LKQ (LKQ) Q1 2026 earnings summary

Executive summary

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

• 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, while 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%.

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

• 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.

• Total debt stood at $3.9 billion, with leverage at 2.6x EBITDA.

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.

• Market recovery not yet reflected in outlook; cautious demand expectations remain.

• Management expects $70 million in restructuring costs in 2026, with over $50 million in annual cost savings expected, most benefits in 2026.