Contact: | 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 FOURTH QUARTER RESULTS
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Revenues Rise 8%; Same-Store Retail Revenues Increase 4%
Company Announces $150 Million Share Repurchase Authority
smart Wholesale Distribution and Retail Networks In Place;
Retail Deliveries Began In January ‘08
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BLOOMFIELD HILLS, MI, February 19, 2008 – Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, reported adjusted fourth quarter income from continuing operations of $31.8 million, or $0.34 per share, compared to income from continuing operations of $32.5 million, or $0.34 per share, in the fourth quarter last year. Adjusted fourth quarter net income was $33.9 million, or $0.36 per share, compared to net income of $30.3 million, or $0.32 per share in the fourth quarter last year. Adjusted earnings exclude the impact of $4.5 million of after-tax impairment losses recorded during the fourth quarter of 2007. Fourth quarter income from continuing operations was $27.4 million, or $0.29 per share, and fourth quarter net income was $29.4 million, or $0.31 per share. Revenues in the quarter increased 7.7% to $3.1 billion, including same-store retail revenue growth of 4.0%.
“Our fourth quarter results reflect the strength of the Penske Automotive business model,” said Penske Automotive Group Chairman Roger Penske. “While the new vehicle sales environment in the U.S. was challenging, the other areas of our business performed very well. In particular, we are pleased to see the continued growth of pre-owned vehicle sales and the sustained strength of our service and parts operations, which have served to partially offset the soft new vehicle sales market.” Penske continued, “We continue to see the benefits of our geographic diversification. Overall, same-store retail revenue increased 4.0%, including 10.5% growth in our international markets. As we look at 2008, we look forward to the opportunity presented by the launch of our smart distribution business, and we are confident in the ability of our business model to continue to perform in these challenging economic times.”
For the year ended December 31, 2007, revenues increased 16.5% to $13.0 billion. Income from continuing operations and related earnings per share for the year were $127.8 million and $1.35 per share, respectively. Excluding $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 and the impairment losses in the fourth quarter noted above, adjusted income from continuing operations for the year increased 9.3% to $144.6 million and related earnings per share increased 9.3% to $1.53 per share. Net income and related earnings per share for the twelve months were $127.7 million and $1.35 per share, respectively. Adjusted net income increased 15.9% to $144.5 million, and related earnings per share increased 15.9% to $1.53 per share.
The Company currently estimates earnings from continuing operations to be in the range of $1.63 to $1.71 per share for the year ended December 31, 2008. First quarter 2008 earnings from continuing operations are estimated to be in the range of $0.32 to $0.34 per share. Earnings per share information in 2008 is based on an estimated average of 95.0 million shares outstanding.
The Company also announced that its Board of Directors has authorized the Company to repurchase up to $150.0 million of its outstanding common stock, depending on market conditions, share price and other factors. Shares may be acquired from time to time either through open market purchases, negotiated transactions or other means. The Company currently contemplates purchasing any shares under this program using cash flow from operations and credit availability in the U.S.
“We view the opportunity to purchase our shares at recent market prices as an outstanding investment, highlighting our belief in the long-term fundamentals and value of our business,” said Bob O’Shaughnessy, Penske Automotive’s Chief Financial Officer. “Based on our current financial position, we believe we can increase shareholder value by pursuing this share repurchase program while we continue our efforts to enhance the business through sustained organic growth and selective acquisition activity.”
smart USA Distributor LLC, the Company’s wholly-owned distribution entity for the smart fortwo in the U.S., has certified 68 dealers in 31 states, including 8 Company-owned franchises, as ready for business. smart USA has shipped vehicles to its dealers, and retail deliveries began in January 2008. “I would like to commend the smart USA team for establishing a first-class distribution operation and organizing the retail network in only 18 months,” said Penske Automotive Chairman Roger Penske. “We are encouraged by the positive reaction of the U.S. consumer towards this unique and exciting product, and are confident that the smart fortwo will be a retail success.”
