LKQ Revenue Falls 5.1% to $3.319 Billion as Quarterly Losses Mount
Key Facts
LKQ reported third-quarter 2026 revenue fell 5.1% to $3.319 billion, compared with $3.499 billion in the same period of 2025, according to its earnings release dated October 29. The company posted a net loss of $24 million, after net income of $178 million a year earlier. The loss included $111 million in non-cash, pre-tax impairment charges. Diluted loss per share was $0.09, compared with diluted earnings per share of $0.69 in the third quarter of 2025. The company attributed weakness in Europe to operational problems related to the implementation of an enterprise resource planning system in Germany, as well as lower volumes in the UK and Benelux.
On an adjusted basis, net income was $127 million, compared with $216 million a year earlier, while adjusted diluted earnings per share fell to $0.50 from $0.84. Chairman John Mendel said recent financial and operating performance “did not reflect the strength of the company or meet the standards we expect, particularly in Europe.” In the European segment, revenue fell 10.2% to $1.451 billion from $1.615 billion in the comparable period. Organic revenue from parts and services in Europe also fell 9.8%. The figures put Europe at the forefront of the areas of weakness identified by management for the quarter.
Across the company, revenue from parts and services fell 5.6%, including an organic decline of 5.4%. Foreign exchange rates reduced revenue by 0.7% year over year, while the net effect of acquisitions and divestitures added 0.6%. Chief Financial Officer Rick Galloway said North America performed in line with expectations despite a weaker demand environment, while the Specialty segment came in slightly below plan. The company did not say total sales volumes fell short of expectations; it cited lower volumes in the UK and Benelux among the reasons for weakness in Europe. In North America, management pointed to performance in line with its expectations, highlighting the divergence in results across regions and segments.
The decline extended into the first nine months of the year, when revenue was $10.196 billion, down 1.4% from $10.339 billion in the comparable period of 2025. Weakness had also emerged in the second quarter, when revenue was $3.4 billion, down 3.0% from $3.5 billion a year earlier. In an update issued on July 30, LKQ cut its 2026 adjusted earnings-per-share outlook range to $2.60–$2.90 from $2.90–$3.20. The company then withdrew its full-year 2026 financial guidance, last updated on July 30. Cash flow from operations was $411 million, while free cash flow was $372 million in the third quarter.
On October 23, the company announced it had appointed Alvarez & Marsal to advise on its European operations, with an initial focus on improving customer service levels, stabilizing operations and strengthening performance and cost discipline. The board also decided to suspend its strategic review, including the sale process for the Specialty segment, to give the new leadership team time to assess the company and its value-creation paths. The board appointed Salvatore Abbate president and chief executive officer, effective December 15, 2026. The steps follow Mendel’s acknowledgment that performance, particularly in Europe, had not met the standards the company expects. The next management milestones center on Abbate taking office and the leadership team’s review of the company’s performance and operations.
In market trading, LKQ shares closed at $18.10 on October 29, up 5.29% during the session, according to Investing.com data. The company announced a quarterly cash dividend of $0.30 per share, payable to shareholders of record at the close of November 19. The dividend is scheduled to be paid on December 3, 2026. These dates provide the near-term timetable for shareholders as the new chief executive begins his duties in December. The withdrawn guidance covered fiscal 2026.