Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 25, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-12297 | |
Entity Registrant Name | Penske Automotive Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 22-3086739 | |
Entity Address, Address Line One | 2555 Telegraph Road | |
Entity Address, City or Town | Bloomfield Hills | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48302-0954 | |
City Area Code | 248 | |
Local Phone Number | 648-2500 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | PAG | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 78,295,038 | |
Entity Central Index Key | 0001019849 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 119.2 | $ 49.5 |
Accounts receivable, net of allowance for doubtful accounts of $5.7 and $5.5 | 737.7 | 806.9 |
Inventories | 2,598.4 | 3,425.6 |
Other current assets | 121.4 | 126.8 |
Total current assets | 3,576.7 | 4,408.8 |
Property and equipment, net | 2,378.6 | 2,404.4 |
Operating lease right-of-use assets | 2,410.9 | 2,416.5 |
Goodwill | 2,050.9 | 1,928.4 |
Other indefinite-lived intangible assets | 600.7 | 563.4 |
Equity method investments | 1,668.2 | 1,500.3 |
Other long-term assets | 33.3 | 25.4 |
Total assets | 12,719.3 | 13,247.2 |
LIABILITIES AND EQUITY | ||
Floor plan notes payable | 962.2 | 1,780.5 |
Floor plan notes payable - non-trade | 1,074.9 | 1,363.8 |
Accounts payable | 808.8 | 675.4 |
Accrued expenses and other current liabilities | 922.4 | 767.2 |
Current portion of long-term debt | 67.9 | 87.5 |
Liabilities held for sale | 0.5 | 0.5 |
Total current liabilities | 3,836.7 | 4,674.9 |
Long-term debt | 1,356.7 | 1,602.1 |
Long-term operating lease liabilities | 2,341.1 | 2,350.3 |
Deferred tax liabilities | 1,003.4 | 873.1 |
Other long-term liabilities | 315 | 420.7 |
Total liabilities | 8,852.9 | 9,921.1 |
Commitments and contingent liabilities (Note 11) | ||
Penske Automotive Group stockholders' equity: | ||
Preferred Stock, $0.0001 par value; 100,000 shares authorized; none issued and outstanding | ||
Common Stock | ||
Additional paid-in capital | 110.8 | 311.8 |
Retained earnings | 3,921.5 | 3,151.3 |
Accumulated other comprehensive income (loss) | (190.2) | (160.6) |
Total Penske Automotive Group stockholders' equity | 3,842.1 | 3,302.5 |
Non-controlling interest | 24.3 | 23.6 |
Total equity | 3,866.4 | 3,326.1 |
Total liabilities and equity | $ 12,719.3 | 13,247.2 |
Non-voting Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock | ||
Class C Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock |
CONSOLIDATED CONDENSED BALANC_2
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 5.7 | $ 5.5 |
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, shares authorized | 100,000 | 100,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 240,000,000 | 240,000,000 |
Common Stock, shares issued | 78,294,013 | 80,392,662 |
Common Stock, shares outstanding | 78,294,013 | 80,392,662 |
Non-voting Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 7,125,000 | 7,125,000 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
Class C Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 20,000,000 | 20,000,000 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Total revenues | $ 6,497.3 | $ 5,971.6 | $ 19,258.6 | $ 14,631.8 |
Cost of sales: | ||||
Total cost of sales | 5,331.6 | 5,015.1 | 15,997 | 12,345.7 |
Gross profit | 1,165.7 | 956.5 | 3,261.6 | 2,286.1 |
Selling, general and administrative expenses | 757.7 | 643.3 | 2,171.8 | 1,738.7 |
Depreciation | 30.2 | 29 | 89.7 | 85.4 |
Operating income | 377.8 | 284.2 | 1,000.1 | 462 |
Floor plan interest expense | (6) | (8) | (23.4) | (37.4) |
Other interest expense | (16.2) | (29.1) | (53.8) | (89.2) |
Debt redemption costs | (1.7) | (17) | (1.7) | |
Equity in earnings of affiliates | 120.5 | 66.2 | 281.5 | 110.6 |
Income from continuing operations before income taxes | 476.1 | 311.6 | 1,187.4 | 444.3 |
Income taxes | (120.1) | (64.1) | (308) | (100.7) |
Income from continuing operations | 356 | 247.5 | 879.4 | 343.6 |
Income from discontinued operations, net of tax | 0.3 | 0.1 | 0.4 | 0.3 |
Net income | 356.3 | 247.6 | 879.8 | 343.9 |
Less: Income attributable to non-controlling interests | 1.2 | 1 | 3.3 | 0.5 |
Net income attributable to Penske Automotive Group common stockholders | $ 355.1 | $ 246.6 | $ 876.5 | $ 343.4 |
Basic earnings per share attributable to Penske Automotive Group common stockholders: | ||||
Continuing operations (in dollars per share) | $ 4.46 | $ 3.07 | $ 10.91 | $ 4.27 |
Discontinued operations (in dollars per share) | ||||
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 4.47 | $ 3.07 | $ 10.92 | $ 4.27 |
Shares used in determining basic earnings per share (in shares) | 79,497,482 | 80,340,076 | 80,272,613 | 80,368,589 |
Diluted earnings per share attributable to Penske Automotive Group common stockholders: | ||||
Continuing operations (in dollars per share) | $ 4.46 | $ 3.07 | $ 10.91 | $ 4.27 |
Discontinued operations (in dollars per share) | ||||
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 4.47 | $ 3.07 | $ 10.92 | $ 4.27 |
Shares used in determining diluted earnings per share (in shares) | 79,523,327 | 80,380,076 | 80,298,458 | 80,408,589 |
Amounts attributable to Penske Automotive Group common stockholders: | ||||
Income from continuing operations | $ 356 | $ 247.5 | $ 879.4 | $ 343.6 |
Less: Income attributable to non-controlling interests | 1.2 | 1 | 3.3 | 0.5 |
Income from continuing operations, net of tax | 354.8 | 246.5 | 876.1 | 343.1 |
Income from discontinued operations, net of tax | 0.3 | 0.1 | 0.4 | 0.3 |
Net income attributable to Penske Automotive Group common stockholders | $ 355.1 | 246.6 | $ 876.5 | $ 343.4 |
Cash dividends per share (in dollars per share) | $ 0.45 | $ 1.32 | $ 0.42 | |
Retail automotive dealership | ||||
Revenue: | ||||
Total revenues | $ 5,634.9 | 5,258 | $ 17,039.4 | $ 12,828.1 |
Cost of sales: | ||||
Total cost of sales | 4,624 | 4,408.3 | 14,188.2 | 10,834 |
Retail commercial truck dealership | ||||
Revenue: | ||||
Total revenues | 717.3 | 590.9 | 1,777.3 | 1,481.5 |
Cost of sales: | ||||
Total cost of sales | 602 | 517.8 | 1,479.3 | 1,279.4 |
Commercial vehicle distribution | ||||
Revenue: | ||||
Total revenues | 145.1 | 122.7 | 441.9 | 322.2 |
Cost of sales: | ||||
Total cost of sales | $ 105.6 | $ 89 | $ 329.5 | $ 232.3 |
CONSOLIDATED CONDENSED STATEM_2
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 356.3 | $ 247.6 | $ 879.8 | $ 343.9 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (42.6) | 49.9 | (40.7) | (15.4) |
Unrealized gain (loss) on interest rate swaps: | ||||
Unrealized gain (loss) arising during the period, net of tax (provision) benefit of ($0.0), ($0.1), ($1.1), and $1.4, respectively | 0.3 | 3 | (3.8) | |
Reclassification adjustment for (gain) loss included in floor plan interest expense, net of tax provision (benefit) of ($0.1), $0.1, ($0.3), and $0.1, respectively | 0.3 | (0.2) | 0.8 | (0.2) |
Unrealized gain (loss) on interest rate swaps, net of tax | 0.3 | 0.1 | 3.8 | (4) |
Other adjustments to comprehensive income (loss), net | (0.5) | 3.3 | 6.6 | 0.6 |
Other comprehensive income (loss), net of tax | (42.8) | 53.3 | (30.3) | (18.8) |
Comprehensive income (loss) | 313.5 | 300.9 | 849.5 | 325.1 |
Less: Comprehensive income (loss) attributable to non-controlling interests | 0.8 | 1.4 | 2.6 | 0.8 |
Comprehensive income (loss) attributable to Penske Automotive Group common stockholders | $ 312.7 | $ 299.5 | $ 846.9 | $ 324.3 |
CONSOLIDATED CONDENSED STATEM_3
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Unrealized gain (loss) on interest rate swaps, tax: | ||||
Unrealized loss arising during the period, tax (provision) benefit | $ 0 | $ (0.1) | $ (1.1) | $ 1.4 |
Reclassification adjustment for loss included in floor plan interest expense, tax provision (benefit) | $ (0.1) | $ 0.1 | $ (0.3) | $ 0.1 |
CONSOLIDATED CONDENSED STATEM_4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Activities: | ||
Net income | $ 879.8 | $ 343.9 |
Adjustments to reconcile net income to net cash from continuing operating activities: | ||
Depreciation | 89.7 | 85.4 |
Earnings of equity method investments | (203.4) | (88.9) |
Income from discontinued operations, net of tax | (0.4) | (0.3) |
Deferred income taxes | 126.3 | 177.6 |
Debt redemption costs | 17 | 1.7 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 69.4 | 112.2 |
Inventories | 863.6 | 1,043.5 |
Floor plan notes payable | (818.3) | (925.9) |
Accounts payable and accrued expenses | 290.5 | 172.1 |
Other | 16.2 | (71.8) |
Net cash provided by continuing operating activities | 1,330.4 | 849.5 |
Investing Activities: | ||
Purchase of equipment and improvements | (157.5) | (114.3) |
Proceeds from sale of dealerships | 4.3 | 10.3 |
Proceeds from sale of equipment and improvements | 54.9 | 19.8 |
Acquisitions net, including repayment of sellers' floor plan notes payable of $24.3 and $0, respectively | (278) | |
Other | 0.2 | (4.4) |
Net cash used in continuing investing activities | (376.1) | (88.6) |
Financing Activities: | ||
Proceeds from borrowings under U.S. credit agreement revolving credit line | 1,487 | 956 |
Repayments under U.S. credit agreement revolving credit line | (1,595) | (1,001) |
Net repayments of other long-term debt | (152.5) | (253.7) |
Net repayments of floor plan notes payable - non-trade | (288.9) | (547.6) |
Payments for contingent consideration | (31.6) | |
Repurchases of common stock | (206.9) | (29.4) |
Dividends | (106.3) | (34.2) |
Payment of debt issuance costs | (6.1) | (7.8) |
Other | (12.8) | (5) |
Net cash used in continuing financing activities | (881.5) | (704.3) |
Discontinued operations: | ||
Net cash provided by discontinued operating activities | 0.4 | 0.2 |
Net cash provided by discontinued investing activities | ||
Net cash provided by discontinued financing activities | ||
Net cash provided by discontinued operations | 0.4 | 0.2 |
Effect of exchange rate changes on cash and cash equivalents | (3.5) | 7.8 |
Net change in cash and cash equivalents | 69.7 | 64.6 |
Cash and cash equivalents, beginning of period | 49.5 | 28.1 |
Cash and cash equivalents, end of period | 119.2 | 92.7 |
Cash paid for: | ||
Interest | 79.8 | 106.7 |
Income taxes | 44.5 | 32.1 |
3.50% senior subordinated notes due 2025 | ||
Financing Activities: | ||
Issuance of senior subordinated notes | 550 | |
3.75% senior subordinated notes due 2029 | ||
Financing Activities: | ||
Issuance of senior subordinated notes | 500 | |
3.75% senior subordinated notes redeemed August 15, 2020 | ||
Financing Activities: | ||
Repayment of senior subordinated notes | $ (300) | |
5.50% senior subordinated notes due 2026 | ||
Financing Activities: | ||
Repayment of senior subordinated notes | $ (500) |
CONSOLIDATED CONDENSED STATEM_5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Repayment of Sellers' Floor Plan Notes Payable Dealership Acquisitions | $ 24.3 | $ 0 |
3.50% senior subordinated notes due 2025 | ||
Interest rate (as a percent) | 3.50% | 3.50% |
3.75% senior subordinated notes due 2029 | ||
Interest rate (as a percent) | 3.75% | |
3.75% senior subordinated notes redeemed August 15, 2020 | ||
Interest rate (as a percent) | 3.75% | |
5.50% senior subordinated notes due 2026 | ||
Interest rate (as a percent) | 5.50% |
CONSOLIDATED CONDENSED STATEM_6
CONSOLIDATED CONDENSED STATEMENTS OF EQUITY - USD ($) $ in Millions | Total Stockholders' Equity Attributable to Penske Automotive Group | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total |
Balance at Dec. 31, 2019 | $ 2,793.4 | $ 320.4 | $ 2,675.8 | $ (202.8) | $ 18.2 | $ 2,811.6 | |
Balance (in shares) at Dec. 31, 2019 | 81,084,751 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 15.2 | 15.2 | 15.2 | ||||
Equity compensation (in shares) | 279,196 | ||||||
Repurchases of common stock | (34.4) | (34.4) | (34.4) | ||||
Repurchases of common stock (in shares) | (1,027,736) | ||||||
Dividends | (34.2) | (34.2) | (34.2) | ||||
Interest rate swaps | (4) | (4) | (4) | ||||
Foreign currency translation | (15.7) | (15.7) | 0.3 | (15.4) | |||
Other | 0.6 | 0.6 | 0.2 | 0.8 | |||
Net income | 343.4 | 343.4 | 0.5 | 343.9 | |||
Balance at Sep. 30, 2020 | 3,064.3 | 301.2 | 2,985 | (221.9) | 19.2 | 3,083.5 | |
Balance (in shares) at Sep. 30, 2020 | 80,336,211 | ||||||
Balance at Jun. 30, 2020 | 2,759.9 | 296.3 | 2,738.4 | (274.8) | 17.7 | 2,777.6 | |
Balance (in shares) at Jun. 30, 2020 | 80,339,909 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 5.1 | 5.1 | 5.1 | ||||
Equity compensation (in shares) | 750 | ||||||
Repurchases of common stock | (0.2) | (0.2) | (0.2) | ||||
Repurchases of common stock (in shares) | (4,448) | ||||||
