LKQ (LKQ) Financials

LKQ’s latest financial statements show a mixed picture. Revenue recovered modestly in the first quarter of 2026, and debt has declined from 2024 and early 2025 levels. However, operating margins have compressed, operating cash flow turned negative, and the company continues to carry substantial goodwill and intangible assets.

• Revenue increased year over year. Q1 2026 revenue was $3.47 billion, up approximately 4.3% from $3.33 billion in Q1 2025. This also represents a recovery from the $3.05 billion reported in Q4 2025.
• Debt levels have improved from recent highs. Short- and long-term debt totaled approximately $3.85 billion at March 31, 2026, down from roughly $4.40 billion at the end of Q1 2025 and $4.93 billion at the end of Q3 2025.
• LKQ maintained a reasonable current-liquidity position. Current assets of $5.48 billion exceeded current liabilities of $3.55 billion, producing a current ratio of approximately 1.5. Cash and equivalents also rose to $335 million from $227 million one year earlier.
• Share count has trended lower over the longer period. Weighted average shares declined from approximately 266.8 million in Q1 2023 to 254.8 million in Q1 2026, supporting per-share value when earnings are healthy. The pace of repurchases, however, was limited to $1 million in Q1 2026.
• Capital spending and acquisition spending were relatively restrained. LKQ used $40 million for property and equipment and $5 million for acquisitions in Q1 2026, below the combined investment levels seen in several earlier quarters.
• Cash was essentially stable during the quarter. Cash increased by $7 million to $335 million, but this was primarily supported by net debt issuance of $189 million after repayments rather than by operating cash generation.
• Q1 results may reflect seasonal working-capital pressure. LKQ generated strong operating cash flow in Q2 through Q4 2025, ranging from $296 million to $440 million, but operating cash flow was negative in Q1 2026. Investors should watch whether the working-capital outflow reverses in subsequent quarters.
• Operating profitability has deteriorated. Q1 2026 operating income was $217 million, down from $267 million in Q1 2025 and $365 million in Q1 2023. The operating margin fell to approximately 6.3%, compared with 8.0% in Q1 2025 and 10.9% in Q1 2023.
• Gross-margin pressure and higher expenses are weighing on earnings. Gross profit rose only modestly to $1.33 billion, while the gross margin declined to approximately 38.4% from 39.5% in Q1 2025. SG&A expense increased to $994 million from $949 million, and restructuring charges rose to $33 million from $11 million.
• Operating cash flow and reported earnings quality require attention. LKQ reported negative operating cash flow of $56 million in Q1 2026, compared with negative $3 million in Q1 2025 and positive $253 million in Q1 2024. The statement also contains apparent inconsistencies between consolidated net income, income attributable to common shareholders and reported EPS, as well as several restated periods, so investors should verify the figures against the company’s filing before relying on per-share calculations.

Overall, LKQ’s balance sheet is stronger than it was during portions of 2024 and 2025 because debt has declined and liquidity remains adequate. The more immediate concern is the income statement: revenue growth has not translated into stronger operating profit, while restructuring and selling, general and administrative costs remain elevated.

Investors should focus on whether LKQ can restore positive operating cash flow, stabilize gross margins and reduce restructuring costs. Goodwill and intangible assets totaled approximately $6.4 billion, or more than 40% of total assets, creating additional impairment risk if business performance weakens.