PAG - Earnings call transcript Q4 2019 | Penske Automotive Group, Inc.

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Operator

Good afternoon, ladies and gentlemen. Welcome to the Penske Automotive Group Fourth Quarter 2019 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through February 12, on the company's website under the Investors tab at www.penskeautomotive.com.

I will now introduce Anthony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Anthony Pordon

Paul. you, Thank and everyone, you joining for Good also today. us afternoon, thank website fourth Penske and financial our performance presentation and detailing understanding release you quarter to is with assist designed Automotive on our morning Press our this Group's XXXX in a issued results posted strategy. along was

e-mail phone any I'm questions follow-up always, As or you available by for may have.

Officer; Controller. call Chairman; J.D. Chief Financial Joining our Carlson, Corporate our Penske, me and are for Hulgrave, Roger today's Shelley our

certain discussing per non-GAAP measures this operations call, and be On continuing depreciation earnings will adjusted adjusted as adjusted and taxes, from EBITDA share financial income amortization interest, we such continuing or and EBITDA. earnings operations, before from

press prominently measures measures. which comparable GAAP presentation, presented website the is and available have on non-GAAP the the GAAP and this comparable release most directly our investor reconciled We morning's to have measures in

call on Also, forward-looking and we may make outlook about our potential today. earnings operations, the statements

outlined because materially Our press results from actual differ XX-K, cause our vary direct may may expectations. to materially. and release, differ SEC results and I of discussion our that you factors in the results for Form including which to could to today's cause actual filings, uncertainties additional risks

to I turn time, will At this the Roger call now over Penske.

Roger Penske

in to adjusted XXX Tony. taxes QX a earnings to QX in SG&A $XXX.X QX points share results X.X% of the were year afternoon improvement up before was a earnings in report XX.X%. for related Thank heavily mix profit When $X.XX. X.X%, operations XX.X% to same XX record from was The from up and points and up morning earnings the gross to an in rate you, XXXX, per XXXX. the QX share quarter Good XX.X% continuing million income basis rated from this an of to U.S. which in income revenues, basis everyone. X.X% to in when and to compared compared shift operations QX continuing to or increase related increase PAG. increased strong this another earnings be per adjusted X.X% of pleased I'm record to We XXXX, reported tax XX.X% increase effective in compared period

today, the results currently per which $X.XX revenue we operations times, cash flow QX had supercenters. to – used highlight which more some nearly X.X%. We used discussing UK and increased retailed continuing generated includes Before $XX I'd our XXX,XXX X.XX $XXX.X XXXX. used in share, We ratio We opened our $XX headwind new allowing million like new four $XXX of increase a achievements generated to We units of billion to we in million than earnings and our per in from from related from million X.XX over X.XX. representing dividend and income Greenfield net in to two the and $X.XX share. us in in yields earned

million, year. at We million of for of repurchased the stock outstanding X% shares shares total $XXX representing the X approximately of beginning

invested $XXX We We in for includes million land time. authorization $XX million at in million have development. repurchase CapEx, our share board net from $XXX this which future

and compared also to of X% We XX%, shareholders market our or income annualized in $XXX returned returned revenues. share million, through shareholders when $X.X In to total, acquired we billion repurchase to and estimated our dividends cap. we

of News. reported one named in had Automotive XXXX this were from best operations, $XXX.X. XXX who million, for We a year’s one XXXX, to number dealerships, XX% PAG $XXX we've XX out revenue and the in XXXX. the dealership at number had dealerships from work we had today's We in earnings $X.X from CAGR a Since billion grown and income our XX% million $XX.X CAGR of dealership to continuing

strategy. to continue results our highlight business I our think our diversification and

of details the to turn the now me fourth quarter. Let

on the the X%. auto business strong We news sales up fourth retailed In revenue market profit basis, both unit is the used same-store U.S. used our outperformed our U.S. Same-store during XX% quarter-over-quarter. up UK sales. the the our represented automotive X% XX% total represented the The was X% sequentially and retailed was and profit. XX% our same-store units retail were in CPO in unit quarter. CPO vehicle of good approximately increased XX% of Our a and our and gross per quarter, was gross new increasing of up

or and new $XX, profit In was vehicle up our was was our or vehicle down used insurance gross X%; X%; $XXX, financial QX, X%. up or $XX,

vehicle gross total $X,XXX $XXX retailed or to increased Our profit per vehicle up X%.

