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Press Release

Penske Automotive Reports Record First Quarter Results
Earnings Per Share From Continuing Operations of $0.90

BLOOMFIELD HILLS, Mich., April 26, 2016 /PRNewswire/ --

First Quarter 2016 Highlights

  • Revenue Increases 7.6% to $4.8 Billion
  • Same-Store Retail Revenue Increases 2.5%, Excluding Foreign Exchange 4.7%
  • Income from Continuing Operations Attributable to Common Shareholders Increases 4.2% to $79.3 Million
  • Earnings Per Share from Continuing Operations Attributable to Common Shareholders Increases 7.1% to $0.90
  • EBITDA Increases 4.7% to $157.6 Million

Penske Automotive Group, Inc. (NYSE: PAG), an international transportation services company, announced today record first quarter 2016 results.  For the three months ended March 31, 2016, income from continuing operations attributable to common shareholders increased 4.2% to $79.3 million, and related earnings per share increased 7.1% to $0.90 when compared to the same period last year.  During the first quarter of 2016, foreign exchange rates negatively impacted earnings per share attributable to common shareholders by $0.03.  Total automotive retail units increased 9.9% and total revenue increased 7.6% to $4.8 billion. Excluding foreign exchange, total revenue increased 10.0%, including 4.7% on a same-store basis.

"The resiliency of the U.S. and U.K. automotive markets and a solid performance from our truck dealership operations drove Penske Automotive to another quarter of record results," said Chairman Roger S. Penske.  "We believe the diversification provided by our business model continues to reward our shareholders.  Further, I am particularly pleased with the 50-basis-point improvement of selling, general and administrative expenses as a percent of gross profit and gross profit flow-through of greater than 30% in the quarter."    

Automotive Retail Highlights of the First Quarter

  • Retail Unit Sales Increased 9.9% to 111,494
    • New unit retail sales +10.2%
    • Used unit retail sales +9.6%
  • Same-Store Retail Revenue Increased 2.5%
    • New +1.6%; Used +3.3%; Finance & Insurance +5.9% Service and Parts +3.7%
    • Excluding f/x, Same-Store retail revenue increased 4.7%
  • Average Transaction Price Per Unit
    • New vehicles $38,607, -$1,532/unit, or -3.8%
    • Used vehicles $26,780, +$108/unit, or +0.4%
  • Average Gross Profit Per Unit
    • New $2,988, -$162/unit; Gross Margin 7.7%, -10 basis points
      • Excluding f/x $3,051, -$99/unit; Gross Margin 7.7%, -10 basis points
    • Used $1,598, -$165/unit; Gross Margin 6.0%, -60 basis points
      • Excluding f/x $1,633, -$130/unit; Gross Margin 5.9%, -70 basis points
    • Finance & Insurance $1,062, -$34/unit
      • Excluding f/x $1,085, -$11/unit

Note: f/x = foreign exchange

Commercial Truck Dealership Operations
The company operates commercial truck dealership locations in the U.S. and Canada under the "Premier Truck Group" brand name offering primarily the Freightliner and Western Star brands. For the three months ended March 31, 2016 and 2015, Premier Truck Group generated $206.7 million and $192.7 million of revenue, and $33.2 million and $32.8 million of gross profit, respectively, principally through the retail sale of new/used medium and heavy-duty trucks and service/parts sales. Service and parts gross profit represents approximately 79.5% and 71.3% of total Premier Truck Group gross profit, respectively.  

Share Repurchases
During the three months ended March 31, 2016, the company acquired 4.5 million shares of its common stock for approximately $167.9 million.  As of March 31, 2016, the company has a remaining share repurchase authorization of approximately $32.1 million.

Acquisitions Update
On April 12, 2016, the company announced that its Premier Truck Group subsidiary had acquired Harper Truck Centres, located in Ontario, Canada. Harper Truck Centres has five dealership locations in the greater Toronto, Ontario market area.  The acquisition is expected to generate approximately $130 million in annualized revenue.

