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Before we begin with our discussion, I'd like to remind everyone that the statements made in this call that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding our expectations, beliefs, hopes, intentions or strategies. Forward-looking statements involve risk and uncertainties, some of which are not currently known to us. Actual events or results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which it was made, except as required by law.Please refer to our Form 10-K and other subsequent documents filed with the SEC and the press release we issued this morning for more information on potential risk. Hopefully, everyone has had a chance to look at our 8-K which we filed with the SEC earlier today. As normal, we are planning to file our 10-Q in the next few days. And with that, I'm happy to turn the call over to Mr. Rob Wagman. Robert L. Wagman Thank you, Joe. Good morning, and thank you for joining us on the call today. We're very pleased with the results we reported this morning. Diluted earnings per share from continuing operations in Q2 was a record of $0.43, an increase of 34% as compared to $0.32 for the second quarter of 2011. As noted in our press release, the second quarter 2012 diluted earnings per share included a gain equal to $0.04 per share that resulted from a favorable legal settlement, partially offset by restructuring and acquisition-related expenses and change in fair value of contingent consideration liabilities totaling $0.02. Revenue for the quarter was $1.01 billion, the second highest quarterly revenue achieved by LKQ, second only to Q1 2012, despite the fact that insurance carriers reported fewer claims in Q2. Industry sources have reported overall claims volumes are down circa 2% year-over-year mainly as a result of fewer catastrophe claims.
Despite the continued challenges of a mild winter we witnessed in the first quarter, the effect of which carried into Q2, and the volatility in the scrap metal, aluminum and precious metal markets, we still achieved 6.3% organic growth for parts and services and 3.7% total organic growth. The softness in the scrap market negatively affected our results by $0.02 of EPS and caused our gross margin to decline by 50 basis points. Revenue growth from acquisitions was 29% in the quarter.The continued growth in organic parts and service revenue in 2012 is a combination of the increased use of alternative parts by insurers and the Direct Repair Program networks to reduce claim cost and our continued success at gaining market share from the competition. As mentioned on the last quarter call, we still believe alternative part usage in 2012 will realize a 100 basis point improvement over 2011 alternative part usage levels. Next I'd like to share some operational statistics. During the second quarter, we purchased nearly 67,000 vehicles for dismantling by our wholesale operations, which is an 18% increase over Q2 2011. As for volumes at the auctions, supply remains strong throughout Q2 and continues to meet our needs early in Q3. With inventory already on hand and a continuation of our current run rate for acquiring cars, we should have sufficient inventory to grow our recycled parts operations. I'd also like to mention that we are starting to see some pricing relief at auction. According to industry sources, wholesale used vehicle prices were down 3.7% in June compared to May and down 3.6% relative to June 2011. We are starting to realize corresponding price reductions in our vehicle procurement, including our self-service operations which we hope will positively impact our gross margin. But please note that our gross margin may be negatively affected by scrap price reductions, going forward. Read the rest of this transcript for free on seekingalpha.com