Penske Automotive Reports Record Results

News provided by

Penske Automotive Group, Inc.

24 Apr, 2014, 11:31 GMT

-- Most Profitable Quarter in Company History

BLOOMFIELD HILLS, Michigan, April 24, 2014 /PRNewswire/ --
  • Revenue Increases 20.9% to $4.0 Billion
  • Same-store Retail Revenue Increases 14.9%
  • Income from Continuing Operations Increases 15.4% to $66.1 Million
  • EPS from Continuing Operations Rises 15.9% to $0.73 per Share
  • EBITDA Increases 16.6% to $130.2 Million

Penske Automotive Group, Inc. (NYSE: PAG), an international transportation services company, announced today record first quarter 2014 performance, including the highest quarterly income from continuing operations in the history of the company. For the first quarter, income from continuing operations attributable to common shareholders increased 15.4% to $66.1 million and related earnings per share increased 15.9% to $0.73 per share when compared to the same period last year.

Logo - http://photos.prnewswire.com/prnh/20130530/MM23675LOGO

Total revenue increased 20.9% to $4.0 billion. The revenue increase was driven by a 13.1% increase in total retail unit sales, including a 9.9% increase on a same-store basis. Gross profit improved 18.5% to $624.0 million while operating income increased 13.8% to $119.7 million.

Chairman Roger S. Penske said, "Penske Automotive Group delivered another solid quarter, achieving double-digit growth in unit volume, revenue, operating income, net income and earnings per share. Despite the challenging weather conditions experienced in the northeast and central United States, the company's performance in the first quarter displays the benefit of our brand mix and the geographical diversification of our revenue base. Our automotive dealership business generated a 14.9% increase in same-store retail revenue, including 7.5% in the U.S. and 28.2% internationally."

Highlights of the First Quarter

  • Total Retail Unit Sales increased 13.1% to 95,658
    • +9.4% in the United States; +21.0% Internationally
    • New unit retail sales +11.6%
    • Used unit retail sales +14.8%
  • Same-store Retail Revenue increased +14.9%
    • New +14.2%; Used +18.7%; Finance & Insurance +18.6%; Service and Parts +7.3%
    • +7.5% in the United States; +28.2% Internationally
  • Average Transaction Price Per Unit
    • New $40,294; +5.8%
    • Used $26,484; +5.9%
  • Average Gross Profit Per Unit
    • New $3,116, +$150/unit; Gross Margin 7.7%, -10 basis points
    • Used $1,918, -$39/unit; Gross Margin 7.2%, -60 basis points
    • Finance & Insurance $1,097, +$82/unit

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the first quarter of 2014 on April 24, 2014, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1085 [International, please dial (612) 288-0329]. 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 first 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, operating automotive dealerships, commercial vehicle distribution and car rental franchises principally in the United States, Western Europe, Australia and New Zealand, employs approximately 18,000 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 income from continuing operations, 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. 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.

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Inquiries should contact:

David K. Jones
Executive Vice President and

Chief Financial Officer

Penske Automotive Group, Inc.
+1-248-648-2800
dave.jones@penskeautomotive.com

Anthony R. Pordon
Executive Vice President Investor Relations

and Corporate Development

Penske Automotive Group, Inc.
+1-248-648-2540
tpordon@penskeautomotive.com


PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Millions, Except Per Share Data)

(Unaudited)


Three Months Ended

March 31,

2014

2013

% Increase/
(Decrease)

Revenues:




New Vehicle

$    2,026.3

$    1,716.8

18.0%

Used Vehicle

1,201.6

988.2

21.6%

Finance and Insurance, Net

104.9

85.9

22.1%

Service and Parts

417.5

379.7

10.0%

Fleet and Wholesale

187.9

171.9

9.3%

Commercial Vehicle, Car Rental and other

109.8

6.8

               NM

Total Revenues

$    4,048.0

$    3,349.3

20.9%

Cost of Sales:




