LKQ Corporation (LKQ) Income Statement

The sequence of negative year-over-year revenue prints indicates that the decline is not a one-quarter anomaly, which weakens the argument that volume softness is purely transitory. The reported North American organic return to growth offers a partial counterweight, but consolidated revenue still reflects drag from Europe and currency effects that the reported figures alone cannot fully separate. Investors should monitor whether the North American inflection broadens into consolidated sequential growth.

The margin band has narrowed to the low-to-high 30s, which is consistent with management's cited pressure from sustained declines in used car pricing compressing the spread between salvage acquisition cost and resale value. The quarter-to-quarter variability, including a 35.1% print in 2025Q4, implies that gross profit is more sensitive to procurement timing than the stable pricing power historically associated with recycled parts. Peers such as AZO and ORLY operate at structurally higher gross margins, which may reflect LKQ's mix toward lower-margin European new-parts distribution.

SG&A has been essentially flat in dollar terms while gross profit has declined, which points to negative operating leverage in which overhead does not flex down with volume. This pattern suggests the cost base was sized for a higher revenue run-rate and that restructuring of European overhead has not yet offset the North American volume loss. Investors should monitor whether management's cost programs can produce a visible SG&A reduction, as the current trajectory would leave operating income highly sensitive to any further gross margin slippage.