With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are diversified, electronics, and food and grocery.

Fortune Sector Leaders: Wholesalers

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

LKQ provides alternative and specialty parts to repair and accessorize cars, trucks, and other vehicles.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-257-LKQ

Chicago's LKQ distributes auto parts to collision and mechanical repair shops in North America, Europe, and India.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Shale rules! That’s the lesson of the latest edition of our annual list of public companies with the most stellar three-year profit, revenue, and stock growth. 

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LKQ Corporation is a leading provider of replacement parts and systems for automobiles in the United States, Canada, and Europe. Its products include bumper covers, body panels, hoods, fenders, lights, and paint. LKQ Corporation mainly serves auto body shops, retail customers, and new and used car dealerships.

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LKQ (LKQ): Company Profile, Stock Price, News, Rankings

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Hello, everyone, and thank you for joining the LKQ Corporation's Second Quarter twenty twenty five Earnings Conference Call. My name is Lucy, and I will be coordinating your call today. We kindly ask all participants to limit their questions to one main and one follow-up. It is now my pleasure to hand over to your host, Joe Butris, Vice President of Investor Relations to begin. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to LKQ's second quarter twenty twenty five earnings conference call. With us today are Justin Jude, LKQ's President and Chief Executive Officer and Rick Galloway, our Senior Vice President Chief Financial Officer. Please refer to the LKQ website at lkqcorp.com for earnings release this morning as well as the accompanying slide presentation for this call. Now let me quickly cover the Safe Harbor.

Some of the statements that we make today may be considered forward looking. These include statements regarding our expectations, beliefs, hopes, intentions or strategies. Actual events or results may differ materially from those expressed or implied in the forward looking statements as a result of various factors. We assume no obligation to update any forward looking statements. For more information, please refer to the risk factors discussed in our Form 10 ks and subsequent reports filed with the SEC.

During this call, we will present both GAAP and non GAAP financial measures. A reconciliation of GAAP to non GAAP measures is included in today's earnings press release as well as slide presentation. Hopefully, everyone has had a chance to look at our eight ks, which we filed with the SEC earlier today. And as normal, we are planning to file our 10 Q in the coming days. And with that, I am happy to turn the call over to our CEO, Justin June.

Thank you, Joe, and good morning to everyone joining us on the call. As you all know, I have now been in the CEO role for a full year. The year has presented some macro challenges and some short term operational obstacles, but also opportunities for longer term value creation. Alongside my leadership team, we have made some tough but necessary decisions to fundamentally reshape how we operate and put us back to a path of consistent value creation. The decisions made are aligned with our overarching strategy, a multiyear transformation to simplify our portfolio, sharpen our focus and position us as a high performing company centered on our core business segments.

Our global team is laser focused on growing our market share while driving productivity and efficiently managing our cost structure. At our September 2024 Investor Day, we set our strategic priorities, simplify our business portfolio and operations, expand our lean operating model globally with a focus on margin enhancement, invest and grow organically, and pursue a disciplined capital allocation strategy. And so as we move forward, we are going to share how we are doing against each of these, a scorecard, if you will, that makes it clear for the investment community to see how we are doing. I can't sugarcoat that today the results are yet to show this progress and the macro headwinds necessitated our revised guidance. We are not where we need to be and so we are going to push harder and move faster.

To that end, we are focused on two immediate things: One, additional cost cutting measures primarily in Europe, but also in North America with a goal of cutting another $75,000,000 in costs. Two, a heightened emphasis on the strategic review of our business units and operations that may result in the sale of assets that further accelerate our simplification strategy and capital allocation operations priorities. We are seeing a turn in the market for strategic activity with credit markets opening, momentum behind midsized transactions and private equity actively seeking to deploy capital. While this will not be a linear process, I remain confident that we are on track to realize the full benefits of this strategy by 2027 as outlined at our September. It is worth noting that we are doing these things at a time when there are broader challenges in the overall auto industry and macroeconomic environment. It is a dynamic and fluid environment given, amongst other factors, the rising input costs and the uncertainties around tariffs are creating confusion. We are not alone in the industry in facing these challenges, but you can either complain and make excuses or focus on your business and operating model to deliver the best possible results.

