LKQ · LKQ Corporation

LKQ Corporation's Q1 2026 results showed revenue growth of 4.3% to $3,469 million, driven by a 5.1% foreign exchange tailwind, offset by a 1.6% decline in organic parts and services revenue and modest 0.2% contribution from acquisitions/divestitures. North America delivered above-market growth amid early recovery signs, while Europe progressed with operational improvements including a major ERP migration in early April. GAAP net income dropped sharply to $77 million from $158 million year-over-year, primarily due to a $44 million impairment on the equity method investment in Mekonomen, resulting in diluted EPS of $0.30 versus $0.61. Adjusted figures were more resilient at $171 million net income and $0.67 EPS, down 9.5% from prior year, reflecting underlying operational challenges in a tough environment. CEO Justin Jude highlighted cost reduction, operational streamlining, market share gains, and urgency in execution to build shareholder value. Cash flows were negative at -$56 million from operations and -$96 million free cash flow, with total debt at $3.9 billion and leverage of 2.6x EBITDA as of March 31. The Board initiated a strategic alternatives review on January 26, 2026, engaging BofA Securities and Goldman Sachs, with no set timeline or assured outcome. Capital returns remained robust with $77 million in Q1 dividends and a declared Q2 dividend of $0.30 per share. Management reaffirmed full-year 2026 guidance, including organic revenue growth of -0.5% to 1.5%, adjusted diluted EPS of $2.90-$3.20, and free cash flow of $700-$850 million, based on current trends, productivity initiatives, and assumed FX/tax rates, while noting tariff impacts and macroeconomic pressures.