Bob O’Shaughnessy Chief Financial Officer 248-648-2800 boshaughnessy@penskeautomotive.com
Tony Pordon Senior Vice President 248-648-2540 tpordon@penskeautomotive.com
PENSKE AUTOMOTIVE REPORTS SECOND QUARTER RESULTS ____________________________________________________________
Same-Store Retail Revenues Increase 8.5%
Income from Continuing Operations Per Share Increases 11% to $0.42 Per Share ____________________________________________________________
BLOOMFIELD HILLS, MI, July 31, 2007 – Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported that second quarter income from continuing operations increased 8.1% to $39.3 million and related earnings per share increased 10.5% to $0.42. Second quarter net income increased 10.0% to $40.4 million and related earnings per share increased 10.3% to $0.43. Revenues in the second quarter increased 19.2% to $3.4 billion, including an 8.5% increase in same-store retail revenues. The increase in same-store retail revenues included:
•
New Vehicles +6.3%
•
Used Vehicles +14.9%
•
Finance & Insurance +7.0%
•
Service & Parts +6.6%
“Our results continue to showcase the strength of our brand mix and the diversity of our business,” said Penske Automotive Chairman Roger Penske. “Our same-store retail revenue growth was strong in each line of our business. Same-store retail revenue growth was 2.5% in the U.S. and 22.8% in our international markets. In addition, our pre-owned vehicle business continued to be exceptionally strong, particularly at our international locations where total pre-owned retail vehicle revenues increased 56.6%, including same-store growth of 24.6%. The increased level of contribution from the pre-owned business, coupled with a challenging marketplace, contributed to an overall decrease in our gross margin during the second quarter.”
1
For the six months ended June 30, 2007, revenues increased 20.4% to $6.5 billion. Income from continuing operations and related earnings per share for the six months were $55.2 million and $0.58, respectively. Adjusted to exclude the $12.3 million ($0.13 per share) of after-tax costs resulting from the March 2007 redemption of the Company’s 9.625% Senior Subordinated Notes, income from continuing operations for the six months increased 8.6% to $67.5 million and related earnings per share increased 7.6% to $0.71. Net income and related earnings per share for the six months were $54.9 million and $0.58 respectively. Adjusted for the debt redemption charge, net income increased 10.9% to $67.2 and related earnings per share increased 10.9% to $0.71.
The Company currently projects earnings from continuing operations in the third quarter to be in the range of $0.40 to $0.44 per share. The Company continues to project earnings from continuing operations for the year in the range of $1.40 to $1.50 per share, excluding the $12.3 million ($0.13 per share) debt redemption charge. These estimates include costs associated with developing the distribution network for the smart® product launch in the U.S. and are based on an estimated average of 94.6 million shares outstanding.
Penske Automotive will host a conference call discussing financial results relating to the second quarter of 2007 on Tuesday, July 31, 2007 at1:00 p.m. EDT. To listen to the conference call, participants must dial(800) 553-0327 [International, please dial (612) 332-0932]. The call will be simultaneously broadcast over the Internet through the Penske Automotive website atwww.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 311 retail automotive franchises, representing 40 different brands, and 26 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 164 franchises in 19 states and Puerto Rico and 147 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 16,000 employees.
2
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. Actual results may vary materially because of risks and uncertainties, including external factors such as 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, 2006 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.
