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Penske Automotive Reports Record Results

Income and Earnings per Share Highest in Company History

  • Revenue Increased 7.7% to $3.4 Billion
  • Same-store Retail Revenue Increased 7.4%
  • Income from Continuing Operations Increased 13.9% to $56.9 Million
  • Earnings per Share from Continuing Operations Increased 14.5% to $0.63
  • EBITDA Increased 9.5% to $111.8 Million
  • Repurchased 410,000 shares

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--Apr. 29, 2013-- Penske Automotive Group, Inc. (NYSE:PAG), an international automotive retailer, announced today the highest income and earnings per share in company history. For the first quarter 2013, income from continuing operations attributable to common shareholders increased 13.9% to $56.9 million and related earnings per share increased 14.5% to $0.63 per share. This compares to income from continuing operations attributable to common shareholders of $49.9 million, or $0.55 per share in the same period last year.

First quarter 2013 revenue was $3.4 billion, compared to $3.2 billion in the same period last year, an increase of 7.7%. On a same-store basis, retail revenue increased 7.4%. The revenue growth was driven by strong performance across each business area including a 9.9% increase in total retail unit sales and 6.8% on a same-store basis. Gross profit improved 7.9% to $533.0 million while overall gross margin increased 10 basis points. Operating income increased 11.7% to $105.2 million.

Highlights of the First Quarter

  • Total Retail Unit Sales increased 9.9% to 85,821
    • +12.7% in the United States; +4.5% Internationally
    • New unit retail sales +9.7%
    • Used unit retail sales +10.2%
  • Same-store Retail Revenue increased 7.4%
    • New +10.1%; Used +4.5%; Finance & Insurance +9.9%; Service and Parts +3.1%
    • +11.5% in the United States; +1.2% Internationally
  • Average Transaction Price Per Unit
    • New $38,099; +2.9%
    • Used $25,076; -2.6%
  • Average Gross Profit Per Unit
    • New $2,959, -$149/unit; Gross Margin 7.8%, -60 bps
    • Used $1,958, -$133/unit; Gross Margin 7.8%, -30 bps
    • Finance & Insurance $1,010, +$14/unit

Chairman Roger Penske said, “Penske Automotive Group delivered strong operating results and record profitability in the first quarter, including double-digit growth in operating income, income from continuing operations and earnings per share. I was pleased to see our gross margin improve to 15.7% on the strength of a 3.1% increase in same-store service and parts revenue and a 60 basis-point increase in service and parts gross margin to 58.4%. Additionally, SG&A as a percent of gross profit improved 80 basis points year-over-year to 77.5% and 200 basis-points sequentially, helping drive an increase in our operating margin to 3.1%.”

Securities Repurchase Activity

During the first quarter, the company acquired 410,000 shares of its common stock for an aggregate purchase price of $12.7 million, or an average price of $30.93 per share. The company currently has remaining authorization from its Board of Directors to repurchase up to $85.6 million of its outstanding common stock or 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 2013 on April 29, 2013, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1059 [International, please dial (612) 234-9959]. The call will also be simultaneously broadcast over the Internet through the Investors Relations section of the Penske Automotive Group website. Additionally, an investor presentation relating to the first quarter 2013 financial results has been posted to the company’s website. To access the presentation or to listen to the company’s webcast, please refer to www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 342 retail automotive franchises, representing 40 different brands and 30 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 18 states and Puerto Rico and 168 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 16,700 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 and provide a meaningful presentation of the company's results from its core business operations excluding the impact of items not related to the company's ongoing core business operations, and improve the period-to-period comparability of the company's results from its core business operations. 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, regulatory 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, 2012, 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
Follow Penske Automotive on Twitter: https://twitter.com/#!/Penskecarscorp
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,
2013     2012
Revenues:
New Vehicle $ 1,742,833 $ 1,543,991
Used Vehicle 1,004,964 936,091
Finance and Insurance, Net 86,685 77,752
Service and Parts 383,483 359,206
Fleet, Wholesale and Other   181,902     239,350  
Total Revenues $ 3,399,867 $ 3,156,390
Cost of Sales:
New Vehicle 1,607,458 1,414,388
Used Vehicle 926,493 860,032
Service and Parts 159,615 151,654
Fleet, Wholesale and Other   173,314     236,457  
Total Cost of Sales 2,866,880 2,662,531
Gross Profit 532,987 493,859
SG&A Expenses 413,312 386,705
Depreciation   14,449     12,950  
Operating Income 105,226 94,204
Floor Plan Interest Expense (10,211 ) (9,493 )
Other Interest Expense (11,776 ) (12,131 )
Equity in Earnings of Affiliates   2,348     4,410  
Income from Continuing Operations Before Income Taxes 85,587 76,990
Income Taxes   (28,381 )   (26,908 )
Income from Continuing Operations 57,206 50,082
(Loss) Income from Discontinued Operations, Net of Tax   813     (3,076 )
Net Income 58,019 47,006
Less: Income Attributable to Non-Controlling Interests   (355 )   (188 )
Net Income Attributable to Common Shareholders $ 57,664   $ 46,818  
Income from Continuing Operations Per Share $ 0.63   $ 0.55  
Income Per Share $ 0.64   $ 0.52  
Weighted Average Shares Outstanding   90,457     90,338  
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $ 57,206 $ 50,082
Less: Income Attributable to Non-Controlling Interests   (355 )   (188 )
Income from Continuing Operations, net of tax $ 56,851 $ 49,894
(Loss) Income from Discontinued Operations, net of tax   813     (3,076 )
Net Income $ 57,664   $ 46,818  
 