Interest rate swaps | 0.1 | 0.1 | 0.1 | ||||
Foreign currency translation | 49.5 | 49.5 | 0.4 | 49.9 | |||
Other | 3.3 | 3.3 | 0.1 | 3.4 | |||
Net income | 246.6 | 246.6 | 1 | 247.6 | |||
Balance at Sep. 30, 2020 | 3,064.3 | 301.2 | 2,985 | (221.9) | 19.2 | 3,083.5 | |
Balance (in shares) at Sep. 30, 2020 | 80,336,211 | ||||||
Balance at Dec. 31, 2020 | 3,302.5 | 311.8 | 3,151.3 | (160.6) | 23.6 | 3,326.1 | |
Balance (in shares) at Dec. 31, 2020 | 80,392,662 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 18.8 | 18.8 | 18.8 | ||||
Equity compensation (in shares) | 426,289 | ||||||
Repurchases of common stock | (219.8) | (219.8) | (219.8) | ||||
Repurchases of common stock (in shares) | (2,524,938) | ||||||
Dividends | (106.3) | (106.3) | (106.3) | ||||
Interest rate swaps | 3.8 | 3.8 | 3.8 | ||||
Distributions to non-controlling interest | (1.9) | (1.9) | |||||
Foreign currency translation | (40) | (40) | (0.7) | (40.7) | |||
Other | 6.6 | 6.6 | 6.6 | ||||
Net income | 876.5 | 876.5 | 3.3 | 879.8 | |||
Balance at Sep. 30, 2021 | 3,842.1 | 110.8 | 3,921.5 | (190.2) | 24.3 | 3,866.4 | |
Balance (in shares) at Sep. 30, 2021 | 78,294,013 | ||||||
Balance at Jun. 30, 2021 | 3,738.7 | 284 | 3,602.5 | (147.8) | 24 | 3,762.7 | |
Balance (in shares) at Jun. 30, 2021 | 80,330,836 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 5.7 | 5.7 | 5.7 | ||||
Equity compensation (in shares) | (7,192) | ||||||
Repurchases of common stock | (178.9) | (178.9) | (178.9) | ||||
Repurchases of common stock (in shares) | (2,029,631) | ||||||
Dividends | (36.1) | (36.1) | (36.1) | ||||
Interest rate swaps | 0.3 | 0.3 | 0.3 | ||||
Distributions to non-controlling interest | (0.5) | (0.5) | |||||
Foreign currency translation | (42.2) | (42.2) | (0.4) | (42.6) | |||
Other | (0.5) | (0.5) | (0.5) | ||||
Net income | 355.1 | 355.1 | 1.2 | 356.3 | |||
Balance at Sep. 30, 2021 | $ 3,842.1 | $ 110.8 | $ 3,921.5 | $ (190.2) | $ 24.3 | $ 3,866.4 | |
Balance (in shares) at Sep. 30, 2021 | 78,294,013 |
Interim Financial Statements
Interim Financial Statements | 9 Months Ended |
Sep. 30, 2021 | |
Interim Financial Statements. | |
Interim Financial Statements | 1. Interim Financial Statements Unless the context otherwise requires, the use of the terms “PAG,” “we,” “us,” and “our” in these Notes to the Consolidated Condensed Financial Statements refers to Penske Automotive Group, Inc. and its consolidated subsidiaries. Business Overview and Concentrations We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships principally in the United States, the United Kingdom, Canada, Germany, Italy, and Japan, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. Additionally, we own 28.9% of Penske Transportation Solutions, a business that manages a fleet of over 350,000 vehicles providing innovative transportation, supply chain, and technology solutions to North American fleets. Retail Automotive. We also operate used vehicle dealerships in the U.S. and the U.K. which retail and wholesale used vehicles under a one price, “no-haggle” methodology under the CarShop brand. As of September 30, 2021, our operations in the U.S. consist of seven retail locations, and our operations in the U.K. consist of thirteen retail locations and a vehicle preparation center. In September 2021, we opened one CarShop location in the U.K., and in October 2021, we opened two additional CarShop locations, one in the U.S. in Scottsdale, Arizona and one in the U.K. During the nine months ended September 30, 2021, we acquired one retail automotive franchise in the U.S., were awarded one retail automotive franchise in the U.S., and disposed of one retail automotive franchise in the U.K. In October 2021, we also purchased the remaining 51% interest in the Nicole Group, our retail automotive joint venture in the greater Tokyo area of Japan representing BMW, MINI, Rolls-Royce, Ferrari, and ALPINA, which will result in these dealerships being consolidated in our financial statements beginning in the fourth quarter of 2021. Retail Commercial Truck Dealership. September 30, 2021, PTG operated 35 locations which sell new and used trucks, parts and service, and collision repair services. Penske Australia Penske Transportation Solutions. Basis of Presentation The accompanying unaudited consolidated condensed financial statements of PAG have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC rules and regulations. The information presented as of September 30, 2021, and December 31, 2020, and for the three and nine months ended September 30, 2021, and 2020 is unaudited but includes all adjustments which our management believes to be necessary for the fair presentation of results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the year. These consolidated condensed financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2020, which are included as part of our Annual Report on Form 10-K. Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets, and certain reserves. Fair Value of Financial Instruments Accounting standards define fair value as the price that would be received from selling an asset, or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted market prices in markets that are not active, or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, forward exchange contracts, and interest rate swaps used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting. Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of our fixed rate debt is as follows: September 30, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value 3.50% senior subordinated notes due 2025 544.3 561.3 543.2 $ 554.6 3.75% senior subordinated notes due 2029 494.1 497.5 — — Mortgage facilities 319.8 326.1 458.1 474.7 During the second quarter of 2021, we issued $500 million in aggregate principal amount of 3.75% senior subordinated notes due 2029, the proceeds of which were used to redeem our $500 million in aggregate principal amount of 5.50% senior subordinated notes due 2026 on June 24, 2021. Refer to Note 9 “Long-Term Debt” for further discussion. Discontinued Operations We had no entities newly classified as held for sale during the nine months ended September 30, 2021, or 2020 that met the criteria to be classified as discontinued operations. As such, results from discontinued operations represent only those businesses that were classified as discontinued operations prior to the adoption of ASU No. 2014-08 on January 1, 2015. Disposals During the nine months ended September 30, 2021, we disposed of one retail automotive franchise. The results of operations for this business are included within continuing operations for the three and nine months ended September 30, 2021, and 2020 as this franchise did not meet the criteria to be classified as held for sale and treated as discontinued operations. Income Taxes Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit. Recent Accounting Pronouncements Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” This ASU refines the scope of ASC 848 and clarifies some of its guidance as part of the Board’s monitoring of global reference rate reform activities. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities. These new standards were effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. While our credit facilities in the U.S. and U.K. and many of our floorplan arrangements utilize LIBOR as a benchmark for calculating the applicable interest rate, some of our floorplan arrangements have already transitioned to utilizing an alternative benchmark rate. We are continuing to evaluate the impact of the transition from LIBOR to alternative reference interest rates. We cannot predict the effect of the potential changes to or elimination of LIBOR, the establishment and use of alternative rates or benchmarks, and the corresponding effects on our cost of capital but do not expect a significant impact on our consolidated financial position, results of operations, and cash flows. Disclosures for Business Acquisitions, Dispositions, and Significant Subsidiaries On May 20, 2020, the SEC issued a final rule that amends the financial statement requirements for acquisitions and dispositions of businesses, including the determinations of whether a subsidiary or an acquired or disposed business is significant. The significance test rule changes to SEC Regulation S-X, Rule 3-09 impact our disclosure requirements for equity method investments, including our investment in Penske Transportation Solutions (“PTS”) as it relates to providing audited financial statements and summarized financial statement information in our footnotes disclosures. The rule is effective January 1, 2021, but earlier compliance is permitted. The Company early adopted this rule in the fourth quarter of 2020. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2021 | |
Revenues. | |
Revenues | 2. Revenues Automotive and commercial truck dealerships generate the majority of our revenues. New and used vehicle revenues typically include sales to retail customers, to fleet customers, and to leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories, as well as warranty repairs that are reimbursed directly by various vehicle manufacturers. Revenues are recognized upon satisfaction of our performance obligations under contracts with our customers and are measured at the amount of consideration we expect to be entitled to in exchange for transferring goods or providing services. A discussion of revenue recognition by reportable segment is included below. Retail Automotive and Retail Commercial Truck Dealership Revenue Recognition Dealership Vehicle Sales. reduced by any noncash consideration representing the fair value of trade-in vehicles, if applicable. Payment is typically due and collected within 30 days subsequent to transfer of control of the vehicle. Dealership Parts and Service Sales. Dealership Finance and Insurance Sales. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $32.2 million and $28.7 million as of September 30, 2021, and December 31, 2020, respectively. Commercial Vehicle Distribution Revenue Recognition Penske Australia. The amount of consideration we receive for vehicle and product sales is stated within the executed contract with our customer. The amount of consideration we receive for parts and service sales is based upon labor hours expended and parts utilized to perform and complete the necessary services to our customers. Payment is typically due upon delivery, upon invoice, or within a period of time shortly thereafter. We receive payment from our customers upon transfer of control or within a period typically less than 30 days subsequent to transfer of control or invoice. We record revenue from the distribution of engines and other products at a point in time when delivered, which is when the transfer of title, risks and rewards of ownership, and control are considered passed to the customer. We record revenue for service or repair work over time as work is completed and when parts are delivered to our customers. For service and parts revenues recorded over time, we utilize a method that considers total costs incurred to date and the applicable margin in relation to total expected efforts to complete our performance obligation in order to determine the appropriate amount of revenue to recognize over time. Recognition of revenue over time reflects the amount of consideration we expect to be entitled to for the transfer of goods and services performed to date, representative of the amount for which we have a right to payment. For our long-term power generation contracts, we record revenue over time as services are provided in accordance with contract milestones, which is considered an output method that requires judgment to determine our progress towards contract completion and the corresponding amount of revenue to recognize. Any revisions to estimates related to revenues or costs to complete contracts are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. The amount of consideration we receive for engine, product, and power generation sales is stated within the executed contract with our customer. The amount of consideration we receive for service sales is based upon labor hours expended and parts utilized to perform and complete the necessary services to our customers. Payment is typically due upon delivery, upon invoice, or within a period of time shortly thereafter. We receive payment from our customers upon transfer of control or within a period typically less than 30 days subsequent to transfer of control or invoice. Service and parts revenue represented $69.5 million and $210.7 