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Penske Automotive Reports Record Results
Total Revenue Increases 10.5% to $3.0 Billion
Revenue for All Categories Increases Compared to Third Quarter Last Year
Income From Continuing Operations of $56.7 Million, Related EPS of $0.62,Representing Increases of 63%
SG&A to Gross Profit Improves by 70 Basis Points
Acquires 1.8 Million Shares of Common Stock

BLOOMFIELD HILLS, Mich., Nov 02, 2011 (BUSINESS WIRE) --

Penske Automotive Group, Inc. (NYSE:PAG), an international automotive retailer, today reported record third quarter results including the highest quarterly profit in company history. For the third quarter of 2011, income from continuing operations attributable to common shareholders was $56.7 million, or $0.62 per share, which compares to income from continuing operations attributable to common shareholders of $34.8 million, or $0.38 per share for the third quarter last year. During the quarter, the Company recognized a net income tax benefit of $11.0 million, or $0.12 per share, reflecting a positive adjustment from the resolution of certain tax items in the U.K. of $17.0 million, or $0.19 per share, partially offset by a reduction in deferred tax assets of $6.0 million, or $0.07 per share. After adjusting for these items, adjusted income from continuing operations attributable to common shareholders was a record $45.7 million, or $0.50 per share, representing an increase of 31.3% compared to the third quarter last year.

Total revenue increased by 10.5%, to $3.0 billion as total retail unit sales increased 6.2%. The increase in retail unit sales was highlighted by a 16.0% increase in used retail unit sales, which drove the Company's used-to-new ratio to 0.88 to 1. During the quarter, higher average transaction prices on both new and used vehicles also contributed to the revenue increase, including an 8.8% increase in same-store retail revenue from the Company's premium/luxury brands. The parts and service business remained strong, increasing 8.6% in the quarter and 4.1% on a same-store basis.

Highlights of the Third Quarter

  • Total retail unit sales increased 6.2% to 72,204
    • +5.9% in the United States; +6.8% Internationally
    • New unit retail sales (1.2%)
    • Used unit retail sales +16.0%
  • Same-store retail revenue increased 6.4%
    • New +2.2%; Used +15.0%; Finance & Insurance +9.3%; Service and Parts +4.1%
    • +5.1% in the United States; +8.7% Internationally
  • Average Transaction Price Per Unit
    • New $38,236, +8.4%
    • Used $26,404, +2.2%
  • Average Gross Profit Per Unit
    • New $3,238/unit, +14.8%; Gross Margin 8.5% +50 bps
    • Used $1,978/unit, +2.8%; Gross Margin 7.5% +10 bps
  • Inventory Days' Supply
    • New 43 days; Used 47 days

Commenting on the Company's performance in the third quarter, Chairman Roger Penske said, "Our business produced another outstanding quarter of results in both the United States and Internationally. Although we faced a challenging new vehicle inventory situation throughout the quarter as a result of the earthquake and tsunami that struck Japan, the Company generated same-store retail revenue increases in each area of the business and leveraged our cost structure by 70 basis points, improving operating income by 17.6%. Going forward, we believe the inventory supply of new vehicles for the affected brands is improving and should normalize in the first quarter of 2012."

Penske added, "Our U.K. business performed well in the third quarter. We continue to realize the benefit from the premium/luxury brand mix of our business in that market and generated a 3.3% increase in same-store new retail unit sales, outperforming the overall U.K. market, which declined nearly 1% in the third quarter. Further, same-store used retail unit sales increased 8.2% in the U.K. during the quarter."

Total revenue for the nine months ended September 30, 2011, increased 12.0% to $8.6 billion and income from continuing operations attributable to common shareholders was $134.9 million, or $1.46 per share, which compares to $90.1 million, or $0.98 per share in the same period last year. Excluding the impact of the net tax benefit noted above, adjusted income from continuing operations attributable to common shareholders increased 37.5%, to $123.9 million or $1.34 per share.

