LKQ : Corporations First Quarter 2026 Investor Presentation

Published: 2026-04-30 07:37:00 ET LKQ

Published on 04/30/2026 at 07:37 am EDT

APRIL 30, 2026

JUSTIN JUDE

President and Chief Executive Officer

($ in millions, except per share data)

Operating Performance(1)

Q1 2026

YoY Change

Total Revenue

$3,469

▲ 4.3%

January 26, 2026, the Company announced that its Board of Directors initiated a formal review of strategic alternatives to identify the best path forward to enhance shareholder value

North America outperformed repairable claims decline of 2% to 4% by delivering organic revenue of (0.4)%

We executed a planned ERP migration in a major European market, which was completed in April 2026

Specialty delivered third consecutive quarter of organic growth, reporting 3.4%; highest first quarter growth since 2021

Returned $77 million to shareholders in Q1 2026 in dividends paid

Organic Parts and Services Revenue Growth (Decline) ▼ (1.6)%

Segment EBITDA(2)

$347

▼

(8.5)%

Segment EBITDA(2) Margin

10.0%

▼

(140) bps

Diluted EPS(3)(4)

$0.30

▼

(50.8)%

Adjusted Diluted EPS(2)(3)

$0.67

▼

(9.5)%

Cash Flow Metrics(5)

YTD 2026

Operating Cash Flow

$(56)

Free Cash Flow(2)

$(96)

Dividends Paid

$77

Excludes Self Service segment results as those are reported as discontinued operations in the unaudited condensed consolidated statements of income

Non-GAAP measure; refer to Appendix for more information

Reference to Diluted EPS and the corresponding adjusted figures reflect amounts from continuing operations attributable to LKQ stockholders

Reflects impact of impairment charge of $0.17 related to our equity method investment in Mekonomen

Includes both continuing and discontinued operations

RICK GALLOWAY

Senior Vice President and Chief Financial Officer

($ in millions, except per share data)

Total Revenue

$3,469

Parts & Services Organic Growth (Decline)

$3,327

3.4%

Segment EBITDA (1)

10.0%

11.4%

$379 $347

(0.4)%

(4.0)%

(1.6)%

Q1 2025 Q1 2026

North America

(2)

Diluted EPS

Europe Specialty Total

Cash Flow (4)

Q1 2025 Q1 2026

$0.61

$0.74

$0.67

$0.30

$(3)

$(56)

$(57)

$(96)

(3)

Reported

(1)

Adjusted

Operating Cash Flow Free Cash Flow (1)

Non-GAAP measure; refer to Appendix for more information

Reference to Diluted EPS and the corresponding adjusted figures reflect amounts from continuing operations attributable to LKQ stockholders

Reflects impact of impairment charge of $0.17 related to our equity method investment in Mekonomen

Operating Cash Flow and Free Cash Flow include both continuing and discontinued operations

($ in millions)

Total Revenue

$1,412

$1,440

Q1 2025 Q1 2026

SG&A

28.5%

29.4%

$414 $410

Q1 2025 Q1 2026

Gross Margin

42.4%

44.4%

$627 $612

Q1 2025 Q1 2026

Segment EBITDA

$217

14.1%

15.4%

$203

Q1 2025 Q1 2026

Commentary

Parts and Services Revenue Change

Organic Decline: 0.4%

Foreign Exchange: 0.8%

Organic Drivers

Repairable claims declined approximately 2% to 4% vs prior year driving lower volumes in some product lines, partially offset by pricing initiatives

Other Revenue Growth: 30.0% Other Revenue Growth Drivers

Increase mainly due to higher prices and volumes from precious metals

and scrap steel

Gross Margin

Gross margin dollars decrease driven by lower vendor rebates, unfavorable customer mix, and cost increases from tariffs and inflationary pressures partially offset by pricing initiatives and higher other revenue

Gross margin percentage decrease driven by the dilutive effect of increasing prices to recoup tariff costs, lower vendor rebates and unfavorable customer mix

