Dominick Zarcone
President and Chief Executive Officer at LKQ
Thank you, Joe, and good morning to everybody on the call.
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 before I come back with a few closing remarks.
On February 28th, the company kicked-off a year long celebration of our 25th anniversary by ringing the opening bell at NASDAQ. The celebration is focused on our 25-year history, our customers, our employees, the communities that we serve and further energizing our global team about our future. Following this initial celebration, we hosted leadership conferences in both North America and Europe for key leaders across each of our operating segments. We all had a chance to celebrate, educate, and collaborate on our past successes and share the excitement of what the future holds for LKQ. While we've had a great run since 1998, I am highly confident that the next 25 years will be even better.
As an organization, we have always held a core set of values that have helped us achieve our success and created the LKQ we are today. Like all aspects of life change is inevitable and as an organization, it's critical that we advance our values forward to lay the foundation for the next 25 years.
Keeping us moving forward, during the quarter, I had the pleasure to announce our updated values for the future. Values that unite our global enterprise as a cohesive and focused 1 LKQ. And that will serve as a single guide to assure we deliver on the promises we hold true for all constituents. The values are development, excellence, leadership, integrity and trust, value-added, embracing change, resourceful and sustainability. Simply put, it spells DELIVERS. Expanding on the word DELIVERS, the 1 LKQ team across the globe delivered a solid first-quarter performance, and an outstanding start to 2023.
During the quarter, our two largest segments, North America and Europe exceeded our expectations as our team has embraced our operational excellence initiatives. The first quarter of 2023, started the year where 2022 left off. As the resilience of our business shine through, a myriad of uncontrollable headwinds ranging from economic softness, inflation, supply-chain disruptions, labor shortages, energy cost spikes and a war in Europe. The continuation of exceptional organic revenue growth and strong margins in our North American and European segments, more than offset the impact of the headwinds experienced by our specialty and self-service segments. The variance in performance across our operating segments this quarter validates our long-term diversification strategy, both with respect to geography and product and speaks to the true strength of our organization in our portfolio of businesses.
Now on to the first quarter 2023 results and year-over-year comparisons. Revenue was $3.3 billion in the first quarter for both 2023 and 2022. Parts and services organic revenue increased 7.9% on a reported basis and 7.1% on a per day basis. The net impact of acquisitions and divestitures decreased revenue by 3.3% and foreign exchange rates decreased revenue by further 3% for total parts and services revenue increase of 1.5%. Other revenue fell 19.2% in the first quarter of 2023, primarily due to weaker precious metal prices relative to the same period in 2022/
Net income was $270 million in Q1 of this year as compared to $269 million last year as better operating results more than offset the negative impacts related to soft foreign currency exchange rates, higher interest expense, and a higher effective tax-rate. Adjusted net income was $279 million in Q1 of 2023 as compared to $287 million last year, a decrease of 2.8%. Diluted earnings per share was $1.01 in Q1 of this year compared to $0.94 last year, an increase of 7.4%. Adjusted diluted earnings per share in Q1 was $1.04 this year as compared to $1 even last year, an increase of 4%. The increases in earnings per share relative to the changes in net income illustrate the positive impact of our historical share repurchase activity.
Let's turn to some of the quarterly segment highlights. As you will note from Slide 7 organic revenue for parts and services in North America increased 14.4% on a reported basis, a record first quarter performance. North America also reported its highest quarterly segment EBITDA margin on record. Rick will cover this segment level margin details shortly. We continue to perform well in North America, especially when you consider that according to CCC, collision liability related auto claims were down 4.4% year-over-year in the first-quarter.
Our growth was balanced between price and volume improvements, the latter of which was particularly evident in the aftermarket product line, which was the result of two factors. First, having largely worked through the industry supply chain issues and having proper levels of inventory enabled us to get back to our historical level a fulfillment rates. Second, the impact of the State Farm program is unfolding nicely and building demand for aftermarket headlights, taillights, and bumper covers. This upward trend in our aftermarket sales volumes is consistent with a general rise in APU, which approached pre-pandemic levels in the first-quarter.
I am pleased to say that the increase in APU also included an uptick in the recycled parts category, increasing 150 basis points year-over-year. Combined aftermarket and recycled parts have witnessed nearly a 500 basis point improvement in APU since the first quarter of 2022. The value proposition of alternative parts is gaining share from OEs as insurance carriers face both catastrophic losses from all the storm activity in the quarter and premium pressures as policyholders are tightening up their spending in the midst of ongoing soft economy.
Total loss rates increased slightly in the first-quarter to about 19%, but as you can see, it appears total losses had little-to-no impact on our organic growth. Based on industry research, we expect total loss rates to end the year in the range of 18% to 19% as the market absorbs the recent increase in used car prices as we've entered 2023.
Now moving onto our European segment. Europe organic revenue for parts and services in the quarter increased 9.7% on a reported basis and 8.2% on a per day basis, which represents the best first quarter per day organic revenue growth since 2016 when we were a much smaller organization and the operating in only six European countries as compared to over 20 today.
I'd also like to highlight that Europe's segment EBITDA margin was the highest first quarter level since 2016. During the first-quarter, we saw high single-digit to low double-digit reported organic growth in each of our key operating geographies. In particular, our Benelux, German, and Eastern European operations performed exceptionally well.
