impairment may exist.

In performing this test, we compare the carrying value of the asset to its fair value.

To derive the fair value for our reporting units which carry goodwill, we consider the use of various valuation techniques, with the primary technique being an income approach via a discounted cash flow method and another being a market approach via a guideline public company method.

Each of our segments is considered a separate reporting unit for purposes of testing goodwill.

In performing this test, we compare the carrying value of the assets of our reporting units to its fair value.

To estimate the fair value for our reporting units that carry goodwill, we use a weighted-average approach that is reviewed annually for changes in facts and circumstances.

The weighting generally incorporates a 75% income approach via a discounted cash flow analysis and a 25% market approach via a guideline public company method.

If the carrying value of these assets exceeds the estimated fair value, the asset is considered impaired and an impairment charge is recognized.

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Estimating the fair values of our reporting units which have goodwill requires the use of significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

As part of applying the discounted cash flow method and guideline public company method, we use significant assumptions which include sales growth, operating margins, discount rates, perpetual growth rates and valuation multiples which consider our budgets, business plans, economic projections and marketplace data.

As part of applying the discounted cash flow method and guideline public company method, we use significant assumptions which include sales growth, operating margins, discount rates, perpetual growth rates and market multiples which consider our budgets, business plans, economic projections and marketplace data.

Sensitivity of Estimate to Change

The balance of our goodwill was $5,448 million and $5,600 million as of December 31, 2024 and December 31, 2023 , respectively.

We have not made material changes in the accounting methodology used to evaluate impairment of goodwill during the last three years.

The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy.

Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses.

During fiscal year 2024, we elected to perform a quantitative impairment test for our goodwill.

No impairment charges were recorded as a result of the testing as the fair value of each goodwill reporting unit exceeded the calculated carrying value.

A 10% decline in projected cash flows or a 10% increase in the discount rate would not have resulted in an impairment to goodwill.

Business Combinations

We account for business combinations using the acquisition method of accounting, under which the acquisition purchase price is allocated to the assets acquired, including purchased intangible assets, and liabilities assumed based upon their respective fair values.

The excess of the fair value of the purchase price over the fair values of these assets acquired and liabilities assumed is recorded as goodwill.

Judgments and Uncertainties

Accounting for business combinations requires management to make significant estimates and assumptions to determine the fair values of assets acquired and liabilities assumed at the acquisition date.

Although we believe the assumptions and estimates we have made in relation to the acquisitions are appropriate, they are based, in part, on historical experience, information obtained from management of the acquired companies and information obtained from independent third party valuation firms and are inherently uncertain.

Critical estimates in valuing certain acquired intangible assets include, but are not limited to, future expected cash flows including revenue growth rate assumptions from product sales and customer contracts, estimated royalty rates used in valuing related intangible assets, customer attrition rates and discount rates.

The discount rates used to discount expected future cash flows to present value are typically derived from a weighted-average cost of capital analysis and adjusted to reflect inherent risks.

Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results.

Sensitivity of Estimate to Change

While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.

Changes in the estimates applied or values of acquired assets and liabilities could have a material impact on our financial statements.

As a result, during the measurement period, which may be up to one year from the business acquisition date, we may record adjustments to the originally assigned values of assets acquired and liabilities assumed with the corresponding offset to goodwill.

We have not made material changes in the accounting methodology used to evaluate impairment of goodwill during the last three years.

During fiscal year 2025, we elected to perform a quantitative impairment test for our goodwill with a testing date as of October 31, 2025.

For the Europe and North America segments, no impairment charges were recorded as a result of the testing as the fair value of these goodwill reporting units exceeded the calculated carrying value by at least 48%.

The balance of goodwill in our North America and Europe segments together was $4,993 million and $4,701 million as of December 31, 2025 and December 31, 2024, respectively.

Given the significant amount of headroom in these segments, it would take in excess of a 45% decrease in projected cash flows, or a greater than 740 basis point increase in the discount rate to result in an impairment to goodwill at either segment.

For the Specialty segment, we recorded a goodwill impairment charge of $52 million for the year ended December 31, 2025 as the carrying value was higher than its estimated fair value based on the results of our October 31, 2025 test.

The impairment was driven by a combination of factors, including lower observed market multiples in the guideline public company method, lower long term revenue growth than previous forecasts, and higher margin product groups having a longer anticipated market recovery.

As of December 31, 2025, the remaining Specialty goodwill balance was $421 million.

A 1% decrease in projected cash flows or long term growth rate would result in approximately an additional $10 million of impairment, a 25 basis point increase in the discount rate would result in approximately an additional $30 million of impairment, or a 1.0 decrease in the market multiples assumption would result in approximately an additional $30 million of impairment.

Given the sensitivity of the calculation to these assumptions, events that cause declines to Specialty's future cash flows such as underperformance relative to our forecasts, since actual results may differ from our estimates of future performance, or events that have a negative impact on the market value of the business, such as a deterioration in macroeconomic conditions, could result in additional future impairment to the goodwill in our Specialty segment.

Strategic Transformation Initiatives

See "Strategic Restructuring and Transformation Initiatives" in 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 information related to our strategic transformation initiatives.

Recently Issued Accounting Pronouncements

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Free cash flow is a financial measure that is not prepared in accordance with U.S.

generally accepted accounting principles (“non-GAAP”).

generally accepted accounting principles.

• Organic revenue growth - We define organic revenue growth as total revenue growth from continuing operations excluding the effects of acquisitions and divestitures (i.e., revenue generated from the date of acquisition to the first anniversary of that acquisition, net of reduced revenue due to the disposal of businesses) and foreign currency movements (i.e., impact of translating revenue at different exchange rates).

