BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--
Penske Automotive Group, Inc. (NYSE: PAG), an international automotive
retailer, today reported first quarter income from continuing operations
of $16.2 million, or $0.18 per share. This compares to income from
continuing operations of $32.3 million, or $0.33 per share, in the first
quarter last year. In the quarter, the Company recorded a $6.5 million,
or $0.07 per share, after-tax gain relating to the repurchase of $69
million principal amount of the Company's 3.5% Senior Subordinated
Convertible Notes due 2026. Excluding this gain, adjusted income from
continuing operations amounted to $9.7 million, or $0.11 per share.
Total revenue was $2.2 billion compared to $3.2 billion in the same
period last year. The decline in revenue versus the comparable prior
year period was driven principally by a 31.2% decrease in total retail
sales. The retail sales decline included a 34.5% same-store retail
revenue decrease, due largely to a 35.1% decrease in same-store new
vehicle unit sales and changes in exchange rates. Despite broad weakness
in the new vehicle market in the U.S. and the U.K., the Company's used
vehicle business performed relatively well. Retail used units sold
increased 1.6%, despite a 4.2% decrease on a same-store basis, as
customers looked for value-priced alternatives to meet their
transportation needs. The service and parts business also performed
well, declining 8.8% in total, but only 2.6% on a same-store basis
excluding changes relating to exchange rates.
"In light of the challenging economic conditions in all of our markets,
we are pleased with the performance of our business in the first
quarter," said Penske Automotive Group Chairman Roger Penske. "Despite
new vehicle sales approaching a 30 year low in the U.S. and a 30%
decline in new vehicle registrations in the U.K. in the March
registration period, our ability to reduce costs and inventory levels
helped us achieve profitability in the first quarter. In total, we
reduced our inventories by $233 million and improved our days supply of
new vehicles to 69 days from 105 days at the end of 2008. I am
particularly pleased to note that the cost reduction initiatives
implemented by the Company have resulted in a decrease in SG&A as a
percentage of gross profit to 85.0% in the first quarter, compared to
89.4% on an adjusted basis in the fourth quarter of 2008."
Mr. Penske continued, "We continue to evaluate ways to operate more
efficiently, and remain focused on maintaining liquidity and
flexibility. I am pleased to report that we are in compliance with all
of our debt covenants, and expect to remain in compliance over the next
twelve months."
Securities Repurchase Authority
The Company's Board of Directors previously approved repurchases of up
to $150 million of our outstanding common stock, debt and convertible
debt. During the first quarter, the Company repurchased $69 million
principal amount of its 3.5% Senior Subordinated Convertible Notes due
2026 for $52 million in cash. After these purchases, the Company has an
additional $44 million remaining under its securities repurchase
authority. As of March 31, 2009, approximately $306 million principal
amount of the 3.5% Senior Subordinated Convertible Notes due 2026
remained outstanding.
smart USA
During the first quarter, smart USA wholesaled 5,714 units, and for the
year expects to wholesale approximately 20,000 units. In addition, smart
USA's distribution of parts is increasing due to the growing number of
smart units in operation. During the quarter, smart USA approved two new
retail centers, expanding the smart retail network in the U.S. to 75
franchises.
Conference Call
Penske Automotive will host a conference call discussing financial
results relating to the first quarter of 2009 on May 5, 2009, at 2:00
p.m. EDT. To listen to the conference call, participants must
dial (800) 230-1096 [International, please dial (612) 332-7515].
The call will be simultaneously broadcast over the Internet through the
Penske Automotive Group website at www.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc., headquartered in Bloomfield Hills,
Michigan, operates 310 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 158 franchises in 19 states
and Puerto Rico and 152 franchises located outside the United States,
primarily in the United Kingdom. Penske Automotive is also the exclusive
distributor of the smart fortwo through its wholly-owned subsidiary
smart USA Distributor LLC. smart USA supports 75 smart retail centers in
the United States. Penske Automotive is a member of the Fortune 200 and
Russell 1000 and has approximately 14,000 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 future sales and earnings potential and its ability to reduce its
variable expenses. Actual results may vary materially because of risks
and uncertainties, including external factors such as consumer credit
conditions, any potential restructuring of the U.S. automotive sector,
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, 2008, 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.
This release contains certain non-GAAP financial measures as defined
under SEC rules, such as adjusted income from continuing operations and
related earnings per share, which exclude certain items disclosed in the
release. The Company has reconciled these measures to the most directly
comparable GAAP measures in the release. The Company believes that these
non-GAAP financial measures improve the transparency of the Company's
disclosure and the period-to-period comparability of the Company's
results from operations.