million for the three and nine months ended September 30, 2021, and $58.4 million and $159.2 million for the three and nine months ended September 30, 2020, respectively, for Penske Australia. Retail Automotive Dealership The following tables disaggregate our retail automotive reportable segment revenue by product type and geographic location for the three and nine months ended September 30, 2021, and 2020: Three Months Ended September 30, Nine Months Ended September 30, Retail Automotive Dealership Revenue 2021 2020 2021 2020 New vehicle $ 2,275.2 $ 2,350.6 $ 7,507.9 $ 5,599.8 Used vehicle 2,302.3 1,954.1 6,437.9 4,739.8 Finance and insurance, net 202.7 174.4 583.8 415.8 Service and parts 555.3 521.8 1,604.7 1,380.3 Fleet and wholesale 299.4 257.1 905.1 692.4 Total retail automotive dealership revenue $ 5,634.9 $ 5,258.0 $ 17,039.4 $ 12,828.1 Three Months Ended September 30, Nine Months Ended September 30, Retail Automotive Dealership Revenue 2021 2020 2021 2020 U.S. $ 3,271.2 $ 2,780.7 $ 9,890.5 $ 7,288.4 U.K. 2,055.2 2,105.5 6,099.2 4,608.7 Germany and Italy 308.5 371.8 1,049.7 931.0 Total retail automotive dealership revenue $ 5,634.9 $ 5,258.0 $ 17,039.4 $ 12,828.1 Retail Commercial Truck Dealership The following table disaggregates our retail commercial truck reportable segment revenue by product type for the three and nine months ended September 30, 2021, and 2020: Three Months Ended September 30, Nine Months Ended September 30, Retail Commercial Truck Dealership Revenue 2021 2020 2021 2020 New truck $ 464.1 $ 376.6 $ 1,110.8 $ 930.4 Used truck 81.2 63.9 191.2 135.4 Finance and insurance, net 4.8 4.1 11.7 10.5 Service and parts 160.9 122.1 442.8 358.1 Other 6.3 24.2 20.8 47.1 Total retail commercial truck dealership revenue $ 717.3 $ 590.9 $ 1,777.3 $ 1,481.5 Commercial Vehicle Distribution Our other reportable segment relates to our commercial vehicle distribution business. Commercial vehicle distribution revenue was $145.1 million and $441.9 million during the three and nine months ended September 30, 2021, and $122.7 million and $322.2 million during the three and nine months ended September 30, 2020, respectively. Contract Balances The following table summarizes our accounts receivable and unearned revenues as of September 30, 2021, and December 31, 2020: September 30, December 31, 2021 2020 Accounts receivable Contracts in transit $ 203.9 $ 254.0 Vehicle receivables 203.5 216.2 Manufacturer receivables 144.0 193.6 Trade receivables 169.4 135.3 Accrued expenses Unearned revenues $ 262.7 $ 262.9 Contracts in transit represent receivables from unaffiliated finance companies relating to the sale of customers’ installment sales and lease contracts arising in connection with the sale of a vehicle by us. Vehicle receivables represent receivables for any portion of the vehicle sales price not paid by the finance company. Manufacturer receivables represent amounts due from manufacturers, including incentives, holdbacks, rebates, warranty claims, and other receivables due from the factory. Trade receivables represent receivables due from customers, including amounts due for parts and service sales, as well as receivables due from finance companies and others for the commissions earned on financing and commissions earned on insurance and extended service products provided by third parties. We evaluate collectability of receivables and estimate an allowance for doubtful accounts based on the age of the receivable, contractual life, historical collection experience, current conditions, and forecasts of future economic conditions, which is recorded within “Accounts receivable” on our consolidated balance sheets with our receivables presented net of the allowance. Unearned revenues primarily relate to payments received from customers prior to satisfaction of our performance obligations, such as customer deposits and deferred revenues from operating leases. These amounts are presented within “Accrued expenses and other current liabilities” on our consolidated balance sheets. Of the amounts recorded as unearned revenues as of December 31, 2020, $155.7 million was recognized as revenue during the nine months ended September 30, 2021. Additional Revenue Recognition Related Policies We do not have any material significant payment terms associated with contracts with our customers. Payment is due and collected as previously detailed for each reportable segment. We do not offer material rights of return or service-type warranties. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue). Shipping costs incurred subsequent to transfer of control to our customers are recognized as cost of sales. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
Leases | 3. Leases We lease land and facilities, including certain dealerships and office space. Our property leases are generally for an initial period between 5 We estimate the total undiscounted rent obligations under these leases, including any extension periods that we are reasonably certain to exercise, to be $5.4 billion as of September 30, 2021. Some of our lease arrangements include rental payments that are adjusted based on an index or rate, such as the Consumer Price Index (CPI). As the rate implicit in the lease is generally not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Pursuant to the leases for some of our larger facilities, we are required to comply with specified financial ratios, including a “rent coverage” ratio and a debt to EBITDA ratio, each as defined. For these leases, non-compliance with the ratios may require us to post collateral in the form of a letter of credit. A breach of the other lease covenants gives rise to certain remedies by the landlord, the most severe of which include the termination of the applicable lease and acceleration of the total rent payments due under the lease. In connection with the sale, relocation, and closure of certain of our franchises, we have entered into a number of third-party sublease agreements. The rent paid by our sub-tenants on such properties was $5.8 million and $18.8 million for the three and nine months ended September 30, 2021, and $6.5 million and $19.4 million for the three and nine months ended September 30, 2020, respectively. We have in the past and may in the future enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell property to third parties and agree to lease those assets back for a certain period of time. Such sales generate proceeds that vary from period to period. We had no proceeds from sale-leaseback transactions during the nine months ended September 30, 2021, and 2020, respectively. We do not have any material leases that have not yet commenced as of September 30, 2021. The following table summarizes our net operating lease cost during the three and nine months ended September 30, 2021, and 2020: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Lease Cost Operating lease cost $ 62.8 $ 64.4 $ 187.1 $ 184.9 Sublease income (5.8) (6.5) (18.8) (19.4) Total lease cost $ 57.0 $ 57.9 $ 168.3 $ 165.5 (1) Includes short-term leases and variable lease costs, which are immaterial. The following table summarizes supplemental cash flow information related to our operating leases: Nine Months Ended Nine Months Ended September 30, 2021 September 30, 2020 Other Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 186.9 174.2 Right-of-use assets obtained in exchange for operating lease liabilities 68.0 63.9 Supplemental balance sheet information related to the weighted average remaining lease term and discount rate of our leases is as follows: September 30, 2021 December 31, 2020 Lease Term and Discount Rate Weighted-average remaining lease term - operating leases 24 years 25 years Weighted-average discount rate - operating leases 6.2% 6.4% The following table summarizes the maturity of our lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on our consolidated condensed balance sheet as of September 30, 2021: Maturity of Lease Liabilities September 30, 2021 2021 $ 66.2 2022 240.1 2023 236.1 2024 250.4 2025 228.2 2026 217.9 2027 and thereafter 4,170.5 Total future minimum lease payments $ 5,409.4 Less: Imputed interest (2,974.3) Present value of future minimum lease payments $ 2,435.1 Current operating lease liabilities (2) $ 94.0 Long-term operating lease liabilities 2,341.1 Total operating lease liabilities $ 2,435.1 (1) Excludes the nine months ended September 30, 2021. (2) Included within “Accrued expenses and other current liabilities” on Consolidated Condensed Balance Sheet as of September 30, 2021. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Inventories | 4. Inventories Inventories consisted of the following: September 30, December 31, 2021 2020 Retail automotive dealership new vehicles $ 763.6 $ 1,810.9 Retail automotive dealership used vehicles 1,130.0 1,019.7 Retail automotive parts, accessories, and other 117.5 117.2 Retail commercial truck dealership vehicles and parts 315.2 223.1 Commercial vehicle distribution vehicles, parts, and engines 272.1 254.7 Total inventories $ 2,598.4 $ 3,425.6 We receive credits from certain vehicle manufacturers that reduce cost of sales when the vehicles are sold. Such credits amounted to $14.4 million and $13.6 million during the three months ended September 30, 2021, and 2020, respectively, and $51.5 million and $37.8 million during the nine months ended September 30, 2021, and 2020, respectively. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations | |
Business Combinations | 5. Business Combinations During the nine months ended September 30, 2021, we acquired one retail automotive franchise in the U.S. We also acquired Kansas City Freightliner (“KCFL”), adding four full-service dealerships, four parts and service centers, and two collision centers to PTG’s existing operations. During the nine months ended September 30, 2020, we made no acquisitions. Our financial statements include the results of operations of the acquired entity from the date of acquisition. The fair value of the assets acquired and liabilities assumed have been recorded in our consolidated condensed financial statements and may be subject to adjustment pending completion of final valuation. The following table summarizes the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed for the nine months ended September 30, 2021: September 30, 2021 Accounts receivable $ — Inventories 37.0 Other current assets 0.1 Property and equipment 62.8 Indefinite-lived intangibles 181.3 Other noncurrent assets — Current liabilities (2.8) Noncurrent liabilities (0.4) Total cash used in acquisitions $ 278.0 The following unaudited consolidated pro forma results of operations of PAG for the three and nine months ended September 30, 2021, and 2020 give effect to acquisitions consummated during 2021 and 2020 as if they had occurred effective at the beginning of the periods: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues $ 6,497.3 $ 6,093.4 $ 19,364.3 $ 14,903.4 Income from continuing operations 354.9 250.3 879.0 350.3 Net income 355.1 250.4 879.3 350.5 Income from continuing operations per diluted common share $ 4.46 $ 3.11 $ 10.95 $ 4.36 Net income per diluted common share $ 4.47 $ 3.11 $ 10.95 $ 4.36 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2021 | |
Intangible Assets | |
Intangible Assets | 6. Intangible Assets Following is a summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets during the nine months ended September 30, 2021: Other Indefinite- Lived Intangible Goodwill Assets Balance, January 1, 2021 $ 1,928.4 $ 563.4 Additions 137.6 43.7 Disposals (0.6) — Foreign currency translation (14.5) (6.4) Balance, September 30, 2021 $ 2,050.9 $ 600.7 The additions during the nine months ended September 30, 2021, were within our Retail Automotive and Retail Truck reportable segments. The disposals during the nine months ended September 30, 2021, were within our Retail Automotive reportable segment. We disposed of one retail automotive franchise. As of September 30, 2021, the goodwill balance within our Retail Automotive, Retail Commercial Truck, and Other reportable segments was $1,602.2 million, $369.4 million, and $79.3 million, respectively. There is no goodwill recorded in our Non-Automotive Investments reportable segment. |
Vehicle Financing
Vehicle Financing | 9 Months Ended |
Sep. 30, 2021 | |
Vehicle Financing | |
