LKQ (LKQ) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue rose 4.3% year-over-year to $3,469 million, with growth in Europe and Specialty, and above-market performance in North America.

• Net income from continuing operations dropped to $77 million from $158 million, impacted by a $44 million impairment on the Mekonomen equity investment and higher restructuring costs.

• Adjusted diluted EPS was $0.67, down 9.5% year-over-year; reported diluted EPS was $0.30, reflecting the impairment charge.

• The Board initiated a strategic review to enhance shareholder value, retaining BofA Securities and Goldman Sachs as advisors.

• $77 million was returned to shareholders via dividends in Q1 2026.

Financial highlights

• Revenue reached $3.5 billion, up 4.3% year-over-year, with organic parts and services revenue declining 1.6%.

• Segment EBITDA was $347 million (10.0% margin), down from $379 million (11.4%) in Q1 2025.

• Free cash flow was negative $96 million, compared to negative $57 million a year ago.

• Gross margin was 38.4%, down from 39.5% year-over-year; North America at 42.4%, Europe at 38.3%.

• Operating income declined to $217 million from $267 million year-over-year.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: organic parts and services revenue growth between -0.5% and +1.5%, adjusted EPS $2.90–$3.20, and free cash flow $700–$850 million.

• Full-year GAAP diluted EPS guidance is $2.16–$2.46.

• Operating cash flow expected at $900–$1,100 million.

• Most of the $50 million+ in annual cost savings expected to be realized in 2026; $70 million in restructuring costs anticipated.

• Outlook incorporates tariffs, a 26.8% global tax rate, and stable FX assumptions.