 
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
       
March 31, December 31,
2013 2012
Assets
Cash and Cash Equivalents $ 31,627 $ 43,753
Accounts Receivable, Net 527,663 552,868
Inventories 2,023,529 1,991,167
Other Current Assets 89,488 90,854
Assets Held for Sale   108,468   94,441
Total Current Assets 2,780,775 2,773,083
Property and Equipment, Net 1,078,627 1,023,781
Intangibles 1,225,591 1,258,012
Other Long-Term Assets   329,989   324,114
Total Assets $ 5,414,982 $ 5,378,990
 
Liabilities and Equity
Floor Plan Notes Payable $ 1,425,199 $ 1,408,363
Floor Plan Notes Payable – Non-Trade 744,223 716,621
Accounts Payable 287,744 263,349
Accrued Expenses 226,080 223,574
Current Portion Long-Term Debt 33,053 19,493
Liabilities Held for Sale   81,452   62,156
Total Current Liabilities 2,797,751 2,693,556
Long-Term Debt 858,676 918,024
Other Long-Term Liabilities   452,979   451,089
Total Liabilities 4,109,406 4,062,669
Equity   1,305,576   1,316,321
Total Liabilities and Equity $ 5,414,982 $ 5,378,990
 
 
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
   
Three Months Ended
March 31,
        % Increase/
2013 2012 (Decrease)
Revenues:
New Vehicle $ 1,742,833 $ 1,543,991

12.9%

 

Used Vehicle 1,004,964 936,091

7.4%

 

Finance and Insurance, Net 86,685 77,752

11.5%

 

Service and Parts 383,483 359,206

6.8%

 

Fleet, Wholesale and Other   181,902     239,350  

(24.0%

)

Total Revenues $ 3,399,867 $ 3,156,390

7.7%

 

Cost of Sales:
New Vehicle 1,607,458 1,414,388

13.7%

 

Used Vehicle 926,493 860,032

7.7%

 

Service and Parts 159,615 151,654

5.2%

 

Fleet, Wholesale and Other   173,314     236,457  

(26.7%

)

Total Cost of Sales 2,866,880 2,662,531

7.7%

 

Gross Profit 532,987 493,859

7.9%

 

SG&A Expenses 413,312 386,705

6.9%

 

Depreciation   14,449     12,950  

11.6%

 

Operating Income 105,226 94,204

11.7%

 

Floor Plan Interest Expense (10,211 ) (9,493 )

7.6%

 

Other Interest Expense (11,776 ) (12,131 )

(2.9%

)

Equity in Earnings of Affiliates   2,348     4,410  

(46.8%

)

Income from Continuing Operations Before Income Taxes 85,587 76,990

11.2%

 

Income Taxes   (28,381 )   (26,908 )

5.5%

 

Income from Continuing Operations 57,206 50,082

14.2%

 

(Loss) Income from Discontinued Operations, Net of Tax   813     (3,076 ) NM  
Net Income 58,019 47,006

23.4%

 

Less: Income Attributable to Non-Controlling Interests   (355 )   (188 )

88.8%

 

Net Income Attributable to Common Shareholders $ 57,664   $ 46,818  

23.2%

 

Income from Continuing Operations Per Share $ 0.63   $ 0.55  

14.5%

 

Income Per Share $ 0.64   $ 0.52  

23.1%

 

Weighted Average Shares Outstanding   90,457     90,338  

0.1%

 

Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $ 57,206 $ 50,082

14.2%

 

Less: Income Attributable to Non-Controlling Interests   (355 )   (188 )

88.8%

 

Income from Continuing Operations, net of tax $ 56,851 $ 49,894

13.9%

 

(Loss) Income from Discontinued Operations, net of tax   813     (3,076 ) NM  
Net Income $ 57,664   $ 46,818  