Vehicle Financing | 7. Vehicle Financing We finance substantially all of the commercial vehicles we purchase for distribution, new vehicles for retail sale, and a portion of our used vehicle inventories for retail sale under floor plan and other revolving arrangements with various lenders, including the captive finance companies associated with automotive manufacturers. In the U.S., the floor plan arrangements are due on demand; however, we have not historically been required to repay floor plan advances prior to the sale of the vehicles that have been financed. We typically make monthly interest payments on the amount financed. Outside of the U.S., substantially all of the floor plan arrangements are payable on demand or have an original maturity of 90 days or less, and we are generally required to repay floor plan advances at the earlier of the sale of the vehicles that have been financed or the stated maturity. The agreements typically grant a security interest in substantially all of the assets of our dealership and distribution subsidiaries and in the U.S., Australia, and New Zealand are guaranteed or partially guaranteed by us. Interest rates under the arrangements are variable and increase or decrease based on changes in the prime rate, defined London Interbank Offered Rate (“LIBOR”), the Finance House Base Rate, the Euro Interbank Offered Rate, the Canadian Prime Rate, the Australian Bank Bill Swap Rate (“BBSW”), or the New Zealand Bank Bill Benchmark Rate. To date, we have not experienced any material limitation with respect to the amount or availability of financing from any institution providing us vehicle financing. We also receive non-refundable credits from certain of our vehicle manufacturers, which are treated as a reduction of cost of sales as vehicles are sold. The weighted average interest rate on floor plan borrowings was 1.2% and 1.5% for the nine months ended September 30, 2021, and 2020, respectively. We classify floor plan notes payable to a party other than the manufacturer of a particular new vehicle and all floor plan notes payable relating to pre-owned vehicles as “Floor plan notes payable — non-trade” on our consolidated balance sheets and classify related cash flows as a financing activity on our consolidated statements of cash flows. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share | |
Earnings Per Share | 8. Earnings Per Share Basic earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, including outstanding unvested equity awards which contain rights to non-forfeitable dividends. Diluted earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, adjusted for any dilutive effects. A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2021, and 2020 follows: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Weighted average number of common shares outstanding 79,497,482 80,340,076 80,272,613 80,368,589 Effect of non-participatory equity compensation 25,845 40,000 25,845 40,000 Weighted average number of common shares outstanding, including effect of dilutive securities 79,523,327 80,380,076 80,298,458 80,408,589 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt | |
Long-Term Debt | 9. Long-Term Debt Long-term debt consisted of the following and includes $500 million in aggregate principal amount of 3.75% senior subordinated notes due 2029 issued in June 2021, the proceeds of which were used to redeem our $500 million in aggregate principal amount of 5.50% senior subordinated notes due 2026 on June 24, 2021: September 30, December 31, 2021 2020 U.S. credit agreement — revolving credit line $ — $ 108.0 U.K. credit agreement — revolving credit line — — U.K. credit agreement — overdraft line of credit — — 3.50% senior subordinated notes due 2025 544.3 543.2 5.50% senior subordinated notes due 2026 — 496.4 3.75% senior subordinated notes due 2029 494.1 — Australia capital loan agreement 27.4 32.1 Australia working capital loan agreement — — Mortgage facilities 319.8 458.1 Other 39.0 51.8 Total long-term debt 1,424.6 1,689.6 Less: current portion (67.9) (87.5) Net long-term debt $ 1,356.7 $ 1,602.1 U.S. Credit Agreement Our U.S. credit agreement (the “U.S. credit agreement”) with Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation provides for up to $800.0 million in revolving loans for working capital, acquisitions, capital expenditures, investments, and other general corporate purposes and up to an additional $50 million of letters of credit. The U.S. credit agreement provides for a maximum of $150.0 million of borrowings for foreign acquisitions and expires on September 30, 2024. The interest rate on revolving loans is LIBOR plus 1.75%, subject to an incremental 1.25% for uncollateralized borrowings in excess of a defined borrowing base. The U.S. credit agreement is fully and unconditionally guaranteed on a joint and several basis by substantially all of our U.S. subsidiaries and contains a number of significant operating covenants that, among other things, restrict our ability to dispose of assets, incur additional indebtedness, repay certain other indebtedness, pay dividends, create liens on assets, make investments or acquisitions, and engage in mergers or consolidations. We are also required to comply with specified financial and other tests and ratios each as defined in the U.S. credit agreement, including a ratio of current assets to current liabilities, a fixed charge coverage ratio, a ratio of debt to stockholders’ equity, and a ratio of debt to earnings before interest, taxes, depreciation, and amortization (“EBITDA”). A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of the amounts owed. The U.S. credit agreement also contains typical events of default, including change of control, non-payment of obligations, and cross-defaults to our other material indebtedness. Substantially all of our U.S. assets are subject to security interests granted to the lenders under the U.S. credit agreement. As of September 30, 2021, we had no outstanding revolver borrowings under the U.S. credit agreement. U.K. Credit Agreement Our subsidiaries in the U.K. (the “U.K. subsidiaries”) are party to a £150.0 million revolving credit agreement with the National Westminster Bank plc and BMW Financial Services (GB) Limited plus an additional £52.0 million of demand overdraft lines of credit, £40.0 million of which is only available on demand from March 20th to April 30th and September 20th to October 31st each year (relating to the peak sales periods in the U.K.), (collectively, the “U.K. credit agreement”) to be used for working capital, acquisitions, capital expenditures, investments, and general corporate purposes. The loans mature on the termination date of the facility, which is December 12, 2023. The revolving loans bear interest between defined LIBOR plus 1.10% and defined LIBOR plus 2.10%. The U.K. credit agreement also includes a £100.0 million “accordion” feature which allows the U.K. subsidiaries to request up to an additional £100.0 million of facility capacity. The lenders may agree to provide the additional capacity, and if not, the U.K. subsidiaries may add an additional lender, if available, to the facility to provide such additional capacity. As of September 30, 2021, we had no outstanding revolver borrowings under the U.K. credit agreement. The U.K. credit agreement is fully and unconditionally guaranteed on a joint and several basis by our U.K. subsidiaries and contains a number of significant covenants that, among other things, restrict the ability of our U.K. subsidiaries to pay dividends, dispose of assets, incur additional indebtedness, repay other indebtedness, create liens on assets, make investments or acquisitions, and engage in mergers or consolidations. In addition, our U.K. subsidiaries are required to comply with defined ratios and tests, including a ratio of earnings before interest, taxes, amortization, and rental payments (“EBITAR”) to interest plus rental payments, a measurement of maximum capital expenditures, and a debt to EBITDA ratio. A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of any amounts owed. The U.K. credit agreement also contains typical events of default, including change of control and non-payment of obligations and cross-defaults to other material indebtedness of our U.K. subsidiaries. Substantially all of our U.K. subsidiaries’ assets are subject to security interests granted to the lenders under the U.K. credit agreement. Senior Subordinated Notes We have issued the following senior subordinated notes: Description Maturity Date Interest Payment Dates Principal Amount 3.50% Notes September 1, 2025 February 15, August 15 $550 million 3.75% Notes June 15, 2029 June 15, December 15 $500 million Each of these notes are our unsecured, senior subordinated obligations and are guaranteed on an unsecured senior subordinated basis by our 100% owned U.S. subsidiaries. Each also contain customary negative covenants and events of default. If we experience certain “change of control” events specified in the indentures, holders of these notes will have the option to require us to purchase for cash all or a portion of their notes at a price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the notes at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest. Optional redemption. June 15, 2024 with net cash proceeds from certain equity offerings at a redemption price equal to 103.750% of the principal thereof, plus accrued and unpaid interest. We may redeem the 3.75% Notes on or after June 15, 2024 at the redemption prices specified in the indenture. Australia Loan Agreements Penske Australia is party to two facilities with Volkswagen Financial Services Australia Pty Limited representing a five-year AU $50.0 million capital loan and a one-year AU $50.0 million working capital loan. Both facilities are subject to annual extensions. These agreements each provide the lender with a secured interest in all assets of these businesses. The loans bear interest at the Australian BBSW 30-day Bill Rate plus 3.0%. Irrespective of the term of the agreements, both agreements provide the lender with the ability to call the loans on 90 days’ notice. These facilities are also guaranteed by our U.S. parent company up to $50.0 million. As of September 30, 2021, we had AU $37.9 million ($27.4 million) outstanding under the capital loan agreement and no outstanding borrowings under the working capital loan agreement. Mortgage Facilities We are party to several mortgages that bear interest at defined rates and require monthly principal and interest payments. These mortgage facilities also contain typical events of default, including non-payment of obligations, cross-defaults to our other material indebtedness, certain change of control events, and the loss or sale of certain franchises operated at the properties. Substantially all of the buildings and improvements on the properties financed pursuant to the mortgage facilities are subject to security interests granted to the lender. As of September 30, 2021, we owed $319.8 million of principal under our mortgage facilities. |
Derivatives and Hedging
Derivatives and Hedging | 9 Months Ended |
Sep. 30, 2021 | |
Derivatives and Hedging | |
