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Penske Automotive Reports Second Quarter Results
Significant Growth in Retail Unit Sales and Revenue
Same-Store Retail Revenue Growth of 16% in U.S. and 9% Internationally
Income From Continuing Operations Increases 47% to $29.2 Million and Related Earnings Per Share Increases 45% to $0.32
Repurchased Additional $84.6 Million of Convertible Notes $150.6 Million Currently Outstanding
U.S. Credit Facility Capacity Increased by $50 Million

BLOOMFIELD HILLS, Mich., Jul 29, 2010 (BUSINESS WIRE) --

Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported second quarter income from continuing operations attributable to common shareholders of $29.2 million, or $0.32 per share. This compares to income from continuing operations attributable to common shareholders of $19.8 million, or $0.22 per share, in the second quarter last year.

Total revenue in the second quarter increased 16.6% to $2.7 billion. The revenue growth was driven by a 16.2% increase in new and used retail unit sales. Total new retail unit sales increased 19.6%, including increases of 20.5% and 17.2% in our U.S. and International operations, respectively, resulting in a 24.4% increase in total new retail revenue. Used retail unit sales increased 12.0%, including increases of 17.1% and 4.2% in our U.S. and International operations, respectively, resulting in a 13.8% increase in total used retail revenue.

Total same-store retail revenue increased 13.3% during the quarter, including growth of 15.8% and 9.0% in our U.S. and International operations, respectively. Excluding changes in exchange rates, total same-store retail revenue increased 15.0%.

Penske Automotive Group Chairman Roger Penske said, "The improving retail environment and our premium/luxury brand mix helped drive double-digit growth in units, revenue, income from continuing operations and earnings per share in the second quarter. Our new vehicle unit sales outperformed industry sales in both the U.S. and the U.K., and we maintained a greater than one to one ratio of used unit to new unit sales in our international markets. Along with our strong operating performance, we have further reduced our leverage, resulting in a decrease in our long-term debt to capital ratio from 50% at the beginning of this year to 47% as of June 30."

Total revenues for the six months ended June 30, 2010, increased 15.9% to $5.2 billion. Income from continuing operations attributable to common shareholders for the six months ended June 30, 2010 and 2009, amounted to $49.9 million, or $0.54 per share, and $36.2 million, or $0.40 per share, respectively. Income from continuing operations for the six months ended June 30, 2010 and 2009, include after-tax gains of $0.7 million, or $0.01 per share, and $6.5 million, or $0.07 per share, respectively, relating to purchases of the Company's 3.5% Senior Subordinated Convertible Notes due 2026. Net income attributable to common shareholders in the six months ended June 30, 2010, was $49.8 million, or $0.54 per share.

smart USA

During the second quarter, smart USA wholesaled 2,040 units, which compares to 956 units in the first quarter of this year. Recent sales activity and proactive management of current model year inventory purchases has resulted in inventory levels more closely aligned with current market conditions. Based on the increase in sales in the second quarter, coupled with expense reduction efforts, the loss in the distribution segment improved to $0.02 per share in the second quarter compared to $0.04 in the first quarter.

Securities Repurchase Activity

In the second and third quarters, the Company repurchased $84.6 million principal amount of its 3.5% Senior Subordinated Convertible Notes due 2026 (the "Notes"), leaving $150.6 million principal amount of the securities outstanding today. The Company also repurchased 68,340 shares of its common stock at an average price of $10.97 per share in July, and currently has approximately 92.1 million shares outstanding.

The Board of Directors of the Company has increased the Company's authority to repurchase its outstanding common stock, debt and convertible debt, depending on market conditions, price and other factors to $150 million. Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means.

U.S. Credit Facility

The Company's U.S. credit facility has been amended to increase the revolving credit line by $50 million to $300 million. Including this increase, the Company currently has approximately $250 million of revolving credit available under the U.S. credit facility, all of which is currently available to repurchase or redeem the remaining $150.6 million of outstanding Notes.

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the second quarter of 2010 on July 29, 2010, at 2:00 p.m.Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1074 [International, please dial (612) 234-9959]. The call will also be simultaneously broadcast over the Internet through the Penske Automotive Group website at http://www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc. (http://www.penskeautomotive.com), headquartered in Bloomfield Hills, Michigan, operates 323 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 171 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 (http://www.smartusa.com), 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 14,100 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 expected ability to access amounts under its U.S. revolving credit facility. 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. Availability of revolving credit under the Company's U.S. credit facility is predicated on continued covenant compliance and other factors. 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.