Our team has chosen to focus on executing our plan, controlling the things we can, such as being efficient and managing our costs and looking for opportunities to take advantage of the current dislocations and disruptions in our core markets to gain market share and expand margins. We know in a challenging earnings environment, cost discipline is paramount, which is why we've taken actions to remove $125,000,000 of costs in the past twelve months without compromising our ability to execute and service our customers. This is just a first step. And as I mentioned, we are going to continue to scrutinize our cost structure and find additional ways to enhance our margins. Next, I will discuss our business segments.

North America's first. North America's organic revenue fell by 2.2% per day, which is less of a decline than the last five quarters and an outperformance of repairable claims by over six fifty bps, well above our historical four fifty bps outperformance. Importantly, our aftermarket collision parts business witnessed slight growth in the quarter. We are still seeing consistent demand across our hard parts business in Canada and margin enhancement as we convert from three step to two step. Lastly, as an update to the issue of repairable claims resulting from declining used car pricing and rising insurance premiums, we previously said that the comps will start to ease as we progress into 2025.

However, the June numbers were weaker than anticipated and at this juncture we think it is prudent to assume minimal market recovery in the back half of the year. Moving on to Europe. Europe's organic revenue decreased 4.9% or 3.8% on a per day basis, primarily driven by difficult economic conditions, increased competition in certain markets and some temporary headwinds due to operational challenges. We expect the economic conditions to continue throughout the balance of the year along with the competitive pressures, which has led to price concessions. As an example, in The U.

K, we've renegotiated several dozen national account agreements and re signed all but one, validating the strong value proposition we offer to our customers. Regarding the operational challenges impacting revenue, in a nutshell, we unintentionally created negative customer experiences and ultimately top line erosion. We have resolved these service issues and are in the process of regaining the customers' confidence and ultimately our share of wallet back. One thing I would like to emphasize here is that Europe represents a significant opportunity for us. As I mentioned in the past, we need the right leaders in place to truly drive the change and achieve the benefits of scale that Europe represents.

After recently making significant leadership changes, we now believe we have the right people. This revamped team is now focused on process and performance, both of which have been lagged in certain areas of our European business. This lack of focus from previous leaders played a role in the underperformance in the quarter, and it will take some time to manage these legacy issues. However, we are confident that we are on track with the three year targets presented at our September twenty twenty four Investor Day. I was in Europe the June to meet with our management teams, and we will be focused on ensuring we are moving quickly to implement our strategy in that market.

Europe is a competitive marketplace, and our focus is on key geographies where we have the ability to be a top player. We continue to make progress on our SKU rationalization goals. Our SKU rationalization project in Europe aims to reduce complexity and simplify our distribution network across all markets. We have reviewed over 70% of our product brands and reduced stocking by an additional 13,000 SKUs. Our private label penetration was flat sequentially, but up 20 bps year to date keeping us on track to hit our 2027 target of 27%.

In addition to our SKU rationalization, we are streamlining our operations and reducing costs through back office and systems rationalization programs as well as greater utilization of our global competency centers. Moreover, we believe we're now positioned to expand our market share, and we feel confident we can continue as the leading European player. We started executing on this goal as we recently announced our partnership with Sphenetic Limited, which is a critical building block in the development of LKQ Europe's salvage channel, a market that will benefit from the full service salvage intellectual capital in North America. Moving on to Specialty. Specialty has turned the corner and is seeing improved results.

Specialty's organic revenue was largely flat year over year, which is the best quarterly year over year revenue performance since the fourth quarter of twenty twenty one. We are cautiously optimistic this segment is starting to show green shoots as our July revenue has continued to show positive trends we saw in June. Lastly, self-service. Self-service's organic revenue was soft in the quarter from lower part volumes, but still managed to deliver a 10% EBITDA margin. Disciplined vehicle procurement combined with overhead cost controls continue to help drive profitable quarterly results in this segment.

I want to stress that people are our greatest assets. Ensuring we have the most talent and effective team is critical to our success. As a result, we have created an executive position focused on global talent development. We think this will be an important role, and we are excited about how it will support our overall business around the globe. A few facts that I think are important to share on talent.

