LKQ Corporation

Good day and welcome to the LKQ Corporation's first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. We ask that you limit your questions to one and one follow-up so we are able to take as many questions as possible. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants this call is being recorded. Thank you. I'd now like to welcome Joe Boutros, Vice President, Investor Relations to begin the conference. Joe, over to you.

Thank you, Operator. Good morning, everyone, and welcome to LKQ's first quarter 2026 earnings conference call. With us today are Justin Jude, LKQ's President and Chief Executive Officer, and Rick Galloway, our 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 8K, which we filed with the SEC earlier today. And as normal, we are planning to file our 10Q in the coming days. And with that, I am happy to turn the call over to our CEO, Justin Jude.

Thank you, Joe, and good morning, everyone. We appreciate you joining us today. Q1 was another quarter of solid progress across our operating segments, and we're increasingly confident in our positioning as North America continues to recover. This quarter reflected the team's operating discipline and relentless focus on the things within our control, taking market share, protecting margins, and improving productivity. OKQ has started 2026 with a strong foundation, featuring a more focused organization, disciplined execution, and an unwavering commitment to long-term value creation. Now I'll provide a brief update on each segment. highlighting demand trends, commercial execution, and the actions we're taking to expand profitability. North America organic revenue declined 0.5% on a per-day basis, an improvement over last year's Q1 decline of 4.1%, and a sequential improvement from Q4's decline of 1%. These results highlight a gradual recovery and reinforce our confidence in the direction of our North American operations. Repairable claims are down approximately 2% to 4%, demonstrating steady recovery from the levels we saw throughout 2025. Importantly, we achieved strong performance in our aftermarket collision product line, surpassing the growth levels of the segment. This positive momentum was partly driven by an increase in utilization of alternative parts, which reached a record high of nearly 40% through February, and we anticipate that this favorable trend continues in March as well. We also renewed several MSO agreements and further integrating ordering capabilities with our key partners. These integrations are designed to increase the ease and velocity of ordering, improve procurement workflows, and position us to capture more share of wallet. Elitech, our calibrations and diagnostic business, delivered strong organic growth and healthy EBITDA margins in the quarter. For context, an increasing share of collision repairs require calibration and diagnostics. and we estimate that requirement has risen to roughly 75% today from about 62% three years ago. We view this as a durable, long-term tailwind and a compelling opportunity to extend our service offering. Our bumper-to-bumper hard parts business in Canada again delivered positive growth, and as I mentioned in the past, we plan to methodically expand this business further given the still fragmented, do-it-for-me hard parts market across North America. We're seeing promising signs of stabilization in North America that reinforce our optimism for the business. Used car prices are climbing, non-comprehensive total loss rates are declining, and auto insurance premiums are easing, all positive indicators for our industry. Notably, used car values improved every month this quarter, with March alone up 6.2%. These trends will drive a reduction in total loss frequency and boost the proportion of accidents that translate into repairable claims, supporting continued growth and opportunity for our company. While we can't predict the exact timing of a broader recovery, the indicators are moving in a direction that supports our model. And importantly, we believe we built a stronger foundation. So as volumes improve, we're confident in our ability to convert that into growth and margin expansion. In Europe, we saw softness early in the quarter, similar to what we experienced in Q4, followed by steady month-over-month improvement, with March showing stronger demand. While the macro backdrop remains mixed, we're focused on controlling what we can control, service levels, execution, and costs. Overall, performance was in line with our expectations as we continued to execute operational initiatives to improve service and further optimize our cost structure. Eastern Europe and Germany delivered positive organic revenue growth, and while the UK and Italy were down year over year, we were encouraged to see sequential improvement. Our private label initiative continues to make progress in the quarter, with volume penetration reaching 25.3%, up from 25.1% in Q4, which aligns with our objective of reaching 30% over the coming years. We are continuing to use targeted introductory pricing to support adoption, and we expect to thoughtfully improve pricing as customers gain confidence in the quality and reliability of our exclusive branded products. As previously communicated, we executed a planned ERP migration in one of our key European markets, which was completed during the first week of April. We anticipated temporary sales disruption associated with the conversion and appropriately reflected that in our four-year guidance. The project is progressing ahead of our initial expectations, and while we are not yet fully optimized post-conversion, our priority is maintaining customer service, and we are seeing daily improvements in sales levels. ERP conversions are intensive projects, but we approached it with deliberate execution. This achievement supports our integration roadmap and enables future process standardization, cost reduction initiatives, and enhancing the ability to become a seamless pan-European distributor. Lastly, turning to specialty. Specialty delivered another solid quarter with organic revenue of 3.4%. That marks three consecutive quarters of positive organic growth. RV revenue growth was nearly double digits, and we also saw strong growth in marine, reflecting continued demand and strong execution by the team. Last quarter, I noted the specialty process was robust, with strong interest from both strategic buyers and financial sponsors. That remains true. At the same time, the recent geopolitical tension has introduced uncertainty into the credit markets, and some potential buyers have seen their lenders tighten financing terms as a result. We haven't shut down the process, but given the environment, we felt it was important to be transparent with our shareholders about the timing and the dynamics we're seeing. Before I hand the call over to Rick, I want to provide an update on our ongoing strategic review. We are still early in the process, and we intend to be thoughtful and pragmatic. We have engaged both Bank of America Securities and Goldman Sachs alongside the board and management to identify and evaluate a full range of alternatives with the objective of maximizing long-term shareholder value. We believe there are multiple paths to create value, and we are committed to evaluating them rigorously. Management and the board are aligned to take a careful, strategic look at the business. We know we have a strong company, and we will be active, thoughtful, and deliberate as we assess the path forward. Given where we are with the process, investors should not expect an immediate update, but you should expect that we are treating this with urgency and evaluating alternatives thoroughly. Finally, to be clear, our teams remain fully focused on executing day-to-day, and the strategic review does not change our operating priorities or our commitments to serving customers and delivering results, something our teams never lose sight of, and for that, I am extremely proud of their continued dedication. With that, I'll turn the call over to Rick to walk through the quarter in more detail.