LKQ Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 revenue was $3.3 billion, a 5.1% decrease compared to $3.5 billion in the third quarter of 2025.
• Total parts and services revenue decreased 5.6%, driven by a 5.4% decline in organic revenue, a 0.7% decrease from foreign exchange rates, partially offset by a 0.6% increase from acquisitions and divestitures.
• Net loss for the quarter was $24 million, including $111 million of pre-tax non-cash impairment charges, compared to net income of $178 million in the same period of 2025.
• Diluted loss per share was $(0.09) compared to diluted earnings per share of $0.69 in the prior year period.
• Adjusted net income was $127 million compared to $216 million in the third quarter of 2025.
• Adjusted diluted earnings per share was $0.50 compared to $0.84 in the prior year period.
• Cash flow from operations was $411 million and free cash flow was $372 million for the third quarter of 2026.
• For the nine months ended September 30, 2026, cash flow from operations was $466 million and free cash flow was $336 million.
• As of September 30, 2026, total debt was $3.7 billion with total leverage at 2.8x EBITDA.
• Segment EBITDA for the third quarter was $296 million (8.9% of revenue), down from $395 million (11.3% of revenue) in the prior year period.
• North America segment EBITDA was $203 million (14.4% of revenue) in Q3 2026 versus $199 million (14.0% of revenue) in Q3 2025.
• Europe segment EBITDA was $68 million (4.6% of revenue) in Q3 2026 versus $162 million (10.0% of revenue) in Q3 2025.
• Specialty segment EBITDA was $25 million (5.5% of revenue) in Q3 2026 versus $34 million (7.3% of revenue) in Q3 2025.

Guidance and Future Outlook:

• The company withdrew its full-year 2026 guidance, which was last updated on July 30, 2026.
• Management stated that recent financial and operating performance has not reflected the strength of the business, particularly in Europe.
• The Board and new leadership team are focused on translating the company's strengths into improved performance and increased shareholder value.

Business Segments and Product Lines:

• Europe segment performance was characterized by weakness driven by operational issues related to ERP implementation in Germany and volume declines in the United Kingdom and Benelux.
• The Specialty segment performed modestly below plan.
• The North America segment performed in line with expectations despite a softer demand environment.
• The Board has decided to suspend the strategic review, including the Specialty segment sales process, to allow the new leadership team to conduct a comprehensive assessment of the business.

Market and Competitive Landscape:

• The company faces competition from local, national, international, and internet-based vehicle products providers.
• The business relies on insurance companies and customers to promote the usage of alternative parts.
• The company operates in North America, Europe, and Taiwan.

Risks and Challenges:

• Significant pre-tax non-cash impairment charges of $111 million were recorded in the third quarter, including $88 million in goodwill impairment and $23 million in impairment of net assets held for sale.
• The company faces risks related to economic, political, and social conditions in its operating regions.
• Future results could be adversely affected by fluctuations in commodity prices, changes in vehicle accident rates, or supply chain disruptions.
• The company has a substantial amount of indebtedness which could impact its financial condition and ability to obtain financing.
• Operational risks include potential disruptions to information technology systems, cybersecurity threats, and business interruptions at distribution centers.

Management Commentary and Tone:

• John Mendel, Chairman of the Board, described LKQ as a "fundamentally strong enterprise" supported by scale and global distribution, but acknowledged that recent performance has not met standards, particularly in Europe.
• The Board has been deeply engaged in addressing challenges, including the appointment of a new CEO and leadership changes in Europe.
• Rick Galloway, CFO, noted that the third quarter was characterized by weakness in Europe and the Specialty segment, while North America met expectations.
• Salvatore A. "Sal" Abbate was appointed President and CEO effective December 15, 2026, bringing over three decades of experience in leading large distribution and industrial businesses.

Other Key Points:

• On October 25, 2026, the Board authorized a two-year extension to the 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, payable on December 3, 2026.
• During the third quarter of 2026, the Company repurchased 1.2 million shares for $30 million and distributed $76 million in cash dividends.
• For the nine months ended September 30, 2026, the Company returned $313 million to shareholders via $83 million in share repurchases and $230 million in dividends.
• Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 72 million shares for a total of $3.0 billion, with $1.5 billion remaining on the authorization as of September 30, 2026.
• The company recorded a $44 million impairment on its equity method investment in Mekonomen during the nine months ended September 30, 2026.
• An impairment charge related to the expected divestiture of operations in Romania was recorded during the nine months ended September 30, 2026.