Oct 29, 2026 earnings call — Leadership change and Europe execution issues
Board appointed Sal Abbate as CEO effective December 15 and suspended 2026 guidance; Q3 revenue was approximately $3.3 billion.
Revenue $3.3B (est $3.4B) · EPS $0.50 (est $0.58)
Key quotes
"Our execution has fallen short, particularly in Europe, and we need to address those issues with urgency, focus and accountability."
"Now in light of the appointment of Sal and the other leadership changes we announced on Friday, the Board has decided to suspend the strategic review, including the specialty sales process."
"These favorable trends helped drive alternative part utilization to a record of nearly 41% for the quarter, surpassing the previous high that we set back in Q2."
Analyst Q&A 6
Germany delivery problems
Q (John Babcock · Barclays): He asked how you will fix the Germany impact and why it got worse. He also asked about U.K./Benelux changes, why Alvarez & Marsal was hired, and about North America organic sales.
A: Sales in Germany are running around 85% per day versus last year, and OTIF (on-time in-full) is improving toward about 95%. You completed two more ERP releases and are focusing on low-performing branches with on-site support and training. In the U.K./Benelux there was deterioration, A&M was hired to restore fundamentals (service, inventory, logistics), and North America had non-collision delivery issues that have been largely fixed entering Q4.
"The sales are hovering now around 85% versus the prior year on a per day perspective." — Rick Galloway
ERP benefits and SG&A
Q (Jeffrey Lick · Stephens): He asked what the ERP in Germany will return as — lower SG&A, more volume, better margins. He also asked when SG&A will drop and what quick operational wins management will pursue.
A: The ERP should make ordering easier, help win new customers, drive revenue and market share, and allow consolidation of corporate headquarters to reduce SG&A. They have not yet quantified the SG&A savings; the quarter included about 300 temporary workers whose costs largely came out by quarter end. Rick said he will work with the incoming CEO on prioritizing quick wins when the CEO arrives.
"We're able to consolidate those and reduce our overall SG&A as well." — Rick Galloway
Order fulfillment vs demand
Q (Craig Kennison · Baird): He asked whether the problem is fulfilling orders or that demand has not returned. He also asked if customers deprioritized LKQ and if promotions will be needed to win business back.
A: OTIF was under 80% in Q2 but improved to about 95% on average; 75% of German locations are now in the upper 90s, so the issue is bringing lower-performing branches up. Some customers pulled significant business or left (a small percentage), while most still give a majority of their business but not yet at prior levels; the company will be aggressive on pricing and promotions in Q4 to help win share back.
"That number needs to be in the high 90s in order for us to be able to say yes to a customer enough, right?" — Rick Galloway
Board review and cash programs
Q (Scott Stember · ROTH Capital Partners): He asked what else caused the company to be distracted and what to watch after management changes. He also asked if European disruption unwound receivable factoring programs.
A: The Board suspended the strategic review to let the company focus on customer relationships and operational improvements; the review had already led to leadership changes and the A&M engagement. The European disruption did not change their supply chain financing; timing differences caused some free cash flow movement between Q2 and Q3, but receivable factoring was not unwound.
"Make no mistake, there's a lot of work that comes behind doing a strategic review and analyzing the overall business." — Rick Galloway
Collision parts and MSO share
Q (Patrick Buckley · Jefferies): He asked whether LKQ lost market share in collision parts, MSO volume shifts, and any paint business changes.
A: Paint is discretionary and was weaker, consistent with repairable claims being negative. One large MSO changed sourcing and reduced LKQ's share a little, but discussions are constructive; the company did not comment on individual customer relationships. LKQ noted strengths like CAPA-certified parts and the Platinum Plus private label and said it grew with other MSOs year-over-year.
"One of our larger MSOs did have a different sourcing approach that they did within the quarter." — Rick Galloway
Price vs volume and Germany progress
Q (Jash Patwa · JPMorgan): He asked how much of the North America revenue decline was price versus volume and whether tariff changes affect pricing. He also asked how Germany progressed from 85% early in Q3 and whether Q4 margins should match Q3.
A: IEEPA tariffs have minimal impact on North America; Taiwan tariff moved from 25% to 15% and some of that reduction showed in the quarter. Their pricing engine shows early positive signs; price was a little favorable year-over-year but volume was the downside. Germany revenue was around 85% and has stagnated despite delivery improvement; they withdrew guidance and expect normal seasonality from Q3 to Q4, will stay competitive on pricing but do not see a major catalyst changing normal patterns.
"The IEEPA tariffs have minimal impact on our North America business." — Rick Galloway