Selling, General and Administrative Expenses

Driven primarily by decreased professional fees and facility expenses, partially offset by increased insurance costs

($ in millions)

Total Revenue

$1,522 $1,621

Q1 2025 Q1 2026

SG&A

30.1%

30.9%

$500

$459

Gross Margin

38.8%

38.3%

$591 $620

Q1 2025 Q1 2026

Segment EBITDA

7.8%

9.3%

$126

$141

Commentary

Parts and Services Revenue Change

Organic Decline: 4.0%

Foreign Exchange: 10.1%

Acquisitions / Divestitures: 0.4%

Organic Drivers

Softer volumes due to near-term economic pressure, followed by intensified competition in specific markets

Gross Margin

Foreign exchange drove increased gross margin dollars, partially offset by lower organic revenue and lower vendor rebates

Decreased gross margin percentage was driven by lower vendor rebates and competitive pricing in certain markets

Selling, General and Administrative Expenses

$46 million unfavorable foreign exchange impact, partially offset by productivity and restructuring initiatives

Q1 2025 Q1 2026 Q1 2025 Q1 2026

($ in millions)

Total Revenue

24.2%

24.3%

$409

$394

Q1 2025 Q1 2026

SG&A

19.4%

20.5%

$84

$76

Gross Margin

$99

$95

Q1 2025 Q1 2026

Segment EBITDA

4.4%

5.4%

$18

$21

Commentary

Parts and Services Revenue Change

Organic Growth: 3.4%

Foreign Exchange: 0.3%

Organic Drivers

Volume growth in our marine and RV product lines

Gross Margin

Increased volumes drove gross margin improvement

Selling, General and Administrative Expenses

Driven primarily by a $6 million increase in credit loss reserves on non-trade receivables

Q1 2025 Q1 2026 Q1 2025 Q1 2026

YTD 2026 Capital Deployment

Key Metrics

as of March 31, 2026

($ and shares in millions)

$40M

$77M

Capex

Cash $335

Total Debt(1) $3,875

Effective Interest Rate(2) 5.0%

Total Leverage Ratio(3) 2.6x

Available Liquidity $2,012

Share Repurchase Program Capacity Remaining

$1,556

Dividends

$24

$528

(4)

Debt Maturities

($ in millions)

$1,109

$515 $218

$1,481

Returned $77 million to shareholders YTD

Remaining 2026

2027 2028 2029 2030 Thereafter

Approximately 68% of our borrowings at March 31, 2026 are effectively at fixed interest rates

Weighted average interest rate on borrowings outstanding under our Senior Unsecured Credit Agreement, CAD Note and senior notes

Total leverage ratio as defined in the Senior Unsecured Credit Agreement filed January 6, 2023

Includes $500 million related to the term loan payable under our Senior Unsecured Credit Agreement due January 2027, which we intend to extend or refinance on or before the scheduled maturity

(effective only on the date issued: April 30, 2026)

2026 Full Year Outlook

Organic P&S Revenue Growth (0.5%) to 1.5%

Prior Outlook Unchanged

Diluted EPS:

GAAP(2)(3) $2.16 to $2.46

Prior Outlook $2.35 to $2.65

Adjusted(2)(4) $2.90 to $3.20

Prior Outlook Unchanged

Cash Flow:

Operating Cash Flow $900 to $1,100 million

Prior Outlook Unchanged

Free Cash Flow(4) $700 to $850 million

Prior Outlook Unchanged

Our outlook for the full year 2026 is based on current conditions, recent trends and our expectations. Outlook includes estimated impacts from the U.S. and retaliatory tariffs in effect as of April 1, 2026. Assumptions used - Tax Rate: 26.8%; Fx Rates: $1.17 EUR, $1.35 GBP, $0.72 CAD; Changes in these conditions may impact our ability to achieve the estimates.