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
First Quarter
2009 2008
Revenues:
New Vehicle $972,127 $1,625,950
Used Vehicle 614,630 794,063
Finance and Insurance, Net 48,409 73,877
Service and Parts 327,554 359,142
Distribution 80,113 63,770
Fleet and Wholesale Vehicle 115,043 258,535
Total Revenues 2,157,876 3,175,337
Cost of Sales:
New Vehicle 900,750 1,489,357
Used Vehicle 558,650 728,295
Service and Parts 150,453 157,885
Distribution 68,314 53,617
Fleet and Wholesale Vehicle 111,418 257,696
Total Cost of Sales 1,789,585 2,686,850
Gross Profit 368,291 488,487
SG&A Expenses 313,002 394,072
Depreciation and Amortization 12,872 13,291
Operating Income 42,417 81,124
Floor Plan Interest Expense (9,515 ) (17,026 )
Other Interest Expense (14,494 ) (11,911 )
Debt Discount Amortization (3,638 ) (3,496 )
Equity in Earnings of Affiliates 714 1,392
Gain on Debt Repurchase 10,429 - -
Income from Continuing Operations Before
Income Taxes 25,913 50,083
Income Taxes (9,717 ) (17,809 )
Income from Continuing Operations 16,196 32,274
Income from Discontinued Operations, Net of Tax 6 57
Net Income 16,202 32,331
Income (Loss) Attributable to Non-Controlling 80 (435 )
Interests
Net Income Attributable to Penske Automotive Group $16,282 $31,896
Common Shareholders
Income from Continuing Operations Per Diluted Share $0.18 $0.33
Income Per Diluted Share $0.18 $0.33
Diluted Weighted Average Shares Outstanding 91,501 95,252
Amounts Attributable to Penske Automotive Group
Common Shareholders:
Reported Income from Continuing Operations $16,196 $32,274
Income (Loss) Attributable to Non-Controlling 80 (435 )
Interests
Income from Continuing Operations, net of tax 16,276 31,839
Income from Discontinued Operations, net of tax 6 57
Net Income $16,282 $31,896
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
3/31/09 12/31/08
Assets
Cash and Cash Equivalents $11,458 $20,109
Accounts Receivable, Net 312,039 294,567
Inventories 1,360,239 1,593,267
Other Current Assets 91,193 88,378
Assets Held for Sale 8,411 9,739
Total Current Assets 1,783,340 2,006,060
Property and Equipment, Net 666,602 662,493
Intangibles 970,681 974,649
Other Long-Term Assets 304,492 318,947
Total Assets $3,725,115 $3,962,149
Liabilities and Stockholders' Equity
Floor Plan Notes Payable $847,711 $968,873
Floor Plan Notes Payable - Non-Trade 389,491 511,357
Accounts Payable 201,798 178,811
Accrued Expenses 199,085 196,274
Current Portion Long-Term Debt 11,132 11,305
Liabilities Held for Sale 10,592 13,492
Total Current Liabilities 1,659,809 1,880,112
Long-Term Debt 1,008,093 1,052,060
Other Long-Term Liabilities 228,743 221,556
Total Liabilities 2,896,645 3,153,728
Stockholders' Equity 828,470 808,421
Total Liabilities and Stockholders' Equity $3,725,115 $3,962,149
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
Three Months
2009 2008
Total Retail Units:
New Retail 30,668 45,188
Used Retail 26,811 26,402
Total Retail 57,479 71,590
smart Wholesale Units 5,714 4,913
Same-Store Retail Units:
New Same-Store Retail 28,963 44,645
Used Same-Store Retail 25,113 26,208
Total Same-Store Retail 54,076 70,853
Same-Store Retail Revenue:
New Vehicles $918,217 $1,606,962
Used Vehicles 574,653 788,940
Finance and Insurance, Net 46,331 73,215
Service and Parts 310,381 353,380
Total Same-Store Retail $1,849,582 $2,822,497
Same-Store Retail Revenue Growth:
New Vehicles (42.9 %) (5.4 %)
Used Vehicles (27.2 %) 2.1 %
Finance and Insurance, Net (36.7 %) 5.3 %
Service and Parts (12.2 %) 1.0 %
Revenue Mix:
New Vehicles 45.1 % 51.2 %
Used Vehicles 28.5 % 25.0 %
Finance and Insurance, Net 2.2 % 2.3 %
Service and Parts 15.2 % 11.3 %
Distribution 3.7 % 2.0 %
Fleet and Wholesale 5.3 % 8.2 %
Average Retail Selling Price:
New Vehicles $31,698 $35,982
Used Vehicles 22,925 30,076
Gross Margin 17.1 % 15.4 %
Retail Gross Margin - by Product:
New Vehicles 7.3 % 8.4 %
Used Vehicles 9.1 % 8.3 %
Service and Parts 54.1 % 56.0 %
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
Three Months
2009 2008
Gross Profit per Retail Transaction:
New Vehicles $2,327 $3,023
Used Vehicles 2,088 2,491
Finance and Insurance 842 1,032
Brand Mix:
BMW 23 % 22 %
Toyota / Lexus 19 % 19 %
Honda / Acura 14 % 14 %
Mercedes Benz 10 % 10 %
Audi 10 % 8 %
Land Rover 4 % 5 %
Ferrari / Maserati 3 % 4 %
Porsche 3 % 3 %
Other 14 % 15 %
100 % 100 %
Premium 65 % 66 %
Foreign 30 % 29 %
Domestic Big 3 5 % 5 %
100 % 100 %
Revenue Mix:
U.S. 64 % 61 %
International 36 % 39 %
100 % 100 %
Rent Expense $39,642 $39,896
3/31/09 12/31/08
Debt to Total Capital Ratio 55 % 57 %
Debt Covenant Compliance (U.S.):
Current Ratio (min 1.00:1) 1.07:1 1.07:1
Fixed Charge Coverage Ratio (min 1.00:1) 1.17:1 1.24:1
Ratio of Non-Floorplan Debt to Stockholders' Equity (max 0.77:1 0.86:1
1.30:1)
Funded Debt to EBITDA Ratio (max 2.50:1) 1.48:1 1.26:1
Debt Covenant Compliance (U.K.):
Capital Expenditures (max £50 million) GBP28.3 GBP29.5
EBITAR to Fixed Charges (min 1.40:1) 1.75x 1.76x
Debt to EBITAR (max 3.25:1) 0.82x 1.45x
Source: Penske Automotive Group, Inc.
Contact: Penske Automotive Group, Inc.
Bob O'Shaughnessy
Chief Financial Officer
248-648-2800
boshaughnessy@penskeautomotive.com
or
Anthony R. Pordon
Senior Vice President
248-648-2540
tpordon@penskeautomotive.com