Good morning everyone. Welcome to LKQ Corporation Second Quarter 2024 Earnings Conference Call. My name is Kiki [ph] and I will be your conference operator today. [Operator Instructions] I will now hand you over to your host, Joe Boutross, to begin. Joe, please go ahead..

Thank you, operator. Good morning, everyone and welcome to LKQ's second quarter 2024 earnings conference call. With us today are Justin Jude, LKQ's President and Chief Executive Officer; and Rick Galloway, Senior Vice President and Chief Financial Officer.

Please refer to the LKQ website at lkqcorp.com for our earnings release issued 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-K 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 and slide presentation.

Hopefully, everyone has had a chance to look at our 8-K 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'm happy to turn the call over to our CEO, Justin Jude..

Thank you, Joe and good morning to everyone joining us on the call. I am deeply honored and excited to be able to speak with you today as the CEO of LKQ, a company where I've spent the last 20 years working with dedicated colleagues to build a strong and vital business.

Before diving into the results for the quarter, I want to start by laying out my overarching priorities for our company and the plans we are executing to enhance performance and drive value for LKQ shareholders. LKQ is a strong company with market-leading businesses.

We have been successful by leaning into our operational excellence strategy with a focus on profitable revenue growth, margin enhancement and cash flow generation. Under my leadership, we will prioritize these strategic pillars which are an integral part of LKQ's culture. However, this doesn't mean we'll follow the exact same playbook.

I expect my team to challenge the status quo, to be innovative, to set goals and communicate them so we hold each other accountable and to learn from mistakes. Rick and I have years of experience operating successful businesses, of which 4, we're together running our North American wholesale segment.

We will work together with our global team to run an efficient organization, one that is focused on growing market share while driving productivity and actively managing the cost structure. In terms of capital allocation, our guiding principle is to direct our resources to the most value-enhancing opportunities.

From our vantage point today, share repurchases will be a priority and a means of driving shareholder value. As you can see from our repurchase activity in the second quarter, we believe our shares are trading below their intrinsic value and repurchases represent our best use of funds.

We see attractive return metrics in our shares and through our capital allocation priorities, you should expect to see ongoing programmatic share repurchasing activity. We have paused any large-scale acquisitions and raised the hurdle rate for improving synergistic tuck-in transactions.

In fact, we have walked away from deals in recent months because the returns on investment did not meet our new criteria. Rationalizing the asset base has been a key element of our strategic framework. We have routinely examined our assets from individual locations up to lines of business to determine if the assets align with our future plans.

As part of this process, we identified certain lines of business that did not fit our strategic objectives and we took action, divesting 14 businesses in the last 5 years which represented over $600 million in low margin revenue.

These transactions were done judiciously and following a disciplined process to achieve a favorable outcome and we will continue to carefully evaluate whether we are the right owners for any of our businesses while we focus on our core strengths. Finally, cash flow generation will remain central to our business.

Delivering strong cash flow allows us to invest in our future through capital projects and to return value to shareholders through dividends and share repurchases while maintaining a manageable debt level and our investment-grade rating. I'll now provide some comments on our results and then Rick will discuss our financials and guidance.

Our second quarter results did not meet expectations on the top line. In the first quarter, we faced revenue headwinds from a decrease in repairable claims in North America which was influenced by mild and dry winter weather conditions.

In our Q1 commentary, we noted there would be a carryover effect in the second quarter as shops had lighter backlogs than normal going into April and we acknowledge a further risk to revenue if repairable claims didn't rebound as we were projecting.

As you can see from our second quarter results, the revenue trends moved in an unfavorable direction in North America as well as our other 3 segments. On a per day basis, organic parts and revenue was down 2.9% overall and was negative in each segment.

Drilling down and starting with North America, organic revenue decreased by 5.3%, with the largest drop coming from aftermarket collision parts. Similar to Q1, repairable claims were down in the second quarter by 7%, proving to be a headwind.

Although not material, access to aftermarket inventory following the Panama Canal disruption and delays with inbound deliveries also had a negative effect. As we continue to see a reduction in repairable claims during Q2, we dug deeper into the market to further understand the drivers of this sequential decrease.

While weather was a contributing factor to the reduction in Q1's repairable claims, as we mentioned on the last call, we further researched the impact of rising insurance costs and declining used car values on the consumer's decision to repair their vehicle.