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Restructuring and transaction related expenses 0.3 % 1.0 %

Impairment of goodwill 0.4 % — %

Depreciation and amortization 2.7 % 2.5 %

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Income from continuing operations 4.4 % 4.8 %

Net (loss) income from discontinued operations — % — %

Net income from discontinued operations 0.1 % 0.2 %

Net income 4.4 % 5.0 %

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Total revenue $ 13,651 $ 13,823 $ (172)

The increase in parts and services revenue of $544 million, or 4.1%, represented increases in segment revenue of 9.9% in Wholesale - North America and 1.3% in Europe, partially offset by decreases of 8.4% in Self Service and 0.7% in Specialty.

This overall increase was driven by a 6.3% increase due to the net impact of acquisitions and divestitures, partially offset by an organic parts and services revenue decline of 2.2%.

The decrease in other revenue of 7.8% was primarily driven by a decrease in organic revenue of $56 million, or 8.1%, due to lower commodities prices and volumes compared to the prior year, which resulted in a $46 million organic revenue decrease in our Self Service segment and a $12 million organic revenue decrease in our Wholesale - North America segment.

The decrease in parts and services revenue of $199 million, or 1.5%, represented decreases in segment revenue of $136 million, or 2.5%, in North America and $99 million, or 1.5%, in Europe, partially offset by an increase of $36 million, or 2.1%, in Specialty.

This overall decrease was driven by an organic parts and services revenue decrease of $362 million, or 2.7% (2.3% decrease on a per day basis) and a $69 million, or 0.5%, decrease due to the net impact of acquisitions and divestitures, partially offset by an increase of $231 million, or 1.7%, due to fluctuations in foreign exchange rates.

Refer to the discussion of our segment results of operations for factors contributing to the changes in revenue by segment for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Cost of Goods Sold

Cost of goods sold decreased by $53 million, or 0.6%, to $8,386 million for the year ended December 31, 2025.

Cost of goods sold primarily reflects decreases of $69 million from Europe and $20 million from North America, partially offset by an increase of $36 million from Specialty.

Cost of goods sold as a percentage of revenue increased to 61.4% for the year ended December 31, 2025 from 61.1% for the year ended December 31, 2024.

Cost of goods sold primarily reflects an increase of 1.0% from our Wholesale - North America segment.

Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold as a percentage of revenue by segment for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Cost of goods sold as a percentage of revenue primarily reflects an increase of 0.3% from North America.

Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold by segment for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Selling, General and Administrative Expenses

Our SG&A expenses as a percentage of revenue decreased to 27.3% for the year ended December 31, 2024 from 27.9% for the year ended December 31, 2023.

The year over year decrease in SG&A expense primarily reflects an impact of 0.7% related to our Wholesale - North America segment.

Refer to the discussion of our segment results of operations for factors contributing to the changes in SG&A expenses as a percentage of revenue by segment for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Our SG&A expenses increased by $55 million, or 1.5%, to $3,813 million for the year ended December 31, 2025.

The year over year increase in SG&A expense primarily reflects increases of $34 million from North America, $17 million from Europe, and $4 million from Specialty.

SG&A expenses as a percentage of revenue increased to 27.9% for the year ended December 31, 2025 from 27.2% for the year ended December 31, 2024.

SG&A expenses as a percentage of revenue primarily reflects increases of 0.5% from North America and 0.3% from Europe.

Refer to the discussion of our segment results of operations for factors contributing to the changes in SG&A expenses by segment for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Restructuring and Transaction Related Expenses

Restructuring and transaction related expenses increased by $70 million, primarily due to (i) a $98 million increase in restructuring expenses related to our 2024 Global Restructuring plan, partially offset by (ii) a $17 million decrease related to transaction related expenses and (iii) an $8 million decrease in restructuring expenses related to our 2022 Global Restructuring Plan.

Depreciation and Amortization

Depreciation and amortization expense increased by $78 million, primarily due to an increase in amortization expense of $56 million driven by an increase in Wholesale - North America primarily due to our acquisition of Uni-Select in August 2023.

Restructuring and transaction related expenses decreased by $93 million, primarily due to a $70 million decrease in restructuring expenses related to our 2024 Global Restructuring plan and a $20 million decrease in restructuring expenses related to our Acquisition Integration plans.

Impairment of Goodwill

Impairment of goodwill increased by $52 million due to the impairment charge related to our Specialty reporting unit.

See "Intangible Assets" in Note 2, "Summary of Significant Accounting Policies" and Note 9, "Intangible Assets" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.

Provision for Income Taxes

See Note 23, "Income Taxes" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.

Total Other Expense, Net

Interest Expense

Interest expense increased by $48 million, primarily due to (i) a $52 million increase from higher outstanding debt primarily related to the permanent financing for the Uni-Select Acquisition, and (ii) a $5 million increase from higher interest rates for the year ended December 31, 2024 compared to the prior year, partially offset by (iii) a $9 million decrease related to amortization of pre-acquisition bridge loan financing costs related to the Uni-Select Acquisition.

Gains on Foreign Exchange Contracts - Acquisition Related

Gains on foreign exchange contracts - acquisition related decreased due to the $49 million pretax gain on the foreign exchange forward contracts related to the Uni-Select Acquisition in 2023.

See Note 3, "Business Combinations" and Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.

Foreign Currency Impact

We translate our statements of income at the average exchange rates in effect for the period.