The revenue growth reflected a combination of positive movements in both price and volume. We believe we are continuing to take share in these large and highly fragmented markets. The European team is laser-focused on the cost structure, including rationalizing headcount to create a more nimble and agile team and focusing on a narrow and actionable list of key projects.
With that operational focus, the European team delivered the lowest first-quarter SG&A level since 2017, notwithstanding a challenging inflationary environment. Additionally, the European team began the integration of the Rhenoy salvage and remanufacturing acquisition that we announced during the last earnings call. In addition, we are ramping up our location count in France with the opening of a distribution center in Marseille, earlier this month, bringing our total location count in France to seven.
Now let's move on to our Specialty segment. During the first quarter, Specialty reported a decrease inorganic revenue of 13% which was below our expectations. The RV portion of our Specialty business was impacted by the wholesale shipment and retail unit sales of RVs, which are down 57.7% and down 23.7% year-to-date through February, 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 about 34% year-over-year. So we believe that the challenges for our specialty segment will continue throughout 2023.
As we work-through the balance of the year, our efforts will be focused on the RV repair and service, as RV usage rates remained strong and the ongoing growth in light vehicle sales by building the right inventory to service this market space. Truck Off-Road and performance parts revenue are also down on a year-over-year basis but less than what we are seeing in the RV sector. Notably, Specialty's marine business posted organic growth of 10.4% in the quarter and we are gaining share in this attractive market. Despite the industry wide headwinds and the cyclical nature of this segment, there was no one in the SEMA or RV distribution space that has such a talented team and has the experience in lean Six-Sigma capabilities to effectively manage through a down cycle.
Now onto our Self Service segment. Organic revenue for parts and services for our Self Service segment increased 4.9% in the first-quarter. Self Service was again challenged by soft commodity pricing, particularly as it related to precious metals, which manifested itself in a significant drop in the value received for recycled catalytic converters. We believe that the challenges for Self Service will persist for the balance of the year as well.
While the rate of inflation is coming down across the globe, inflation continues to impact all of our businesses. Our teams are doing an effective job of getting price relief where possible and are using productivity improvements to offset the negative impact of the increased cost. Regarding labor, our open positions in North-America dropped by 20% since year end, but the challenges with turnover have not abated. The labor market in North America is still overheated and we are pushing wages and selected benefits to combat the issue.
In Europe, we are also countering the labor tightness with wage increases to retain our employees and we have maintained low turnover levels in the first quarter. On the corporate development front, as most of you know, on February 27th, we announced that we entered into a definitive agreement to acquire all of units [Phonetic]issued and outstanding shares for CAD48 per share in cash, representing a total enterprise value of approximately $2.1 billion. Uni-Select is a leader in the distribution of automotive refinish and industrial coatings and related products in North America through its FinishMaster segment. In the automotive aftermarket parts business, Uni-Select operates through its Canadian Automotive Group segment up in Canada and through its GSF Car Parts segment in the U.K.
Today is Uni-Select's special shareholder meeting and the final day that its shareholders may cast their votes on the transaction. So we don't yet have a final report. Considering that both ISS and Glass Lewis published reports supporting the transaction and that approximately 20% of Uni-Select shareholders entered into a voting agreements to approve the transaction as part of [Phonetic]signing of the acquisition agreement back in February. We are highly confident that Uni-Select shareholders will approve the transaction. We have submitted applications for approvals to the various regulatory authorities in the United States, Canada, and the United Kingdom. And at this time, all the regulatory reviews are proceeding according to plan. Both the FTC in the United States and the Competitive Bureau in Canada have until May 11, 2023 to determine whether they issue a second request for information.
To address any regulatory concerns in the UK, we have commenced a process to sell Uni-Select's GSF car parts business. Our adviser has started the buyer outreach process and while we can't say much at this time, we are pleased with the initial interest level in the asset. Ultimately, we hope to receive the required approvals and to complete the Uni-Select acquisition in the second half of this year.
Now let's turn to ESG. During the first quarter, we focused our people efforts and various social initiatives. And in particular education for both our employees and importantly their families as they face the increasing cost of education. Recently, we enhanced two existing educational programs available for LKQ employees. The Joseph Holsten scholarship fund established over a decade ago provides grants to the children of our employees to assist with post high school education or expenses.
Prior to 2022, the fund was only available to our North American team. But we expanded the program to include our entire global organization. Our goal is to distribute at least $1 million of scholarships in 2023. Additionally, in Q1 of this year, we increased our North American employee tuition reimbursement program by 100%. Our people are the biggest asset at LKQ and programs like the two I just mentioned are critical to enhancing employee engagement, which in turn supports the continued success of our business. Importantly, we are honored and proud to be part of the educational development and personal growth of our employees and their families.
We look forward to issuing our 2023 CSR before the end of the second quarter, a report that will expand our sustainability disclosures across many aspects of our global enterprise.
Lastly, before I turn the discussion over to Rick, who will run through the details of the segment results and discuss our outlook for 2023. I am pleased to announce that on April 25, 2023, our Board of Directors declared a quarterly cash dividend of $0.275 per share of common stock payable on June 1, 2023 to stockholders of record at the close of business on May 18.