We found the combination of these economic factors, rising insurance premiums and repair costs relative to the declining used car prices have the largest aggregate effect. In parallel, we also engaged a leading global consulting firm to conduct an independent assessment of the market and their findings lined up with our deep dive analysis.

Based on these findings, we believe that most of these factors are temporary as weather conditions will fluctuate from year to year and economic conditions should normalize over time, allowing for insurance cost to moderate and used car prices to stabilize.

We believe that an improvement in economic conditions will contribute to more cars being repaired. The smaller impact of repairable claims is the ongoing effect of ADAS technology entering the car park and we estimate that headwind to approximately be a 1% decrease in repairable claims per year.

This is further supported by research from the Insurance Institute for Highway Safety and the Highway Loss Data Institute, that states there is little evidence that partial automation systems are preventing collisions.

However, the ADAS impact is not news to us and it doesn't change our near and long-term outlook on the collision market as we believe there will continue to be offset [indiscernible] volumes with revenue opportunities from an increase in parts per estimate, the cost of more complex replacement parts, expanding our services of calibration and diagnostics and continued growth in APU.

Rick will discuss in more detail how we are factoring these temporary effects into our guidance. We have taken decisive cost actions to address the revenue shortfall. As we discussed on the last call, we accelerated the FinishMaster integration and announced a global restructuring program in the first quarter.

With revenue remaining soft in Q2, we implemented a further cost reduction plan and I am pleased with the progress the North American team has made. Just as the team proved throughout the COVID pandemic, we know how to drive cost out of the business and we exited Q2 with $60 million in run rate savings on the cost reductions.

By making these actions quick, North America was able to generate a segment EBITDA margin above 17%, in line with our previous guidance. Our actions have been careful and deliberate and we believe we are well positioned to scale back up again as demand increases.

Switching to our Europe segment; organic parts and services revenue increased by 0.3% on a reported basis but declined 1.3% on a per day basis due to volume reductions. There were several factors behind the negative trend with economic conditions being the most significant component.

Modest economic growth and high inflation across many of our markets, including the U.K. and Germany, have impacted demand contributing to a year-over-year decline in overall volume. Like North America, we expect the unfavorable economic conditions to be a temporary headwind but one that will likely persist through the second half of 2024.

Other factors impacting revenue include the strike activity in Germany and heightened competition from small distributors. With the pressure coming from soft consumer demand, we are seeing some of our smaller competitors aggressively lowering prices. LKQ has been a price leader but we are also very disciplined.

By resisting price decreases, we lost some volume in the quarter. However, we do not think the short-term pricing behavior of these competitors is sustainable or irrational strategy and we believe our compelling value proposition will continue to be a key competitive advantage.

Europe has also taken actions to mitigate the revenue decline, including cost takeouts and productivity initiatives. Given local regulations, these efforts require more time to implement and thus, the benefits weren't fully realized in the second quarter. We expect to see greater cost savings as the year progresses and into 2025.

Additionally, the European team continues to advance our SKU rationalization project. The team has reviewed product groups representing about 1/3 of our revenue and we believe there is an opportunity to reduce about 30% of the current SKUs in these groups.

The SKUs would be delisted over a 3-year period starting in 2025, with the large majority coming in the first 2 years. As I noted in my introductory remarks, we continue to review our portfolio and look for opportunities to divest noncore businesses.

In Q2, we reached an agreement to sell our operations [indiscernible] and the transaction is expected to close in the third quarter.

Combined with the previously announced sales of our Bosnian and Slovenian businesses, the ELIT Polska divestiture reflects our ongoing efforts to streamline and simplify our operations while improving our margin profile.

This sale represents a good strategic fit as both LKQ and Mekonomen operated in Poland but neither had the scale to compete effectively with the larger players in the market. The combined operation will be better positioned to compete and we will share any upside potential through our investment in Mekonomen.

Shifting to specialty; organic revenue was down 2.1% for the quarter, roughly in line with the Q1 change. Softness in RV demand continues to be a headwind with uncertain economic conditions and high interest rates contributing to pressure on retail volume. We are seeing growth in some product lines, including marine.

Consistent with the rest of the organization, specialty has taken cost actions to protect margins and is narrowing the gap in the year-over-year margin change. I want to mention some other noteworthy items for the past several months. In May, we received a favorable ruling from the Federal Circuit Court related to design patents.