Since I took over the CEO role last July, we have taken difficult, bold and necessary steps to reshape our leadership team. Over 25% of the roles at the VP level and above have been refreshed with new talent or redefined responsibilities. This level of transformation reflects our commitment to building a high performing agile organization. We're focused on getting the right people on the bus and just as importantly ensuring they're in the right seats. These changes, while not without challenges, are foundational to driving sustainable growth and consistent performance, which yield long term value creation for shareholders. Equally important is the strength of our talent pipeline. Over 50% of it now comes from external hires with a high focus on our European operations to lead us through business transformation. This infusion of fresh perspectives and different experiences is accelerating innovation, bringing a clear lens on growing the business, finding efficiencies and positioning us for the future. We're not just evolving.

We're focused on fixing, repairing and building momentum. I'm going to hand it over to Rick now, but I want to emphasize the following. We have size, scale and an unmatched distribution network. We know the current results are yet to reflect the value we are creating, and we share your frustration. But we are solidifying our foundation and ensuring when the cycle turns in this sector that we will be in the strongest position to capitalize on it to deliver results for our customers, partners and importantly our shareholders.

That is our mission and we are hell bent on accomplishing it.

Thank you, Justin, and welcome to everyone joining us today. I want to begin by reinforcing Justin's remarks on our continued commitment to execute on our multiyear transformation strategy that includes simplifying the business and reshaping our focus on core segments. We are and will continue to be relentless in our pursuit of these goals. Now turning to Q2 results. As Justin said in his remarks, our results are yet to reflect all of these efforts and Q2 results were below our expectations.

While our initiatives are underway, revenue declines overall have created margin pressure driving down our earnings and free cash flow. We reported total revenues of 3,600,000,000 Diluted earnings per share were $0.75 a $05 increase compared to Q2 twenty twenty four. On an adjusted diluted earnings per share basis, we reported $0.87 a decrease of $0.11 per share versus prior year, primarily due to lower operating results. On a positive note, execution on our balanced capital allocation strategy benefited earnings per share by $03 from share repurchases and another penny for interest. FX rates added another $03 Free cash flow during the quarter was $243,000,000 despite a nearly $35,000,000 headwind from tariffs, bringing the year to date cash flows to $186,000,000 We anticipate generating positive free cash flow in the next two quarters, but tariffs will present a working capital challenge in the back half of the year that I will discuss shortly.

We returned $117,000,000 to shareholders, including $39,000,000 to repurchase 1,000,000 shares and $78,000,000 for our quarterly dividend. We remain focused on deploying capital in a way that maximizes shareholder value while supporting growth. In North America, we are pleased with our top line performance given the market pressure as we work through the continued decline in repairable claims. We are confident we are increasing our market share in a declining market. However, increasing competition and market dynamics contributed to a 100 basis point decline in gross margins.

North America posted a segment EBITDA margin of 15.8%, a 150 basis point decrease relative to last year, but roughly 10 basis points better than Q1. The decline in gross margins and leverage effect from lower revenue on overheads contributed to the decline in EBITDA margins. In Europe, segment EBITDA was 9.4%, a 120 basis point decrease from last year. If you will recall, in last year's Q2 call, I discussed a reduction in labor related accruals previously recorded after successful conclusion to the union negotiations in Germany. This benefited the prior year by roughly 70 basis points.

Excluding this non recurring prior year benefit, EBITDA margins declined by 50 basis points. We were pleased to see the year over year gross margin improvement resulting from procurement initiatives and ongoing productivity measures that outpaced inflation. However, the organic revenue decline put pressure on overhead expense leverage resulting in the decrease to segment EBITDA margins. Specialty's EBITDA margin of 8.5% is 40 basis points below the prior year due to a slight uptick in overhead costs related to inflationary cost increases. With organic revenue being largely flat year over year and positive in June and thus far in July, we're encouraged by these recent trends heading into the back half of the year.

