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.--(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 www.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc. (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 (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.
Contact:
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