We believe the ruling is a win for the aftermarket industry and consumers who benefit from the value proposition offered by aftermarket products. In June, the Verdi Trade Union and Employers Association in Germany entered into a new collective bargaining agreement.

The new contract which runs through April 2026, covers approximately 5,000 of our employees and puts an end to the strike activity we experienced over the last year. We remain dedicated to providing the industry's best service to our customers and this agreement will improve our ability to deliver on this commitment.

We have already seen an improvement in branch availability following the agreement and we expect to get back to pre-strike levels in the second half of this year. In the quarter, we did a handful of tuck-in acquisitions, mostly by our BUMPER TO BUMPER business in Canada, where a tax law change provided an incentive to finish deals prior to June 30.

As I noted earlier, we are deprioritizing M&A as we shift focus to share repurchase and other more accretive uses of capital. On that note, we returned over $200 million to our shareholders through both dividends and share repurchases in the quarter.

This included the highest number of shares repurchased any quarter in the past 18 months and we are continuing to repurchase shares in Q3. Our Board of Directors approved a quarterly cash dividend of $0.30 per share to be paid in August.

Finally, from a governance standpoint, we regularly review the composition of our Board and ensure that we have members with the relevant experience and skills to support our mission. As part of this process, last week, we added Andy Clarke as a new board member.

Andy is a former public company CFO and financial expert and we are excited to add his expertise to the Board. I'll now turn the call over to Rick for a review of the financials and guidance..

$0.37 from lowering operating results, including the reduction in revenue expectations and persistent inflationary pressures outpacing market pricing, partially offset by cost savings, productivity and restructuring initiatives; $0.08 from non-EBITDA related items, including investment performance, depreciation, interest and taxes; and $0.03 from lower FX rates and commodity prices.

These are partially offset by a $0.03 benefit from share repurchases. While we continue to see variability in revenue trends, the team is doing an excellent job in addressing controllable factors to align to the current market environment and adjust for the short-term economic headwinds.

The free cash flow target of 50% to 60% annual EBITDA conversion remains in place but with the lower earnings expectations, we now expect free cash flow of approximately $850 million. Diligent balance sheet management should support achievement of the full year target while continuing to balance trade working capital needs heading into 2025.

Thank you for your time. I will now turn the call back to Justin for his closing comments..

the wholesale North American and Europe segments. Our senior management from these segments will present business overviews and targets for growth and margin expansion. To close out, in the first half, we faced obstacles that have tested our resolve and resilience.

Through it all, I have seen the unwavering dedication and hard work that define our LKQ culture. I am inspired by the LKQ team's commitment to excellence and perseverance in the face of adversity. We are well positioned to navigate the road ahead, seize new opportunities and accelerate our work to create value for our shareholders.

I'll now ask the operator to open up the line for questions..

[Operator Instructions] We've now received the first question from Scott Stember from ROTH MKM..

In North America, you talked about -- last quarter, you talked about weather and the emerging trend, I guess, of lower repairable claims because of the economy. It seems like that part of it has become a bigger piece.

Just trying to get a sense of if you had to frame out how much of the weakness is due to weather and just more just underlying economic issues in the country. Just trying to get a sense of how cyclical this business is starting to become..

Yes. So if you look at the weather piece, it was a large item in there. But if we looked at that economic factor, it was the majority of the headwinds that we face in repairable claims. As I mentioned on the call, we did a deep dive. We talked to a lot of our customers, insurance carriers.

We also engaged that third party which was BCG, to do that deep dive in Q1 and part of Q2. And so whether it's the weather side, whether it's the economic factor, we see all those things as being temporary in nature.

Hard to say when some of those economic factors start to reverse but by far, the majority of all of the issue of repairable claims we saw was just temporary in nature..

All right. And the $60 million that you talked about in cost cuts, I assume that was for North America, that's year-to-date. Did you put out a goal for the full year? And how much of that is going to stick? I imagine some of it is just related to pay and stock comp and things like that.

But just trying to get a sense of how much will stay?.

Yes. So good question, Scott. You're correct. Most of that came through from North America. I think the North American business can make the impact much quicker. So as far as the target goes, one of the things that we look at is we look at the overall performance, we look at it on a daily basis. There's a lot of other metrics that we go to.

So there wasn't a specific dollar threshold target. What it was is trying to get us back to the point that we talked about a few minutes ago within getting North America back up above 17 and really driving overall performance.