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)

Second Quarter

2010

2009

Revenues:
New Vehicle $1,355,813 $1,090,127
Used Vehicle 749,669 658,787
Finance and Insurance, Net 63,558 54,674
Service and Parts 332,160 331,106
Distribution 19,933 53,152
Fleet and Wholesale Vehicle 182,555 130,849
Total Revenues 2,703,688 2,318,695
Cost of Sales:
New Vehicle 1,244,630 1,004,151
Used Vehicle 689,552 599,526
Service and Parts 141,655 148,692
Distribution 17,227 45,702
Fleet and Wholesale Vehicle 180,280 126,869
Total Cost of Sales 2,273,344 1,924,940
Gross Profit 430,344 393,755
SG&A Expenses 355,177 327,389
Depreciation 12,054 13,811
Operating Income 63,113 52,555
Floor Plan Interest Expense (8,321 ) (8,969 )
Other Interest Expense (12,542 ) (13,687 )
Debt Discount Amortization (2,428 ) (3,135 )
Equity in Earnings of Affiliates 4,784 3,466
Gain on Debt Repurchase 422 --
Income from Continuing Operations Before Income Taxes 45,028 30,230
Income Taxes (15,625 ) (10,329 )
Income from Continuing Operations 29,403 19,901
Income (Loss) from Discontinued Operations, Net of Tax 281 (5,734 )
Net Income 29,684 14,167
Income Attributable to Non-Controlling Interests (243 ) (88 )
Net Income Attributable to Common Shareholders $29,441 $14,079
Income from Continuing Operations Per Share $0.32 $0.22
Income Per Share $0.32 $0.15
Weighted Average Shares Outstanding 92,206 91,592
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $29,403 $19,901
Income Attributable to Non-Controlling Interests (243 ) (88 )
Income from Continuing Operations, net of tax 29,160 19,813
Loss from Discontinued Operations, net of tax 281 (5,734 )
Net Income $29,441 $14,079
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)

Six Months

2010

2009

Revenues:
New Vehicle $2,588,136 $2,061,323
Used Vehicle 1,446,337 1,275,286
Finance and Insurance, Net 122,992 103,137
Service and Parts 666,183 658,009
Distribution 27,869 133,265
Fleet and Wholesale Vehicle 337,850 245,975
Total Revenues 5,189,367 4,476,995
Cost of Sales:
New Vehicle 2,375,452 1,903,990
Used Vehicle 1,329,500 1,160,009
Service and Parts 287,275 298,867
Distribution 24,949 114,016
Fleet and Wholesale Vehicle 331,819 238,319
Total Cost of Sales 4,348,995 3,715,201
Gross Profit 840,372 761,794
SG&A Expenses 695,691 640,055
Depreciation 24,428 26,692
Operating Income 120,253 95,047
Floor Plan Interest Expense (16,842 ) (18,431 )
Other Interest Expense (25,262 ) (28,187 )
Debt Discount Amortization (5,343 ) (6,773 )
Equity in Earnings of Affiliates 4,355 4,180
Gain on Debt Repurchase 1,027 10,429
Income from Continuing Operations Before Income Taxes 78,188 56,265
Income Taxes (28,060 ) (20,074 )
Income from Continuing Operations 50,128 36,191
Loss from Discontinued Operations, Net of Tax (112 ) (5,822 )
Net Income 50,016 30,369
Income Attributable to Non-Controlling Interests (221 ) (8 )
Net Income Attributable to Common Shareholders $49,795 $30,361
Income from Continuing Operations Per Share $0.54 $0.40
Income Per Share $0.54 $0.33
Weighted Average Shares Outstanding 92,086 91,537
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $50,128 $36,191
Income Attributable to Non-Controlling Interests (221 ) (8 )
Income from Continuing Operations, net of tax 49,907 36,183
Loss from Discontinued Operations, net of tax (112 ) (5,822 )
Net Income $49,795 $30,361
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)

6/30/10

12/31/09

Assets
Cash and Cash Equivalents $17,664 $13,999
Accounts Receivable, Net 351,013 321,226
Inventories 1,364,718 1,302,495
Other Current Assets 106,479 95,426
Assets Held for Sale 572 10,625
Total Current Assets 1,840,446 1,743,771
Property and Equipment, Net 707,832 726,808
Intangibles 994,947 1,011,803
Other Long-Term Assets 295,438 313,625
Total Assets $3,838,663 $3,796,007
Liabilities and Equity
Floor Plan Notes Payable $818,339 $769,657
Floor Plan Notes Payable - Non-Trade 499,410 423,316
Accounts Payable 209,535 189,989
Accrued Expenses 218,716 227,294
Current Portion Long-Term Debt 16,551 12,442
Liabilities Held for Sale 501 7,675
Total Current Liabilities 1,763,052 1,630,373
Long-Term Debt 844,292 933,966
Other Long-Term Liabilities 269,585 285,629
Total Liabilities 2,876,929 2,849,968
Equity 961,734 946,039
Total Liabilities and Equity $3,838,663 $3,796,007
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
(Unaudited)

