LKQ Corporation (NASDAQ:LKQ) Q4 2022 Earnings Call Transcript

Daniel Imbro: Great. That’s helpful color. And then, I wanted to just circle back on the potential battery remanufacturing JV. If you take a step back and just think about how State Farm handled the aftermarket after one accident 20 years ago, I mean, have you guys talked to the insurance companies? Do you think that they’re actually going to reinsure remanufactured EV batteries? Or if there’s one accident, does that become a category that insurance companies just won’t touch because of the liability? Just trying to think through what the actual end market could be there. Can insurance companies actually do that?

Nick Zarcone: Yes. So, Daniel, you need to separate the collision business from the mechanical repair business. And the EV batteries, what we’re doing right now with Bumblebee and Green Bean, the two companies that we bought over the last year or so that remanufacture batteries, that has nothing to do with the collision business. That just has to do with the failure of the batteries and the life batteries to extend the life of the vehicle, okay? The memorandum of understanding on recycling with Korea Zinc, again, has nothing to do with remanufacturing. That is truly a recycling to get to the core elements that are inside that EV. And so, you need to keep — there’s a big difference between remanufacturing and recycling. Recycling, there’s not a battery left to go back into another vehicle, right?

Remanufacturing is where we truly look at the battery, we replace certain cells. That is not an insurance-driven profit. If you have a nine-year-old EV and your battery is failing, you’re not going to get reimbursed a nickel from your insurance company to go replace that battery. That’s going to be an out-of-pocket expense.

Daniel Imbro: Got it. So, this is more on the — it’s on the mineral extraction or kind of recycling side, the potential…

Nick Zarcone: Yes.

Daniel Imbro: Okay. That’s helpful. Thanks, guys.

Nick Zarcone: Yes.

Operator: There are no further questions at this time. Mr. Nick Zarcone, I turn the call back over to you for some final closing remarks.

Nick Zarcone: Well, as always, we greatly appreciate everyone’s time and attention on this call. We know it’s a busy reporting period, and we appreciate you spending the hour with LKQ. Again, I couldn’t be more proud of our team and the results that we posted up not only in the fourth quarter of 2022, but the full year as a whole. We’re looking forward to being back on line with you in about, I don’t know, 60 days or so, in late April, when we announce our first quarter results. So, thank you for your time, and we’ll be talking to you soon.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.