LKQ posts slight increase in net income despite lower revenue in Q2

Recycled and aftermarket parts supplier LKQ Corp., Antioch, Tennessee, has reported second-quarter 2025 financial results showing $3.6 billion in revenue, a decrease of 1.9 percent from the $3.7 billion recorded in the second quarter of 2024. Parts and services organic revenue decreased 3.4 percent, while the net impact of acquisitions and divestitures decreased revenue by 1 percent and foreign exchange rates increased revenue by 2.3 percent year over year, for a total parts and services revenue decrease of 2.1 percent.

Net income for the quarter totaled $192 million compared with $185 million for the same period in 2024. Diluted earnings per share of 75 cents increased compared with 70 cents in the second quarter of 2024, an increase of 7.1 percent.

On an adjusted basis, net income totaled $225 million compared with $261 million for the same period of 2024, while adjusted diluted earnings per share totaled 87 cents compared with 98 cents for the same period of 2024, a decrease of 11.2 percent.

LKQ says its focus on cost reduction measures has resulted in more than $125 million in costs taken out over the past 12 months, with an additional $75 million targeted for 2025.

North American organic revenue outperformed the market even as repairable claims across the entire industry declined 9 percent, according to the company.

In Europe, LKW says it has replaced more than 25 percent of the leadership team and continues to focus on reducing costs, rationalizing SKUs and enhancing revenue opportunities, including entering into a strategic partnership to expand its salvage business.

The company has launched a number of strategic Initiatives designed to simplify its business portfolio and operations by divesting noncore assets and enhancing efficiencies; expanding its lean operating model globally to drive productivity, improve execution and accelerate decision-making; investing in organic growth; and pursuing a disciplined capital allocation strategy focused on maximizing shareholder value.

Commenting on the quarter, LKQ President and CEO Justin Jude says, “We are executing on our three-year plan outlined at our September 2024 Investor Day and are confident in our strategy. We have no doubt we have the size, scale and an unmatched distribution network that are the best in the industry. Our results this quarter reflect a company that is in transformation. We will move faster and harder to simplify our business and reduce costs. As we sharpen our focus on people, process and performance, we will be well-positioned to capitalize as the cycle in our sector turns. We are committed to delivering better results for our customers, employees and partners and, importantly, creating more value for shareholders.”

2025 Outlook

“As we look ahead, we are focused on executing on our strategic initiatives to deliver improved financial results,” say sRick Galloway, senior vice president and chief financial officer. “We will continue to follow a disciplined capital allocation strategy that returns capital to shareholders. Our strategy includes driving efficiencies and simplifying our business and portfolio as we look at ROIC [return on invested capital] as a constant measure. We are navigating through the cyclical issues in our marketplace and will have a stronger company that is well-positioned when the market turns.”

LKQ says that based on a confluence of macroeconomic factors in North America and Europe and its quarterly results, it is lowering its full-year outlook from zero-2 percent organic revenue growth for parts and service to negative 3.5-negative 1.5 percent and its diluted earnings per share from $2.91-$3.21 to $2.46-$2.77. Adjusted diluted earnings have been reduced from $3.40-$3.70 to $3-$3.30. In North America, LKQ says is not seeing a recovery in the repairable claims and tariff uncertainty continues, while in Europe, general economic softness and geopolitical unrest drive uncertainty.