LKQ, an automotive parts supplier, halted its strategic review to explore selling the company after posting a $24 million quarterly loss and the departure of its president and CEO. The decision came following significant operational disruptions in Europe, particularly from a new enterprise resource planning system in Germany, which contributed to an 80.7 percent decline in operating income.
- LKQ posted a $24 million quarterly loss in Q3 2025, compared to a $178 million profit the previous year
- Operating income plunged 80.7% to $53 million, with $111 million in non-cash write-downs included
- European operations were the primary driver of poor performance, with disruptions from a new ERP system in Germany and declining sales in the UK and Low Countries
- The company suspended its strategic review that had explored selling the specialty division and potentially the entire company
- New CEO Salvatore Abbate takes over December 15, bringing experience from leading Veritiv packaging distributor
LKQ directors have halted a review that could have led to the sale of the automotive parts supplier after a US$24-million quarterly loss and the departure of two senior executives.
The Tennessee distributor of recycled and aftermarket vehicle parts released its third-quarter results Oct. 29, six days after Justin Jude’s immediate departure as president and chief executive.
Directors suspended the strategic review, including efforts to sell the specialty division, to give incoming management time to assess the business.
The process had extended beyond selling one division. Management began exploring a specialty division sale in December 2025, followed by a broader review in January 2026 that included a possible sale of LKQ itself. As recently as July 30, management said discussions with multiple parties remained active.
Revenue for the quarter ended Sept. 30 fell 5.1% to US$3.32 billion. The US$24-million loss from continuing operations attributable to shareholders compared with a US$178-million profit a year earlier.
Operating income plunged 80.7% to US$53 million.
The results included US$111 million in non-cash, pre-tax write-downs. Adjusted earnings, which exclude those charges and other items, still fell to US$127 million from US$216 million.
European operations were central to the shortfall. Management identified disruptions from an enterprise resource planning system introduced in Germany, alongside declining sales volumes in the United Kingdom and the Low Countries.
Andy Hamilton also departed as president and managing director of LKQ Europe on Oct. 23. Directors retained consulting firm Alvarez & Marsal to help stabilize operations, improve customer service and strengthen cost controls.
In an Oct. 23 press release, board chair John Mendel said performance, particularly in Europe, had fallen significantly short of directors’ expectations.
Management withdrew its full-year financial forecast that same date.
The German problems had already affected the previous quarter. On July 30, Jude acknowledged that Europe had fallen short of expectations because of the system implementation, while saying the business’s underlying performance was improving.
“Overall, the fundamentals of our business are improving,” Jude said in that release.
At the time, management reduced its forecast for annual adjusted earnings to between US$2.60 and US$2.90 per share, down from between US$2.90 and US$3.20. That reduced forecast has now been withdrawn.
North American parts and services sales also declined in the third quarter, falling 2.4% after excluding acquisitions, divestitures and currency movements.
“North America performed in line with expectations despite a softer demand environment,” chief financial officer Rick Galloway said in the Oct. 29 release.
The North American figures combine operations across the region. The release does not provide a separate Canadian sales result.
Salvatore “Sal” Abbate becomes president and chief executive Dec. 15. Until then, Mendel and audit committee chair Sue Gove are overseeing operations through an interim office of the chief executive.
Abbate previously led Veritiv, a packaging distributor sold to private equity firm Clayton, Dubilier & Rice for US$2.6 billion in 2023. His earlier positions included chief operating officer and chief commercial officer at Veritiv.
The management change carries substantial compensation commitments.
According to LKQ’s securities filing, Abbate will receive an annual base salary of US$1.34 million, a US$3.3-million cash signing award and a signing grant of restricted stock units valued at US$12 million, subject to vesting conditions.
Jude is eligible for payments and benefits provided for termination without cause under the executive severance policy. The filing does not characterize his departure as a dismissal for misconduct.
