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SEC Filings

10-K
PENSKE AUTOMOTIVE GROUP, INC. filed this Form 10-K on 02/24/2017
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Revenues

 

Service and parts revenue increased from 2015 to 2016, including a 5.1% increase in the U.S. and a 9.5% increase internationally. The overall increase in service and parts revenue is due to a $78.4 million increase from net dealership acquisitions, coupled with a $39.5 million, or 2.2%, increase in same-store revenues during the year. Excluding $59.4 million of negative foreign currency fluctuations, same-store service and parts revenue increased 5.5%. The increase in same-store revenue is due to a $26.9 million, or 2.2%, increase in customer pay revenue, a  $10.2 million, or 2.3%, increase in warranty revenue, and a $2.4 million, or 1.7%, increase in vehicle preparation and body shop revenue.

 

The increase from 2014 to 2015 is due to a $65.7 million, or 3.9%, increase in same-store revenues during the year, coupled with a $48.1 million increase from net dealership acquisitions. Excluding $44.9 million of negative foreign currency fluctuations, same-store service and parts revenue increased 6.5%. The increase in same-store revenue is due to a $52.1 million, or 13.9%, increase in warranty revenue, a $10.7 million, or 0.9%, increase in customer pay revenue, a $1.7 million, or 7.4%, increase in vehicle preparation revenue, and a $1.2 million, or 1.0%, increase in body shop revenue.

 

We believe that our service and parts business is being positively impacted by increasing units in operation due to increasing new vehicle sales in recent years, which is driving the increase in customer pay revenue. In recent years, we saw an increase in warranty revenue due to recall activity as a result of manufacturer initiated programs to correct safety related issues; however, this activity has decreased from 2015 to 2016, as many of the significant recalls driving the recent increases have been completed.

 

Gross Profit

 

Service and parts gross profit increased from 2015 to 2016 due to a $40.7 million increase from net dealership acquisitions, coupled with a $5.0 million, or 0.5%, increase in same-store gross profit during the year. Excluding $36.1 million of negative foreign currency fluctuations, same-store service and parts gross profit increased 3.8%. The same-store gross profit increase is due to the increase in same-store revenues, which increased gross profit by $23.2 million, offset by a 1.7% decrease in same-store gross margin percentage, which decreased gross profit by $18.2 million. The same-store gross profit increase is composed of a $2.2 million, or 0.9%, increase in vehicle preparation and body shop gross profit, a $2.0 million, or 0.9%, increase in warranty gross profit, and a  $0.8 million, or 0.1%, increase in customer pay gross profit.

 

We believe the overall decline in service and parts gross margin is due to a shift in mix from more profitable warranty recall work to less profitable customer pay work in the U.S., and a shift in mix in the U.K. to less profitable warranty work, when compared to the same period last year. We also believe the decline is due to inclusion of our German automotive dealership joint venture, which we began consolidating during the third quarter of 2015, which realizes a lower service and parts gross margin than our other businesses.

 

The increase from 2014 to 2015 is due to a $42.8 million, or 4.2%, increase in same-store gross profit, coupled with a $19.6 million increase from net dealership acquisitions. Excluding $26.1 million of negative foreign currency fluctuations, same-store service and parts gross profit increased 6.8%. The same-store gross profit increase is due to the increase in same-store revenues, which increased gross profit by $39.3 million, coupled with a 0.3% increase in same-store gross margin percentage, which increased gross profit by $3.5 million. The same-store gross profit increase is composed of a $28.5 million, or 14.7%, increase in warranty gross profit, a $7.7 million, or 4.4%, increase in vehicle preparation gross profit, a $6.3 million, or 1.1%, increase in customer pay gross profit, and a $0.3 million, or 0.4%, increase in body shop gross profit. 

 

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