LKQ guidance withdrawal and CEO exit sink shares 19.6%
The auto parts distributor pulled its 2026 outlook, replaced its chief executive and hired restructuring advisers after a sharp slump in Europe, and the stock lost almost a fifth of its value.
The LKQ guidance withdrawal came with a clean sweep at the top. LKQ Corporation, one of the largest suppliers of recycled and aftermarket car parts, said on Friday, Oct. 23, that it was scrapping its full-year 2026 outlook, that chief executive Justin Jude had left with immediate effect and that third-quarter results would show a loss. The shares fell 19.6% to $18.07, according to Kalkine.
What happened
Preliminary figures point to third-quarter revenue of $3.32 billion, down from $3.50 billion a year earlier and below the $3.41 billion analysts expected, Investing.com reported. LKQ expects to lose $16 million to $32 million, a range that absorbs $111 million of non-cash impairments, versus a $178 million profit a year ago. Adjusted earnings are seen at 47 to 53 cents a share, against 84 cents last year and a consensus of 69 cents.
Europe is the problem. Organic parts and services revenue in the region fell 9.8%, while segment EBITDA margin shrank to a range of 4.1% to 5.1%, from 10.0%. The company blamed disruption from a new enterprise resource planning system in Germany and falling volumes in the United Kingdom and Benelux. North America performed in line with expectations, it said, while the Specialty unit came in modestly below plan.
On a reported basis, LKQ expects a diluted loss of 6 to 12 cents a share, including 42 cents a share of impairment charges, compared with earnings of 69 cents a year earlier. The withdrawn outlook had last been updated on July 30.
Salvatore Abbate will become president and chief executive on Dec. 15. Until then, chairman John Mendel and audit committee chair Sue Gove will run an interim office of the CEO. Andy Hamilton, head of LKQ Europe, is also leaving, and the board has hired Alvarez & Marsal to stabilize European operations.
Why it matters
"LKQ's performance, particularly in Europe, has fallen significantly short of the Board's expectations," Mendel said in the company's statement. The LKQ guidance withdrawal removes the main anchor investors had for valuing the business through the end of the year, which helps explain why the stock lost far more than the market.
It also lands in a tough tape for consumer and industrial names on a risk-off Friday, and it follows a week in which General Motors fell despite a $20 billion buyback as cost pressures mounted. Earnings that disappoint are being punished hard, a contrast with the mood around the Dow's one-month high earlier this month.
The company also tied the leadership changes to an ongoing review of strategic alternatives, leaving the door open to asset sales or a broader restructuring.
What's next
LKQ will publish full third-quarter results and hold a conference call on Oct. 29, according to its preliminary results release. Investors will want detail on how long the German systems problems will last and how much Alvarez & Marsal's work will cost.
A new outlook may have to wait for Abbate's arrival in mid-December. Until then, the LKQ guidance withdrawal leaves analysts to rebuild their estimates from the preliminary numbers alone.
This article is for information only and is not investment advice.