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Segment and Geographic Information
 3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Segment and Geographic Information
Segment and Geographic Information
We have four operating segments: Wholesale – North America, Europe, Specialty and Self Service. Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our reportable segments are organized based on a combination of geographic areas served and type of product lines offered. The reportable segments are managed separately as each business serves different customers (i.e. geographic in the case of North America and Europe and product type in the case of Specialty) and is affected by different economic conditions. Therefore, we present three reportable segments: North America, Europe and Specialty.
The following tables present our financial performance by reportable segment for the periods indicated (in thousands):
 
North America
 
Europe
 
Specialty
 
Eliminations
 
Consolidated
Three Months Ended March 31, 2018
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
Third Party
$
1,329,660

 
$
1,040,430

 
$
350,674

 
$
—

 
$
2,720,764

Intersegment
183

 
—

 
1,118

 
(1,301
)
 
—

Total segment revenue
$
1,329,843

 
$
1,040,430

 
$
351,792

 
$
(1,301
)
 
$
2,720,764

Segment EBITDA
$
177,713

 
$
75,534

 
$
41,969

 
$
—

 
$
295,216

Depreciation and amortization (1)
21,228

 
32,757

 
7,081

 
—

 
61,066

Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
Third Party
$
1,208,047

 
$
820,897

 
$
313,899

 
$
—

 
$
2,342,843

Intersegment
193

 
—

 
1,035

 
(1,228
)
 
—

Total segment revenue
$
1,208,240

 
$
820,897

 
$
314,934

 
$
(1,228
)
 
$
2,342,843

Segment EBITDA
$
176,135

 
$
78,694

 
$
35,441

 
$
—

 
$
290,270

Depreciation and amortization (1)
20,378

 
24,751

 
5,475

 
—

 
50,604


(1)
Amounts presented include depreciation and amortization expense recorded within cost of goods sold.
The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. 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. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses and equity in earnings of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding noncontrolling interest, discontinued operations, depreciation, amortization, interest and income tax expense.
The table below provides a reconciliation of Net Income to Segment EBITDA (in thousands):
 
Three Months Ended
 
March 31,
2018
 
2017
Net income
$
152,763

 
$
136,278

Less: net loss attributable to noncontrolling interest
(197
)
 
—

Net income attributable to LKQ stockholders
152,960

 
136,278

Subtract:
 
 
 
Net loss from discontinued operations
—

 
(4,531
)
Net income from continuing operations attributable to LKQ stockholders
152,960

 
140,809

Add:
 
 
 
Depreciation and amortization
56,458

 
48,656

Depreciation and amortization - cost of goods sold
4,608

 
1,948

Interest expense, net
28,515

 
23,988

Provision for income taxes
49,584

 
72,155

EBITDA
292,125

 
287,556

Subtract:
 
 
 
Equity in earnings of unconsolidated subsidiaries
1,412

 
214

Add:
 
 
 
Restructuring and acquisition related expenses (1)
4,054

 
2,928

Inventory step-up adjustment - acquisition related
403

 
—

Change in fair value of contingent consideration liabilities
46

 
—

Segment EBITDA
$
295,216

 
$
290,270


(1)
See Note 6, "Restructuring and Acquisition Related Expenses," for further information.
The following table presents capital expenditures by reportable segment (in thousands):
 
Three Months Ended
March 31,
2018
 
2017
Capital Expenditures
 
 
 
North America
$
29,662

 
$
16,760

Europe
28,815

 
20,458

Specialty
3,712

 
3,582

Discontinued operations
—

 
3,598

Total capital expenditures
$
62,189

 
$
44,398


The following table presents assets by reportable segment (in thousands):
 
March 31,
 
December 31,
2018
 
2017
Receivables, net
 
 
 
North America
$
448,973

 
$
379,666

Europe
622,592

 
555,372

Specialty
140,223

 
92,068

Total receivables, net (1)
1,211,788

 
1,027,106

Inventories
 
 
 
North America
1,053,322

 
1,076,393

Europe
998,617

 
964,068

Specialty
349,370

 
340,322

Total inventories
2,401,309

 
2,380,783

Property, Plant and Equipment, net
 
 
 
North America
542,453

 
537,286

Europe
304,048

 
293,539

Specialty
83,255

 
82,264

Total property, plant and equipment, net
929,756

 
913,089

Equity Method Investments
 
 
 
North America
336

 
336

Europe 
207,874

 
208,068

Total equity method investments
208,210

 
208,404

Other unallocated assets
4,885,115

 
4,837,490

Total assets
$
9,636,178

 
$
9,366,872


(1)
Refer to Note 4, "Financial Statement Information," for the increase in total receivables, net compared to December 31, 2017 as a result of the adoption of ASC 606.
We report net receivables; inventories; net property, plant and equipment; and equity method investments by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash, prepaid and other current and noncurrent assets, goodwill, other intangibles and income taxes.
The majority of our operations are conducted in the U.S. Our European operations are located in the U.K., the Netherlands, Belgium, Italy, Czech Republic, Poland, Slovakia and other European countries. Our operations in other countries include operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. Our net sales are attributed to geographic area based on the location of the selling operation.
The following table sets forth our revenue by geographic area (in thousands):
 
Three Months Ended
 
March 31,
 
2018
 
2017
Revenue
 
 
 
United States
$
1,560,027

 
$
1,417,040

United Kingdom
430,992

 
382,652

Other countries
729,745

 
543,151

Total revenue
$
2,720,764

 
$
2,342,843



The following table sets forth our tangible long-lived assets by geographic area (in thousands):
 
March 31,
 
December 31,
 
2018
 
2017
Long-lived Assets
 
 
 
United States
$
589,848

 
$
583,236

United Kingdom
186,347

 
178,021

Other countries
153,561

 
151,832

Total long-lived assets
$
929,756

 
$
913,089