LKQ Corporation, the parent company of Keystone Automotive and its NTP-STAG RV distribution division, reported second quarter 2026 financial results and provided an updated outlook for 2026.
“Our second‑quarter performance reflected solid execution across our North America and Specialty segments. North America returned to positive organic growth for the first time in nine quarters, driven by record alternative-parts utilization of over 40%, moderating insurance premiums that were negative in May and June, and continued sequential improvement in repairable claims. Specialty also delivered growth despite a challenging end‑market environment and continued macro‑economic pressure on consumers. Europe fell short of expectations, with results affected by the ERP implementation in Germany. Outside of the ERP impact, the team delivered substantial cost reductions that largely offset the lower volumes we witnessed in the UK and Benelux regions. Overall, the fundamentals of our business are improving, and as market conditions continue to recover, we expect those operational gains to translate into stronger financial performance and profitability in the quarters ahead,” said Justin Jude, president and chief executive officer.
Second Quarter 2026 Financial and Operating Results
Revenue for the second quarter of 2026 was $3.4 billion, a decrease of 3.0% compared to $3.5 billion for the second quarter of 2025. Total parts and services revenue decreased 3.6%, which included a 5.1% decrease in parts and services organic revenue, a 1.0% increase from foreign exchange rates year over year, and the net impact of acquisitions and divestitures, which increased revenue by 0.5%.
Net income was $134 million compared to $185 million for the same period of 2025. Diluted earnings per share was $0.52 compared to $0.72 for the same period of 2025.
On an adjusted basis, net income was $170 million compared to $218 million for the same period of 2025. Adjusted diluted earnings per share was $0.67 compared to $0.84 for the same period of 2025.
Strategic Initiatives
In December 2025, the company announced that it had commenced a process to explore a potential sale of its Specialty segment, and in January 2026, the company announced that its board of directors had initiated a comprehensive review of strategic alternatives, including a sale of the company, to enhance shareholder value. The Specialty segment is currently being evaluated as part of the broader strategic review process initiated in January.
The strategic review process remains active, and the company said it continues to engage with multiple parties. 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 as appropriate, LKQ said.
Cash Flow and Balance Sheet
Cash flow from operations and free cash flow were $111 million and $60 million, respectively, for the second quarter of 2026. Cash flow from operations3 and free cash flow were $55 million and negative $36 million, respectively, for the six months ended June 30. As of June 30, the balance sheet reflected total debt of $4.0 billion and total leverage, as defined in our credit facility, was 2.8x EBITDA.
Returning Capital to Shareholders
During the second quarter of 2026, the company invested $52 million to repurchase 1.9 million shares of its common stock and distributed $77 million in cash dividends. For the six months ended June 30, the company returned $207 million to its shareholders by investing $53 million to repurchase 1.9 million shares of its common stock and distributing $154 million in cash dividends. Since initiating the stock repurchase program in late October 2018, the company has repurchased approximately 71 million shares of its common stock for a total of $3.0 billion through June 30, 2026. An aggregate balance of $1.5 billion remains for potential additional stock repurchases through Oct. 25. On July 28, the board of directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on Sept. 3, to stockholders of record at the close of business on Aug. 20.
2026 Outlook
“Second-quarter results reflected improving trends in North America and resilient demand in Specialty, offset by a slower-than-expected recovery following the ERP implementation in Germany. North America remains on track against its full-year plan, and Specialty’s revenue performance has been consistent with our expectations. Our revised outlook reflects a more measured pace of recovery in Europe, while we maintain a disciplined focus on cost management, cash generation and capital allocation. The actions underway in Europe are focused on restoring service levels, aligning the cost structure with current demand and translating operational improvement into stronger financial performance,” stated Rick Galloway, senior vice president and chief financial officer.
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