LKQ’s first quarter was met with a negative market reaction, as the company’s revenue fell short of Wall Street’s expectations while non-GAAP profit modestly exceeded analyst estimates. Management attributed the sales decline to ongoing softness in North American repairable claims, continued weakness in discretionary Specialty segments, and muted consumer sentiment in Europe. CEO Justin Jude highlighted that, despite these headwinds, the company gained market share in North America by outperforming industry repairable claims and maintained operating margins through cost controls and portfolio simplification. Management acknowledged that tariff developments, inflationary pressures, and competitive pricing in some European markets created ongoing challenges, and signaled a cautious approach to navigating these uncertainties.
Is now the time to buy LKQ? Find out in our full research report (it’s free).
LKQ (LKQ) Q1 CY2025 Highlights:
- Revenue: $3.46 billion vs analyst estimates of $3.61 billion (6.5% year-on-year decline, 4.1% miss)
- Adjusted EPS: $0.79 vs analyst estimates of $0.78 (1.5% beat)
- Management reiterated its full-year Adjusted EPS guidance of $3.55 at the midpoint
- EBITDA guidance for the full year is $825 million at the midpoint, below analyst estimates of $1.73 billion
- Operating Margin: 8.3%, in line with the same quarter last year
- Organic Revenue fell 4.1% year on year (-1.1% in the same quarter last year)
- Market Capitalization: $9.52 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 LKQ’s Q1 Earnings Call
- Scott Stember (ROTHMKM) asked about trends in insurance industry behavior and used car pricing; CEO Justin Jude said rising used car prices and flat insurance premiums could improve repairable claims as the year progresses.
- Scott Stember (ROTHMKM) inquired if LKQ could pass along new tariffs to customers; CFO Rick Galloway stated that historically the company has done so, and will seek to share costs with suppliers before resorting to price increases.
- Craig Kennison (Baird) questioned whether SKU rationalization in Europe had affected fill rates or revenue; CEO Jude replied that there was no negative impact, as discontinued SKUs were low volume and substituted with other brands or private labels.
- Jash Patwa (JPMorgan) asked about the link between pricing initiatives and competitive pressures in North America; CFO Galloway clarified that LKQ has not pursued aggressive pricing, but instead focused on service improvements to gain share.
- Bret Jordan (Jefferies) asked if tariff changes would affect LKQ’s price gap to original equipment (OE) products; CEO Jude responded that LKQ’s pricing would remain competitive, but the final impact depends on tariff scope and OE responses.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the implementation and financial impact of new tariffs on imported parts, (2) progress on European SKU rationalization and private label expansion, and (3) signs of recovery in North American repairable claims as used car pricing stabilizes and insurance premium pressures ease. The company’s ability to manage cost inflation and execute on service-led growth will also be important indicators.
LKQ currently trades at $37.09, down from $42.13 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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