Earnings
LKQ replaces its CEO and withdraws 2026 guidance as European sales slump and margins halve
The car-parts distributor expects a third-quarter loss after $111 million of impairments, hires Alvarez & Marsal for Europe and names former Veritiv chief Sal Abbate to take over in December.
HedgeWeekly News Desk ·
LKQ said on Friday that chief executive Justin Jude has left with immediate effect and pulled its full-year 2026 forecast, after preliminary figures showed a sharp deterioration in its European business. Salvatore "Sal" Abbate, who previously ran paper and packaging distributor Veritiv, will become president and CEO on December 15. Until then, chairman John Mendel and audit committee chair Sue Gove will share an interim office of the CEO. Andy Hamilton, who ran LKQ Europe, has also stepped down.
Third-quarter revenue fell to $3.32 billion from $3.50 billion a year earlier, below the $3.41 billion analysts expected, according to Investing.com. Parts and services organic revenue declined 5.4% across the group. LKQ expects a net loss from continuing operations of $16 million to $32 million, against net income of $178 million a year earlier, after $111 million of non-cash impairment charges. Adjusted diluted earnings are seen at $0.47 to $0.53 a share, down from $0.84 and short of the roughly $0.69 consensus.
Europe drove the miss. Organic parts and services revenue there dropped 9.8%, and the segment's EBITDA margin is expected at 4.1% to 5.1%, roughly half the 10.0% it earned a year earlier. The company blamed disruption from an ERP system rollout in Germany and lower volumes in the UK and Benelux. North America performed in line with internal expectations despite softer markets, while the Specialty unit came in modestly below plan. Investing.com reported the shares fell about 10% in Friday morning trading.
Why it matters: The board has hired Alvarez & Marsal to advise on European operations, starting with customer service, operational stability and cost discipline, and says its review of strategic alternatives is still under way. That combination of a new outside CEO, a restructuring adviser and an open review puts the European business, which carried the margin collapse, at the centre of any break-up or sale debate. Investors get the full numbers and a conference call on October 29, the first chance to hear whether management will put a new forecast back on the table.