LKQ CORPORATION ANNOUNCES RESULTS FOR THIRD 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 THIRD QUARTER 2026 Antioch, TENN (October 29, 2026) -- LKQ Corporation (Nasdaq: LKQ) today reported third quarter 2026 financial results. Commenting on the third quarter, John Mendel, Chairman of the Board of LKQ, said: “LKQ rema
Facts are quoted from the filing text and checked against it. Details that could not be matched to the text are left out.
How this was made
The 30-second read
Why it matters
The earnings release highlights operational issues in Europe and a strategic pause, which may affect investor sentiment.
Market read
First‑report Q3 earnings with a loss and guidance withdrawal; material for traders evaluating LKQ and the auto parts sector.
What to watch
The $30M share repurchase and dividend payout may provide some support despite earnings weakness.
Third-quarter revenue declined 5.1%, Europe weakened sharply, and LKQ withdrew full-year 2026 guidance.
Revenue, gross margin, operating income, GAAP earnings and adjusted earnings all declined year over year. Europe was affected by ERP implementation issues and volume declines, while the Company recorded $111 million of pre-tax non-cash impairment charges and withdrew full-year 2026 guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30GAAP | $3.32B | – | (5.1) % |
| Organic revenue growth, three months ended September 30other | (5.0) % | – | (5.0) % |
| Parts and services revenue, three months ended September 30GAAP | $3.22B | – | (5.6) % |
| Gross margin, three months ended September 30GAAP | $1.24B | – | (7.8) % |
| Gross margin as a percentage of revenue, three months ended September 30GAAP | 37.2 % | – | – |
| Selling, general and administrative expenses, three months ended September 30GAAP | $959M | – | 0.1 % |
| Restructuring and transaction related expenses, three months ended September 30GAAP | $24M | – | 71.4 % |
| Impairment of goodwill, three months ended September 30GAAP | $88M | – | n/m |
| Impairment of net assets held for sale, three months ended September 30GAAP | $23M | – | n/m |
| Depreciation and amortization, three months ended September 30GAAP | $89M | – | (6.3) % |
| Operating income, three months ended September 30GAAP | $53M | – | (80.7) % |
| Operating income as a percentage of revenue, three months ended September 30GAAP | 1.6 % | – | – |
| Interest expense, three months ended September 30GAAP | $56M | – | 1.8 % |
| Provision for income taxes, three months ended September 30GAAP | $32M | – | (28.9) % |
| Net loss from continuing operations attributable to LKQ stockholders, three months ended September 30GAAP | −$24M | – | n/m |
| Net loss, three months ended September 30GAAP | −$27M | – | n/m |
| Diluted loss per share from continuing operations attributable to LKQ stockholders, three months ended September 30GAAP | $(0.09) | – | n/m |
| Adjusted net income, three months ended September 30non-GAAP | $127M | – | – |
| Adjusted diluted earnings per share, three months ended September 30non-GAAP | $0.50 | – | – |
| Total Segment EBITDA, three months ended September 30other | $296M | – | – |
| Total Segment EBITDA as a percentage of revenue, three months ended September 30other | 8.9 % | – | – |
| Net cash provided by operating activities, three months ended September 30GAAP | $411M | – | – |
| Free cash flow, three months ended September 30non-GAAP | $372M | – | – |
| Revenue, nine months ended September 30GAAP | $10.20B | – | (1.4) % |
| Organic revenue growth, nine months ended September 30other | (3.5) % | – | (3.5) % |
| Gross margin, nine months ended September 30GAAP | $3.89B | – | (3.0) % |
| Gross margin as a percentage of revenue, nine months ended September 30GAAP | 38.1 % | – | – |
| Operating income, nine months ended September 30GAAP | $495M | – | (41.1) % |
| Net income from continuing operations attributable to LKQ stockholders, nine months ended September 30GAAP | $187M | – | – |
| Diluted earnings per share from continuing operations attributable to LKQ stockholders, nine months ended September 30GAAP | $0.73 | – | (63.9) % |
| Adjusted net income, nine months ended September 30non-GAAP | $468M | – | – |
| Adjusted diluted earnings per share, nine months ended September 30non-GAAP | $1.84 | – | – |
| Total Segment EBITDA, nine months ended September 30other | $992M | – | – |
| Net cash provided by operating activities, nine months ended September 30GAAP | $466M | – | – |
| Free cash flow, nine months ended September 30non-GAAP | $336M | – | – |
| Total debt as of September 30, 2026GAAP | $3.7B | – | – |
| Total leverage as defined in the credit facility as of September 30, 2026other | 2.8x EBITDA | – | – |
| Cash and cash equivalents as of September 30, 2026GAAP | $319M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| North America third party revenue, three months ended September 30North America performed in line with expectations despite a softer demand environment. | $1.31B | – | (2.6) % |
| Europe third party revenue, three months ended September 30Operational issues related to the ERP implementation in Germany and volume declines in the United Kingdom and Benelux. | $1.45B | – | (10.2) % |
| Specialty third party revenue, three months ended September 30Specialty was modestly below plan. | $465M | – | 1.9 % |
Full-year 2026 outlook
- NoteOn October 23, 2026 the Company announced that it is withdrawing its full-year 2026 guidance, which was most recently updated on July 30, 2026.
