PENSKE AUTOMOTIVE REPORTS SECOND QUARTER RESULTS ____________________________________________________________
Significant Growth in Retail Unit Sales and Revenue
Same-Store Retail Revenue Growth of 16% in U.S. and 9% Internationally
Income From Continuing Operations Increases 47% to $29.2 Million and Related Earnings Per Share Increases 45% to $0.32
Repurchased Additional $84.6 Million of Convertible Notes $150.6 Million Currently Outstanding
U.S. Credit Facility Capacity Increased by $50 Million ___________________________________________________________
BLOOMFIELD HILLS, MI, July 29, 2010 – Penske Automotive Group, Inc. (NYSE: PAG), an international automotive retailer, today reported second quarter income from continuing operations attributable to common shareholders of $29.2 million, or $0.32 per share. This compares to income from continuing operations attributable to common shareholders of $19.8 million, or $0.22 per share, in the second quarter last year.
Total revenue in the second quarter increased 16.6% to $2.7 billion. The revenue growth was driven by a 16.2% increase in new and used retail unit sales. Total new retail unit sales increased 19.6%, including increases of 20.5% and 17.2% in our U.S. and International operations, respectively, resulting in a 24.4% increase in total new retail revenue. Used retail unit sales increased 12.0%, including increases of 17.1% and 4.2% in our U.S. and International operations, respectively, resulting in a 13.8% increase in total used retail revenue.
Total same-store retail revenue increased 13.3% during the quarter, including growth of 15.8% and 9.0% in our U.S. and International operations, respectively. Excluding changes in exchange rates, total same-store retail revenue increased 15.0%.
Penske Automotive Group Chairman Roger Penske said, “The improving retail environment and our premium/luxury brand mix helped drive double-digit growth in units, revenue, income from continuing operations and earnings per share in the second quarter. Our new vehicle unit sales outperformed industry sales in both the U.S. and the U.K., and we maintained a greater than one to one ratio of used unit to new unit sales in our international markets. Along with our strong operating performance, we have further reduced our leverage, resulting in a decrease in our long-term debt to capital ratio from 50% at the beginning of this year to 47% as of June 30.”
Total revenues for the six months ended June 30, 2010, increased 15.9% to $5.2 billion. Income from continuing operations attributable to common shareholders for the six months ended June 30, 2010 and 2009, amounted to $49.9 million, or $0.54 per share, and $36.2 million, or $0.40 per share, respectively. Income from continuing operations for the six months ended June 30, 2010 and 2009, include after-tax gains of $0.7 million, or $0.01 per share, and $6.5 million, or $0.07 per share, respectively, relating to purchases of the Company’s 3.5% Senior Subordinated Convertible Notes due 2026. Net income attributable to common shareholders in the six months ended June 30, 2010, was $49.8 million, or $0.54 per share.
smart USA
During the second quarter, smart USA wholesaled 2,040 units, which compares to 956 units in the first quarter of this year. Recent sales activity and proactive management of current model year inventory purchases has resulted in inventory levels more closely aligned with current market conditions. Based on the increase in sales in the second quarter, coupled with expense reduction efforts, the loss in the distribution segment improved to $0.02 per share in the second quarter compared to $0.04 in the first quarter.
Securities Repurchase Activity
In the second and third quarters, the Company repurchased $84.6 million principal amount of its 3.5% Senior Subordinated Convertible Notes due 2026 (the “Notes”), leaving $150.6 million principal amount of the securities outstanding today. The Company also repurchased 68,340 shares of its common stock at an average price of $10.97 per share in July, and currently has approximately 92.1 million shares outstanding.
The Board of Directors of the Company has increased the Company’s authority to repurchase its outstanding common stock, debt and convertible debt, depending on market conditions, price and other factors to $150 million. Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means.
1
U.S. Credit Facility
The Company’s U.S. credit facility has been amended to increase the revolving credit line by $50 million to $300 million. Including this increase, the Company currently has approximately $250 million of revolving credit available under the U.S. credit facility, all of which is currently available to repurchase or redeem the remaining $150.6 million of outstanding Notes.
Conference Call
Penske Automotive will host a conference call discussing financial results relating to the second quarter of 2010 onJuly 29, 2010, at2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial(800) 230-1074 [International, please dial (612) 234-9959]. The call will also be simultaneously broadcast over the Internet through the Penske Automotive Group website atwww.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc. (www.penskeautomotive.com), headquartered in Bloomfield Hills, Michigan, operates 323 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 171 franchises in 17 states and Puerto Rico and 152 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 14,100 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.
