President, Chief Executive Officer and Director at LKQ
Thank you, Joe, and good morning to everyone on the call. This morning, I will provide some high-level comments relative to our performance in the quarter and then Varun will dive into the financial details and provide an update on our guidance before I come back with a few closing remarks. The second quarter of 2022 was one of the most unusual and complicated operating environments we've encountered maybe ever, but clearly, since the financial crisis. During the quarter, we were confronted with ongoing COVID risk and the issues associated with an uptick in positive cases in our workforce. Major labor constraints, ongoing supply chain disruptions, a challenging inflationary environment globally as evidenced by June being the highest level of inflation the United States have seen in some 40 years.
Soaring energy prices, commodity price volatility, the unfortunate conflict in Ukraine and political unrest across the globe. And all this has resulted in major volatility in the foreign exchange markets with the euro weakening materially in the quarter and reaching parity with the dollar in July. I think I speak for all CEOs across all industries when I say the sheer number of cross currents and headwinds have created some very challenging business dynamics. Yet, the LKQ team delivered another quarter of solid performance, driven by excellent focus and execution, exceeding many expectations, both internally and externally. I am very proud of the hard work and dedication demonstrated by our 45,000 employees that enabled our company to deliver on behalf of our stockholders and our customers during the quarter.
I am equally proud of the team's commitment to effectively immense the dynamics of our business, which they can control, while not losing focus on growing the business, developing our people and continuously looking for opportunities to generate leverage and synergies across our operating segments. This effective management will serve the company well as we progress through the balance of 2022 and continue to confront many of the same headwinds. Our confidence in our team's ability to manage through this environment is validated by the reaffirming of our 2022 guidance, which Varun will discuss shortly. Now on to the quarter. Revenue for the second quarter of 2022 was $3.3 billion, a decrease of 2.7% as compared to $3.4 billion in the second quarter of 2021. Parts and services organic revenue increased 3.8% on a reported basis and 4.2% on a per day basis.
The net impact of acquisitions and divestitures decreased revenue by 1%, and foreign exchange rates decreased revenue by 5.6% for total parts and services revenue decrease of 2.7% on a reported basis or 2.4% on a per day basis. Other revenue fell 2.9%, driven by a decline in precious metal prices. Net income for the quarter was $420 million as compared to $305 million for the same period of last year. Diluted earnings per share for the quarter was $1.49 as compared to $1.01 for the same period of 2021, an increase of 47.5%. These amounts reflects a $127 million gain on sale of the PGW Glass business in April or $0.45 a share. On an adjusted basis, net income in the quarter was $307 million as compared to $340 million for the same period of 2021. Adjusted diluted earnings per share for the quarter was $1.09 as compared to $1.13 for the same period last year, a 3.5% decrease.
The adjusted results exclude the impact of the PGW sale. Now let's turn to some of the quarterly segment highlights. In North America, organic revenue for parts and services for our North American segment increased 10.7% in the quarter on a year-over-year basis, which exceeded our expectations. This performance confirms the resiliency of our business model and our team's ability to effectively implement pricing initiatives to offset inflationary pressures. As it relates to volume, during the quarter, we saw some weakness, which was consistent with a 2.6% decrease in second quarter fuel consumption as measured by the U.S. Department of Energy. Additionally, vehicle miles traveled saw a little year-over-year growth, and Q2 growth was down relative to Q1.
The largest pressure point in North America continues to be the aftermarket collision parts product line, which experienced reduced year-over-year volumes due to lower performance rates associated with the supply chain disruptions. During the quarter, we benefited from some minor relief in the aftermarket supply chain relative to Q1, which translated into a very modest increase in our fill rates, with June aftermarket fill rates reaching the highest levels of 2022. While we are still well below historical levels, we are encouraged by this modest positive trend in the supply chain, which is also evidenced by the decrease of spot container costs the market witnessed during the quarter, albeit the shipping costs are still multiples above pre-pandemic levels.
During the quarter, we were successful in getting a higher level of aftermarket collision parts shipped from Taiwan, but most all of that inventory is still on the water and won't be received in our warehouses until late summer or early fall. Our salvage collision part volumes were up a bit compared to last year as we were able to shift some of the aftermarket demand over to recycled parts. Recycled and remanufactured mechanical part volumes were generally flat on a year-over-year basis. The value proposition of alternative parts could not be more attractive that insurance carriers base loss pressures from increased parts cost, rising labor cost and technician shortages at the repair shops, broader supply chain issues and decreased availability and increased cost of rental cars.
During the quarter, collision repair costs increased 11.6% year-over-year with cycle time still being over double their historical averages. Recently, the value proposition of CAPA Certified Aftermarket Parts is being recognized by the largest auto insurer in the United States, that being State Farm through a small pilot program. On June 20, State Farm began an 8-week program where it introduced aftermarket bumper covers, headlights and taillights when preparing repair estimates and settling auto claims in the Oklahoma and Texas markets. As you all know, State Farms historically has not utilized the aftermarket collision parts. We cannot predict the outcome of the pilot or estimate how this will impact State Farm's parts strategy going forward and neither should you.
