February 19, 2026
- Annual operating cash flow of $1.1 billion; free cash flow of $847 million
- Returned $116 million of Capital to Shareholders; $40 million of Share Repurchases and $76 million in Cash Dividends in the Fourth Quarter
- Board of Directors Initiated a Comprehensive Review of Strategic Alternatives to Enhance Shareholder Value
- 2026 Outlook Provided
ANTIOCH, TN — LKQ Corporation (Nasdaq: LKQ) reported fourth quarter and full year 2025 financial results and 2026 financial outlook.
“Throughout 2025, our team relentlessly focused on what we could control, resulting in significant free cash flow generation despite sector headwinds across our global enterprise. Our North America business gained market share in a soft demand environment through pricing discipline, continued expansion of our MSO relationships, and the ongoing expansion of our Canadian hard parts business. Despite the headwinds in Europe, we further integrated and simplified our operations to support sustained margin improvement and capitalize on adjacent market opportunities. The European leadership team has taken a stronger position on productivity to ensure the appropriate cost structure is delivered in 2026,” noted Justin Jude, President and Chief Executive Officer. “Specialty performed well in the quarter posting organic revenue growth of 7.8% as their end markets continue to improve.”
Fourth Quarter and Full Year 2025 Financial Results
Revenue for the fourth quarter of 2025 was $3.3 billion, an increase of 2.7% compared to $3.2 billion for the fourth quarter of 2024. Total parts and services revenue increased 2.2%, which included a 3.7% increase from foreign exchange rates year over year, a 1.7% decrease in parts and services organic revenue and the net impact of acquisitions and divestitures, which increased revenue by 0.2%.
Net income for the fourth quarter of 2025 was $75 million compared to $151 million for the same period of 2024. Diluted earnings per share was $0.29 compared to $0.58 for the same period of 2024, a decrease of 50.0%.
On an adjusted basis, net income in the fourth quarter of 2025 was $150 million compared to $202 million for the same period of 2024, which benefited from a non-recurring favorable legal settlement of $35 million (pre-tax). Adjusted diluted earnings per share was $0.59 compared to $0.78 for the same period of 2024, a decrease of 24.4%.
Revenue for the full year of 2025 was $13.7 billion, a decrease of 1.3% compared to $13.8 billion for the full year of 2024. Total parts and services revenue decreased 1.5%, which included a 2.7% decrease in parts and services organic revenue (2.3% decrease on a per day basis), a 1.7% increase from foreign exchange rates year over year, and the net impact of acquisitions and divestitures, which decreased revenue by 0.5%.
Net income for the full year of 2025 was $596 million compared to $666 million for the same period of 2024. Diluted earnings per share was $2.3 compared to $2.53 for the same period of 2024, a decrease of 8.7%.
On an adjusted basis, net income for the full year of 2025 was $777 million compared to $894 million for the same period of 2024. Adjusted diluted earnings per share was $3.01 compared to $3.39 for the same period of 2024, a decrease of 11.2%.
Strategic Initiatives
On January 26, 2026, the Company announced that the Board of Directors initiated a comprehensive review of strategic alternatives to enhance shareholder value. The review has no deadline or definitive timetable and there can be no assurance the review will result in any transaction or other strategic outcome. The Company will provide updates on the process if appropriate or required by law. In addition, the Company continues to execute on the following key initiatives:
- Simplify Business Portfolio and Operations: Streamlining operations by focusing on our non-discretionary businesses, divesting non-core assets, and enhancing efficiencies.
- Announced completion of the sale of our former Self Service segment in October and announced the process to explore a potential sale of our Specialty segment in December.
- Expand Lean Operating Model Globally: Continuing global rollout of lean operating model to improve productivity, execution, and decision-making.
- Achieved meaningful progress with our SKU rationalization program in 2025, with over 85% of targeted SKUs reviewed, up from 50% in 2024.
- Invest and Grow Organically: Investing in our core businesses to achieve above market growth and drive market share gains.
- Gained share in North America despite economic backdrop, grew our Bumper to Bumper hard parts business and expanded our calibration services platform.
- Pursue Disciplined Capital Allocation Strategy: Remaining focused on maximizing shareholder value with a disciplined capital allocation strategy and further strengthening our balance sheet to maintain our competitive market position and resilient business model through all market cycles.
- Returned $469 million of capital through share buybacks and dividends and launched strategic review process to enhance shareholder value.
Further supporting our strategic initiatives, we recently approved a restructuring plan intended to better position our cost structure to more efficiently serve our strategic markets and enhance the Company’s long-term performance. The plan is expected to result in restructuring charges of approximately $60 to $70 million and generate more than $50 million in annualized cost savings, with more than half of these savings anticipated to be realized in 2026.
Cash Flow and Balance Sheet
Cash flow from operations and free cash flow were $1.1 billion and $0.8 billion, respectively, for the full year of 2025. As of December 31, 2025, the balance sheet reflected total debt of $3.7 billion and total leverage, as defined in our credit facility, was 2.4x EBITDA.
Returning Capital to Shareholders
During the fourth quarter of 2025, the Company invested approximately $40 million to repurchase 1.3 million shares of its common stock and distributed $76 million in cash dividends. For the year ended December 31, 2025, the Company returned approximately $469 million to its shareholders by investing approximately $159 million to repurchase 4.5 million shares of its common stock and distributing $310 million in cash dividends. Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 69.0 million shares for a total of $2.9 billion through December 31, 2025. An aggregate balance of $1.6 billion remains for potential additional repurchases through October 25, 2026. On February 17, 2026, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on March 26, 2026, to stockholders of record at the close of business on March 12, 2026.
2026 Outlook
“Operational excellence remains our core focus as our teams continue to drive simplification and productivity in an uncertain demand environment. Our 2026 guidance reflects current market conditions and assumes gradual improvement as the year progresses. The strength of our operating model and culture continues to support solid free cash flow generation, and together with our strong balance sheet, positions the Company to execute on its long-term strategy and further strengthen its financial profile,” stated Rick Galloway, Senior Vice President and Chief Financial Officer.
For 2026, management is anticipating the following outlook as set forth below. This outlook is based on what the Company can reasonably predict at this time given the current demand environment.
| 2026 Full Year Outlook | |
| Organic revenue growth for parts and services | (0.5%) to 1.5% |
| Diluted EPS | $2.35 to $2.65 |
| Adjusted diluted EPS | $2.90 to $3.20 |
| Operating cash flow | $900 to $1,100 million |
| Free cash flow | $700 to $850 million |
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 February 1, 2026 and assumes a global effective tax rate of 26.8% and foreign currency exchange rates near recent average levels, including $1.17, $1.35 and $0.72 for the euro, pound sterling and Canadian dollar, respectively, for the year. Changes in these conditions may impact our ability to achieve the estimates. Adjusted figures exclude (to the extent applicable) the impact of restructuring and transaction related expenses; amortization expense related to acquired intangibles; excess tax benefits and deficiencies from stock-based payments; losses on debt extinguishment; impairment charges; and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities).
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For additional details, including financial and supplementary data, view the full Press Release on the LKQ website.
About LKQ Corporation
LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of OEM recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.