Penske Automotive will host a conference call discussing financial results relating to the fourth quarter of 2007 on February 19, 2008 at2:00 p.m. EDT. To listen to the conference call, participants must dial(866) 254-5942 [International, please dial (612) 332-0636]. The call will be simultaneously broadcast over the Internet through the Penske Automotive Group website atwww.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 315 retail automotive franchises, representing 40 different brands, and 27 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 170 franchises in 19 states and Puerto Rico and 145 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. smart and fortwo are registered trademarks of Daimler AG.
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.
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PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Fourth Quarter | ||||||||
2007 | 2006 | |||||||
Revenues: | ||||||||
New Vehicle | $ | 1,668,779 | $ | 1,571,646 | ||||
Used Vehicle | 741,078 | 676,349 | ||||||
Finance and Insurance, Net | 67,872 | 58,782 | ||||||
Service and Parts | 351,731 | 323,711 | ||||||
Fleet and Wholesale Vehicle | 251,678 | 230,285 | ||||||
Total Revenues | 3,081,138 | 2,860,773 | ||||||
Cost of Sales: | ||||||||
New Vehicle | 1,527,526 | 1,432,341 | ||||||
Used Vehicle | 681,419 | 621,913 | ||||||
Service and Parts | 154,269 | 145,700 | ||||||
Fleet and Wholesale Vehicle | 253,966 | 231,660 | ||||||
Total Cost of Sales | 2,617,180 | 2,431,614 | ||||||
Gross Profit | 463,958 | 429,159 | ||||||
SG&A Expenses | 380,619 | 345,714 | ||||||
Depreciation and Amortization | 13,014 | 12,050 | ||||||
Operating Income | 70,325 | 71,395 | ||||||
Floor Plan Interest Expense | (20,141 | ) | (15,446 | ) | ||||
Other Interest Expense | (12,014 | ) | (14,703 | ) | ||||
Equity in Earnings of Affiliates | 901 | 2,695 | ||||||
Income from Continuing Operations Before Income Taxes and Minority Interests | 39,071 | 43,941 | ||||||
Income Taxes | (11,244 | ) | (10,840 | ) | ||||
Minority Interests | (445 | ) | (636 | ) | ||||
Income from Continuing Operations | 27,382 | 32,465 | ||||||
Income (Loss) from Discontinued Operations, Net of Tax | 2,026 | (2,142 | ) | |||||
Net Income | $ | 29,408 | $ | 30,323 | ||||
Income from Continuing Operations Per Diluted Share | $ | 0.29 | $ | 0.34 | ||||
Diluted EPS | $ | 0.31 | $ | 0.32 | ||||
Diluted Weighted Average Shares Outstanding | 94,677 | 94,389 | ||||||
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PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
Twelve Months | ||||||||
2007 | 2006 | |||||||
Revenues: | ||||||||
New Vehicle | $ | 7,008,071 | $ | 6,185,880 | ||||
Used Vehicle | 3,149,145 | 2,531,001 | ||||||
Finance and Insurance, Net | 290,144 | 246,448 | ||||||
Service and Parts | 1,413,986 | 1,228,876 | ||||||
Fleet and Wholesale Vehicle | 1,096,393 | 934,514 | ||||||
Total Revenues | 12,957,739 | 11,126,719 | ||||||
Cost of Sales: | ||||||||
New Vehicle | 6,417,064 | 5,644,220 | ||||||
Used Vehicle | 2,898,051 | 2,316,748 | ||||||
Service and Parts | 623,585 | 550,520 | ||||||
Fleet and Wholesale Vehicle | 1,093,830 | 930,967 | ||||||
Total Cost of Sales | 11,032,530 | 9,442,455 | ||||||