Relative to the rates used for the year ended December 31, 2023, the Czech koruna and Canadian dollar rates used to translate the 2024 statements of income decreased by 4.4% and 1.5%, respectively, while the pound sterling rate increased by 2.7% and the euro was flat.

Realized and unrealized currency gains and losses (including the effects of hedge instruments) combined with the translation effect of the change in foreign currencies against the U.S.

dollar had a net negative effect of $0.20 on diluted earnings per share relative to the prior year primarily related to the $49 million pretax gain on the foreign exchange forward contracts related to the Uni-Select Acquisition in 2023.

Relative to the rates used for the year ended December 31, 2024, the Czech koruna, euro, and pound sterling rates used to translate the 2025 statements of income increased by 6.3%, 4.5%, and 3.2%, respectively, while the Canadian dollar rate decreased by 1.9%.

Realized and unrealized currency gains and losses combined with the translation effect of the change in foreign currencies against the U.S.

dollar had a net positive effect of $0.05 on diluted earnings per share from continuing operations relative to the prior year.

Results of Operations—Segment Reporting

We have four reportable segments:

Wholesale - North America;

and Self Service.

We have presented the growth of our revenue and profitability in our operations on both an as reported and a constant currency basis.

The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates.

We believe providing constant currency information provides valuable supplemental information regarding our growth and profitability, consistent with how we evaluate our performance, as this statistic removes the translation impact of exchange rate fluctuations, which are outside of our control and do not reflect our operational performance.

Constant currency revenue and Segment EBITDA results are calculated by translating prior year revenue and Segment EBITDA in local currency using the current year's currency conversion rate.

This non-GAAP financial measure has important limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP.

Our use of this term may vary from the use of similarly-titled measures by other issuers due to potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

In addition, not all companies that report revenue or profitability on a constant currency basis calculate such measures in the same manner as we do, and accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

We have three reportable segments:

North America;

and Specialty.

The following table presents our financial performance, including third party revenue, total revenue and Segment EBITDA, by reportable segment for the periods indicated (in millions):

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Third Party Revenue

Wholesale - North America

North America

$ 5,650 $ 5,762 $ 5,281

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Total Revenue

Wholesale - North America

North America

$ 5,651 $ 5,763 $ 5,282

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Segment EBITDA

Wholesale - North America

North America

$ 814 14.4 % $ 940 16.3 % $ 959 18.1 %

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Specialty 111 6.5 % 113 6.8 % 134 8.0 %

50 9.3 % 36 6.0 % 83 11.7 %

In the table above, the percentages of total segment revenue may not recalculate due to rounding.

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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Wholesale - North America

The following table provides a reconciliation of Revenue to Segment EBITDA in our Wholesale - North America segment (in millions):

North America

The following table provides a reconciliation of Revenue to Segment EBITDA in our North America segment (in millions):

Year Ended December 31,

Wholesale - North America 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change

North America 2025 % of Total Segment Revenue 2024 % of Total Segment Revenue $ Change

Parts & services revenue $ 5,329 $ 5,465 $ (136) (1)

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Selling, general and administrative expenses (4)

Other segment items (4)

Segment EBITDA $ 959 16.6 % $ 975 18.5 % $ (16)

(1) Parts and services revenue increased by $491 million, or 9.9%, to $5,465 million for the year ended December 31, 2024.

This increase was primarily driven by acquisitions, net of divestitures revenue of $779 million, or 15.7%, primarily due to the acquisition of Uni-Select in the third quarter of 2023.

See Note 3, "Business Combinations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on the acquisition of Uni-Select.

This was partially offset by an organic revenue decrease of $278 million, or 5.6% (6.3% on a per day basis), primarily due to a reduction in aftermarket collision volumes, which were negatively impacted by a reduction in repairable claims.

We believe this is mainly attributable to difficult economic conditions.

Additionally, organic revenue was negatively impacted by (i) a reduction in paint revenue related to increased competition and (ii) weather related events in 2024.

(2) Gross margin increased by $25 million, or 1.0%, to $2,511 million for the year ended December 31, 2024.

This increase was driven by the acquisition of Uni-Select, partially offset by a decrease in parts and services organic revenue and a decline in commodities prices.

The decrease in gross margin as a percentage of total segment revenue of 3.4% for the year ended December 31, 2024 compared to the prior year was primarily due to the dilutive nature of the acquisition of Uni-Select, which changed the segment's product mix to reflect a greater percentage of paint, body and equipment and maintenance product lines.

These product lines have a lower gross margin structure than our other wholesale product lines.

Additionally, the gross margin was negatively affected by the related mix effect resulting from lower aftermarket revenue, which has a higher margin than our other wholesale lines as well as decreases in salvage margins tied to softening salvage revenue and a decline in commodities prices.

(3) Selling, general and administrative expenses increased by $32 million, or 2.3%, to $1,567 million for the year ended December 31, 2024.

The increase in Selling, general and administrative expense primarily reflects unfavorable impacts of (i) $71 million from personnel costs excluding incentive compensation primarily due to the acquisition of Uni-Select, (ii) $36 million from facility costs primarily due to the acquisition of Uni-Select, (iii) $11 million from increased freight, vehicle, and fuel costs, partially offset by (iv) $42 million from lower incentive compensation, (v) $27 million from

professional fees primarily related to proceeds from the favorable settlement of a legal claim in 2024, (vi) $6 million from lower charitable contributions in the prior year period, and (vii) other individually immaterial factors representing an $11 million favorable impact in the aggregate.

Selling, general and administrative expenses as a percent of total segment revenue decreased by 1.8% to 27.2% for the year ended December 31, 2024.