Actuals and outlook figures are for continuing operations attributable to LKQ stockholders

Primarily reflects impact of impairment charge of $0.17 related to our equity method investment in Mekonomen

Non-GAAP measure; refer to Appendix for more information

JUSTIN JUDE

President and Chief Executive Officer

Revenue and Segment EBITDA by segment

Three Months Ended March 31

(in millions) 2026 % of revenue 2025 % of revenue Revenue

North America $1,440 $1,412

Europe 1,621 1,522

Specialty 409 394

Total Revenue $3,469 $3,327

Eliminations (1) (1)

Segment EBITDA

North America $203 14.1% $217 15.4%

Europe 126 7.8% 141 9.3%

Total Segment EBITDA $347 10.0% $379 11.4%

Specialty 18 4.4% 21 5.4%

We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations. We calculate Segment EBITDA as Net Income excluding net income and loss attributable to noncontrolling interest; income and loss from discontinued operations; depreciation; amortization; interest; gains and losses on debt extinguishment; income tax expense; restructuring and transaction related expenses; change in fair value of contingent consideration liabilities; other gains and losses related to acquisitions, equity method investments, or divestitures; equity in losses and earnings of unconsolidated subsidiaries; equity investment fair value adjustments; impairment charges; and direct impacts of the Ukraine/Russia conflict. Our chief operating decision maker ("CODM"), who is our Chief Executive Officer, uses Segment EBITDA as the key measure of our segment profit or loss. The CODM uses Segment EBITDA to compare profitability among our segments and evaluate business strategies. This financial measure is included in the metrics used to determine incentive compensation for our senior management. We also consider Segment EBITDA to be a useful financial measure in evaluating our operating performance, as it provides investors, securities analysts and other interested parties with supplemental information regarding the underlying trends in our ongoing operations. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Refer to the table on the following page for a reconciliation of net income to Segment EBITDA.

Reconciliation of Net Income to Segment EBITDA

Three Months Ended March 31

Net income $79 $169

(in millions) 2026 2025

Income from continuing operations

$77

$158

Adjustments:

Depreciation and amortization

Interest expense, net of interest income

Provision for income taxes

Equity in losses of unconsolidated subsidiaries (1)

Equity investment fair value adjustments

(1)

Restructuring and transaction related expenses

Direct impacts of Ukraine/Russia conflict (2)

Less: net income from discontinued operations 2 11

Segment EBITDA

$347

$379

companies.

Income from continuing operations as a percentage of revenue

2.2%

4.8%

Segment EBITDA as a percentage of revenue

10.0%

11.4%

Segment EBITDA should not be construed as an alternative to operating income, net income or net cash provided by (used in) operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report Segment EBITDA information calculate Segment EBITDA in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly-named measures of other companies and may not be an appropriate measure for performance relative to other

Includes a $44 million other-than-temporary impairment recorded during the three months ended March 31, 2026 related to our equity method investment in Mekonomen

Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (primarily receivables and inventory)

Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS

Three Months Ended March 31

(in millions, except per share data)

2026

2025

Net income

$79

$169

Less: net income from discontinued operations

Income from continuing operations

$77

$158

Adjustments:

Amortization of acquired intangibles

Restructuring and transaction related expenses

Direct impacts of Ukraine/Russia conflict (1)

Impairment on Mekonomen equity method investment

Excess tax deficiency from stock-based payments

Tax effect of adjustments

(17)

(13)

Adjusted net income(2)

$171

$193

Weighted average diluted common shares outstanding

255.9

259.6

Diluted earnings per share:

Reported(2)

$0.30

$0.61

Adjusted(2)

$0.67

$0.74

Adjustments include provisions for and subsequent adjustments to reserves for asset recoverability (primarily receivables and inventory)

