LKQ
#We are intentionally buying a better vehicle.
It's slightly newer ---+ younger, I should say, in age.
With that intent of, as that car part shifts to a newer car, Jamie, we want to have, obviously, newer model parts in the inventory.
It is going to plan.
We are buying that younger vehicle.
We are absolutely getting more gross margin dollars.
We run a report here that is showing that we are actually getting more dollars out of the same amount of cars.
Not really.
The inventory, historically, has turned about 3 times a year; there's no big changes there.
On a consolidated basis, it will begin to turn a bit faster, just because PGW has a much higher turn, because their OE business is basically direct delivery to the assembly lines.
Order of 6 to 7 times.
I think that's fair, Jamie.
It is opening up new opportunities for us, particularly in the accessory space ---+ those vertical moves.
We have a lot of opportunities there to expand that side of the Business.
We are not in the reman transmission business today.
We think that's a great opportunity for us, so we are looking at those opportunities very closely now.
Thanks, Jamie.
Yes.
<UNK>, PGW had a really good contribution to the quarter.
Again, they haven't changed their overall projections for the year, their budgets or their plans.
So, they're right on target.
That's a combination of both the aftermarket business and the OE business.
Obviously, the OE business plays to different dynamics than our historical businesses, if you will.
The reality is, they are very ---+ they're different, right.
The drivers of our core North American business are different than the core drivers of the PGW business.
Again, we think our core North American business had a great quarter.
I mean, the margins were up, gross margins were up, operating margins were up, profitability was up nicely.
The organic growth was a little bit lower than I think was expected.
But given what was happening with total, the frequency of collisions, all put together, we think we had a terrific first quarter in North America.
I will just add to what <UNK> said, with the PGW acquisition, we are starting to sell glass in our LKQ facilities.
Those reps have access to that.
We do like that.
Certainly, the distribution side of the Business, to be able to cross sell in our different entities.
We're looking at opportunities in Europe as well, so we're very pleased with that acquisition.
The biggest benefit we think we can get is just training.
By consolidating our call centers, and getting our people better trained and better monitored is the ultimate goal here.
We talked about the CCC initiative where more and more is going online as an opportunity as well.
We see more effectiveness with our sales reps, and just being able to better handle call volume as well.
The way we are situated now with sales reps spread out all over, we now have the ability to move our phones ---+ if the phones go down, we can move it to a different call center.
We do plan on going to extended hours, so that at 5 in the morning, if someone on the West Coast wanted to order a part, if they are up early, those will ring on the East Coast, and when we close down at 5 o'clock on the East Coast, those phones will be ringing on the West Coast.
We expect expanded service because of the way we're going to be routing the calls and handling the sales force.
We do expect some good efficiencies to come out of this.
Collision today is roughly 30% of our total revenue.
I think the question you are asking ---+ is collision ---+ kind of performance of collision versus mechanical.
The collision side actually performed a little bit better than mechanical.
The two biggest parts we take off of a salvage vehicle is obviously the engine and the transmission.
On the aftermarket side, we sell no mechanical.
Mechanical strictly relates to the salvage side of the Business.
The reality is, those parts start selling year seven or so.
If you take a look at the requests that we get for engines and transmissions, about 15% of the total requests relate to model years that are 1 to 6 years old.
65% of the requests come from model years that are 7 to 15 years old.
The sweet spot for the mechanical side are older vehicles, and the strong SAR rate over the last several years, it's going to take some time before those cars come into the sweet spot on the mechanical side.
A little bit stronger performance on collision versus the mechanical, but nothing ---+ not significant.
It's annualizing roughly about $80 million now.
Thank you, everyone, for your time today, and we look forward to speaking with you in October when we report Q3 2016 results.
Have a great day.
Thanks, everyone.
