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What changed in LKQ Corporation's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of LKQ Corporation's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+339 added−390 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-20)

Top changes in LKQ Corporation's 2025 10-K

339 paragraphs added · 390 removed · 256 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+33 added−50 removed10 unchanged
Biggest changeIn addition to traditional customers, we sell to several large parts and accessory online retailers. Our Specialty segment also operates retail stores in northeast Pennsylvania. We promote our products to customers through marketing programs, which include: (i) catalogs, advertising, sponsorships and promotional activities, (ii) product level marketing and merchandising support, and (iii) online and digital marketing initiatives.
Biggest changeWe promote our products through a range of marketing programs, including (i) catalogs, advertising, sponsorships and promotional activities, (ii) product‑level marketing and merchandising support, and (iii) online and digital marketing initiatives. We also stage in‑person and/or virtual trade shows across the U.S., which provide opportunities to increase sales by showcasing new and innovative products from our vendors to our customers.
Our proactive approach includes implementing a range of programs and practices aimed at preventing accidents and fostering a culture of safety throughout our organization. Employee Engagement and Empowerment We strive to create an environment where creativity thrives, and team members are empowered to make decisions that are best for their teams and the business.
Our proactive approach includes implementing a range of programs and practices aimed at preventing accidents and fostering a culture of safety throughout our organization. Employee Empowerment We strive to create an environment where creativity thrives, and team members are empowered to make decisions that are best for their teams and the business.
We do not believe that our business is materially dependent on any single item of intellectual property, or any single group of related intellectual property, owned or licensed, nor would the expiration of any particular item or related group of intellectual property, or the termination of any particular intellectual property license 10 agreement, materially affect our business.
We do not believe that our business is materially dependent on any single item of intellectual property, or any single group of related intellectual property, owned or licensed, nor would the expiration of any particular item or related group of intellectual property, or the termination of any particular intellectual property license agreement, materially affect our business.
One example of this practice is our global employee engagement survey, which provides an opportunity to listen to our organization, understand what we are doing well, and identify areas for improvement.
One example of this practice is our global employee engagement survey, which provides an opportunity for us to listen to our organization, understand what we are doing well, and identify areas for improvement.
And in furtherance of our mission, in 2020 we established the LKQ Community Foundation, which is committed to supporting charitable organizations that help the communities where our employees live and LKQ operates.
And in furtherance of our mission, we established the LKQ Community Foundation, which is committed to supporting charitable organizations that help the communities where our employees live and LKQ operates.
Our recycling efforts preserve natural resources, reduce the demand for scarce landfill space, and help decrease air and water pollution, the latter attributed to the avoidance of new manufacturing activities that would otherwise be required. People-led Performance Part of LKQ’s mission is to build strong partnerships with our employees and the communities in which we operate.
Our recycling and remanufacturing efforts preserve natural resources, reduce the demand for scarce landfill space, and help decrease air and water pollution, the latter attributed to the avoidance of new manufacturing activities that would otherwise be required. 10 People-led Performance Part of LKQ’s mission is to build strong partnerships with our employees and the communities in which we operate.
Vehicles that have been dismantled for recycled products and "crush only" end-of-life vehicles acquired from other companies are typically crushed using equipment on site. In other cases, we will hire mobile crushing equipment to crush the vehicles before they are transported to shredders and scrap metal processors.
Vehicles that have been dismantled for salvage products and "crush only" end-of-life vehicles acquired from other companies are typically crushed using equipment on site. In other cases, we will hire mobile crushing equipment to crush the vehicles before they are transported to shredders and scrap metal processors.
Outside of North America, we have government-mandated collective bargaining agreements and union contracts in certain countries, particularly in Europe where many of our employees are represented by unions and/or works councils. Health and Safety We are dedicated to ensuring a safe and secure work environment for all team members, where unnecessary risks are minimized, and safety is a shared priority.
Outside of North America, we have government-mandated collective bargaining agreements and union contracts in certain countries, particularly in Europe where approximately 7,000 of our employees are represented by unions and/or works councils. Health and Safety We are dedicated to ensuring a safe and secure work environment for all team members, where risks are minimized, and safety is a shared priority.
And through this initiative, we prioritize the well-being, development, and engagement of our workforce, recognizing that a diverse and inclusive environment drives both innovation and success. Commitment to Values and Ethics Our Code of Ethics empowers our team members to make principled decisions in every aspect of their work.
Through this initiative, we prioritize the well-being, development, and engagement of our workforce, recognizing that an inclusive environment drives both innovation and success. 9 Commitment to Values and Ethics Our Code of Ethics empowers our team members to make principled decisions in every aspect of their work.
Once the parts are removed from end-of-life vehicles, some of the remaining valuable materials are collected and repurposed for use in the manufacturing of new basic materials such as steel, aluminum, plastic, and rubber.
Once the parts are removed from purchased vehicles, some of the remaining valuable materials are collected and repurposed for use in the manufacturing of new basic materials such as steel, aluminum, plastic, and rubber.
We compete with alternative parts distributors on the basis of our nationwide distribution system, our product lines and inventory availability, customer service, our relationships with insurance companies, and to a lesser extent, price; we compete with OEMs primarily on the basis of price and, to a lesser extent, on service and product quality.
We compete with alternative parts distributors utilizing our nationwide distribution system, the breadth, depth and availability of our product lines, our customer service and relationships with insurance companies, and, to a lesser extent, price. We compete with OEMs primarily on the basis of price and, to a lesser extent, service and product quality.
Damaged and unusable wheel cores are melted in our aluminum furnace and sold to consumers of aluminum ingots and sows for the production of various automotive products, including wheels. We also sell the precious metals contained in certain of our recycled parts such as catalytic converters.
Damaged and unusable wheel cores are melted in our aluminum furnace and sold to consumers of aluminum ingots and sows for use in the production of various automotive products. We also sell the precious metals recovered from certain recycled parts, such as catalytic converters.
We compete on the basis of product breadth and depth, rapid and dependable delivery, marketing initiatives, support services, and price. Information Technology Systems Most of our Specialty operations utilize an internally developed inventory management and order entry system that interfaces with third party software systems for accounting, transaction processing, inventory and warehouse management, data analytics, and reporting.
We compete on the basis of product breadth and depth, rapid and reliable delivery, marketing initiatives, support services, and price. Information Technology Systems Most of our Specialty operations use an internally developed inventory management and order entry system that integrates with third party software solutions supporting accounting, transaction processing, inventory and warehouse management, data analytics, and reporting.
In addition to our sales to repair shops and wholesale distributors, we generate a portion of our revenue through sales to retail customers from e-commerce platforms and from point of sale transactions at branch locations.
In our three‑step operations, we sell products to wholesale distributors or jobbers. In addition to sales to repair shops and wholesale distributors, we generate a portion of our revenue from sales to retail customers through e‑commerce platforms and point‑of‑sale transactions at branch locations.
Buyers of vehicle replacement products have the option to purchase from primarily five sources: new products produced by original equipment manufacturers ("OEMs"); new products produced by companies other than the OEMs, which are referred to as aftermarket products; recycled products obtained from salvage and total loss vehicles; recycled products that have been refurbished; and recycled products that have been remanufactured.
Buyers of vehicle replacement products have the option to purchase from primarily four sources: new products produced by original equipment manufacturers ("OEMs"); new products produced by companies other than the OEMs, which are referred to as aftermarket products; salvaged products taken from total loss vehicles; and reconditioned products that have been refurbished or remanufactured.
It is available in 16 languages through our Website. More information on our Sustainability initiatives can be found in our 2023 Sustainability Report on our Website. The Sustainability Report is not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.
More information on our Sustainability initiatives can be found in our most recent Sustainability Report on our website. The Sustainability Report is not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.
For example, during periods of extreme cold, our Europe segment historically witnesses an increase in battery demand. Our Specialty segment sells parts for RV and marine products, and as a result, we tend to see higher demand for our products during periods of warmer weather due to an increased level of outdoor leisure activity.
Our Specialty segment sells parts for RV and marine products, and as a result, we tend to see higher demand for our products during periods of warmer weather due to an increased level of outdoor leisure activity.
We proactively divest businesses that no longer align with our strategic vision, financial objectives or have limited long-term value potential, as demonstrated by our divestment of certain of our operations in Poland in 2024.
We proactively divest businesses that no longer align with our strategic vision, financial objectives or have limited long-term value potential, as demonstrated by our divestments of certain operations in Poland, Slovenia, and Bosnia in 2024 and our Self Service segment in 2025.
Competition We view all suppliers of replacement repair products as our competitors, including other alternative parts suppliers and OEMs and their dealer networks.
Competition We consider all suppliers of replacement repair products to be competitors, including other alternative parts suppliers as well as OEMs and their dealer networks.
BUSINESS OVERVIEW LKQ Corporation ("LKQ," the "Company" or "we"), a member of the Standard & Poor's 500 Stock In dex ("S&P 500 Index") , is a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, and specialty aftermarket products and accessories to improve the performance, functionality and appearance of vehicles.
ITEM 1. BUSINESS OVERVIEW LKQ Corporation ("LKQ," the "Company" or "we") is a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, and specialty aftermarket products and accessories to improve the performance, functionality and appearance of vehicles.
We believe we have been able to distinguish ourselves from other specialty vehicle aftermarket parts and equipment distributors primarily through our broad product selection, which encompasses both popular and hard-to-find products, our national distribution network, and our efficient inventory management systems, as well as through our service.
We believe we differentiate ourselves from other specialty vehicle aftermarket parts and equipment distributors primarily through our broad product selection, which encompasses both widely used and hard-to-find products, our national distribution network, our efficient inventory management systems, and the quality of our service.
As of December 31, 2024, we employ approximately 47,000 people globally, of which approximately 19,000 were based in North America, 26,000 based in Europe and 2,000 based in Asia. Of our employees in North America, approximately 1,000 were represented by unions.
As of December 31, 2025, we employ approximately 44,000 people globally, of which approximately 17,000 are based in North America, 25,000 based in Europe and 2,000 based in Asia. Of our employees in North America, approximately 1,000 are represented by unions.
Strong Governance and Ethical Practices Our Board of Directors (the “Board") refreshment process has resulted in over half of our current Board being added since August 2018, and currently, 38% of our Board is comprised of persons from underrepresented groups. Additionally, eleven of our thirteen directors are independent.
Strong Governance and Ethical Practices Our Board refreshment process has resulted in over half of our current Board being added since May 2024, and currently, 22% of our Board is comprised of persons from underrepresented groups. Additionally, eight of our nine directors are independent.
Information Technology Systems In our aftermarket operations, we use a third party enterprise management system along with other third party software packages to enhance our online business-to-business platforms - OrderKeystone.com and Keyless.
Information Technology Systems Across our aftermarket operations, we use a third‑party enterprise management system along with other third‑party software packages to support and enhance our online business‑to‑business platforms, including OrderKeystone.com and Keyless, while Bumper to Bumper continues to operate on its existing, separate enterprise management system.
We are committed to simplifying our business by optimizing our product offerings. Our current efforts are focused on evaluating the product mix and market demand for common passenger vehicles parts to identify opportunities for streamlining - including reducing the number of SKU's offered, consolidating suppliers and increasing private label penetration.
We remain focused on simplifying our business by optimizing our product assortment. Current initiatives include evaluating product mix and market demand for common passenger vehicle parts to identify opportunities for streamlining, such as reducing the number of SKUs offered, consolidating suppliers, and increasing private‑label penetration.
Expanding our lean operating model We are committed to generating sustainable returns on invested capital by driving operational excellence and lean management across our businesses. We continuously evaluate and pursue opportunities to improve efficiency, margins and returns on invested capital.
Drive lean operating model globally We are committed to generating sustainable returns on invested capital by driving operational excellence and lean management across our businesses. We continuously evaluate and pursue initiatives to improve operating efficiencies, enhance margins and leverage the intellectual capital opportunities that exist across our operating segments.
We face significant competition in many markets where even smaller competitors can compete on price and service, and the OEMs compete via ties to brand loyalty of the consumer while also remaining competitive on price, service and availability.
We face significant competition across many of our markets, where even smaller participants can compete effectively on price and service, and OEMs benefit from consumer brand loyalty while also remaining competitive on price, service, and product availability.
To achieve this mission, our strategy focuses on executing three key initiatives: Capitalizing on profitable growth opportunities We are dedicated to building competitive advantages and maintaining our leadership positions in the markets in which we operate. We focus on driving profitable growth and increasing free cash flow while maintaining a strong balance sheet.
To achieve this mission, our strategy focuses on executing three key initiatives: Capitalizing on profitable growth opportunities We are dedicated to building competitive advantages, widening the moats around each of our operating segments, and maintaining our leadership positions in the markets in which we operate.
Additionally, our global Speak Up program provides a secure, anonymous channel for reporting complaints related to potential violations of our Code of Ethics, policies, laws, or safety practices.
Additionally, our global Speak Up Program provides a secure, anonymous channel for reporting complaints related to potential violations of our Code of Ethics, policies, laws, or safety practices. INTELLECTUAL PROPERTY We own and have the right to use various intellectual property, including intellectual property acquired as a result of past acquisitions.
Our top selling products include brake pads, discs and sensors, clutches, electrical products such as spark plugs and batteries, steering and suspension products, filters, and oil and automotive fluids. Our inventory is comprised of over 900,000 SKU's , of which, parts related to common passenger vehicles represents the largest group.
Our top‑selling products include brake pads, discs and sensors, clutches, electrical components such as spark plugs and batteries, steering and suspension parts, filters, oil and automotive fluids, and paint and paint related consumables. We maintain an inventory of more than 900,000 SKUs, with parts for common passenger vehicles representing the largest category.
Platinum Plus is our exclusive product line offered under the Keystone brand of aftermarket products. We also offer a product line called "Value Line" for more value conscious, often self-pay, consumers. We receive certifications on certain of our products from Certified Automotive Parts Association, an independent organization that evaluates the quality of our parts compared to OEM collision replacement products.
Our private label products include the Platinum Plus line which is marketed under the Keystone brand and the “Value Line” product category designed for value‑oriented, often self‑pay, consumers. Certain products receive certifications from the Certified Automotive Parts Association, an independent organization that evaluates the quality and performance of aftermarket parts relative to OEM collision replacement products.
Additionally, we extract fluids, some of which are recycled or utilized in our own operations, such as fuel to run our own on- and off-site fleet, and washer fluid. Our recycling expertise and efforts are a key pillar of our mission statement of being a leading global value-added and sustainable distributor of vehicle parts and accessories.
Additionally, we extract fluids, some of which are recycled or utilized in our own operations, such as fuel to run our own on- and off-site fleet, and washer fluid.
INTELLECTUAL PROPERTY We own and have the right to use various intellectual property, including intellectual property acquired as a result of past acquisitions, such as intellectual property related to winches manufactured by Warn. In addition to trade names, trademarks and patents, we also have technology-based intellectual property that has been both internally developed and obtained through license agreements and acquisitions.
In addition to trade names, trademarks and patents, we also have technology-based intellectual property that has been both internally developed and obtained through license agreements and acquisitions.
We have adopted “proxy access,” which permits an eligible stockholder to nominate and include in our proxy materials director nominees (subject to the terms set forth in our Bylaws).
We have adopted “proxy access,” which permits an eligible stockholder to nominate and include in our proxy materials director nominees (subject to the terms set forth in our Bylaws). We also have majority voting for the election of our directors, requiring a director who fails to receive a majority vote to tender his or her resignation to the Board.
We believe we have been able to distinguish ourselves from other alternative parts suppliers primarily through our distribution network, efficient inventory management systems and proprietary technology, which allows us to deliver our products quickly, reliably, and at competitive prices. 7 Information Technology Systems Our aftermarket operations in Europe use various information technology ("IT") systems.