That team, when there's tough economic conditions, I think everyone realized that the North American team is fantastic in operating in a cyclical environment, if you look back a couple of years ago. And so most of those actions were completed by quarter end and then we'll start seeing that come through, through the rest of the year.

We also have similar actions over in Europe. Obviously, there's some different requirements, regulatory requirements that will delay us but we will start seeing some of those come in, in Q4 and then pretty much a full benefit as we go into 2025..

And as far as how much will stick?.

Yes. So as far as how much will stick, the full amount will stick. I mean these are permanent cost reductions that we're looking at. We're not sitting there trying to figure out this much is going to be a temporary basis and we're somewhat [indiscernible].

These are permanent cost actions and that's one of the things that Justin talked about is that, we need to make sure we're operationally excellent and looking at overall permanent reductions. And these items will stick..

The next question is from Craig Kennison from Baird..

Justin, regarding the SKU count reduction plan in Europe, how do you ensure that it doesn't impact your fulfilment rates?.

Yes. So our goal is kind of twofold. One, we want to simplify the business in our operations. We have a lot of SKUs that are duplication -- that are duplicated if you think of applications. So when a customer calls for a specific year making model, we have several brands of those.

We have a large team within our Europe operations across all countries, working to analyze that, the whole SKU rationalization project. I mean as of today, we've really not non-stocked any part or removed any SKUs from the application or removed any SKUs from our DCs. It's very small.

We're very cognizant that we want to make sure we have a better application coverage. So right now, there's definitely some holes where when a customer calls us for a part, we don't have it. So we want to improve the availability of the application level.

When it comes down to brands, obviously, there are certain brands in certain countries across Europe that we need to have and we will have. And so we have, once again, a large team focused on this project to make sure we don't make the wrong decisions.

The other thing that we're going to be pushing also towards, that the team is excited about is driving our private label throughout the rest of our Europe operations which as you guys can imagine, the private label brings the best gross margin for LKQ..

Is there a way to frame your private label penetration today and where it could be?.

We have some countries that are in the 30%, other countries that are in the single digits. We'll hear from Andy Hamilton at the Investor Day and we'll talk a little bit about some of our strategy to drive that even higher at our Investor Day once again in Nashville on September 10..

The next question is from Gary Prestopino from Barrington Research..

A couple of quick questions. Number one, the free cash flow generation that we're expecting for this year. I would expect, given what you've said, Justin, about share repurchases, the priority is share repurchases and you're fairly happy with your debt levels at this point..

Yes, Gary, I can take that one. I'll speak for Justin. And yes, we are content with where our debt levels are right now.

And we will have a primary folks and Justin kind of laid it out during his presentation, prepared remarks, that a priority is focusing on total shareholder return and there will be a large focus on share repurchases, particularly as we see the opportunities with our current stock price..

Okay. And then a second quick question. You gave us a number for repairable claims being down.

But do you have any numbers on what frequencies were in the quarter?.

We don't have an exact number on that, Gary. But I will tell you the actual frequency was not as bad as the repairable claims; for example, the weather brought down frequency and obviously brought down repairable claims.

That economic situation -- there were accidents out there and as we reach out to customers, insurance carriers, we found these actions just weren't getting repaired. And so we don't have an exact number of that but I would say the majority -- maybe not, sorry, the majority was temporary, as I said earlier.

A large chunk was what I would say, the frequency was there, they just weren't getting repaired..

The next question is from Bret Jordan from Jefferies..

On the BCG study, I guess, the economic factor, are they projecting that this lost volume is forever lost or is this deferred? I guess, sort of what was the takeaway from the impact?.

They kind of thought that there's some pent-up demand in this piece but then there's also some volume of frequency that occurred that just probably won't ever get repaired. It's hard to -- it's hard to speculate on how much will actually come through eventually into the mix.

But just with the rising insurance costs, the deductible cost, the repair cost climbing and then that the consumer's vehicle value dropping, it will be -- we'll have to see what happens with the economic if it changes the consumers' behavior.

But we do think there is some pent-up demand but nothing that shows us it's going to start coming in relatively quickly..

And I guess you commented about price competition from smaller players in Europe.

Are you seeing any price competition from smaller collision players in North America, like Empire, Cosmopolitan or any of that?.

