This report does not constitute a rating action. Restoring service levels and profitability in Europe will take time. LKQ Corp.’s third quarter results significantly underperformed as organic revenues in Europe fell 9.8%, due to operational disruptions from LKQ's enterprise resource planning (ERP) software implementation in Germany as well as volume declines in the U.K. and Benelux regions. The German ERP implementation reduced on-time delivery, resulting in customer losses. In the U.K. and Benelux, the company struggled with product availability, which reduced service levels and led to share loss. This all translated into third-quarter European EBITDA margins contracting to 4.6%, from 10% last year. In response, the company replaced its CEO, removed its president and managing director of LKQ Europe, and