Second Quarter

Six Months

2010

2009

2010

2009

Total Retail Units:
New Retail 39,676 33,176 75,815 63,911
Used Retail 29,232 26,100 55,996 53,090
Total Retail 68,908 59,276 131,811 117,001
smart Wholesale Units 2,040 3,659 2,996 9,373
Same-Store Retail Units:
New Same-Store Retail 38,091 33,140 73,482 63,750
Used Same-Store Retail 28,239 26,070 54,512 52,854
Total Same-Store Retail 66,330 59,210 127,994 116,604
Same-Store Retail Revenue:
New Vehicles $1,301,745 $1,088,359 $2,498,367 $2,049,239
Used Vehicles 727,441 657,920 1,396,170 1,261,872
Finance and Insurance, Net 62,064 54,620 119,743 102,669
Service and Parts 321,851 329,492 649,707 652,477
Total Same-Store Retail $2,413,101 $2,130,391 $4,663,987 $4,066,257
Same-Store Retail Revenue Growth:
New Vehicles 19.6 % (39.2 %) 21.9 % (41.0 %)
Used Vehicles 10.6 % (23.0 %) 10.6 % (25.0 %)
Finance and Insurance, Net 13.6 % (29.8 %) 16.6 % (33.3 %)
Service and Parts (2.3 %) (11.5 %) (0.4 %) (11.8 %)
Revenue Mix:
New Vehicles 50.1 % 47.0 % 49.9 % 46.0 %
Used Vehicles 27.7 % 28.4 % 27.9 % 28.5 %
Finance and Insurance, Net 2.4 % 2.4 % 2.4 % 2.3 %
Service and Parts 12.3 % 14.3 % 12.8 % 14.7 %
Distribution 0.7 % 2.3 % 0.5 % 3.0 %
Fleet and Wholesale 6.8 % 5.6 % 6.5 % 5.5 %
Average Retail Selling Price:
New Vehicles $34,172 $32,859 $34,137 $32,253
Used Vehicles 25,645 25,241 25,829 24,021
Gross Margin 15.9 % 17.0 % 16.2 % 17.0 %
Retail Gross Margin - by Product:
New Vehicles 8.2 % 7.9 % 8.2 % 7.6 %
Used Vehicles 8.0 % 9.0 % 8.1 % 9.0 %
Service and Parts 57.4 % 55.1 % 56.9 % 54.6 %
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)

Second Quarter

Six Months

2010

2009

2010

2009

Gross Profit per Retail Transaction:
New Vehicles $2,802 $2,591 $2,805 $2,462
Used Vehicles 2,056 2,271 2,086 2,171
Finance and Insurance 922 922 933 882
Brand Mix:
BMW 20 % 21 % 20 % 22 %
Toyota / Lexus 18 % 18 % 18 % 19 %
Honda / Acura 15 % 15 % 14 % 15 %
Audi 11 % 11 % 11 % 10 %
Mercedes Benz 10 % 10 % 10 % 10 %
Land Rover 4 % 3 % 5 % 4 %
Porsche 4 % 4 % 4 % 4 %
Ferrari / Maserati 3 % 3 % 3 % 3 %
Other 15 % 15 % 15 % 13 %
100 % 100 % 100 % 100 %
Premium 64 % 65 % 65 % 65 %
Foreign 31 % 31 % 31 % 31 %
Domestic Big 3 5 % 4 % 4 % 4 %
100 % 100 % 100 % 100 %
Revenue Mix:
U.S. 65 % 64 % 63 % 64 %
International 35 % 36 % 37 % 36 %
100 % 100 % 100 % 100 %
Rent Expense $41,455 $40,859 $82,686 $80,484

SOURCE: Penske Automotive Group, Inc.

Penske Automotive Group, Inc.
Bob O'Shaughnessy
Chief Financial Officer
248-648-2800
boshaughnessy@penskeautomotive.com
or
Anthony R. Pordon
Senior Vice President
248-648-2540
tpordon@penskeautomotive.com