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Penske Automotive Group, Inc. : Penske Automotive Reports Record First Quarter Results

04/25/2012 | 08:10am US/Eastern

  • Total Retail Unit Sales Increase 18.1%
  • Revenues Increase 17.9% to $3.2 Billion
  • Same-store Retail Revenue Increases 7.5%
  • Income from Continuing Operations Increases 37.3% to $50.0 Million
  • EPS from Continuing Operations Increases 41.0% to $0.55

Penske Automotive Group, Inc. (NYSE:PAG), an international automotive retailer, announced today the most profitable first quarter in Company history. First quarter 2012 income from continuing operations attributable to common shareholders increased 37.3% to $50.0 million and related earnings per share increased 41.0% to $0.55 per share. This compares to income from continuing operations attributable to common shareholders of $36.4 million, or $0.39 per share in the same period last year.

First quarter revenue increased by 17.9% to $3.2 billion, driven by an improvement in total retail unit sales of 18.1% and growth in the Company's used-to-new ratio to .89 to 1 from .78 to 1 in the same period last year. Same-store new and used retail unit sales increased 9.5% and total same-store retail revenue increased 7.5% with each area of the business generating growth.

Total gross profit improved 15.3% to $506.6 million. The Company's selling, general and administrative expenses as a percentage of gross profit leveraged 220 basis points in the first quarter to 78.7% contributing to a 31.3% improvement in operating income to $94.6 million. Operating income as a percent of revenue was 2.9%, representing an improvement of 30 basis points.

Highlights of the First Quarter

  • Total retail unit sales increased 18.1% to 81,472
    • +12.3% in the United States; +30.7% Internationally
    • New unit retail sales +11.5%
    • Used unit retail sales +26.6%
  • Same-store retail revenue increased 7.5%
    • New +5.1%; Used +14.0%; Finance & Insurance +14.2%; Service and Parts +0.7%
    • +8.5% in the United States; +5.9% Internationally
  • Average Gross Profit Per Unit
    • New $3,064; Gross Margin 8.4%, up 50 basis points
    • Used $2,043; Gross Margin 8.1%, down 10 basis points
    • Finance & Insurance $981

Chairman Roger Penske said, "I am extremely pleased with our team's performance. Our results continue to demonstrate the strength and diversity of our business in both the U.S. and international markets. We produced another outstanding quarter of profitability while generating same-store revenue increases in each area of our business, including same-store retail revenue growth of 7.5%. New and used vehicle margins were strong, and our service and parts operations gross margin added 60 basis points to 57.7%."

Penske added, "In light of perceptions surrounding our international markets, I am particularly pleased with the performance of these businesses. During the first quarter, our international-based same-store retail revenue increased 5.9%."

Securities Repurchase Activity

During the first quarter the Company acquired 350,000 shares of its common stock for an aggregate purchase price of $8.5 million, or an average price of $24.35 per share. The Company currently has remaining authorization from its Board of Directors to repurchase up to $98.3 million of its outstanding common stock, debt or convertible debt. Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means.

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the first quarter of 2012 on April 25, 2012, at 2:30 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1085 [International, please dial (612) 234-9960]. The call will also be simultaneously broadcast over the Internet through the Investors Relations section of the Penske Automotive Group website at www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 335 retail automotive franchises, representing 40 different brands and 29 collision repair centers. Penske Automotive, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 168 franchises in 17 states and Puerto Rico and 167 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is a member of the Fortune 500 and Russell 2000 and has approximately 16,000 employees.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as earnings before interest, taxes, depreciation and amortization ("EBITDA"). The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these widely accepted measures of operating profitability improve the transparency of the Company's disclosures. These non-GAAP financial measures are not substitutes for GAAP financial results, and should only be considered in conjunction with the Company's financial information that is presented in accordance with GAAP.