parts same-store was our Audi X.X%. X.X%, and X.X% FX, and up X.X% [ph] X.X% service exchange. collision revenue ex. pay ex. up down was was repair foreign or increased Our Customer

As business UK conditions we the in challenging said QX. before remain during

business XXXX and However, inquiry some in the order we has we've an seen increase improved pent-up demand. conditions in with market expect

supercenter and X vehicle U.S. XX We the on dealerships, in business. move me the XX Let operate in our used UK. to

track to XXXX: the have four locations the initiatives UK. in one We develop Both opened successful openings initial had grow and through expectations with and remain We large business sites. in one a two U.S. profitable. expect combination e-commerce supercenter We locations sites. new and supercenter of are Greenfield of outperformed the the our and in on

QX, of transaction X.X%, – two two gross and in average gross early the open gross price XXXX. to for in in XX,XXX almost XX,XXX X% average revenue. these The retailed generated of in unit and million retailed expect per In increased XX.X%. and a $XXX early units, margin We another was we to more XXXX up $X,XXX

fixed truck commercial used retail made of profit our covered sales of a on and and Due generated and we truck our our XX%. revenue and had represented Truck Service commercial to new X.X%. at increased return the trucks X,XXX our retailed $XXX dealership truck quarter, business million and fourth of the business; in our Looking used July, of XX% acquisition cost. Parts total gross XXX% Warner in of new and sales

of mainly timing of of XX% the unit fourth largest bankruptcies two However, quarter. sales deliveries in same our our customers and the store due to declined

units. In the return the North in sales environment of Research demand more the retail to truck of which potential XXXX, backlog to to normal a X% At ACT end XXX,XXX may was increased sales forecasting is XXXX, X Class XXX,XXX. a XX%. result decline approximately Class December X in in America of XX%

that However, cycle Warner acquisition business of OEM and come Truck strength a of of and our with of year. well our next positive last to our recent year Parts July, the we customers Centers expect up next trade Service will many perform

to single operate last distribution million $XXX business, QX, a system $X.X truck called power an commercial are two under of combining Australia. In QX generated structure in Penske revenue EBT, on in our return a to for and million we X%. the million we and of year sales entities Turning to increase compared $X.X

with to quarterly Turning generally earnings, cash tax Penske associated with Solutions, equity and Transportation our ownership depreciation. provides distribution benefits XX% accelerated PAD

For $XXX the December million. XX, generated PTS in XXXX billion ended and $X.X income three months of operating revenue

$XX.X we equity earnings. million Accordingly, recognize of

XX of months, in distribution and of investment cash our fleet the is vehicles. PTS savings. managing XXX,XXX benefits provided has cash a $XX now PTS over Over past tax million through

of heavy decline truck in is drive Although duty to another truck nature the expected year is term expected businesses longer XXXX performance the logistics solid market in strong to rentals, of leases X along with XXXX. Class

XX% over the for and Today, and digital used in XX% we a quarter, over sales sources time. increase digital from to first our our of Google originated leads an continue the in vehicles traffic, saw new in engaging and customer the capabilities In our customers purchase. XX,XXX We increase U.S. for enhance in tools. unit our an listings. have and and We online ready XX% fourth improve increase business by

We rollout by also back securing allows creating locations, cost in funding and to processing of electronically a providing improving technology our docuPAD customers us efficiencies U.S. digitally completed engage offices. savings all our of the transaction which and while of to and

updates your such as has online, buy technology Customer satisfaction, self appointments, us service for estimating and online now. pilot to encouraged and to make digital videos continue to and Their improve collision experience. customer service whether pictures success car such for pay our the centers new ability as tools

to source vehicles sold online enhance site bid with wholesale active year. approximately the X,XXX closed continue that We XX,XXX auction online UK we’ve and our through last proprietary in bidders

the to sales pilot initial well digital UK. on will we continue and with pleased roll testing transaction. platform that our result full We're for our announce retail in infinity new to performing enhancements very digital dealership out the I'm Finally, It's a in partners.

