10-Q · April 30, 2026
LKQ Corporation's Q1 2026 results show a revenue of $3.47 billion, exceeding estimates but experiencing a significant diluted EPS miss at $0.30 compared to an expected $0.67. The revenue reflects a 4.3% year-over-year…
Earnings analysis · 10-Q
LKQ earnings analysis
Filed October 29, 2026 · Our reading of the company's report
The latest report
LKQ’s third quarter showed a substantial deterioration in profitability, driven primarily by Europe’s ERP-related operational disruption and lower demand. Revenue declined 5.1% year over year to $3,319 million,…
Read full summary
LKQ’s third quarter showed a substantial deterioration in profitability, driven primarily by Europe’s ERP-related operational disruption and lower demand. Revenue declined 5.1% year over year to $3,319 million, operating margin fell to 1.6%, and reported diluted EPS was $(0.09), while the company withdrew full-year 2026 guidance. Positive free cash flow and covenant compliance provide liquidity support, but rising revolver borrowings, significant impairment charges and continued Europe weakness keep the outlook bearish.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.09
What stood out
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Revenue and margins weakened sharply
Third-quarter revenue was $3,319 million, down $180 million, or 5.1%, from $3,499 million in the prior-year quarter and down approximately 2.7% from $3,410 million in Q2 2026. Gross margin fell to 37.2% from 38.3% year over year and 38.8% in Q2 2026, while operating margin fell to 1.6% from 7.8% year over year and 6.6% in Q2.
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North America showed resilience
North America remained the strongest segment: total revenue was $1,402 million versus $1,423 million, while Segment EBITDA increased to $203 million from $199 million and margin improved to 14.4% from 14.0%. Cost savings reduced SG&A by $7 million, partially offsetting lower parts volumes.
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Specialty grew but profitability declined
Specialty revenue increased to $465 million from $457 million, supported by RV and marine volume growth and $5 million of acquisition revenue. However, Segment EBITDA declined to $25 million from $34 million, with margin decreasing to 5.5% from 7.3% as cost of goods sold rose $12 million and SG&A rose $6 million.
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Free cash flow remained positive
Year-to-date operating cash flow was $466 million versus $733 million in the prior-year period. Free cash flow was $336 million after $130 million of capital expenditures, compared with $573 million and $160 million, respectively, in the prior-year period; capex intensity was approximately 1.3% of nine-month revenue.
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Liquidity declined as revolver debt rose
Cash and cash equivalents were $319 million at September 30, 2026, unchanged from December 31, 2025, while total liquidity fell to $1,658 million from $2,204 million. Revolver borrowings increased to $580 million from $1 million, primarily after $500 million of term-loan prepayment was funded with revolver borrowings.
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New leadership paused Specialty review
Management suspended the previously announced strategic review, including the Specialty sales process, on October 29, 2026, to allow new leadership to assess the business. The company also reported $1,658 million of liquidity, $39 million of current maturities and covenant ratios of 2.8 versus a 4.00 maximum leverage limit and 6.7 versus a 3.00 minimum interest-coverage requirement.
What to watch
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Further impairment risk
The company recorded an $88 million goodwill impairment for Specialty and a $23 million impairment on Romanian net assets held for sale. Management estimates that a 5% decrease in Specialty projected cash flows would cause approximately $45 million of additional impairment, while a 25-basis-point discount-rate increase would cause approximately $25 million more.
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ERP disruption pressured Europe
Europe revenue fell $167 million, or 10.2%, to $1,453 million, and Segment EBITDA fell $94 million to $68 million, reducing margin to 4.6% from 10.0%. Management attributed the decline primarily to lower volumes from Germany’s ERP implementation, with organic parts and services revenue down $158 million, or 9.8%, in the quarter.
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Higher leverage and funding costs
Debt and liquidity risk increased as borrowings under revolving facilities and term loans rose to $1,072 million from $1,011 million at December 31, 2025, while total liquidity declined by $546 million to $1,658 million. The company’s overall weighted-average borrowing rate was 5.0%, and management cautioned that future refinancing may not be available on attractive terms.
Management's outlook
The company withdrew full-year 2026 guidance on October 23, 2026. The 10-Q provides no replacement quantitative revenue or EPS outlook; management states it believes current liquidity, future operating cash flow and capital-market access will be sufficient for current operating and capital requirements.
Earlier filings 4
10-Q · October 30, 2025
LKQ reported Q3 revenue of $3,499 million (up $46 million versus $3,453 million a year ago) while diluted EPS fell to $0.70 from $0.73. Gross margin was $1,341 million (roughly 38.3%) but operating income declined to…
10-Q · July 24, 2025
LKQ reported Q2 revenue of $3,642 million and diluted EPS of $0.75. Revenue was down versus the prior-year quarter (Q2 2024 revenue $3,711 million) while EPS and cash improved; working capital, debt and restructuring…
10-Q · October 24, 2024
LKQ reported quarterly revenue of $3,584 million, up $16 million (+0.45%) year-over-year, while diluted EPS declined to $0.73 from $0.77 a year ago. Operating income was essentially flat at $310 million (operating…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.