Caution Concerning Forward Looking Statements

Statements in this press release may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.'s future sales potential and outlook. Actual results may vary materially because of risks and uncertainties that are difficult to predict. These risks and uncertainties include, among others: economic conditions generally, conditions in the credit markets and changes in interest rates, adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to natural disasters or other disruptions that interrupt the supply of vehicles or parts to us; changes in consumer credit availability, the outcome of legal and administrative matters, and other factors over which management has limited control. These forward-looking statements should be evaluated together with additional information about Penske Automotive's business, markets, conditions and other uncertainties, which could affect Penske Automotive's future performance. These risks and uncertainties are addressed in Penske Automotive's Form 10-K for the year ended December 31, 2011, and its other filings with the Securities and Exchange Commission ("SEC"). This press release speaks only as of its date, and Penske Automotive disclaims any duty to update the information herein.

Find a vehicle: http://www.penskecars.com
Engage Penske Automotive: http://www.penskesocial.com
Like Penske Automotive on Facebook: https://facebook.com/PenskeCars
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Visit Penske Automotive on YouTube: http://www.youtube.com/penskecars

 
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
 
Three Months Ended
March 31,
  2012       2011  
Revenues:
New Vehicle $ 1,578,319 $ 1,385,556
Used Vehicle 969,732 791,734
Finance and Insurance, Net 79,894 66,463
Service and Parts 369,727 341,542
Fleet and Wholesale Vehicle   244,616     165,741  
Total Revenues   3,242,288     2,751,036  
Cost of Sales:
New Vehicle 1,446,281 1,275,804
Used Vehicle 891,327 726,619
Service and Parts 156,525 146,649
Fleet and Wholesale Vehicle   241,562     162,719  
Total Cost of Sales 2,735,695 2,311,791
Gross Profit 506,593 439,245
SG&A Expenses 398,637 355,391
Depreciation   13,349     11,798  
Operating Income 94,607 72,056
Floor Plan Interest Expense (9,725 ) (6,925 )
Other Interest Expense (12,210 ) (11,285 )
Debt Discount Amortization - (1,718 )
Equity in Earnings of Affiliates   4,410     22  
Income from Continuing Operations Before Income Taxes 77,082 52,150
Income Taxes   (26,902 )   (15,670 )
Income from Continuing Operations 50,180 36,480
Loss from Discontinued Operations, Net of Tax   (3,174 )   (2,483 )
Net Income 47,006 33,997
Income Attributable to Non-Controlling Interests   (188 )   (70 )
Net Income Attributable to Common Shareholders   46,818   $ 33,927  
Income from Continuing Operations Per Share $ 0.55   $ 0.39  
Income Per Share $ 0.52   $ 0.37  
Weighted Average Shares Outstanding   90,338     92,554  
 
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $ 50,180 $ 36,480
Income Attributable to Non-Controlling Interests   (188 )   (70 )
Income from Continuing Operations, net of tax 49,992 36,410
Loss from Discontinued Operations, net of tax   (3,174 )   (2,483 )
Net Income   46,818   $ 33,927  
   
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
 
March 31, December 31,
  2012   2011
Assets
Cash and Cash Equivalents $ 31,768 $ 28,490
Accounts Receivable, Net 492,653 440,273
Inventories 1,770,235 1,581,586
Other Current Assets 91,869 80,269
Assets Held for Sale   29,075   67,777
Total Current Assets 2,415,600 2,198,395
Property and Equipment, Net 915,081 857,587
Intangibles 1,201,566 1,134,179
Other Long-Term Assets   302,518   312,138
Total Assets $ 4,834,765 $ 4,502,299
 
Liabilities and Equity
Floor Plan Notes Payable $ 1,114,070 $ 977,547
Floor Plan Notes Payable - Non-Trade 701,242 700,572
Accounts Payable 297,705 220,708
Accrued Expenses 258,455 201,579
Current Portion Long-Term Debt 13,264 3,414
Liabilities Held for Sale   29,928   45,852
Total Current Liabilities 2,414,664 2,149,672
Long-Term Debt 848,630 846,777
Other Long-Term Liabilities   389,274   365,437
Total Liabilities 3,652,568 3,361,886
Equity   1,182,197   1,140,413
Total Liabilities and Equity $ 4,834,765 $ 4,502,299
   
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
(Unaudited)
 
Three Months Ended
March 31, %
  2012       2011   Change
Total Retail Units:
New Retail 43,099 38,668 11.5 %
Used Retail   38,373     30,299   26.6 %
Total Retail   81,472     68,967   18.1 %
 
