LKQ withdraws annual outlook after weak preliminary third-quarter performance and operational changes
Key Facts
LKQ withdrew its 2026 financial outlook after preliminary third-quarter results showed significant weakness in its European operations, according to a summary of the company’s statement issued on October 23. The company announced leadership and operational measures the same day, including the appointment of Salvatore Abbate as CEO and the engagement of Alvarez & Marsal to advise on its European operations. The development puts preliminary third-quarter results at the center of the story, after a decline in Europe in the second quarter prompted the company to cut its annual outlook in July. The details of the preliminary results statement and third-quarter figures could not be verified, so revenue and earnings figures for the period are not available here. The withdrawal of the outlook comes as the company continues to review its strategic alternatives.
The October statement summary said third-quarter results reflected “significantly below-expectation performance in Europe” and announced that LKQ had engaged Alvarez & Marsal to advise on its operations in the region. The appointment of a specialist adviser indicates the company has taken direct action to address challenges in Europe, alongside withdrawing its full-year outlook and changing its executive leadership. The available summary did not detail the scope of the advice or the specific operational measures under consideration. It also did not say what the outcome of the strategic alternatives review would be or when a decision would be made. In its second-quarter update, LKQ said its strategic review remained active and that it was in contact with multiple parties, without a deadline or set timetable.
The backdrop to the earlier decline in Europe dates to the second quarter, when the segment’s organic revenue fell 12.6% year over year, while total revenue declined 9.6%. LKQ said results came in below its expectations and that the implementation of an enterprise resource planning system in Germany affected performance. It added that lower volumes in the UK and Benelux weighed on activity, while cost reductions largely offset the impact of that decline. These figures show that weakness in Europe preceded the third-quarter results, but they are not the latest-quarter figures the company preliminarily announced in October. The new developments therefore center on the company’s intervention in the region’s operations, rather than reusing second-quarter figures as third-quarter results.
At the group level, LKQ reported second-quarter revenue of $3.4 billion, down 3.0% from $3.5 billion in the same period of 2025. Adjusted diluted earnings per share fell to $0.67 from $0.84 a year earlier. Europe’s organic revenue also fell 8.4% in the first half, or $262 million, which the company attributed primarily to lower volumes linked to temporary operational challenges arising from the system implementation in Germany, as well as competition and difficult economic conditions. In the second quarter, Europe’s earnings before interest, taxes, depreciation and amortization fell to $109 million from $151 million, and the margin declined to 7.5% from 9.4%. These indicators show the scale of earlier pressure in the region before the company described third-quarter performance as significantly weak.
By contrast, LKQ said in July that North America had returned to positive organic growth for the first time in nine quarters, supported by record use of aftermarket parts that exceeded 40%. But that improvement did not prevent the company from lowering its 2026 adjusted diluted earnings-per-share outlook at the time to a range of $2.60–$2.90, from a previous range of $2.90 to $3.20. That range is historical context for the company’s outlook; it withdrew it in October, and it is no longer current guidance. The contrast between a return to growth in North America and weakness in Europe highlights why the October measures focused on European operations. The available materials do not include preliminary third-quarter figures that would allow a comparison of the regions’ performance in that period.
LKQ’s board began a comprehensive review of strategic alternatives in January to enhance shareholder value and appointed financial advisers for the process, according to the company’s first-quarter update cited in the earlier draft; the information documented here confirms that the review remained active in the second-quarter update, with no deadline. The company said then that it remained in contact with multiple parties, while the October summary announced neither an outcome of the review nor a change to its timetable. The October 23 announcement thus combines the withdrawal of the full-year outlook, action to address weakness in Europe and the appointment of a new CEO, while the strategic alternatives review remains active according to its latest documented update. The company is scheduled to hold its third-quarter earnings conference on October 29, after announcing preliminary results on October 23. That is the next set date for an official update on results and operational developments.