LKQ to focus on simplification, productivity in uncertain demand environment

LKQ Corp., based in Antioch, Tennessee, has reported its fourth-quarter and full-year financial results for 2025 and provided its outlook for 2026, with the company noting that it will focus on simplification and productivity in the uncertain demand environment.

Quarterly and full-year results

Revenue for the fourth quarter of 2025 was $3.3 billion, an increase of 2.7 percent compared with $3.2 billion for the fourth quarter of 2024. Total parts and services revenue increased 2.2 percent, which included a 3.7 percent increase from foreign exchange rates year over year, a 1.7 percent decrease in parts and services organic revenue and the net impact of acquisitions and divestitures, which increased revenue by 0.2 percent, according to LKQ.

Net income for the fourth quarter totaled $75 million compared with $151 million for the same period of 2024, while diluted earnings per share equaled 29 cents compared with 58 in the fourth-quarter of 2024.

On an adjusted basis, net income for the quarter was $150 million compared with $202 million in 2024, helped by a nonrecurring favorable legal settlement of $35 million (pretax). The company’s adjusted diluted earnings per share totaled 59 cents versus 78 cents for the same period of 2024, a decrease of 24.4 percent.

For the full year, LKQ, which provides recycled and specialty parts to repair and accessorize automobiles and other vehicles, reported revenue of $13.7 billion, a decrease of 1.3 percent compared with $13.8 billion for 2024 as total parts and services revenue decreased 1.5 percent, which included a 2.7 percent decrease in parts and services organic revenue, a 1.7 percent increase from foreign exchange rates year over year and the net impact of acquisitions and divestitures, which decreased revenue by 0.5 percent.

Net income for 2025 totaled $596 million compared with $666 million in 2024, and diluted earnings per share were $2.31 compared with $2.53 for 2024, a decrease of 8.7 percent.

On an adjusted basis, net income in 2025 was $777 million compared with $894 million the previous year. Adjusted diluted earnings per share were $3.01 compared with $3.39 in 2024, a decrease of 11.2 percent.

“Throughout 2025, our team relentlessly focused on what we could control, resulting in significant free cash flow generation despite sector headwinds across our global enterprise,” LKQ President and CEO Justin Jude says.

“Our North America business gained market share in a soft-demand environment through pricing discipline, continued expansion of our MSO [multishop operators ] relationships, and the ongoing expansion of our Canadian hard parts business.

“Despite the headwinds in Europe, we further integrated and simplified our operations to support sustained margin improvement and capitalize on adjacent market opportunities,” Jude continues. “The European leadership team has taken a stronger position on productivity to ensure the appropriate cost structure is delivered in 2026.”

Strategic initiatives

Earlier this year, LKQ announced that its board initiated a review of strategic alternatives to enhance shareholder value, with no deadline or definitive timetable established. LKQ says it will provide updates on the process if appropriate or required by law.

The company continues to execute on a number of key initiatives that involve simplifying its business portfolio and operations, including streamlining operations by focusing on its nondiscretionary businesses, divesting noncore assets and enhancing efficiencies. Those efforts include selling its former self-service segment in October of last year and exploring a potential sale of its Specialty segment. LKQ says it also is expanding its lean operating model globally, investing in its core businesses to achieve above-market growth and drive market share gains, and pursuing a disciplined capital allocation strategy.

In support of its strategic initiatives, the company approved a restructuring plan intended to better position its cost structure to more efficiently serve strategic markets and enhance long-term performance. The plan is expected to result in restructuring charges of approximately $60-$70 million and generate more than $50 million in annualized cost savings, with more than half of these savings anticipated to be realized in 2026.

2026 outlook

“Operational excellence remains our core focus as our teams continue to drive simplification and productivity in an uncertain demand environment,” says Rick Galloway, senior vice president and chief financial officer. “Our 2026 guidance reflects current market conditions and assumes gradual improvement as the year progresses.”

For 2026, LKQ’s management anticipates organic revenue growth for parts and services ranging from (0.5)- 1.5 percent, diluted earnings per share (EPS) of $2.35-$2.65, adjusted diluted EPS of $2.90-$3.20, operating cash flow of $900 -$1,100 million and free cash flow of $700-$850 million based on current conditions, recent trends and the company’s expectations. This outlook includes estimated impacts from the U.S. and retaliatory tariffs in effect as of Feb. 1, though the Supreme Court struck down tariffs the administration enacted based on the International Emergency Economic Powers Act Feb. 20, only to have the president use Section 122 of the Trade Act to institute new global tariffs of 10 percent for 150 days.