Acquisition Activity

As previously announced, the Company has acquired seven franchises in 2011, which are expected to generate approximately $525 million of annual revenue. Additionally, the Company has either sold, or is in the process of disposing dealerships, which represent approximately $300 million in annualized revenue.

U.S. Credit Agreement

During the third quarter, the Company amended its credit agreement with Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation (the "U.S. Credit Agreement") to increase the revolving loan availability by $75 million, from $300 million to $375 million. Additionally, the term of the U.S. Credit Agreement was extended by one year through September 30, 2014, pursuant to its evergreen provision.

Securities Repurchase Activity

During the third quarter of 2011, the Company acquired 1,831,559 shares of its common stock for an aggregate purchase price of $31.9 million, or an average price of $17.39 per share. For the nine months ended September 30, 2011, the Company acquired 2,449,768 shares of its common stock for an aggregate purchase price of $44.3 million, or an average price of $18.07 per share. The Company currently has remaining authorization from its Board of Directors to repurchase up to $106.8 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 third quarter of 2011 on November 2, 2011, at 2:00 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 325 retail automotive franchises, representing 42 different brands and 28 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 170 franchises in 17 states and Puerto Rico and 155 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 15,000 employees.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations, adjusted income from continuing operations per share and 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. Actual results may vary materially because of risks and uncertainties as well as external factors such as consumer credit conditions; adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to natural disasters such as the earthquake and tsunami that struck Japan in March 2011; 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, 2010, 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.