Capital returns
- During the third quarter of 2026, the Company invested $30 million to repurchase 1.2 million shares of its common stock.
- During the third quarter of 2026, the Company distributed $76 million in cash dividends.
- For the nine months ended September 30, 2026, the Company returned $313 million to its shareholders by investing $83 million to repurchase 3.1 million shares of its common stock and distributing $230 million in cash dividends.
- Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 72 million shares of its common stock for a total of $3.0 billion through September 30, 2026.
- As of September 30, 2026, there was $1.5 billion remaining on the authorization.
- On October 25, 2026, the Board authorized a two-year extension to its stock repurchase program, authorizing repurchases through October 25, 2028.
- On October 27, 2026, the Board declared a quarterly cash dividend of $0.30 per share of common stock, payable on December 3, 2026, to stockholders of record at the close of business on November 19, 2026.
What drove it
- Total parts and services revenue decreased 5.6%, including a 5.4% decrease in parts and services organic revenue, a 0.7% decrease from foreign exchange rates, and a 0.6% increase from the net impact of acquisitions and divestitures.
- Europe third party revenue decreased 10.2%, with a 9.8% organic decline, a 0.8% benefit from acquisitions and divestitures, and a 1.2% foreign exchange headwind.
- North America third party revenue decreased 2.6%, including a 2.4% organic decline and a 0.3% foreign exchange headwind.
- Specialty third party revenue increased 1.9%, including 0.9% organic growth and a 1.2% contribution from acquisitions and divestitures.
- The Company recorded $111 million of pre-tax non-cash impairment charges, consisting of $88 million of goodwill impairment and $23 million of net assets held for sale impairment.
Concerns
- Europe weakness was driven by operational issues related to the ERP implementation in Germany and volume declines in the United Kingdom and Benelux.
- Third-quarter gross margin declined to 37.2 % from 38.3 % and operating income declined to $53 million from $274 million.
- Third-quarter GAAP results moved to a net loss from continuing operations attributable to LKQ stockholders of $(24) million from net income of $178 million.
- Specialty Segment EBITDA was $25 million, compared with $34 million, and the Company recorded an $88 million goodwill impairment charge related to the Specialty reporting unit.
- The Board suspended the strategic review, including the Specialty segment sales process.
- Full-year 2026 guidance was withdrawn.
What to watch
- Execution of the ERP implementation in Germany and recovery of Europe volumes in the United Kingdom and Benelux.
- The new leadership team's comprehensive assessment of the business and evaluation of value-creation pathways following the suspension of the strategic review.
- Performance of the Specialty segment following the suspension of its sales process and the goodwill impairment charge.
- Cash generation, leverage, and use of the $1.5 billion remaining share repurchase authorization.
- Any replacement full-year 2026 outlook following the withdrawal of guidance.
Balance sheet and cash flow
- Cash and cash equivalents were $319 million as of September 30, 2026, compared with $319 million as of December 31, 2025.
- Total debt was $3.7 billion as of September 30, 2026.
- Total leverage, as defined in the credit facility, was 2.8x EBITDA as of September 30, 2026.
- Net cash provided by operating activities was $411 million for the third quarter of 2026 and $466 million for the nine months ended September 30, 2026.
- Free cash flow was $372 million for the third quarter of 2026 and $336 million for the nine months ended September 30, 2026.