Fleet 3,476 1,480 134.9 %
Wholesale   17,944     14,492   23.8 %
Total   102,892     84,939   21.1 %
 
Same-Store Retail Units:
New Same-Store Retail 39,437 38,368 2.8 %
Used Same-Store Retail   35,556     30,117   18.1 %
Total Same-Store Retail   74,993     68,485   9.5 %
 
Same-Store Retail Revenue: (Amounts in thousands)
New Vehicles $ 1,447,577 $ 1,376,770 5.1 %
Used Vehicles 897,709 787,310 14.0 %
Finance and Insurance, Net 75,434 66,027 14.2 %
Service and Parts   342,000     339,466   0.7 %
Total Same-Store Retail $ 2,762,720   $ 2,569,573   7.5 %
 
Revenue Mix:
New Vehicles 48.7 % 50.4 %
Used Vehicles 29.9 % 28.8 %
Finance and Insurance, Net 2.5 % 2.4 %
Service and Parts 11.4 % 12.4 %
Fleet and Wholesale 7.5 % 6.0 %
 
Average Revenue per Vehicle Retailed:
New Vehicles $ 36,621 $ 35,832 2.2 %
Used Vehicles 25,271 26,131 (3.3 %)
 
Gross Profit per Vehicle Retailed:
New Vehicles $ 3,064 $ 2,838 7.9 %
Used Vehicles 2,043 2,149 (4.9 %)
Finance and Insurance 981 964 1.8 %
 
Operating items as a percentage of revenue:
New Vehicle Gross Profit 8.4 % 7.9 %
Used Vehicle Gross Profit 8.1 % 8.2 %
Service and Parts Gross Profit 57.7 % 57.1 %
Total Gross Profit 15.6 % 16.0 %
Selling, General and Admin. Expenses 12.3 % 12.9 %
Operating Income 2.9 % 2.6 %
Inc. From Cont. Ops. Before Inc. Taxes 2.4 % 1.9 %
 
Operating items as a percentage of total gross profit:
Selling, General and Administrative Expenses 78.7 % 80.9 %
Operating Income 18.7 % 16.4 %
 
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)
 
Three Months Ended
March 31,
  2012       2011  
Brand Revenue Mix:
Premium:
BMW 24 % 23 %
Audi 13 % 12 %
Mercedes-Benz 10 % 9 %
Lexus 4 % 5 %
Land Rover 5 % 5 %
Porsche 4 % 4 %
Ferrari / Maserati 3 % 3 %
Acura 1 % 2 %
Other   4 %   4 %
Total Premium 68 % 67 %
Foreign:
Toyota 11 % 11 %
Honda 11 % 12 %
Nissan 1 % 2 %
Volkswagen 2 % 2 %
Other   3 %   2 %
Total Foreign 28 % 29 %
Domestic Big 3
General Motors / Chrysler / Ford 4 % 4 %
 
Revenue Mix:
U.S. 61 % 62 %
International 39 % 38 %
 
Other (Amounts in Thousands):
EBITDA * $ 102,641 $ 76,951
Rent Expense 44,129 42,174
Floorplan Credits 4,888 5,202

* See the following Non-GAAP reconciliation tables

 
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)
 
Reconciliation of 2012 and 2011 net income to EBITDA:
 
Three Months Ended
March 31,
(Amounts in Thousands)   2012     2011
 
Net Income $ 47,006 $ 33,997
Depreciation 13,349 11,798
Other Interest Expense 12,210 11,285
Debt Discount Amortization - 1,718
Income Taxes 26,902 15,670
Loss from Discontinued Operations, net   3,174   2,483
EBITDA $ 102,641 $ 76,951

Inquiries should contact:
David K. Jones
Executive Vice President and
Chief Financial Officer
Penske Automotive Group, Inc.
248-648-2800
dave.jones@penskeautomotive.com
or
Anthony R. Pordon
Executive Vice President Investor Relations and Corporate Development
Penske Automotive Group, Inc.
248-648-2540
tpordon@penskeautomotive.com


© Business Wire 2012
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