Figures are for continuing operations attributable to LKQ stockholders

Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS

We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share as we believe these measures are useful for evaluating the core operating performance of our continuing business across reporting periods and in analyzing our historical operating results. We define Adjusted Net Income and Adjusted Diluted Earnings per Share as Net Income and Diluted Earnings per Share adjusted to eliminate the impact of net income and loss attributable to noncontrolling interest, income and loss from discontinued operations, restructuring and transaction related expenses, amortization expense related to all acquired intangible assets, gains and losses on debt extinguishment, changes in fair value of contingent consideration liabilities, other gains and losses related to acquisitions, equity method investments, or divestitures, impairment charges, direct impacts of the Ukraine/Russia conflict, excess tax benefits and deficiencies from stock-based payments and any tax effect of these adjustments. The tax effect of these adjustments is calculated using the effective tax rate for the applicable period or for certain discrete items the specific tax expense or benefit for the adjustment. Given the variability and volatility of the amount of related transactions in a particular period, management believes that these costs are not core operating expenses and should be adjusted in our calculation of Adjusted Net Income. Our adjustment of the amortization of all acquisition-related intangible assets does not exclude the amortization of other assets, which represents expense that is directly attributable to ongoing operations. Management believes that the adjustment relating to amortization of acquisition-related intangible assets supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. The acquired intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. These financial measures are used by management in its decision making and overall evaluation of our operating performance and are included in the metrics used to determine incentive compensation for our senior management. Adjusted Net Income and Adjusted Diluted Earnings per Share should not be construed as alternatives to Net Income or Diluted Earnings per Share as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report measures similar to Adjusted Net Income and Adjusted Diluted Earnings per Share calculate such measures in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

Forecasted EPS and Free Cash Flow Reconciliation

Forecasted Fiscal Year 2026

(in millions, except per share data)

Minimum Outlook

Maximum Outlook

Net income(1)

$553

$630

Adjustments:

Amortization of acquired intangibles

128

Restructuring and transaction related expenses

Impairment on Mekonomen equity method investment

Tax effect of adjustments

(53)

Adjusted net income(1)

$742

$819

Weighted average diluted common shares outstanding

256.0

Diluted EPS:

Reported(1)

$2.16

$2.46

Adjusted(1)

$2.90

$3.20

Actuals and outlook figures are for continuing operations attributable to LKQ stockholders

We have presented forecasted Adjusted Net Income and forecasted Adjusted Diluted Earnings per Share in our financial outlook. Refer to the discussion of Adjusted Net Income and Adjusted Diluted Earnings per Share for details on the calculation of these non-GAAP financial measures. In the calculation of forecasted Adjusted Net Income and forecasted Adjusted Diluted Earnings per Share, we included estimates of net income, amortization of acquired intangibles for the full fiscal year 2026, restructuring expenses under approved plans, and the related tax effect; we included for all other components the amounts incurred through March 31, 2026.

Forecasted Fiscal Year 2026

(in millions)

Minimum Outlook

Maximum Outlook

Net cash provided by operating activities

$900

$1,100

Less: purchases of property, plant and equipment

200

250

Free cash flow

$700

$850

We have presented forecasted free cash flow in our financial outlook. Refer to Appendix 5 for details on the calculation of free cash flow.

Reconciliations of Net Cash Provided by (Used In) Operating Activities to Free Cash Flow

Three Months Ended March 31

(in millions)

2026

2025

Net cash used in operating activities(1)

$(56)

($3)

Less: purchases of property, plant and equipment(1)

Free cash flow (1)

$(96)

$(57)

(1) Includes both continuing and discontinued operations. For the three months ended March 31, 2025, Self Service contributed approximately $15 million of free cash flow.

We have presented free cash flow solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our liquidity. We calculate free cash flow as net cash provided by (used in) operating activities, less purchases of property, plant and equipment. We believe free cash flow provides insight into our liquidity and provides useful information to management and investors concerning our cash flow available to meet future debt service obligations and working capital requirements, make strategic acquisitions, pay dividends and repurchase stock. We believe free cash flow is used by investors, securities analysts and other interested parties in evaluating the liquidity of other companies, many of which present free cash flow when reporting their results. This financial measure is included in the metrics used to determine incentive compensation for our senior management.

Free cash flow should not be construed as an alternative to net cash provided by (used in) operating activities as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report free cash flow information calculate this metric in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

Disclaimer

LKQ Corporation published this content on April 30, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 30, 2026 at 11:32 UTC.