We believe we differentiate ourselves from other alternative parts suppliers through the scale of our distribution network, the efficiency of our inventory management systems, and our proprietary technology, which together enable us to deliver products quickly, reliably, and at competitive prices. 7 Information Technology Systems Across our aftermarket operations, we utilize various information technology ("IT") systems that support the diverse needs of our markets.
Inventory Our aftermarket products encompass items commonly prone to damage in a collision, including bumper covers, automotive body panels, and lights, as well as paint and paint related consumables for refinishing vehicles. Additionally, through the acquisition of Canadian Automotive Group, we have broadened our product offerings to include a range of mechanical automotive parts and accessories.
Inventory Our aftermarket products encompass items commonly prone to damage in a collision, including bumper covers, fenders, paint and paint related body repair products, and lights, as well as mechanical automotive parts and accessories.
We also have majority voting for the election of our directors, requiring a director who fails to receive a majority vote to tender his or her resignation to the Board. 11 Our Board adopted a revised Code of Ethics in 2024, which covers a variety of topics, including the use of company assets, bribery and corruption, conflicts of interest, discrimination, harassment, health and safety, privacy and data protection, and the safeguarding of confidential information, and reporting Code of Ethics violations.
Our Board adopted a revised Code of Ethics in 2024, which covers a variety of topics, including the use of company assets, bribery and corruption, conflicts of interest, discrimination, harassment, health and safety, privacy and data protection, and the safeguarding of confidential information, and reporting Code of Ethics violations. It is available in 17 languages through our website.
For our Wholesale - North America segment, we tend to see higher demand for our collision related products during periods of cold inclement weather, which creates a higher likelihood of increased collision frequency and repairable claims. For our Europe segment, many of our aftermarket service-related products are impacted by weather patterns.
SEASONALITY Our operating results are subject to quarterly variations based on a variety of factors, including, but not limited to, seasonal weather patterns and events. For our North America segment, we tend to see higher demand for our collision related products during periods of inclement weather, which creates a higher likelihood of increased collision frequency and repairable claims.
In our two-step operations, we sell the majority of our products to commercial customers primarily consisting of professional repairers, including both independent mechanical repair shops and collision repair shops. In our three-step operations, we sell products to wholesale distributors or jobbers.
Certain businesses in Italy, the Netherlands, Germany, Switzerland and Hungary also operate elements of a three‑step model, in which we sell to distributors who then sell to repair shop customers. In our two‑step operations, we sell the majority of our products to commercial customers, primarily professional repairers, including independent mechanical repair shops and collision repair shops.
In 2024, approximately 21% of our specialty vehicle aftermarket purchases were made from our top three suppliers to this segment, with our largest supplier providing approximately 12% of our annual inventory purchases. No other suppliers comprised more than 4% of our purchases during 2024.
As a result of this highly fragmented supplier base, our supplier concentration within this segment is limited. In 2025, approximately 19% of our specialty vehicle aftermarket purchases were made from our top three suppliers, with our largest supplier accounting for approximately 10% of our annual inventory purchases. No other supplier represented more than 4% of our purchases during 2025.
Finally, we maintain a prudent and disciplined financial policy that prioritizes returning cash to shareholders through dividends and share repurchases, while maintaining our investment grade credit rating.
Additionally, in 2025, aligning with our ongoing strategy to simplify our portfolio and concentrate on our core segments, we commenced a process to explore the potential sale of our Specialty segment. Finally, we maintain a prudent and disciplined financial policy that prioritizes returning cash to shareholders through share repurchases and dividends, while maintaining our investment grade credit rating.
SUSTAINABILITY MATTERS Profitably Delivering Sustainable Solutions LKQ's North American and European operations purchase used vehicles and remove certain components for reuse in the repair of vehicles which helps reduce the use of raw materials and contributes to a circular economy.
LKQ purchases end-of-life vehicles and removes certain components for reuse in the repair of vehicles which helps reduce the use of raw materials and contributes to a circular economy.
We foster an entrepreneurial and employee-centric culture that enables agility and innovation, empowering our businesses to succeed in the markets they serve. To continuously enhance the quality of our portfolio, our growth strategy is driven by organic investments in automation, productivity improvements, talent development, and strategic acquisitions.
To continuously enhance the quality of our portfolio, our growth strategy is driven by organic investments in automation, productivity improvements, talent development, and strategic acquisitions that are aligned with the ongoing evolution of the car parc.
Our Wholesale - North America segment is a leading provider of alternative vehicle collision replacement products, paint and related body repair products, and alternative vehicle mechanical replacement products, with our sales, processing, and distribution facilities reaching most major markets in the United States and Canada.
Refer to Note 12, "Revenue Recognition" and Note 26, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for financial information by reportable segment and by geographic region. 3 Our North America segment is a leading provider of alternative vehicle collision replacement products, paint and related body repair products, and alternative vehicle mechanical replacement and maintenance products, with our sales, processing, and distribution facilities reaching most major markets in the United States ("U.S.") and Canada.
The system also supports an electronic exchange process for identifying and locating parts at other select recyclers and facilitates brokered sales to fill customer orders for items not in stock.
LKQX also enables electronic part-exchange capabilities with select recyclers and supports brokered sales to fulfill customer orders for items not in stock.
We purchased approximately 56% of our aftermarket products in 2024 from vendors located in the U.S.; however, we believe the majority of these products were manufactured in Taiwan, Mexico or other foreign countries, with the remaining aftermarket products being purchased directly from manufacturers in Taiwan and other Asian countries.
Outside of this group, no other supplier accounted for more than 4% of our aftermarket product purchases in 2025. Approximately 49% of our aftermarket products in 2025 were purchased from vendors located in the U.S.; however, we believe that most of these products were manufactured in Taiwan, Mexico, or other foreign countries.
We believe that the use of a single system across a majority of our wholesale recycled product operations helps facilitate the sales process; allows for continued implementation of standard operating procedures; and improves training efficiency, employee transferability, access to our national inventory database, management reporting and data storage.
Our wholesale salvage product locations in North America use LKQX, an internally-developed, proprietary enterprise management system. Operating on a single platform across most of our wholesale salvage product operations streamlines the sales process, supports standard operating procedures, strengthens training efficiency and employee mobility, and facilitates access to our national inventory database, management reporting, and data storage.
While the majority of our distribution is done through a two-step model, our Canadian Automotive Group business utilizes a mix of both a two-step (i.e., direct sales to repair shop customers) and three-step model (i.e., sales to distributors who in turn sell to repair shop customers). 5 Automobile insurance companies affect the demand for our collision products; while insurance companies do not pay for our products directly, they ultimately pay for the repair costs of insured vehicles in excess of any deductible amount.
While our distribution generally follows a two‑step model, our Bumper to Bumper business utilizes a combination of a two‑step model (direct sales to repair shop customers) and a three‑step model (sales to distributors who then sell to repair shop customers). 5 Automobile insurance companies influence demand for our collision products.
In 2024, approximately 49% of our aftermarket purchases were made from our top six vendors, with our largest vendor providing approximately 19% of our annual inventory purchases for the Wholesale - North America segment. This is primarily related to our acquisition of FinishMaster, where we obtained a strategic relationship with a supplier for paint and related products.
In 2025, approximately 44% of our aftermarket purchases were made from our top six vendors, with our largest vendor accounting for approximately 13% of our annual inventory purchases for the North America segment.
We also use other third party software packages, such as a data warehouse and integrated budgeting system, to leverage centralized data and information to conduct enhanced analytics and reporting. 6 EUROPE SEGMENT Our Europe segment operates in approximately 20 countries and was built up through a series of acquisitions.
In addition, we utilize other third party software solutions, including a data warehouse and an integrated budgeting system, to centralize information and enable more advanced analytics and reporting. 6 EUROPE SEGMENT Our Europe segment operates in approximately 20 countries throughout continental Europe and the U.K.
See Note 25, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for financial information by reportable segment and by geographic region.
We have made certain reclassifications to the prior period financial information to reflect discontinued operations presentation as a result of the sale of our Self Service segment. Refer to Note 4, "Discontinued Operations and Divestitures" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Through targeted productivity initiatives and a disciplined approach to cost management, we drive performance across key metrics, such as free cash flow generation, organic growth and profit margins.
Through targeted productivity efforts and a disciplined approach to cost management, we target specific performance metrics including free cash flow generation, organic growth and margins. Our current initiatives include optimizing working capital, enhancing margins through our inventory optimization efforts and reducing selling, general and administrative costs through streamlining our footprint and reducing complexity across our business.
Our delivery fleet utilizes a third party software provider to optimize delivery routes, and to track the progress of delivery vehicles. Competition Industry participants have a variety of supply choices. Vendors can deliver products to market via warehouse distributors and mail order catalog businesses, or directly to retailers and/or consumers.
Competition Industry participants have a variety of supply options. Vendors may deliver products through warehouse distributors and mail order catalog businesses, or directly to retailers and/or consumers. We view all distributors of specialty vehicle aftermarket equipment and accessories as our competitors.
Customers Overall, the specialty vehicle aftermarket parts and accessories market serves a fragmented customer base composed of RV, marine, and specialty automotive dealers, installers, jobbers, builders, parts chains, and mail-order businesses. Our customers are principally small, independent businesses. These customers depend on us to provide a broad range of products, rapid delivery, marketing support and technical assistance.
Customers Our customers are principally small, independent businesses that rely on us to provide a broad range of products, rapid delivery, marketing support and technical assistance. In addition to these traditional customers, we also sell to several large online retailers of parts and accessories.
In our salvage operations, we purchase severely damaged or total loss vehicles from insurance companies and auctions, which are transferred to our dismantling facilities or sold to other third party dismantlers.
We procure salvaged products from dismantling total loss vehicles, which we typically acquire from insurance companies and auctions. These vehicles are either transferred to our dismantling facilities for processing or sold to third‑party dismantlers. Customers We primarily operate a two‑step distribution model in Europe, under which we sell directly to repair shop customers.
Our Specialty segment is a leading distributor of specialty vehicle aftermarket equipment and accessories reaching most major markets in the U.S. and Canada. Our Self Service segment operates self service retail facilities across the U.S. that sell recycled automotive products from end-of-life-vehicles. 3 In 2023, we acquired Uni-Select Inc.
Our Specialty segment is a leading distributor of specialty vehicle aftermarket products and accessories reaching most major markets in the U.S. and Canada. On September 30, 2025, we completed the sale of our Self Service segment to an affiliate of Pacific Avenue Capital Partners, LLC.
Distribution We believe our Wholesale - North America segment has the largest distribution network of alternative vehicle parts and accessories for the vehicle collision and mechanical repair market in North America.
Distribution We believe our North America segment operates the largest distribution network of alternative vehicle parts and accessories serving the vehicle collision and mechanical repair markets in North America. Our network of warehouses and cross‑dock facilities enables us to maintain high service levels for local repair shops and to provide industry‑leading fulfillment rates supported by our nationwide footprint.
Customers We sell our products to wholesale customers that include collision and mechanical repair shops and new and used car dealerships, as well as to retail customers. The majority of these customers tend to be individually-owned small businesses, although the number of independent and dealer-operated repair facilities has declined over the last decade as a result of consolidation.
Customers We sell our products to wholesale customers, including collision and mechanical repair shops and new and used car dealerships, as well as to retail customers. These customers represent the primary source of revenue for the segment.
Distribution We currently have operations in approximately 20 different European countries, which we believe represents the broadest and largest footprint in the aftermarket industry in Europe with a distribution network larger than those of any of our principal competitors.
Distribution We believe our Europe segment operations represent the broadest and largest footprint in the European aftermarket industry and include a distribution network that exceeds those of our principal competitors. We operate a distribution model which utilizes a combination of large distribution centers, regional hubs and branch sales locations to fulfill customer demand.
Our salvage products include both mechanical and collision parts, including engines; transmissions; door assemblies; sheet metal products such as trunk lids, fenders and hoods; lights; and bumper assemblies. The aftermarket products we distribute are purchased from independent manufacturers and distributors located primarily in North America and Asia, principally Taiwan.
Our salvage products include both mechanical and collision parts, including engines; transmissions; door assemblies; sheet metal products such as trunk lids, fenders and hoods; lights; and bumper assemblies. We prioritize procurement of products with the highest expected demand, based on factors such as historical vehicle sales by model and year, customer requests, and projected supply and demand trends.
Product is moved through the distribution network on our trucks, vans or via common carriers. We have major international central distribution centers in Tamworth, England, Sulzbach-Rosenberg, Germany, and Berkel en Rodenrijs, the Netherlands, that have allowed us to consolidate multiple regional distribution centers while maintaining local distribution centers as necessary to support our businesses.
Our larger distribution centers are located in Tamworth, England; Sulzbach‑Rosenberg, Germany; and Berkel en Rodenrijs, the Netherlands; and regularly replenish the smaller branches and hubs through our distribution network via our fleet of trucks and vans or through common carriers.
Inventory The specialty vehicle aftermarket equipment and accessories we distribute and raw materials for products we manufacture are purchased from suppliers located primarily in the U.S., Canada, and China. Our top selling products are recreational vehicles ("RV") appliances and air conditioners, towing hitches, truck bed covers, vehicle protection products, marine electronics, cargo management products, and wheels, tires, and suspension products.
Inventory We source the specialty vehicle aftermarket products and accessories we distribute, as well as the raw materials used in our manufacturing operations, from suppliers located primarily in the U.S., Canada, and China.
We operate a delivery fleet of trucks and vans, which deliver multiple product types on the same delivery routes to minimize distribution costs, improve customer service and reduce environmental impacts. Competition We consider all suppliers of vehicle collision and mechanical products to be competitors, including aftermarket suppliers, recycling businesses, refurbishing operations, parts remanufacturers, OEMs and internet-based suppliers.
Our sales force and local delivery personnel cultivate and maintain key relationships with repair shops, which benefit from access to the broad product assortment made possible by our regional inventory network. Competition We consider all suppliers of vehicle collision and mechanical products to be competitors, including aftermarket suppliers, recycling businesses, refurbishing operations, parts remanufacturers, OEMs and internet‑based suppliers.
We seek to deploy capital for acquisitions in attractive growth areas. We apply strict criteria, targeting accretive tuck-in acquisition opportunities with high synergies that align with the core businesses in our strategic framework.
Disciplined capital allocation and portfolio simplification We are focused on maximizing return on invested capital through an efficient capital allocation strategy. We apply strict criteria, targeting accretive tuck-in acquisitions with high synergies that align with the core businesses and strategy.
We distribute a variety of products to collision and mechanical repair shops, including aftermarket collision and mechanical products; recycled collision and mechanical products; refurbished collision products such as wheels, bumper covers and lights; and remanufactured engines and transmissions. Collectively, we refer to the four sources that are not new OEM products as alternative parts.
Collectively, we refer to the three sources that are not new OEM products as alternative parts.
We believe this provides added value to our customers through a broader product offering and more efficient distribution process. We use our delivery routes to provide delivery and returns of our products directly to and from our customers in all 48 8 continental U.S. states and 9 Canadian provinces, and we ship globally to customers in other countries.
We utilize our delivery routes to manage both deliveries and returns directly to and from customers across all 48 continental United States and 9 Canadian provinces, and we also ship products globally to customers in other countries. Our delivery fleet uses third‑party software to optimize routing and monitor the progress of delivery vehicles.
Distribution Our Specialty segment operations employ a hub-and-spoke distribution model that enables us to transport products from our primary distribution centers to our non-inventory stocking cross docks, some of which are co-located with our Wholesale - North America operations and provide distribution points to key regional markets and synergies with our existing infrastructure.
Several of these cross docks are co‑located with our North America operations, providing distribution points to key regional markets and creating synergies with our existing infrastructure. We believe this model enhances the value we provide to customers by supporting a broader product offering and a more efficient distribution process.
This partnership will continue to play a key role in the expansion of our offerings for paint and related products. We believe we are one of the largest customers of each of these suppliers. Outside of this group, no other supplier provided more than 4% of our supply of aftermarket products in 2024.