Conference Call
Penske Automotive will host a conference call discussing financial results relating to the first quarter of 2016 on April 26, 2016, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial 800-230-1092 [International, please dial 612-234-9960]. The call will also be simultaneously broadcast over the Internet through the Investor Relations section of the Penske Automotive Group website. Additionally, an investor presentation relating to the first quarter 2016 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 and commercial truck dealerships principally in the United States, Canada 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 22,000 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.   They 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. 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 and foreign currency exchange rates, adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to natural disasters, recall 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, 2015, 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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Inquiries should contact:




J.D. Carlson

Anthony R. Pordon

Executive Vice President and

Executive Vice President Investor Relations

Chief Financial Officer

and Corporate Development

Penske Automotive Group, Inc.

Penske Automotive Group, Inc.

248-648-2810

248-648-2540

jcarlson@penskeautomotive.com

tpordon@penskeautomotive.com

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Millions, Except Per Share Data)

(Unaudited)



Three Months Ended


March 31,


2016


2015


Increase/

(Decrease)

Revenue

$   4,824.6


$   4,482.9


7.6%

Cost of Sales

4,100.8


3,793.0


8.1%

Gross Profit

$      723.8


$      689.9


4.9%

SG&A Expenses

558.9


535.8


4.3%

Depreciation

20.8


18.6


11.8%

    Operating Income

$      144.1


$     135.5


6.3%

Floor Plan Interest Expense

(12.8)


(10.3)


24.3%

Other Interest Expense

(17.2)


(16.3)


5.5%

Equity in Earnings of Affiliates

5.5


6.7


(17.9%)

    Income from Continuing Operations Before Income Taxes

$      119.6


$      115.6


3.5%

Income Taxes

(39.4)


(38.8)


1.5%

    Income from Continuing Operations

$        80.2


$        76.8


4.4%

Loss from Discontinued Operations, net of tax

---


(0.9)


nm  

    Net Income

$        80.2


$        75.9


5.7%

Less: Income Attributable to Non-Controlling Interests

0.9


0.7


28.6%

    Net Income Attributable to Common Shareholders

$        79.3


$        75.2


5.5%







Amounts Attributable to Common Shareholders:






Reported Income from Continuing Operations

$        80.2


$        76.8


4.4%

Less: Income Attributable to Non-Controlling Interests

0.9


0.7


28.6%

Income from Continuing Operations, net of tax

$        79.3


$        76.1


4.2%

Loss from Discontinued Operations, net of tax

---


(0.9)


nm  

Net Income Attributable to Common Shareholders

$        79.3


$        75.2


5.5%

Income from Continuing Operations Per Share

$        0.90


$        0.84


7.1%

Net Income Per Share

$        0.90


$        0.83


8.4%

Weighted Average Shares Outstanding

88.3


90.3


(2.2%)







nm – not meaningful






 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Millions)

(Unaudited)



March 31,


December 31,



2016


2015


Assets:





Cash and Cash Equivalents

$               45.6


$             62.4


Accounts Receivable, Net

835.6


782.3


Inventories

3,513.4


3,463.5


Other Current Assets

101.5


85.6


Assets Held for Sale

9.8


13.1


Total Current Assets

4,505.9


4,406.9


Property and Equipment, Net

1,545.8


1,520.1


Intangibles

1,734.8


1,730.8


Other Long-Term Assets

386.4


355.6


Total Assets

$          8,172.9


$        8,013.4







Liabilities and Equity:





Floor Plan Notes Payable

$          2,262.5


$        2,247.2


Floor Plan Notes Payable – Non-Trade

1,187.3


1,132.4


Accounts Payable

541.5


493.8


Accrued Expenses

388.0


378.1


Current Portion Long-Term Debt

54.5


28.0


Liabilities Held for Sale

5.1


6.2


Total Current Liabilities

4,438.9


4,285.7


Long-Term Debt

1,330.1


1,247.0


Other Long-Term Liabilities

679.9


645.8


Total Liabilities

6,448.9


6,178.5


Equity

1,724.0


1,834.9


Total Liabilities and Equity

$          8,172.9


$          8,013.4


 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Operations

Selected Data

(Unaudited)




Three Months Ended


March 31,


2016


2015

Geographic Revenue Mix:




U.S.

57.3%


60.4%

U.K.