Derivatives and Hedging | 10. Derivatives and Hedging Penske Australia sells vehicles, engines, parts and other products purchased from manufacturers in the U.S., Germany, and the U.K. In order to protect against exchange rate movements, Penske Australia enters into foreign exchange forward contracts against anticipated cash flows. The contracts are timed to mature when major shipments are scheduled to arrive in Australia and when receipt of payment from customers is expected. We classify our foreign exchange forward contracts as cash flow hedges and record them at fair value. We use Level 2 inputs to estimate the fair value of the foreign exchange forward contracts. The fair value of the contracts designated as hedging instruments was estimated to be an asset of $1.7 million and a liability of $2.5 million as of September 30, 2021, and December 31, 2020, respectively. The Company periodically uses interest rate swaps to manage interest rate risk associated with the Company’s variable rate floor plan debt. In April 2020, we entered into a five-year interest rate swap agreement pursuant to which the LIBOR portion of $300.0 million of our U.S. floating rate floor plan debt is fixed at 0.5875%. This arrangement is in effect through April 2025. We may terminate this arrangement at any time, subject to the settlement at that time of the fair value of the swap arrangement. The interest rate swap is designated as a cash flow hedge, and the related gain or loss is deferred in stockholders’ equity as a component of Accumulated Other Comprehensive Income (Loss). Monthly contractual settlements of the position are recognized as Floorplan interest expense, net, in the Condensed Consolidated Statements of Operations. We had no gain or loss related to ineffectiveness recognized in the Condensed Consolidated Statements of Operations during the three and nine months ended September 30, 2021. We use Level 2 inputs to estimate the fair value of the interest rate swap agreement. The fair value of the swap designated as a hedging instrument was estimated to be a net asset of $0.8 million as of September 30, 2021, and a net liability of $4.3 million as of December 31, 2020. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | 11. Commitments and Contingent Liabilities We are involved in litigation which may relate to claims brought by governmental authorities, issues with customers, and employment related matters, including class action claims and purported class action claims. As of September 30, 2021, we were not party to any legal proceedings, including class action lawsuits that, individually or in the aggregate, are reasonably expected to have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition or cash flows. We lease land and facilities, including certain dealerships and office space. Pursuant to the leases for some of our larger facilities, we are required to comply with specified financial ratios, including a “rent coverage” ratio and a debt to EBITDA ratio, each as defined. For these leases, non-compliance with the ratios may require us to post collateral in the form of a letter of credit. A breach of the other lease covenants gives rise to certain remedies by the landlord, the most severe of which include the termination of the applicable lease and acceleration of the total rent payments due under the lease. Refer to the disclosures provided in Note 3 for further description of our leases. We have sold a number of dealerships to third parties and, as a condition to certain of those sales, remain liable for the lease payments relating to the properties on which those businesses operate in the event of non-payment by the buyer. We are also party to lease agreements on properties that we no longer use in our retail operations that we have sublet to third parties. We rely on subtenants to pay the rent and maintain the property at these locations. In the event the subtenant does not perform as expected, we may not be able to recover amounts owed to us and we could be required to fulfill these obligations. Our floor plan credit agreements with Mercedes Benz Financial Services Australia and Mercedes Benz Financial Services New Zealand (“MBA”) provide us revolving loans for the acquisition of commercial vehicles for distribution to our retail network. These facilities include a commitment to repurchase dealer vehicles in the event the dealer’s floor plan agreement with MBA is terminated. We have $29.2 million of letters of credit outstanding as of September 30, 2021, and have posted $21.3 million of surety bonds in the ordinary course of business. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2021 | |
Equity | |
Equity | 12. Equity During the three months ended September 30, 2021, we repurchased 2,027,531 shares of our common stock for $178.7 million, or an average of $88.15 per share, under our securities repurchase program approved by our Board of Directors. During the nine months ended September 30, 2021, we repurchased 2,375,762 shares of our outstanding common stock for $206.9 million, or an average of $87.07 per share, under this program. In July 2021, our Board of Directors increased the authority delegated to management to repurchase our outstanding securities to $250.0 million, of which $71.3 million remains outstanding a s of September 30, 2021. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income/(Loss) | 13. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component and the reclassifications out of accumulated other comprehensive income (loss) during the three and nine months ended September 30, 2021, and 2020, respectively, attributable to Penske Automotive Group common stockholders follows: Three Months Ended September 30, 2021 Foreign Currency Interest Rate Translation Swaps Other Total Balance at June 30, 2021 $ (133.3) $ 0.3 $ (14.8) $ (147.8) Other comprehensive income (loss) before reclassifications (42.2) — (0.5) (42.7) Amounts reclassified from accumulated other comprehensive income (loss) — net of tax benefit of $0.1 — 0.3 — 0.3 Net current period other comprehensive income (loss) (42.2) 0.3 (0.5) (42.4) Balance at September 30, 2021 $ (175.5) $ 0.6 $ (15.3) $ (190.2) Three Months Ended September 30, 2020 Foreign Currency Interest Rate Translation Swaps Other Total Balance at June 30, 2020 $ (251.3) $ (4.1) $ (19.4) $ (274.8) Other comprehensive income (loss) before reclassifications 49.5 0.3 3.3 53.1 Amounts reclassified from accumulated other comprehensive income (loss) — net of tax provision of $0.1 — (0.2) — (0.2) Net current period other comprehensive income (loss) 49.5 0.1 3.3 52.9 Balance at September 30, 2020 $ (201.8) $ (4.0) $ (16.1) $ (221.9) Nine Months Ended September 30, 2021 Foreign Currency Interest Rate Translation Swaps Other Total Balance at December 31, 2020 $ (135.5) $ (3.2) $ (21.9) $ (160.6) Other comprehensive income (loss) before reclassifications (40.0) 3.0 6.6 (30.4) Amounts reclassified from accumulated other comprehensive income (loss) — net of tax benefit of $0.3 — 0.8 — 0.8 Net current period other comprehensive income (loss) (40.0) 3.8 6.6 (29.6) Balance at September 30, 2021 $ (175.5) $ 0.6 $ (15.3) $ (190.2) Nine Months Ended September 30, 2020 Foreign Currency Interest Rate Translation Swaps Other Total Balance at December 31, 2019 $ (186.1) $ — $ (16.7) $ (202.8) Other comprehensive income (loss) before reclassifications (15.7) (3.8) 0.6 (18.9) Amounts reclassified from accumulated other comprehensive income (loss) — net of tax provision of $0.1 — (0.2) — (0.2) Net current period other comprehensive income (loss) (15.7) (4.0) 0.6 (19.1) Balance at September 30, 2020 $ (201.8) $ (4.0) $ (16.1) $ (221.9) |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information | |
Segment Information | 14. Segment Information Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations which includes our investment in PTS. The Retail Automotive reportable segment includes all automotive dealerships and all departments relevant to the operation of the dealerships and our retail automotive joint ventures. The individual dealership operations included in the Retail Automotive reportable segment represent six operating segments: Eastern, Central, and Western United States, Used Vehicle Dealerships United States, International, and Used Vehicle Dealerships International. These operating segments have been aggregated into one reportable segment as their operations (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and/or used vehicles, service, parts, and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). Revenue and segment income for the three and nine months ended September 30, 2021, and 2020 follows: Three Months Ended September 30 Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2021 $ 5,634.9 $ 717.3 $ 145.1 $ — $ — $ 6,497.3 2020 5,258.0 $ 590.9 $ 122.7 $ — $ — $ 5,971.6 Segment income 2021 $ 299.6 $ 48.3 $ 9.8 $ 118.4 $ — $ 476.1 2020 215.4 $ 23.4 $ 8.3 $ 64.5 $ — $ 311.6 Nine Months Ended September 30 Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2021 $ 17,039.4 $ 1,777.3 $ 441.9 $ — $ — $ 19,258.6 2020 12,828.1 $ 1,481.5 $ 322.2 $ — $ — $ 14,631.8 Segment income 2021 $ 772.9 $ 115.5 $ 24.2 $ 274.8 $ — $ 1,187.4 2020 268.5 $ 51.7 $ 16.1 $ 108.0 $ — $ 444.3 |
Interim Financial Statements (P
Interim Financial Statements (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Interim Financial Statements. | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated condensed financial statements of PAG have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC rules and regulations. The information presented as of September 30, 2021, and December 31, 2020, and for the three and nine months ended September 30, 2021, and 2020 is unaudited but includes all adjustments which our management believes to be necessary for the fair presentation of results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the year. These consolidated condensed financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2020, which are included as part of our Annual Report on Form 10-K. |
Estimates | Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets, and certain reserves. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting standards define fair value as the price that would be received from selling an asset, or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted market prices in markets that are not active, or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, forward exchange contracts, and interest rate swaps used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting. Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of our fixed rate debt is as follows: September 30, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value 3.50% senior subordinated notes due 2025 544.3 561.3 543.2 $ 554.6 3.75% senior subordinated notes due 2029 494.1 497.5 — — Mortgage facilities 319.8 326.1 458.1 474.7 During the second quarter of 2021, we issued $500 million in aggregate principal amount of 3.75% senior subordinated notes due 2029, the proceeds of which were used to redeem our $500 million in aggregate principal amount of 5.50% senior subordinated notes due 2026 on June 24, 2021. Refer to Note 9 “Long-Term Debt” for further discussion. |
Discontinued Operations | Discontinued Operations We had no entities newly classified as held for sale during the nine months ended September 30, 2021, or 2020 that met the criteria to be classified as discontinued operations. As such, results from discontinued operations represent only those businesses that were classified as discontinued operations prior to the adoption of ASU No. 2014-08 on January 1, 2015. |
Disposals | Disposals During the nine months ended September 30, 2021, we disposed of one retail automotive franchise. The results of operations for this business are included within continuing operations for the three and nine months ended September 30, 2021, and 2020 as this franchise did not meet the criteria to be classified as held for sale and treated as discontinued operations. |
Income Taxes | Income Taxes Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” This ASU refines the scope of ASC 848 and clarifies some of its guidance as part of the Board’s monitoring of global reference rate reform activities. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities. These new standards were effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. While our credit facilities in the U.S. and U.K. and many of our floorplan arrangements utilize LIBOR as a benchmark for calculating the applicable interest rate, some of our floorplan arrangements have already transitioned to utilizing an alternative benchmark rate. We are continuing to evaluate the impact of the transition from LIBOR to alternative reference interest rates. We cannot predict the effect of the potential changes to or elimination of LIBOR, the establishment and use of alternative rates or benchmarks, and the corresponding effects on our cost of capital but do not expect a significant impact on our consolidated financial position, results of operations, and cash flows. Disclosures for Business Acquisitions, Dispositions, and Significant Subsidiaries On May 20, 2020, the SEC issued a final rule that amends the financial statement requirements for acquisitions and dispositions of businesses, including the determinations of whether a subsidiary or an acquired or disposed business is significant. The significance test rule changes to SEC Regulation S-X, Rule 3-09 impact our disclosure requirements for equity method investments, including our investment in Penske Transportation Solutions (“PTS”) as it relates to providing audited financial statements and summarized financial statement information in our footnotes disclosures. The rule is effective January 1, 2021, but earlier compliance is permitted. The Company early adopted this rule in the fourth quarter of 2020. |
Interim Financial Statements (T
Interim Financial Statements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Interim Financial Statements. | |
Summary of carrying values and fair values of senior subordinated notes and fixed rate mortgage facilities | September 30, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value 3.50% senior subordinated notes due 2025 544.3 561.3 543.2 $ 554.6 3.75% senior subordinated notes due 2029 494.1 497.5 — — Mortgage facilities 319.8 326.1 458.1 474.7 |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenues | |
Schedule of accounts receivable and unearned revenues | September 30, December 31, 2021 2020 Accounts receivable Contracts in transit $ 203.9 $ 254.0 Vehicle receivables 203.5 216.2 Manufacturer receivables 144.0 193.6 Trade receivables 169.4 135.3 Accrued expenses Unearned revenues $ 262.7 $ 262.9 |
Retail automotive dealership | |
Revenues | |
Schedule of disaggregation of revenues | Three Months Ended September 30, Nine Months Ended September 30, Retail Automotive Dealership Revenue 2021 2020 2021 2020 New vehicle $ 2,275.2 $ 2,350.6 $ 7,507.9 $ 5,599.8 Used vehicle 2,302.3 1,954.1 6,437.9 4,739.8 Finance and insurance, net 202.7 174.4 583.8 415.8 Service and parts 555.3 521.8 1,604.7 1,380.3 Fleet and wholesale 299.4 257.1 905.1 692.4 Total retail automotive dealership revenue $ 5,634.9 $ 5,258.0 $ 17,039.4 $ 12,828.1 Three Months Ended September 30, Nine Months Ended September 30, Retail Automotive Dealership Revenue 2021 2020 2021 2020 U.S. $ 3,271.2 $ 2,780.7 $ 9,890.5 $ 7,288.4 U.K. 2,055.2 2,105.5 6,099.2 4,608.7 Germany and Italy 308.5 371.8 1,049.7 931.0 Total retail automotive dealership revenue $ 5,634.9 $ 5,258.0 $ 17,039.4 $ 12,828.1 |
Retail commercial truck dealership | |
Revenues | |
Schedule of disaggregation of revenues | Three Months Ended September 30, Nine Months Ended September 30, Retail Commercial Truck Dealership Revenue 2021 2020 2021 2020 New truck $ 464.1 $ 376.6 $ 1,110.8 $ 930.4 Used truck 81.2 63.9 191.2 135.4 Finance and insurance, net 4.8 4.1 11.7 10.5 Service and parts 160.9 122.1 442.8 358.1 Other 6.3 24.2 20.8 47.1 Total retail commercial truck dealership revenue $ 717.3 $ 590.9 $ 1,777.3 $ 1,481.5 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
Summary of net operating lease cost | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Lease Cost Operating lease cost $ 62.8 $ 64.4 $ 187.1 $ 184.9 Sublease income (5.8) (6.5) (18.8) (19.4) Total lease cost $ 57.0 $ 57.9 $ 168.3 $ 165.5 (1) Includes short-term leases and variable lease costs, which are immaterial. |
Summary of supplemental cash flow information related to operating leases and weighted average remaining lease term and discount rate of leases | Nine Months Ended Nine Months Ended September 30, 2021 September 30, 2020 Other Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 186.9 174.2 Right-of-use assets obtained in exchange for operating lease liabilities 68.0 63.9 Supplemental balance sheet information related to the weighted average remaining lease term and discount rate of our leases is as follows: September 30, 2021 December 31, 2020 Lease Term and Discount Rate Weighted-average remaining lease term - operating leases 24 years 25 years Weighted-average discount rate - operating leases 6.2% 6.4% |
Schedule of maturity of lease liabilities | Maturity of Lease Liabilities September 30, 2021 2021 $ 66.2 2022 240.1 2023 236.1 2024 250.4 2025 228.2 2026 217.9 2027 and thereafter 4,170.5 Total future minimum lease payments $ 5,409.4 Less: Imputed interest (2,974.3) Present value of future minimum lease payments $ 2,435.1 Current operating lease liabilities (2) $ 94.0 Long-term operating lease liabilities 2,341.1 Total operating lease liabilities $ 2,435.1 (1) Excludes the nine months ended September 30, 2021. (2) Included within “Accrued expenses and other current liabilities” on Consolidated Condensed Balance Sheet as of September 30, 2021. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Inventories | September 30, December 31, 2021 2020 Retail automotive dealership new vehicles $ 763.6 $ 1,810.9 Retail automotive dealership used vehicles 1,130.0 1,019.7 Retail automotive parts, accessories, and other 117.5 117.2 Retail commercial truck dealership vehicles and parts 315.2 223.1 Commercial vehicle distribution vehicles, parts, and engines 272.1 254.7 Total inventories $ 2,598.4 $ 3,425.6 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | September 30, 2021 Accounts receivable $ — Inventories 37.0 Other current assets 0.1 Property and equipment 62.8 Indefinite-lived intangibles 181.3 Other noncurrent assets — Current liabilities (2.8) Noncurrent liabilities (0.4) Total cash used in acquisitions $ 278.0 |
Summary of unaudited consolidated pro forma results of operations | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues $ 6,497.3 $ 6,093.4 $ 19,364.3 $ 14,903.4 Income from continuing operations 354.9 250.3 879.0 350.3 Net income 355.1 250.4 879.3 350.5 Income from continuing operations per diluted common share $ 4.46 $ 3.11 $ 10.95 $ 4.36 Net income per diluted common share $ 4.47 $ 3.11 $ 10.95 $ 4.36 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Intangible Assets | |
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | Other Indefinite- Lived Intangible Goodwill Assets Balance, January 1, 2021 $ 1,928.4 $ 563.4 Additions 137.6 43.7 Disposals (0.6) — Foreign currency translation (14.5) (6.4) Balance, September 30, 2021 $ 2,050.9 $ 600.7 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share | |
Reconciliation of number of shares used in calculation of basic and diluted earning per share | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Weighted average number of common shares outstanding 79,497,482 80,340,076 80,272,613 80,368,589 Effect of non-participatory equity compensation 25,845 40,000 25,845 40,000 Weighted average number of common shares outstanding, including effect of dilutive securities 79,523,327 80,380,076 80,298,458 80,408,589 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Debt | |
Long Term Debt | September 30, December 31, 2021 2020 U.S. credit agreement — revolving credit line $ — $ 108.0 U.K. credit agreement — revolving credit line — — U.K. credit agreement — overdraft line of credit — — 3.50% senior subordinated notes due 2025 544.3 543.2 5.50% senior subordinated notes due 2026 — 496.4 3.75% senior subordinated notes due 2029 494.1 — Australia capital loan agreement 27.4 32.1 Australia working capital loan agreement — — Mortgage facilities 319.8 458.1 Other 39.0 51.8 Total long-term debt 1,424.6 1,689.6 Less: current portion (67.9) (87.5) Net long-term debt $ 1,356.7 $ 1,602.1 |
Schedule of senior subordinated notes issuances | Description Maturity Date Interest Payment Dates Principal Amount 3.50% Notes September 1, 2025 February 15, August 15 $550 million 3.75% Notes June 15, 2029 June 15, December 15 $500 million |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss). | |
Schedule of the changes in accumulated other comprehensive income/(loss) by component and the reclassifications out of accumulated other comprehensive income/(loss) attributable to the entity's common stockholders | Three Months Ended September 30, 2021 Foreign Currency Interest Rate Translation Swaps Other Total Balance at June 30, 2021 $ (133.3) $ 0.3 $ (14.8) $ (147.8) Other comprehensive income (loss) before reclassifications (42.2) — (0.5) (42.7) Amounts reclassified from accumulated other comprehensive income (loss) — net of tax benefit of $0.1 — 0.3 — 0.3 Net current period other comprehensive income (loss) (42.2) 0.3 (0.5) (42.4) Balance at September 30, 2021 $ (175.5) $ 0.6 $ (15.3) $ (190.2) Three Months Ended September 30, 2020 Foreign Currency Interest Rate Translation Swaps Other Total Balance at June 30, 2020 $ (251.3) $ (4.1) $ (19.4) $ (274.8) Other comprehensive income (loss) before reclassifications 49.5 0.3 3.3 53.1 Amounts reclassified from accumulated other comprehensive income (loss) — net of tax provision of $0.1 — (0.2) — (0.2) Net current period other comprehensive income (loss) 49.5 0.1 3.3 52.9 Balance at September 30, 2020 $ (201.8) $ (4.0) $ (16.1) $ (221.9) Nine Months Ended September 30, 2021 Foreign Currency Interest Rate Translation Swaps Other Total Balance at December 31, 2020 $ (135.5) $ (3.2) $ (21.9) $ (160.6) Other comprehensive income (loss) before reclassifications (40.0) 3.0 6.6 (30.4) Amounts reclassified from accumulated other comprehensive income (loss) — net of tax benefit of $0.3 — 0.8 — 0.8 Net current period other comprehensive income (loss) (40.0) 3.8 6.6 (29.6) Balance at September 30, 2021 $ (175.5) $ 0.6 $ (15.3) $ (190.2) Nine Months Ended September 30, 2020 Foreign Currency Interest Rate Translation Swaps Other Total Balance at December 31, 2019 $ (186.1) $ — $ (16.7) $ (202.8) Other comprehensive income (loss) before reclassifications (15.7) (3.8) 0.6 (18.9) Amounts reclassified from accumulated other comprehensive income (loss) — net of tax provision of $0.1 — (0.2) — (0.2) Net current period other comprehensive income (loss) (15.7) (4.0) 0.6 (19.1) Balance at September 30, 2020 $ (201.8) $ (4.0) $ (16.1) $ (221.9) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Information | |
Revenues and segment income by reportable segment | Three Months Ended September 30 Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2021 $ 5,634.9 $ 717.3 $ 145.1 $ — $ — $ 6,497.3 2020 5,258.0 $ 590.9 $ 122.7 $ — $ — $ 5,971.6 Segment income 2021 $ 299.6 $ 48.3 $ 9.8 $ 118.4 $ — $ 476.1 2020 215.4 $ 23.4 $ 8.3 $ 64.5 $ — $ 311.6 Nine Months Ended September 30 Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2021 $ 17,039.4 $ 1,777.3 $ 441.9 $ — $ — $ 19,258.6 2020 12,828.1 $ 1,481.5 $ 322.2 $ — $ — $ 14,631.8 Segment income 2021 $ 772.9 $ 115.5 $ 24.2 $ 274.8 $ — $ 1,187.4 2020 268.5 $ 51.7 $ 16.1 $ 108.0 $ — $ 444.3 |
Interim Financial Statements -
Interim Financial Statements - Business Overview (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Oct. 31, 2021location | Sep. 30, 2021itemlocation | Apr. 30, 2021item | Sep. 30, 2021USD ($)itemlocation | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)itemlocation | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Interim Financial Statements | ||||||||
Total revenues | $ | $ 6,497,300,000 | $ 5,971,600,000 | $ 19,258,600,000 | $ 14,631,800,000 | ||||
Number of acquired franchises | 1 | |||||||
PTL | ||||||||
Interim Financial Statements | ||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% | |||||||
KCFL | ||||||||
Interim Financial Statements | ||||||||
Number of full service dealerships added | 4 | |||||||
Number of parts and service centers added | 4 | |||||||
Number of collision centers added | 2 | |||||||
Retail Automotive | ||||||||
Interim Financial Statements | ||||||||
Total number of owned and operated franchises | 305 | 305 | 305 | |||||
Number of owned and operated franchises in US | 144 | 144 | 144 | |||||
Number of owned and operated franchises outside US | 161 | 161 | 161 | |||||
Minimum number of vehicles retailed and wholesaled | 433,000 | |||||||
Minimum number of vehicle brands offered | 35 | |||||||
Retail Automotive | CarShop | ||||||||
Interim Financial Statements | ||||||||
Number of locations acquired | location | 2 | |||||||
Retail Automotive | Nicole Group | ||||||||
Interim Financial Statements | ||||||||
Ownership acquired (as a percent) | 51.00% | |||||||
UK | Retail Automotive | ||||||||
Interim Financial Statements | ||||||||
Number of franchises disposed | $ | 1 | |||||||
UK | Retail Automotive | CarShop | ||||||||
Interim Financial Statements | ||||||||
Number of used vehicle supercenters operated in the U.K. | location | 13 | 13 | 13 | |||||
Number of locations acquired | location | 1 | |||||||
U.S. | Retail Automotive | ||||||||
Interim Financial Statements | ||||||||
Number of acquired franchises | $ | 1 | |||||||
Number of franchises awarded to the reporting entity | $ | 1 | |||||||
U.S. | Retail Automotive | CarShop | ||||||||
Interim Financial Statements | ||||||||
Number of used vehicle supercenters operated in the U.S. | location | 7 | 7 | 7 | |||||
Number of locations acquired | location | 1 | 1 | ||||||
Revenues | Geographic | U.S. and Puerto Rico | ||||||||
Interim Financial Statements | ||||||||
Automotive dealership revenue (as a percent) | 58.00% | |||||||
Revenues | Geographic | Outside the U.S. | ||||||||
Interim Financial Statements | ||||||||
Automotive dealership revenue (as a percent) | 42.00% | |||||||
PTL | ||||||||
Interim Financial Statements | ||||||||
Number of vehicles managed in fleet, minimum | 350,000 | |||||||
Penske Corporation | PTL | ||||||||
Interim Financial Statements | ||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | |||||||
Mitsui and Co | PTL | ||||||||
Interim Financial Statements | ||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 30.00% | |||||||
PTG | Retail Commercial Truck Dealership | ||||||||
Interim Financial Statements | ||||||||
Number of operating locations | location | 35 | |||||||
Retail automotive dealership | ||||||||