This concentration is largely attributable to our paint, body and equipment ("PBE") business, through which we established a strategic relationship with a key supplier of paint and related products. This partnership is expected to remain an important contributor to our paint‑related offerings. We believe we are among the largest customers of each of these suppliers.
Our delivery fleet utilizes a third party software provider to optimize delivery routes and to track the progress of delivery vehicles throughout their runs. This third party software connects into each of our wholesale systems to allow a single interface for our management team to facilitate a single delivery to our customer, regardless of the product line or operating system.
This software integrates with each of our wholesale systems, providing a single interface that allows our management team to coordinate deliveries to customers regardless of product line or operating system. Our local presence supports a responsive and predictable customer experience, including the ability to deliver daily when required and to use consistent drivers for each route.
Removed
("Uni-Select"), a leading distributor of automotive refinish and industrial coatings and related products in North America through its FinishMaster business and a leading distributor of automotive maintenance parts and accessories serving the Canadian market through its Canadian Automotive Group business.
Added
We sell a variety of alternative replacement and maintenance parts including collision parts, which are typically exterior components used in the collision repair process to restore a vehicle's appearance and safety, such as bumper covers, fenders, paint and related body repair products, and lights; hard parts, which are typically internal components that are either mechanical in nature, such as alternators, starters, and clutches, or functional components that are replaced as part of routine maintenance, such as brake pads, discs and sensors, filters and batteries; and major mechanical parts, such as engines and transmissions.
Removed
This acquisition complemented our existing North American paint distribution operations and provided a scaled position in the Canadian replacement and maintenance parts market, with opportunity for future consolidation and growth. We are organized into four operating segments: Wholesale - North America; Europe; Specialty; and Self Service, each of which is presented as a reportable segment.
Added
We also sell specialty products and accessories, which are vehicle products that improve the performance, functionality and appearance of vehicles. We are organized into three operating segments: North America (formerly known as ("f/k/a") Wholesale - North America); Europe; and Specialty, each of which is presented as a reportable segment.
Removed
Our current initiatives include optimizing working capital through expansion of our vendor financing program, enhancing margins through our inventory optimization efforts and reducing selling, general and administrative costs through streamlining our footprint and reducing complexity across our business. Disciplined capital allocation and portfolio simplification We are focused on maximizing return on investment though efficient allocation of capital.
Added
We focus on profitable growth and increasing free cash flow while maintaining a resilient, investment grade balance sheet. We foster an entrepreneurial and employee-centric culture that enables agility and innovation, empowering our businesses to succeed in the markets they serve with a compensation structure that is aligned with our strategy to deliver long-term total shareholder returns.
Removed
WHOLESALE - NORTH AMERICA SEGMENT Our Wholesale - North America segment, which consists of aftermarket and salvage operations, sells five product types (aftermarket, OEM recycled, OEM remanufactured, OEM refurbished and, to a lesser extent, new OEM parts) to professional collision and mechanical vehicle repair businesses, which represents the source of the majority of the revenue generated by the segment.
Added
In addition to the above, on January 26, 2026 our Board of Directors (the "Board") announced it has initiated a comprehensive review of strategic alternatives to enhance shareholder value.
Removed
As the profile and complexity of vehicles being repaired evolves, we have expanded and continue to expand our offerings to customers. In recent years, we have begun to offer on-site mobile and remote diagnostics services through our brand known as Elitek Vehicle Services.
Added
As part of the review, the Board is working with its advisors to evaluate our strategic alternatives, including a potential sale of the Company. 4 BUSINESS TRANSFORMATION As part of executing our strategy to deliver profitable growth, drive a lean operating model and maximize returns on invested capital, we will, from time to time, engage in restructuring and business transformation initiatives.
Removed
Additiona lly, we began offering proprietary hybrid battery reconditioning and installation services which create a more reliable hybrid battery while also extending the battery's useful life.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese restrictions may limit our ability, among other things, to: • incur, assume or permit to exist additional indebtedness (including guarantees thereof) outside of our existing indebtedness; • incur liens on assets; 18 • engage in transactions with affiliates; • sell certain assets or merge or consolidate with or into other companies; • guarantee indebtedness; and • alter the business we conduct.
Biggest changeThese restrictions may limit our ability to, among other things: incur, assume or permit to exist additional indebtedness (including guarantees thereof) outside of our existing indebtedness; incur liens on assets; engage in transactions with affiliates; sell certain assets or merge or consolidate with or into other companies; guarantee indebtedness; and alter the business we conduct. 17 As a result of these covenants and restrictions, we may be limited in how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities.
Moreover, counter-measures have been taken by countries in retaliation for the U.S.-imposed tariffs and countries may take additional countermeasures and/or impose other restrictions on the importation of products in response to the threatened tariffs. The tariffs cover products and materials that we import, and the countermeasures may affect products we export.
Moreover, counter-measures have been taken by countries in retaliation for the U.S.-imposed tariffs and countries may take additional counter-measures and/or impose other restrictions on the importation of products in response to the threatened tariffs. The tariffs cover products and materials that we import, and the countermeasures may affect products we export.
For example, our debt and our debt service obligations could: • increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest; • require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures, dividends, share repurchases, other investments or other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and industry; • place us at a disadvantage compared to competitors that may have proportionately less debt; • limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and • increase our cost of borrowing.
For example, our debt and our debt service obligations could increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest; require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures, dividends, share repurchases, other investments or other general corporate purposes; limit our flexibility in planning for, or reacting to, changes in our business and industry; place us at a disadvantage compared to competitors that may have proportionately less debt; limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements and indentures; and increase our cost of borrowing.
Many foreign countries and governmental bodies, including the European Union, Canada, U.K., Switzerland and other 23 jurisdictions where we conduct business, have laws and regulations concerning the collection and use of PII and other data obtained from their residents or by businesses operating within their jurisdictions that are more restrictive than those in the U.S.
Many foreign countries and governmental bodies, including the European Union, Canada, U.K., Switzerland and other jurisdictions where we conduct business, have laws and regulations concerning the collection and use of PII and other data obtained from their residents or by businesses operating within their jurisdictions that are more restrictive than those in the U.S.
Additional unionization efforts, new collective bargaining or similar agreements, and work stoppages could materially increase our costs and reduce revenue and could limit our flexibility in terms of work schedules, reductions in force and other operational matters. We also are subject to laws and regulations that govern such matters as minimum wage, overtime and other working conditions.
Additional unionization efforts, 23 new collective bargaining or similar agreements, and work stoppages could materially increase our costs and reduce revenue and could limit our flexibility in terms of work schedules, reductions in force and other operational matters. We also are subject to laws and regulations that govern such matters as minimum wage, overtime and other working conditions.
Within each of these categories of suppliers, there are local owner-operated companies, larger regional suppliers, national and international providers, and internet-based suppliers and distributors. Providers of vehicle replacement and accessory products that have traditionally sold only certain categories of such products may decide to expand their product offerings into other categories of vehicle products, 12 which may further increase competition.
Within each of these categories of suppliers, there are local owner-operated companies, larger regional suppliers, national and international providers, and internet-based suppliers and distributors. Providers of vehicle replacement and accessory products that have traditionally sold only certain categories of such products may decide to expand their product offerings into other categories of vehicle products, which may further increase competition.
Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and operating results.
Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated 21 with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and operating results.
In the event that we do not receive sufficient distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the senior notes. A downgrade in our credit rating would impact our cost of capital. Credit ratings have an important effect on our cost of capital.
In the event that we do not receive sufficient distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the senior notes. A downgrade in our credit rating would impact us. Credit ratings have an important effect on our cost of capital.
In addition, efforts to better protect local markets from 24 foreign workers and decisions of countries to withdraw from treaties and joint economic areas may lead to increased restrictions on the free movement of people and labor and may limit our ability to place key personnel where they could best serve our needs.
In addition, efforts to better protect local markets from foreign workers and decisions of countries to withdraw from treaties and joint economic areas may lead to increased restrictions on the free movement of people and labor and may limit our ability to place key personnel where they could best serve our needs.
To the extent OEMs install or are mandated by law to install accident avoidance systems in their vehicles, the number and severity of accidents could decrease, which could have a material adverse effect on our business. The average number of new vehicles sold annually has fluctuated from year-to-year.
To the extent OEMs install or are mandated by law to install accident avoidance systems in their vehicles, the number and severity of accidents could decrease, which could have a material adverse effect on our business. 13 The average number of new vehicles sold annually has fluctuated from year-to-year.
Auction companies have been actively seeking to reduce, circumvent or eliminate these regulations, which would further increase the number of bidders. 15 In addition, there is a limited supply of salvage vehicles in North America, and thus the costs to us of these vehicles could increase over time.
Auction companies have been actively seeking to reduce, circumvent or eliminate these regulations, which would further increase the number of bidders. In addition, there is a limited supply of salvage vehicles in North America, and thus the costs to us of these vehicles could increase over time.
For further discussion of our annual impairment test, see "Goodwill Impairment" in the Critical Accounting Estimates section of Part II, Item 7 and 16 "Intangible Assets" in Note 2, "Summary of Significant Accounting Policies" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
For further discussion of our annual impairment test, see "Goodwill Impairment" in the Critical Accounting Estimates section of Part II, Item 7 and "Intangible Assets" in Note 2, "Summary of Significant Accounting Policies" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
If we or our subsidiaries incur additional debt, the risks associated with our substantial leverage and the need to service such debt would increase. Each of our credit agreement and CAD Note imposes operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.
If we or our subsidiaries incur additional debt, the risks associated with our leverage and the need to service such debt would increase. Each of our credit agreement and CAD Note imposes operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.
Such a disruption in revenue could potentially have a negative impact on our results of operations and financial condition. 25 If we experience problems with our fleet of trucks and other vehicles, our business could be harmed. We use a fleet of trucks and other vehicles to deliver the majority of the products we sell.
Such a disruption in revenue could potentially have a negative impact on our results of operations and financial condition. If we experience problems with our fleet of trucks and other vehicles, our business could be harmed. We use a fleet of trucks and other vehicles to deliver the majority of the products we sell.
Our costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past or future releases of, or exposure to, hazardous substances, may adversely affect our business, results of operations, or financial condition. 21 If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be negatively impacted, which could harm our operating results and investor perceptions of our company and as a result may have a material adverse effect on the value of our common stock.
Our costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past or future releases of, or exposure to, hazardous substances, may adversely affect our business, results of operations, or financial condition. 20 If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be negatively impacted, which could harm our operating results and investor perceptions of our company and as a result may have a material adverse effect on the value of our common stock.
These unfavorable events affecting our business partners could have an adverse effect on our business, results of operations, financial condition and cash flows. We have a presence in the Ukraine and are monitoring the situation there carefully.
These unfavorable events affecting our business partners could have an adverse effect on our business, results of operations, financial condition and cash flows. 11 We have a presence in Ukraine and are monitoring the situation there carefully.
Thus, an increase in electric vehicles as a percentage of vehicles sold could have a negative impact on our sales of engines, transmissions, and other related parts. 14 Fluctuations in the prices of commodities could adversely affect our financial results.
Thus, an increase in electric vehicles as a percentage of vehicles sold could have a negative impact on our sales of engines, transmissions, and other related parts. Fluctuations in the prices of commodities could adversely affect our financial results.
Depending on the circumstances, we may reach agreements with such investors, such as the cooperation agreement that we entered into with Ancora Catalyst Institutional, LP, Engine Capital, LP and certain of their affiliates in February 2025.
Depending on the circumstances, we may reach agreements with such investors, such as the cooperation agreement that we entered into with Ancora Catalyst Institutional, LP, Engine Capital, LP and certain of their affiliates in February 2025 (amended May 2025).
The U.S. has imposed tariffs on certain materials imported into the U.S. from China, announced additional tariffs on other goods from China and other countries, and threatened to impose additional tariffs on goods from other countries.
The U.S. historically has imposed tariffs on certain materials imported into the U.S. from China, announced additional tariffs on other goods from China and other countries, and threatened to impose additional tariffs on goods from other countries.
Additionally, political instability in certain geographic regions in which or our business partners operate exposes us to an increased risk of state-sponsored threats.
Additionally, political instability in certain geographic regions in which our business partners operate exposes us to an increased risk of state-sponsored threats.
Some jurisdictions have enacted laws prohibiting or severely restricting the sale of certain recycled products that we provide, such as airbags. In addition, laws relating to the regulation of parts affecting vehicle emissions, such as California’s Proposition 65, may impact the ability of our Specialty segment to sell certain accessory products.
Some jurisdictions have enacted laws prohibiting or severely restricting the sale of certain salvage products that we provide, such as airbags. In addition, laws relating to the regulation of parts affecting vehicle emissions, such as California’s Proposition 65, may impact the ability of our Specialty segment to sell certain accessory products.
In addition, Congress could enact federal legislation restricting the use of aftermarket or recycled automotive products used in the course of vehicle repairs. 20 In Europe, the Motor Vehicle Block Exemption Regulations ("MVBER") regulate the competition rules on automotive spare parts. In April 2023, the MVBER was extended for 5 years.
In addition, Congress could enact federal legislation restricting the use of aftermarket or recycled automotive products used in the course of vehicle repairs. 19 In Europe, the Motor Vehicle Block Exemption Regulations ("MVBER") regulate the competition rules on automotive spare parts. In April 2023, the MVBER was extended for 5 years.
These and other jurisdictions could enact similar laws or could prohibit or severely restrict the sale of additional recycled products. The passage of legislation with prohibitions or restrictions that are more severe than current laws could have a material adverse effect on our business.
These and other jurisdictions could enact similar laws or could prohibit or severely restrict the sale of additional salvage products. The passage of legislation with prohibitions or restrictions that are more severe than current laws could have a material adverse effect on our business.
To the extent that the number of bidders increases, it may have the effect of increasing our cost of goods sold for wholesale recycled products. Some jurisdictions regulate bidders to help ensure that salvage vehicles are purchased for legal purposes by qualified buyers.
To the extent that the number of bidders increases, it may have the effect of increasing our cost of goods sold for wholesale salvaged products. Some jurisdictions regulate bidders to help ensure that salvage vehicles are purchased for legal purposes by qualified buyers.
As a result of a divestment, we may not recover the carrying value of our investment in the divested business; in addition, such divestment transactions require significant management time and attention. 17 Risks Relating to Our Financial Structure We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business.
As a result of a divestment, we may not recover the carrying value of our investment; in addition, such divestment transactions require significant management time and attention. 16 Risks Relating to Our Financial Structure We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business.
Most of our wholesale recycled and a portion of our self service inventory is obtained from vehicles offered at salvage auctions that are owned and operated by third party companies. We do not typically have contracts with these auction companies. According to industry analysts, a small number of companies control a large percentage of the salvage auction market.
Most of our wholesale recycled inventory is obtained from vehicles offered at salvage auctions that are owned and operated by third party companies. We do not typically have contracts with these auction companies. According to industry analysts, a small number of companies control a large percentage of the salvage auction market.
In addition, the indentures do not contain many other restrictions, including certain restrictions contained in our credit agreement, including, without limitation, making investments, prepaying subordinated indebtedness or engaging in transactions with our affiliates. Our credit agreement will permit, subject to specified conditions and limitations, the incurrence of a significant amount of additional indebtedness under the existing agreement.
In addition, the indentures do not contain many other restrictions, including certain restrictions contained in our credit agreement and CAD Note, including, without limitation, making investments, prepaying subordinated indebtedness or engaging in transactions with our affiliates. Our credit agreement will permit, subject to specified conditions and limitations, the incurrence of a significant amount of additional indebtedness under the credit agreement.
Moreover, changes in market interest rates could affect the trading value of the senior notes. 19 Repayment of our indebtedness is dependent on cash flow generated by our subsidiaries.
Moreover, changes in market interest rates could affect the trading value of the senior notes. 18 Repayment of our indebtedness is dependent on cash flow generated by our subsidiaries.
