UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________ 

FORM 10-Q

____________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from              to

Commission File Number: 001-42002

____________________________ 

LKQ CORPORATION

(Exact name of registrant as specified in its charter)

____________________________ 

Delaware	36-4215970
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5846 Crossings Boulevard
Antioch, Tennessee	37013
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (615) 781-5200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	LKQ	The Nasdaq Global Select Market
4.125% Notes due 2031	LKQ31	The Nasdaq Global Select Market

________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐	Emerging Growth Company	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

At July 19, 2024, the registrant had outstanding an aggregate of 263,256,076 shares of Common Stock.

1

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TABLE OF CONTENTS

Item		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023	3
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	4
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	6
	Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023	7
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
SIGNATURES		54

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income

(In millions, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	3,711	$	3,448	$	7,414	$	6,797
Cost of goods sold	2,270		2,034		4,521		4,011
Gross margin	1,441		1,414		2,893		2,786
Selling, general and administrative expenses	976		938		2,020		1,869
Restructuring and transaction related expenses	49		8		79		26
Depreciation and amortization	87		61		176		119
Operating income	329		407		618		772
Other expense (income):
Interest expense	66		52		130		88
Gains on foreign exchange contracts - acquisition related (1)	—		(23)		—		(46)
Interest income and other income, net	(3)		(11)		(9)		(20)
Total other expense, net	63		18		121		22
Income before provision for income taxes	266		389		497		750
Provision for income taxes	82		109		153		203
Equity in earnings of unconsolidated subsidiaries	2		2		—		5
Net income	186		282		344		552
Less: net income attributable to noncontrolling interest	1		1		1		1
Net income attributable to LKQ stockholders	$	185	$	281	$	343	$	551
Basic earnings per share:
Net income	$	0.70	$	1.05	$	1.29	$	2.06
Less: net income attributable to noncontrolling interest	—		—		—		—
Net income attributable to LKQ stockholders	$	0.70	$	1.05	$	1.29	$	2.06
Diluted earnings per share:
Net income	$	0.70	$	1.05	$	1.29	$	2.06
Less: net income attributable to noncontrolling interest	—		—		—		—
Net income attributable to LKQ stockholders	$	0.70	$	1.05	$	1.29	$	2.06

(1)    Related to the Uni-Select Inc. ("Uni-Select") acquisition. Refer to Note 2, "Business Combinations" and Note 13, "Derivative Instruments and Hedging Activities" for further information.

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

3

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income

(In millions)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	186	$	282	$	344	$	552
Less: net income attributable to noncontrolling interest	1		1		1		1
Net income attributable to LKQ stockholders	185		281		343		551
Other comprehensive income (loss):
Foreign currency translation, net of tax	(21)		34		(78)		91
Net change in unrealized gains/losses on cash flow hedges, net of tax	1		10		5		(7)
Other comprehensive income from unconsolidated subsidiaries	5		1		—		4
Other comprehensive (loss) income	(15)		45		(73)		88
Comprehensive income	171		327		271		640
Less: comprehensive income attributable to noncontrolling interest	1		1		1		1
Comprehensive income attributable to LKQ stockholders	$	170	$	326	$	270	$	639

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

4

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(In millions, except per share data)

	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	276	$	299
Receivables, net of allowance for credit losses	1,360		1,165
Inventories	3,064		3,121
Prepaid expenses and other current assets	385		283
Total current assets	5,085		4,868
Property, plant and equipment, net	1,509		1,516
Operating lease assets, net	1,364		1,336
Goodwill	5,530		5,600
Other intangibles, net	1,233		1,313
Equity method investments	157		159
Other noncurrent assets	333		287
Total assets	$	15,211	$	15,079
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,764	$	1,648
Accrued expenses:
Accrued payroll-related liabilities	199		260
Refund liability	134		132
Other accrued expenses	353		309
Current portion of operating lease liabilities	238		224
Current portion of long-term obligations	44		596
Other current liabilities	172		149
Total current liabilities	2,904		3,318
Long-term operating lease liabilities, excluding current portion	1,179		1,163
Long-term obligations, excluding current portion	4,253		3,655
Deferred income taxes	425		448
Other noncurrent liabilities	306		314
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 1,000.0 shares authorized, 323.6 shares issued and 264.2 shares outstanding at June 30, 2024; 323.1 shares issued and 267.2 shares outstanding at December 31, 2023	3		3
Additional paid-in capital	1,547		1,538
Retained earnings	7,472		7,290
Accumulated other comprehensive loss	(313)		(240)
Treasury stock, at cost; 59.4 shares at June 30, 2024 and 55.9 shares at December 31, 2023	(2,580)		(2,424)
Total Company stockholders' equity	6,129		6,167
Noncontrolling interest	15		14
Total stockholders' equity	6,144		6,181
Total liabilities and stockholders' equity	$	15,211	$	15,079