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PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Revenues:
New Vehicle $ 1,471,606 $ 1,373,240 $ 4,288,746 $ 3,882,945
Used Vehicle 890,251 750,720 2,580,261 2,170,006
Finance and Insurance, Net 73,289 65,185 208,765 184,577
Service and Parts 354,616 326,494 1,049,467 974,913
Fleet and Wholesale Vehicle 161,284 154,134 496,471 485,329
Total Revenues 2,951,046 2,669,773 8,623,710 7,697,770
Cost of Sales:
New Vehicle 1,346,995 1,263,386 3,932,360 3,565,684
Used Vehicle 823,562 694,806 2,375,508 1,999,446
Service and Parts 153,153 139,906 451,600 420,552
Fleet and Wholesale Vehicle 160,229 153,506 490,170 478,712
Total Cost of Sales 2,483,939 2,251,604 7,249,638 6,464,394
Gross Profit 467,107 418,169 1,374,072 1,233,376
SG&A Expenses 375,432 339,120 1,111,812 1,003,151
Depreciation 12,590 11,820 36,578 35,123
Operating Income 79,085 67,229 225,682 195,102
Floor Plan Interest Expense (7,020 ) (8,805 ) (21,131 ) (24,907 )
Other Interest Expense (11,288 ) (12,229 ) (33,264 ) (37,491 )
Debt Discount Amortization - (1,647 ) (1,718 ) (6,990 )
Equity in Earnings of Affiliates 9,623 7,370 17,527 11,725
Gain on Debt Repurchase - 607 - 1,634
Income from Continuing Operations Before Income Taxes 70,400 52,525 187,096 139,073
Income Taxes (13,355 ) (17,428 ) (51,293 ) (48,485 )
Income from Continuing Operations 57,045 35,097 135,803 90,588
Loss from Discontinued Operations, Net of Tax (1,000 ) (4,837 ) (5,702 ) (10,312 )
Net Income 56,045 30,260 130,101 80,276
Income Attributable to Non-Controlling Interests (338 ) (283 ) (907 ) (504 )
Net Income Attributable to Common Shareholders $ 55,707 $ 29,977 $ 129,194 $ 79,772
Income from Continuing Operations Per Share $ 0.62 $ 0.38 $ 1.46 $ 0.98
Income Per Share $ 0.61 $ 0.33 $ 1.40 $ 0.87
Weighted Average Shares Outstanding 91,431 92,141 92,169 92,171
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $ 57,045 $ 35,097 $ 135,803 $ 90,588
Income Attributable to Non-Controlling Interests (338 ) (283 ) (907 ) (504 )
Income from Continuing Operations, net of tax 56,707 34,814 134,896 90,084
Loss from Discontinued Operations, net of tax (1,000 ) (4,837 ) (5,702 ) (10,312 )
Net Income $ 55,707 $ 29,977 $ 129,194 $ 79,772
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
September 30, December 31,
2011 2010
Assets
Cash and Cash Equivalents $ 7,735 $ 17,808
Accounts Receivable, Net 385,137 383,379
Inventories 1,481,629 1,449,157
Other Current Assets 88,676 68,355
Assets Held for Sale 54,168 117,018
Total Current Assets 2,017,345 2,035,717
Property and Equipment, Net 821,421 719,762
Intangibles 1,148,247 1,011,275
Other Long-Term Assets 308,456 303,078
Total Assets $ 4,295,469 $ 4,069,832
Liabilities and Equity
Floor Plan Notes Payable $ 902,163 $ 918,628
Floor Plan Notes Payable - Non-Trade 597,982 491,889
Accounts Payable 226,709 253,277
Accrued Expenses 247,185 202,480
Current Portion Long-Term Debt 9,642 10,593
Liabilities Held for Sale 34,464 84,139
Total Current Liabilities 2,018,145 1,961,006
Long-Term Debt 841,927 769,285
Other Long-Term Liabilities 322,979 293,688
Total Liabilities 3,183,051 3,023,979
Equity 1,112,418 1,045,853
Total Liabilities and Equity $ 4,295,469 $ 4,069,832
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
(Unaudited)
Three Months Ended Nine Months Ended
September 30, % September 30, %
2011 2010 Change 2011 2010 Change
Total Retail Units:
New Retail 38,487 38,936 -1.2 % 114,943 111,961 2.7 %
Used Retail 33,717 29,058 16.0 % 97,494 83,460 16.8 %
Total Retail 72,204 67,994 6.2 % 212,437 195,421 8.7 %
Fleet 848 840 1.0 % 3,846 4,500 -14.5 %
Wholesale 15,238 15,765 -3.3 % 44,113 45,740 -3.6 %
Total 16,086 16,605 -3.1 % 47,959 50,240 -4.5 %
Same-Store Retail Units:
New Same-Store Retail 36,990 38,697 -4.4 % 109,084 109,498 -0.4 %
Used Same-Store Retail 32,698 28,952 12.9 % 92,548 81,760 13.2 %
Total Same-Store Retail 69,688 67,649 3.0 % 201,632 191,258 5.4 %
Same-Store Retail Revenue: (Amounts in thousands)
New Vehicles $ 1,397,916 $ 1,368,179 2.2 % $ 4,047,261 $ 3,802,541 6.4 %
Used Vehicles 861,576 749,261 15.0 % 2,458,124 2,134,916 15.1 %
Finance and Insurance, Net 70,932 64,870 9.3 % 201,211 181,843 10.7 %
Service and Parts 339,119 325,799 4.1 % 997,742 958,795 4.1 %
Total Same-Store Retail $ 2,669,543 $ 2,508,109 6.4 % $ 7,704,338 $ 7,078,095 8.8 %
Revenue Mix:
New Vehicles 49.9 % 51.4 % 49.7 % 50.4 %
Used Vehicles 30.2 % 28.2 % 29.9 % 28.2 %
Finance and Insurance, Net 2.5 % 2.4 % 2.4 % 2.4 %
Service and Parts 12.0 % 12.2 % 12.2 % 12.7 %
Fleet and Wholesale 5.4 % 5.8 % 5.8 % 6.3 %
Average Revenue per Vehicle Retailed:
New Vehicles $ 38,236 $ 35,269 8.4 % $ 37,312 $ 34,681 7.6 %
Used Vehicles 26,404 25,835 2.2 % 26,466 26,001 1.8 %
Gross Profit per Vehicle Retailed:
New Vehicles $ 3,238 $ 2,821 14.8 % $ 3,101 $ 2,834 9.4 %
Used Vehicles 1,978 1,924 2.8 % 2,100 2,043 2.8 %
Finance and Insurance 1,015 959 5.9 % 983 945 4.0 %
Operating items as a percentage of revenue:
New Vehicle Gross Profit 8.5 % 8.0 % 8.3 % 8.2 %
Used Vehicle Gross Profit 7.5 % 7.4 % 7.9 % 7.9 %
Service and Parts Gross Profit 56.8 % 57.1 % 57.0 % 56.9 %
Total Gross Profit 15.8 % 15.7 % 15.9 % 16.0 %
Selling, general and admin. expenses 12.7 % 12.7 % 12.9 % 13.0 %
Operating income 2.7 % 2.5 % 2.6 % 2.5 %
Inc. from Cont. Ops. Before Inc. Taxes 2.4 % 2.0 % 2.2 % 1.8 %
Operating items as a percentage

