Potential Loss of Up to $32 Million Prompts LKQ to Withdraw 2026 Guidance
Key Facts
LKQ withdrew its 2026 financial guidance after estimating a net loss from continuing operations of between $16 million and $32 million in the third quarter, compared with income of $178 million a year earlier. The company said in its preliminary disclosure that the expected loss includes $111 million in non-cash impairment charges, while diluted loss per share could range from $0.06 to $0.12, compared with earnings of $0.69 in the year-earlier period. It estimated adjusted diluted earnings per share, a non-GAAP measure, at between $0.47 and $0.53, compared with $0.84 a year earlier. The company attributed the decline primarily to weakness in its European operations, while saying North American performance was in line with expectations despite softer market conditions. The announcement coincided with leadership changes and steps to address performance in Europe, with full results scheduled for October 29, 2026.
Preliminary quarterly revenue was $3.32 billion, compared with $3.50 billion in the third quarter of 2025, and organic parts and services revenue fell 5.4%. The decline was steeper in Europe, where organic parts and services revenue fell 9.8%. LKQ estimated the Europe segment’s EBITDA margin at between 4.1% and 5.1%, down from 10.0% in the same period last year. The figures show a widening gap between the European segment’s performance and the rest of the company’s operations, which LKQ said performed in line with expectations in North America. Chairman John Mendel said the company’s performance, particularly in Europe, fell significantly short of the board’s expectations, adding that the board was taking steps to address it.
LKQ identified disruptions related to the implementation of an enterprise resource planning system in Germany, along with lower volumes in the United Kingdom and the Benelux countries, as key factors behind weakness in Europe. The company completed the rollout of the shared system in Germany in April 2026, according to its quarterly report filed with the U.S. Securities and Exchange Commission. In the second quarter, revenue fell to $3.4 billion, down 3.0% from $3.5 billion a year earlier, while net income declined to $134 million from $185 million. Organic parts and services revenue fell 5.1% in that quarter. In July, the company lowered its 2026 annual adjusted diluted earnings-per-share forecast to a range of $2.60–$2.90, from a previous range of $2.90–$3.20, before withdrawing its full-year guidance after the new preliminary results.
In leadership changes, Justin Jude left his roles as chief executive and board member effective October 23, 2026, while Andy Hamilton on the same date left his roles as president and managing director of LKQ Europe. The company appointed Salvatore Abbate to succeed Jude, with Abbate set to become president and chief executive on December 15, 2026. Until then, LKQ formed an interim Office of the CEO comprising John Mendel and Sue Gove. The board also retained Alvarez & Marsal to advise on its European operations. LKQ said the initial focus would be on improving customer service, stabilizing operations, and strengthening performance and cost discipline across the region.
LKQ shares closed at $17.42 on October 23, compared with a close of $22.47 in the previous session. After the company’s preliminary announcement and withdrawal of its annual guidance, Roth/MKM downgraded the stock to Neutral from Buy and cut its price target to $18 from $35. Separately, the law firm Block & Leviton said it was investigating whether LKQ may have misled investors about its European operations and the implementation of the ERP system in Germany. The firm said no lawsuit had been filed and no court ruling had been issued; the announcement came from a law firm and does not establish that there is an official government investigation. LKQ said its preliminary financial results were unaudited and that closing and accounting procedures were incomplete, warning that final results could differ materially from the estimates.
The next near-term milestone is LKQ’s release of full third-quarter results on October 29, 2026, alongside an investor conference. The final results will allow the company to present completed accounts for the period following the preliminary estimates it published. Addressing system disruptions in Germany and lower volumes in the United Kingdom and Benelux remain among the operational challenges the company cited in explaining weakness in Europe. The results date also follows the immediate leadership transition and precedes Abbate’s start in December. The board had said the company’s performance, particularly in Europe, fell significantly short of its expectations, linking remedial steps to restoring operational stability, improving customer service and strengthening cost discipline.