In addition to the factors noted above, the decrease in Selling, general and administrative expenses as a percent of total segment revenue was driven by cost saving initiatives and acquisition related synergies, partially offset by inflationary pressures.

(4) Amounts primarily represent other non operating income and expenses, 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 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.

The following table provides a reconciliation of Revenue to Segment EBITDA in our Europe segment (in millions):

Year Ended December 31,

Europe 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change

Parts & services revenue $ 6,386 $ 6,303 $ 83 (1)

Other revenue 21 20 1

Total segment revenue 6,407 6,323 84

Cost of goods sold 3,953 3,886 67

Gross margin 2,454 38.3 % 2,437 38.5 % 17 (2)

Selling, general and administrative expenses 1,855 28.9 % 1,842 29.1 % 13 (3)

Other segment items (4)

1,622 28.7 % 1,588 27.5 % 34 (3)

Segment EBITDA $ 634 9.9 % $ 614 9.7 % $ 20

(1) Parts and services revenue increased by $83 million, or 1.3%, to $6,386 million for the year ended December 31, 2024.

This increase was primarily due to a parts and services organic revenue increase of $76 million, or 1.2% (0.7% on a per day basis), driven by pricing initiatives to offset increased costs resulting from inflationary pressures and, to a lesser extent, increased volumes.

(2) Gross margin increased by $17 million, or 0.7%, to $2,454 million for the year ended December 31, 2024.

This increase was primarily attributable to increased revenue through pricing initiatives, partially offset by unfavorable customer mix, inflationary pressures and a $16 million reduction primarily related to restructuring expenses incurred as part of the 2024 Global Restructuring Plan.

These restructuring expenses are excluded from the calculation of Segment EBITDA.

See Note 13, "Restructuring and Transaction Related Expenses" and Note 25, "Segment and Geographic Information" for further information.

(3) Selling, general and administrative expenses increased by $13 million, or 0.7%, to $1,855 million for the year ended December 31, 2024.

The increase in selling, general and administrative expense primarily reflects unfavorable impacts of (i) $15 million from professional fees related to several strategic central and regional IT initiatives, (ii) $14 million from increased outbound freight and logistics costs, (iii) $7 million from increased personnel costs mainly due to wage inflation, and (iv) other individually immaterial factors representing a $1 million unfavorable impact in the aggregate, partially offset by favorable impacts of (v) $13 million due to lower energy and utilities costs compared to the prior year across all geographies, and (vi) $11 million of non-recurring expense in the prior year related to the settlement of a value-added tax issue in Italy.

The following table provides a reconciliation of Revenue to Segment EBITDA in our Specialty segment (in millions):

Year Ended December 31,

Specialty 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change

Parts & services revenue $ 1,654 $ 1,665 $ (11) (1)

Intersegment revenue 3 3 —

Total segment revenue 1,657 1,668 (11)

Cost of goods sold 1,238 1,238 —

Gross margin 419 25.3 % 430 25.8 % (11) (2)

Selling, general and administrative expenses 315 19.0 % 305 18.3 % 10 (3)

Other segment items (5)

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(1) Parts and services revenue decreased by $136 million, or 2.5%, to $5,329 million for the year ended December 31, 2025.

This was primarily due to a parts and services organic revenue decrease of $75 million, or 4.5% (5.3% on a per day basis), driven by demand softness in the RV and automotive product lines, as unit retail sales for RV and certain automotive categories have declined year over year.

This was partially offset by a net increase of $66 million, or 4.0%, in acquisition and divestiture revenue primarily related to our acquisition of one Specialty business in 2023.

This decrease was primarily due to an organic revenue decrease of $126 million, or 2.3% (1.9% on a per day basis), driven primarily by lower volumes in our PBE business from lower repairable claims and increased competition, and having one fewer selling days in the current year, partially offset by pricing initiatives to recoup tariff costs and targeted actions to increase market penetration.

Additionally, revenue decreased due to a negative exchange rate effect of $18 million, or 0.3%, primarily due to the stronger U.S.

dollar against the Canadian dollar.

(2) Gross margin decreased by $92 million, or 3.7%, to $2,419 million for the year ended December 31, 2025.

This decrease was primarily driven by higher discounts to help maintain sales volume in the first six months of the year, as well as lower revenue.

(3) Selling, general and administrative expenses increased by $10 million, or 3.3%, to $315 million for the year ended December 31, 2024.

The increase in selling, general and administrative expenses reflects unfavorable impacts of (i) $5 million from increased personnel costs, (ii) $3 million related to higher credit loss reserves compared to prior year, and (iii) other individually immaterial factors representing a $5 million unfavorable impact in the aggregate, partially offset by a favorable impact of (iv) $3 million due to lower freight, vehicle and fuel expenses.

The following table provides a reconciliation of Revenue to Segment EBITDA in our Self Service segment (in millions):

Year Ended December 31,

Self Service 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change

Parts & services revenue $ 213 $ 232 $ (19) (1)

Other revenue 319 365 (46) (2)

Total segment revenue 532 597 (65)

Cost of goods sold 305 375 (70)

Gross margin 227 42.7 % 222 37.2 % 5 (3)

Selling, general and administrative expenses 179 33.6 % 188 31.5 % (9) (4)

Other segment items (5)

Segment EBITDA $ 50 9.3 % $ 36 6.0 % $ 14

(1) Parts and services organic revenue decreased by $19 million, or 8.4% (8.7% on a per day basis), to $213 million for the year ended December 31, 2024.

This decrease was primarily due to lower parts volumes from a reduced number of customer admissions.