Gross Profit | 1,925,209 | 1,684,264 | ||||||
SG&A Expenses | 1,531,628 | 1,337,019 | ||||||
Depreciation and Amortization | 50,957 | 43,164 | ||||||
Operating Income | 342,624 | 304,081 | ||||||
Floor Plan Interest Expense | (74,749 | ) | (59,806 | ) | ||||
Other Interest Expense | (56,245 | ) | (49,174 | ) | ||||
Equity in Earnings of Affiliates | 4,084 | 8,201 | ||||||
Debt Redemption Charge | (18,634 | ) | — | |||||
Income from Continuing Operations Before Income Taxes and Minority Interests | 197,080 | 203,302 | ||||||
Income Taxes | (67,310 | ) | (68,906 | ) | ||||
Minority Interests | (1,972 | ) | (2,172 | ) | ||||
Income from Continuing Operations | 127,798 | 132,224 | ||||||
Income (Loss) from Discontinued Operations, Net of Tax | (59 | ) | (7,523 | ) | ||||
Net Income | $ | 127,739 | $ | 124,701 | ||||
Income from Continuing Operations Per Diluted Share | $ | 1.35 | $ | 1.40 | ||||
Diluted EPS | $ | 1.35 | $ | 1.32 | ||||
Diluted Weighted Average Shares Outstanding | 94,558 | 94,178 | ||||||
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PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
12/31/07 | 12/31/06 | |||||||
Assets | ||||||||
Cash and Cash Equivalents | $ | 10,895 | $ | 13,147 | ||||
Accounts Receivable, Net | 449,278 | 465,579 | ||||||
Inventories | 1,688,286 | 1,506,237 | ||||||
Other Current Assets | 66,312 | 71,398 | ||||||
Assets Held for Sale | 86,838 | 193,026 | ||||||
Total Current Assets | 2,301,609 | 2,249,387 | ||||||
Property and Equipment, Net | 618,491 | 592,718 | ||||||
Intangibles | 1,663,559 | 1,518,045 | ||||||
Other Assets | 84,894 | 109,652 | ||||||
Total Assets | $ | 4,668,553 | $ | 4,469,802 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Floor Plan Notes Payable | $ | 1,074,820 | $ | 872,906 | ||||
Floor Plan Notes Payable – Non-Trade | 478,077 | 296,580 | ||||||
Accounts Payable | 268,214 | 298,066 | ||||||
Accrued Expenses | 212,601 | 213,957 | ||||||
Current Portion Long-Term Debt | 14,522 | 13,385 | ||||||
Liabilities Held for Sale | 47,805 | 56,972 | ||||||
Total Current Liabilities | 2,096,039 | 1,751,866 | ||||||
Long-Term Debt | 830,106 | 1,168,666 | ||||||
Other Long-Term Liabilities | 320,949 | 253,617 | ||||||
Total Liabilities | 3,247,094 | 3,174,149 | ||||||
Stockholders’ Equity | 1,421,459 | 1,295,653 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 4,668,553 | $ | 4,469,802 | ||||
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PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
Fourth Quarter | Twelve Months | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Total Retail Units | ||||||||||||||||
New Retail | 45,377 | 43,232 | 195,160 | 181,544 | ||||||||||||
Used Retail | 23,804 | 22,350 | 102,214 | 88,262 | ||||||||||||
Total Retail | 69,181 | 65,582 | 297,374 | 269,806 | ||||||||||||
Same-Store Retail Units | ||||||||||||||||
New Same-Store Retail | 42,583 | 42,908 | 174,759 | 174,188 | ||||||||||||
Used Same-Store Retail | 23,008 | 21,304 | 87,262 | 80,810 | ||||||||||||
Total Same-Store Retail | 65,591 | 64,212 | 262,021 | 254,998 | ||||||||||||
Same-Store Retail Revenue | ||||||||||||||||
New Vehicles | $ | 1,573,362 | $ | 1,557,992 | $ | 6,205,014 | $ | 5,882,310 | ||||||||
