LKQ Corporation Q2 2009 Earnings Call Transcript

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2009-07-31 15:45:34.0

Tags: Call Transcript, Quarter, Earnings, Sales Strategy, Sales Force Management, Policies And Procedures, Sales, Human Resources, Seeking Alpha, LKQ Corp.

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question and answer session. (Operator Instructions). Our first question is from the line of Tony Cristello with BB&T Capital Markets. Please state your question.

Tony Cristello - BB&T Capital Markets

I guess the question, Joe, when you look at June and you look at September on a seasonal basis, they're typically weaker for the aftermarket business. This quarter, you did put up what would be a sort of implied near 8% organic growth on that side of the business, even though it sounds like industry claims are still running somewhat negative. There's a disparity there, and is it simply LKQ, because of the scale gaining market share, or are there some other industry dynamics at work, or maybe you've got some color you can provide on sort of that disparity for us?

Joe Holsten

I think, maybe, a couple observations. The first would be that it might be said for the quarter overall that the accident rates may have been off a few percent. The other trend we see that is going on within the industry is the increase in alternative part utilization. We generally like to see a couple of reports from the leading data providers, CCC and Mitchell, we like to see a couple of reports from them before we really claim that there's a kind of permanent change there, but the more recent reports we saw would suggest, there has been about a 200 basis point improvement or gain in alternative part utilization. So, just getting our fair share of that is important.

I guess, secondly, I would probably say that I suspect that we're getting a little bit more than our fair share, being a public company, operating against exclusively in the aftermarket world, against strictly private companies, our access to the capital markets is certainly and the strength of our balance sheet has allowed us to put on a broader and stronger inventory in place, we believe, to address potential out-of-stock positions.

The interesting thing about the quarter is that we saw aftermarket sales gains build throughout the quarter. And I think on our last call, we indicated April was not a very robust month, and we saw sales momentum gain throughout the quarter. Our average daily sales in June were much stronger than what we saw in April. But, again, the momentum kind of built throughout the quarter.

 

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