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Penske Automotive Reports Third Quarter Results
Total Revenue Increases 6.5% and Retail Unit Sales Increase 4.7%
Same-Store Retail Revenue Increases 4.2% in U.S. and 3.1% Internationally
Income From Continuing Operations of $31.0 Million, or $0.34 Per Share

BLOOMFIELD HILLS, Mich., Oct 22, 2010 (BUSINESS WIRE) -- Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported third quarter income from continuing operations attributable to common shareholders of $31.0 million, or $0.34 per share. This compares to income from continuing operations attributable to common shareholders of $27.7 million, or $0.30 per share, in the third quarter last year. Third quarter 2009 income from continuing operations attributable to common shareholders included net expenses of $3.4 million, or $0.04 per share, relating to unusual items as shown in the reconciliation included in the attached selected data tables.

Total revenue in the third quarter increased 6.5% to $2.8 billion. The revenue increase was driven by a 4.7% increase in total retail unit sales. Total used units retailed increased 16.5%, including an increase in the U.S. of 20.6%. Total new units retailed declined 2.6% due to the impact of the highly successful government incentive programs in the U.S., U.K. and Germany last year. Total same-store retail revenue increased 3.8% during the quarter, including growth of 4.2% and 3.1% in our U.S. and International operations, respectively. Excluding changes in exchange rates, total same-store retail revenue increased 6.0%.

Penske Automotive Group Chairman Roger Penske said, "The new vehicle retail environment was challenging during the third quarter, however, our performance at our premium/luxury franchises and our focus on increasing used vehicle sales drove our same-store retail revenue growth." Penske continued, "We remain committed to growing our business. In 2010, we have acquired or been awarded new franchises that we expect will generate approximately $350 million of revenue on an annualized basis. We will continue to pursue opportunities to generate incremental revenue, while maintaining the financial discipline that has allowed us to pay down more than $210 million of long-term debt since the beginning of 2009."

Total revenues for the nine months ended September 30, 2010 increased 12.5% to $7.9 billion. Income from continuing operations attributable to common shareholders in the nine months ended September 30, 2010 amounted to $80.9 million, or $0.88 per share. This compares to income from continuing operations attributable to common shareholders of $63.9 million, or $0.70 per share, in the nine months ended September 30, 2009. Income from continuing operations attributable to common shareholders for the nine months ended September 30, 2010 includes after-tax gains of $1.1 million, or $0.01 per share, relating to purchases of the Company's 3.5% Senior Subordinated Convertible Notes due 2026. Income from continuing operations attributable to common shareholders for the nine months ended September 30, 2009 includes a net after-tax gain of $3.1 million, or $0.04 per share, relating to unusual items as shown in the reconciliation included in the attached selected data tables.

smart USA

As previously announced, smart USA expects to incur approximately $25 million of development, engineering and tooling costs relating to a new five-door vehicle based upon Nissan's global architecture to be distributed through the smart USA dealer network. smart USA currently expects that approximately $17 million of the costs incurred relating to the new vehicle will be expensed prior to the projected launch of the vehicle in the fourth quarter of 2011.

During the third quarter, smart USA wholesaled 1,165 units. In October, smart USA introduced finance and marketing campaigns designed to sell through the balance of the 2010 model year inventory, resulting in $0.9 million, or $0.01 per share, of after-tax expense in the third quarter. In addition, smart USA recognized $1.1 million, or $0.01 per share, of after-tax expense in the third quarter relating to the new vehicle.

Credit Facilities

The Company's U.S. credit facility was extended in September by one year to September 2013. As of September 30, 2010, the Company had approximately $262 million and $60 million of revolving credit available under its U.S. and U.K. credit facilities, respectively. Penske Automotive CFO Bob O'Shaughnessy said, "Together with cash flow from operations and working capital, we believe our credit facilities will provide liquidity to fund our growth objectives and repurchase or redeem outstanding securities, including the $150.6 million principal amount of convertible notes expected to be redeemed in April 2011."