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

5

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In millions)

	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	344	$	552
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	200		135
Stock-based compensation expense	16		20
Gains on foreign exchange contracts - acquisition related	—		(46)
Other	57		37
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Receivables	(225)		(223)
Inventories	(37)		132
Prepaid income taxes/income taxes payable	(10)		(5)
Accounts payable	180		104
Other operating assets and liabilities	(59)		(3)
Net cash provided by operating activities	466		703
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(146)		(136)
Acquisitions, net of cash acquired	(30)		(52)
Other investing activities, net	(2)		3
Net cash used in investing activities	(178)		(185)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs	(7)		(30)
Proceeds from issuance of U.S. Notes (2028/33), net of unamortized bond discount	—		1,394
Proceeds from issuance of Euro Notes (2031), net of unamortized bond discount	816		—
Repayment of Euro Notes (2024)	(547)		—
Borrowings under revolving credit facilities	931		1,693
Repayments under revolving credit facilities	(1,104)		(2,267)
Borrowings under term loans	—		500
Repayments of other debt, net	(16)		(16)
Settlement of derivative instruments	3		(13)
Dividends paid to LKQ stockholders	(161)		(148)
Purchase of treasury stock	(155)		(8)
Other financing activities, net	(36)		(6)
Net cash (used in) provided by financing activities	(276)		1,099
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(10)		9
Net increase in cash, cash equivalents and restricted cash	2		1,626
Cash and cash equivalents, beginning of period	299		278
Cash, cash equivalents and restricted cash, end of period (1)	$	301	$	1,904
Supplemental disclosure of cash paid for:
Income taxes, net of refunds	$	167	$	184
Interest	122		67

(1)    Refer to Note 18, "Cash, Cash Equivalents and Restricted Cash" for further information on restricted cash.    

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

6

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Equity

(In millions, except per share data)

	Three Months Ended June 30, 2024
	LKQ Stockholders
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of April 1, 2024	323.5	$	3	(56.5)	$	(2,454)	$	1,541	$	7,367	$	(298)	$	14	$	6,173
Net income	—	—		—	—		—		185		—		1		186
Other comprehensive loss	—	—		—	—		—		—		(15)		—		(15)
Purchase of treasury stock	—	—		(2.9)	(126)		—		—		—		—		(126)
Vesting of restricted stock units, net of shares withheld for employee tax	0.1	—		—	—		(1)		—		—		—		(1)
Stock-based compensation expense	—	—		—	—		8		—		—		—		8
Dividends declared to LKQ stockholders ($0.30 per share)	—	—		—	—		—		(80)		—		—		(80)
Purchase of noncontrolling interest	—	—		—	—		(1)		—		—		—		(1)
Balance as of June 30, 2024	323.6	$	3	(59.4)	$	(2,580)	$	1,547	$	7,472	$	(313)	$	15	$	6,144

	Three Months Ended June 30, 2023
	LKQ Stockholders
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of April 1, 2023	322.8	$	3	(55.2)	$	(2,394)	$	1,510	$	6,852	$	(280)	$	14	$	5,705
Net income	—	—		—	—		—		281		—		1		282
Other comprehensive income	—	—		—	—		—		—		45		—		45
Vesting of restricted stock units, net of shares withheld for employee tax	0.1	—		—	—		—		—		—		—		—
Stock-based compensation expense	—	—		—	—		10		—		—		—		10
Dividends declared to LKQ stockholders ($0.275 per share)	—	—		—	—		—		(74)		—		—		(74)
Balance as of June 30, 2023	322.9	$	3	(55.2)	$	(2,394)	$	1,520	$	7,059	$	(235)	$	15	$	5,968