Interim Financial Statements | ||||||||
Total revenues | $ | $ 5,634,900,000 | 5,258,000,000 | $ 17,039,400,000 | 12,828,100,000 | $ 17,900,000,000 | |||
Retail automotive dealership | UK | ||||||||
Interim Financial Statements | ||||||||
Total revenues | $ | 2,055,200,000 | 2,105,500,000 | 6,099,200,000 | 4,608,700,000 | ||||
Retail automotive dealership | U.S. | ||||||||
Interim Financial Statements | ||||||||
Total revenues | $ | 3,271,200,000 | 2,780,700,000 | $ 9,890,500,000 | 7,288,400,000 | ||||
Retail automotive dealership | Revenues | Premium brands | ||||||||
Interim Financial Statements | ||||||||
Automotive dealership revenue (as a percent) | 70.00% | |||||||
Retail commercial truck dealership | ||||||||
Interim Financial Statements | ||||||||
Total revenues | $ | 717,300,000 | 590,900,000 | $ 1,777,300,000 | 1,481,500,000 | ||||
Retail commercial truck dealership | KCFL | ||||||||
Interim Financial Statements | ||||||||
Number of full service dealerships added | 4 | |||||||
Number of parts and service centers added | 4 | |||||||
Number of collision centers added | 2 | |||||||
Commercial vehicle distribution | ||||||||
Interim Financial Statements | ||||||||
Total revenues | $ | $ 145,100,000 | $ 122,700,000 | $ 441,900,000 | $ 322,200,000 |
Interim Financial Statements _2
Interim Financial Statements - Fair Value, Assets Held For Sale, Discontinued Operations (Details) $ in Millions | 9 Months Ended | |||
Sep. 30, 2021USD ($)itementity | Sep. 30, 2020USD ($)entity | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | |
Fair Value of Financial Instruments | ||||
Debt instrument, Carrying Value | $ 1,424.6 | $ 1,689.6 | ||
Assets Held for Sale and Discontinued Operations | ||||
Number of entities newly classified as held for sale | entity | 0 | 0 | ||
3.50% senior subordinated notes due 2025 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | |
Debt instrument, Carrying Value | $ 544.3 | $ 543.2 | ||
Debt instrument, Fair Value | 561.3 | $ 554.6 | ||
Senior unsecured notes issued | $ 550 | |||
3.75% senior subordinated notes due 2029 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | |
Debt instrument, Carrying Value | $ 494.1 | |||
Debt instrument, Fair Value | 497.5 | |||
Senior unsecured notes issued | $ 500 | $ 500 | ||
5.50% senior subordinated notes due 2026 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | |
Debt instrument, Carrying Value | $ 496.4 | |||
Senior unsecured notes issued | $ 500 | $ 500 | ||
Repayments of senior subordinated notes | 500 | |||
3.75% senior subordinated notes redeemed August 15, 2020 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 3.75% | |||
Repayments of senior subordinated notes | $ 300 | |||
Mortgage facilities | ||||
Fair Value of Financial Instruments | ||||
Debt instrument, Carrying Value | 319.8 | 458.1 | ||
Debt instrument, Fair Value | $ 326.1 | $ 474.7 | ||
Retail Automotive Franchise | Disposal group, not discontinued operations | ||||
Disposals | ||||
Number of franchises disposed | item | 1 |
Revenues - Other Disclosures (D
Revenues - Other Disclosures (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Revenues | |||||
Total revenues | $ 6,497.3 | $ 5,971.6 | $ 19,258.6 | $ 14,631.8 | |
Commercial vehicle distribution | |||||
Revenues | |||||
Total revenues | 145.1 | 122.7 | $ 441.9 | 322.2 | |
Vehicle Sales | Retail Automotive and Retail Commercial Truck Dealership | |||||
Revenues | |||||
Payment period | 30 days | ||||
Service and parts | Retail Automotive and Retail Commercial Truck Dealership | |||||
Revenues | |||||
Payment period | 30 days | ||||
Finance and insurance, net | Retail Automotive and Retail Commercial Truck Dealership | |||||
Revenues | |||||
Payment period | 30 days | ||||
Aggregate reserves relating to chargeback activity | 32.2 | $ 32.2 | $ 28.7 | ||
Penske Australia | Commercial vehicle distribution | |||||
Revenues | |||||
Payment period | 30 days | ||||
Penske Australia | Service and parts | Commercial vehicle distribution | |||||
Revenues | |||||
Total revenues | $ 69.5 | $ 58.4 | $ 210.7 | $ 159.2 |
Revenues - Retail Automotive De
Revenues - Retail Automotive Dealership (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Revenues | |||||
Total revenues | $ 6,497.3 | $ 5,971.6 | $ 19,258.6 | $ 14,631.8 | |
Retail automotive dealership | |||||
Revenues | |||||
Total revenues | 5,634.9 | 5,258 | 17,039.4 | 12,828.1 | $ 17,900 |
Retail automotive dealership | U.S. | |||||
Revenues | |||||
Total revenues | 3,271.2 | 2,780.7 | 9,890.5 | 7,288.4 | |
Retail automotive dealership | UK | |||||
Revenues | |||||
Total revenues | 2,055.2 | 2,105.5 | 6,099.2 | 4,608.7 | |
Retail automotive dealership | Germany and Italy | |||||
Revenues | |||||
Total revenues | 308.5 | 371.8 | 1,049.7 | 931 | |
New vehicle | Retail automotive dealership | |||||
Revenues | |||||
Total revenues | 2,275.2 | 2,350.6 | 7,507.9 | 5,599.8 | |
Used vehicle | Retail automotive dealership | |||||
Revenues | |||||
Total revenues | 2,302.3 | 1,954.1 | 6,437.9 | 4,739.8 | |
Finance and insurance, net | Retail automotive dealership | |||||
Revenues | |||||
Total revenues | 202.7 | 174.4 | 583.8 | 415.8 | |
Service and parts | Retail automotive dealership | |||||
Revenues | |||||
Total revenues | 555.3 | 521.8 | 1,604.7 | 1,380.3 | |
Fleet and wholesale | Retail automotive dealership | |||||
Revenues | |||||
Total revenues | $ 299.4 | $ 257.1 | $ 905.1 | $ 692.4 |
Revenues - Retail Commercial Tr
Revenues - Retail Commercial Truck Dealership (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues | ||||
Total revenues | $ 6,497.3 | $ 5,971.6 | $ 19,258.6 | $ 14,631.8 |
Retail commercial truck dealership | ||||
Revenues | ||||
Total revenues | 717.3 | 590.9 | 1,777.3 | 1,481.5 |
New vehicle | Retail commercial truck dealership | ||||
Revenues | ||||
Total revenues | 464.1 | 376.6 | 1,110.8 | 930.4 |
Used vehicle | Retail commercial truck dealership | ||||
Revenues | ||||
Total revenues | 81.2 | 63.9 | 191.2 | 135.4 |
Finance and insurance, net | Retail commercial truck dealership | ||||
Revenues | ||||
Total revenues | 4.8 | 4.1 | 11.7 | 10.5 |
Service and parts | Retail commercial truck dealership | ||||
Revenues | ||||
Total revenues | 160.9 | 122.1 | 442.8 | 358.1 |
Other | Retail commercial truck dealership | ||||
Revenues | ||||
Total revenues | $ 6.3 | $ 24.2 | $ 20.8 | $ 47.1 |
Revenues - Commercial Vehicle D
Revenues - Commercial Vehicle Distribution (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues | ||||
Total revenues | $ 6,497.3 | $ 5,971.6 | $ 19,258.6 | $ 14,631.8 |
Commercial vehicle distribution | ||||
Revenues | ||||
Total revenues | $ 145.1 | $ 122.7 | $ 441.9 | $ 322.2 |
Revenues - Contract Balances (D
Revenues - Contract Balances (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Contract Balances | ||
Accounts receivable, net | $ 737.7 | $ 806.9 |
Unearned revenues | 262.7 | 262.9 |
Unearned revenue recognized as revenue | 155.7 | |
Contracts in transit | ||
Contract Balances | ||
Accounts receivable, net | 203.9 | 254 |
Vehicle receivables | ||
Contract Balances | ||
Accounts receivable, net | 203.5 | 216.2 |
Manufacturer receivables | ||
Contract Balances | ||
Accounts receivable, net | 144 | 193.6 |
Trade receivables | ||
Contract Balances | ||
Accounts receivable, net | $ 169.4 | $ 135.3 |
Leases - Other (Details)
Leases - Other (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Leases | ||||
Total undiscounted rent obligations | $ 5,409.4 | $ 5,409.4 | ||
Sublease rent received | $ 5.8 | $ 6.5 | 18.8 | $ 19.4 |
Proceeds from sale-leaseback transactions | $ 0 | $ 0 | ||
Property leases | Minimum | ||||
Leases | ||||
Initial lease period (in years) | 5 years | 5 years | ||
Property leases | Maximum | ||||
Leases | ||||
Initial lease period (in years) | 20 years | 20 years | ||
Equipment leases | Maximum | ||||
Leases | ||||
Initial lease period (in years) | 5 years | 5 years |
Leases - Net operating lease co
Leases - Net operating lease cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Lease Cost | ||||
Operating lease cost | $ 62.8 | $ 64.4 | $ 187.1 | $ 184.9 |
Sublease income | (5.8) | (6.5) | (18.8) | (19.4) |
Total lease cost | $ 57 | $ 57.9 | $ 168.3 | $ 165.5 |
Leases - Cash flow information,
Leases - Cash flow information, weighted average remaining term and discount rate (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ 186.9 | $ 174.2 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 68 | $ 63.9 | |
Weighted-average remaining lease term - operating leases | 0 years | 25 years | |
Weighted-average discount rate - operating leases | 6.20% | 6.40% |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities (Details) $ in Millions | Sep. 30, 2021USD ($) |
Maturity of Lease Liabilities | |
2021 | $ 66.2 |
2022 | 240.1 |
2023 | 236.1 |
2024 | 250.4 |
2025 | 228.2 |
2026 | 217.9 |
2027 and thereafter | 4,170.5 |
Total future minimum lease payments | 5,409.4 |
Less: Imputed interest | (2,974.3) |
Total operating lease liabilities | $ 2,435.1 |
Leases - Operating lease liabil
Leases - Operating lease liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Leases | ||
Current operating lease liabilities | $ 94 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Long-term operating lease liabilities | $ 2,341.1 | $ 2,350.3 |
Total operating lease liabilities | $ 2,435.1 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Inventories | |||||
Retail automotive dealership new vehicles | $ 763.6 | $ 763.6 | $ 1,810.9 | ||
Retail automotive dealership used vehicles | 1,130 | 1,130 | 1,019.7 | ||
Retail automotive parts, accessories and other | 117.5 | 117.5 | 117.2 | ||
Retail commercial truck dealership vehicles and parts | 315.2 | 315.2 | 223.1 | ||
Commercial vehicle distribution vehicles, parts and engines | 272.1 | 272.1 | 254.7 | ||
Total inventories | 2,598.4 | 2,598.4 | $ 3,425.6 | ||
Interest credits and advertising assistance | $ 14.4 | $ 13.6 | $ 51.5 | $ 37.8 |
Business Combinations - Activit
Business Combinations - Activity (Details) | 9 Months Ended |
Sep. 30, 2021item | |
Business combinations | |
Number of acquired franchises | 1 |
KCFL | |
Business combinations | |
Number of full service dealerships added | 4 |
Number of parts and service centers added | 4 |
Number of collision centers added | 2 |
Business Combinations - Conside
Business Combinations - Consideration Paid and Assets Acquired and Liabilities Assumed (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | |
Inventories | $ 37 |
Other current assets | 0.1 |
Property and equipment | 62.8 |
Indefinite-lived intangibles | 181.3 |
Current liabilities | (2.8) |
Noncurrent liabilities | (0.4) |
Total cash used in acquisitions | $ 278 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Summary of unaudited consolidated pro forma results of operations | ||||
Revenues | $ 6,497.3 | $ 6,093.4 | $ 19,364.3 | $ 14,903.4 |
Income from continuing operations | 354.9 | 250.3 | 879 | 350.3 |
Net income | $ 355.1 | $ 250.4 | $ 879.3 | $ 350.5 |
Income from continuing operations per diluted common share (in dollars per share) | $ 4.46 | $ 3.11 | $ 10.95 | $ 4.36 |
Net income per diluted common share (in dollars per share) | $ 4.47 | $ 3.11 | $ 10.95 | $ 4.36 |
Intangible Assets - Summary of
Intangible Assets - Summary of Changes (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | |
Goodwill, Beginning balance | $ 1,928.4 |
Goodwill, Additions | 137.6 |
Goodwill, Disposals | (0.6) |
Goodwill, Foreign currency translation | (14.5) |
Goodwill, Ending balance | 2,050.9 |
Other indefinite-lived intangible assets, Beginning Balance | 563.4 |
Other indefinite-lived intangible assets, Additions | 43.7 |
Other indefinite-lived intangible assets, Foreign currency translation | (6.4) |
Other indefinite-lived intangible assets, Ending Balance | $ 600.7 |
Intangible Assets - Activity (D
Intangible Assets - Activity (Details) | 9 Months Ended |
Sep. 30, 2021item | |
Retail Automotive | Disposal group, not discontinued operations | |
Intangible assets | |
Number of franchises disposed | 1 |
Intangible Assets - Information
Intangible Assets - Information by Segment (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Intangible assets | ||
Goodwill | $ 2,050.9 | $ 1,928.4 |
Retail automotive dealership | ||
Intangible assets | ||
Goodwill | 1,602.2 | |
Retail commercial truck dealership | ||
Intangible assets | ||
Goodwill | 369.4 | |
Other | ||
Intangible assets | ||
Goodwill | 79.3 | |
Non-Automotive Investments | ||
Intangible assets | ||
Goodwill | $ 0 |
Vehicle Financing (Details)
Vehicle Financing (Details) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Vehicle Financing | ||