A default, if not waived, could result in acceleration of our debt, in which case the debt would become immediately due and payable. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it.
A default, if not waived, could result in acceleration of our debt (including our senior notes), in which case the debt would become immediately due and payable. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it.
Notes (2028)"), €750 million ( $777 million) of 4.125% senior notes due 2031 (the "Euro Notes (2031)"), and $600 million of 6.25% senior notes due 2033 (the "U.S. Notes (2033)," and together with the Euro Notes (2028), the U.S. Notes (2028), and the Euro Notes (2031), the "senior notes").
Notes (2028)"), €750 million ( $881 million) of 4.125% senior notes due 2031 (the "Euro Notes (2031)"), and $600 million of 6.25% senior notes due 2033 (the "U.S. Notes (2033)," and together with the Euro Notes (2028), the U.S. Notes (2028), and the Euro Notes (2031), the "senior notes").
The occurrence of any adverse cybersecurity events in the future involving us or third parties with which we do business could compromise our or the third parties' networks, and the information stored in those networks could be accessed, publicly disclosed, compromised, destroyed, lost or stolen.
The occurrence of any adverse cybersecurity events in the future involving us or third parties with which we do business could compromise our or the third parties' networks, and the information stored in those networks could be accessed, publicly disclosed, compromised, destroyed, lost or stolen. We have experienced cybersecurity incidents in the past.
As of December 31, 2024 , the value of our other intangible assets, net of accumulated amortization, was $1,150 million. We could be subject to product liability claims and involved in product recalls. If our products cause injury or property damage, we could be subject to product liability claims.
As of December 31, 2025 , the value of our other intangible assets, net of accumulated amortization, was $1,072 million. We could be subject to product liability claims and involved in product recalls. If our products cause injury or property damage, we could be subject to product liability claims.
Although we are subject to our credit agreement and CAD Note for so long as each of those respectively remains in effect, the indentures governing the senior notes do not restrict the future incurrence of unsecured indebtedness, guarantees or other obligations.
Although we are subject to our credit agreement and CAD Note for so long as each of those respective agreements remain in effect, the indentures governing the senior notes do not restrict the future incurrence of unsecured indebtedness, guarantees or other obligations.
Perceived uncertainties as to our future direction, strategy or leadership that arise as a consequence of activist investor initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, employees and business partners, and cause our stock price to experience periods of volatility or stagnation. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Perceived uncertainties as to our future direction, strategy or leadership that arise as a consequence of activist investor initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, employees and business partners, and cause our stock price to experience periods of volatility or stagnation.
Further escalation of the Israel and Hamas conflict and related geopolitical tensions, including the crisis in the Red Sea and increased trade barriers or restrictions on global trade, could result in, among other things, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business, financial condition and results of operations.
Additional and/or increased geopolitical tensions, including the crisis in the Red Sea and increased trade barriers or restrictions on global trade, could result in, among other things, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business, financial condition and results of operations.
Therefore, our effective tax rate may be adversely affected by changes in the mix of our earnings by jurisdiction. We are also subject to ongoing audits of our income tax returns in various jurisdictions both in the U.S. and internationally.
The tax rates applicable in the jurisdictions within which we operate vary. Therefore, our effective tax rate may be adversely affected by changes in the mix of our earnings by jurisdiction. We are also subject to ongoing audits of our income tax returns in various jurisdictions both in the U.S. and internationally.
Goodwill is reviewed at least annually for impairment. Impairment may result from, among other things, deterioration in the performance of acquired businesses, deterioration of expected future cash flows or performance, increases in our cost of capital, adverse market conditions, and adverse changes in applicable laws or regulations, including modifications that restrict the activities of the acquired business.
Impairment may result from, among other things, deterioration in the performance of acquired businesses, deterioration of expected future cash flows or performance, increases in our cost of capital, adverse market conditions, and adverse changes in applicable laws or regulations, including modifications that restrict the activities of the acquired business.
The effects currently are not material; however, depending on the breadth of products and materials ultimately affected by, and the duration of, the tariffs and countermeasures, our financial results may be materially harmed. Governmental agencies may refuse to grant or renew our operating licenses and permits.
Depending on the breadth of products and materials ultimately affected by, and the duration of, the tariffs and countermeasures, our financial results may be materially harmed. Governmental agencies may refuse to grant or renew our operating licenses and permits.
As of December 31, 2024 , we would have been able to incur an additional $1,222 million of indebtedness under our credit agreement ( $1,336 million of availability reduced by $114 million of amounts outstanding under letters of credit).
As of December 31, 2025 , we would have been able to incur an additional $1,885 million of indebtedness under our credit agreement ( $1,999 million of availability reduced by $114 million of amounts outstanding under letters of credit).
In addition, we had approximately $2,436 million aggregate principal amount of unsecured, fixed rate debt outstanding comprised o f €250 million ( $259 million ) of 4.125% senior n otes due 2028 (the "Euro Notes (2028)"), $800 million of 5.75% senior notes due 2028 (the "U.S.
In addition, as of December 31, 2025, we had approximately $2,575 million aggregate principal amount of unsecured, fixed rate debt outstanding comprised o f €250 million ( $294 million ) of 4.125% senior n otes due 2028 (the "Euro Notes (2028)"), $800 million of 5.75% senior notes due 2028 (the "U.S.
As of December 31, 2024, our total goodwill subject to future impairment testing was $5,448 million.
As of December 31, 2025, our total goodwill subject to future impairment testing was $5,414 million.
Our operating subsidiaries in our salvage, self service, and refurbishing operations must obtain licenses and permits from state and local governments to conduct their operations. When we develop or acquire a new facility, we must seek the approval of state and local units of government.
Our operating subsidiaries in our salvage and refurbishing operations must obtain licenses and permits from state and local governments to conduct their operations. When we develop or acquire a new facility, we must seek the approval of state and local units of government. Governmental agencies may resist the establishment of a vehicle recycling or refurbishing facility in their communities.
Notes (2033) on our ability to refinance such notes prior to May 15, 2028, December 13, 2030 and March 15, 2033, respectively. We could refinance the senior notes through open market purchases, subject to a limitation in our credit agreement on the amount of such purchases. If we fail to raise capital when needed, our business may be negatively affected.
Notes (2033) on our ability to refinance such notes prior to May 15, 2028, December 13, 2030 and March 15, 2033, respectively. We could refinance the senior notes through open market purchases, subject to a limitation in our credit agreement and CAD Note on the amount of such purchases.
While Pillar Two did not have a material impact on our effective tax rate for 2024, our analysis will continue as the OECD continues to release additional guidance and countries implement legislation. The tax rates applicable in the jurisdictions within which we operate vary.
While Pillar Two did not have a material impact on our effective tax rate for 2025, our analysis will continue as the OECD continues to release additional guidance and countries implement legislation.
These insurance companies encourage vehicle repair facilities to use products we provide. The business relationships include in some cases participation in aftermarket quality and service assurance programs that may result in a higher usage of our aftermarket products than would be the case without the programs.
The business relationships include in some cases participation in aftermarket quality and service assurance programs that may result in a higher usage of our aftermarket products than would be the case without the programs.
We incur substantial freight costs to import parts from our suppliers, many of which are located in Asia. The cost of freight and shipping containers have historically fluctuated, sometimes significantly, due to market factors. If the cost of freight and shipping containers rise in the future, we might not be able to pass the cost increases on to our customers.
The cost of freight and shipping containers have historically fluctuated, sometimes significantly, due to market factors. If the cost of freight and shipping containers rise in the future, we might not be able to pass the cost increases on to our customers.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly. Borrowings under our credit agreement and CAD Note are at variable rates of interest and expose us to interest rate risk.
If we fail to raise capital when needed, our business may be negatively affected. Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly. Borrowings under our credit agreement and CAD Note are at variable rates of interest and expose us to interest rate risk.
The legislative and regulatory framework relating to privacy and data protection is rapidly evolving worldwide and is likely to remain uncertain for the foreseeable future. This data is subject to a variety of U.S. and international laws and regulations.
We collect personally identifiable information ("PII") and other data as part of our business processes and operations. The legislative and regulatory framework relating to privacy and data protection is rapidly evolving worldwide and is likely to remain uncertain for the foreseeable future. This data is subject to a variety of U.S. and international laws and regulations.
The extent to which new strains or variants of COVID-19 or other public health emergencies could impact our business, results of operations, financial condition or liquidity is highly uncertain and would depend on future developments, including the spread and duration of any such virus and the variants thereof, potential actions taken by governmental authorities and how quickly economic conditions stabilize and recover.
The extent to which other public health emergencies could impact our business, results of operations, financial condition or liquidity is highly uncertain and would depend on future developments, including the spread and duration of any such virus and the variants thereof, potential actions taken by governmental authorities and how quickly economic conditions stabilize and recover. 15 If we determine that our goodwill or other intangible assets have become impaired, we may incur significant charges to our pretax income.
The choice of forum provision in our bylaws does not apply to claims brought to enforce any duty or liability created by the Exchange Act or the Securities Act or any claim with respect to which the federal courts have exclusive jurisdiction. 22 Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers due to, among other possible factors, increased costs of such lawsuits and limitations on the ability to bring claims in a judicial forum that the plaintiffs may consider more favorable.
Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers due to, among other possible factors, increased costs of such lawsuits and limitations on the ability to bring claims in a judicial forum that the plaintiffs may consider more favorable.
We rely on business relationships with insurance companies and our customers, and our success depends, in part, on the acceptance and promotion of alternative parts usage by automotive insurance companies and vehicle repair facilities. There can be no assurance that current levels of alternative parts usage will be maintained or will increase in the future.
We rely on business relationships with insurance companies and our customers, and our success depends, in part, on the acceptance and promotion of alternative parts usage by automotive insurance companies and vehicle repair facilities.
The cost of our self service retail and, to a lesser extent, our wholesale recycled inventory purchases will change as a result of fluctuating scrap metal and other metals prices.
The cost of our salvaged inventory purchases will change as a result of fluctuating scrap metal and other metals prices.
As of December 31, 2024, we had approxi mately $1,651 million aggregate principal amount of unsecured, variable-rate debt outstanding under our Senior Unsecured Credit Agreement (the "credit agreement") and Senior Unsecured Term Loan Agreement (the "CAD Note"), of which $987 million matures during 2026 and $664 million in 2028, and approximate ly $1,222 million of availability under the credit agreement ( $1,336 million of availability reduced by $114 million of amounts outstanding under letters of credit).
As of December 31, 2025, we had (a) approxi mately $1,011 million aggregate principal amount of unsecured, variable-rate debt outstanding under our Credit Agreement (the "credit agreement") and Term Loan Credit Agreement (the "CAD Note"), of which $500 million matures during 2027, $510 million during 2029, and $1 million matures in 2030, and (b) approximate ly $1,885 million of availability under the credit agreement ( $1,999 million of availability reduced by $114 million of amounts outstanding under letters of credit).
The IRA contained a number of new provisions the most significant of which are a new Corporate Alternative Minimum Tax and a new Stock Repurchase Excise Tax. In addition, the Organization for Economic Co-operation and Development (the “OECD”) released a framework, referred to as Pillar Two, to implement a global minimum corporate tax rate of 15% on certain multinational enterprises.
The Organization for Economic Co-operation and Development (the “OECD”) released a framework, referred to as Pillar Two, to implement a global minimum corporate tax rate of 15% on certain multinational enterprises.
Our Wholesale - North America business is dependent on a relatively small number of suppliers of aftermarket products, a large portion of which are sourced from Taiwan. Our European business acquires products from a wide variety of suppliers, including products from Asian sources.
Our North American business is dependent on a relatively small number of suppliers of aftermarket products, a large portion of which are sourced from Taiwan. Our European business acquires products from a wide variety of suppliers, including products from Asian sources. We incur substantial freight costs to import parts from our suppliers, many of which are located in Asia.
In addition, if we or our subsidiaries incur additional debt, the risks associated with our substantial leverage and the ability to service such debt would increase. Our senior notes do not impose any limitations on our ability to incur additional debt or protect against certain other types of transactions, and we may incur certain additional indebtedness under our credit agreement.
Our senior notes do not impose any limitations on our ability to incur additional debt or protect against certain other types of transactions, and we may incur certain additional indebtedness under our credit agreement and CAD Note.
Therefore, we are subject to changes in tax laws in each of these jurisdictions, and such changes could have a material adverse effect on our effective tax rate and cash flows. On August 16, 2022, the U.S. enacted legislation commonly referred to as the Inflation Reduction Act (the "IRA").
Therefore, we are subject to changes in tax laws in each of these jurisdictions, and such changes could have a material adverse effect on our effective tax rate and cash flows.
In some cases, we have entered into patent license agreements with OEMs that allow us to sell aftermarket parts that replicate the patented protected parts in exchange for a royalty and otherwise in accordance with the terms of the agreements. 13 To the extent OEMs and other manufacturers obtain design patents or trademarks and are successful in asserting claims of infringement of these patents or trademarks against us, we could be restricted or prohibited from selling certain aftermarket products, which could have an adverse effect on our business.
To the extent OEMs and other manufacturers obtain design patents or trademarks and are successful in asserting claims of infringement of these patents or trademarks against us, we could be restricted or prohibited from selling certain aftermarket products, which could have an adverse effect on our business.
See the risk factor entitled “ If significant tariffs or other restrictions are placed on products or materials we import or any related counter-measures are taken by countries to which we export products, our revenue and results of operations may be materially harmed ” for further information.
See the risk factor entitled “ If significant tariffs or other restrictions are placed on products or materials we import or any related counter-measures are taken by countries to which we export products, our revenue and results of operations may be materially harmed ” for further information. 14 Because a substantial volume of our sales involves products manufactured from sheet metal, we can be adversely impacted if sheet metal becomes unavailable or is only available at higher prices, which we may not be able to pass on to our customers.
In the event we fail to maintain compliance with these covenants in the future, we may be unable to obtain waivers from the lenders and/or amend the covenants. Failure to comply with any of these covenants would cause a default under the credit agreement and the CAD Note.
In addition, our failure to maintain compliance with such covenants may trigger consent requirements under our senior notes, which we may be unable to obtain. Failure to comply with any of these covenants would cause a default under the credit agreement and the CAD Note.
However, a resurgence or development of new strains of COVID-19 or any other public health emergencies could result in unpredictable responses by authorities around the world which could negatively impact our global operations, customers and suppliers.
The global outbreak of the coronavirus significantly increased economic, demand and operational uncertainty. Other public health emergencies could result in unpredictable responses by authorities around the world which could negatively impact our global operations, customers and suppliers.
Our revenue further may be hampered during the period of implementing an alternative system, which period could extend longer than we anticipated. We are in the midst of a systems conversion project for our European businesses, which will be subject to all of these risks.
Our revenue further may be hampered during the period of implementing an alternative system, which period could extend longer than we anticipated.
Business interruptions in our distribution centers or other facilities may affect our operations, the function of our computer systems, and/or the availability and distribution of merchandise, which may affect our business.
We are in the midst of a systems conversion project for our European businesses, which will be subject to all of these risks. 24 Business interruptions in our distribution centers or other facilities may affect our operations, the function of our computer systems, and/or the availability and distribution of merchandise, which may affect our business.
If we determine that our goodwill or other intangible assets have become impaired, we may incur significant charges to our pretax income. Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. In the future, our goodwill and intangible assets may increase as a result of acquisitions.
Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. In the future, our goodwill and intangible assets may increase as a result of acquisitions. Goodwill is reviewed at least annually for impairment.
The costs of complying with the requirements of laws pertaining to data privacy and cybersecurity of personal information and the potential liability associated with the failure to comply with such laws could materially adversely affect our business and results of operations. We collect personally identifiable information ("PII") and other data as part of our business processes and operations.
In addition, there can be no assurance that we will be able to maintain and renew the licenses and permits our operating subsidiaries currently hold. 22 The costs of complying with the requirements of laws pertaining to data privacy and cybersecurity of personal information and the potential liability associated with the failure to comply with such laws could materially adversely affect our business and results of operations.