(2) Other organic revenue decreased $46 million, or 12.7%, to $319 million for the year ended December 31, 2024.

This decrease was primarily driven by (i) a $28 million decrease in revenue from precious metals due to lower prices and lower volumes and (ii) a $24 million decrease in revenue from scrap steel primarily related to lower volumes and lower prices, partially offset by (iii) a $6 million increase in revenue from other scrap (e.g., aluminum) and cores due to higher prices, partially offset by lower volumes.

(3) Gross margin increased by $5 million, or 2.3%, to $227 million for the year ended December 31, 2024.

The increase is attributable to improvements in vehicle procurement costs, partially offset by lower commodities prices.

Decreases in precious metals prices contributed an estimated $13 million decline in gross margin relative to the year ended December 31, 2023.

During the year ended December 31, 2024, scrap steel prices had a $2 million unfavorable impact on gross margin, compared to a $5 million favorable impact during the year ended December 31, 2023.

The unfavorable impacts for the year ended December 31, 2024 resulted from decreases in scrap steel prices between the date we purchased a vehicle, which influences the price we pay for a vehicle, and the date we scrapped a vehicle, which influences the price we receive for scrapping a vehicle.

(4) Selling, general and administrative expenses decreased by $9 million, or 5.0%, to $179 million for the year ended December 31, 2024.

The decrease in Selling, general and administrative expenses primarily reflects individually immaterial factors representing a $9 million favorable impact in the aggregate primarily related to operational productivity initiatives.

(5) Amounts primarily represent other non operating income and expenses, 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.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Wholesale - North America

The following table provides a reconciliation of Revenue to Segment EBITDA in our Wholesale - North America segment (in millions):

Year Ended December 31,

Wholesale - North America 2023 % of Total Segment Revenue 2022 % of Total Segment Revenue $ Change

Parts & services revenue $ 4,974 $ 4,207 $ 767 (1)

Other revenue 307 349 (42) (2)

Intersegment revenue 1 — 1

Total segment revenue 5,282 4,556 726

Cost of goods sold 2,796 2,347 449

Gross margin 2,486 47.0 % 2,209 48.5 % 277 (3)

Selling, general and administrative expenses 1,535 29.0 % 1,372 30.1 % 163 (4)

Other segment items (5)

(24) (15) (9)

Segment EBITDA $ 975 18.5 % $ 852 18.7 % $ 123

(1) Parts and services revenue increased by $767 million, or 18.2%, to $4,974 million for the year ended December 31, 2023.

This increase was primarily driven by an acquisition and divestiture parts and services revenue net increase of $432 million, or 10.3%, primarily due to the acquisition of Uni-Select in the third quarter of 2023, partially offset by the divestiture of our PGW aftermarket glass business in the second quarter of 2022.

See Note 3, "Business Combinations" and "Other Divestitures (Not Classified in Discontinued Operations)" in 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 further information on the acquisition of Uni-Select and the divestiture of PGW, respectively.

Additionally, parts and services organic revenue increased 8.2% (8.6% on a per day basis) for the year ended December 31, 2023 compared to the prior year, primarily driven pricing initiatives which focused on offsetting inflation on input costs and a net volume increase.

Aftermarket collision parts volumes increased year over year due to reduced pressures on our supply chain.

collision parts volumes also grew as a result of the continued rollout of State Farm's aftermarket parts program, which began on a trial basis in June 2022 and has subsequently been expanded.

(2) Other revenue decreased by $42 million, or 12.0%, to $307 million for the year ended December 31, 2023.

This decrease was primarily due to an other organic revenue decrease of $41 million, or 11.8%, primarily related to (i) a $46 million decrease in revenue from precious metals (platinum, palladium, and rhodium) due to lower prices, partially offset by higher volumes, partially offset by (ii) a $5 million increase in revenue from other scrap (e.g., aluminum) and cores due to higher volumes, partially offset by lower prices.

(3) Gross margin increased by $277 million, or 12.5%, to $2,486 million for the year ended December 31, 2023.

The decrease in gross margin as a percentage of total segment revenue of was primarily driven by (i) an unfavorable impact of 2.1% related to the acquisition of Uni-select in the third quarter of 2023 due to product mix as the paint, body, and equipment and maintenance parts lines have a lower gross margin structure than other wholesale product lines, partially offset by (ii) a 0.5% benefit from lower inbound freight costs and (iii) a 0.2% mix benefit resulting from the PGW divestiture in the second quarter of 2022.

(4) Selling, general and administrative expenses increased by $163 million, or 11.8%, to $1,535 million for the year ended December 31, 2023.

The decrease in Selling, general and administrative expenses as a percentage of revenue reflects favorable impacts of (i) 0.9% related to the acquisition of Uni-Select as Uni-Select operates with lower overhead expenses than our other wholesale product lines, (ii) 0.5% from decreased freight, vehicle, and fuel costs and (iii) other individually immaterial factors representing a 0.2% favorable impact in the aggregate, partially offset by (iv) 0.4% from higher professional fees and (v) 0.2% from higher charitable contributions.

This decrease was driven by lower revenue as described above as well as a decrease in gross margin percentage due to unfavorable customer mix, the dilutive effect of increasing prices to recoup tariff costs and higher other input costs not fully offset by price increases due to market competition.

(3) SG&A expenses increased by $34 million, or 2.1%, to $1,622 million for the year ended December 31, 2025.

The increase in SG&A expense is primarily due to (i) a nonrecurring $35 million credit related to the favorable settlement of a legal claim in 2024, and (ii) $18 million from increased vehicle costs, partially offset by (iii) $14 million from decreased personnel costs due to cost savings initiatives which were partially offset by inflationary pressures, and (iv) other individually immaterial factors representing a $5 million favorable impact in the aggregate.