year Looking at had our million cash. balance end at $XX of the of sheet the we

compared $X.XX increase billion This related last to to billion Our was Truck Warner year. acquisition. $X.XX the is inventory all

vehicles last of compared new XX our this year. year was year, was days Our last used to XX days compared to XX XX supply

rates. $X.X and our billion Our with floor at plan non-vehicle was XX% billion is fixed was debt $X

million advantage $XXX $XXX low to of increased debt interest long-term non-vehicle Our which mortgages was rates. million take of

consistent included XX% XXXX. with was December development. end Capital which expenditures in At million acquisition for $XX capitalization million future in $XXX to we land the liquidity. were of the of end had debt $XXX Our million,

In us and our coming significant completed the the We return flow see providing recently can year capital about and the our quarter optimistic acquisition almost shareholders. closing, to with year. remain I'm as to make very which performance and committed you generates pleased cash fourth opportunity in the an to diversified remain model,

profit. and reoccurring company throughout of revenue gross Parts provide Service operation generates XX% organization which the Our our

the SAR. than model to continue through new total, repurchases we In million business XX% returned is We more a demonstrate share or income that of monthly or much dividends. $XXX sales and to shareholders vehicle our PAG’s

for Thanks open call to to joining the operator you. Thank for like I'd our it today. us on up questions.

Operator

Rajat Please ahead. come from [Operator will line Gupta Instructions] of Morgan. today First with question J.P. go

Rajat Gupta

my Thanks good on congrats Hey, quarter. the and afternoon. question taking for

new doing the those like for both approaching up. to EchoPark? you Just U.S. And then to what any looks of had question be stores. going the perhaps in differently, SuperCenter the plan are it plan One lines there on SuperCenter on is the I have potentially of Thanks. open follow Sonic question XXXX, is Used two a market around a the And with was, discussion in side,

Roger Penske

thanks the question. for Well, Rajat

that we're New completing. sure, really the opening, for in process is and them both would on in Stoke, Jersey Nottingham We end working number of will site. Phoenix one which And the expect be the of Nottingham, one think one in we the In by I that will market. open we operational will mid-year XX% piece of of have be will points completion in a probably One would hopefully that completed. and land would we following have the be of be we XXXX. and two they – that site another be we the UK have

SuperCenters. standpoint me, build mortar to to of the the and bricks we'll So from continue

that compare Sonic at in used when you Because today, the X.X%. perspective, margin. which have were to volume, lower think to car traditional look we a higher model, the we're you I probably business, margins they XX%, From at XX% a different our and

see So, want we way this as to the continue. is we a,

opportunity to the On other view. electronic same there don't we is and dealerships opportunity where have hand, to for the thing customers to do have the an units an

that the XX same days So on the that's these I But going track an see of least profitable. we they we opportunity XXXX, the be we've took can profitability at would we're that in opened, probably and stores to were future. and XX to that in say it are

Rajat Gupta

was U.S. to or Got function some it I is looks ramping That's for X%. highlighted a the used just there? the roughly more was on of quarter, stores unit gross volume drive And new mean substantially, the and like trying the side fourth in variable sacrificing I it. GPU the mean of just is the as in it up it helpful. just that you down

Roger Penske

customers. think the and used would stores think had to tend of not UK. the full thing Well, that's same about mature I the gross, Bristol we that talking we the SuperCenter I to opening from salespeople so margin have the in we in at you're and get obviously would don't if seen the point, you have tend QX But

I it's and again, So think a force mature there's pressures. sales

in to that have reconditioning a and of cars get bit gross. take want. acquisition that costs spending the would bit We're we from some higher probably more away right little I we little of a think

Operator

from is question next with ahead. go Stephens. The Rick Nelson Please

Roger Penske

Hey Rick.

