LKQ Corp., which supplies recycled OEM and aftermarket parts used to repair vehicles, said organic parts and services revenue in its North America segment fell 2.4% in the third quarter of 2026, according to the company’s Oct. 29 earnings release. The result follows a second quarter in which the company said record use of alternative parts helped return North America to growth.
Company-wide revenue declined 5.1% to $3.3 billion, compared with $3.5 billion a year earlier. LKQ reported a net loss from continuing operations attributable to stockholders of $24 million, which included $111 million in pretax, noncash impairment charges. That compares with income from continuing operations of $178 million in the third quarter of 2025. The loss fell within the $16 million to $32 million range the company projected in its Oct. 23 preliminary results.
Along with the LKQ earnings report, the board said it has suspended its strategic review, including the sales process for its Specialty segment. The release said the pause gives the incoming leadership team time to fully assess the business and weigh its options for creating value.
North America margin edges up as revenue declines
North America parts and services revenue was $1.31 billion, down 2.6% from $1.34 billion a year earlier. Organic revenue declined 2.4%, and foreign exchange accounted for another 0.3% decline.
The segment’s EBITDA rose to $203 million, or 14.4% of revenue, from $199 million, or 14.0%, in the prior-year quarter.
“North America performed in line with expectations despite a softer demand environment,” Chief Financial Officer Rick Galloway said in the release.
In LKQ’s July 30 second-quarter release, then-CEO Justin Jude said, “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.”
At that time, LKQ lowered its full-year outlook and projected that company-wide organic parts and services revenue would decline 1% to 3%. The company withdrew its full-year guidance on Oct. 23.
Europe and Specialty results
Europe parts and services revenue fell 10.2% to $1.45 billion, including a 9.8% organic decline. The segment’s EBITDA margin was 4.6%, compared with 10.0% a year earlier.
“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,” Galloway said.
Specialty parts and services revenue rose 1.9% to $465 million, with organic growth of 0.9%. The segment’s EBITDA margin narrowed to 5.5% from 7.3%.
The quarter’s impairment charges included an $88 million goodwill impairment tied to the Specialty reporting unit. They also included a $23 million impairment of net assets held for sale, related to LKQ’s expected divestiture of its operations in Romania.
On an adjusted basis, LKQ earned $127 million, or 50 cents per diluted share, compared with $216 million, or 84 cents per share, in the third quarter of 2025.
Leadership transition
Salvatore A. “Sal” Abbate will become president and CEO on Dec. 15, according to the release. Abbate previously served as CEO of Veritiv Corp., which Clayton, Dubilier & Rice acquired for $2.6 billion in 2023.
Until Abbate starts, an interim Office of the Chief Executive Officer is providing leadership continuity, LKQ said in its Oct. 23 appointment announcement. The office consists of board Chairman John Mendel and Audit Committee Chair Sue Gove.
Mendel said in the LKQ earnings release that the company’s “recent financial and operating performance has not reflected the strength of the business or met the standards we expect, particularly in Europe.” He added that “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.”
Cash flow and shareholder returns
LKQ generated $411 million in operating cash flow and $372 million in free cash flow during the quarter. As of Sept. 30, the company carried $3.7 billion in total debt, with leverage of 2.8 times EBITDA as defined in its credit facility.
LKQ repurchased 1.2 million shares for $30 million during the quarter and paid $76 million in dividends.
The board declared a quarterly dividend of 30 cents per share, payable Dec. 3 to shareholders of record as of Nov. 19. It also extended LKQ’s share repurchase program through Oct. 25, 2028.
Lisa McArdle