LKQ CORPORATION ANNOUNCES RESULTS FOR SECOND QUARTER 2026
LKQ CORP (LKQ) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 LKQ CORPORATION ANNOUNCES RESULTS FOR SECOND QUARTER 2026 Antioch, TENN (July 30, 2026) -- LKQ Corporation (Nasdaq: LKQ) today reported second quarter 2026 financial results and provided an updated outlook for 2026. "Our second‑quarter performance reflected solid exe
How this was made
The 30-second read
Why it matters
Traders can reprice LKQ based on the updated 2026 guidance ranges (diluted EPS, adjusted EPS, operating cash flow, free cash flow) and the stated driver of underperformance in Europe tied to Germany ERP implementation.
Market read
This is a primary earnings-and-guidance disclosure with explicit updated full-year ranges and segment drivers, making it actionable for positioning and risk management.
What to watch
The company also cites cost reductions that largely offset lower UK and Benelux volumes, and it provides a capital return plan with remaining buyback authorization through Oct 25, 2026, which may cushion valuation despite weaker Europe.
LKQ reported second-quarter 2026 revenue of $3.4 billion, down 3.0%, with lower earnings and reduced full-year outlooks reflecting a slower-than-expected recovery in Europe following the ERP implementation in Germany.
North America returned to positive organic growth and Specialty grew despite end-market pressure, but consolidated revenue, GAAP earnings, adjusted earnings and parts-and-services organic revenue declined year over year. Europe fell short of expectations, and management reduced its full-year outlook for organic revenue growth, diluted EPS, adjusted diluted EPS, operating cash flow and free cash flow.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Organic revenue growth for parts and services | (0.5%) to 1.5% | a 5.1% decrease | below |
| Diluted EPS | $2.16 to $2.46 | $0.52 | n/a |
| Adjusted diluted EPS | $2.90 to $3.20 | $0.67 | n/a |
| Operating cash flow | $900 to $1,100 million | $111 million | n/a |
| Free cash flow | $700 to $850 million | $60 million | n/a |
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $3.4B | – | a decrease of 3.0% |
| Total parts and services revenueGAAP | decreased 3.6% | – | decreased 3.6% |
| Parts and services organic revenueother | a 5.1% decrease | – | a 5.1% decrease |
| Foreign exchange impact on parts and services revenueother | a 1.0% increase | – | a 1.0% increase |
| Net impact of acquisitions and divestitures on revenueother | increased revenue by 0.5% | – | increased revenue by 0.5% |
| Net incomeGAAP | $134M | – | – |
| Diluted earnings per shareGAAP | $0.52 | – | – |
| Adjusted net incomenon-GAAP | $170M | – | – |
| Adjusted diluted earnings per sharenon-GAAP | $0.67 | – | – |
| Cash flow from operationsother | $111M | – | – |
| Free cash flownon-GAAP | $60M | – | – |
| Cash flow from operations for the six months ended June 30, 2026other | $55M | – | – |
| Free cash flow for the six months ended June 30, 2026non-GAAP | negative $36 million | – | – |
| Alternative-parts utilizationother | over 40% | – | – |
| Total debtother | $4B | – | – |
| Total leverage, as defined in credit facilityother | 2.8x EBITDA | – | – |
2026 Updated Full Year Outlook outlook
- Revenue(3.0%) to (1.0%)
- Tax rate26.8%
- NoteOrganic revenue growth for parts and services: (3.0%) to (1.0%)
- NoteDiluted EPS: $1.78 to $2.08
- NoteAdjusted diluted EPS: $2.60 to $2.90
- NoteOperating cash flow: $825 to $1,025 million
- NoteFree cash flow: $625 to $775 million
- NoteForeign currency exchange rates for the balance of the year: $1.17, $1.35 and $0.72 for the euro, pound sterling and Canadian dollar, respectively.
Capital returns
- During the second quarter of 2026, the Company invested $52 million to repurchase 1.9 million shares of its common stock.
- During the second quarter of 2026, the Company distributed $77 million in cash dividends.
- For the six months ended June 30, 2026, the Company returned $207 million to its shareholders by investing $53 million to repurchase 1.9 million shares of its common stock and distributing $154 million in cash dividends.
- Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 71 million shares of its common stock for a total of $3.0 billion through June 30, 2026.
- An aggregate balance of $1.5 billion remains for potential additional stock repurchases through October 25, 2026.
- On July 28, 2026, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on September 3, 2026, to stockholders of record at the close of business on August 20, 2026.
What drove it
- North America returned to positive organic growth for the first time in nine quarters.
- North America was driven by record alternative-parts utilization of over 40%, moderating insurance premiums that were negative in May and June, and continued sequential improvement in repairable claims.
- Specialty delivered growth despite a challenging end-market environment and continued macro-economic pressure on consumers.
- Europe delivered substantial cost reductions outside of the ERP impact.
- Management maintained a focus on cost management, cash generation and capital allocation.
Concerns
- Revenue decreased 3.0% to $3.4 billion, while total parts and services revenue decreased 3.6% and parts and services organic revenue decreased 5.1%.
- Europe fell short of expectations and was affected by the ERP implementation in Germany.
- The company cited lower volumes in the UK and Benelux regions.
- GAAP net income declined to $134 million from $185 million, and adjusted net income declined to $170 million from $218 million.
- Management reduced the full-year outlook for organic revenue growth for parts and services, diluted EPS, adjusted diluted EPS, operating cash flow and free cash flow.
- Free cash flow for the six months ended June 30, 2026 was negative $36 million.
What to watch
- The pace of recovery following the ERP implementation in Germany and actions to restore service levels in Europe.
- Whether European cost reductions can offset lower volumes in the UK and Benelux regions.
- North America's ability to sustain positive organic growth, alternative-parts utilization of over 40%, and improvement in repairable claims.
- Specialty demand amid the challenging end-market environment and macro-economic pressure on consumers.
- Progress of the active strategic review, including the evaluation of the Specialty segment and engagement with multiple parties.
- Delivery against the updated 2026 outlook for organic revenue growth, earnings and cash flow.
Balance sheet and cash flow
- Cash flow from operations was $111 million for the second quarter of 2026.
- Free cash flow was $60 million for the second quarter of 2026.
- Cash flow from operations was $55 million for the six months ended June 30, 2026.
- Free cash flow was negative $36 million for the six months ended June 30, 2026.
- As of June 30, 2026, total debt was $4.0 billion.
- As of June 30, 2026, total leverage, as defined in the credit facility, was 2.8x EBITDA.
Analysis
LKQ's second-quarter results were mixed. Revenue was $3.4 billion, a decrease of 3.0% from $3.5 billion, while total parts and services revenue decreased 3.6%. The company reported a 5.1% decrease in parts and services organic revenue, partly offset by a 1.0% increase from foreign exchange rates and a 0.5% revenue increase from the net impact of acquisitions and divestitures. GAAP net income was $134 million compared with $185 million, and adjusted net income was $170 million compared with $218 million.
The operational picture differed across regions. North America returned to positive organic growth for the first time in nine quarters, supported by record alternative-parts utilization of over 40%, moderating insurance premiums, and continued sequential improvement in repairable claims. Specialty delivered growth despite a challenging end market and macro-economic pressure on consumers. Europe was the primary shortfall, as the ERP implementation in Germany impaired results and the company experienced lower volumes in the UK and Benelux regions. Management said cost reductions outside the ERP impact largely offset those lower volumes.
Cash generation was positive in the quarter but weaker on a year-to-date basis. Cash flow from operations was $111 million and free cash flow was $60 million in the second quarter. For the six months ended June 30, 2026, cash flow from operations was $55 million and free cash flow was negative $36 million. The balance sheet carried total debt of $4.0 billion and total leverage of 2.8x EBITDA as of June 30, 2026. Capital returns included $52 million of second-quarter repurchases and $77 million of cash dividends.
Management reduced every disclosed full-year operating and cash flow target. Updated organic revenue growth for parts and services is (3.0%) to (1.0%), versus the prior outlook of (0.5%) to 1.5%. Updated diluted EPS is $1.78 to $2.08 and adjusted diluted EPS is $2.60 to $2.90. Updated operating cash flow is $825 to $1,025 million and free cash flow is $625 to $775 million. The revised outlook reflects a more measured European recovery after the ERP implementation, while management continues to emphasize restoring service levels, cost alignment, cash generation and capital allocation.
