LKQ, a major collision repair parts supplier, saw its stock plunge 22% after CEO Justin Jude's departure and a quarterly loss warning, with new CEO Salvatore Abbate taking over in December to address significant performance issues, particularly in European operations.
- Stock Impact: LKQ shares dropped 22.47% (US$5.05) to US$17.42 on the day of the CEO departure announcement on October 23.
- Financial Decline: Revenue fell to US$3.32 billion from US$3.50 billion year-over-year, with a projected loss of US$16-32 million compared to a US$178 million profit in the prior year.
- Leadership Change: CEO Justin Jude departed after just four months; Salvatore Abbate, former CEO of Veritiv, will assume the role on December 15.
- European Challenges: European organic revenue declined 9.8% due to software implementation disruption in Germany and lower sales in the UK and Benelux regions.
- Strategic Review: The company is undergoing a broader ownership review launched in January, including consideration of a potential sale of the entire business.
The chief executive of a major collision repair parts supplier has been removed less than three months after telling investors that the hardest step in a troubled software rollout was behind the business.
Justin Jude departed as LKQ’s president, chief executive officer and a director on Oct. 23. He had held the top job since July 2024.
His departure coincided with a quarterly loss warning, the withdrawal of the annual financial forecast LKQ shares closed that session at US$17.42, down US$5.05 or about 22.5%.
Antioch, Tenn.-based LKQ supplies recycled original-equipment parts, aftermarket components, coatings, equipment and services to collision repairers and other automotive businesses.
Its Canadian holdings include Boucherville, Que.-based Uni-Select, acquired in August 2023. Uni-Select distributes aftermarket parts through a network that includes Bumper to Bumper.
Board chair John Mendel announced a leadership change that also included the departure of European president and managing director Andy Hamilton.
“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 in a press release.
The October warning followed months of assurances about recovery from a German business software conversion completed in early April.
On an April 30 earnings call, Jude described the conversion as proceeding ahead of expectations. He acknowledged temporary sales disruption but said that disruption had been included in the annual forecast.
“The project is progressing ahead of our initial expectations,” Jude said, according to the transcript posted on LKQ’s investor website.
At that point, the full-year adjusted earnings forecast remained US$2.90 to US$3.20 a share. The free cash flow forecast remained US$700 million to US$850 million.
By July 30, both forecasts had been reduced.
Adjusted earnings were then projected at US$2.60 to US$2.90 a share, with free cash flow of US$625 million to US$775 million.
Jude acknowledged that the German implementation had been more difficult and taken longer to stabilize than planned. He also identified execution problems in the United Kingdom and Benelux, alongside softer demand.
Nevertheless, he continued to describe an improving business.
“Overall, the fundamentals of our business are improving,” Jude said in the July 30 earnings press release.
During the earnings call that day, he said German revenue had recovered to more than 85% of its normal run rate in the preceding week. The conversion had increased the portion of European operations using a common software platform from about 5% to more than 30%.
“The most difficult scaling step is now behind us, the recovery is underway, and the long-term benefits of the program remain fully intact,” Jude said, according to the company-posted transcript.
The disruption had already carried a substantial cost.
Chief financial officer Rick Galloway estimated on that call that the German implementation had reduced second-quarter revenue by approximately US$140 million and earnings before interest, taxes, depreciation and amortization by approximately US$50 million.
In the Oct. 23 update, German software disruption was again identified among the causes of European underperformance.
European parts and services organic revenue fell 9.8% in the third quarter. That decline was less steep than the second quarter’s 12.6% drop.
However, the projected European earnings margin before interest, taxes, depreciation and amortization was just 4.1% to 5.1%, compared with 10% a year earlier.
Preliminary group revenue was US$3.32 billion, down from US$3.50 billion.
The projected loss from continuing operations attributable to shareholders was US$16 million to US$32 million, including US$111 million in non-cash write-downs. A year earlier, the comparable profit was US$178 million.
Adjusted diluted earnings were projected at US$0.47 to US$0.53 a share, below the US$0.67 reported for the second quarter.
The European problems did not extend uniformly across the business. North American results were in line with expectations despite softer conditions.
Galloway had reported mid-single-digit growth in the Canadian hard-parts business during the second quarter. No separate Canadian financial breakdown was included in the preliminary third-quarter update.
The financial pressure also extended beyond quarterly earnings.
Free cash flow for the first six months of 2026 was negative US$36 million. During the same period, US$207 million went to shareholders through US$154 million in dividends and US$53 million in share repurchases.
Total debt stood at US$4 billion at June 30.
Jude’s departure also leaves compensation and severance costs.
His reported compensation for 2025 totalled US$8.77 million. That included a US$1-million salary, US$1.2 million in non-equity incentive compensation and US$6.5 million in stock awards measured at their grant-date value.
The stock-award figure represents an accounting valuation, rather than cash received. His reported total compensation was approximately 182 times the median employee’s compensation.
Under the departure terms disclosed on Oct. 23, Jude is eligible for benefits associated with termination without cause.
The executive severance policy provides for 18 months of payments for the CEO, calculated using base salary and average annual bonuses for the preceding two full fiscal years. It also provides for subsidized health and dental coverage, continued vesting of qualifying equity awards and certain other benefits.
Eligibility depends on a release of claims and compliance with restrictions covering matters such as competition and solicitation. An exact departure payout was not disclosed.
Salvatore Abbate, a former chief executive of packaging distributor Veritiv, will succeed Jude on Dec. 15.
His agreement includes a US$1.34-million annual salary, a target annual cash incentive equal to 150% of salary, a US$3.3-million signing payment and a signing grant of restricted stock units valued at US$12 million. Those units are scheduled to vest over three years, subject to the agreement’s conditions.
Until Abbate starts, Mendel and audit committee chair Sue Gove will oversee operations through an interim Office of the CEO.
Directors have also retained consulting firm Alvarez & Marsal to advise on European operations.
The changes come during a strategic review launched in January, with a possible sale of the entire business among the options. A possible sale of the Specialty segment had been under consideration since December 2025.
No transaction was announced in the Oct. 23 update. Full quarterly results and a conference call are scheduled for Oct. 29.
“There is meaningful opportunity to improve performance, and I intend to move quickly,” Abbate said in the press release announcing his appointment.