Yes. And I would say that's nothing new. It probably slowed down a bit during the pandemic and the supply chain issue where we had a lot of inventory and a lot of our smaller folks did it. As they started getting their inventory back in, they kind of went back to their old ways of offering price more than service.

And so that's not necessarily anything new for us. So yes, we still see it..

Okay.

And I guess housekeeping, what was the total loss rate in the quarter?.

I kind of don't know if I have that number handy on it..

Bret, we can get back to you. I think it was roughly 21-ish but we can get back to you on that one..

The next question is from Ryan Brinkman from JPMorgan..

Hi, good morning. This is Josh Batra [ph] on for Ryan Brinkman. Thanks for taking my questions.

Could you help us unpack -- could you help us unpack the $0.37 impact to operating results embedded within the bridge to the updated EPS guide? Mainly in terms of the contribution from weaker revenue growth outlook and mix shift-related margin headwinds as opposed to the benefits from ongoing cost initiatives. And I have a follow-up..

Yes, it's a good question. When we're looking at the overall $0.37, it's a significant amount of volume. North of $0.50 would be volume and then there's some other pricing impacts that would be in addition to that.

And then we're looking at a pretty substantial productivity initiative in the back half which is what I was talking about a few minutes ago on the $60 million cost reductions that are working to offset that to bring us to the $0.37.

But if you think about it, we're somewhere north of, call it, $0.60 with some negativity on volume and pricing and then clawing back a fair amount of that through productivity initiatives..

Understood, that's very helpful. As a follow-up, just curious if the organic revenue growth metrics reflect an impact from the recent CDK outage at dealers, that may have perhaps led to a backlog at the collision repair shops in the U.S. as OE parts shipments were delayed.

And separately, wondering if you could share with us any impact of LKQ observed from the Hurricane Beryl into July?.

Yes. I caught on the CDK comments. So I will tell you, I think there was roughly, what, 15,000 dealerships, not all those are automotive. There is some volume that we gained from that CDK when some of the OE dealerships could not necessarily service the parts.

Obviously though, when we saw a headwind of repairable claims coming down 7.1%, it wasn't enough to -- the volume from CDK wasn't enough to offset that. A lot of the dealers that -- I mean, we still see those dealers today that have body shops and service centers. A lot of those are kind of have gone through the repair.

They've either fixed the issue or they're off to CDK. So we had a little bit of a volume tick up there but nothing meaningful..

Any color on Hurricane Beryl?.

We had some shutdowns within a couple of our facilities as far as the cost side goes. We haven't seen any type of volume changes. We're still kind of going through that as far as the hurricane goes but nothing material that we've seen at this point..

The next question comes from Brian Butler from Stifel..

Just starting out, I guess, when you look at the first quarter result, our first half results and kind of then pair that with the guidance revision that you gave, it feels like the repairable claim outlook is definitely still on a downward trajectory in the third quarter and maybe into fourth quarter.

So what gives you the confidence that this is just temporary in nature? And maybe, is there any historical precedent that we can look at and give you some comfort, again, that this isn't a much longer-term secular trend?.

Yes. So I mean, if you look at our last year Q1, we had very tough comps, Q2 tough comps and in the guide, a little bit softer Q2, Q3 and Q4. If we look at our -- so our thought is over a prior year, we see that getting better throughout the back half of the year, meaning not as bad as what we saw in Q1 and Q2.

If we look at just our run rate of revenue from month-to-month, from May to June and July, I mean, obviously, we had a week there with 4th of July that slowed down. If you look at our normalized daily run rate of revenue, we're seeing that kind of flat.

And while we don't have how repairable claims are shaken out in July yet or any part of Q2, our volume is staying flat, if that makes sense. So we think we've kind of hit bottom.

There may be some still negative on year-over-year trends because last year, it was a decent amount of repairable claims to -- I'm sorry, there's a decent amount of cars getting fixed because of -- if you think about it, used car pricing was climbing pretty aggressively last year. Now the opposite is happening where used car pricing is dropping.

And do consumers want to spend that money out of their pocket to fix that vehicle when the used car value has dropped. So we're pretty confident in the new guidance on what we see on revenue for LKQ for the back half of the year..

I guess so if you think about that guidance and the way the market should view that, I mean, it feels like that's got to be, as you said, kind of you're starting to flatten out almost the bottom. Is that almost a worst-case scenario? I mean, obviously, there's, I'm sure, scenarios where it can get worse.