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

7

LKQ CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Equity

(In millions, except per share data)

	Six Months Ended June 30, 2024
	LKQ Stockholders
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of January 1, 2024	323.1	$	3	(55.9)	$	(2,424)	$	1,538	$	7,290	$	(240)	$	14	$	6,181
Net income	—	—		—	—		—		343		—		1		344
Other comprehensive loss	—	—		—	—		—		—		(73)		—		(73)
Purchase of treasury stock	—	—		(3.5)	(156)		—		—		—		—		(156)
Vesting of restricted stock units, net of shares withheld for employee tax	0.5	—		—	—		(6)		—		—		—		(6)
Stock-based compensation expense	—	—		—	—		16		—		—		—		16
Dividends declared to LKQ stockholders ($0.60 per share)	—	—		—	—		—		(161)		—		—		(161)
Purchase of noncontrolling interest	—	—		—	—		(1)		—		—		—		(1)
Balance as of June 30, 2024	323.6	$	3	(59.4)	$	(2,580)	$	1,547	$	7,472	$	(313)	$	15	$	6,144

	Six Months Ended June 30, 2023
	LKQ Stockholders
	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of January 1, 2023	322.4	$	3	(55.1)	$	(2,389)	$	1,506	$	6,656	$	(323)	$	14	$	5,467
Net income	—	—		—	—		—		551		—		1		552
Other comprehensive income	—	—		—	—		—		—		88		—		88
Purchase of treasury stock	—	—		(0.1)	(5)		—		—		—		—		(5)
Vesting of restricted stock units, net of shares withheld for employee tax	0.5	—		—	—		(6)		—		—		—		(6)
Stock-based compensation expense	—	—		—	—		20		—		—		—		20
Dividends declared to LKQ stockholders ($0.55 per share)	—	—		—	—		—		(148)		—		—		(148)
Balance as of June 30, 2023	322.9	$	3	(55.2)	$	(2,394)	$	1,520	$	7,059	$	(235)	$	15	$	5,968

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

8

LKQ CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Interim Financial Statements

LKQ Corporation, a Delaware corporation, is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," the "Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries.

We have prepared the accompanying Unaudited Condensed Consolidated Financial Statements pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These Unaudited Condensed Consolidated Financial Statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

We have reclassified certain prior period amounts to conform to the current period presentation.

Results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 22, 2024 ("2023 Form 10-K").

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

During the first quarter of 2023, we adopted Accounting Standards Update No. 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations" ("ASU 2022-04"), which requires the buyer in a supplier finance program to disclose certain information about its program, including key terms, balance sheet presentation of amounts, outstanding amounts at the end of each period, and rollforwards of balances. We adopted the provisions of ASU 2022-04 on a retrospective basis (see Note 11, "Supply Chain Financing"), except for the disclosure of rollforward information, which will be adopted prospectively in our Annual Report on Form 10-K for the year ending December 31, 2024 as required. The adoption of ASU 2022-04 did not have a material impact on our unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The ASU requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU will be effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements.

9

Note 2. Business Combinations

During the six months ended June 30, 2024, we completed acquisitions of five businesses within our Wholesale - North America segment and one business within our Europe segment. These acquisitions were not material to our financial position or results of operations as of and for the three and six months ended June 30, 2024. Additionally, in January 2024, we paid $23 million (€21 million) to a minority shareholder to settle a put option exercised on redeemable shares issued in conjunction with a previous acquisition. This payment was presented within Other financing activities, net in financing activities in our Unaudited Condensed Consolidated Statements of Cash Flows.

On February 26, 2023, we entered into a plan of arrangement to acquire all of Uni-Select's issued and outstanding shares. On August 1, 2023, we completed the acquisition of Uni-Select for an aggregate consideration paid of approximately Canadian dollar (“CAD”) 2.8 billion ($2.1 billion) (the "Uni-Select Acquisition"). In order to reduce the risk related to changes in CAD foreign exchange rates for the CAD purchase price, we entered into foreign exchange contracts. These foreign exchange contracts did not qualify for hedge accounting, and therefore the changes in fair value were reported in Gains on foreign exchange contracts - acquisition related in the Unaudited Condensed Consolidated Statements of Income. We reported Gains on foreign exchange contracts - acquisition related of $23 million and $46 million for the three and six months ended June 30, 2023, respectively. These foreign exchange contracts were settled in July 2023 ahead of closing of the Uni-Select Acquisition, resulting in total payments received of $49 million. See Note 13, "Derivative Instruments and Hedging Activities" for information related to these foreign exchange contracts.