Rick Nelson

Roger, Hey Tony.

ball So the that mentioned that there you decline crystal your it's think, I in UK possible XXXX? I’d year-over-year, know could you and cost recover $X.XX like you do you’ve to get

Roger Penske

really really �� look you back got happened at Brexit the about UK, last what really it no us became, there – to go UK. but months, Well, I to think we really and during and – it's we decision the really when mid-year tougher the think in when was XX

I things of and January, in at exited obviously and year that maybe be happened out. the now six agreements January, EU he if, with of and my negotiate could So sure countries. the months EU at where And Johnson, But in they think that the have end to they, Boris when end of is other pause to it they UK lots they the a wants year. a understanding push have trade completes

point people where and So and what understanding more much have this there's business that a consumer we've we seen and no are condition at confidence question uncertainty. they there there's no better think is a better

As at January, better I people And were where rates it margins up. we generally looked with confidence inquiry our consumer up, our lot is. feel think a were

a a month. hopefully no registration there's back, that So, us it's to really March, back to see question is, we're going strong which

give you good that'll a idea. So pretty

particularly procedures, the basis seen in seen was really with the And diesel points light that vehicle because hadn't year or last on us But to not impact we of used. world the a year also but you've And pretty during UK probably have of marketplace, on confused good on points really QX new also XX for basis the testing we WLTP, drop the diesel. at year. XX look still only

I We pretty really So much, driving uncertainty in real been is And which through Brexit March. had think the a RDE, that process. started the I emissions. that's think

QX, I we've go see we're probably some to favor we QX, at quite XXXX. So, our as FX really in when benefit. into and we QX got think look And honestly, going

Rick Nelson

used changes helpful. I'm There the the some be business performance? curious might car of the the That I there. in UK. what management sounds good making some team, the were they changes new to and know improve Superstore

Roger Penske

in own Yes. the that the role obviously he's When today end year to the and and as And made also a locations, and management, one XX longer QX our it's big we side bring the leading or running bought our earn-out focus understand on existing service. team on parts stock move impact in no And that job, purchasing almost of over the we've three brought at particular that because point. we'll business, Nigel two CarShop, our own in with spent forward or at And we decision when right the big pricing had person took now, terrific on to think people BMW me our a I you that and a team, brand we a Hurley, as team. and brand towards that and and will We who's going the years XX the think did people with what I vehicles. look to difference make of team management are focusing XX that be procurement, UK. right grown we of the obviously go on pricing internal the the and

CarShop. the about for probably year They'll XX,XXX sell. is out is we auction that net, which it then vehicles for mentioned And this other opportunity I bid XX say have this now one great they'll on we a that have Sytner closed source a of vehicles call. people, X,XXX is And buy

great at with So resource customers home, along the normal a this auction. from buying than is

of we QX. any we buying So, I when Sytner, QX, no we're that for really when year there think from this remember of purchase bought going into we as and business, us to was good couple a QX see enter so together, source

Rick Nelson

Roger. great. luck. That's Thanks Good

Roger Penske

Rick. Thanks

Operator

Stanley, Morgan with question a Armintas please have from We go ahead.

Armintas Sinkevicius

for basis used be that used magnitude, you taking truck trucks should down the increase look When GPUs on effectively order X,XXX question. to something the how something and the a in XXX thinking given in we Thank supply. came Great. around about that around we go-forward from at of

Roger Penske

I'd recently not I've sold. there's months had are new trucks to which the here being now is to we're at are Well, before, the I Obviously, growing they XXX,XXX marketplace in. pressure too least I for with probably going but market say used rather a replacing months. trucks trucks, probably that in a some next, think that conversations And mentioned come much, on XX those now real XX which going see to put as

that's impact So our an on going have profit. gross to

insurance our the of the the as part because end process we overall cycle with going we've the to it's drive certain be, obligated that that that part trades, we're key going supply got of the and the of have really go of to day, that's and of to other to I that demand have But and we deal and we me to things business of before, overall, with it did products but forward. recap a we that. still availability and still day, buybacks finance is And at and used at got that. we sales is our end the think However, ability that the

Armintas Sinkevicius

Okay. used drivers maybe on of profitability profitability versus the on both side, on as we’re that side based and used helpful well. quite the exposure the And and new then luxury on on the will new side much vehicle the be on How of was some strong. light to emphasis