The indentures contain certain limitations on our ability to incur liens on assets and engage in sale and leaseback transactions. However, these limitations are subject to important exceptions.
The indentures contain certain limitations, including limitations on our ability to incur liens on assets, engage in sale and leaseback transactions, and engage in certain change of control transactions or merge or consolidate with or into other companies.
We experienced an incident in November 2024 involving a third party obtaining unauthorized access to IT systems of one of our Canadian business units, which we do not believe to have been material to our financial condition or results of operations as a result of our efforts to contain and mitigate the threat; however, failure on our part to successfully prevent or mitigate cybersecurity threats in the future could result in data loss, legal liability and damage to our reputation.
In both cases, based on our investigation and remediation efforts, we do not believe these incidents were material to our financial condition or results of operations. While these incidents were contained, failure on our part to successfully prevent or mitigate cybersecurity threats in the future could result in data loss, legal liability and damage to our reputation.
As a result of these covenants and restrictions, we may be limited in how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants.
The terms of any future indebtedness we may incur could include more restrictive covenants. In the event we fail to maintain compliance with these covenants in the future, we may be unable to obtain waivers from the lenders and/or amend the covenants.
Removed
Because a substantial volume of our sales involves products manufactured from sheet metal, we can be adversely impacted if sheet metal becomes unavailable or is only available at higher prices, which we may not be able to pass on to our customers.
Added
There can be no assurance that current levels of alternative parts usage will be maintained or will increase in the future. 12 These insurance companies encourage vehicle repair facilities to use products we provide.
Removed
The global outbreak of the coronavirus ("COVID-19") significantly increased economic, demand and operational uncertainty. Our operations have generally stabilized since the peak of the COVID-19 pandemic, and, in May 2023, the World Health Organization declared an end to COVID-19 as a public health emergency.
Added
In some cases, we have entered into patent license agreements with OEMs that allow us to sell aftermarket parts that replicate the patented protected parts in exchange for a royalty and otherwise in accordance with the terms of the agreements.
Removed
Governmental agencies may resist the establishment of a vehicle recycling or refurbishing facility in their communities. There can be no assurance that future approvals or transfers will be granted. In addition, there can be no assurance that we will be able to maintain and renew the licenses and permits our operating subsidiaries currently hold.
Added
In addition, if we or our subsidiaries incur additional debt, the risks associated with our leverage and the ability to service such debt would increase.
Added
Certain additional restrictions in the indenture governing our Euro Notes (2028) (including restrictions on asset dispositions and restricted payments) are not currently applicable, but will become applicable to us if our Euro Notes (2028) are no longer investment grade. Furthermore, these limitations in our debt agreements are subject to important exceptions.
Added
The choice of forum provision in our bylaws does not apply to claims brought to enforce any duty or liability created by the Exchange Act or the Securities Act or any claim with respect to which the federal courts have exclusive jurisdiction.
Added
Additionally, on July 4, 2025, new U.S tax legislation was signed into law, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.
Added
These new provisions take effect starting in 2025 through 2027. The Company has evaluated the OBBBA enacted during the year and estimated its impact on the consolidated financial statements to be immaterial. We will continue to evaluate the full impact of these legislative changes as additional guidance becomes available.
Added
In March 2025, the U.S. government imposed additional tariffs on a significant number of countries and threatened to further increase the scope and amount of tariffs in the event of retaliatory countermeasures, causing the future of existing tariffs and the possibility for new tariffs to be uncertain.
Added
There can be no assurance that future approvals or transfers will be granted.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeEducation and Awareness: The Company provides regular, mandatory training for personnel regarding cybersecurity threats and best practices as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s information security policies, standards, processes and practices.
Biggest changeAdditionally, the Company maintains cybersecurity insurance coverage to mitigate financial impacts from potential cyber incidents. Education and Awareness: The Company provides regular, mandatory training for personnel regarding cybersecurity threats and best practices as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s information security policies, standards, processes and practices.
The Company’s 27 CEO, CFO, Senior Vice President of Policy and Administration, and GC each hold degrees in their respective fields, and each has experience managing risks at the Company and at similar companies, including risks arising from cybersecurity threats.
The Company’s CEO, CFO, Senior Vice President of Policy and Administration, and GC each hold degrees in their respective fields, and each has experience managing risks at the Company and at similar companies, including risks arising from cybersecurity threats.
The CISO has served in various roles in IT and information security for over 27 years, including serving as the Chief Information Security Officer of two large public companies.
The CISO has served in various roles in IT and information security for over 28 years, including serving as the Chief Information Security Officer of two large public companies.
The CISO holds an undergraduate degree in computer science and a graduate degree in business and attained professional certification as a Certified Information System Security Professional ("CISSP"), Certified Information Security Manager ("CISM") and GIAC Certified Incident Handler ("GCIH").
The CISO holds an undergraduate degree in computer science and a graduate degree in business and attained professional certification as a Certified Information System Security Professional, 27 Certified Information Security Manager and GIAC Certified Incident Handler.
Added
The Company’s incident response process establishes a materiality committee, including members of senior leadership, who are responsible for evaluating materiality of any significant incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur European headquarters are located in Zug, Switzerland, and certain back-office support functions for our European segment are located in Katowice, Poland, which began operations in the second half of 2021. Our largest distribution centers are located in Tamworth, England, Sulzbach-Rosenberg, Germany, and Berkel en Rodenrijs, the Netherlands.
Biggest changeOur largest distribution centers are located in Tamworth, England, Sulzbach-Rosenberg, Germany, and Berkel en Rodenrijs, the Netherlands. Our Specialty operations maintain primary procurement, accounting and finance functions in Exeter, Pennsylvania. Certain back-office support functions for our segments are performed in Bengaluru, India.
ITEM 2. PROPERTIES As of December 31, 2024, our operations included approximately 1,450 facilities, most of which are leased. Of our total facilities, approximately 450 facilities were located in the U.S. and approximately 1,000 facilities were located in approximately 25 other countries. Many of our locations stock multiple product types and/or serve more than one function.
ITEM 2. PROPERTIES As of December 31, 2025, our operations included approximately 1,400 facilities, most of which are leased. Of our total facilities, approximately 400 facilities were located in the U.S. and approximately 1,000 facilities were located in approximately 25 other countries. Many of our locations stock multiple product types and/or serve more than one function.
Our principal executive offices and North American headquarters are located at 5846 Crossings Boulevard, Antioch, Tennessee 37013, and maintain certain centralized functions for our Wholesale - North America and Self Service operations, including accounting, procurement, and information systems support.
Our principal executive offices and North American headquarters are located at 5846 Crossings Boulevard, Antioch, Tennessee 37013, and maintain certain centralized functions for our North America operations, including accounting, procurement, and information systems support. Our European headquarters are located in Zug, Switzerland, and certain back-office support functions for our European segment are located in Katowice, Poland.
Our properties are sufficient to meet our present needs, and we do not anticipate difficulty in securing additional space to conduct operations or additional office space, as needed, on terms acceptable to us.
Additionally, we operate an aftermarket parts warehouse in Taiwan to aggregate inventory for shipment to our locations in North America and manage supplier relationships and purchase orders. Our properties are sufficient to meet our present needs, and we do not anticipate difficulty in securing additional space to conduct operations or additional office space, as needed, on terms acceptable to us.
Removed
Our Specialty operations maintain primary procurement, accounting and finance functions in Exeter, Pennsylvania. Certain back-office support functions for our segments are performed in Bengaluru, India. Additionally, we operate an aftermarket parts warehouse in Taiwan to aggregate inventory for shipment to our locations in North America and manage supplier relationships and purchase orders.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are from time to time subject to various claims and lawsuits incidental to our business. In the opinion of management, currently outstanding claims and lawsuits will not, individually or in the aggregate, have a material adverse effect on our financial position, results of operations or cash flows.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are from time to time subject to various claims and lawsuits incidental to our business. In the opinion of management, currently outstanding claims and lawsuits will not, individually or in the aggregate, have a material adverse effect on our financial position, results of operations or cash flows. ITEM 4.
Added
MINE SAFETY DISCLOSURES Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Cumulative Return Among LKQ Corporation, the S&P 500 Index and the Peer Group 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 LKQ Corporation $ 100 $ 99 $ 169 $ 153 $ 140 $ 111 S&P 500 Index $ 100 $ 118 $ 152 $ 125 $ 158 $ 197 Peer Group $ 100 $ 118 $ 142 $ 105 $ 105 $ 81 This stock performance information is "furnished" and shall not be deemed to be "soliciting material" or subject to Rule 14A, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this report and irrespective of any general incorporation by reference language in any such filing, except to the extent that it specifically incorporates the information by reference. 30 Issuer Purchases of Equity Securities Our Board has authorized a stock repurchase program under which we are able to purchase our common stock from time to time.
Biggest changeComparison of Cumulative Return Among LKQ Corporation, the S&P 500 Index, the S&P SmallCap 600 Index and the Peer Group 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 LKQ Corporation $ 100 $ 171 $ 155 $ 142 $ 112 $ 95 S&P 500 Index $ 100 $ 129 $ 105 $ 133 $ 166 $ 196 S&P SmallCap 600 Index $ 100 $ 127 $ 106 $ 123 $ 134 $ 142 Peer Group $ 100 $ 121 $ 89 $ 89 $ 69 $ 80 This stock performance information is "furnished" and shall not be deemed to be "soliciting material" or subject to Rule 14A, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this report and irrespective of any general incorporation by reference language in any such filing, except to the extent that it specifically incorporates the information by reference. 30 Issuer Purchases of Equity Securities Our Board has authorized a stock repurchase program under which we are able to purchase up to $4,500 million of our common stock from time to time through the scheduled duration of the program ending on October 25, 2026.
Securities Authorized for Issuance Under Equity Compensation Plans Information about our common stock that may be issued under our equity compensation plans as of December 31, 2024 included in Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by reference. ITEM 6. [RESERVED] 31
Securities Authorized for Issuance Under Equity Compensation Plans Information about our common stock that may be issued under our equity compensation plans as of December 31, 2025 included in Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by reference. ITEM 6. [RESERVED] 31
Auto Parts Index (the "Peer Group") for the period beginning on December 31, 2019 and ending on December 31, 2024 (which was the last day of our 2024 fiscal year). The stock price performance in the graph is not necessarily indicative of future stock price performance.
Auto Parts Index (the "Peer Group") for the period beginning on December 31, 2020 and ending on December 31, 2025 (which was the last day of our 2025 fiscal year). The stock price performance in the graph is not necessarily indicative of future stock price performance.
A summary of the dividend activity for our common stock for the year ended December 31, 2024 is as follows: Dividend Amount Declaration Date Record Date Payment Date $0.30 February 20, 2024 March 14, 2024 March 28, 2024 $0.30 April 22, 2024 May 16, 2024 May 30, 2024 $0.30 July 23, 2024 August 15, 2024 August 29, 2024 $0.30 October 22, 2024 November 14, 2024 November 27, 2024 On February 18, 2025, our Board declared a quarterly cash dividend of $0.30 per share of common stock, payable on March 27, 2025, to stockholders of record at the close of business on March 13, 2025 .
A summary of the dividend activity for our common stock for the year ended December 31, 2025 is as follows: Dividend Amount Declaration Date Record Date Payment Date $0.30 February 18, 2025 March 13, 2025 March 27, 2025 $0.30 April 22, 2025 May 15, 2025 May 29, 2025 $0.30 July 22, 2025 August 14, 2025 August 28, 2025 $0.30 October 28, 2025 November 20, 2025 December 4, 2025 On February 17, 2026, our Board declared a quarterly cash dividend of $0.30 per share of common stock, payable on March 26, 2026, to stockholders of record at the close of business on March 12, 2026.
The payment of any future dividends will be at the discretion of our Board and will depend upon our results of operations, financial condition, business prospects, capital requirements, contractual restrictions, any potential indebtedness we may incur, restrictions imposed by applicable law, tax considerations and other factors that our Board deems relevant. 29 Stock Performance Graph and Cumulative Total Return The following graph compares the percentage change in the cumulative total returns on our common stock, the S&P 500 Index and the Dow Jones U.S.
The payment of any future dividends will be at the discretion of our Board and will depend upon our results of operations, financial condition, business prospects, capital requirements, contractual restrictions, any potential indebtedness we may incur, restrictions imposed by applicable law, tax considerations and other factors that our Board deems relevant. 29 Stock Performance Graph and Cumulative Total Return The following graph compares the percentage change in the cumulative total returns on our common stock, the S&P 500 Index, the S&P SmallCap 600 Index of which the Company is a part of beginning in December 2025, and the Dow Jones U.S.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on The Nasdaq Global Select Market under the symbol "LKQ." At February 14, 2025, there were 16 record holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on The Nasdaq Global Select Market under the symbol "LKQ." At February 13, 2026, there were 29 record holders of our common stock.
The graph assumes that the value of an investment in each of the Company's common stock, the S&P 500 Index and the Peer Group wa s $100 on December 31, 2019 and that all dividends , where applicable, were reinvested.
The graph assumes that the value of an investment in each of the Company's common stock, the S&P 500 Index, the S&P SmallCap 600 Index and the Peer Group was $100 on December 31, 2020 and that all dividends, where applicable, were reinvested.
The following table summarizes our stock repurchases for the three months ended December 31, 2024 (in millions, except per share data): Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2024 - October 31, 2024 1.9 $ 38.63 1.9 $ 1,725 November 1, 2024 - November 30, 2024 0.2 $ 37.33 0.2 $ 1,716 December 1, 2024 - December 31, 2024 — $ — — $ 1,716 Total 2.1 2.1 (1) Average price paid per share excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
The following table summarizes our stock repurchases for the three months ended December 31, 2025 (in millions, except per share data): Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2025 - October 31, 2025 0.4 $ 30.42 0.4 $ 1,583 November 1, 2025 - November 30, 2025 0.4 $ 30.20 0.4 $ 1,570 December 1, 2025 - December 31, 2025 0.5 $ 29.92 0.5 $ 1,556 Total 1.3 1.3 (1) Average price paid per share excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
Removed
On October 22, 2024, our Board authorized a $1,000 million increase to our existing stock repurchase program, raising the aggregate program authorization to $4,500 million, and extended the duration through October 25, 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+21 added−77 removed35 unchanged
Biggest changeResults of Operations—Consolidated The following table sets forth statements of income data as a percentage of total revenue for the periods indicated: Year Ended December 31, 2024 2023 Revenue 100.0 % 100.0 % Cost of goods sold 60.9 % 59.8 % Gross margin 39.1 % 40.2 % Selling, general and administrative expenses 27.3 % 27.9 % Restructuring and transaction related expenses 0.9 % 0.5 % Depreciation and amortization 2.5 % 2.0 % Operating income 8.4 % 9.8 % Total other expense, net 1.7 % 0.9 % Income from continuing operations before provision for income taxes 6.7 % 8.9 % Provision for income taxes 1.9 % 2.2 % Equity in earnings of unconsolidated subsidiaries 0.1 % 0.1 % Income from continuing operations 4.8 % 6.8 % Net (loss) income from discontinued operations — % — % Net income 4.8 % 6.8 % Less: net income attributable to continuing noncontrolling interest — % — % Net income attributable to LKQ stockholders 4.8 % 6.7 % Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
Biggest changeResults of Operations—Consolidated The following table sets forth statements of income data as a percentage of total revenue for the periods indicated: Year Ended December 31, 2025 2024 Revenue 100.0 % 100.0 % Cost of goods sold 61.4 % 61.1 % Gross margin 38.6 % 38.9 % Selling, general and administrative expenses 27.9 % 27.2 % Restructuring and transaction related expenses 0.3 % 1.0 % Impairment of goodwill 0.4 % — % Depreciation and amortization 2.7 % 2.5 % Operating income 7.3 % 8.3 % Total other expense, net 1.4 % 1.6 % Income from continuing operations before provision for income taxes 5.9 % 6.7 % Provision for income taxes 1.5 % 1.9 % Equity in earnings of unconsolidated subsidiaries — % (0.1) % Income from continuing operations 4.4 % 4.8 % Net income from discontinued operations 0.1 % 0.2 % Net income 4.4 % 5.0 % Less: net income attributable to continuing noncontrolling interest — % — % Net income attributable to LKQ stockholders 4.4 % 5.0 % Note: In the table above, the sum of the individual percentages may not equal the total due to rounding. 35 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Revenue The following table summarizes the changes in revenue by category (in millions): Year Ended December 31, 2025 2024 Change Parts & services revenue $ 13,306 $ 13,505 $ (199) Other revenue 345 318 27 Total revenue $ 13,651 $ 13,823 $ (172) The decrease in parts and services revenue of $199 million, or 1.5%, represented decreases in segment revenue of $136 million, or 2.5%, in North America and $99 million, or 1.5%, in Europe, partially offset by an increase of $36 million, or 2.1%, in Specialty.
