Dominick Zarcone
President and Chief Executive Officer at LKQ
Thank you, Joe, and good morning to everybody on the call. I hope you're all having a safe and enjoyable summer. This morning, I will provide some high-level
Comments related to our performance in the quarter, and then Rick will dive into the financial details and provide an overview of our updated guidance before I come back with a few closing remarks. The second quarter of 2023 was a continuation of what we delivered in the first quarter, where, again, the resilience of our businesses shined through with an exceptional organic revenue growth and strong margins in our North American and European segments, which more than offset the impact of the headwinds experienced by our Specialty and Self-Service segments.
The non discretionary nature of the parts these core segments distribute, coupled with our ongoing operational excellence initiatives highlights the strength of our business model and our ability to generate robust profitability during periods of challenging macroeconomic conditions, including flat declining economic growth in several of our markets, decreases in commodity pricing, the ongoing conflict in Ukraine and its impact on the broader European markets and the continued increases in interest rates and its subsequent impact on consumers. The strength of our North American and European segments is evidenced by the fact that in the second quarter of 2023, North America and Europe collectively represented roughly 90% of our total segment EBITDA versus 79% for the second quarter of 2022 and just 74% in 2021.
The variance in performance across our operating segments this quarter again validates our long-term diversification strategy, both with respect to geography and product and speaks to the true strength of our organization and our portfolio of businesses. Now on to the second quarter 2023 results and year-over-year comparisons. Revenue for the second quarter was $3.4 billion, an increase of 3.2%. Parts and services organic revenue increased 4.8% on a reported basis and 5.4% on a per day basis. The net impact of acquisitions and divestitures was flat year-over-year and foreign exchange rates increased revenue by 0.6% for total parts and services revenue increases of 5.4%.
Other revenue fell 23.9% in the second quarter of 2023, primarily due to weaker precious metal prices relative to the same period in the prior year. Net income for the second quarter of 2023 was $281 million as compared to $420 million last year. Diluted earnings per share was $1.05 in the second quarter of 2023 compared to $1.49, a decrease of 29.5%. The company completed the divestiture of PGW Auto Glass in the second quarter of last year, which generated a pretax gain of $155 million and an after-tax gain of $127 million or $0.45 a share in the second quarter of 2022. Adjusted net income of $291 million in Q2 of 2023 compared to $307 million last year, a decrease of 5.1%.
Adjusted diluted earnings per share in the second quarter of 2023 was flat with last year at $1.09, coming in flat to the prior year is a testament to the strength of our operating performance as we faced headwinds from significantly lower commodity prices and higher interest expense. Rick will provide further financial details in his prepared remarks. Now let's turn to some of the quarterly segment highlights. As you will note from slide eight, organic parts and services revenue for North America increased 8.3%. North America also reported the highest quarterly EBITDA on record as a stand-alone segment, excluding self-service.
We continue to perform well in North America, especially when you consider that collision and liability-related auto claims were down 3.1% year-over-year in the second quarter. Similar to Q1, the growth in North America was a combination of price and volume improvements. The pricing impact primarily reflected the year-over-year benefit of increases implemented late in Q2 and Q3 of last year as opposed to further increases in 2023. The volume pickup was particularly evident in the aftermarket product line and was the result of two factors. First, having largely worked through the industry supply chain issues and returning to proper levels of inventory enabled us to get back to our historical level of fulfillment rates with year-to-date aftermarket fill rates at their highest level since June of 2020.
Second, the impact of the State Farm program continues to unfold nicely and is building demand for aftermarket headlights, tail lights and bumper covers. As previously disclosed, in December of last year, State Farm announced that it would allow the use of these aftermarket part types. Late last month, State Farm announced that they are running yet another pilot, this time in California and Arizona, for the use of a full range of aftermarket collision parts, including sheet metal products like fenders, hoods and trunk lids and other items like side mirrors and grills. As part of this pilot, State Farm requires that these parts to be certified by CAPA, Certified Automotive Parts Association,
As many of you know, we are by far the largest distributor of CAPA-certified collision parts in the United States. Importantly, we believe the potential expansion by State Farm into the utilization of these additional aftermarket part types validates both the high-quality standards of our platinum plus private label aftermarket parts offerings and our ability to deliver best-in-class service to State Farm's direct repair network across the country. We will be a beneficiary should State Farm ultimately decide to roll out the use of these additional aftermarket part types on a nationwide basis. This upward trend in our aftermarket sales volumes is consistent with a general rise in alternative part usage or APU, which again approached pre-pandemic levels in the second quarter.
I am pleased to say that the increase in APU also included an uptick in the recycled parts category, increasing about 140 basis points year-over-year. Combined, aftermarket and recycled parts have witnessed over a 400 basis point improvement in industry-wide APU year-over-year in the second quarter of 2023. Our outperformance is another indicator that we continue to take market share. Noncomprehensive total loss rates decreased sequentially in the second quarter to 20.4% from 20.9% in Q1. With the recent drop in used car prices, we expect total loss rates to slightly pick up for the balance of the year. And then as OEs work through their healthy inventory levels, industry experts believe we will likely see a mix shift to newer vehicles down the road and would expect to see any near-term increase in total losses to reverse course given newer vehicles are less likely to be deemed a total loss.