23.2%

 

 

NM – not meaningful

 
 
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
(Unaudited)
   
Three Months Ended
March 31,
        % Increase/
2013 2012 (Decrease)
Total Retail Units:
New Retail 45,745 41,704

9.7%

 

Used Retail   40,076     36,371  

10.2%

 

Total Retail

  85,821     78,075  

9.9%

 

 
Same-Store Retail Units:
New Same-Store Retail 44,203 41,353

6.9%

 

Used Same-Store Retail   38,492     36,109  

6.6%

 

Total Same-Store Retail   82,695     77,462  

6.8%

 

 
Same-Store Retail Revenue: (Amounts in thousands)
New Vehicles $ 1,687,000 $ 1,532,293

10.1%

 

Used Vehicles 974,251 931,971

4.5%

 

Finance and Insurance, Net 84,839 77,198

9.9%

 

Service and Parts   368,498     357,309  

3.1%

 

Total Same-Store Retail $ 3,114,588   $ 2,898,771  

7.4%

 

 
Revenue Mix:
New Vehicles 51.3 % 48.9 %
Used Vehicles 29.6 % 29.7 %
Finance and Insurance, Net 2.5 % 2.5 %
Service and Parts 11.3 % 11.4 %
Fleet, Wholesale and Other 5.3 % 7.5 %
 
Average Revenue per Vehicle Retailed:
New Vehicles $ 38,099 $ 37,023

2.9%

 

Used Vehicles $ 25,076 $ 25,737

(2.6%

)

 
Gross Profit per Vehicle Retailed:
New Vehicles $ 2,959 $ 3,108

(4.8%

)

Used Vehicles $ 1,958 $ 2,091

(6.4%

)

Finance and Insurance $ 1,010 $ 996

1.4%

 

 
Operating items as a percentage of revenue:
New Vehicle Gross Profit 7.8 % 8.4 %

(60 bps

)

Used Vehicle Gross Profit 7.8 % 8.1 %

(30 bps

)

Service and Parts Gross Profit 58.4 % 57.8 % 60 bps

Total Gross Profit

15.7 % 15.6 % 10 bps
Selling, General and Admin. Expenses 12.2 % 12.3 %

(10 bps

)

Operating Income 3.1 % 3.0 % 10 bps
Inc. From Cont. Ops. Before Inc. Taxes 2.5 % 2.4 % 10 bps
 
Operating items as a percentage of total gross profit:
Selling, General and Administrative Expenses 77.5 % 78.3 %

(80 bps

)

Operating Income 19.7 % 19.1 % 60 bps
 
 
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)
   
Three Months Ended
March 31,
        % Increase/
2013 2012 (Decrease)
 
Other (Amounts in Thousands):
EBITDA * $ 111,812 $ 102,071 9.5 %
Rent Expense $ 44,487 $ 42,908 3.7 %
Floorplan Credits $ 5,943 $ 4,636 28.2 %
 

* See the following Non-GAAP reconciliation table

 
 
Selected Data
Brand Revenue Mix
(Unaudited)
   
Three Months Ended
March 31,
2013     2012
Brand Revenue Mix:
Premium:
BMW 25 % 24 %
Audi 13 % 13 %
Mercedes-Benz 10 % 11 %
Lexus 4 % 4 %
Land Rover 5 % 5 %
Porsche 4 % 4 %
Ferrari / Maserati 3 % 3 %
Acura 1 % 1 %
Other 4 % 4 %
Total Premium 69 % 69 %
Foreign:
Toyota 11 % 10 %
Honda 10 % 11 %
Nissan 2 % 1 %
Volkswagen 2 % 2 %
Other 2 % 3 %
Total Foreign 27 % 27 %
Domestic Big 3
General Motors / Chrysler / Ford 4 % 4 %
 
Revenue Mix:
U.S. 63 % 61 %
International 37 % 39 %
 
 
PENSKE AUTOMOTIVE GROUP, INC.
Non-GAAP Reconciliations
(Unaudited)
 

Reconciliation of first quarter 2013 and 2012 net income to EBITDA (earnings before interest, income taxes, depreciation and amortization):

 
Three Months Ended
March 31,
        % Increase/
(Amounts in Thousands) 2013 2012 (Decrease)
 
Net Income $ 58,019 $ 47,006

23.4%

 

Depreciation 14,449 12,950

11.6%

 

Other Interest Expense 11,776 12,131

(2.9%

)

Income Taxes 28,381 26,908

5.5%

 

Loss (income) from Discontinued Operations, net   (813 )   3,076 NM  
EBITDA $ 111,812   $ 102,071

9.5%

 

 

NM – not meaningful

Source: Penske Automotive Group, Inc.

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

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