3
PENSKE AUTOMOTIVE GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Second Quarter
2007
2006
Revenues:
New Vehicle
$
1,831,369
$
1,583,639
Used Vehicle
829,057
631,982
Finance and Insurance, Net
75,698
65,680
Service and Parts
357,377
306,924
Fleet and Wholesale Vehicle
288,137
249,502
Total Revenues
3,381,638
2,837,727
Cost of Sales:
New Vehicle
1,678,521
1,444,861
Used Vehicle
763,636
577,581
Service and Parts
156,407
137,730
Fleet and Wholesale Vehicle
287,089
248,064
Total Cost of Sales
2,885,653
2,408,236
Gross Profit
495,985
429,491
SG&A Expenses
389,276
334,600
Depreciation and Amortization
13,337
10,805
Operating Income
93,372
84,086
Floor Plan Interest Expense
(19,546
)
(16,218
)
Other Interest Expense
(12,917
)
(11,436
)
Equity in Earnings of Affiliates
2,529
1,968
Income from Continuing Operations Before Income Taxes and Minority Interests
63,438
58,400
Income Taxes
(23,473
)
(21,457
)
Minority Interests
(702
)
(636
)
Income from Continuing Operations
39,263
36,307
Income from Discontinued Operations, Net of Tax
1,092
386
Net Income
$
40,355
$
36,693
Income from Continuing Operations Per Diluted Share
$
0.42
$
0.38
Diluted EPS
$
0.43
$
0.39
Diluted Weighted Average Shares Outstanding
94,532
94,636
4
PENSKE AUTOMOTIVE GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Six Months
2007
2006
Revenues:
New Vehicle
$
3,479,067
$
3,017,486
Used Vehicle
1,617,464
1,187,322
Finance and Insurance, Net
144,666
123,745
Service and Parts
710,310
600,905
Fleet and Wholesale Vehicle
538,570
462,725
Total Revenues
6,490,077
5,392,183
Cost of Sales:
New Vehicle
3,187,699
2,752,530
Used Vehicle
1,490,807
1,082,744
Service and Parts
313,501
269,806
Fleet and Wholesale Vehicle
534,586
458,554
Cost of Sales
5,526,593
4,563,634
Gross Profit
963,484
828,549
SG&A Expenses
764,862
657,345
Depreciation and Amortization
26,147
20,982
Operating Income
172,475
150,222
Floor Plan Interest Expense
(35,721
)
(30,191
)
Other Interest Expense
(31,776
)
(23,383
)
Equity in Earnings of Affiliates
1,708
3,118
Debt Redemption Charge
(18,634
)
—
Income from Continuing Operations Before Income Taxes and Minority Interests
88,052
99,766
Income Taxes
(31,829
)
(36,521
)
Minority Interests
(996
)
(1,058
)
Income from Continuing Operations
55,227
62,187
Loss from Discontinued Operations, Net of Tax
(290
)
(1,539
)
Net Income
$
54,937
$
60,648
Income from Continuing Operations Per Diluted Share
$
0.58
$
0.66
Diluted EPS
$
0.58
$
0.64
Diluted Weighted Average Shares Outstanding
94,483
94,499
5
PENSKE AUTOMOTIVE GROUP, INC. Consolidated Condensed Balance Sheets (Amounts In Thousands) (Unaudited)
6/30/07
12/31/06
Assets
Cash and Cash Equivalents
$
18,256
$
13,147
Accounts Receivable, Net
474,674
470,301
Inventories
1,635,690
1,525,800
Other Current Assets
99,653
71,526
Assets Held for Sale
139,907
190,881
Total Current Assets
2,368,180
2,271,655
Property and Equipment, Net
563,548
582,407
Intangibles
1,626,259
1,506,004
Other Assets
93,094
109,736
Total Assets
$
4,651,081
$
4,469,802