Self-service reported EBITDA margin of 10% consistent with the prior year. Turning now to the balance sheet. We repaid approximately $111,000,000 of debt in the quarter. As of June 30, we had total debt of $4,500,000,000 with a total leverage ratio of 2.6 times EBITDA. We remain committed to maintaining a manageable debt level and our investment grade ratings.

As of 06/30/2025, our current debt maturities were $34,000,000 a reduction from the $558,000,000 on 03/31/2025, as we extended the maturity date of the $500,000,000 U. S. Term loan by one year to Q1 twenty twenty seven. As normal practice, we actively manage our capital structure and we are working through our options with our lending group regarding the Canadian term loan due in the third quarter of twenty twenty six. We think in a high interest rate environment, ensuring our cost of capital is reasonable and managing the timing of our maturities is an important piece of prudent financial management.

Our effective interest rate was 5.2% at the end of Q2, consistent with Q1. We have $1,800,000,000 in variable rate debt, of which $700,000,000 has been fixed with interest rate swaps, which effectively provides a fixed rate on approximately 75% of our debt. Given a confluence of macroeconomic factors in both North America and Europe, coupled with the results this quarter, we are lowering our full year outlook. In North America, we are anticipating a delayed recovery in repairable claims, ongoing tariff disruptions and competitive market dynamics. In Europe, persistent economic softness, geopolitical unrest and ongoing U.

S. Trade negotiations are all drivers of an uncertain environment. To provide more detail, June's repairable claim numbers were down the most of all three months in the quarter despite our anticipated recovery. Based on current industry data and recent trends, we no longer expect these declines to rebound in 2025. Auto insurance prices are still rising and are expected to increase an average of 7.5% this year.

According to a recent survey, nearly one in four people have downgraded or dropped their auto insurance to free up cash. To help further depict the economic factors driving the current market dynamics around repairable claims, we included a slide in the appendix on Page 17 with data derived from our proprietary analysis. The ever changing tariff landscape further erodes consumer confidence and also complicates the views toward a more linear recovery. While we have been pricing in the impact from tariffs, our market remains competitive and it may be difficult to maintain margins at the same levels in the short term. In Europe, with the persistent softness in many of our markets and increased geopolitical unrest, we are no longer anticipating market improvements.

To mitigate the lower revenue expectations, we have taken corrective action, including leadership changes and productivity initiatives, and are targeting additional cost removal in the back half of the year. However, these actions will not be enough to offset the full year impact of lower revenue. Turning back to 2025. Our revised outlook and assumptions are included on Slide 13. We expect reported organic parts and services revenue in the range of negative 150 basis points to negative three fifty basis points.

As a result of the revenue headwinds, we expect adjusted diluted EPS to be in the range of $3 to $3.3 a decrease of zero four zero dollars from the midpoint from the previous guidance. Approximately half of the decrease is from our North American segment, 40% from Europe and the remainder is largely from higher interest expense. Free cash flow will be impacted by the anticipated decrease in earnings and the impact of tariffs on working capital that will be on the balance sheet at year end. To partially mitigate these headwinds, we are reducing our anticipated capital spend by approximately $50,000,000 We will continue to diligently manage our trade working capital in order to mitigate the lower earnings and tariff impact to drive EBITDA conversion to the extent possible. Free cash flow is expected to be in the range of approximately 600,000,000 to $750,000,000 Thank you for your time.

And with that, I will now turn the call back over to Justin for his closing remarks.

Thank you, Rick. As stated at the outset, we have made some tough but necessary decisions to fundamentally reshape how we operate and put us back on the path toward consistent value creation. We need to set ourselves up for success and be able to deliver on what we say we are going to do. We are implementing our strategic plan and we are holding ourselves accountable to deliver that plan. In closing, I want to reiterate our key strategic priorities: simplify our business portfolio and operations expand our lean operating model globally with a focus on margin enhancement invest and grow organically and pursue a disciplined capital allocation strategy.

Our foot is on the accelerator to deliver these strategic initiatives and create value for our shareholders. We expect to see the results and we know you do too. With that, I'll now turn the call over to the operator for questions.

Thank you. Session. The first question comes from Scott Stember of ROTH. Scott, your line is now open. Please go ahead.

