LKQ 2025 FCF Tops $847M, Board Initiates Review After Unit Divestiture
LKQ generated $847 million free cash flow in 2025 and guides 2026 free cash flow of $700–$850 million with adjusted EPS of $2.90–$3.20. The board initiated a January 2026 review following the self‐service divestiture, citing stock undervaluation and margin compression (North America EBITDA down 380 bps, Europe down 180 bps).
1. Strong Cash Generation
LKQ generated $847 million of free cash flow in 2025, exceeding its $825 million target, and returned $469 million to shareholders through dividends and share repurchases. Management guides 2026 free cash flow of $700–$850 million and adjusted earnings per share of $2.90–$3.20.
2. Operational Pressure and Margins
In the fourth quarter, North America organic revenue per day declined 1%, driving EBITDA margin down 380 basis points to 12.7% due to tariffs, competitive pricing and overhead leverage. Europe revenue fell 5.2% per day and EBITDA margin dropped 180 basis points to 8.3% driven by weak consumer confidence, private-label rollout and SKU rationalization.
3. Strategic Review and Divestiture
In January 2026 the board launched a comprehensive review of strategic alternatives, citing stock undervaluation and seeking ways to unlock value. This follows the completion of the self-service unit divestiture in 2025 and signals potential options for the Specialty segment.