As stated in prior calls, we are generally agnostic as to the small up and down shifts in the total loss rate. Finally, last month, I had the opportunity to spend some quality time with the top-performing general managers and salespeople at an event for our North American business. I must say their enthusiasm regarding the future of LKQ was simply energizing. Now let's move on to our European segment. Europe's organic revenue growth for parts and services in the quarter increased 8.5% on a reported basis and 9.8% on a per day basis. It was a quarter of records for the European segment, which reported the highest quarterly revenue ever at $1.64 billion, the highest EBITDA at $188 million and the highest second quarter EBITDA margin percentage ever at 11.5%.
During the quarter, we saw high single-digit to low double-digit reported organic growth in some of our key operating geographies. In particular, our Benelux, Germany and Eastern European operations performed exceptionally well. The revenue growth reflected a combination of positive movements in both price and volume. We are confident we are continuing to take share in these large and highly fragmented markets as witnessed by ECP, our U.K. business, which generated its highest level of per day sales on record. In the second quarter, LKQ Europe entered into a strategic partnership with Mobivia, Europe's largest independent provider of automotive maintenance and repair services operating under 11 brands in 18 countries across Europe.
The agreement between Mobivia and LKQ Europe is based on a dual mode of collaboration which includes the procurement and delivery of automotive parts to Mobivia's 530 ATU service branches across Germany. LKQ and Mobivia are both leaders in our respective sectors of the European automotive aftermarket. And thanks to this collaboration, we will leverage our strengths to provide a differentiated solution that is unparalleled in the marketplace. Our European team continues to face cost inflation across all operating markets. And to combat this, the team has taken decisive structural and multiple efficiency actions. These actions resulted in year-over-year improvements in SG&A for the second quarter despite this challenging macro environment.
I spent last week in Europe meeting with all the senior leaders across this segment and also with the regional teams in the U.K. and the Benelux region. I am incredibly proud of the performance of the European team in what they are delivering. And I am very excited about all the initiatives they have underway to grow the business and enhance our leading competitive position. The team's focus and drive are outstanding and they are creating a uniquely special and market-leading business. Now let's move on to our Specialty segment. During the second quarter, Specialty reported a decrease in organic revenue of 12.9%, which was below our expectations.
There were major differences in the demand for various part types with the truck, off-road and marine categories being down less than 2%, while RV and towing related products were off substantially more than the overall segment decline. The RV portion of our Specialty business was impacted by the wholesale shipment and retail sales of RVs, which were down 50% and 20% year-to-date through May, respectively. We expect to see further declines in the RV market as recent industry reports project that full year 2023 wholesale shipments will be down 40% year-over-year. With that, we believe the challenges for our Specialty segment will continue in the back half of the year.
Now on to our Self-Service segment. Organic revenue for parts and services for our Self-Service segment increased 4.7% in the second quarter. Self-service was again challenged by extremely soft commodity pricing particularly as it is related to precious metals. On the corporate development front, during the quarter and recently in July, we completed some smaller, highly synergistic tuck-in acquisitions including a U.S.-based remanufacturer and distributor of OE replacement engines, marine replacement engines and high-performance crate engines, a leading independent truck parts distributor in the U.K., a Holland-based automotive aftermarket parts distributor, a Belgium-based business that distributes automotive parts, paint, tools and accessories and aftermarket accessories distributor with locations in Texas and Oklahoma.
Additionally, during the quarter, we divested a small noncore business in our Specialty segment. The net annualized revenue impact of these six transactions collectively is approximately $240 million. As most of you know, on February 26, we entered into a definitive agreement to acquire all of Uni-Select's issued and outstanding shares for CAD48 per share in cash representing a total enterprise value of approximately USD2.1 billion. The process is on schedule, and we are pleased with our progress. During the second quarter, we received the required approvals from Uni-Select shareholders, the Superior Court of Quebec, the antitrust regulators in the United States and in Canada.
On July 21, the Competition and Markets Authority in the United Kingdom issued its Phase one decision on the transaction. And in response, we immediately submitted our proposed undertakings related to the divestiture of Uni-Select's GSF Car Parts business in the U.K. for evaluation by the CMA. In light of those developments, yesterday, we waived the closing conditions relating to regulatory approvals, and I'm happy to announce we plan to complete the acquisition of Uni-Select on or about August 1. The pending divestiture of GSF continues to progress in accordance with our desired time line. After we complete the customary competitive bid sale process, this CMA will complete its suitability review of our proposed buyer.
Upon we received an approval of the buyer from the CMA, we will complete the sale of GSF likely in the third quarter. Now turning to ESG. During the order we initiated or expanded various programs that centered around our people - LKQ's most important asset. As part of our response to our employee engagement survey, we identified that ensuring the health, safety and well-being of our employees is essential to our success. With that engagement data, we took action. We expanded our Inspire to Thrive wellness program globally, which focuses on the physical, mental and financial well-being of our employees. We expanded the installation of dash cams across our North America and specialty fleets, a program that enhances the safety of our drivers. And at ECP, our team implemented two exciting programs, 25 by 25 and PAVE, which stands for People Adding Value Everywhere.
Both these programs are centered around our diversity, equity and inclusion initiatives. Again, we implemented these programs as they are in the best interest of our employees. I could not be prouder of the continued progress on our ESG efforts, which was again validated in June by MSCI maintaining our AAA ESG rating, a rating that very few companies can claim. Lastly, I am pleased to announce that on July 25, 2023, the Board of Directors declared a quarterly cash dividend of $0.275 per share of common stock payable on August 31, 2023, to stockholders of record at the close of business on August 17, 2023. I will now turn the discussion over to Rick who will run through the details of the segment results and discuss our outlook for 2023.
