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Penske Automotive Reports Record Third Quarter 2014 Results
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Signs Agreements to Acquire Majority Stake in Heavy-Duty Truck Dealership Group

BLOOMFIELD HILLS, Mich., Oct. 29, 2014 /PRNewswire/ --

Third Quarter 2014

Nine Months 2014

·   Revenue Increases 17.5% to $4.4 Billion

·   Revenue Increases 19.9% to $12.9 Billion

·   Same-store Retail Revenue Increases 11.2%

·   Same-store Retail Revenue Increases 12.8%

·   Income from Continuing Operations Increases 15.6% to $76.4 Million

·   Income from Continuing Operations Increases 19.5% to $222.8 Million

·   Earnings Per Share from Continuing Operations Increases 16.4% to $0.85

·   Earnings Per Share from Continuing Operations Increases 19.4% to $2.46

·   EBITDA Increases 17.6% to $147.3 Million

·   EBITDA Increases 18.9% to $430.5 Million

 

Penske Automotive Group, Inc. (NYSE: PAG), an international transportation services company, announced today the highest third quarter and nine-months income from continuing operations and earnings per share in the history of the company.  For the third quarter of 2014, when compared to the same period last year, income from continuing operations attributable to common shareholders increased 15.6% to $76.4 million and related earnings per share increased 16.4% to $0.85 per share.  

Total revenue increased 17.5% to $4.4 billion. The revenue increase was driven by a 10.2% increase in total retail unit sales, including a 5.3% increase on a same-store basis. Gross profit improved 15.3% to $658.7 million while operating income increased 17.1% to $128.0 million.

Commenting on the company's record results, Penske Automotive Group Chairman Roger S. Penske said, "Our business delivered another strong quarter, including an 11.2% increase in same-store retail revenue.  Our results in the quarter were highlighted by another outstanding performance from our U.K. operations as our international diversification continues to complement our U.S. operations."  

Highlights of the Third Quarter

  • Total Retail Unit Sales Increased 10.2% to 104,963
    • +9.2% in the United States; +12.5% Internationally
    • New unit retail sales +9.2%
    • Used unit retail sales +11.6%

  • Same-store Retail Revenue Increased 11.2%
    • New +8.3%; Used +16.6%; Finance & Insurance +12.2%; Service and Parts +11.0%
    • +7.5% in the United States; +18.1% Internationally

  • Average Transaction Price Per Unit
    • New $38,955; +4.0%
    • Used $27,299; +8.2%

  • Average Gross Profit Per Unit
    • New $2,989, +$177/unit; Gross Margin 7.7%, +20 basis points
    • Used $1,800, -$69/unit; Gross Margin 6.6%, -80 basis points
    • Finance & Insurance $1,092, +$60/unit

For the nine months ended September 30, 2014, total revenue increased 19.9% to $12.9 billion.  The revenue increase was driven by an 11.2% increase in total retail unit sales, including 6.7% on a same-store basis.  Same-store retail revenue growth was 12.8%.  Income from continuing operations attributable to common shareholders increased 19.5% to $222.8 million and related earnings per share increased 19.4% to $2.46 per share when compared to the same period last year.

Acquisitions

The Company has signed agreements to acquire a majority ownership interest in The Around The Clock Freightliner Group ("ATC"), a heavy-duty retail truck dealership group located in Texas, Oklahoma and New Mexico.  Upon completion of the transactions, Penske Automotive Group's ownership interest would increase from 27% to approximately 86% and would become a fully consolidated entity.  Upon completion of the transactions, ATC is expected to contribute an estimated $600 - $700 million in incremental revenue and incremental earnings per share of $0.12 to $0.14 on an annualized basis.   

ATC currently operates fourteen locations, including eight full-service dealerships, offering Freightliner, Western Star, and Sprinter-branded trucks.  The company also offers a full range of used trucks available for sale and service and parts departments that are open 24 hours a day, 7 days a week.  Commenting on the acquisition, Penske Automotive Group Chairman Roger S. Penske said, "We are thrilled with the opportunity to acquire a majority ownership interest in ATC and to represent these world-class Daimler brands. ATC has a long and distinguished history as one of North America's premier full service heavy-duty truck dealerships, and provides an ideal framework for our company to begin building scale within the highly-fragmented commercial truck dealership industry."   

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the third quarter of 2014 on October 29, 2014, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (877) 260-8896 [International, please dial (612) 332-0530]. 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 third quarter 2014 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., (NYSE: PAG) headquartered in Bloomfield Hills, Michigan, is an international transportation services company that operates automotive dealerships principally in the United States and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand.  PAG employs more than 20,000 people worldwide and is a member of the Fortune 500 and Russell 2000. For additional information, visit the company's website at www.penskeautomotive.com.