New Vehicle

$    1,869.6

$    1,583.1

18.1%

Used Vehicle

1,114.6

910.9

22.4%

Service and Parts

170.3

158.5

7.4%

Fleet and Wholesale

183.5

167.7

9.4%

Commercial Vehicle, Car Rental and other

86.0

2.5

               NM

Total Cost of Sales

$    3,424.0

$    2,822.7

21.3%

Gross Profit

624.0

526.6

18.5%

SG&A Expenses

487.8

407.1

19.8%

Depreciation

16.5

14.3

15.4%

Operating Income

119.7

105.2

13.8%

Floor Plan Interest Expense

(11.1)

(10.1)

9.9%

Other Interest Expense

(13.1)

(11.5)

13.9%

Equity in Earnings of Affiliates

5.1

2.3

121.7%

Income from Continuing Operations Before Income Taxes

100.6

85.9

17.1%

Income Taxes

(34.1)

(28.3)

20.5%

Income from Continuing Operations

66.5

57.6

15.5%

Gain from Discontinued Operations, Net of Tax

1.4

0.4

250.0%

Net Income

67.9

58.0

17.1%

Less: Income Attributable to Non-Controlling Interests

(0.4)

(0.3)

33.3%

Net Income Attributable to Common Shareholders

$      67.5

$      57.7

17.0%

Income from Continuing Operations Per Share

$      0.73

$      0.63

15.9%

Income Per Share

$      0.75

$      0.64

17.2%

Weighted Average Shares Outstanding

90,473,732

90,456,509

--

Amounts Attributable to Common Shareholders:




Reported Income from Continuing Operations

$      66.5

$      57.6

15.5%

Less:  Income Attributable to Non-Controlling Interests

(0.4)

(0.3)

33.3%

Income from Continuing Operations, net of tax

$      66.1

$      57.3

15.4%

Gain from Discontinued Operations, net of tax

1.4

0.4

250.0%

Net Income

$      67.5

$      57.7

17.0%

NM – not meaningful


PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Millions)

(Unaudited)


March 31,

December 31,

2014

2013

Assets


Cash and Cash Equivalents

$           54.9

$           49.8

Accounts Receivable, Net

677.7

600.8

Inventories

2,547.3

2,518.3

Other Current Assets

101.8

88.4

Assets Held for Sale

55.6

107.3

Total Current Assets

3,437.3

3,364.6

Property and Equipment, Net

1,301.2

1,232.2

Intangibles

1,501.9

1,439.9

Other Long-Term Assets

371.8

378.8

Total Assets

$      6,612.2

$      6,415.5




Liabilities and Equity


Floor Plan Notes Payable

$      1,721.6

$      1,685.1

Floor Plan Notes Payable – Non-Trade

908.7

901.6

Accounts Payable

411.7

373.3

Accrued Expenses

319.1

262.6

Current Portion Long-Term Debt

65.1

50.0

Liabilities Held for Sale

36.9

59.7

Total Current Liabilities

3,463.1

3,332.3

Long-Term Debt

1,010.3

1,033.2

Other Long-Term Liabilities

555.6

527.9

Total Liabilities

5,029.0

4,893.4

Equity

1,583.2

1,522.1

Total Liabilities and Equity

$      6,612.2

$      6,415.5


PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Selected Data

(Unaudited)



Three Months Ended

March 31,

2014

2013

Geographic Revenue Mix:


U.S.

58%

63%

U.K.

38%

36%

Other International

4%

1%

Total 

100%

100%




Revenue Mix:


Automotive Dealership

97%

100%

Commercial Vehicle, Car Rental and other

3%

--

Total 

100%

100%




Automotive Dealership Revenue Mix:


    Premium/Luxury:


BMW

25%

25%

Audi

14%

13%

Mercedes-Benz

10%

10%

Lexus

4%

4%

Land Rover

7%

5%

Porsche

5%

5%

Ferrari / Maserati

2%

2%

Bentley

2%

1%

Acura

1%

2%

Others

2%

3%

Total Premium/Luxury

72%

70%

Volume Foreign:


Toyota

11%

11%

Honda

8%

9%

Nissan

1%

1%

Volkswagen

2%

2%

Others

2%

3%

Total Volume Foreign

24%

26%

Domestic Big 3:


General Motors / Chrysler / Ford

4%

4%

    Total Automotive Dealership Revenue

100%

100%




Gross Profit Mix:


New Vehicles

25.1%

25.4%

Used Vehicles

13.9%

14.7%

Service and Parts

16.8%

16.3%

Finance and Insurance

39.6%

42.0%

Fleet and Wholesale

0.8%

0.8%

Commercial Vehicle, Car Rental and other

3.8%

0.8%

Total

100.0%

100.0%







PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Selected Data

(Unaudited)


Three Months Ended

March 31,

2014

2013

Increase/ (Decrease)

Operating items as a percentage of revenue:




Gross Profit:




   New Vehicle

7.7%

7.8%

        -10 bps

   Used Vehicle

7.2%

7.8%

        -60 bps

   Service and Parts

59.2%

58.3%

          90 bps

   Fleet and Wholesale

2.3%

2.4%

        -10 bps

   Commercial Vehicle, Car Rental and other

21.6%

NM

              NM

  Total Gross Profit

15.4%

15.7%

        -30 bps

Selling, General and Admin. Expenses

12.1%

12.2%

        -10 bps

Operating Income

3.0%

3.1%

        -10 bps

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

78.2%

77.3%

          90 bps

Operating Income

19.2%

20.0%

        -80 bps













Three Months Ended

March 31,

2014

2013

% Increase/
(Decrease)







Other (Amounts in Millions):





    EBITDA*

$          130.2

$          111.7

16.6%

Rent Expense

47.8

43.5

9.9%

Floorplan Credits

6.1

6.0

1.7%


* See the following Non-GAAP reconciliation table

NM – not meaningful


PENSKE AUTOMOTIVE GROUP, INC.

Automotive Retail Operations Selected Data

(Unaudited)


Three Months Ended

March 31,

2014

2013

% Increase/ (Decrease)

Total Retail Units:




New Retail

50,288

45,060

11.6%

Used Retail

45,370

39,510

14.8%

Total Retail

95,658

84,570

13.1%






Same-Store Retail Units:






New Same-Store Retail

48,243

44,693

7.9%

Used Same-Store Retail

43,832

39,063

12.2%

Total Same-Store Retail

92,075

83,756

9.9%






Same-Store Retail Revenue: (Amounts in millions)




New Vehicles

$        1,944.9

$        1,702.5

14.2%

Used Vehicles

1,164.6

980.9

18.7%

Finance and Insurance, Net

101.8

85.8

18.6%

Service and Parts

402.6

375.1

7.3%

Total Same-Store Retail

$        3,613.9

$        3,144.3

14.9%






Retail Revenue Mix:




New Vehicles

54.0%

54.1%

        -10 bps

Used Vehicles

32.0%

31.2%

          80 bps

Finance and Insurance, Net

2.8%

2.7%

          10 bps

Service and Parts

11.2%

12.0%

        -80 bps






Average Revenue per Vehicle Retailed:




New Vehicles

$      40,294

$      38,100

5.8%

Used Vehicles

26,484

25,012

5.9%






Gross Profit per Vehicle Retailed:




New Vehicles

$        3,116

$        2,966

5.1%

Used Vehicles

1,918

1,957

-2.0%

Finance and Insurance

1,097

1,015

8.1%









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 ended March 31, 2014 and 2013:


Three Months Ended

March 31,

(Amounts in Millions)

2014

2013

% Increase/ (Decrease)






Net Income

$             67.9

$             58.0

17.1%

Depreciation

16.5

14.3

15.4%

Other Interest Expense

13.1

11.5

13.9%

Income Taxes

34.1

28.3

20.5%

Gain from Discontinued Operations, net

(1.4)

(0.4)

250.0%

EBITDA

$           130.2

$           111.7

16.6%