- Purchases of property, plant and equipment were $130 million for the nine months ended September 30, 2026.
- Repayments under term loan payable were $500 million for the nine months ended September 30, 2026.
Analysis
LKQ reported a weak third quarter. Revenue declined to $3,319 million from $3,499 million, while organic revenue declined 5.0 %. Parts and services revenue declined 5.6 %, including a 5.4% decline in parts and services organic revenue. The decline was concentrated in Europe, where third party revenue fell 10.2 %, while North America third party revenue declined 2.6 % and Specialty third party revenue increased 1.9 %.
Profitability deteriorated substantially. Gross margin declined to $1,236 million, or 37.2 % of revenue, from $1,341 million, or 38.3 % of revenue. Operating income declined to $53 million from $274 million. The Company recorded $111 million of pre-tax non-cash impairment charges, comprising $88 million of goodwill impairment related to the Specialty reporting unit and $23 million related to the expected divestiture of Romanian operations.
GAAP net loss from continuing operations attributable to LKQ stockholders was $(24) million, compared with net income of $178 million, and diluted loss per share was $(0.09), compared with diluted earnings per share of $0.69. Adjusted net income declined to $127 million from $216 million and adjusted diluted earnings per share declined to $0.50 from $0.84. Segment EBITDA declined to $296 million from $395 million, with Europe Segment EBITDA declining to $68 million from $162 million and Specialty Segment EBITDA declining to $25 million from $34 million.
Liquidity remained positive but year-to-date cash generation was lower. Third-quarter cash flow from operations was $411 million and free cash flow was $372 million. For the nine months ended September 30, 2026, cash flow from operations was $466 million and free cash flow was $336 million, compared with $733 million and $573 million, respectively, in the prior-year period. Total debt was $3.7 billion, total leverage was 2.8x EBITDA, and cash and cash equivalents were $319 million.
Capital returns continued through dividends and repurchases, but strategic direction changed. LKQ returned $313 million to shareholders during the first nine months, including $83 million of share repurchases and $230 million of dividends. The Board extended the repurchase authorization through October 25, 2028 and declared a $0.30 per share quarterly dividend. However, the Board suspended the strategic review, including the Specialty sales process, announced a new CEO effective December 15, 2026, and withdrew full-year 2026 guidance.
Management, verbatim
LKQ remains a fundamentally strong enterprise, supported by its scale, leading positions across key markets, and global distribution platform. At the same time, our recent financial and operating performance has not reflected the strength of the business or met the standards we expect, particularly in Europe.
John Mendel, Chairman of the Board of LKQ
The Board has been deeply engaged in addressing these challenges, and the appointment of a new CEO, leadership changes in Europe, and the engagement of Alvarez & Marsal are important steps in a broader effort to improve execution and financial performance.
John Mendel, Chairman of the Board of LKQ
The third quarter was characterized by weakness in our Europe segment, driven by operational issues related to the ERP implementation in Germany and volume declines in the United Kingdom and Benelux. Specialty was modestly below plan. North America performed in line with expectations despite a softer demand environment.
Rick Galloway, Chief Financial Officer of LKQ
Not in the filing
stated, not guessed- Numerical full-year 2026 guidance was not provided because the Company withdrew its full-year 2026 guidance.
- Prior-quarter comparisons were not provided for the reported third-quarter financial metrics.
- An effective tax rate was not provided.
- A cash balance comparison with the immediately preceding quarter was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. 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 is a leading distributor of automotive parts and accessories, listed on Nasdaq.
Ticker impact
LKQ reported Q3 2026 results showing a 5.1% revenue decline and a net loss of $24M after withdrawing full-year guidance.
likely downside as investors price in weaker performance and lack of guidance
The disclosed loss, revenue decline, and guidance withdrawal are fresh, material facts that typically trigger sell pressure.
Market effects
Auto parts distribution sector may see broader scrutiny as LKQ signals weakness in Europe.
European markets could face modest pressure from LKQ's Europe segment challenges.
Limited to automotive supply chain investors; no broad market impact.
Counterpoint
If the market overreacts to the miss, the stock could rebound on the upcoming CEO transition and cost‑cutting initiatives.
Key entities
- personSalvatore A. Abbate
Newly appointed CEO effective Dec 15, 2026.
- personJohn Mendel
Chairman of the Board, provided commentary on results.