Roger Penske

from when at went X.X%. up to actually our to Well, you I from new our X.X% margin perspective, think look and from X.X% luxury X.X% went

wanted where team, the that So, our lost margin third the small of I overall on of to place ending gross. beginning our store actually we business. to quarter I at beat any domestic the part only very it's same said was maintain wanted a I our think And the and and I

gross low profit, things us I we quarter. the of during we that the in on probably are our I side in year, divestitures XX% luxury And grosses helped some again one the the probably it's which market, get to we've that that XX%. had big to margins think able the saw because And that had a strong we at fourth time. think the And gross year that during always quarter also lease had strong

up BMW X% And we of internationally. our was XX%, was you almost Porsche because had remember and so that at both almost year up fourth picked down a business Mercedes XX%, during up quarter Porsche so, margins the Audi volume the had been benefit because domestically WLTP, look and up for the

Armintas Sinkevicius

rate a it sort forward about – is going going then. run adjusting is forward thinking this So, seasonality of for

Roger Penske

to certainly Well, it down maybe relate the go I'm and always I is QX it's be into mix. to we'll because think of of the QX end we XXXX at year, sequentially we sure some QX, look will XXXX the QX the so and because higher got

Armintas Sinkevicius

Roger. Appreciate it,

Roger Penske

thanks. Great, Yes.

Operator

The next go question is from ahead. please John Bank America, with of Murphy

John Murphy

afternoon, Good Roger.

business, good some to some mean, But to really with see on – motivated everybody obviously, there distress themselves there follow-up some the on of truck side. is that the volume opportunities avail Just also you I ops year will expecting maybe the that. have some wanted the make fixed under some will offset be pressure more are is, accretive dealers we to sell. to come acquisitions or the of This

Roger Penske

allocation. capital Well, looking we're opportunity as you brands But Freightliner at acquisitions. car we be our to see a through we're make when we Obviously, agreement and no and that there's for our them. side with looking right look real will on question, contiguous to the limited

As ago great. we this built here been you years know, no returns business few have from almost our and where

high would a but not business. – don't I a this We we're with So is a positive, again, cycle. say it's in this CapEx burdened

costs, our look medium Star Freightliner, the truck and got at market. parts fixed and and and their almost Western inventory units locations of heavy when of It's dealerships, XXX% represent cases XX% at duty you at And that Thomas truck which and in I remember we through operation, duty Bus, some their of cost and some service. the coverage look they've to think mainly the cover XXX%

for you drive it's in parts in service, gross good, our business think business, support. that's a help from And standpoint fixed and overall why all it's profit our I this XX% of at of So operation, when look us XX% which from parts that's coverage. a really the all And our of units comes good and will thing service. so a

We have trucks. some weakness in used

John Murphy

service was parts Okay. almost, the and side? the vehicle think I question in you it about up on And just X% mean, a I put second on quarter. light

they've opportunity quarter. good talking some So getting it the growth there dealers and do some on accelerate about flips for in. think digit factor if But gating going was about curious to how maybe we curious just I'm what to or mean, there's an should mid-single forward, growth human growth and the, I just been back you? the might had sort have other capital a of tax be

Roger Penske

players numbers with Phoenix, Well We're maintenance stores, look, think of of seen customer market. one us. our two our I've us Austin new had excluding three which and our one open coming that in which big I around one exchange two BMW other some the for this in certainly to of an reduced impacted key maintenance impact the areas the in the out And had for year from X%. stores, we years. also points, years four is plan which BMW, free from largest obviously And brand, with the

to that the a the in impact plan again, be looking But to I'm I a perspective, the there's at results. question X% tech unhappy from somewhere individual. be think not is will we X%, out on same the no all had When that us growth for we're with that some normal digit market. which obviously from think I parts single look service. So really and our But

body side doing shop technician, growing. see the sales the the is age technicians We’re thing we body And ironically. shop, our on of our in same certainly

a So our we're very it's part profitable build really entering that into to try program because an to business. apprentice of

John Murphy

Got it.

performance And to the these can is lastly missed themselves? a where things on there great below inside Or just you our the the I call, do I I mean dealerships there opportunity early just quarter. Okay. of mix? but vehicle – it business – a then in XX%? mean right at new even Would it take be apologize the and of I take ratio function the SG&A, is part that now lower below is was

Roger Penske

$X – I be the folks million cost UK will facility one remember you increases when a we rent – Well, we'll We'll through UK. the probably of had In talked of but think some key I that. reduction depreciation, cost the you QX, we in $XX see look in about that. things be to in increases million at will there see and think, some

to got also our gross maintain We profit.