of total gross profit:

Selling, general and administrative expenses 80.4 % 81.1 % 80.9 % 81.3 %
Operating income 16.9 % 16.1 % 16.4 % 15.8 %
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Brand Mix:
Premium:
BMW 25 % 22 % 24 % 21 %
Audi 12 % 11 % 12 % 11 %
Mercedes-Benz 11 % 10 % 10 % 10 %
Lexus 5 % 5 % 5 % 5 %
Land Rover 4 % 4 % 4 % 5 %
Porsche 4 % 5 % 4 % 4 %
Ferrari / Maserati 3 % 3 % 3 % 3 %
Acura 2 % 2 % 2 % 2 %
Other 4 % 5 % 5 % 5 %
Total Premium 70 % 67 % 69 % 66 %
Foreign:
Toyota 10 % 11 % 10 % 11 %
Honda 10 % 12 % 11 % 12 %
Nissan 2 % 2 % 2 % 2 %
Volkswagen 2 % 1 % 2 % 2 %
Other 1 % 2 % 1 % 2 %
Total Foreign 25 % 28 % 26 % 29 %
Domestic Big 3
General Motors / Chrysler / Ford 5 % 5 % 5 % 5 %
Revenue Mix:
U.S. 62 % 62 % 62 % 62 %
International 38 % 38 % 38 % 38 %
Other (Amounts in thousands):
EBITDA * $ 94,278 $ 78,221 $ 258,656 $ 218,677
Rent Expense $ 43,051 $ 40,678 $ 128,310 $ 120,451
Floorplan Credits $ 4,940 $ 5,209 $ 15,466 $ 14,983

* See the following Non-GAAP reconciliation tables

PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Concluded)
(Unaudited)
Reconciliation of 2011 and 2010 net income to EBITDA:
Three Months Ended Nine Months Ended
September 30, September 30,
(Amounts in thousands) 2011 2010 2011 2010
Net income $ 56,045 $ 30,260 $ 130,101 $ 80,276
Depreciation 12,590 11,820 36,578 35,123
Other interest expense 11,288 12,229 33,264 37,491
Debt discount amortization - 1,647 1,718 6,990
Income taxes 13,355 17,428 51,293 48,485
Loss from discontinued operations, net of tax 1,000 4,837 5,702 10,312
EBITDA $ 94,278 $ 78,221 $ 258,656 $ 218,677

Reconciliation of three and nine months ended September 30, 2011 income from continuing operations attributable to common shareholders and related earnings per share to adjusted income from continuing operations attributable to common shareholders and related earnings per share:

Three Months Ended Nine Months Ended
September 30, 2011 September 30, 2011
(Amounts in thousands,

except per share amounts)

Income EPS Income EPS
Income from continuing operations

attributable to common shareholders

$ 56,707 $ 0.62 $ 134,896 $ 1.46
Net tax benefit (11,046 ) $ (0.12 ) (11,046 ) $ (0.12 )
Adjusted income from continuing operations

attributable to common shareholders

$ 45,661 $ 0.50 $ 123,850 $ 1.34

SOURCE: Penske Automotive Group, Inc.

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
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