In addition to our acquisition of Uni-Select, we completed acquisitions of three businesses within our Wholesale - North America segment, four businesses within our Europe segment and one business in our Specialty segment, during the year ended December 31, 2023.

The purchase price allocations for these acquisitions are preliminary and are subject to change during the measurement periods, which is not to exceed 12 months from the close of the acquisitions. During the six months ended June 30, 2024, there have been no significant adjustments to the preliminary purchase price allocations from those disclosed in our December 31, 2023 Consolidated Financial Statements. At this time, we are in the process of finalizing the purchase price allocations, which includes finalizing the acquisition date fair value of certain liabilities assumed and the tax basis of the entities acquired.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the effect of the businesses acquired during the six months ended June 30, 2024 as though the businesses had been acquired as of January 1, 2023, and the businesses acquired during the year ended December 31, 2023 as though they had been acquired as of January 1, 2022. The unaudited pro forma financial information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma financial information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value, adjustments to depreciation on acquired property, plant and equipment, adjustments to rent expense for above or below market leases, adjustments to amortization on acquired intangible assets, adjustments to interest expense, and the related tax effects. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results. The unaudited pro forma financial information is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	3,715	$	3,889	$	7,425	$	7,655
Net income	186		250		344		485

The pro forma impact of our acquisitions also reflects the elimination of acquisition related expenses (net of tax) of $5 million and $15 million for the three and six months ended June 30, 2023, respectively, and gains on foreign exchange contracts - acquisition related of $23 million and $46 million for the three and six months ended June 30, 2023, respectively. Refer to Note 8, "Restructuring and Transaction Related Expenses" for further information regarding our acquisition related expenses.

10

Note 3. Inventories

We classify our inventory into the following categories: (i) aftermarket and refurbished products, (ii) salvage and remanufactured products, and (iii) manufactured products.

Inventories consist of the following (in millions):

	June 30, 2024		December 31, 2023
Aftermarket and refurbished products	$	2,503	$	2,556
Salvage and remanufactured products	509		510
Manufactured products	52		55
Total inventories	$	3,064	$	3,121

Aftermarket and refurbished products and salvage and remanufactured products are primarily composed of finished goods. As of June 30, 2024, manufactured products inventory was composed of $24 million of raw materials, $7 million of work in process, and $21 million of finished goods. As of December 31, 2023, manufactured products inventory was composed of $26 million of raw materials, $7 million of work in process, and $22 million of finished goods.

Note 4. Allowance for Credit Losses

Our allowance for credit losses was $55 million and $61 million as of June 30, 2024 and December 31, 2023, respectively. The provision for credit losses was $1 million for both the three months ended June 30, 2024 and 2023 and $4 million and $6 million for the six months ended June 30, 2024 and 2023, respectively.

Note 5. Intangible Assets

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. We performed our annual impairment test during the fourth quarter of 2023, and determined no impairment existed as all of our reporting units had a fair value estimate which exceeded the carrying value by at least 20%. The fair value estimates of our reporting units were established using weightings of the results of a discounted cash flow methodology and a comparative market multiples approach. Goodwill and indefinite-lived intangible assets impairment testing may also be performed on an interim basis when events or circumstances arise that may lead to impairment. We did not identify any indicators of impairment in the first six months of 2024 that necessitated an interim test of goodwill impairment or indefinite-lived intangible assets impairment.

