Q2 2026 LKQ Corp Earnings Call Transcript
Key Points
- North America returned to positive organic revenue growth for the first time in nine quarters, outperforming the market.
- Alternative parts utilization (APU) reached a record high of over 40% in the quarter, a positive trend for the business.
- Specialty segment delivered resilient organic revenue growth of 4.5%, demonstrating its strong market position.
- Europe, excluding the ERP disruption in Germany, was on track to generate double-digit EBITDA margins, showing underlying earnings power.
- The company delivered over $40 million in year-over-year cost improvements in Europe through restructuring and efficiency initiatives.
- Europe's performance was significantly impacted by ERP implementation challenges in Germany, causing a $140 million revenue hit and $50 million EBITDA loss.
- Overall adjusted diluted EPS fell to $0.67 from $0.84 in the prior year, driven by European underperformance.
- The UK and Benelux regions underperformed due to softer demand and weaker commercial execution.
- Full-year 2026 guidance was reduced, with adjusted diluted EPS now expected between $2.60 and $2.90, down from $2.90 to $3.20.
- Free cash flow expectations were lowered to $625-$775 million from $700-$850 million, reflecting slower recovery in Europe.
Hello, everyone. Thank you for joining us, and welcome to LKQ Corporation's second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question-and-answer session. (Operator Instructions)
I will now hand the conference over to Joe Boutross, Vice President of Investor Relations. Joe, please go ahead.
Thank you, operator. Good morning, everyone, and welcome to LKQ's second quarter 2026 earnings conference call.
With us today are Justin Jude, LKQ's President and Chief Executive Officer; and Rick Galloway, our Senior Vice President and Chief Financial Officer. Please refer to the LKQ website at lkqcorp.com for our earnings release issued this morning as well as the accompanying slide presentation for this call.
Now let me quickly cover the Safe Harbor. Some of the statements that we make today may be considered forward-looking. These include statements regarding our expectations, beliefs, hopes, intentions or strategies.
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