LKQ Corp. has entered into a cooperation agreement with Ancora Catalyst Institutional, LP, and Engine Capital, LP. As part of this agreement, LKQ will add two independent directors to its Board of Directors and establish a Finance Committee. In return, Ancora and Engine Capital, both hedge fund firms, have agreed to certain standstill restrictions, voting commitments, and other provisions.
The new board members include Sue Gove, founder and president of Excelsior Advisors, LLC, a retail consulting firm. Gove has previously served on the boards of IAA, Inc., and AutoZone, Inc. The second appointment is Michael Powell, who most recently held the position of claims process general manager at Progressive Corp. from 2022 to 2024. Powell has also held various leadership roles at Progressive, including central zone claims general manager and claims physical damage business leader.
“I am pleased to welcome Sue and Michael to our board. Their executive experience and knowledge of the automotive industry will be valuable additions,” said LKQ Chairman Guhan Subramanian. “LKQ is committed to operational excellence and strategic growth, and we appreciate the constructive engagement with Ancora and Engine in our shared goal of increasing shareholder value.”
Gove and Powell will serve on LKQ’s newly created Finance Committee, a five-member group responsible for advising the board on capital allocation strategy and business portfolio decisions.
Financial Performance Update
LKQ reported $3.6 billion in revenue for the third quarter, reflecting a 0.5% increase compared to Q3 2023. However, organic revenue for parts and services declined by 2.8% during the same period.
CEO Justin L. Jude noted during an earnings call that organic parts and services revenue was down approximately 4% on a per-day basis in Q3. North American market parts and services revenue fell by 7.5% on a per-day basis, with aftermarket parts experiencing a steeper decline than salvage parts.
Additionally, year-over-year insurance claims continued to decline, dropping 9.5% in Q3 following a 7% decrease in Q2. Despite the decline in claims, collision volumes were only down 6%, indicating that LKQ has maintained its market share.
Jude attributed the drop in claims to economic factors such as rising insurance premiums and declining used car prices. “While we anticipated a slow rebound in claims volume, the Q3 decline exceeded our projections, impacting revenue performance,” he said. “This suggests a potentially longer recovery period than previously expected, and we are incorporating this analysis into our 2025 budget strategy.”
LKQ remains focused on optimizing its operations and adapting to market conditions as it moves forward with its strategic initiatives.
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