LKQ (LKQ) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue declined 6.5% year-over-year to $3.46 billion, with organic parts and services revenue down 4.3% and declines across all segments.

• Net income rose to $169 million from $158 million in Q1 2024; reported diluted EPS increased to $0.65, up 10.2% year-over-year.

• Adjusted diluted EPS was $0.79, down 3.7% year-over-year, meeting expectations despite macroeconomic and tariff headwinds.

• Margin expansion achieved through simplification, SKU rationalization, and operational excellence, despite market declines.

• $118 million returned to shareholders via $40 million in share repurchases and $78 million in dividends; $0.30 per share dividend approved for Q2 2025.

Financial highlights

• Gross margin improved to 39.8% from 39.2% year-over-year; operating income was $287 million, 8.3% of revenue.

• Segment EBITDA was $404 million (11.7% of revenue), down from $430 million; adjusted EBITDA for Q1 2025 was $392 million.

• Free cash flow was negative $57 million, in line with expectations due to inventory investments and timing of payables.

• Total debt at quarter-end was $4.4 billion, with a leverage ratio of 2.5x EBITDA and $1.29 billion in available liquidity.

• Effective interest rate on borrowings was 5.2%.

Outlook and guidance

• Full-year 2025 adjusted diluted EPS guidance remains $3.40–$3.70; GAAP EPS guidance is $2.91–$3.21.

• Organic parts and services revenue growth expected at 0–2% for 2025.

• Free cash flow guidance is $750–$900 million; operating cash flow forecasted at $1.075–$1.275 billion.

• Guidance excludes potential impacts from new U.S. tariffs or retaliatory measures; tariff impacts remain uncertain with updates expected in Q2.

• North America EBITDA margin projected in the low 16% range; Europe expected to achieve double-digit EBITDA margin for the year.