That said, as with many things, the first test is the widest and the tallest and we're cautiously optimistic that aftermarket parts could potentially become a larger portion of State Farm's parts spend over the long term, as they work through the outcomes of this pilot program. Moving on to our European segment. Organic revenue for parts and services in the second quarter increased 4.2% on a reported basis and 4.9% on a per day basis. Our regional operations continued to experience varying revenue performance in the quarter, but every geographic market was positive year-over-year with our Benelux, U.K., Central and Eastern European and salvage businesses being the top performers. Importantly, Italy realized year-over-year growth, which reflected the second consecutive quarter of positive revenue performance in that region. As mentioned last quarter, we halted all sales of parts into Russia when the war commenced.
This decision reduced same-day organic growth for the European segment during the second quarter by approximately 1.5% to 1%. Excluding the impact of the lost Russian revenue, same-day organic growth in Europe was 5.4%. When taken as a whole, the European volumes were down a bit during the quarter, but pricing was strong. We continue to make great progress with our one LKQ Europe Program. Alongside solid organic growth during the quarter, our European segment achieved double-digit segment EBITDA margins which represented incremental improvements, both sequentially and year-over-year. Our European teams focus on pricing actions, private label branding and procurement initiatives generated positive results in the quarter.
As I've said before, the execution element of the one LKQ Europe program will be with us forever, and it will be the driving factor behind the productivity improvements in years to come. Given all the current operating challenges in Europe, including the foreign exchange and geopolitical dynamics, I am very pleased with Europe's performance in the quarter. Now let's move on to our specialty segment. Organic revenue for parts and services for specialty declined 11.5% in the quarter, largely due to a tough year-over-year comp. As you may recall, this segment reported 30% organic growth in the second quarter of last year. So on a 2-year stack, the annual revenue growth is still well into double digits. Indeed, specialty revenue in the second quarter would have been a record for the team, if not for the buoyant performance in 2021.
Our RV parts category performed better than the segment level growth as a whole during the quarter, as demand for the majority of our RV parts offerings is driven more by the size of the RV part and not new RV unit volume. That said, certain product groups such as towing that have some exposure to new unit volume, underperformed in the quarter. Also, some of the softness that the SEMA-related products based in the quarter was due to a year-over-year decrease in light vehicle sales in the U.S. In particular, pickup truck sales were down nearly 12% in the quarter, an important vehicle category for our specialty offerings. Now on to self service. Organic revenue for parts and services for our Self Service segment increased 13.2%. There were some softness towards the end of the quarter in precious metals prices, which also impacted segment EBITDA margins year-over-year.
Self service also had increased vehicle procurement costs as we were challenged to source inventory. The recent volatility in commodities further validates the rationale for breaking out this nondistribution Self Service business as a separate segment, given it represents the vast majority of the other revenue category. Let's move on to the initial Q3 revenue trends. Revenue for North America wholesale operation have gotten off to a solid start, though we don't anticipate it will continue at the double-digit growth rates experienced in the first half of the year. Our European segment is also witnessing a good start, with growth rates continuing at second quarter levels. Lastly, specialty revenue is slowly trending back towards prior year levels now that it has lapsed the incredibly strong growth rates experienced in the first half of 2021. We are experiencing some level of supply chain shortages and disruptions across all of our segments.
These disruptions are creating product scarcity and freight delays that are resulting in meaningful availability pressures. While supply chain challenges are also driving cost inflation across all our segments, we have been very effective in passing along these higher costs, as witnessed by our margin performance. Alongside supply chain inflationary pressures, like many businesses across the globe, we are facing wage inflation and increased competition for labor. We are constantly looking at our wage structure and turnover rates across all of our segments to ensure that we stay ahead of any competitive pressures and help backfill the open positions with the best candidates we can attract.
Our focus on the total rewards received by LKQ employees, not just compensation, is helping us navigate the difficult labor markets. From a corporate development perspective, in the second quarter, we acquired four businesses. In the United States, we acquired Bumblebee Batteries, another EV battery remanufacturing operation. In Europe, we acquired a workshop concept in The Netherlands, two very small former Hess Automotive branch locations in Germany and the equity interest of our former JV partner in a small aftermarket parts business in Germany. In addition to closing on the sale of our PGW business during the quarter, we also divested our equity interest in two small joint ventures.
Lastly, on the ESG front, on May 23, we released our 2021 Sustainability Report and unveiled our new brand identity, reflecting the company's transformation from a salvage dismantler and recycler to a leading global value-added and sustainable distributor of vehicle parts accessories and services. LKQ is widely known and respected for our environmental stewardship. But within our 2021 CSR, we provided a deeper understanding of our social impact initiatives and strong governance structure, both of which underpin the long-term strength and success of our business. This year's report is another step in evolving our holistic ESG focus across our global organization with new and robust disclosures and accomplishments.
Also during the quarter, 50/50 Women On Boards, a leading education and efficacy campaign driving the movement towards gender balance and diversity on corporate Boards recognized LKQ as a 3-plus company. This award acknowledges our efforts in understanding the importance and advantages of having a diverse Board that ultimately benefit stockholders, customers, employees and communities. And I will now turn the discussion over to Varun, who will run you through the details of the strong second quarter financial performance.