Our Europe segment is a leading provider of alternative vehicle replacement and maintenance products in Germany, the U.K., the Benelux region, Italy, Czech Republic, Austria, Slovakia, France and various other European countries. Our Specialty segment is a leading distributor of specialty vehicle aftermarket equipment and accessories reaching most major markets in the U.S. and Canada.
Our Europe segment is a leading provider of alternative vehicle replacement and maintenance products in Germany, the U.K., the Benelux region, Italy, Czech Republic, Austria, Slovakia, France and various other European countries. Our Specialty segment is a leading distributor of specialty vehicle aftermarket products and accessories reaching most major markets in the U.S. and Canada.
See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our borrowings and related interest.
See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for 41 information related to our borrowings and related interest.
Free cash flow is a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles (“non-GAAP”). • Organic revenue growth - We define organic revenue growth as total revenue growth from continuing operations excluding the effects of acquisitions and divestitures (i.e., revenue generated from the date of acquisition to the first anniversary of that acquisition, net of reduced revenue due to the disposal of businesses) and foreign currency movements (i.e., impact of translating revenue at different exchange rates).
Free cash flow is a financial measure that is not prepared in accordance with U.S. generally accepted accounting principles. • Organic revenue growth - We define organic revenue growth as total revenue growth from continuing operations excluding the effects of acquisitions and divestitures (i.e., revenue generated from the date of acquisition to the first anniversary of that acquisition, net of reduced revenue due to the disposal of businesses) and foreign currency movements (i.e., impact of translating revenue at different exchange rates).
The required debt covenants per both the Senior Unsecured Credit Agreement and CAD Note and our actual ratios with respect to those covenants are as follows as of December 31, 2024 : Covenant Level Ratio Achieved as of December 31, 2024 Maximum total leverage ratio 4.00 : 1.00 2.3 Minimum interest coverage ratio 3.00 : 1.00 7.5 The indentures relating to our U.S.
The required debt covenants per both the Senior Unsecured Credit Agreement and CAD Note and our actual ratios with respect to those covenants are as follows as of December 31, 2025: Covenant Level Ratio Achieved as of December 31, 2025 Maximum total leverage ratio 4.00 : 1.00 2.4 Minimum interest coverage ratio 3.00 : 1.00 7.5 The indentures relating to our U.S.
The terms maximum total leverage ratio and minimum interest coverage ratio are specifically calculated per both the Senior Unsecured Credit Agreement and CAD Note, and differ in specified ways from comparable GAAP or common usage terms. We were in compliance with all applicable covenants under both our Senior Unsecured Credit Agreement and CAD Note as of December 31, 2024 .
The terms maximum total leverage ratio and minimum interest coverage ratio are specifically calculated per both the Senior Unsecured Credit Agreement and CAD Note, and differ in specified ways from comparable GAAP or common usage terms. We were in compliance with all applicable covenants under both our Senior Unsecured Credit Agreement and CAD Note as of December 31, 2025.
Of these amounts , there were no current maturities at December 31, 2024 or 2023. See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding the scheduled maturities of long-term obligations outstanding .
Of these amounts, there were no current maturities at December 31, 2025 or 2024. See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding the scheduled maturities of long-term obligations outstanding.
As part of applying the discounted cash flow method and guideline public company method, we use significant assumptions which include sales growth, operating margins, discount rates, perpetual growth rates and valuation multiples which consider our budgets, business plans, economic projections and marketplace data.
As part of applying the discounted cash flow method and guideline public company method, we use significant assumptions which include sales growth, operating margins, discount rates, perpetual growth rates and market multiples which consider our budgets, business plans, economic projections and marketplace data.
We believe that organic revenue growth is a key performance indicator as this statistic measures our ability to serve and grow our customer base successfully. 34 • Segment EBITDA - See Note 25, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a description of the calculation of Segment EBITDA.
We believe that organic revenue growth is a key performance indicator as this statistic measures our ability to serve and grow our customer base successfully. • Segment EBITDA - See Note 26, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a description of the calculation of Segment EBITDA.
See Part II, Item 5 of this Annual Report on Form 10-K for further information regarding the dividend activity for our common stock for the year ended December 31, 2024 .
See Part II, Item 5 of this Annual Report on Form 10-K for further information regarding the dividend activity for our common stock for the year ended December 31, 2025.
See Note 7, "Self-Insurance Reserves" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to self-insurance reserves at December 31, 2024. 47 Summarized Guarantor Financial Information Our U.S.
See Note 7, "Self-Insurance Reserves" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to self-insurance reserves at December 31, 2025. Summarized Guarantor Financial Information Our U.S.
O ur Senior Unsecured Credit Agreement and our CAD Note both include two financial maintenance covenants: a maximum total leverage ratio and minimum interest coverage ratio.
Our Senior Unsecured Credit Agreement and our CAD Note both include two financial maintenance covenants: a maximum total leverage ratio and minimum interest coverage ratio.
Discussion of 2022 items and the year-over-year comparison of changes in our financial condition and the results of operations as of and for the years ended December 31, 2023 and December 31, 2022 for our Consolidated Results of Operations can be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 22, 2024.
Discussion of 2023 items and the year-over-year comparison of changes in our financial condition and the results of operations as of and for the years ended December 31, 2024 and December 31, 2023 for our Consolidated Results of Operations can be found in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 20, 2025.
See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to debt amounts outstanding at December 31, 2024. • Operating lease payments of $1,838 million, of which $333 million is expected to be paid within twelve months.
See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to debt amounts outstanding at December 31, 2025. • Operating lease payments of $1,730 million, of which $335 million is expected to be paid within twelve months.
See Note 22, "Employee Benefit Plans" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to net pension obligations at December 31, 2024. • Self-insurance reserves of $144 million, of which $79 million is expected to be paid within twelve months.
See Note 22, "Employee Benefit Plans" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to net pension obligations at December 31, 2025. • Self-insurance reserves of $139 million, of which $76 million is expected to be paid within twelve months.
To fund our acq uisitions, we have accessed various forms of debt 44 financing, including revolving credit facilities, term loans, and senior notes. We currently believe we have sufficient access to capital markets to support our future growth objectives.
To fund our acquisitions, we have accessed various forms of debt financing, including revolving credit facilities, term loans, and senior notes. We currently believe we have sufficient access to capital markets to support our future growth objectives.
See Note 21, "Leases" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to lease amounts outstanding at December 31, 2024. • Purchase obligations of $693 million for open purchase orders for aftermarket inventory all expected to be paid within twelve months. • Net pension obligations of $84 million, of which $8 million is expected to be paid within twelve months.
See Note 21, "Leases" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information related to lease amounts outstanding at December 31, 2025. • Purchase obligations of $739 million for open purchase orders for aftermarket inventory all expected to be paid within twelve months. • Net pension obligations of $80 million, of which $9 million is expected to be paid within twelve months.
The interest rate swaps are described in Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. We had outstanding borrowin gs under our revolving credit facilities and term loans payable of $1,651 million and $1,943 million at December 31, 2024 and 2023, respectively.
The interest rate swaps are described in Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. We had outstanding borrowings under our revolving credit facilities and term loans payable of $1,011 million and $1,651 million at December 31, 2025 and 2024, respectively.
Our Wholesale - North America segment is a leading provider of alternative vehicle collision replacement products, paint and body repair related products, and alternative vehicle mechanical replacement products, with our sales, processing, and distribution facilities reaching most major markets in the United States and Canada.
Our North America segment is a leading provider of alternative vehicle collision replacement products, paint and related body repair products, and alternative vehicle mechanical replacement and maintenance products, with our sales, processing, and distribution facilities reaching most major markets in the U.S. and Canada.
After giving effect to these contracts outstanding, the weighted average interest rate on borrowings outstanding under our Senior Unsecured Credit Agreement was 5.8% at December 31, 2024 . Including our senior notes and CAD Note, our overall weighted average interest rate on borrowings was 5.3% at December 31, 2024 .
After giving effect to these contracts outstanding, the weighted average interest rate on borrowings outstanding under our Senior Unsecured Credit Agreement was 5.4% at December 31, 2025. Including our senior notes and CAD Note, our overall weighted average interest rate on borrowings was 5.0% at December 31, 2025.
As of December 31, 2024, the Company had cash and cash equivalents of $234 million , of which $213 million was held by foreign subsidiaries. In general, it is our practice and intention to permanently reinvest the undistributed earnings of our foreign subsidiaries.
As of December 31, 2025, the Company had cash and cash equivalents of $319 million, of which $292 million was held by foreign subsidiaries. In general, it is our practice and intention to permanently reinvest the undistributed earnings of our foreign subsidiaries.
Refer to the discussion of our segment results of operations for factors contributing to the changes in SG&A expenses as a percentage of revenue by segment for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Refer to the discussion of our segment results of operations for factors contributing to the changes in SG&A expenses by segment for the year ended December 31, 2025 compared to the year ended December 31, 2024.
See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges.
Strategic Transformation Initiatives See "Strategic Restructuring and Transformation Initiatives" in Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our strategic transformation initiatives.
Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period. Inventories represented $324 million in incremental cash outflows for the year ended December 31, 2024 compared to the same period of 2023.
Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period. Receivables represented $14 million in higher cash outflows for the year ended December 31, 2025 compared to the same period of 2024.
See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges. 39 Specialty The following table provides a reconciliation of Revenue to Segment EBITDA in our Specialty segment (in millions): Year Ended December 31, Specialty 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change Parts & services revenue $ 1,654 $ 1,665 $ (11) (1) Intersegment revenue 3 3 — Total segment revenue 1,657 1,668 (11) Cost of goods sold 1,238 1,238 — Gross margin 419 25.3 % 430 25.8 % (11) (2) Selling, general and administrative expenses 315 19.0 % 305 18.3 % 10 (3) Less: Other segment items (4) (9) (9) — Segment EBITDA $ 113 6.8 % $ 134 8.0 % $ (21) (1) Parts and services revenue decreased by $11 million, or 0.7%, to $1,654 million for the year ended December 31, 2024.
See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges. 39 Specialty The following table provides a reconciliation of Revenue to Segment EBITDA in our Specialty segment (in millions): Year Ended December 31, Specialty 2025 % of Total Segment Revenue 2024 % of Total Segment Revenue $ Change Parts & services revenue $ 1,690 $ 1,654 $ 36 (1) Intersegment revenue 3 3 — Total segment revenue 1,693 1,657 36 Cost of goods sold 1,274 1,238 36 Gross margin 419 24.8 % 419 25.3 % — Selling, general and administrative expenses 319 18.8 % 315 19.0 % 4 Less: Other segment items (2) (11) (9) (2) Segment EBITDA $ 111 6.5 % $ 113 6.8 % $ (2) (1) Parts and services revenue increased by $36 million, or 2.1%, to $1,690 million for the year ended December 31, 2025.
With $1,456 million of total liquidity as of December 31, 2024 and $38 million of current maturities, we have access to funds to meet our near term commitments. We have a surplus of current assets over current liabilities, which further reduces the risk of short-term cash shortfalls.
With $2,204 million of total liquidity as of December 31, 2025 and $32 million of current maturities, we have access to funds to meet our near term commitments. We have a surplus of current assets over current liabilities, which further reduces the risk of short-term cash shortfalls.
Revenue from other sources includes sales of scrap and other metals (including precious metals - platinum, palladium and rhodium - contained in recycled parts such as catalytic converters), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations.
Other revenue includes sales of scrap and other metals (including precious metals - platinum, palladium and rhodium - contained in recycled parts such as catalytic converters), bulk sales to mechanical manufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations; all of which are typically acquired as byproducts of our salvage operations.
Relative to the rates used for the year ended December 31, 2023, the Czech koruna and Canadian dollar rates used to translate the 2024 statements of income decreased by 4.4% and 1.5%, respectively, while the pound sterling rate increased by 2.7% and the euro was flat.
Relative to the rates used for the year ended December 31, 2024, the Czech koruna, euro, and pound sterling rates used to translate the 2025 statements of income increased by 6.3%, 4.5%, and 3.2%, respectively, while the Canadian dollar rate decreased by 1.9%.
Cash outflows for share repurchases were $360 million and dividends paid were $318 million for the year ended December 31, 2024 compared to $38 million for share repurchases and $302 million for dividends paid for the same period of 2023.
Cash outflows for share repurchases were $159 million and dividends paid were $310 million for the year ended December 31, 2025 compared to $360 million for share repurchases and $318 million for dividends paid for the same period of 2024.
Buyers of vehicle replacement products have the option to purchase from primarily five sources: new products produced by OEMs; new products produced by companies other than the OEMs, which are referred to as aftermarket products; recycled products obtained from salvage and total loss vehicles; recycled products that have been refurbished; and recycled products that have been remanufactured.
Buyers of vehicle replacement products have the option to purchase from primarily four sources: new products produced by OEMs; new products produced by companies other than the OEMs, which are referred to as aftermarket products; salvaged products taken from total loss vehicles; and reconditioned products that have been refurbished or remanufactured.
(4) Amounts primarily represent other non operating income and expenses, as well as reconciling items to remove depreciation - cost of goods sold and restructuring - cost of goods sold, which are excluded from the calculation of Segment EBITDA.
(2) Amounts primarily represent other non operating income and expenses, as well as a reconciling item to remove depreciation - cost of goods sold, which is excluded from the calculation of Segment EBITDA.
On February 18, 2025, our Board declared a quarterly cash dividend of $0.30 per share of common stock, payable on March 27, 2025, to stockholders of record at the close of business on March 13, 2025 .
On February 17, 2026, our Board declared a quarterly cash dividend of $0.30 per share of common stock, payable on March 26, 2026, to stockholders of record at the close of business on March 12, 2026.
See Note 3, "Business Combinations" and Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information. 36 Foreign Currency Impact We translate our statements of income at the average exchange rates in effect for the period.
Provision for Income Taxes See Note 23, "Income Taxes" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information. 36 Foreign Currency Impact We translate our statements of income at the average exchange rates in effect for the period.
The following represent our anticipated material cash requirements from known contractual and other obligations as of December 31, 2024. • Long-term debt of $4,198 million and related interest totaling $914 million, of which $38 million and $223 million, respectively, is expected to be paid within twelve months.
The following represent our anticipated material cash requirements from known contractual and other obligations as of December 31, 2025. • Long-term debt of $3,695 million and related interest totaling $717 million, of which $32 million and $182 million, respectively, is expected to be paid within twelve months.
The indentures do not prohibit amendments to the financial covenants under the Senior Unsecured Credit Agreement and CAD Note as needed. 45 While we believe that we have adequate capacity under our existing revolving credit facilities to finance our current operations, from time to time we may need to raise additional funds through public or private financing, strategic relationships or modification of our existing Senior Unsecured Credit Agreement to finance additional investments or to refinance existing debt obligations.