But is this kind of one of the low case scenarios where you put this guidance with the expectation of kind of resetting expectations going forward from there?.

Yes. We hope the volume is level. I don't know if it was worst case necessarily. Obviously, it's hard for us to predict what happens with the economy and used car pricing and some of these other dynamics that affect us.

I've got to imagine at some point, we say it's temporary because at some point, used car pricing has to stabilize, normalize and then start to increase..

So Brian, part of the way that we look at this in the forecast is the economic factors that we looked at ourselves and then further validated with the study that we did started to indicate when the insurance companies have increased their pricing.

And so you get essentially a onetime change within the behavior with significant increases in insurance premium costs moving from one deductible to another deductible. And that impact started sort of in late Q2, early Q3 of last year which we think will then lead through at least through the end of the year.

And that's what we've put in, that year-over-year impact going through the end of the year. But then once you annualize that, the change from one deductible to another deductible, we don't expect that to continue. We expect moderating within the insurance premiums and the behavior from the consumer will be back to a more normalized behavior..

Okay. And so again, not to [indiscernible] point. But I guess then the 2024 guidance is kind of the starting point to where you think growth comes, starts to return.

There's not a big rebound somewhere in here in 2025?.

No, we don't. Yes, that's correct. We don't think that there's some sort of big rebound. There's nothing that indicates to us that there will be a significant bump up one way or the other. But it will be the new starting point, if you will, in the back half of the year that will grow from there..

The next question is from John Healy from Northcoast Research..

I know that it's been talked about a lot already but I just thought I maybe ask the question differently.

Relating to the accident frequency dynamic, I mean what's does the BCG study kind of say about, if they said anything, just kind of accident frequency potentially over the long term? And did you guys kind of flesh out with the scenario where maybe the decline in claims is maybe some form of accident avoidance technology and vehicles starting to proliferate through the car part? Like did they address that? And if they did, how did they refuse that as maybe potentially a sign of what's starting to change here?.

Yes, I'll answer that. This is Justin. The second part of your question on the technology [indiscernible]; I kind of made it a comment in my script on ADAS. So ADAS is not a new phenomenon -- phenomenon for us, sorry.

We've seen the -- as the car park really starting in 2016 getting introduced with more of these features for ADAS or accident avoidance systems, we would start to see that reduction in overall repairable claims. We think right now, it's around 1%, BCG confirm that. That's what we would call as more kind of constant.

Now while that may be a reduction of accidents by 1%, we see the overall market still growing for the future because of more parts per estimate. The complexity of those parts are higher which means higher prices. Also, there's more business going in for calibration and services and we also see a continual opportunity to improve APU.

But your question on the technology, it's been there. It's been in the car park for quite a while and we see that about as a 1% reduction, 1% year-over-year reduction in the repairable claims.

When we talk about the future, the forecast, in nature, the majority by far was these temporary items, whether it was weather or whether it was these economic factors, they did not and we didn't necessarily speculate as to when do -- obviously, the weather is the weather and it happens and it could be year-to-year, it could be different.

But they and LKQ is not going to speculate on when some of these economic factors are going to start to improve and help drive higher repairable claims..

And Justin, maybe I'll just add back on to one thing that Bret was asking a few minutes ago. The repairable claims, we did see the peak in Q1, 21.4%, start dropping, Bret, to 20.7% in Q2. So it's starting to make its way back down on total losses. I'm sorry, total losses..

We currently have no further questions. So I'd like to hand over to Justin Jude, President and CEO, for closing remarks..

Thanks, operator. First, I want to thank our team out in the field, both in North America and Europe and the other countries for which we operate. Just we all face challenges. We face headwinds in the overall market but very proud of the team and how they reacted, getting our business rightsized or how they're working still to rightsize that business.

So very much appreciative of that team. And for everybody on the call and for all of our employees and investors, as we talked about some of these headwinds, it's not an LKQ problem, it's a market issue right now.

We're making sure we have the cost put [ph] in place and we'll be ready to go when the volume starts to recover and we have quite a bit of initiative and we'll share some of those at our Investor Day on September 10, once again, in Nashville, about how we have opportunities to continue to grow market share and that will help us as the market continues to recover.

So with that, thanks everybody for joining the call, we appreciate it. And with that, we'll end the call..

This concludes today's conference call. You may now disconnect your lines. Thank you..