- LKQ said Friday it expects third-quarter adjusted earnings of 47 cents to 53 cents a share, well below the 69 cents analysts polled by FactSet were expecting. The shortfall came amid a 9.8% drop in European organic parts-and-services revenue.
- The company has parted ways with president and CEO Justin Jude, who had held the role since July 2024, and with Andy Hamilton, president and managing director of LKQ Europe. Former Vertiv CEO Salvatore Abbate will join as president and CEO on Dec. 15, and Chairman John Mendel and board member Sue Gove will run an interim office of the CEO until then.
- LKQ hired professional services and advisory firm Alvarez & Marsal to advise on its European operations, with an initial focus on improving customer service, stabilizing operations and strengthening performance and cost discipline across the region. “LKQ’s performance, particularly in Europe, has fallen significantly short of the board’s expectations, and the board is taking decisive action to address it,” Mendel said.
- Shares of LKQ were recently down 18% to $18.45 in premarket trading. The selloff followed what the WSJ described as another disappointing quarterly performance for the Antioch, Tenn., automotive parts-and-services company.
What Happened?
LKQ announced the leadership change alongside a preliminary third-quarter earnings warning and a review of its European operations. The board removed Jude, CEO since July 2024, and the head of its European business at the same time. Abbate, who previously led Vertiv, was named as the new president and CEO effective Dec. 15. Until he starts, Mendel and Gove will share leadership duties through an interim office of the CEO.
Why It Matters?
The combination of an earnings warning, a CEO exit and an outside review shows the board sees Europe as the core problem in the business. A guidance range that sits well below the consensus estimate suggests analysts will need to reset their numbers for the quarter and possibly the full year. Bringing in Alvarez & Marsal with a mandate covering customer service, operations and cost discipline points to an operational fix rather than only a cost-cutting exercise. The 18% premarket drop shows how much investors had been counting on a recovery in the region.
What’s Next?
Investors will look to the full third-quarter report for more detail on Europe and any change to the full-year outlook. Abbate’s Dec. 15 start date means the new CEO will set priorities going into next year. The scope and findings of the Alvarez & Marsal review will be key to judging whether the European business can be stabilized. Any further leadership changes or restructuring steps in Europe would signal how far the board is prepared to go.
Affected Tickers and Coins: LKQ, XLY
Source: WSJ
