XML 32 R21.htm IDEA: XBRL DOCUMENT v3.20.2
Segment and Geographic Information
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment and Geographic Information Segment and Geographic Information
We have four operating segments: Wholesale – North America, Europe, Specialty and Self Service. Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our reportable segments are organized based on a combination of geographic areas served and type of product lines offered. The reportable segments are managed separately as each business serves different customers (i.e., geographic in the case of North America and Europe and product type in the case of Specialty) and is affected by different economic conditions. Therefore, we present three reportable segments: North America, Europe and Specialty.
The following tables present our financial performance by reportable segment for the periods indicated (in thousands):
North AmericaEuropeSpecialtyEliminationsConsolidated
Three Months Ended September 30, 2020
Revenue:
Third Party$1,164,031 $1,484,099 $399,554 $— $3,047,684 
Intersegment210 — 875 (1,085)— 
Total segment revenue$1,164,241 $1,484,099 $400,429 $(1,085)$3,047,684 
Segment EBITDA$204,957 $136,165 $48,340 $— $389,462 
Depreciation and amortization (1)
24,479 44,412 7,436 — 76,327 
Three Months Ended September 30, 2019
Revenue:
Third Party$1,302,086 $1,451,483 $394,204 $— $3,147,773 
Intersegment61 — 1,110 (1,171)— 
Total segment revenue$1,302,147 $1,451,483 $395,314 $(1,171)$3,147,773 
Segment EBITDA$166,310 $124,712 $45,464 $— $336,486 
Depreciation and amortization (1)
23,593 47,302 6,983 — 77,878 
North AmericaEuropeSpecialtyEliminationsConsolidated
Nine Months Ended September 30, 2020
Revenue:
Third Party$3,465,102 $4,058,878 $1,150,962 $— $8,674,942 
Intersegment729 — 2,923 (3,652)— 
Total segment revenue$3,465,831 $4,058,878 $1,153,885 $(3,652)$8,674,942 
Segment EBITDA$565,949 $303,814 $132,805 $— $1,002,568 
Depreciation and amortization (1)
72,677 126,000 21,959 — 220,636 
Nine Months Ended September 30, 2019
Revenue:
Third Party$3,925,962 $4,413,264 $1,157,023 $— $9,496,249 
Intersegment260 — 3,664 (3,924)— 
Total segment revenue$3,926,222 $4,413,264 $1,160,687 $(3,924)$9,496,249 
Segment EBITDA$532,994 $346,291 $135,790 $— $1,015,075 
Depreciation and amortization (1)
68,257 141,087 20,895 — 230,239 
(1)    Amounts presented include depreciation and amortization expense recorded within Cost of goods sold and Restructuring and acquisition related expenses.
The key measure of segment profit or loss reviewed by our chief operating decision maker, our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses (which includes restructuring expenses recorded in Cost of goods sold); change in fair value of contingent consideration liabilities; other gains and losses related to acquisitions, equity method investments, or divestitures; equity in losses and earnings of unconsolidated subsidiaries; and impairment charges. EBITDA, which is the basis for Segment EBITDA, is calculated as net income attributable to LKQ stockholders excluding discontinued operations and discontinued noncontrolling interest, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense.
The table below provides a reconciliation of Net Income to EBITDA and Segment EBITDA (in thousands):

 Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Net income$193,931 $152,593 $458,680 $403,761 
Less: net income (loss) attributable to continuing noncontrolling interest448 (46)1,166 2,321 
Less: net income attributable to discontinued noncontrolling interest— 376 103 568 
Net income attributable to LKQ stockholders193,483 152,263 457,411 400,872 
Subtract:
Net income (loss) from discontinued operations— 781 (638)1,179 
Net income attributable to discontinued noncontrolling interest— (376)(103)(568)
Net income from continuing operations attributable to LKQ stockholders193,483 151,858 458,152 400,261 
Add:
Depreciation and amortization68,655 71,513 199,897 213,349 
Depreciation and amortization - cost of goods sold7,067 5,391 16,162 15,916 
Depreciation and amortization - restructuring expenses (1)
605 9744,577 974
Interest expense, net of interest income25,182 32,104 76,729 104,077 
(Gain) loss on debt extinguishment— (128)12,751 (128)
Provision for income taxes78,510 57,747 180,790 165,122 
EBITDA373,502 319,459 949,058 899,571 
Subtract:
Equity in earnings (losses) of unconsolidated subsidiaries (2)
4,113 4,232 1,980 (33,745)
Add:
Restructuring and acquisition related expenses (1)
19,890 7,955 47,838 19,639 
Restructuring expenses - cost of goods sold833 17,130 6,494 17,130 
(Gain) loss on disposal of businesses and impairment of net assets held for sale (3)
(503)(3,601)1,733 44,919 
Change in fair value of contingent consideration liabilities(147)(225)(575)71
Segment EBITDA$389,462 $336,486 $1,002,568 $1,015,075 
(1)    The sum of these two captions represents the total amount that is reported in Restructuring and acquisition related expenses in our Unaudited Condensed Consolidated Statements of Income. Refer to Note 5, "Restructuring and Acquisition Related Expenses," for further information.
(2)    Refer to "Investments in Unconsolidated Subsidiaries" in Note 3, "Financial Statement Information," for further information.
(3)    Refer to "Net Assets Held for Sale" in Note 3, "Financial Statement Information," for further information.
The following table presents capital expenditures by reportable segment (in thousands):
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Capital Expenditures
North America$12,352 $29,430 $52,565 $83,833 
Europe17,420 30,916 49,970 72,333 
Specialty2,876 3,937 7,414 9,385 
Total capital expenditures$32,648 $64,283 $109,949 $165,551 

The following table presents assets by reportable segment (in thousands):
September 30,December 31,
20202019
Receivables, net
North America$380,907 $419,452 
Europe688,175 636,216 
Specialty105,422 75,464 
Total receivables, net1,174,504 1,131,132 
Inventories
North America805,681 991,062 
Europe1,228,332 1,401,801 
Specialty211,833 379,914 
Total inventories2,245,846 2,772,777 
Property, plant and equipment, net
North America579,693 610,573 
Europe544,745 538,951 
Specialty80,328 84,876 
Total property, plant and equipment, net1,204,766 1,234,400 
Operating lease assets, net
North America761,928 768,164 
Europe441,223 457,035 
Specialty80,061 83,312 
Total operating lease assets, net1,283,212 1,308,511 
Equity method investments
North America18,730 17,624 
Europe128,806 121,619 
Total equity method investments147,536 139,243 
Other unallocated assets6,105,348 6,193,893 
Total assets$12,161,212 $12,779,956 

We report net receivables; inventories; net property, plant and equipment; net operating lease assets; and equity method investments by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash and cash equivalents, prepaid and other current and noncurrent assets, goodwill and other intangibles.
Our largest countries of operation are the U.S., followed by Germany and the U.K. Additional European operations are located in the Netherlands, Italy, Czech Republic, Belgium, Austria, Slovakia, Poland, and other European countries. Our operations in other countries include wholesale operations in Canada, remanufacturing operations in Mexico, an aftermarket
parts freight consolidation warehouse in Taiwan, and administrative support functions in India. Our net sales are attributed to geographic area based on the location of the selling operation.
The following table sets forth our revenue by geographic area (in thousands):
Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
Revenue
United States$1,463,063 $1,579,691 $4,327,563 $4,735,134 
Germany396,119 394,115 1,129,805 1,196,527 
United Kingdom411,861 394,621 1,080,899 1,217,199 
Other countries776,641 779,346 2,136,675 2,347,389 
Total revenue$3,047,684 $3,147,773 $8,674,942 $9,496,249 

The following table sets forth our tangible long-lived assets by geographic area (in thousands):
September 30,December 31,
20202019
Long-lived assets
United States$1,429,743 $1,467,701 
Germany348,260 340,995 
United Kingdom295,658 330,113 
Other countries414,317 404,102 
Total long-lived assets$2,487,978 $2,542,911