The strategic review remains active, with Specialty being evaluated within the broader review process initiated in January 2026. The company stated that it continues to engage with multiple parties but provided no deadline or definitive timetable and said there can be no assurance of a transaction or other strategic outcome. Near-term attention centers on European service recovery and volume trends, the durability of North American organic growth, Specialty demand, and progress toward the reduced full-year financial targets.
Management, verbatim
Our second‑quarter performance reflected solid execution across our North America and Specialty segments. North America returned to positive organic growth for the first time in nine quarters, driven by record alternative-parts utilization of over 40%, moderating insurance premiums that were negative in May and June, and continued sequential improvement in repairable claims. Specialty also delivered growth despite a challenging end‑market environment and continued macro‑economic pressure on consumers. Europe fell short of expectations, with results affected by the ERP implementation in Germany. Outside of the ERP impact, the team delivered substantial cost reductions that largely offset the lower volumes we witnessed in the UK and Benelux regions. Overall, the fundamentals of our business are improving, and as market conditions continue to recover, we expect those operational gains to translate into stronger financial performance and profitability in the quarters ahead.
Justin Jude, President and Chief Executive Officer
Second-quarter results reflected improving trends in North America and resilient demand in Specialty, offset by a slower-than-expected recovery following the ERP implementation in Germany. North America remains on track against its full-year plan, and Specialty’s revenue performance has been consistent with our expectations. Our revised outlook reflects a more measured pace of recovery in Europe, while we maintain a disciplined focus on cost management, cash generation and capital allocation. The actions underway in Europe are focused on restoring service levels, aligning the cost structure with current demand and translating operational improvement into stronger financial performance.
Rick Galloway, Senior Vice President and Chief Financial Officer
Not in the filing
stated, not guessed- Gross profit and gross margin
- Operating income and operating margin
- Operating expenses
- Cash and cash equivalents balance
- Prior-year and prior-quarter cash flow comparisons
- Prior-quarter comparisons for revenue, income and EPS
- Segment revenue figures for North America, Europe and Specialty
- Segment-level revenue growth percentages
- Full-year 2026 actual results, preventing period-consistent comparison of full-year prior guidance for diluted EPS, adjusted diluted EPS, operating cash flow and free cash flow
- Forward guidance for gross margin and operating expenses
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
LKQ filed an SEC 8-K (Item 2.02) with Q2 2026 results and an updated full-year 2026 outlook, including commentary on North America, Specialty, and Europe.
Ticker impact
LKQ reported Q2 2026 results and updated 2026 outlook, including weaker Europe tied to Germany ERP implementation and revised EPS and cash flow ranges.
Near-term bias likely negative as the updated full-year outlook narrows to lower EPS and free cash flow ranges versus prior guidance, despite North America improvement.
The filing discloses concrete Q2 financials (revenue, net income, EPS) and a specific updated 2026 outlook table with lower organic growth, diluted EPS, adjusted EPS, operating cash flow, and free cash flow ranges, plus the stated Europe ERP impact.
Market effects
Auto parts aftermarket names may see read-across from LKQ’s Europe ERP disruption and cost-management narrative, but the key signal is guidance direction rather than a sector-wide shock.
Europe demand and operational execution risk is highlighted via Germany ERP implementation, potentially affecting sentiment toward European auto parts distribution.
Tariff and FX assumptions are explicitly embedded in LKQ’s outlook, which can influence how traders model cross-border margin and volume sensitivity for similar distributors.
Counterpoint
North America returned to positive organic growth for the first time in nine quarters, and Specialty demand is described as resilient, which could limit downside if investors focus on offsetting segment strength.
Key entities
- companyLKQ Corporation
Reported Q2 2026 results and updated 2026 outlook, citing Europe ERP impact and revised recovery pace.
- business_segmentSpecialty segment
Under evaluation as part of an active strategic alternatives review that includes a potential sale process.
- operational_factorGermany ERP implementation
Identified as a key reason Europe fell short of expectations and slowed recovery.