Contacts:
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
2
PENSKE AUTOMOTIVE GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Second Quarter
2010
2009
Revenues:
New Vehicle
$
1,355,813
$
1,090,127
Used Vehicle
749,669
658,787
Finance and Insurance, Net
63,558
54,674
Service and Parts
332,160
331,106
Distribution
19,933
53,152
Fleet and Wholesale Vehicle
182,555
130,849
Total Revenues
2,703,688
2,318,695
Cost of Sales:
New Vehicle
1,244,630
1,004,151
Used Vehicle
689,552
599,526
Service and Parts
141,655
148,692
Distribution
17,227
45,702
Fleet and Wholesale Vehicle
180,280
126,869
Total Cost of Sales
2,273,344
1,924,940
Gross Profit
430,344
393,755
SG&A Expenses
355,177
327,389
Depreciation
12,054
13,811
Operating Income
63,113
52,555
Floor Plan Interest Expense
(8,321
)
(8,969
)
Other Interest Expense
(12,542
)
(13,687
)
Debt Discount Amortization
(2,428
)
(3,135
)
Equity in Earnings of Affiliates
4,784
3,466
Gain on Debt Repurchase
422
—
Income from Continuing Operations Before Income Taxes
45,028
30,230
Income Taxes
(15,625
)
(10,329
)
Income from Continuing Operations
29,403
19,901
Income (Loss) from Discontinued Operations, Net of Tax
281
(5,734
)
Net Income
29,684
14,167
Income Attributable to Non-Controlling Interests
(243
)
(88
)
Net Income Attributable to Common Shareholders
$
29,441
$
14,079
Income from Continuing Operations Per Share
$
0.32
$
0.22
Income Per Share
$
0.32
$
0.15
Weighted Average Shares Outstanding
92,206
91,592
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations
$
29,403
$
19,901
Income Attributable to Non-Controlling Interests
(243
)
(88
)
Income from Continuing Operations, net of tax
29,160
19,813
Loss from Discontinued Operations, net of tax
281
(5,734
)
Net Income
$
29,441
$
14,079
PENSKE AUTOMOTIVE GROUP, INC. Consolidated Statements of Income (Amounts In Thousands, Except Per Share Data) (Unaudited)
Six Months
2010
2009
Revenues:
New Vehicle
$
2,588,136
$
2,061,323
Used Vehicle
1,446,337
1,275,286
Finance and Insurance, Net
122,992
103,137
Service and Parts
666,183
658,009
Distribution
27,869
133,265
Fleet and Wholesale Vehicle
337,850
245,975
Total Revenues
5,189,367
4,476,995
Cost of Sales:
New Vehicle
2,375,452
1,903,990
Used Vehicle
1,329,500
1,160,009
Service and Parts
287,275
298,867
Distribution
24,949
114,016
Fleet and Wholesale Vehicle
331,819
238,319
Total Cost of Sales
4,348,995
3,715,201
Gross Profit
840,372
761,794
SG&A Expenses
695,691
640,055
Depreciation
24,428
26,692
Operating Income
120,253
95,047
Floor Plan Interest Expense
(16,842
)
(18,431
)
Other Interest Expense
(25,262
)
(28,187
)
Debt Discount Amortization
(5,343
)
(6,773
)
Equity in Earnings of Affiliates
4,355
4,180
Gain on Debt Repurchase
1,027
10,429
Income from Continuing Operations Before Income Taxes
78,188
56,265
Income Taxes
(28,060
)
(20,074
)
Income from Continuing Operations
50,128
36,191
Loss from Discontinued Operations, Net of Tax
(112
)
(5,822
)
Net Income
50,016
30,369
Income Attributable to Non-Controlling Interests
(221
)
(8
)
Net Income Attributable to Common Shareholders
$
49,795
$
30,361
Income from Continuing Operations Per Share
$
0.54
$
0.40
Income Per Share
$
0.54
$
0.33
Weighted Average Shares Outstanding
92,086
91,537
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations
$
50,128
$
36,191
Income Attributable to Non-Controlling Interests
(221
)
(8
)
Income from Continuing Operations, net of tax
49,907
36,183
Loss from Discontinued Operations, net of tax
(112
)
(5,822
)
Net Income
$
49,795