Good morning. Thanks for taking my questions.

Maybe talk about some of the in North America, some of the increased competition that you're talking about? And last quarter, we were talking about used car pricing starting to increase that might be helping. Are you not seeing that anymore as a driver towards a recovery in claims?

Hey, Scott. On the used car pricing, when we if you look at Q2, the beginning of it, April and May, we started to see some improvements in used car pricing. We kind of look to be bottoming out. Some of that we're kind of uncovering that there was a kind of some pulled up demand of new car sales, which drove up some used car pricing. So we haven't necessarily seen coming into June or even into July that those numbers are starting to grow fast enough.

We're seeing, in some cases, year over year growth, but not necessarily month over month. And so if you if you take that used car pricing change, you know, year over year relative to repair cost, it hasn't necessarily grown at the same rate, which is once again creating that gap between repairable claims.

What we are seeing is we're seeing a decent increase in APU. We're seeing quite a bit of opportunity for us to expand better than what we are seeing on the overall repairable claims. So the business is really picking up a fair amount of market share, proven by the six fifty basis points better than the repairable claims. What we're not seeing, Scott, is the improvement on the overall repairable claims. So what we're saying is, look, the repairable claims number is going to have slight improvements, but the business is operating very, very well.

Continues to drive performance, continues to pick up share, continues to diversify the portfolio. So all good news on that side of what we can control.

Got you. And then last, in Europe, one of your biggest competitors over there yesterday reported relatively or, you know, at least flattish results for Europe. And now you're you're talking about some competition. It sounds like, you know, were you guys just not properly priced in the market? Or are you saying it's a combination of the market being, you know, increasingly weak plus the competitive nature picking up?

Yeah. I mean, I guess you're probably talking about GPC. I mean, if you really back out some of the stuff that stuff we talked about, we're we're pretty much in line with them. But isn't necessarily always a good compare because we operate in different markets. For example, France, we know that market overall in this business.

We operate in France, but we're very small and we grew. They're larger in France. Spain was up. We don't operate in Spain, but they do. And so it's not necessarily a great compare.

But the market said, you know, the primary issue we're seeing still is that the market is just soft. In some cases, as I mentioned in the past, pricing becomes a problem with the smaller competitors. But as I mentioned, you know, specifically in The UK, we renegotiated, you know, several dozen different contracts with our national accounts, and we lost one. And we really lost one because we weren't we weren't going to chase the price all the way down. It did not make sense.

So when you really look at the value proposition that we offer to our customers when it comes to service level fill rate, you know, we have to sharpen our pencils a little bit, with that down in market, but we still feel that we're maintaining market share.

The next question comes from Bret Jordan of Jefferies. Bret, your line is now open. Please go ahead.

Same European topic, I guess, is GSF obviously The UK pricing issue? And are they abating on the price competition? Or does that remain as hot as ever? And then I guess you've also mentioned negative customer experiences. Could you talk about the relatively weaker markets? Where did you see the real softness?

Yes. In U. In particular, mean, GSF is still there. Other folks are expanding as well. We're the largest today.

We've got the most coverage. So as some of our competitors open branches, they create a little bit of noise. But GSF is still a big one. I think it's slowing down somewhat. I mean, when we look at some of the pricing that we won't necessarily chase down, I know how good we buy based on our scale, and it doesn't necessarily make sense.

So and and we and we're winning the customer still, Brett, in that market. Even if you look at the national accounts, it's really good for us. I was just there, as I mentioned in my script, at the June meeting with the team talking about, you know, not only the long term strategy plan to integrate that business, transform that business, to really deliver significant opportunity for us, and they're and they're working on that. If you look at the simplification of operations, SKU rationalization, they're working on implementing lean operating model. They have cost cutting measures.

That $75,000,000 of cost cutting that I mentioned primarily will be in Europe, and they've already started on that. In addition, as we announced, we did a partnership in The UK where we're pretty strong in a collision market with SONETIC. So we're now expanding into salvage product lines into that to really fill in the portfolio for us on products.

Okay. On the North American collision, think you mentioned some price increase. Could you tell us what you took for price increase?