Maturity period of floor plan arrangements outside the U.S. if not payable on demand | 90 days | |
Weighted average interest rate on floor plan borrowings (as a percent) | 1.20% | 1.50% |
Earnings Per Share - (Details)
Earnings Per Share - (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reconciliation of number of shares used in calculation of basic and diluted earnings per share | ||||
Weighted average number of common shares outstanding | 79,497,482 | 80,340,076 | 80,272,613 | 80,368,589 |
Effect of non-participatory equity compensation (in shares) | 25,845 | 40,000 | 25,845 | 40,000 |
Weighted average number of common shares outstanding, including effect of dilutive securities | 79,523,327 | 80,380,076 | 80,298,458 | 80,408,589 |
Long-Term Debt - Summary (Detai
Long-Term Debt - Summary (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 |
Long Term Debt | ||||
Total long-term debt | $ 1,424.6 | $ 1,689.6 | ||
Less: current portion | (67.9) | (87.5) | ||
Net long-term debt | 1,356.7 | 1,602.1 | ||
US Credit Agreement Revolving Credit Line | ||||
Long Term Debt | ||||
Total long-term debt | 108 | |||
3.50% senior subordinated notes due 2025 | ||||
Long Term Debt | ||||
Total long-term debt | $ 544.3 | $ 543.2 | ||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | |
5.50% senior subordinated notes due 2026 | ||||
Long Term Debt | ||||
Total long-term debt | $ 496.4 | |||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | |
3.75% senior subordinated notes due 2029 | ||||
Long Term Debt | ||||
Total long-term debt | $ 494.1 | |||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | |
Australia capital loan agreement | ||||
Long Term Debt | ||||
Total long-term debt | $ 27.4 | $ 32.1 | ||
Mortgage facilities | ||||
Long Term Debt | ||||
Total long-term debt | 319.8 | 458.1 | ||
Other debt | ||||
Long Term Debt | ||||
Total long-term debt | $ 39 | $ 51.8 |
Long-Term Debt - Other (Details
Long-Term Debt - Other (Details) £ in Millions, $ in Millions, $ in Millions | 9 Months Ended | |||||
Sep. 30, 2021AUD ($)item | Sep. 30, 2021USD ($) | Sep. 30, 2021GBP (£) | Jun. 30, 2021USD ($) | Dec. 31, 2020 | Sep. 30, 2020 | |
US Credit Agreement Revolving Credit Line | ||||||
Debt Instrument | ||||||
Maximum credit available | $ 800 | |||||
Future borrowings available for foreign acquisitions | 150 | |||||
Maximum amount available for letters of credit | 50 | |||||
Incremental interest rate for uncollateralized borrowings in excess of maximum limit (as a percent) | 1.25% | |||||
Balance outstanding under credit agreement | 0 | |||||
US Credit Agreement Revolving Credit Line | LIBOR | ||||||
Debt Instrument | ||||||
Base rate of interest on loans | 1.75% | |||||
UK Credit Agreement Revolving Credit Line | ||||||
Debt Instrument | ||||||
Maximum credit available | £ | £ 150 | |||||
Additional facility capacity under accordion feature | £ | 100 | |||||
Balance outstanding under credit agreement | $ 0 | |||||
UK Credit Agreement Revolving Credit Line | Minimum | LIBOR | ||||||
Debt Instrument | ||||||
Line of credit basis spread on variable rate (as a percent) | 1.10% | |||||
UK Credit Agreement Revolving Credit Line | Maximum | LIBOR | ||||||
Debt Instrument | ||||||
Line of credit basis spread on variable rate (as a percent) | 2.10% | |||||
UK Credit Agreement Overdraft Line of Credit | ||||||
Debt Instrument | ||||||
Maximum credit available | £ | 52 | |||||
Amount of demand overdraft lines of credit available during specified time periods each year | £ | £ 40 | |||||
Senior Subordinated Notes | ||||||
Debt Instrument | ||||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | 100.00% | 100.00% | |||
Change of control, redemption price as a percentage of principal | 101.00% | |||||
Sale of assets, redemption price as percentage of principal | 100.00% | |||||
3.50% senior subordinated notes due 2025 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | 3.50% | 3.50% | |
Principal amount | $ 550 | |||||
3.50% senior subordinated notes due 2025 | Debt Instrument Redemption Period Prior To September 2022 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | |||
Redemption price as a percentage of principal | 100.00% | |||||
Specified equity offerings, percentage of debt which may be redeemed | 103.50% | |||||
3.50% senior subordinated notes due 2025 | Debt Instrument Redemption Period On or After September 2022 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 3.50% | 3.50% | 3.50% | |||
3.50% senior subordinated notes due 2025 | Minimum | Debt Instrument Redemption Period Prior To September 2022 | ||||||
Debt Instrument | ||||||
Specified equity offerings, percentage of debt which may be redeemed | 40.00% | |||||
5.50% senior subordinated notes due 2026 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | |
Principal amount | $ 500 | $ 500 | ||||
3.75% senior subordinated notes due 2029 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | |
Principal amount | $ 500 | $ 500 | ||||
3.75% senior subordinated notes due 2029 | Debt Instrument Redemption Period Prior to June 15, 2024 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | |||
Redemption price as a percentage of principal | 100.00% | |||||
Specified equity offerings, percentage of debt which may be redeemed | 40.00% | |||||
Certain equity offerings, redemption price as a percentage of principal | 103.75% | |||||
3.75% senior subordinated notes due 2029 | Debt Instrument Redemption Period On or After June 15, 2024 | ||||||
Debt Instrument | ||||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | |||
Australia capital loan agreement | ||||||
Debt Instrument | ||||||
Maximum credit available | $ 50 | |||||
Debt term | 5 years | |||||
Call period | 90 days | |||||
Maximum amount of debt guaranteed by the Company's U.S. parent company | $ 50 | |||||
Balance outstanding under credit agreement | $ 37.9 | $ 27.4 | ||||
Number of facilities | item | 2 | |||||
Australia capital loan agreement | Australian BBSW 30-Day Bill Rate | ||||||
Debt Instrument | ||||||
Base rate of interest on loans | 30-day Bill Rate | |||||
Line of credit basis spread on variable rate (as a percent) | 3.00% | |||||
Australia working capital loan agreement | ||||||
Debt Instrument | ||||||
Maximum credit available | $ 50 | |||||
Debt term | 1 year | |||||
Call period | 90 days | |||||
Maximum amount of debt guaranteed by the Company's U.S. parent company | 50 | |||||
Balance outstanding under credit agreement | 0 | |||||
Australia working capital loan agreement | Australian BBSW 30-Day Bill Rate | ||||||
Debt Instrument | ||||||
Base rate of interest on loans | 30-day Bill Rate | |||||
Line of credit basis spread on variable rate (as a percent) | 3.00% | |||||
Mortgage facilities | ||||||
Debt Instrument | ||||||
Balance outstanding under credit agreement | $ 319.8 |
Derivatives and Hedging (Detail
Derivatives and Hedging (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Apr. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Forward foreign exchange contracts | Fair Value, Inputs, Level 2 | ||||
Derivative | ||||
Estimated liability of contracts designated as hedging instruments, fair value | $ 1.7 | $ 1.7 | $ 2.5 | |
Interest Rate Swap Agreements | ||||
Derivative | ||||
Gain (loss) on derivatives | 0 | 0 | ||
Interest Rate Swap Agreements | Fair Value, Inputs, Level 2 | ||||
Derivative | ||||
Estimated liability of contracts designated as hedging instruments, fair value | $ 4.3 | |||
Estimated asset of contracts designated as hedging instruments, fair value | $ 0.8 | $ 0.8 | ||
Interest Rate Swap Agreements | Floating Rate Floor Plan Debt | ||||
Derivative | ||||
Derivative, term | 5 years | |||
Portion of floating rate floor plan debt fixed by swap agreements | $ 300 | |||
Interest rate swap, fixed (as a percent) | 0.5875% |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Details) $ in Millions | Sep. 30, 2021USD ($) |
Loss Contingencies | |
Letters of credit outstanding | $ 29.2 |
Surety bonds posted | $ 21.3 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jul. 31, 2021 | |
Securities Repurchase Program | |||||
Repurchase of common stock | $ 178.9 | $ 0.2 | $ 219.8 | $ 34.4 | |
Securities Repurchase Program | |||||
Securities Repurchase Program | |||||
Repurchased shares | 2,027,531 | 2,375,762 | |||
Repurchase of common stock | $ 178.7 | $ 206.9 | |||
Repurchased shares, average price (in dollars per share) | $ 88.15 | $ 87.07 | |||
Amount authorized to be repurchased | $ 250 | ||||
Remaining amount authorized to be repurchased | $ 71.3 | $ 71.3 | |||
Acquired Employee Equity Awards | |||||
Securities Repurchase Program | |||||
Repurchased shares | 2,100 | 149,176 | |||
Repurchase of common stock | $ 0.2 | $ 12.9 | |||
Repurchased shares, average price (in dollars per share) | $ 75.49 | $ 86.78 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Changes in accumulated other comprehensive income (loss) by component | ||||
Balance at the beginning of the period | $ 3,302.5 | |||
Balance at the end of the period | $ 3,842.1 | 3,842.1 | ||
Amounts reclassified from accumulated other comprehensive income, tax benefit | 0.1 | $ 0.1 | 0.3 | $ 0.1 |
Foreign Currency Translation | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Balance at the beginning of the period | (133.3) | (251.3) | (135.5) | (186.1) |
Other comprehensive income (loss) before reclassifications | (42.2) | 49.5 | (40) | (15.7) |
Net current period other comprehensive income (loss) | (42.2) | 49.5 | (40) | (15.7) |
Balance at the end of the period | (175.5) | (201.8) | (175.5) | (201.8) |
Interest Rate Swaps | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Balance at the beginning of the period | 0.3 | (4.1) | (3.2) | |
Other comprehensive income (loss) before reclassifications | 0.3 | 3 | (3.8) | |
Amounts reclassified from accumulated other comprehensive income (loss) - net of tax provision | 0.3 | (0.2) | 0.8 | (0.2) |
Net current period other comprehensive income (loss) | 0.3 | 0.1 | 3.8 | (4) |
Balance at the end of the period | 0.6 | (4) | 0.6 | (4) |
Other | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Balance at the beginning of the period | (14.8) | (19.4) | (21.9) | (16.7) |
Other comprehensive income (loss) before reclassifications | (0.5) | 3.3 | 6.6 | 0.6 |
Net current period other comprehensive income (loss) | (0.5) | 3.3 | 6.6 | 0.6 |
Balance at the end of the period | (15.3) | (16.1) | (15.3) | (16.1) |
Accumulated Other Comprehensive Income (Loss) | ||||
Changes in accumulated other comprehensive income (loss) by component | ||||
Balance at the beginning of the period | (147.8) | (274.8) | (160.6) | (202.8) |
Other comprehensive income (loss) before reclassifications | (42.7) | 53.1 | (30.4) | (18.9) |
Amounts reclassified from accumulated other comprehensive income (loss) - net of tax provision | 0.3 | (0.2) | 0.8 | (0.2) |
Net current period other comprehensive income (loss) | (42.4) | 52.9 | (29.6) | (19.1) |
Balance at the end of the period | $ (190.2) | $ (221.9) | $ (190.2) | $ (221.9) |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)item | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Segment Reporting Information | |||||
Number of reportable segments | item | 4 | ||||
Number of operating segments | item | 6 | ||||
Revenues and segment income by reportable segment | |||||
Revenues | $ 6,497.3 | $ 5,971.6 | $ 19,258.6 | $ 14,631.8 | |
Segment income | 476.1 | 311.6 | $ 1,187.4 | 444.3 | |
Operating segments | |||||
Segment Reporting Information | |||||
Number of reportable segments | item | 1 | ||||
Retail automotive dealership | |||||
Revenues and segment income by reportable segment | |||||
Revenues | 5,634.9 | 5,258 | $ 17,039.4 | 12,828.1 | $ 17,900 |
Retail automotive dealership | Operating segments | |||||
Revenues and segment income by reportable segment | |||||
Revenues | 5,634.9 | 5,258 | 17,039.4 | 12,828.1 | |
Segment income | 299.6 | 215.4 | 772.9 | 268.5 | |
Retail commercial truck dealership | |||||
Revenues and segment income by reportable segment | |||||
Revenues | 717.3 | 590.9 | 1,777.3 | 1,481.5 | |
Retail commercial truck dealership | Operating segments | |||||
Revenues and segment income by reportable segment | |||||
Revenues | 717.3 | 590.9 | 1,777.3 | 1,481.5 | |
Segment income | 48.3 | 23.4 | 115.5 | 51.7 | |
Other | Operating segments | |||||
Revenues and segment income by reportable segment | |||||
Revenues | 145.1 | 122.7 | 441.9 | 322.2 | |
Segment income | 9.8 | 8.3 | 24.2 | 16.1 | |
Non-Automotive Investments | Operating segments | |||||
Revenues and segment income by reportable segment | |||||
Segment income | $ 118.4 | $ 64.5 | $ 274.8 | $ 108 |