Securities Repurchase Activity

The Company currently has authorization to repurchase up to $150 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 2010 on October 22, 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) 332-0228]. 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 324 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 173 franchises in 17 states and Puerto Rico and 151 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 14,500 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)

Third Quarter

2010

2009

Revenues:
New Vehicle $1,416,314 $1,338,759
Used Vehicle 765,555 674,228
Finance and Insurance, Net 67,149 60,872
Service and Parts 335,250 335,571
Distribution 15,306 36,451
Fleet and Wholesale Vehicle 156,548 142,161
Total Revenues 2,756,122 2,588,042
Cost of Sales:
New Vehicle 1,304,008 1,225,907
Used Vehicle 708,593 614,867
Service and Parts 143,197 150,083
Distribution 14,481 30,294
Fleet and Wholesale Vehicle 155,990 144,184
Total Cost of Sales 2,326,269 2,165,335
Gross Profit 429,853 422,707
SG&A Expenses 355,920 347,550
Depreciation 12,403 14,019
Operating Income 61,530 61,138
Floor Plan Interest Expense (9,048) (9,061)
Other Interest Expense (12,229) (13,490)
Debt Discount Amortization (1,647) (3,135)
Equity in Earnings of Affiliates 7,370 7,536
Gain on Debt Repurchase 607 --
Income from Continuing Operations Before Income Taxes 46,583 42,988
Income Taxes (15,279) (15,069)
Income from Continuing Operations 31,304 27,919
Loss from Discontinued Operations, Net of Tax (1,044) (257)
Net Income 30,260 27,662
Income Attributable to Non-Controlling Interests (283) (239)
Net Income Attributable to Common Shareholders $29,977 $27,423
Income from Continuing Operations Per Share $0.34 $0.30
Income Per Share $0.33 $0.30
Weighted Average Shares Outstanding 92,141 91,625
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $31,304 $27,919
Income Attributable to Non-Controlling Interests (283) (239)
Income from Continuing Operations, Net of Tax 31,021 27,680
Loss from Discontinued Operations, Net of Tax (1,044) (257)
Net Income $29,977 $27,423
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)

Nine Months

2010

2009

Revenues:
New Vehicle $4,004,450 $3,400,082
Used Vehicle 2,211,892 1,949,514
Finance and Insurance, Net 190,141 164,009
Service and Parts 1,001,433 993,580
Distribution 43,175 169,716
Fleet and Wholesale Vehicle 494,398 388,136
Total Revenues 7,945,489 7,065,037
Cost of Sales:
New Vehicle 3,679,460 3,129,896
Used Vehicle 2,038,092 1,774,877
Service and Parts 430,472 448,950
Distribution 39,430 144,310
Fleet and Wholesale Vehicle 487,810 382,503
Total Cost of Sales 6,675,264 5,880,536
Gross Profit 1,270,225 1,184,501
SG&A Expenses 1,051,611 987,605
Depreciation 36,831 40,711
Operating Income 181,783 156,185
Floor Plan Interest Expense (25,890) (27,492)
Other Interest Expense (37,491) (41,677)
Debt Discount Amortization (6,990) (9,908)
Equity in Earnings of Affiliates 11,725 11,716
Gain on Debt Repurchase 1,634 10,429
Income from Continuing Operations Before Income Taxes 124,771 99,253
Income Taxes (43,339) (35,143)
Income from Continuing Operations 81,432 64,110
Loss from Discontinued Operations, Net of Tax (1,156) (6,079)
Net Income 80,276 58,031
Income Attributable to Non-Controlling Interests (504) (247)
Net Income Attributable to Common Shareholders $79,772 $57,784
Income from Continuing Operations Per Share $0.88 $0.70
Income Per Share $0.87 $0.63
Weighted Average Shares Outstanding 92,171 91,563
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $81,432 $64,110
Income Attributable to Non-Controlling Interests (504) (247)
Income from Continuing Operations, Net of Tax 80,928 63,863
Loss from Discontinued Operations, Net of Tax (1,156) (6,079)
Net Income $79,772 $57,784
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)

9/30/10

12/31/09

Assets
Cash and Cash Equivalents $6,027 $13,999
Accounts Receivable, Net 367,888 321,226
Inventories 1,437,939 1,302,495
Other Current Assets 109,106 95,426
Assets Held for Sale 584 10,625
Total Current Assets 1,921,544 1,743,771
Property and Equipment, Net 731,813 726,808
Intangibles 1,017,133 1,011,803
Other Long-Term Assets 305,107 313,625
Total Assets $3,975,597 $3,796,007
Liabilities and Equity
Floor Plan Notes Payable $907,315 $769,657
Floor Plan Notes Payable - Non-Trade 474,805 423,316
Accounts Payable 210,999 189,989
Accrued Expenses 231,237 227,294
Current Portion Long-Term Debt 15,409 12,442
Liabilities Held for Sale 548 7,675
Total Current Liabilities 1,840,313 1,630,373
Long-Term Debt 837,976 933,966
Other Long-Term Liabilities 274,527 285,629
Total Liabilities 2,952,816 2,849,968
Equity 1,022,781 946,039
Total Liabilities and Equity $3,975,597 $3,796,007
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
(Unaudited)