$
30,361
PENSKE AUTOMOTIVE GROUP, INC. Consolidated Condensed Balance Sheets (Amounts In Thousands) (Unaudited)
6/30/10
12/31/09
Assets
Cash and Cash Equivalents
$
17,664
$
13,999
Accounts Receivable, Net
351,013
321,226
Inventories
1,364,718
1,302,495
Other Current Assets
106,479
95,426
Assets Held for Sale
572
10,625
Total Current Assets
1,840,446
1,743,771
Property and Equipment, Net
707,832
726,808
Intangibles
994,947
1,011,803
Other Long-Term Assets
295,438
313,625
Total Assets
$
3,838,663
$
3,796,007
Liabilities and Equity
Floor Plan Notes Payable
$
818,339
$
769,657
Floor Plan Notes Payable – Non-Trade
499,410
423,316
Accounts Payable
209,535
189,989
Accrued Expenses
218,716
227,294
Current Portion Long-Term Debt
16,551
12,442
Liabilities Held for Sale
501
7,675
Total Current Liabilities
1,763,052
1,630,373
Long-Term Debt
844,292
933,966
Other Long-Term Liabilities
269,585
285,629
Total Liabilities
2,876,929
2,849,968
Equity
961,734
946,039
Total Liabilities and Equity
$
3,838,663
$
3,796,007
PENSKE AUTOMOTIVE GROUP, INC. Selected Data (Unaudited)
Second Quarter
Six Months
2010
2009
2010
2009
Total Retail Units:
New Retail
39,676
33,176
75,815
63,911
Used Retail
29,232
26,100
55,996
53,090
Total Retail
68,908
59,276
131,811
117,001
smart Wholesale Units
2,040
3,659
2,996
9,373
Same-Store Retail Units:
New Same-Store Retail
38,091
33,140
73,482
63,750
Used Same-Store Retail
28,239
26,070
54,512
52,854
Total Same-Store Retail
66,330
59,210
127,994
116,604
Same-Store Retail Revenue:
New Vehicles
$
1,301,745
$
1,088,359
$
2,498,367
$
2,049,239
Used Vehicles
727,441
657,920
1,396,170
1,261,872
Finance and Insurance, Net
62,064
54,620
119,743
102,669
Service and Parts
321,851
329,492
649,707
652,477
Total Same-Store Retail
$
2,413,101
$
2,130,391
$
4,663,987
$
4,066,257
Same-Store Retail Revenue Growth:
New Vehicles
19.6
%
(39.2
%)
21.9
%
(41.0
%)
Used Vehicles
10.6
%
(23.0
%)
10.6
%
(25.0
%)
Finance and Insurance, Net
13.6
%
(29.8
%)
16.6
%
(33.3
%)
Service and Parts
(2.3
%)
(11.5
%)
(0.4
%)
(11.8
%)
Revenue Mix:
New Vehicles
50.1
%
47.0
%
49.9
%
46.0
%
Used Vehicles
27.7
%
28.4
%
27.9
%
28.5
%
Finance and Insurance, Net
2.4
%
2.4
%
2.4
%
2.3
%
Service and Parts
12.3
%
14.3
%
12.8
%
14.7
%
Distribution
0.7
%
2.3
%
0.5
%
3.0
%
Fleet and Wholesale
6.8
%
5.6
%
6.5
%
5.5
%
Average Retail Selling Price:
New Vehicles
$
34,172
$
32,859
$
34,137
$
32,253
Used Vehicles
25,645
25,241
25,829
24,021
Gross Margin
15.9
%
17.0
%
16.2
%
17.0
%
Retail Gross Margin – by Product:
New Vehicles
8.2
%
7.9
%
8.2
%
7.6
%
Used Vehicles
8.0
%
9.0
%
8.1
%
9.0
%
Service and Parts
57.4
%
55.1
%
56.9
%
54.6
%
3
PENSKE AUTOMOTIVE GROUP, INC. Selected Data (Continued) (Unaudited)
Second Quarter
Six Months
2010
2009
2010
2009
Gross Profit per Retail Transaction:
New Vehicles
$
2,802
$
2,591
$
2,805
$
2,462
Used Vehicles
2,056
2,271
2,086
2,171
Finance and Insurance
922
922
933
882
Brand Mix:
BMW
20
%
21
%
20
%
22
%
Toyota / Lexus
18
%
18
%
18
%
19
%
Honda / Acura
15
%
15
%
14
%
15
%
Audi
11
%
11
%
11
%
10
%
Mercedes Benz
10
%
10
%
10
%
10
%
Land Rover
4
%
3
%
5
%
4
%
Porsche
4
%
4
%
4
%
4
%
Ferrari / Maserati
3
%
3
%
3
%
3
%
Other
15
%
15
%
15
%
13
%
100
%
100
%
100
%
100
%
Premium
64
%
65
%
65
%
65
%
Foreign
31
%
31
%
31
%
31
%
Domestic Big 3
5
%
4
%
4
%
4
%
100
%
100
%
100
%
100
%
Revenue Mix:
U.S.
65
%
64
%
63
%
64
%
International
35
%
36
%
37
%
36
%
100
%
100
%
100
%
100
%
Rent Expense
$
41,455
$
40,859
$
82,686
$
80,484
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