(4) Amounts include certain shared overhead costs that were historically allocated to the Self Service segment.

See 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.

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Segment EBITDA $ 584 9.3 % $ 634 9.9 % $ (50)

(1) Parts and services revenue increased by $592 million, or 10.4%, to $6,303 million for the year ended December 31, 2023.

This increase was primarily due to (i) a parts and services organic revenue increase of 6.9% (7.4% on a per day basis), primarily driven by pricing initiatives across all geographies to offset increased costs resulting from inflationary pressures and to a lesser extent, higher volumes, (ii) an acquisition and divestiture revenue net increase of $76 million, or 1.3%, primarily related to our acquisition of seven wholesale businesses from the beginning of 2022 through the one-year anniversary of the acquisition dates and (iii) an exchange rate increase of $121 million, or 2.1%, primarily due to the weaker U.S.

dollar against the euro, Czech koruna and pound sterling for the year ended December 31, 2023 relative to the prior year.

(2) Gross margin increased by $222 million, or 10.0%, to $2,437 million for the year ended December 31, 2023.

Gross margin as a percent of total segment revenue was flat on a year to date basis, as favorable impacts from price increases were offset by inflationary pressures and difficult macro-economic conditions causing consumer price sensitivity, most notably in our Central and Eastern European regions.

(3) Selling, general and administrative expenses increased by $191 million, or 11.6%, to $1,842 million for the year ended December 31, 2023.

The increase in selling, general and administrative expense as a percentage of total segment revenue primarily reflects the unfavorable impacts of 0.2% due to the settlement of a value-added tax issue in Italy and leverage effects of 0.2% caused by strike activity in Germany.

(1) Parts and services revenue decreased by $99 million, or 1.5%, to $6,287 million for the year ended December 31, 2025.

This decrease was primarily due to (i) an organic revenue decrease of $274 million, or 4.3% (3.9% on a per day basis), driven by decreased volumes due to heightened competition in certain markets and difficult economic conditions, (ii) divestitures, net of acquisitions, of $77 million, or 1.2%, primarily related to the divestiture of certain operations in Poland, Slovenia and Bosnia in 2024, partially offset by (iii) the effect of an exchange rate increase of $252 million, or 4.0%, primarily due to the strengthening of the pound sterling and euro, and to a lesser extent, the Czech koruna against the U.S.

(2) Gross margin decreased by $27 million, or 1.1%, to $2,427 million for the year ended December 31, 2025.

This decrease was primarily attributable to decreased revenue, partially offset by a $13 million reduction in cost of goods sold related to restructuring expenses incurred as part of the 2024 Global Restructuring Plan in the prior year.

These restructuring expenses are excluded from the calculation of Segment EBITDA.

See Note 13, "Restructuring and Transaction Related Expenses" and Note 26, "Segment and Geographic Information" for further information.

(3) SG&A expenses increased by $17 million, or 0.9%, to $1,872 million for the year ended December 31, 2025.

The increase in SG&A expense includes a $74 million unfavorable foreign exchange impact from a weakening U.S.

The remaining increase primarily relates to (i) a $9 million unfavorable impact in professional fees related to several strategic central and regional information technology initiatives, partially offset by (ii) a $23 million favorable impact from the divestiture of certain operations in Poland, Slovenia and Bosnia in 2024, (iii) $20 million from decreased personnel costs primarily due to lower incentive compensation in the current year, (iv) $10 million from lower freight, vehicle and fuel costs and (v) other individually immaterial factors representing an $13 million favorable impact in the aggregate.

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Segment EBITDA $ 111 6.5 % $ 113 6.8 % $ (2)

(1) Parts and services revenue decreased by $123 million, or 6.9%, to $1,665 million for the year ended December 31, 2023.

This decrease was primarily due to a parts and services organic revenue decrease of 10.1% primarily due to demand softness in the RV product line, as RV unit retail sales and wholesale shipments have declined year over year.

This was partially offset by an acquisition and divestiture parts and services revenue net increase of $64 million, or 3.6%, primarily related to our acquisition of one Specialty business in 2023.

(2) Gross margin decreased by $91 million, or 17.4%, to $430 million for the year ended December 31, 2023.

Gross margin as a percent of total segment revenue decreased primarily due to product channel mix toward lower margin auto and marine products and increased competitive pricing due to broader availability of inventory among competitors in the market.

(3) Selling, general and administrative expenses decreased by $20 million, or 6.4%, to $305 million for the year ended December 31, 2023.

The decrease in selling, general and administrative expenses as a percent of total segment revenue was primarily due to a 0.2% decrease in personnel costs, mainly driven by decreased workers compensation and health insurance expenses, as well as restructuring activities.

The following table provides a reconciliation of Revenue to Segment EBITDA in our Self Service segment (in millions):

Year Ended December 31,

Self Service 2023 % of Total Segment Revenue 2022 % of Total Segment Revenue $ Change

Parts & services revenue $ 232 $ 227 $ 5 (1)

Other revenue 365 488 (123) (2)

Total segment revenue 597 715 (118)

Cost of goods sold 375 437 (62)

Gross margin 222 37.2 % 278 38.8 % (56) (3)

Selling, general and administrative expenses 188 31.5 % 196 27.4 % (8) (4)

Other segment items (5)

Segment EBITDA $ 36 6.0 % $ 83 11.7 % $ (47)

(1) Parts and services organic revenue increased by $5 million, or 2.4%, to $232 million for the year ended December 31, 2023, primarily driven by pricing initiatives which focused on offsetting inflation on input costs resulting from greater competition for vehicles.