35.4%


35.5%

Other International

7.3%


4.1%

Total

100.0%


100.0%





Revenue: (Amounts in Millions)




Retail Automotive

$      4,512.9


$      4,186.8

Retail Commercial Trucks

206.7


192.7

Commercial Vehicles Australia/Power Systems and Other

105.0


103.4

Total

$      4,824.6


$      4,482.9





Gross Profit: (Amounts in Millions)




Retail Automotive

$         665.0


$         629.3

Retail Commercial Trucks

33.2


32.8

Commercial Vehicles Australia/Power Systems and Other

25.6


27.8

Total

$         723.8


$         689.9





Gross Margin:




Retail Automotive

14.7%


15.0%

Retail Commercial Trucks

16.1%


17.0%

Commercial Vehicles Australia/Power Systems and Other

24.4%


26.9%

Total

15.0%


15.4%

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Operations

Selected Data

(Unaudited)





Three Months Ended


March 31,


2016


2015


Increase/

(Decrease)

Operating Items as a Percentage of Revenue:






Gross Profit

15.0%


15.4%


-40 bps

Selling, General and Administrative Expenses

11.6%


12.0%


-40 bps

Operating Income

3.0%


3.0%


---

Inc. From Cont. Ops. Before Inc. Taxes

2.5%


2.6%


    -10 bps







Operating Items as a Percentage of Total Gross Profit:






Selling, General and Administrative Expenses

77.2%


77.7%


-50 bps

Operating Income

19.9%


19.6%


+30 bps














Three Months Ended


March 31,


2016


2015


Increase/
(Decrease)

(Amounts in Millions)






EBITDA*

$           157.6


$           150.5


4.7%

Floorplan Credits

$               8.9


$               6.7


32.8%

Rent Expense

$             51.5


$             50.1


2.8%







* See the following Non-GAAP reconciliation table.

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations

Selected Data

(Unaudited)



Three Months Ended


March 31,


2016


2015

Retail Automotive Units:




New Retail

58,753


53,318

Used Retail

52,741


48,102

Total

111,494


101,420





Retail Automotive Revenue: (Amounts in Millions)




New Vehicles

$      2,268.2


$      2,140.1

Used Vehicles

1,412.4


1,283.0

Finance and Insurance, Net

118.4


111.1

Service and Parts

478.1


438.4

Fleet and Wholesale

235.8


214.2

Total Revenue

$      4,512.9


$      4,186.8





Retail Automotive Gross Profit: (Amounts in Millions)



New Vehicles

$         175.5


$         167.9

Used Vehicles

84.3


84.9

Finance and Insurance, Net

118.4


111.1

Service and Parts

281.4


260.8

Fleet and Wholesale

5.4


4.6

Total Gross Profit

$         665.0


$         629.3





Retail Automotive Revenue Per Vehicle Retailed:




New Vehicles

$         38,607


$         40,139

Used Vehicles

26,780


26,672





Retail Automotive Gross Profit Per Vehicle Retailed:




New Vehicles

$           2,988


$           3,150

Used Vehicles

1,598


1,763

Finance & Insurance

1,062


1,096

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations

 Selected Data

(Unaudited)



Three Months Ended


March 31,


2016


2015

Retail Automotive Revenue Mix Percentages:




New Vehicles

50.3%


51.1%

Used Vehicles

31.3%


30.6%

Finance and Insurance, Net

2.6%


2.7%

Service and Parts

10.6%


10.5%

Fleet and Wholesale

5.2%


5.1%

Total

100.0%


100.0%





Retail Automotive Gross Profit Mix Percentages:




New Vehicles

26.4%


26.7%

Used Vehicles

12.7%


13.5%

Finance and Insurance, Net

17.8%


17.7%

Service and Parts

42.3%


41.4%

Fleet and Wholesale

0.8%


0.7%

Total

100.0%


100.0%





Three Months Ended


March 31,


2016


2015


Increase/

(Decrease)

Retail Automotive Gross Margin:






New Vehicles

7.7%


7.8%


-10 bps

Used Vehicles

6.0%


6.6%


-60 bps

Service and Parts

58.9%


59.5%


-60 bps

Fleet and Wholesale

2.3%


2.1%


+20 bps

Total Gross Margin

14.7%


15.0%


-30 bps

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations

Selected Data

(Unaudited)






Three Months Ended


March 31,


2016


2015

Retail Automotive Revenue Mix:




Premium:




BMW / MINI

25%


27%

Audi

14%


13%

Mercedes-Benz

10%


10%

Land Rover

7%


7%

Porsche

5%


5%

Lexus

4%


4%

Ferrari / Maserati

2%


2%

Acura

1%


1%

Bentley

1%


1%

Others

3%


2%

Total Premium

72%


72%

Volume Non-U.S.:




Toyota

11%


11%

Honda

7%


7%

Volkswagen

3%


3%

Nissan

1%


1%

Others

2%


2%

Total Volume Non-U.S.