Note 6. Equity Method Investments

The carrying value of our Equity method investments were as follows (in millions):

	Segment	Ownership as of June 30, 2024	June 30, 2024		December 31, 2023
MEKO AB (1)	Europe	26.6%	$	144	$	145
Other			13		14
Total			$	157	$	159

(1)    As of June 30, 2024, the Level 1 fair value of our investment in MEKO AB ("Mekonomen") was $167 million based on the quoted market price for Mekonomen's common stock using the same foreign exchange rate as the carrying value. Our share of the book value of Mekonomen's net assets exceeded the book value of our investment by $10 million; this difference is primarily related to Mekonomen's Accumulated Other Comprehensive Income balance as of our acquisition date in 2016. We record our equity in the net earnings of Mekonomen on a one quarter lag.

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Note 7. Revenue Recognition

Disaggregated Revenue

We report revenue in two categories: (i) parts and services and (ii) other.

Parts revenue is generated from the sale of vehicle products including replacement parts, components and systems used in the repair and maintenance of vehicles and specialty products and accessories to improve the performance, functionality and appearance of vehicles. Services revenue includes (i) additional services that are generally billed concurrently with the related product sales, such as the sale of service-type warranties, (ii) fees for admission to our self service yards, and (iii) diagnostic and repair services.

For Wholesale - North America and Self Service, vehicle replacement products include sheet metal collision parts such as doors, hoods, and fenders; bumper covers; head and tail lamps; mirrors; grilles; wheels; and large mechanical items such as engines and transmissions. For Europe, and to a lesser extent for Wholesale - North America, vehicle replacement products include a wide variety of small mechanical products such as brake pads, discs and sensors; clutches; electrical products such as spark plugs and batteries; steering and suspension products; filters; and oil and automotive fluids. Additionally, in both our Wholesale - North America and Europe segments, we sell paint and paint related consumables for refinishing vehicles. For our Specialty operations, we serve seven product segments: truck and off-road; speed and performance; recreational vehicles; towing; wheels, tires and performance handling; marine; and miscellaneous accessories.

Other revenue includes sales of scrap and precious metals (platinum, palladium, and rhodium), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from furnace operations. We derive scrap metal and other precious metals from several sources in both our Wholesale - North America and Self Service segments, including vehicles that have been used in our recycling operations and vehicles from original equipment manufacturers ("OEMs") and other entities that contract with us for secure disposal of "crush only" vehicles. Revenue from the sale of hulks in our Wholesale - North America and Self Service segments is recognized based on a price per ton of delivered material when the customer (processor) collects the scrap.

The following table sets forth our revenue disaggregated by category and reportable segment (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Wholesale - North America	$	1,398	$	1,121	$	2,820	$	2,269
Europe	1,633		1,633		3,270		3,181
Specialty	466		442		888		838
Self Service	55		63		109		123
Parts and services	3,552		3,259		7,087		6,411
Wholesale - North America	75		78		153		159
Europe	6		5		13		12
Self Service	78		106		161		215
Other	159		189		327		386
Total revenue	$	3,711	$	3,448	$	7,414	$	6,797

Variable Consideration

Amounts related to variable consideration on our Unaudited Condensed Consolidated Balance Sheets are as follows (in millions):

	Classification	June 30, 2024		December 31, 2023
Return asset	Prepaid expenses and other current assets	$	70	$	68
Refund liability	Refund liability	134		132
Variable consideration reserve	Receivables, net of allowance for credit losses	130		155

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Revenue by Geographic Area

Our net sales are attributed to geographic area based on the location of the selling operation. The following table sets forth our revenue by geographic area (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue
United States	$	1,769	$	1,690	$	3,564	$	3,371
Germany	445		436		870		852
United Kingdom	423		422		868		837
Other countries	1,074		900		2,112		1,737
Total revenue	$	3,711	$	3,448	$	7,414	$	6,797

Note 8. Restructuring and Transaction Related Expenses

From time to time, we initiate restructuring plans to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations. Below is a summary of our current restructuring plans:

2024 Global Restructuring Plan

In the first quarter of 2024, we began a global restructuring initiative focused on enhancing profitability. This initiative includes exiting businesses and markets that do not align with our strategic objectives and executing on opportunities to reduce costs, streamline operations and consolidate facilities. As we move forward with our plan, we will incur impairments and other charges related to the disposal of long-lived assets, inventory, and other assets; costs for employee severance; lease termination charges and facility closure costs; and other contract termination charges. We expect that the largest portion of the activity will come from the Europe segment. In the second quarter of 2024, we entered into agreements to divest our operations in Slovenia, which closed in April 2024; Bosnia, which we expect to close in the second half of 2024 subject to customary closing conditions and regulatory approval; and Poland, which we expect to close in the third quarter of 2024 subject to customary closing conditions. Our operations in Poland will be sold to Mekonomen, an equity method investment of which we own 26.6%. In connection with entering into the Bosnia and Poland agreements, we concluded that these disposal groups met the held for sale criteria and classified their assets and liabilities as held for sale. As of June 30, 2024, total assets and liabilities of the combined disposal groups held for sale were $46 million and $46 million, recorded to Prepaid expenses and other current assets and Other current liabilities on the Unaudited Condensed Consolidated Balance Sheets, respectively. Our decision to exit these and other markets constituted a triggering event to evaluate certain long-lived assets for impairment, and as a result, we incurred and expect to incur impairment charges with the divestiture of Slovenia and as we move forward with plans to exit Bosnia, Poland and any other identified markets. This plan is scheduled to be substantially complete by the end of 2025 with an estimated total incurred cost of between $80 million and $100 million. In the future, we may identify additional initiatives under the plan that may result in additional expenditures, although we are currently unable to estimate the range of charges for such potential future initiatives.

2022 Global Restructuring Plan

In the fourth quarter of 2022, we began a restructuring initiative covering all of our reportable segments designed to reduce costs, streamline operations, consolidate facilities and implement other strategic changes to the overall organization. We have incurred and expect to incur costs primarily for employee severance, inventory or other asset write-downs, and exiting facilities. This plan is scheduled to be substantially complete by the end of 2024 with an estimated total incurred cost of between $28 million and $32 million.

1 LKQ Europe Plan

In 2019, we announced a multi-year plan called "1 LKQ Europe" which is intended to create structural centralization and standardization of key functions to facilitate the operation of the Europe segment as a single business. Under the 1 LKQ Europe plan, we are reorganizing our non-customer-facing teams and support systems through various projects including the implementation of a common Enterprise Resource Planning platform, rationalization of our product portfolio, and creation of a Europe headquarters office and central back office. We completed the organizational design and implementation projects in June 2021, with the remaining projects scheduled to be completed by the end of 2027 with a total incurred cost of between $30 million and $40 million.

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Acquisition Integration Plans

As we complete the acquisition of a business, we may incur costs related to integrating the acquired business into our current business structure and systems. These costs are typically incurred within a year from the acquisition date and vary in magnitude depending on the size and complexity of the related integration activities. We expect to incur additional expenses of approximately $5 million by the end of 2024 to substantially complete the integration plan related to the Uni-Select Acquisition in our Wholesale - North America segment.

The following table sets forth the expenses incurred related to our restructuring plans (in millions):

		Three Months Ended June 30,				Six Months Ended June 30,
Plan	Expense Type	2024		2023		2024		2023
2024 Global Plan	Employee related costs	$	3	$	—	$	3	$	—
	Inventory related costs (1)	6		—		14		—
	Asset impairments (2)	29		—		46		—
	Other costs	5		—		7		—
	Total	$	43	$	—	$	70	$	—
2022 Global Plan	Employee related costs	$	1	$	—	$	1	$	2
	Facility exit costs	—		1		1		3
	Other costs	—		1		—		2
	Total	$	1	$	2	$	2	$	7
1 LKQ Europe Plan	Employee related costs	$	1	$	—	$	2	$	1
	Facility exit costs	—		—		1		—
	Total	$	1	$	—	$	3	$	1
Acquisition Integration Plans	Employee related costs	$	3	$	—	$	4	$	—
	Facility exit costs	5		—		9		2
	Other costs	2		—		3		—
	Total	$	10	$	—	$	16	$	2
Total restructuring expenses		$	55	$	2	$	91	$	10

(1)    Recorded to Cost of goods sold in the Unaudited Condensed Consolidated Statements of Income.

(2)    Related to impairment of assets in Property, plant and equipment, net and Prepaid expenses and other current assets on the Unaudited Condensed Consolidated Balance Sheets.