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 potential earnings outlook and ability to complete the transactions noted above. 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 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, 2013, 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 vehiclehttp://www.penskecars.com 
Engage Penske Automotivehttp://www.penskesocial.com 
Like Penske Automotive on Facebookhttps://facebook.com/PenskeCars 
Follow Penske Automotive on Twitterhttps://twitter.com/#!/Penskecarscorp 
Visit Penske Automotive on YouTubehttp://www.youtube.com/penskecars

 

Inquiries should contact:




David K. Jones
Executive Vice President and

Chief Financial Officer

Penske Automotive Group, Inc.
248-648-2800
dave.jones@penskeautomotive.com

Anthony R. Pordon
Executive Vice President Investor Relations
and Corporate Development

Penske Automotive Group, Inc.
248-648-2540
tpordon@penskeautomotive.com

 

 


PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Millions, Except Per Share Data)

(Unaudited)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


% Increase/

(Decrease)


2014


2013


% Increase/

(Decrease)

Revenues:












New Vehicle

$  2,231.1


$   1,964.5


13.6%


$   6,495.5


$   5,575.3


16.5%

Used Vehicle

1,301.9


1,078.5


20.7%


3,776.8


3,128.4


20.7%

Finance and Insurance, Net

114.7


98.2


16.8%


331.9


278.8


19.0%

Service and Parts

435.5


375.0


16.1%


1,288.7


1,139.6


13.1%

Fleet and Wholesale

215.9


177.0


22.0%


620.6


529.2


17.3%

Commercial Vehicle, Car Rental and Other

118.8


65.9


80.3%


359.1


87.7


309.5%

Total Revenues

$  4,417.9


$  3,759.1


17.5%


$ 12,872.6


$ 10,739.0


19.9%

Cost of Sales:












New Vehicle

$  2,059.9


$  1,817.0


13.4%


$   5,994.7


$   5,152.4


16.3%

Used Vehicle

1,216.1


998.6


21.8%


3,513.7


2,891.5


21.5%

Service and Parts

176.8


149.3


18.4%


522.7


461.5


13.3%

Fleet and Wholesale

214.6


174.7


22.8%


611.8


520.1


17.6%

Commercial Vehicle, Car Rental and Other

91.8


48.4


89.7%


280.1


56.3


397.5%

Total Cost of Sales

$  3,759.2


$  3,188.0


17.9%


$ 10,923.0


$  9,081.8


20.3%

Gross Profit

658.7


571.1


15.3%


1,949.6


1,657.2


17.6%

SG&A Expenses

512.9


446.4


14.9%


1,513.9


1,286.2


17.7%

Depreciation

17.8


15.4


15.6%


51.8


44.4


16.7%

Operating Income

$     128.0


$    109.3


17.1%


$      383.9


$     326.6


17.5%

Floor Plan Interest Expense

(11.2)


(10.6)


5.7%


(33.9)


(31.4)


8.0%

Other Interest Expense

(13.3)


(12.3)


8.1%


(39.5)


(35.7)


10.6%

Equity in Earnings of Affiliates

12.7


11.2


13.4%


28.7


22.4


28.1%

Income from Continuing Operations Before Income Taxes

$     116.2


$      97.6


19.1%


$     339.2


$     281.9


20.3%

Income Taxes

(39.2)


(31.3)


25.2%


(114.4)


(94.5)


21.1%

Income from Continuing Operations

$       77.0


$      66.3


16.1%


$     224.8


$     187.4


20.0%

Loss from Discontinued Operations, net of tax

(1.9)


(0.8)


137.5%


(7.9)


(1.4)


464.3%

Net Income

$       75.1


$      65.5


14.7%


$     216.9


$     186.0


16.6%

Less: Income Attributable to Non-Controlling Interests

0.6


0.2


200.0%


2.0


1.0


100.0%

Net Income Attributable to Common Shareholders

$       74.5


$      65.3


14.1%


$     214.9


$     185.0


16.2%

Income from Continuing Operations Per Share

$       0.85


$      0.73


16.4%


$       2.46


$       2.06


19.4%

Income Per Share

$       0.83


$      0.72


15.3%


$       2.38


$       2.05


16.1%

Weighted Average Shares Outstanding

90.3


90.2


0.1%


90.4


90.3


0.1%

Amounts Attributable to Common Shareholders:












Reported Income from Continuing Operations

$       77.0


$      66.3


16.1%


$     224.8


$     187.4


20.0%

Less:  Income Attributable to Non-Controlling Interests

0.6


0.2


200.0%


2.0


1.0


100.0%

Income from Continuing Operations, net of tax

$       76.4


$      66.1


15.6%


$     222.8


$     186.4


19.5%

Loss from Discontinued Operations, net of tax

(1.9)


(0.8)


137.5%


(7.9)


(1.4)


464.3%

Net Income Attributable to Common Shareholders

$       74.5


$      65.3


14.1%


$     214.9


$     185.0


16.2%

 

 


PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Millions)

(Unaudited)






September 30,


December 31,


2014


2013

Assets




Cash and Cash Equivalents

$         150.5


$           49.8

Accounts Receivable, Net

643.8


600.8

Inventories

2,479.0


2,518.3

Other Current Assets

100.4


88.4

Assets Held for Sale

45.6


107.3

Total Current Assets

3,419.3


3,364.6

Property and Equipment, Net

1,375.1


1,232.2

Intangibles

1,482.7


1,439.9

Other Long-Term Assets

405.2


378.8

Total Assets

$      6,682.3


$      6,415.5





Liabilities and Equity




Floor Plan Notes Payable

$        1,606.1


$      1,685.1

Floor Plan Notes Payable – Non-Trade

893.6


901.6

Accounts Payable

382.7


373.3

Accrued Expenses

317.3


262.6

Current Portion Long-Term Debt

71.8


50.0

Liabilities Held for Sale

33.7


59.7

Total Current Liabilities

3,305.2


3,332.3

Long-Term Debt

1,161.6


1,033.2

Other Long-Term Liabilities

560.1


527.9

Total Liabilities

5,026.9


4,893.4

Equity

1,655.4


1,522.1

Total Liabilities and Equity

$      6,682.3


$      6,415.5

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Selected Data

(Unaudited)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013

Geographic Revenue Mix:








U.S.

61%


63%


60%


64%

U.K.

35%


35%


36%


35%

Other International

4%


2%


4%


1%

Total 

100%


100%


100%


100%









Revenue Mix:








Automotive Dealership

97%


98%


97%


99%

Commercial Vehicle, Car Rental and Other

3%


2%


3%


1%

Total 

100%


100%


100%


100%









Automotive Dealership Revenue Mix:








    Premium:








BMW

26%


25%


26%


25%

Audi

13%


13%


13%


13%

Mercedes-Benz

11%


11%


10%


11%

Land Rover

6%


4%


6%


4%

Porsche

5%


4%


5%


5%

Lexus

4%


4%


4%


4%

Ferrari / Maserati

2%


2%


2%


2%

Bentley

1%


1%


2%


1%

Acura

1%


2%


1%


2%

Others

2%


3%


2%


2%

Total Premium

71%


69%


71%


69%

Volume Non-U.S.:








Toyota

12%


12%


12%


12%

Honda

8%


10%


8%


10%

Volkswagen

2%


2%


2%


2%

Nissan

1%


1%


1%


1%

Others

2%


2%


2%


2%

Total Volume Non-U.S.

25%


27%


25%


27%

U.S.:








General Motors / Chrysler / Ford

4%


4%


4%


4%

    Total Automotive Dealership Revenue

100%


100%


100%


100%









Gross Profit Mix:








New Vehicles

26.0%


25.8%


25.7%


25.5%

Used Vehicles

13.0%


14.0%


13.5%


14.3%

Finance and Insurance

17.4%


17.2%


17.0%


16.8%

Service and Parts

39.3%


39.5%


39.3%


40.9%

Fleet and Wholesale

0.2%


0.4%


0.5%


0.6%

Commercial Vehicle, Car Rental and Other

4.1%


3.1%


4.0%


1.9%

Total

100.0%


100.0%


100.0%


100.0%

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Selected Data

 (Unaudited)












Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


Increase/
(Decrease)


2014


2013


Increase/
(Decrease)

Operating items as a percentage of revenue:












Gross Profit:












   New Vehicle

7.7%


7.5%


+20 bps


7.7%


7.6%


+10 bps

   Used Vehicle

6.6%


7.4%


-80 bps


7.0%


7.6%


-60 bps

   Service and Parts

59.4%


60.2%


-80 bps


59.4%


59.5%


-10 bps

   Fleet and Wholesale

0.6%


1.3%


-70 bps


1.4%


1.7%


    -30 bps

   Commercial Vehicle, Car Rental and Other

22.7%


26.6%


           nm


22.0%


35.8%


           nm

  Total Gross Profit

14.9%


15.2%


-30 bps


15.1%


15.4%


-30 bps

Selling, General and Administrative Expenses

11.6%


11.9%


-30 bps


11.8%


12.0%


-20 bps

Operating Income

2.9%


2.9%


---


3.0%


3.0%


---

Inc. From Cont. Ops. Before Inc. Taxes

2.6%


2.6%


---


2.6%


2.6%


---













Operating items as a percentage of total gross profit:












Selling, General and Administrative Expenses

77.9%


78.2%


-30 bps


 

77.7%


 

77.6%


 

+10 bps

Operating Income

19.4%


19.1%


   +30 bps


 

19.7%


 

19.7%


 

---













nm – not meaningful








 

 



Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


%
Increase/
(Decrease)


2014


2013


%
Increase/
(Decrease)

(Amounts in Millions):












    EBITDA*

$        147.3


$        125.3


17.6%


$      430.5


$       362.0


18.9%

Rent Expense

49.0


44.7


9.6%


146.6


132.2


10.9%

Floorplan Credits

7.9


7.4


6.8%


22.0


19.7


11.7%













* See the following Non-GAAP reconciliation tables






 

 


PENSKE AUTOMOTIVE GROUP, INC.

Automotive Retail Operations Selected Data

(Unaudited)






Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


%
Increase/
(Decrease)


2014


2013


%
Increase/
(Decrease)

Total Retail Units:












New Retail

57,273


52,463


9.2%


163,071


147,769


10.4%

Used Retail

47,690


42,751


11.6%


138,972


123,848


12.2%

Total Retail

104,963


95,214


10.2%


302,043


271,617


11.2%













Same-Store Retail Units:












New Same-Store Retail

54,572


52,463


4.0%


155,188


147,273


5.4%

Used Same-Store Retail

45,678


42,751


6.8%


133,123


122,898


8.3%

Total Same-Store Retail

100,250


95,214


5.3%


288,311


270,171


6.7%













Same-Store Retail Revenue: (Amounts in Millions)









New Vehicles

$        2,127.7


$      1,964.5


8.3%


$       6,179.2


$       5,552.9


11.3%

Used Vehicles

1,257.1


1,078.5


16.6%


3,637.5


3,109.5


17.0%

Finance and Insurance, Net

110.2


98.2


12.2%


319.2


278.3


14.7%

Service and Parts

416.4


375.0


11.0%


1,232.8


1,134.1


8.7%

Total Same-Store Retail

$        3,911.4


$      3,516.2


11.2%


$     11,368.7


$     10,074.8


12.8%













Retail Revenue Mix:












New Vehicles

54.6%


55.9%


  -130 bps


54.6%


55.1%


-50 bps

Used Vehicles

31.9%


30.7%


+120 bps


31.8%


30.9%


+90 bps

Finance and Insurance, Net

2.8%


2.8%


---


2.8%


2.7%


+10 bps

Service and Parts

10.7%


10.6%


+10 bps


10.8%


11.3%


-50 bps













Average Revenue per Vehicle Retailed:











New Vehicles

$      38,955


$      37,445


4.0%


$       39,832


$      37,729


5.6%

Used Vehicles

27,299


25,227


8.2%


27,176


25,260


7.6%













Gross Profit per Vehicle Retailed:











New Vehicles

$        2,989


$        2,812


6.3%


$         3,071


$        2,861


7.3%

Used Vehicles

1,800


1,869


-3.7%


1,893


1,913


-1.0%

Finance and Insurance

1,092


1,032


5.8%


1,099


1,026


7.1%

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Non-GAAP Reconciliation

(Unaudited)





Reconciliation of reported net income to earnings before interest, taxes, depreciation and amortization ("EBITDA") for the three months and nine months ended September 30, 2014 and 2013:






Three Months Ended


Nine Months Ended


September 30,


September 30,

(Amounts in Millions)

2014


2013


%
Increase/
(Decrease)


2014


2013


%
Increase/
(Decrease)













Net Income

$       75.1


$      65.5


14.7%


$      216.9


$     186.0


16.6%

Depreciation

17.8


15.4


15.6%


51.8


44.4


16.7%

Other Interest Expense

13.3


12.3


8.1%


39.5


35.7


10.6%

Income Taxes

39.2


31.3


25.2%


114.4


94.5


21.1%

Loss from Discontinued Operations, net of tax

1.9


0.8


137.5%


7.9


1.4


464.3%

EBITDA

$     147.3


$    125.3


17.6%


$     430.5


$    362.0


18.9%

 

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