We don't disclose the overall price increase, but we have been pushing price. Obviously, tariffs are forcing that. We're seeing the OEMs put price. I know last time you asked the question, we didn't see it. Obviously, you read the headlines on the big on some of the big OEMs, they're feeling a pain of tariffs.

I don't think they have any choice but to continue to push price. They're pushing it. We're pushing it. The good news is obviously the most tariff product line that we have is aftermarket. With repairable claims being down nine percent, our actual volume on aftermarket was positive in the quarter.

So even though we put the price, we maintain service levels, with the leverage impacted our margins somewhat, but we wanted to make sure we maintain our service levels. It allowed us to outperform the market. I mean, grew six fifty bps as Rick mentioned over the repair claim decline. And we really want to just be poised from a service level and availability standpoint to gain that leverage when the market recovers.

The next question comes from Craig Kennison of Baird. Craig, your line is now open. Please go ahead.

Hey, good morning. Thanks for taking my question. I really appreciate Appendix one, Slide 17. And trying to understand that even better, your unrepaired vehicle metric seems to be one of the top issues that you face. How do you see that unfolding?

Some of those trends look to be very long term while they may be cyclical. Insurance rates are still high and that behavior may persist for some time. So I'm curious when you think that will ultimately find a bottom.

Yes. It's hard for me to speculate. I mean, we tried we saw some green shoots in used car pricing, as we mentioned early on, and we expected the market to recover. We haven't seen that yet necessarily. If you look at the big overall picture Craig on the just the industry in general, mean as I mentioned earlier the OEMs are under tremendous pressure.

A lot of tariff impact for them, lost profits. They are going to have no choice but to pass on pricing, increase new car sales to offset the volume. Those will be good for us, right? If the OEMs have a strong presence in the market that's good for us, it leads to higher used car pricing, higher part pricing, more car sales on a new side leads into our sweet spot. And so the repairable the unrepaired vehicles, that number has grown.

That is cyclical. As you mentioned, our what we don't know is when it's going to turn around, right? I mean we've got to see abatement of high insurance rates. And I think we've seen the growth of that slowdown. The question is will insurance rates start to drop as insurance companies want to gain market share?

Used car pricing at some point will start to rebound to grow at the same rate of repair cost. And so at some point, we see that unrepaired vehicles coming back to more than normal number. But the team there is really I mean, in North America, as we as you saw, we're still executing. Mean, even though in a down market, repairable claims being down 9%, you know, the team was down 2%. I mean, it's just phenomenal growth.

So in some cases, if you look at that chart you mentioned, you look at self pay repairs. I mean, we're the trade down alternative on the OEM side. So we're gaining share on that self pay. And overall, just with our service levels and our fill rate, we're doing really well. In addition to help offset or create revenue opportunities, our hard parts business in Canada is is performing really well as well as we convert that from three step to two step.

So we don't we don't we're not just sitting with our sitting on our hands, I guess, you know, letting letting the market dictate to us what we're gonna do. We're still looking at revenue opportunities. And once again, Craig, we're definitely outperforming the market.

Yeah. Thanks, Justin. And think it was Rick who mentioned APU being stronger. I wonder if you could share that metric.

Yeah. I know the number went up about 150 bps. I don't know the exact We're up really

close to 39%, Craig, is where the number is sitting right now.

Yeah. And when you see, Craig, the OEs, as I mentioned, they're pushing price. That's creating even more value proposition for alternative parts and we're the alternative parts leader. I mean, obviously, we have no tariff impact on our salvage. So it pushes towards salvage.

It pushes more towards aftermarket. And so that APU growth is just really just in a lot of cases possible because it all takes you just national coverage that we have.

The next question comes from Gary Prestopino of Barrington Research. Gary, your line is now open. Please go ahead.

Thank you. Good morning, Will. In your narrative, like you mentioned what's going on in Europe, you had to change out some people, you're going to focus on cost cuts there. I mean, I think you basically said that you had also been going through some change in personnel over there since the start of the year. Are you where you need to be and as far as personnel?

