Shares were down about 21% by early afternoon, at levels last seen in April 2020, after the auto-parts distributor said its European margin had roughly halved, hired Alvarez & Marsal for Europe and named former Veritiv chief Salvatore Abbate to start Dec. 15. The board tied the CEO change, the European leadership change and the adviser hire to its ongoing review of strategic alternatives.
In January, LKQ's board said it would explore options for the company, including a sale. On Friday, it changed chief executives, withdrew its forecast and hired Alvarez & Marsal to advise on its European operations, and it tied the leadership and adviser moves to that same review.
Justin Jude "ceased to serve" as president and chief executive and resigned from the board effective Oct. 23, LKQ said in a regulatory filing. He is eligible for the payments and benefits due upon a termination without cause under the company's severance policy. The filing gave no reason for his departure. Andy Hamilton, head of LKQ Europe, also left, on the same terms.
Salvatore Abbate, the former chief executive of Veritiv, will become CEO and join the board on Dec. 15. Until then, an interim Office of the CEO made up of Chairman John Mendel and Audit Committee Chair Sue Gove will run the company, with Chief Financial Officer Rick Galloway serving as principal executive officer for regulatory purposes. The board engaged Alvarez & Marsal to advise on European operations and withdrew full-year 2026 guidance.
"In connection with the Board's ongoing review of strategic alternatives, the Company has taken several actions," the filing said, listing the appointment, the European leadership change and the adviser hire. LKQ said it would provide additional updates on the process "as appropriate."
Europe is the problem, by LKQ's own numbers
Preliminary third-quarter figures, released at the same time, show where the damage is. Revenue fell to $3.32 billion from $3.50 billion a year earlier, with organic parts and services revenue down 5.4%. Adjusted earnings were 47 to 53 cents a share, compared with 84 cents a year earlier and the 69 cents analysts expected, according to LSEG data cited by Reuters. Including $111 million of non-cash impairments, LKQ expects a net loss from continuing operations of $16 million to $32 million.
In Europe, organic parts and services revenue fell 9.8%, and the segment's EBITDA margin dropped to 4.1% to 5.1% from 10.0%. LKQ blamed disruption from an enterprise software rollout in Germany and lower volumes in the U.K. and Benelux. North America "performed in line with the Company's expectations despite softer market conditions."
"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. He added that the board has "strong conviction in LKQ's business and its potential to create significant value for shareholders."
What the pay package says about the horizon
The terms of Abbate's offer, summarized in the filing, read like a plan for several years of running the company. He receives a base salary of $1.34 million, a target bonus of 150% of salary, a $3.3 million sign-on payment that he must repay if he leaves without good reason or is fired for cause before Dec. 15, 2027, and sign-on restricted stock worth $12 million that vests in installments over three years starting in March 2027.
His 2027 performance shares, with a target value of $8 million, are split in two. Half are measured against goals for 2027 through 2029. The other half vest if LKQ achieves "positive adjusted diluted earnings per share" in any fiscal year within five years of the grant, a low bar that can be read either as a retention device or as a signal about the earnings path.
That structure is consistent with a board preparing for standalone operation through at least 2027. It does not rule out a sale, since the offer includes a change-of-control agreement, and the board has not said it has given up on one. No bidder or timetable has been disclosed.
LKQ says Veritiv's share price rose more than 13-fold during Abbate's tenure, ending with the company's $2.6 billion sale to Clayton, Dubilier & Rice in 2023.
Activists in the background
LKQ signed a cooperation agreement with activist investors Ancora and Engine Capital in February 2025, and an amendment to that cooperation agreement ties the investors' standstill commitments to the board re-nominating Gove and director Michael Powell at the 2026 annual meeting. Gove is now half of the interim leadership. Separately, activist Ananym Capital has pressed LKQ since October 2025 to exit its European business, in a letter to the board.
The board's choice so far is to stabilize Europe with outside advisers. LKQ has not said whether it intends to keep the business.
The reaction
In premarket trading after the 8 a.m. releases, the stock fell below $20 from Thursday's $22.47 close. By about 1:45 p.m., it was at $17.67, down 21.4%, which would be its lowest close since April 2020 if it holds. That erased about $1.2 billion of market value. Genuine Parts, the closest listed peer, was down about 4% and the consumer discretionary sector about 1.6%. The CEO change, the earnings shortfall and the guidance withdrawal came out together, so the decline cannot be attributed to any one of them.
LKQ is now about 48% below its $33.77 close on Jan. 26, the day it announced the review. Guidance was cut in July, to adjusted earnings of $2.60 to $2.90 a share from $2.90 to $3.20, and is now withdrawn. At the end of June, the company had $4.0 billion of debt and leverage of 2.8 times EBITDA under its credit-facility definition, before a quarter in which European margins roughly halved.
Reset or retreat
The constructive view is that the board has named the problem precisely, moved on both the CEO and the European head at once, and hired an operator with a record of selling a company at a premium. A cleaner European business could improve whatever the review produces, whether that is a sale of Europe, a sale of the whole company or a credible standalone plan. A $23 million impairment of "net assets held for sale" suggests at least one disposal is already in motion, though LKQ has not said which assets.
The skeptical view is that nine months into a review that includes a possible sale, the board has hired a chief executive on a three-year pay schedule, with no bidder in sight, while the earnings base is still falling. That would mean the stock's support from a potential takeover premium has weakened.
What to watch
Full third-quarter results and the conference call on Oct. 29, where investors will press for detail on Europe, the assets held for sale and the strategic review. Abbate's start on Dec. 15. Any statement from LKQ's activist shareholders.