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Penske Automotive Reports First Quarter Results

Same-Store Retail Revenues Increase 16.4%
Income from Continuing Operations Increases to $20.8 Million and RelatedEarnings per Share Increases to $0.23
Adjusted Income from Continuing Operations Increases 105% to $20.4 Million
SG&A to Gross Profit Improves 182 Basis Points to 83.1%
$71.1 Million of Convertible Notes Repurchased in Q1 2010

BLOOMFIELD HILLS, Mich., Apr 30, 2010 (BUSINESS WIRE) --Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported first quarter income from continuing operations attributable to PAG of $20.8 million, or $0.23 per share. This compares to income from continuing operations attributable to PAG of $16.5 million, or $0.18 per share, in the first quarter last year. The Company recorded after-tax gains of $0.4 million and $6.5 million ($0.07 per share) in the first quarter of 2010 and 2009, respectively, relating to purchases of the Company's 3.5% Senior Subordinated Convertible Notes due 2026. Excluding these gains, adjusted income from continuing operations attributable to PAG in the first quarter of 2010 and 2009 amounted to $20.4 million, or $0.22 per share, and $10.0 million, or $0.11 per share, respectively. Net income attributable to common shareholders in the first quarter of 2010 was $20.4 million, or $0.22 per share.

Total revenue increased $332 million, or 15.4%, to $2.5 billion in the first quarter 2010. The increase in revenue was driven by 9.2% increase in total retail unit sales. On a same-store basis, total retail revenue increased 16.4%, including increases of 14.0% in the United States and 20.4% internationally. During the first quarter, selling, general and administrative expenses as a percentage of gross profit declined 182 basis points to 83.1%.

"I am extremely pleased with the performance of our business in the first quarter," said Penske Automotive Group Chairman Roger Penske. "Despite difficult weather conditions in many of our markets and the challenging market dynamics facing the smart brand, an improving overall retail environment and the continued strong performance of our premium/luxury brands in all of our markets contributed to our strong operating results. On an adjusted basis, income from continuing operations increased 105% and earnings per share doubled compared to the first quarter last year."

smart USA

During the first quarter, smart USA wholesaled 956 units, which compares to 5,714 units in the first quarter last year. In response to the continuing slow selling environment, smart USA further enhanced its efforts to reduce vehicle stock and offered increased incentives on certain 2009 smart fortwos, which resulted in an after-tax expense of $0.7 million, or $0.01 per share. These challenging conditions contributed to a loss of $0.04 per share in the distribution segment in the first quarter.

Securities Repurchase Authority

The Company repurchased $71.1 million principal amount of its 3.5% Senior Subordinated Convertible Notes due 2026 in open market transactions for $71.7 million in cash during the first quarter, leaving approximately $235 million principal amount of these securities outstanding.

The Company has $123 million remaining under its previously announced authority to repurchase its outstanding common stock, debt and convertible debt, depending on market conditions, price and other factors. 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 2010 on April 30, 2010, at 2:00 p.m.Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1093 [International, please dial (612) 288-0329]. The call will also be simultaneously broadcast over the Internet through the Penske Automotive Group website at

About Penske Automotive

Penske Automotive Group, Inc. (, headquartered in Bloomfield Hills, Michigan, operates 326 retail automotive franchises, representing 40 different brands and 25 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 174 franchises in 17 states and Puerto Rico and 152 franchises located outside the United States, primarily in the United Kingdom.

Penske Automotive, through its wholly-owned subsidiary smart USA Distributor LLC (, is the exclusive distributor of the smart fortwo vehicle and related parts in the United States. smart USA supports more than 75 smart retail centers in the United States.

Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 14,000 employees. smart and fortwo are registered trademarks of Daimler AG.

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. Actual results may vary materially because of risks and uncertainties, including external factors such as consumer credit conditions, adverse conditions affecting a particular manufacturer, macro-economic factors, interest rate fluctuations, changes in consumer spending, and other factors over which management has no 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, 2009, 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.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations attributable to PAG and related earnings per share. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure by providing period-to-period comparability of the Company's results from operations.

Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)

First Quarter



New Vehicle $1,234,705 $971,814
Used Vehicle 698,771 616,727
Finance and Insurance, Net 59,592 48,497
Service and Parts 335,207 327,526
Distribution 7,936 80,113
Fleet and Wholesale Vehicle 156,163 115,222
Total Revenues 2,492,374 2,159,899
Cost of Sales:
New Vehicle 1,132,996 900,409
Used Vehicle 641,872 560,629
Service and Parts 146,167 150,392
Distribution 7,722 68,314
Fleet and Wholesale Vehicle 152,387 111,547
Total Cost of Sales 2,081,144 1,791,291
Gross Profit 411,230 368,608
SG&A Expenses 341,644 312,941
Depreciation and Amortization 12,374 12,881
Operating Income 57,212 42,786
Floor Plan Interest Expense (8,570) (9,474)
Other Interest Expense (12,720) (14,500)
Debt Discount Amortization (2,915) (3,638)
Equity in Earnings (Loss) of Affiliates (429) 714
Gain on Debt Repurchase 605 10,429
Income from Continuing Operations Before Income Taxes 33,183 26,317
Income Taxes (12,444) (9,857)
Income from Continuing Operations 20,739 16,460
Loss from Discontinued Operations, Net of Tax (407) (258)
Net Income 20,332 16,202
Loss Attributable to Non-Controlling Interests 22 80
Net Income Attributable to Common Shareholders $20,354 $16,282
Income from Continuing Operations Per Share $0.23 $0.18
Income Per Share $0.22 $0.18
Weighted Average Shares Outstanding 91,961 91,501
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $20,739 $16,460
Loss Attributable to Non-Controlling Interests 22 80
Income from Continuing Operations, net of tax 20,761 16,540
Loss from Discontinued Operations, net of tax (407) (258)
Net Income $20,354 $16,282
Consolidated Condensed Balance Sheets
(Amounts In Thousands)