The following table sets forth the cumulative plan costs by segment related to our restructuring plans (in millions):

	Cumulative Program Costs
	Wholesale - North America		Europe		Specialty		Self Service		Total
2024 Global Plan	$	10	$	60	$	—	$	—	$	70
2022 Global Plan	2		18		4		3		27
1 LKQ Europe Plan	—		13		—		—		13

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Transaction Related Expenses

During the three months ended June 30, 2024 and 2023, we incurred expenses totaling an insignificant amount and $6 million, respectively, and during the six months ended June 30, 2024 and 2023 we incurred expenses totaling $2 million and $16 million, respectively, for legal, accounting and advisory services related to completed and potential transactions.

Note 9. Earnings Per Share

The following chart sets forth the computation of earnings per share (in millions, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	186	$	282	$	344	$	552
Denominator for basic earnings per share—Weighted-average shares outstanding	265.3		267.6		266.2		267.5
Effect of dilutive securities:
Restricted stock units ("RSUs")	0.2		0.4		0.4		0.6
Performance-based RSUs ("PSUs")	0.1		0.2		0.1		0.2
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding	265.6		268.2		266.7		268.3
Basic earnings per share	$	0.70	$	1.05	$	1.29	$	2.06
Diluted earnings per share (1)	$	0.70	$	1.05	$	1.29	$	2.06

(1)    Diluted earnings per share was computed using the treasury stock method for dilutive securities.

Note 10. Accumulated Other Comprehensive Income (Loss)

The components of Accumulated Other Comprehensive Income (Loss) are as follows (in millions):

	Three Months Ended June 30, 2024
	Foreign Currency Translation		Unrealized Gain (Loss) on Cash Flow Hedges		Unrealized Gain on Pension Plans		Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries		Accumulated Other Comprehensive Income (Loss)
Balance as of April 1, 2024	$	(300)	$	(7)	$	6	$	3	$	(298)
Pretax (loss) income	(21)		3		—		—		(18)
Income tax effect	—		(1)		—		—		(1)
Reclassification of unrealized gain	—		(2)		—		—		(2)
Reclassification of deferred income taxes	—		1		—		—		1
Other comprehensive income from unconsolidated subsidiaries	—		—		—		5		5
Balance as of June 30, 2024	$	(321)	$	(6)	$	6	$	8	$	(313)

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	Three Months Ended June 30, 2023
	Foreign Currency Translation		Unrealized Gain (Loss) on Cash Flow Hedges		Unrealized Gain on Pension Plans		Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries		Accumulated Other Comprehensive Income (Loss)
Balance as of April 1, 2023	$	(276)	$	(17)	$	11	$	2	$	(280)
Pretax income	34		14		—		—		48
Income tax effect	—		(3)		—		—		(3)
Reclassification of unrealized gain	—		(1)		—		—		(1)
Other comprehensive income from unconsolidated subsidiaries	—		—		—		1		1
Balance as of June 30, 2023	$	(242)	$	(7)	$	11	$	3	$	(235)

	Six Months Ended June 30, 2024
	Foreign Currency Translation		Unrealized Gain (Loss) on Cash Flow Hedges		Unrealized Gain on Pension Plans		Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries		Accumulated Other Comprehensive Income (Loss)
Balance as of January 1, 2024	$	(243)	$	(11)	$	6	$	8	$	(240)
Pretax (loss) income	(78)		9		—		—		(69)
Income tax effect	—		(2)		—		—		(2)
Reclassification of unrealized gain	—		(3)		—		—		(3)
Reclassification of deferred income taxes	—		1		—		—		1
Balance as of June 30, 2024	$	(321)	$	(6)	$	6	$	8	$	(313)

	Six Months Ended June 30, 2023
	Foreign Currency Translation		Unrealized Gain (Loss) on Cash Flow Hedges		Unrealized Gain on Pension Plans		Other Comprehensive Income (Loss) from Unconsolidated Subsidiaries		Accumulated Other Comprehensive Income (Loss)
Balance as of January 1, 2023	$	(333)	$	—	$	11	$	(1)	$	(323)
Pretax income (loss)	91		(8)		—		—		83
Income tax effect	—		2		—		—		2
Reclassification of unrealized gain	—		(1)		—		—		(1)
Other comprehensive income from unconsolidated subsidiaries