(2) Other revenue decreased by $123 million, or 25.2%, to $365 million for the year ended December 31, 2023, primarily driven by an other organic decrease of $93 million, or 19.1%, due to (i) a $79 million decrease in revenue from precious metals (platinum, palladium, and rhodium) due to lower prices, (ii) a $20 million decrease in revenue from scrap steel related to lower prices and lower volumes, partially offset by (iii) a $6 million increase in revenue from other scrap (e.g., aluminum) and cores primarily related to higher volumes, partially offset by lower prices.

Additionally, acquisition and divestiture other revenue was a net decrease of $30 million, or 6.1%, due to the divestiture of a business in the third quarter of 2022.

See "Other Divestitures (Not Classified in Discontinued Operations)" in 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 further information on the divestiture.

(3) Gross margin decreased by $56 million, or 20.0%, to $222 million for the year ended December 31, 2023 primarily due to an unfavorable impact resulting from vehicle procurement costs decreasing at a lesser rate than commodity prices.

Decreases in precious metals prices contributed an estimated $60 million decline in gross margin relative to the year ended December 31, 2022.

Net sequential changes in scrap steel prices partially offset the impact of the decline in precious metals prices.

During the year ended December 31, 2023, scrap steel prices had a $5 million favorable impact on gross margin compared to a $15 million unfavorable impact during the year ended December 31, 2022.

The favorable impacts for the year ended December 31, 2023 resulted from the increase in scrap steel prices between the date we purchased a vehicle, which influences the price we pay for a vehicle, and the date we scrapped a vehicle, which influences the price we receive for scrapping a vehicle.

(4) Selling, general and administrative expenses decreased by $8 million, or 3.9%, to $188 million for the year ended December 31, 2023.

The increase in selling, general and administrative expenses as a percent of total segment revenue was primarily due to a negative leverage effect of 5.7% from decreases in metals revenue, partially offset by other individually immaterial factors representing a 1.5% favorable impact in the aggregate.

(1) Parts and services revenue increased by $36 million, or 2.1%, to $1,690 million for the year ended December 31, 2025.

This was primarily due to an organic revenue increase of $38 million, or 2.3% (2.7% on a per day basis), driven by volume growth in our marine and automotive product lines.

(2) Amounts primarily represent other non operating income and expenses, as well as a reconciling item to remove depreciation - cost of goods sold, which is excluded from the calculation of Segment EBITDA.

Liquidity and Capital Resources

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As we have pursued acquisitions as part of our historical growth strategy, our cash flows from operations have not always been sufficient to cover our investing activities.

To fund our acq uisitions, we have accessed various forms of debt

financing, including revolving credit facilities, term loans, and senior notes.

To fund our acquisitions, we have accessed various forms of debt financing, including revolving credit facilities, term loans, and senior notes.

We currently believe we have sufficient access to capital markets to support our future growth objectives.

7 unchanged sentences

Total liquidity $ 2,204 $ 1,456

(1) As of December 31, 2025, we had outstanding letters of credit of $134 million, of which $20 million does not reduce availability under our revolving credit facilities.

We had $1,885 million available under our revolving credit facilities as of December 31, 2025.

Combined with $234 million of cash and cash equivalents at December 31, 2024, we had $1,456 million i n available liquidity, an increase of $181 million from our available liquidity as of December 31, 2023, primarily as a result of reducing our revolving credit facilities borrowings by $250 million.

Combined with $319 million of cash and cash equivalents at December 31, 2025, we had $2,204 million in available liquidity, an increase of $748 million from our available liquidity as of December 31, 2024, primarily as a result of reducing our revolving credit facilities borrowings by $663 million.

In the second quarter of 2025, we entered into Amendment No.

3 to the Senior Unsecured Credit Agreement and Amendment No.

2 to the CAD Note.

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.

In the fourth quarter of 2025, we entered into Amendments No.

4 and 5 to the Senior Unsecured Credit Agreement, which extended the maturity date of the revolving credit facility from January 2028 to December 2030, and included certain other immaterial modifications and administrative changes.

Further, in the fourth quarter of 2025, we entered into Amendments No.

3 and 4 to the CAD Note which extended the maturity date from July 2026 to March 2029, and included certain other immaterial modifications and administrative changes.

See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding total debt outstanding.

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We have a surplus of current assets over current liabilities, which further reduces the risk of short-term cash shortfalls.

O ur Senior Unsecured Credit Agreement and our CAD Note both include two financial maintenance covenants:

Our Senior Unsecured Credit Agreement and our CAD Note both include two financial maintenance covenants:

a maximum total leverage ratio and minimum interest coverage ratio.

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The indentures relating to our U.S.

Notes and Euro Notes d o not include financial maintenance covenants, and the indentures will not restrict our ability to draw funds under the Senior Unsecured Credit Agreement.

Notes and Euro Notes do not include financial maintenance covenants, and the indentures will not restrict our ability to draw funds under the Senior Unsecured Credit Agreement.

The indentures do not prohibit amendments to the financial covenants under the Senior Unsecured Credit Agreement and CAD Note as needed.

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Our failure to raise capital if and when needed could have a material adverse impact on our business, operating results, and financial condition.

As part of our effort to improve our operating cash flows, we may negotiate payment term extensions with suppliers.

These efforts are supported by our supply chain finance programs.

See Note 17, "Supply Chain Financing" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our supply chain financing arrangements.