of now. gross increased probably but compare I as profit more of as network. you business, particularly will you at decrease lot allowed from we of out at overhead think for docuPAD also got that, the we peers support looked mortgages different we've look calculation of us, have. maybe when to When when sale XXX our – you today, do mode at And the SG&A. the remember our a we mortgages. into of with overall, our help we when leasebacks some particular the points us other an across returned about XXX to as had our we financing business, areas just It has look to impacts SG&A us you look more us that That at

opportunity from We it. information big loaner in your We focus the look access out. offices. at certainly you efficiencies that's never when at look end – little was when ours. can no how surrounding the up office future growth, look a when asset paper going This is of we with an think me Also repairs looking and anywhere the cars got a we in until And knew started to is and we our that is our or be we've docuPAD. using phone. service also to really good we big the business. with cars the of at country a XX% back start we Loaner at cars of at our from of when that standpoint we there you collision And those there parts loan it

John Murphy

And maybe just follow-up, to Roger.

a I SG&A to that correct? that sort would the of I it as – And the businesses grows XX% total over growth range. in that statement? business time, correct the think Is As means that low drag truck mid a Is down recall, rate. that dealership fair naturally commercial in

Roger Penske

XXs and think know sense, – it XX.X% so Yes, – is in sense. I probably what think also car in don't I but exactly in the it's I car

those start things we at to we So bring that's when that – look to all and be me good together. when would it

So we it's at of the the said – end can Tony just what XX%. day

XXs, going So, it you that's to reduce us benefit when that, averaging overall. give again, to in start some

John Murphy

Great. very Thank you much.

Roger Penske

John. Thanks,

Operator

Chris Armes, go ahead. next Armes from Our question Instructions] please will with Research. [Operator Buckingham be Mr.

Chris Armes

Hey, the Roger. good Congrats quarter. afternoon, on

Roger Penske

Thank Chris. Hey, you.

Chris Armes

touch was just on up And can think that be – XX%. looks those touch you a And growth? growth same-store Could it of like auto you you components the just would also what profit I F&I, some I what what's driving If of know that? gross internal initiatives. about bucket of on just can XXXX? going is you the kind sustainable in rate forward have

Roger Penske

you Do I missed… question. F&I? the missed said I

Chris Armes

F&I same-store gross profit was…

Roger Penske

with more a docuPAD I because digital Yes. now it's much is formal. customer Well, think, with this had and is a one of initiatives process the certainly the we've commitment

key that is of other we've we We us planning. certainly some top better. reduced think F&I significantly, on in better. we it have the gets been that that, is product. our said, at that have. even most that's think transit penetration continuing today remember less us see capital mistakes. I as us about And you look probably And of captives our to at look year have the sub-prime, with we'll thing the XX% for we drive our I When helps fund the with contracts see I when core And roll to efficiencies the And SG&A. And taken done across the grow that out up us with it's overall only penetration, forward. financed, country, And we to balance that much the go the is little as overall very docuPAD, really this that which was X% are business our sub-prime. you about with captives. XX% of And only do we

Chris Armes

the follow-up very talk Good, what secondly, you that brands vehicle year. how to of helpful. in a on down within you kind just then have briefly big you being runway with a opportunistic to were of now? Can commercial sell right discussing a And grow in you the market

Roger Penske

business we think I their XX% ceiling think something. of that's acquire that Well, a when – I of and we have

probably runway available those our think still point. calculations I at we this has to if XX% XX% take

plenty cap I think there's to top think the And they our I with and towards have but goal scope, bigger would question a they've less, invest. of to owners hopefully that when can that so us you remember that's that that the start, think have that record that is was – I And Freightliner room. give always less opportunity, So on of they when of put a track you given date get us.

Chris Armes

you. Thank Great.

Operator

Next question is go Robinson from with Humphrey. Benjamin SunTrust Please ahead. Stephanie

Roger Penske

Hi, Stephanie.

