LKQ’s third quarter results were met with a positive market response, as the company delivered non-GAAP earnings per share above Wall Street expectations despite slightly missing on revenue. Management attributed the quarter’s performance to ongoing cost reduction efforts, progress on portfolio simplification, and gains from operational discipline across its North American and European businesses. CEO Justin Jude acknowledged challenging macroeconomic conditions, particularly reduced consumer spending and lower demand for vehicle repairs, but highlighted that LKQ’s teams “remained focused on controlling the things that we can control.” The divestiture of the Self Service segment and continued execution on lean initiatives contributed to margin stability and strong free cash flow.
Is now the time to buy LKQ? Find out in our full research report (it’s free for active Edge members).
LKQ (LKQ) Q3 CY2025 Highlights:
- Revenue: $3.50 billion vs analyst estimates of $3.53 billion (1.3% year-on-year growth, 0.9% miss)
- Adjusted EPS: $0.84 vs analyst estimates of $0.76 (11% beat)
- Adjusted EBITDA: $395 million vs analyst estimates of $373.5 million (11.3% margin, 5.8% beat)
- Management lowered its full-year Adjusted EPS guidance to $3.08 at the midpoint, a 2.4% decrease
- EBITDA guidance for the full year is $794 million at the midpoint, below analyst estimates of $1.57 billion
- Operating Margin: 7.8%, in line with the same quarter last year
- Organic Revenue fell 1% year on year vs analyst estimates of 2.6% declines (159 basis point beat)
- Market Capitalization: $7.89 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From LKQ’s Q3 Earnings Call
- Craig Kennison (RW Baird) asked about the competitive landscape in Europe and low-margin business the company is no longer pursuing. CEO Justin Jude said competition remains stable, but LKQ is accelerating integration and focusing on profitable growth rather than chasing low-margin accounts.
- Craig Kennison (RW Baird) followed up on leadership changes in Europe and traction from new hires. Jude explained that the new leadership is realigning teams and driving the transformation plan, with early signs of improved execution.
- Jash Patwa (JPMorgan) inquired about alternative parts utilization and total loss frequencies. Jude replied that alternative parts usage remained flat and that volatility in used car pricing continues to affect total loss trends.
- Jash Patwa (JPMorgan) asked about the drivers behind North America’s outperformance relative to repairable claims. Jude attributed gains to passing through tariffs, winning more business with MSOs, and maintaining service levels, but noted volume is still down overall.
- Patrick Buckley (Jefferies) questioned the sustainability of Specialty segment growth. Jude responded that share gains are the primary driver, as the market itself has not yet recovered, and that maintaining service and inventory levels has differentiated LKQ from competitors.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will track (1) the pace and impact of LKQ’s cost savings initiatives, especially in Europe; (2) additional portfolio simplification efforts or divestitures that could further streamline operations; and (3) stabilization or recovery in North American and European vehicle repair demand. We will also monitor the rollout of the common operating platform in Europe and progress toward deleveraging as key indicators of operational execution.
LKQ currently trades at $30.51, up from $30.04 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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