And then what they're doing over there coupled with the cost cuts that you're envisioning, when should we start seeing that impact come into the P and L?

Yes. Thanks for the question. I was over there in June meeting with that team. We've I feel pretty confident in the team that we have. We've brought on new skill set, new mindsets.

I mean, quite honestly, we've been after, you know, some of these initiatives for a while in Europe. And so making sure we have the right team that is going to execute against that. You know, mentioned at Investor Day our three year plan. It's it's not a linear progression, Gary. It's a I mean, it's really truly a three year plan that the team has to execute.

Obviously, they got to navigate through the existing market conditions today, work on the cost cutting initiatives, but they are truly laser focused working on the three year strap plan, integrating that business, transforming it to really unlock the significant potential that I feel we have over there.

I think the target that Justin gave out, dollars 75,000,000, the vast majority of that is coming from our European operations. As you know, Gary, it takes a little while to get some of those implemented. I would expect those to be primarily implemented by the end of Q4. And so you should see the full benefit of that in 2026.

And did you quantify on EPS and what the impact of the tariffs was on the bottom line?

Yes. So Gary, we think we have the ability to pass through all of our tariff costs. And so we're expecting to pass those through. What we are seeing as well as what Justin talked about as far as the competitiveness in the marketplace. So it's a combination of the two.

So for us, the tariff piece, we're pushing through all of that through pricing through when we net out the cost.

Okay. So you're not having any issues with passing that through?

No, not so far. Justin talked about it. So in Q2, OE started raising their prices and we started doing the same. And the value proposition is strong. We're not losing anything there.

So really optimistic looking in the back half of the year of what we've got coming up.

And then just let me sneak in one more quick one and I'll jump off. Was there in this slide that you put in 2017, has there been any change in the impact of ADAS on accident volumes from where you talked about during your Investor Day last year? Any change in that outlook that's been de minimis due to ADAS?

I mean, the long term outlook remains the same. If you compare on this chart, we're comparing 2022 or 2022 to 2025. And so ADAS, the technology did have an impact on overall accidents. It was offset by just some of that kind of what I would call COVID snapback, more people getting back into the office, more miles traveled, more vehicles in operation. So actuality, we saw the true accidents increase.

Long term, we still see ADAS having a slight headwind on overall accidents. But once again, I think we've talked during Investor Day is even with the reduction in accidents from ADAS, the overall market we're still seeing on the collision side growing for the next ten years. When you look at APU growth opportunity, you look at just part proliferation, more parts on the estimate, the ability for us to gain share and push price. So we still see the overall collision market being very strong for us.

The next question comes from Josh Bhatma of JPMorgan. Your line is now open. Please go ahead.

Hi, good morning. Thanks for taking my questions. I was hoping to just talk to the right to appraisal legislation in some key states like Texas and New Jersey. Could you maybe talk about the implications from a repairable claim standpoint and whether this could move the needle on total loss frequencies if adopted by more states? Thanks. And I a follow-up.

LKQ Q2 2025 Earnings Call Transcript | Fortune

Companies

John Kell

How brokerage Compass sold its 83,000 real estate agents on the use of AI

/2026/09/23/compass-ai-assistant-real-estate-agents/

Phil Wahba

Steve Jobs made Apple iconic. Tim Cook made it a $5 trillion behemoth

/2026/09/22/tim-cook-apple-ceo-legacy-stock-price-growth-services-supply-chain/

Indrani Sen

Apple’s first 50 years: Charts show how the iPhone maker became a $4.85 trillion giant

/2026/09/22/apple-first-50-years-history-iphone-mac-services-revenue-growth-timeline/

Fortune Editors

Fortune 500 Power Moves: Which executives gained and lost power this week

/2026/09/18/fortune-500-power-moves-september-12-18/

AI agents are going rogue. CIOs are racing to put guardrails around them

/2026/09/16/ai-agents-are-going-rogue-cios-are-racing-to-put-guardrails-around-them/

Fernanda Tronco

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event in Menlo Park, California, US, on Wednesday, Sept. 17, 2025.

LKQ (LKQ) Q2 2025 Earnings Call Transcript

Company Participants