Used Vehicles | 711,687 | 646,849 | 2,597,746 | 2,268,920 | ||||||||||||
Finance and Insurance, Net | 65,185 | 58,786 | 258,320 | 236,721 | ||||||||||||
Service and Parts | 336,302 | 318,765 | 1,242,260 | 1,157,014 | ||||||||||||
Total Same-Store Retail | $ | 2,686,536 | $ | 2,582,392 | $ | 10,303,340 | $ | 9,544,965 | ||||||||
Same-Store Retail Revenue Growth | ||||||||||||||||
New Vehicles | 1.0 | % | 6.3 | % | 5.5 | % | 2.3 | % | ||||||||
Used Vehicles | 10.0 | % | 14.3 | % | 14.5 | % | 8.9 | % | ||||||||
Finance and Insurance, Net | 10.9 | % | (9.3 | %) | 9.1 | % | 0.4 | % | ||||||||
Service and Parts | 5.5 | % | 6.8 | % | 7.4 | % | 7.2 | % | ||||||||
Revenue Mix | ||||||||||||||||
New Vehicles | 54.2 | % | 54.9 | % | 54.1 | % | 55.6 | % | ||||||||
Used Vehicles | 24.1 | % | 23.6 | % | 24.3 | % | 22.8 | % | ||||||||
Finance and Insurance, Net | 2.2 | % | 2.1 | % | 2.3 | % | 2.2 | % | ||||||||
Service and Parts | 11.4 | % | 11.3 | % | 10.9 | % | 11.0 | % | ||||||||
Fleet and Wholesale | 8.1 | % | 8.1 | % | 8.4 | % | 8.4 | % | ||||||||
Average Retail Selling Price | ||||||||||||||||
New Vehicles | $ | 36,776 | $ | 36,354 | $ | 35,909 | $ | 34,074 | ||||||||
Used Vehicles | 31,132 | 30,262 | 30,809 | 28,676 | ||||||||||||
Gross Margin | 15.1 | % | 15.0 | % | 14.9 | % | 15.1 | % | ||||||||
Retail Gross Margin – by Product | ||||||||||||||||
New Vehicles | 8.5 | % | 8.9 | % | 8.4 | % | 8.8 | % | ||||||||
Used Vehicles | 8.1 | % | 8.0 | % | 8.0 | % | 8.5 | % | ||||||||
Service and Parts | 56.1 | % | 55.0 | % | 55.9 | % | 55.2 | % | ||||||||
Gross Profit per Retail Transaction | ||||||||||||||||
New Vehicles | $ | 3,113 | $ | 3,222 | $ | 3,028 | $ | 2,984 | ||||||||
Used Vehicles | 2,506 | 2,436 | 2,457 | 2,427 | ||||||||||||
Finance and Insurance | 981 | 896 | 976 | 913 |
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PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
Fourth Quarter | Twelve Months | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Brand Mix: | ||||||||||||||||
BMW | 22 | % | 21 | % | 22 | % | 18 | % | ||||||||
Toyota / Lexus | 20 | % | 20 | % | 20 | % | 21 | % | ||||||||
Honda / Acura | 14 | % | 14 | % | 15 | % | 16 | % | ||||||||
Mercedes Benz | 11 | % | 11 | % | 11 | % | 10 | % | ||||||||
Audi | 8 | % | 7 | % | 8 | % | 7 | % | ||||||||
Land Rover | 5 | % | 5 | % | 5 | % | 5 | % | ||||||||
Ferrari / Maserati | 4 | % | 3 | % | 3 | % | 3 | % | ||||||||
Porsche | 3 | % | 4 | % | 4 | % | 4 | % | ||||||||
General Motors | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||
Other | 10 | % | 12 | % | 9 | % | 13 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Premium | 65 | % | 67 | % | 65 | % | 62 | % | ||||||||
Foreign | 29 | % | 28 | % | 29 | % | 32 | % | ||||||||
Domestic Big 3 | 6 | % | 5 | % | 6 | % | 6 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Revenue Mix: | ||||||||||||||||
U.S. | 64 | % | 65 | % | 62 | % | 68 | % | ||||||||
International | 36 | % | 35 | % | 38 | % | 32 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Debt to Total Capital Ratio | 37 | % | 48 | % | 37 | % | 48 | % | ||||||||
Rent Expense | $ | 39,764 | $ | 34,890 | $ | 152,267 | $ | 132,569 |
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