We hold interest rate swaps to hedge the variable rates on a portion of our credit agreement borrowings.

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Under the CAD Note, the interest rate may be (i) a forward-looking term rate based on the Canadian Overnight Repo Rate Average ("CORRA") for an interest period chosen by the Company of one or three months or (ii) the Canadian Prime Rate (as defined in the CAD Note), plus in each case a spread.

See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our borrowings and related interest.

See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for

information related to our borrowings and related interest.

The interest rate swaps are described in Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

We had outstanding borrowin gs under our revolving credit facilities and term loans payable of $1,651 million and $1,943 million at December 31, 2024 and 2023, respectively.

We had outstanding borrowings under our revolving credit facilities and term loans payable of $1,011 million and $1,651 million at December 31, 2025 and 2024, respectively.

Of these amounts, there were no current maturities at December 31, 2025 or 2024.

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We normally pay for salvage vehicles acquired at salvage auctions and under direct procurement arrangements at the time that we take possession of the vehicles.

As part of our effort to improve our operating cash flows, we may negotiate payment term extensions with suppliers.

These efforts are supported by our supply chain finance programs.

For the year ended December 31, 2025, net cash provided by operating activities totaled $1,063 million compared to $1,121 million for the same period of 2024.

Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period.

Inventories represented $324 million in incremental cash outflows for the year ended December 31, 2024 compared to the same period of 2023.

Accounts payable produced $256 million in incremental cash inflows for the year ended December 31, 2024 compared to the same period of 2023.

Other operating activities primarily reflect the aggregate effect of lower cash earnings, higher interest payments (primarily due to additional borrowings for the Uni-Select Acquisition and higher interest rates), and higher cash paid for taxes during the year ended December 31, 2024 compared to the same period of 2023.

For the year ended December 31, 2024, net cash used in investing activities totaled $406 million compared to $2,442 million for the same period of 2023.

We invested $49 million and $2,225 million of cash in business acquisitions during the years ended December 31, 2024 and 2023, respectively.

Proceeds from the disposal of businesses, net of divested cash were an outflow of $11 million for the year ended December 31, 2024, compared to an inflow of $110 million for the year ended December 31, 2023, primarily related to the sale of GSF Car Parts.

Receivables represented $14 million in higher cash outflows for the year ended December 31, 2025 compared to the same period of 2024.

Inventories represented $204 million in lower cash outflows for the year ended December 31, 2025 compared to the same period of 2024.

Accounts payable produced $95 million in lower cash inflows for the year ended December 31, 2025 compared to the same period of 2024.

Other operating activities primarily reflect the aggregate effect of lower cash earnings and movements in various accruals during the year ended December 31, 2025 compared to the same period of 2024.

For the year ended December 31, 2025, net cash provided by investing activities totaled $185 million compared to net cash used in investing activities of $406 million for the same period of 2024.

Proceeds from the disposal of businesses, net of divested cash were an inflow of $397 million for the year ended December 31, 2025, compared to an outflow of $11 million for the year ended December 31, 2024.

We invested $49 million of cash in business acquisitions during the year ended December 31, 2024.

There were no significant business acquisitions during the year ended December 31, 2025.

Property, plant and equipment purchases were $216 million for the year ended December 31, 2025 compared to $311 million in the prior year.

During the year ended December 31, 2023, we settled our foreign exchange forward contracts related to the Uni-Select purchase price with the counterparties and received $49 million due primarily to strengthening in the Canadian exchange rate relative to the contract rates.

The following table reconciles Net Cash Provided by Operating Activities to Free Cash Flow (in millions):

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Free cash flow (1)

For the year ended December 31, 2024, net cash used in financing activities totaled $746 million compared to net cash provided by financing activities of $1,102 million for the same period of 2023.

The decrease is primarily due to proceeds (net of unamortized bond discounts) of $1,394 million from the issuance of the U.S.

Notes (2028/33) in 2023.

(1) For the years ended December 31, 2025 and 2024, Self Service contributed approximately $50 million and $40 million, respectively, of free cash flow.

For the year ended December 31, 2025, net cash used in financing activities totaled $1,191 million compared to $746 million for the same period of 2024.

Cash outflows for share repurchases were $159 million and dividends paid were $310 million for the year ended December 31, 2025 compared to $360 million for share repurchases and $318 million for dividends paid for the same period of 2024.

Net debt payments (net of unamortized bond discounts) were $17 million for the year ended December 31, 2024 compared to net debt borrowings (net of unamortized bond discounts) of $111 million for the same period of 2023 (excluding proceeds from the issuance of the U.S.

Notes (2028/33) of $1,394 million).

Net debt payments were $708 million for the year ended December 31, 2025 compared to net debt payments (net of unamortized bond discounts) of $17 million for the same period of 2024.

We intend to continue to evaluate markets for potential growth through the internal development of distribution centers, processing and sales facilities, and warehouses, through further integration of our facilities, and through selected business acquisitions.

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Noncurrent liabilities 3,294 4,046

(1) Current liabilities for guarantor subsidiaries included $219 million of short term notes payable to non-guarantor subsidiaries as of December 31, 2024.

(1) Noncurrent assets for guarantor subsidiaries included $510 million and $487 million of long-term notes receivable from non-guarantor subsidiaries as of December 31, 2025 and 2024, respectively.

(2) Current liabilities for guarantor subsidiaries included $621 million and $219 million of short term notes payable to non-guarantor subsidiaries as of December 31, 2025 and 2024, respectively.

(3) Information reflects the current Obligor Group listed in Exhibit 22.1 in Part IV, Item 15 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 7. Management’s Discussion and Analysis