Liabilities and Stockholders’ Equity
Floor Plan Notes Payable
$
1,108,688
$
874,326
Floor Plan Notes Payable – Non-Trade
452,850
298,703
Accounts Payable
290,911
301,592
Accrued Expenses
257,126
214,544
Current Portion Long-Term Debt
14,725
13,385
Liabilities Held for Sale
69,959
50,560
Total Current Liabilities
2,194,259
1,753,110
Long-Term Debt
831,771
1,168,666
Other Long-Term Liabilities
277,135
252,373
Total Liabilities
3,303,165
3,174,149
Stockholders’ Equity
1,347,916
1,295,653
Total Liabilities and Stockholders’ Equity
$
4,651,081
$
4,469,802
6
PENSKE AUTOMOTIVE GROUP, INC. Selected Data
Second Quarter
Six Months
2007
2006
2007
2006
Total Retail Units
New Retail
51,449
47,508
97,033
89,850
Used Retail
26,862
22,364
52,559
42,361
Total Retail
78,311
69,872
149,592
132,211
Same-Store Retail Units
New Same-Store Retail
46,808
46,884
88,390
87,701
Used Same-Store Retail
23,471
22,028
44,585
40,665
Total Same-Store Retail
70,279
68,912
132,975
128,366
Same-Store Retail Revenue
New Vehicles
$
1,662,883
$
1,563,628
$
3,129,150
$
2,931,834
Used Vehicles
717,171
624,360
1,327,178
1,130,131
Finance and Insurance, Net
69,680
65,122
131,031
120,858
Service and Parts
323,390
303,413
629,556
582,177
Total Same-Store Retail
$
2,773,124
$
2,556,523
$
5,216,915
$
4,765,000
Same-Store Retail Revenue Growth
New Vehicles
6.3
%
1.5
%
6.7
%
2.3
%
Used Vehicles
14.9
%
8.8
%
17.4
%
7.3
%
Finance and Insurance, Net
7.0
%
8.5
%
8.4
%
7.3
%
Service and Parts
6.6
%
8.0
%
8.1
%
8.1
%
Revenue Mix
New Vehicles
54.2
%
55.8
%
53.6
%
56.0
%
Used Vehicles
24.5
%
22.3
%
24.9
%
22.0
%
Finance and Insurance, Net
2.2
%
2.3
%
2.2
%
2.3
%
Service and Parts
10.6
%
10.8
%
11.0
%
11.1
%
Fleet and Wholesale
8.5
%
8.8
%
8.3
%
8.6
%
Average Retail Selling Price
New Vehicles
$
35,595
$
33,334
$
35,854
$
33,584
Used Vehicles
$
30,863
$
28,259
$
30,774
$
28,029
Gross Margin
14.7
%
15.1
%
14.9
%
15.4
%
Retail Gross Margin – by Product
New Vehicle
8.3
%
8.8
%
8.4
%
8.8
%
Used Vehicle
7.9
%
8.6
%
7.8
%
8.8
%
Service and Parts
56.2
%
55.1
%
55.9
%
55.1
%
Gross Profit per Retail Transaction
New Vehicles
$
2,971
$
2,921
$
3,003
$
2,949
Used Vehicles
2,435
2,433
2,410
2,469
Finance and Insurance
967
940
967
936
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PENSKE AUTOMOTIVE GROUP, INC. Selected Data (Continued)
Second Quarter
Six Months
2007
2006
2007
2006
Brand Mix:
BMW
22
%
16
%
22
%
16
%
Toyota/Lexus
20
%
22
%
19
%
22
%
Honda/Acura
15
%
16
%
14
%
16
%
DCX
11
%
11
%
12
%
11
%
Ford
9
%
10
%
10
%
11
%
Audi
7
%
7
%
8
%
7
%
Porsche
4
%
4
%
4
%
4
%
General Motors
3
%
4
%
3
%
4
%
Nissan/Infiniti
3
%
3
%
3
%
3
%
Other
6
%
7
%
5
%
6
%
100
%
100
%
100
%
100
%
Premium
65
%
60
%
66
%
61
%
Foreign
30
%
33
%
29
%
32
%
Domestic Big 3
5
%
7
%
5
%
7
%
100
%
100
%
100
%
100
%
Revenue Mix:
U.S.
63
%
71
%
62
%
70
%
International
37
%
29
%
38
%
30
%
100
%
100
%
100
%
100
%
Debt to Total Capital Ratio
39
%
37
%
39
%
37
%
Rent Expense
$
37,914
$
33,423
$
74,851
$
65,351
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