Cash and Cash Equivalents $23,543 $13,769
Accounts Receivable, Net 378,395 322,598
Inventories 1,384,231 1,306,532
Other Current Assets 103,821 95,560
Assets Held for Sale 6,302 5,005
Total Current Assets 1,896,292 1,743,464
Property and Equipment, Net 720,575 726,835
Intangibles 1,004,367 1,012,079
Other Long-Term Assets 294,941 313,629
Total Assets $3,916,175 $3,796,007
Liabilities and Equity
Floor Plan Notes Payable $868,226 $772,926
Floor Plan Notes Payable - Non-Trade 488,362 423,316
Accounts Payable 213,541 190,325
Accrued Expenses 235,114 227,725
Current Portion Long-Term Debt 16,611 12,442
Liabilities Held for Sale 4,616 3,083
Total Current Liabilities 1,826,470 1,629,817
Long-Term Debt 862,785 933,966
Other Long-Term Liabilities 283,891 286,185
Total Liabilities 2,973,146 2,849,968
Equity 943,029 946,039
Total Liabilities and Equity $3,916,175 $3,796,007
Selected Data

Three Months



Total Retail Units:
New Retail 36,212 30,756
Used Retail 26,887 27,007
Total Retail 63,099 57,763
smart Wholesale Units 956 5,714
Same-Store Retail Units:
New Same-Store Retail 35,485 30,681
Used Same-Store Retail 26,436 26,918
Total Same-Store Retail 61,921 57,599
Same-Store Retail Revenue:
New Vehicles $1,206,057 $967,461
Used Vehicles 681,068 613,150
Finance and Insurance, Net 58,358 48,363
Service and Parts 329,254 324,762
Total Same-Store Retail $2,274,737 $1,953,736
Same-Store Retail Revenue Growth:
New Vehicles 24.7% (42.9%)
Used Vehicles 11.1% (27.0%)
Finance and Insurance, Net 20.7% (36.6%)
Service and Parts 1.4% (12.2%)
Revenue Mix:
New Vehicles 49.5% 45.0%
Used Vehicles 28.0% 28.6%
Finance and Insurance, Net 2.4% 2.2%
Service and Parts 13.5% 15.2%
Distribution 0.3% 3.7%
Fleet and Wholesale 6.3% 5.3%
Average Retail Selling Price:
New Vehicles $34,097 $31,598
Used Vehicles 25,989 22,836
Gross Margin 16.5% 17.1%
Retail Gross Margin - by Product:
New Vehicles 8.2% 7.3%
Used Vehicles 8.1% 9.1%
Service and Parts 56.4% 54.1%
Selected Data (Continued)

Three Months



Gross Profit per Retail Transaction:
New Vehicles $2,809 $2,322
Used Vehicles 2,116 2,077
Finance and Insurance 944 840
Brand Mix:
BMW 20% 22%
Toyota / Lexus 18% 19%
Honda / Acura 14% 14%
Audi 11% 10%
Mercedes Benz 10% 10%
Land Rover 5% 4%
Porsche 4% 3%
Other 18% 18%
100% 100%
Premium 65% 65%
Foreign 30% 31%
Domestic Big 3 5% 4%
100% 100%
Revenue Mix:
U.S. 61% 64%
International 39% 36%
100% 100%
Rent Expense $41,419 $39,625



Debt to Total Capital Ratio 48% 50%
Debt Covenant Compliance (U.S.):
Current Ratio (min 1.00:1) 1.04:1 1.07:1
Fixed Charge Coverage Ratio (min 1.00:1) 1.34:1 1.29:1
Ratio of Non-Floorplan Debt to Stockholders' Equity (max 1.30:1) 0.61:1 0.66:1
Funded Debt to EBITDA Ratio (max 2.50:1) 1.04:1 1.11:1
Debt Covenant Compliance (U.K.):
Capital Expenditures (max £50 million) £9.3 £12.7
EBITAR to Fixed Charges (min 1.50:1) 2.88x 2.72x
Debt to EBITAR (max 3.25:1) 0.71x 0.77x

SOURCE: Penske Automotive Group, Inc.

Penske Automotive Group, Inc.
Bob O'Shaughnessy
Chief Financial Officer
Anthony R. Pordon
Senior Vice President