Third Quarter

Nine Months

2010

2009

2010

2009

Total Retail Units:
New Retail 40,504 41,574 116,319 105,485
Used Retail 29,975 25,723 85,971 78,813
Total Retail 70,479 67,297 202,290 184,298
smart Wholesale Units 1,165 3,401 4,161 12,774
Same-Store Retail Units:
New Same-Store Retail 38,907 41,544 112,210 105,116
Used Same-Store Retail 28,985 25,682 83,324 78,380
Total Same-Store Retail 67,892 67,226 195,534 183,496
Same-Store Retail Revenue:
New Vehicles $1,362,433 $1,336,849 $3,846,861 $3,376,289
Used Vehicles 744,025 672,957 2,128,821 1,924,278
Finance and Insurance, Net 65,521 60,811 184,712 163,012
Service and Parts 324,227 334,018 972,210 984,657
Total Same-Store Retail $2,496,206 $2,404,635 $7,132,604 $6,448,236
Same-Store Retail Revenue Growth:
New Vehicles 1.9% (14.9%) 13.9% (32.9%)
Used Vehicles 10.6% (8.6%) 10.6% (20.1%)
Finance and Insurance, Net 7.7% (11.8%) 13.3% (26.8%)
Service and Parts (2.9%) (7.8%) (1.3%) (10.6%)
Revenue Mix:
New Vehicles 51.4% 51.7% 50.4% 48.1%
Used Vehicles 27.8% 26.1% 27.8% 27.6%
Finance and Insurance, Net 2.4% 2.4% 2.4% 2.3%
Service and Parts 12.2% 13.0% 12.6% 14.1%
Distribution 0.5% 1.3% 0.6% 2.4%
Fleet and Wholesale 5.7% 5.5% 6.2% 5.5%
Average Retail Selling Price:
New Vehicles $34,967 $32,202 $34,426 $32,233
Used Vehicles 25,540 26,211 25,728 24,736
Gross Margin 15.6% 16.3% 16.0% 16.8%
Retail Gross Margin - by Product:
New Vehicles 7.9% 8.4% 8.1% 7.9%
Used Vehicles 7.4% 8.8% 7.9% 9.0%
Service and Parts 57.3% 55.3% 57.0% 54.8%
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)

Third Quarter

Nine Months

2010

2009

2010

2009

Gross Profit per Retail Transaction:
New Vehicles $2,773 $2,714 $2,794 $2,561
Used Vehicles 1,900 2,308 2,022 2,216
Finance and Insurance 953 905 940 890
Brand Mix:
BMW / Mini 22% 21% 21% 21%
Toyota / Lexus 18% 20% 18% 19%
Honda / Acura 14% 14% 14% 15%
Audi 11% 10% 11% 10%
Mercedes Benz / smart 10% 10% 10% 10%
Land Rover 4% 4% 5% 4%
Porsche 4% 4% 4% 4%
Ferrari / Maserati 3% 3% 3% 3%
Other 14% 14% 14% 14%
100% 100% 100% 100%
Premium 66% 64% 65% 64%
Foreign 30% 32% 31% 32%
Domestic Big 3 4% 4% 4% 4%
100% 100% 100% 100%
Revenue Mix:
U.S. 63% 63% 63% 63%
International 37% 37% 37% 37%
100% 100% 100% 100%
Rent Expense $42,177 $40,906 $124,863 $121,390

Reconciliation of reported income from continuing operations attributable to PAG and related earnings per share to adjusted income from continuing operations attributable to PAG and related earnings per share for 2009:

Third Quarter 2009

Nine Months 2009

Earnings

EPS

Earnings

EPS

Income from continuing operations attributable to PAG

$27,680

$0.30

$63,863

$0.70

Gain on debt repurchase -- -- (6,518) (0.07)
Costs relating to Saturn transaction 1,926 0.02 1,926 0.02
Franchise closure/relocation costs 778 0.01 778 0.01
Hedge de-designation costs 686 0.01 686 0.01
Adjusted income from continuing operations attributable to PAG

$31,070

$0.34

$60,735

$0.66

SOURCE: Penske Automotive Group, Inc.

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