While we believe that we have adequate capacity under our existing revolving credit facilities to finance our current operations, from time to time we may need to raise additional funds through public or private financing, strategic relationships or modification of our existing Senior Unsecured Credit Agreement to finance additional investments or to refinance existing debt obligations.
Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold as a percentage of revenue by segment for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Cost of goods sold as a percentage of revenue primarily reflects an increase of 0.3% from North America. Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold by segment for the year ended December 31, 2025 compared to the year ended December 31, 2024.
The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy. Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. During fiscal year 2024, we elected to perform a quantitative impairment test for our goodwill.
Sensitivity of Estimate to Change The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy. Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses.
Notes and Euro Notes d o not include financial maintenance covenants, and the indentures will not restrict our ability to draw funds under the Senior Unsecured Credit Agreement.
Notes and Euro Notes do not include financial maintenance covenants, and the indentures will not restrict our ability to draw funds under the Senior Unsecured Credit Agreement. The indentures do not prohibit amendments to the financial covenants under the Senior Unsecured Credit Agreement and CAD Note as needed.
These restructuring expenses are excluded from the calculation of Segment EBITDA. See Note 13, "Restructuring and Transaction Related Expenses" and Note 25, "Segment and Geographic Information" for further information. (3) Selling, general and administrative expenses increased by $13 million, or 0.7%, to $1,855 million for the year ended December 31, 2024.
These restructuring expenses are excluded from the calculation of Segment EBITDA. See Note 13, "Restructuring and Transaction Related Expenses" and Note 26, "Segment and Geographic Information" for further information. (3) SG&A expenses increased by $17 million, or 0.9%, to $1,872 million for the year ended December 31, 2025.
The following table summarizes liquidity data as of the dates indicated (in millions): December 31, 2024 December 31, 2023 Capacity under revolving credit facilities $ 2,000 $ 2,000 Less: Revolving credit facilities borrowings 664 914 Less: Letters of credit 114 110 Availability under credit revolving facilities 1,222 976 Add: Cash and cash equivalents 234 299 Total liquidity $ 1,456 $ 1,275 We had $1,222 million available under our revolving credit facilities as of December 31, 2024.
The following table summarizes liquidity data as of the dates indicated (in millions): December 31, 2025 December 31, 2024 Capacity under revolving credit facilities $ 2,000 $ 2,000 Less: Revolving credit facilities borrowings 1 664 Less: Letters of credit (1) 114 114 Availability under credit revolving facilities 1,885 1,222 Add: Cash and cash equivalents 319 234 Total liquidity $ 2,204 $ 1,456 (1) As of December 31, 2025, we had outstanding letters of credit of $134 million, of which $20 million does not reduce availability under our revolving credit facilities.
Financial Information by Geographic Area See Note 12, "Revenue Recognition" and Note 25, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our revenue and long-lived assets by geographic region.
Financial Information by Geographic Area See Note 12, "Revenue Recognition" and Note 26, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our revenue and long-lived assets by geographic region. 34 Key Performance Indicators We believe that organic revenue growth, Segment EBITDA and free cash flow are key performance indicators for our business.
The following table reconciles Net Cash Provided by Operating Activities to Free Cash Flow (in millions): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 1,121 $ 1,356 Less: purchases of property, plant and equipment 311 358 Free cash flow $ 810 $ 998 For the year ended December 31, 2024, net cash used in financing activities totaled $746 million compared to net cash provided by financing activities of $1,102 million for the same period of 2023.
The following table reconciles Net Cash Provided by Operating Activities to Free Cash Flow (in millions): Year Ended December 31, 2025 2024 Net cash provided by operating activities $ 1,063 $ 1,121 Less: purchases of property, plant and equipment 216 311 Free cash flow (1) $ 847 $ 810 (1) For the years ended December 31, 2025 and 2024, Self Service contributed approximately $50 million and $40 million, respectively, of free cash flow. 42 For the year ended December 31, 2025, net cash used in financing activities totaled $1,191 million compared to $746 million for the same period of 2024.
Judgments and Uncertainties Determining whether impairment indicators exist and estimating fair values as part of impairment testing require significant judgment. Estimating the fair values of our reporting units which have goodwill requires the use of significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
Estimating the fair values of our reporting units which have goodwill requires the use of significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
Combined with $234 million of cash and cash equivalents at December 31, 2024, we had $1,456 million i n available liquidity, an increase of $181 million from our available liquidity as of December 31, 2023, primarily as a result of reducing our revolving credit facilities borrowings by $250 million.
Combined with $319 million of cash and cash equivalents at December 31, 2025, we had $2,204 million in available liquidity, an increase of $748 million from our available liquidity as of December 31, 2024, primarily as a result of reducing our revolving credit facilities borrowings by $663 million.
Accounts payable produced $256 million in incremental cash inflows for the year ended December 31, 2024 compared to the same period of 2023.
Inventories represented $204 million in lower cash outflows for the year ended December 31, 2025 compared to the same period of 2024. Accounts payable produced $95 million in lower cash inflows for the year ended December 31, 2025 compared to the same period of 2024.
Property, plant and equipment purchases were $311 million for the year ended December 31, 2024 compared to $358 million in the prior year.
There were no significant business acquisitions during the year ended December 31, 2025. Property, plant and equipment purchases were $216 million for the year ended December 31, 2025 compared to $311 million in the prior year.
Goodwill Impairment Description Goodwill is obtained through business acquisitions and recorded at the estimated fair value at the date of acquisition. Goodwill is not amortized but instead tested for impairment annually or sooner if events indicate that an impairment may exist. In performing this test, we compare the carrying value of the asset to its fair value.
Goodwill Impairment Description Goodwill is obtained through business acquisitions and recorded at the estimated fair value at the date of acquisition. Goodwill is not amortized but instead tested for impairment annually or sooner if events indicate that an impairment may exist. Each of our segments is considered a separate reporting unit for purposes of testing goodwill.
Refer to the discussion of our segment results of operations for factors contributing to the changes in revenue by segment for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Refer to the discussion of our segment results of operations for factors contributing to the changes in revenue by segment for the year ended December 31, 2025 compared to the year ended December 31, 2024. Cost of Goods Sold Cost of goods sold decreased by $53 million, or 0.6%, to $8,386 million for the year ended December 31, 2025.
See Note 3, "Business Combinations" and Note 10, "Equity Method Investments" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to our acquisitions and investments. Sources of Revenue We report our revenue in two categories: (i) parts and services and (ii) other.
Our acquisition strategy is to target highly accretive tuck-in acquisitions with significant synergies or critical capabilities. See Note 3, "Business Combinations" and Note 10, "Equity Method Investments" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to our acquisitions and investments.
The CODM uses Segment EBITDA to compare profitability among the segments and evaluate business strategies. 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.
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.
The following table presents our financial performance, including third party revenue, total revenue and Segment EBITDA, by reportable segment for the periods indicated (in millions): Year Ended December 31, 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue 2022 % of Total Segment Revenue Third Party Revenue Wholesale - North America $ 5,762 $ 5,281 $ 4,556 Europe 6,407 6,323 5,735 Specialty 1,654 1,665 1,788 Self Service 532 597 715 Total third party revenue $ 14,355 $ 13,866 $ 12,794 Total Revenue Wholesale - North America $ 5,763 $ 5,282 $ 4,556 Europe 6,407 6,323 5,735 Specialty 1,657 1,668 1,791 Self Service 532 597 715 Eliminations (4) (4) (3) Total revenue $ 14,355 $ 13,866 $ 12,794 Segment EBITDA Wholesale - North America $ 959 16.6 % $ 975 18.5 % $ 852 18.7 % Europe 634 9.9 % 614 9.7 % 585 10.2 % Specialty 113 6.8 % 134 8.0 % 199 11.1 % Self Service 50 9.3 % 36 6.0 % 83 11.7 % Note: In the table above, the percentages of total segment revenue may not recalculate due to rounding. 37 The key measure of segment profit or loss reviewed by our CODM, our Chief Executive Officer, is Segment EBITDA.
The following table presents our financial performance, including third party revenue, total revenue and Segment EBITDA, by reportable segment for the periods indicated (in millions): Year Ended December 31, 2025 % of Total Segment Revenue 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue Third Party Revenue North America $ 5,650 $ 5,762 $ 5,281 Europe 6,311 6,407 6,323 Specialty 1,690 1,654 1,665 Total third party revenue $ 13,651 $ 13,823 $ 13,269 Total Revenue North America $ 5,651 $ 5,763 $ 5,282 Europe 6,311 6,407 6,323 Specialty 1,693 1,657 1,668 Eliminations (4) (4) (4) Total revenue $ 13,651 $ 13,823 $ 13,269 Segment EBITDA North America $ 814 14.4 % $ 940 16.3 % $ 959 18.1 % Europe 584 9.3 % 634 9.9 % 614 9.7 % Specialty 111 6.5 % 113 6.8 % 134 8.0 % Note: In the table above, the percentages of total segment revenue may not recalculate due to rounding.
See "Other Divestitures (Not Classified in Discontinued Operations)" in Note 4, "Discontinued Operations and Divestitures" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on the divestiture.
(4) Amounts include certain shared overhead costs that were historically allocated to the Self Service segment. See Note 4, "Discontinued Operations and Divestitures" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Please refer to the factors referred to in Special Note on Forward-Looking Statements and Risk Factors above. Due to these factors and others, which may be unknown to us at this time, our operating results in future periods can be expected to fluctuate. Accordingly, our historical results of operations may not be indicative of future performance.
Due to these factors and others, which may be unknown to us at this time, our operating results in future periods can be expected to fluctuate. Accordingly, our historical results of operations may not be indicative of future performance. Portfolio Management We continuously manage and assess the businesses and investments we own and the markets in which we operate.
Proceeds from the disposal of businesses, net of divested cash were an outflow of $11 million for the year ended December 31, 2024, compared to an inflow of $110 million for the year ended December 31, 2023, primarily related to the sale of GSF Car Parts.
Proceeds from the disposal of businesses, net of divested cash were an inflow of $397 million for the year ended December 31, 2025, compared to an outflow of $11 million for the year ended December 31, 2024. We invested $49 million of cash in business acquisitions during the year ended December 31, 2024.
Net debt payments (net of unamortized bond discounts) were $17 million for the year ended December 31, 2024 compared to net debt borrowings (net of unamortized bond discounts) of $111 million for the same period of 2023 (excluding proceeds from the issuance of the U.S. Notes (2028/33) of $1,394 million).
Net debt payments were $708 million for the year ended December 31, 2025 compared to net debt payments (net of unamortized bond discounts) of $17 million for the same period of 2024.
No impairment charges were recorded as a result of the testing as the fair value of each goodwill reporting unit exceeded the calculated carrying value.
For the Europe and North America segments, no impairment charges were recorded as a result of the testing as the fair value of these goodwill reporting units exceeded the calculated carrying value by at least 48%.
(3) Selling, general and administrative expenses increased by $32 million, or 2.3%, to $1,567 million for the year ended December 31, 2024.
(3) SG&A expenses increased by $34 million, or 2.1%, to $1,622 million for the year ended December 31, 2025.
Europe The following table provides a reconciliation of Revenue to Segment EBITDA in our Europe segment (in millions): Year Ended December 31, Europe 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change Parts & services revenue $ 6,386 $ 6,303 $ 83 (1) Other revenue 21 20 1 Total segment revenue 6,407 6,323 84 Cost of goods sold 3,953 3,886 67 Gross margin 2,454 38.3 % 2,437 38.5 % 17 (2) Selling, general and administrative expenses 1,855 28.9 % 1,842 29.1 % 13 (3) Less: Other segment items (4) (35) (19) (16) Segment EBITDA $ 634 9.9 % $ 614 9.7 % $ 20 (1) Parts and services revenue increased by $83 million, or 1.3%, to $6,386 million for the year ended December 31, 2024.
See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges. 38 Europe The following table provides a reconciliation of Revenue to Segment EBITDA in our Europe segment (in millions): Year Ended December 31, Europe 2025 % of Total Segment Revenue 2024 % of Total Segment Revenue $ Change Parts & services revenue $ 6,287 $ 6,386 $ (99) (1) Other revenue 24 21 3 Total segment revenue 6,311 6,407 (96) Cost of goods sold 3,884 3,953 (69) Gross margin 2,427 38.4 % 2,454 38.3 % (27) (2) Selling, general and administrative expenses 1,872 29.7 % 1,855 28.9 % 17 (3) Less: Other segment items (4) (29) (35) 6 Segment EBITDA $ 584 9.3 % $ 634 9.9 % $ (50) (1) Parts and services revenue decreased by $99 million, or 1.5%, to $6,287 million for the year ended December 31, 2025.
This overall increase was driven by a 6.3% increase due to the net impact of acquisitions and divestitures, partially offset by an organic parts and services revenue decline of 2.2%.
This overall decrease was driven by an organic parts and services revenue decrease of $362 million, or 2.7% (2.3% decrease on a per day basis) and a $69 million, or 0.5%, decrease due to the net impact of acquisitions and divestitures, partially offset by an increase of $231 million, or 1.7%, due to fluctuations in foreign exchange rates.
We are organized into four operating segments: Wholesale - North America; Europe; Specialty; and Self Service, each of which is presented as a reportable segment.
Collectively, we refer to the three sources that are not new OEM products as alternative parts. We are organized into three operating segments: North America; Europe; and Specialty, each of which is presented as a reportable segment.
(2) Gross margin increased by $17 million, or 0.7%, to $2,454 million for the year ended December 31, 2024. This increase was primarily attributable to increased revenue through pricing initiatives, partially offset by unfavorable customer mix, inflationary pressures and a $16 million reduction primarily related to restructuring expenses incurred as part of the 2024 Global Restructuring Plan.
(2) Gross margin decreased by $27 million, or 1.1%, to $2,427 million for the year ended December 31, 2025. This decrease was primarily attributable to decreased revenue, partially offset by a $13 million reduction in cost of goods sold related to restructuring expenses incurred as part of the 2024 Global Restructuring Plan in the prior year.
Selling, General and Administrative Expenses Our SG&A expenses as a percentage of revenue decreased to 27.3% for the year ended December 31, 2024 from 27.9% for the year ended December 31, 2023. The year over year decrease in SG&A expense primarily reflects an impact of 0.7% related to our Wholesale - North America segment.
SG&A expenses as a percentage of revenue increased to 27.9% for the year ended December 31, 2025 from 27.2% for the year ended December 31, 2024. SG&A expenses as a percentage of revenue primarily reflects increases of 0.5% from North America and 0.3% from Europe.
Key Performance Indicators We believe that organic revenue growth, Segment EBITDA and free cash flow are key performance indicators for our business. Segment EBITDA is our key measure of segment profit or loss reviewed by our chief operating decision maker ("CODM").
Segment EBITDA is our key measure of segment profit or loss reviewed by our chief operating decision maker ("CODM").
Our Self Service segment operates self service retail facilities across the U.S. that sell recycled automotive products from end-of-life-vehicles. Our operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control.
Our operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control. Please refer to the factors referred to in the Special Note on Forward-Looking Statements and Risk Factors above.
(2) Information reflects the current Obligor Group listed in Exhibit 22.1 in Part IV, Item 15 of this Annual Report on Form 10-K.
(2) Current liabilities for guarantor subsidiaries included $621 million and $219 million of short term notes payable to non-guarantor subsidiaries as of December 31, 2025 and 2024, respectively. (3) Information reflects the current Obligor Group listed in Exhibit 22.1 in Part IV, Item 15 of this Annual Report on Form 10-K.
Cost of Goods Sold Cost of goods sold as a percentage of revenue increased to 60.9% for the year ended December 31, 2024 from 59.8% for the year ended December 31, 2023. Cost of goods sold primarily reflects an increase of 1.0% from our Wholesale - North America segment.
Cost of goods sold primarily reflects decreases of $69 million from Europe and $20 million from North America, partially offset by an increase of $36 million from Specialty. Cost of goods sold as a percentage of revenue increased to 61.4% for the year ended December 31, 2025 from 61.1% for the year ended December 31, 2024.