24%


24%

U.S.:




General Motors / Chrysler / Ford

4%


4%

Total

100%


100%





Retail Automotive Geographic Revenue Mix:




U.S.

56.6%


60.0%

U.K.

37.8%


38.0%

Other International

5.6%


2.0%

Total

100%


100%

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations

Same-Store

Selected Data

(Unaudited)






Three Months Ended


March 31,


2016


2015

Retail Automotive Same-Store Units:




New Retail

55,457


53,239

Used Retail

48,711


48,089

Total

104,168


101,328





Retail Automotive Same-Store Revenue: (Amounts in Millions)



New Vehicles

$        2,166.5


$      2,133.4

Used Vehicles

1,325.0


1,282.5

Finance and Insurance, Net

117.4


110.9

Service and Parts

453.5


437.5

Fleet and Wholesale

230.3


213.6

Total Revenue

$        4,292.7


$      4,177.9





Retail Automotive Same-Store Gross Profit: (Amounts in Millions)

New Vehicles

 

$           162.4


$           167.2

Used Vehicles

80.2


84.8

Finance and Insurance, Net

117.4


110.9

Service and Parts

268.8


260.4

Fleet and Wholesale

5.3


4.6

Total Gross Profit

$           634.1


$           627.9





Retail Automotive Same-Store Revenue Per Vehicle Retailed:



New Vehicles

 

$         39,066


$         40,072

Used Vehicles

27,201


26,668





Retail Automotive Same-Store Gross Profit Per Vehicle Retailed:



New Vehicles

$           2,928


$           3,140

Used Vehicles

1,646


1,763

Finance & Insurance

1,127


1,095

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Commercial Truck Operations

Selected Data

(Unaudited)



Three Months Ended


March 31,

Retail Commercial Truck Units:

2016


2015

New Retail

1,160


1,039

Used Retail

271


296

Total

1,431


1,335





Retail Commercial Truck Revenue: (Amounts in Millions)




New Vehicles

$                        116.7


$                        102.2

Used Vehicles

13.5


15.9

Finance and Insurance, Net

1.9


1.3

Service and Parts

71.4


63.1

Lease, Rental & Wholesale

3.2


10.2

Total Revenue

$                        206.7


$                        192.7

Retail Commercial Truck Gross Profit: (Amounts in Millions)




New Vehicles

$                            4.9


$                            4.9

Used Vehicles

(0.4)


1.7

Finance and Insurance, Net

1.9


1.3

Service and Parts

26.4


23.4

Lease, Rental & Wholesale

0.4


1.5

Total Gross Profit

$                          33.2


$                          32.8

Retail Commercial Truck Revenue Per Vehicle Retailed:




New Vehicles

$                    100,618


$                      98,345

Used Vehicles

49,727


53,700





Retail Commercial Truck Gross Profit Per Vehicle Retailed:




New Vehicles

$                        4,201


$                        4,691

Used Vehicles

(1,471)


5,882

Finance & Insurance

1,311


1,008





Retail Commercial Truck Gross Profit as a Percentage of Revenue




Gross Profit:




   New Vehicle

4.2%


4.8%

   Used Vehicle

(3.0%)


10.7%

   Service and Parts

37.0%


37.1%

   Lease, Rental & Wholesale

12.5%


14.7%

        Total Gross Profit

16.1%


17.0%

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Non-GAAP Reconciliations

(Unaudited)


The following table reconciles reported net income to earnings before interest, taxes, depreciation and amortization ("EBITDA") for the three months ended March 31, 2016 and 2015:



Three Months Ended


March 31,


2016


2015


Increase/

(Decrease)

(Amounts in Millions)






Net Income

$        80.2


$         75.9


5.7%

Add: Depreciation

20.8


18.6


11.8%

     Other Interest Expense

17.2


16.3


5.5%

     Income Taxes

39.4


38.8


1.5%

     Loss from Discontinued Operations, net of tax

---


0.9


nm  

EBITDA

$      157.6


$       150.5


4.7%


nm – not meaningful

 

 

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SOURCE Penske Automotive Group, Inc.