Our 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 used to improve the performance, functionality and appearance of vehicles.
Our parts revenue is generated from the sale of alternative parts and vehicle products including collision parts, which are typically exterior components used in the collision repair process to restore a vehicle's appearance and safety; hard parts, which are typically internal components that are either mechanical in nature or functional components that are replaced as part of routine maintenance; major mechanical parts; and specialty products and accessories, which are vehicle products that improve the performance, functionality and appearance of vehicles.
Restructuring and Transaction Related Expenses Restructuring and transaction related expenses increased by $70 million, primarily due to (i) a $98 million increase in restructuring expenses related to our 2024 Global Restructuring plan, partially offset by (ii) a $17 million decrease related to transaction related expenses and (iii) an $8 million decrease in restructuring expenses related to our 2022 Global Restructuring Plan.
Restructuring and Transaction Related Expenses Restructuring and transaction related expenses decreased by $93 million, primarily due to a $70 million decrease in restructuring expenses related to our 2024 Global Restructuring plan and a $20 million decrease in restructuring expenses related to our Acquisition Integration plans.
See Note 25, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a reconciliation of total Segment EBITDA to net income.
We have made certain reclassifications to the prior period financial information to reflect discontinued operations presentation as a result of the sale of our Self Service segment. See Note 4, "Discontinued Operations and Divestitures" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Realized and unrealized currency gains and losses (including the effects of hedge instruments) combined with the translation effect of the change in foreign currencies against the U.S. dollar had a net negative effect of $0.20 on diluted earnings per share relative to the prior year primarily related to the $49 million pretax gain on the foreign exchange forward contracts related to the Uni-Select Acquisition in 2023.
Realized and unrealized currency gains and losses combined with the translation effect of the change in foreign currencies against the U.S. dollar had a net positive effect of $0.05 on diluted earnings per share from continuing operations relative to the prior year. Results of Operations—Segment Reporting We have three reportable segments: North America; Europe; and Specialty.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Wholesale - North America The following table provides a reconciliation of Revenue to Segment EBITDA in our Wholesale - North America segment (in millions): Year Ended December 31, Wholesale - North America 2024 % of Total Segment Revenue 2023 % of Total Segment Revenue $ Change Parts & services revenue $ 5,465 $ 4,974 $ 491 (1) Other revenue 297 307 (10) Intersegment revenue 1 1 — Total segment revenue 5,763 5,282 481 Cost of goods sold 3,252 2,796 456 Gross margin 2,511 43.6 % 2,486 47.0 % 25 (2) Selling, general and administrative expenses 1,567 27.2 % 1,535 29.0 % 32 (3) Less: Other segment items (4) (15) (24) 9 Segment EBITDA $ 959 16.6 % $ 975 18.5 % $ (16) (1) Parts and services revenue increased by $491 million, or 9.9%, to $5,465 million for the year ended December 31, 2024.
See Note 26, "Segment and Geographic Information" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a reconciliation of total Segment EBITDA to net income. 37 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 North America The following table provides a reconciliation of Revenue to Segment EBITDA in our North America segment (in millions): Year Ended December 31, North America 2025 % of Total Segment Revenue 2024 % of Total Segment Revenue $ Change Parts & services revenue $ 5,329 $ 5,465 $ (136) (1) Other revenue 321 297 24 Intersegment revenue 1 1 — Total segment revenue 5,651 5,763 (112) Cost of goods sold 3,232 3,252 (20) Gross margin 2,419 42.8 % 2,511 43.6 % (92) (2) Selling, general and administrative expenses (4) 1,622 28.7 % 1,588 27.5 % 34 (3) Less: Other segment items (5) (17) (17) — Segment EBITDA $ 814 14.4 % $ 940 16.3 % $ (126) (1) Parts and services revenue decreased by $136 million, or 2.5%, to $5,329 million for the year ended December 31, 2025.
See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges.
See Note 4, "Discontinued Operations and Divestitures" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to our divestitures. In addition to the above, on January 26, 2026 our Board announced it has initiated a comprehensive review of strategic alternatives to enhance shareholder value.
See Note 13, "Restructuring and Transaction Related Expenses" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on restructuring charges.
Impairment of Goodwill Impairment of goodwill increased by $52 million due to the impairment charge related to our Specialty reporting unit. See "Intangible Assets" in Note 2, "Summary of Significant Accounting Policies" and Note 9, "Intangible Assets" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
Other operating activities primarily reflect the aggregate effect of lower cash earnings, higher interest payments (primarily due to additional borrowings for the Uni-Select Acquisition and higher interest rates), and higher cash paid for taxes during the year ended December 31, 2024 compared to the same period of 2023. 46 For the year ended December 31, 2024, net cash used in investing activities totaled $406 million compared to $2,442 million for the same period of 2023.
Other operating activities primarily reflect the aggregate effect of lower cash earnings and movements in various accruals during the year ended December 31, 2025 compared to the same period of 2024.
See Note 17, "Supply Chain Financing" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our supply chain financing arrangements. We hold interest rate swaps to hedge the variable rates on a portion of our credit agreement borrowings.
See Note 17, "Supply Chain Financing" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for information related to our supply chain financing arrangements. For the year ended December 31, 2025, net cash provided by operating activities totaled $1,063 million compared to $1,121 million for the same period of 2024.
Summarized Balance Sheets (in millions) December 31, 2024 2023 (2) Current assets $ 2,321 $ 2,167 Noncurrent assets 5,722 5,699 Current liabilities (1) 1,206 925 Noncurrent liabilities 4,163 4,031 (1) Current liabilities for guarantor subsidiaries included $219 million of short term notes payable to non-guarantor subsidiaries as of December 31, 2024.
Summarized Balance Sheets (in millions) December 31, 2025 2024 (3) Current assets $ 2,349 $ 2,273 Noncurrent assets (1) 4,797 5,207 Current liabilities (2) 1,616 1,171 Noncurrent liabilities 3,294 4,046 (1) Noncurrent assets for guarantor subsidiaries included $510 million and $487 million of long-term notes receivable from non-guarantor subsidiaries as of December 31, 2025 and 2024, respectively.
The increase in selling, general and administrative expenses reflects unfavorable impacts of (i) $5 million from increased personnel costs, (ii) $3 million related to higher credit loss reserves compared to prior year, and (iii) other individually immaterial factors representing a $5 million unfavorable impact in the aggregate, partially offset by a favorable impact of (iv) $3 million due to lower freight, vehicle and fuel expenses.
The increase in SG&A expense is primarily due to (i) a nonrecurring $35 million credit related to the favorable settlement of a legal claim in 2024, and (ii) $18 million from increased vehicle costs, partially offset by (iii) $14 million from decreased personnel costs due to cost savings initiatives which were partially offset by inflationary pressures, and (iv) other individually immaterial factors representing a $5 million favorable impact in the aggregate.
Sensitivity of Estimate to Change The balance of our goodwill was $5,448 million and $5,600 million as of December 31, 2024 and December 31, 2023 , respectively. We have not made material changes in the accounting methodology used to evaluate impairment of goodwill during the last three years.
We have not made material changes in the accounting methodology used to evaluate impairment of goodwill during the last three years. During fiscal year 2025, we elected to perform a quantitative impairment test for our goodwill with a testing date as of October 31, 2025.
The increase in Selling, general and administrative expense primarily reflects unfavorable impacts of (i) $71 million from personnel costs excluding incentive compensation primarily due to the acquisition of Uni-Select, (ii) $36 million from facility costs primarily due to the acquisition of Uni-Select, (iii) $11 million from increased freight, vehicle, and fuel costs, partially offset by (iv) $42 million from lower incentive compensation, (v) $27 million from 38 professional fees primarily related to proceeds from the favorable settlement of a legal claim in 2024, (vi) $6 million from lower charitable contributions in the prior year period, and (vii) other individually immaterial factors representing an $11 million favorable impact in the aggregate.
The remaining increase primarily relates to (i) a $9 million unfavorable impact in professional fees related to several strategic central and regional information technology initiatives, partially offset by (ii) a $23 million favorable impact from the divestiture of certain operations in Poland, Slovenia and Bosnia in 2024, (iii) $20 million from decreased personnel costs primarily due to lower incentive compensation in the current year, (iv) $10 million from lower freight, vehicle and fuel costs and (v) other individually immaterial factors representing an $13 million favorable impact in the aggregate.
Our failure to raise capital if and when needed could have a material adverse impact on our business, operating results, and financial condition. As part of our effort to improve our operating cash flows, we may negotiate payment term extensions with suppliers. These efforts are supported by our supply chain finance programs.
We normally pay for salvage vehicles acquired at salvage auctions and under direct procurement arrangements at the time that we take possession of the vehicles. As part of our effort to improve our operating cash flows, we may negotiate payment term extensions with suppliers. These efforts are supported by our supply chain finance programs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+1 added−2 removed11 unchanged
Biggest changeWe do not currently attempt to hedge foreign currency exposure related to our foreign currency denominated inventory purchases in our Wholesale - North America operations, and we may not be able to pass on any resulting price increases to our customers.
Biggest changeWe do not currently attempt to hedge foreign currency exposure related to our foreign currency denominated inventory purchases in our North America operations, and we may not be able to pass on any resulting price increases to our customers. 44 To the extent that we are exposed to foreign currency fluctuations related to non-functional currency denominated transactions, we may hedge the exposure through the use of foreign currency forward contracts.
See our Results of Operations discussion in Part II, Item 7 of this Annual Report on Form 10-K for additional information regarding the impact of fluctuations in exchange rates on our year over year results. 48 Additionally, we are exposed to foreign currency fluctuations with respect to the purchase of aftermarket products from foreign countries, primarily in Europe and Asia.
See our Results of Operations discussion in Part II, Item 7 of this Annual Report on Form 10-K for additional information regarding the impact of fluctuations in exchange rates on our year over year results. Additionally, we are exposed to foreign currency fluctuations with respect to the purchase of aftermarket products from foreign countries, primarily in Europe and Asia.
Using sensitivity analysis, a 100 basis point movement in interest rates would change interest expense by $10 million over the next twelve months. Commodity Prices We are exposed to market risk related to price fluctuations in scrap metal and other metals (including precious metals, such as platinum, palladium, and rhodium, contained in some recycled parts, such as catalytic converters).
Using sensitivity analysis, a 100 basis point movement in interest rates would change interest expense by $7 million over the next twelve months. Commodity Prices We are exposed to market risk related to price fluctuations in scrap metal and other metals (including precious metals, such as platinum, palladium, and rhodium, contained in some recycled parts, such as catalytic converters).
Inflationary pressures in the future may have an adverse effect on our ability to maintain current levels of gross margin and SG&A expenses as a percentage of net revenue if the selling prices of our products do not increase with these increased costs, we cannot identify cost efficiencies, or the higher prices impact demand. 50
Inflationary pressures in the future may have an adverse effect on our ability to maintain current levels of gross margin and SG&A expenses as a percentage of net revenue if the selling prices of our products do not increase with these increased costs, we cannot identify cost efficiencies, or the higher prices impact demand. 45
We hedge our exposure to foreign currency fluctuations related to a portion of inventory purchases in our Europe operations, but the notional amount and fair value of these foreign currency forward contracts at December 31, 2024 were immaterial.
We hedge our exposure to foreign currency fluctuations related to a portion of inventory purchases in our Europe operations, but the notional amount and fair value of these foreign currency forward contracts at December 31, 2025 were immaterial.
As of December 31, 2024, we had outstanding borrowings of €250 million under our Euro Notes (2028), €750 million under our Euro Notes (2031), CAD 700 million under our CAD Note, and Swedish Krona ("SEK") 25 million under our revolving credit facilities.
As of December 31, 2024, we had outstanding borrowings of €250 million under our Euro Notes (2028), €750 million under our Euro Notes (2031), CAD 700 million under our CAD Note, and SEK 25 million under our revolving credit facilities.
See Note 18, "Long-Term Obligations" and Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information. At December 31, 2024, we had approximately $951 million of variable rate debt that was not hedged.
See Note 18, "Long-Term Obligations" and Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information. At December 31, 2025, we had approximately $711 million of variable rate debt that was not hedged.
An increase or decrease in the strength of the U.S. dollar against these currencies by 10% would result in a 5.2% change in our consolidated revenue and a 3.7% change in our operating income for the year ended December 31, 2024.
An increase or decrease in the strength of the U.S. dollar against these currencies by 10% would result in a 5.4% change in our consolidated revenue and a 4.5% change in our operating income for the year ended December 31, 2025.
Foreign Exchange Rates Foreign currency fluctuations may impact the financial results we report for the portions of our business that operate in functional currencies other than the U.S. dollar. Our operations outside of the U.S. represented 52.4% and 50.8% of our revenue during years ended December 31, 2024 and 2023, respectively.
Foreign Exchange Rates Foreign currency fluctuations may impact the financial results we report for the portions of our business that operate in functional currencies other than the U.S. dollar. Our operations outside of the U.S. represented 54.4% of our revenue during both years ended December 31, 2025 and 2024.
The average of scrap metal prices for the year ended December 31, 2024 decreased by 5% over the average for 2023, noting prices decreased over both years.
The average of scrap metal prices for the year ended December 31, 2025 decreased by 9% over the average for 2024, noting prices decreased over both years.
The average prices of 49 palladium, rhodium and platinum decreased by 26%, 23% and 2%, respectively, for the year ended December 31, 2024 compared to the average prices for the year ended December 31, 2023. Inflation We are exposed to market risks related to inflation in product, labor, shipping, freight and general overhead costs.
The average prices of rhodium, platinum, and palladium increased by 40%, 38% and 20%, respectively, for the year ended December 31, 2025 compared to the average prices for the year ended December 31, 2024. Inflation We are exposed to market risks related to inflation in product, labor, shipping, freight and general overhead costs.
We designated our interest rate swap contracts as cash flow hedges, and net interest payments or receipts from interest rate swap contracts are included as adjustments to interest expense. In February 2023, we entered into two sets of interest rate swap agreements to hedge the variable rates on a portion of our credit agreement borrowings.
We designated our interest rate swap contracts as cash flow hedges, and net interest payments or receipts from interest rate swap contracts are included as adjustments to interest expense. As of December 31, 2025 we had interest rate swap agreements outstanding to hedge the variable rates on a portion of our credit agreement borrowings.
As of December 31, 2023, we had outstanding borrowings of €500 million under our Euro Notes (2024) and €250 million under our Euro Notes (2028), CAD 700 million under our CAD Note, and €344 million and SEK 60 million under our revolving credit facilities.
As of December 31, 2025, we had outstanding borrowings of €250 million under our Euro Notes (2028), €750 million under our Euro Notes (2031), Canadian dollar ("CAD") 700 million under our CAD Note, and Swedish Krona ("SEK") 10 million under our revolving credit facilities.
In 2023, inflation increased to rates beyond recent history, which resulted in rising costs, but started to ease in 2024. We adjusted our prices and drove productivity initiatives to partially mitigate the inflationary effects. If these pressures continue or increase in severity, we may not be able to fully offset such higher costs through price increases and productivity initiatives.
In 2023, inflation increased to rates beyond recent history, which resulted in rising costs, but started to ease in 2024 and continued to ease in 2025. We adjusted our prices and drove productivity initiatives to partially mitigate the inflationary effects.
Removed
To the extent that we are exposed to foreign currency fluctuations related to non-functional currency denominated transactions, we may hedge the exposure through the use of foreign currency forward contracts. In March 2023, we entered into foreign currency forward contracts related to the Uni-Select Acquisition. These contracts were settled in July 2023 ahead of closing of the Uni-Select Acquisition.
Added
If these pressures continue or increase in severity, we may not be able to fully offset such higher costs through price increases and productivity initiatives.
Removed
See Note 3, "Business Combinations" and Note 19, "Derivative Instruments and Hedging Activities" to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.