Stephanie Benjamin

I was business, we an really Any Penske couple nice as bit kind for of in hoping at would maybe little the be just could through of saw Hi. color there you're afternoon. helpful. years, that maybe what you. growth outlook Thank services the you last looking provide of Good a XXXX. you Truck move

Roger Penske

a great Well, number year. we one, had

in delivered. most think, profitability the went perspective, new of rental think, a the slowdown to of our some great EBT in year-over-year. which obviously I We had SAAR these from business QX I in got was XXX,XXX trucks increase because from XXX, XXX an vehicles

probably So down. requirement to was the our utilize trucks

look profit. were lower that took on at this We happen. when gain out trucks that our so sale you of of some We the going also X,XXX $X.X knowing QX some deflated about it. We percentage down impact had in and was we about million on those, to had

at got overall But components. you've the all to look

good X% And year quarter logistics maintenance maintenance can three all Our contract a economic have, service to lease – up we're quarter service maintenance, businesses we're they we was on that up very see, contracts had we you typically have up full the and XX%, in contract of and increase. those and had escalators are that contracts. lease in the full five

So with growth. we really that see strong the

more on We and X have customers to be smaller of would one and in lot But we mode of into a X, same class might any in this that business have mid day, and seeing where roll as transportation vehicle. offset wants with That would X which range thing range. we're seeing we or reduction hopefully the all be will everybody class side. we'll rental delivery XXXX, of a interest overnight that we're have be light mid the

So we that opportunity. is an really see

standpoint – at X.X% and And look X they up class during up the heavy X% and XX%. about X were even X the of mid months and duty were you three the from and – probably X X range, only down about last was the when

normalizing So, a or the good. portfolio. market product has very still retail mix because the opportunity referral with be us certainly, should a the their has with see truck perspective positive of that Daimler XX% business be again, this And repeat very share, to for Freightliner I and in from

Stephanie Benjamin

Got color. it. so you Thank much for the

Roger Penske

Thanks.

Operator

Glynn We ConsumerEdge have for and time one Please Research. that'll go the here come Derek question line with of from more ahead.

Derek Glynn

Hey, afternoon. guys. Good

Roger Penske

Hi, Derek.

Derek Glynn

Just standalone used. had the a follow-up on

there any scale further that captive establish is need to similar business, you or and CarMax As has? appetite financing units to your own what

Roger Penske

that course But we have have I'll job that terrific side, we up. this that don't might with That's providers and scale might might can financing a But in A sit put be at then the leasing. think that become And CarMax of and have company. we setting can think our get want of people really with in carve if think in their we we – and to lot this I staying today able meetings see that experience change of right this just CarMax This you, our way the moment. talked it board out a does honest the we be And premium else. at area the scale at the not You within might have day. point It every to we've a used now. in to that drives on lot this about had We us we've we in have a capital business the our our don't what a be marketplace. real XX right scratch into I be talked finance start focus. done from banks to as has traction I with captive it securitize the have now. hard something the point, and people on scale about for times providers as and car once

Derek Glynn

you've wanted get credit if behavior Roger, in And it. auto credit seen any then just broadly to environment Got from any on your lenders? irrational pulse or changes I the availability

Roger Penske

at see rate Obviously, XX% our the captive see of I remains to I And to captives our know, credit, are premium from customer, at and when zero And almost reason me, because go we the least credit no and credit we're – utilizing moment to you really we very, sources at don't pricing demographics point. not but weakness no we finance as strong at scoring the this companies, think extend important. we've competitive seen financing as looked all Well, our me the use, seen approval very very the we I've there's levels. of much really at forward.

five we months. think, of now, is our rebates. I only – we Right have see – volume more XX less only And X% we

our a a aggressive for back the got reason They've putting unemployment don't see quite in – think got side, People So right got buy we now XX values to maybe as any very today. they're a pulling vehicle the in say are see jobs. that leasing attractive premium very, very a – lower. Plus because very customer very – there's to income. honestly months. the the we much But have make that their some are XX these And captives. residual very cases it on to we I

at now, of anything later right year. right At don't the end see would about. I I be concerned maybe see that So we'll now something least the

Derek Glynn

it. Got Thanks guys.

Roger Penske

Thank you.

Operator

at turn it this for the time. closing I'll to comments company back

Roger Penske

everybody and for support see Thank thank next you on want the just we'll the and you. for to being thanks after quarter. I

Operator

you our conference your does service. and AT&T Ladies and using for participation conclude that today. for gentlemen, Conferencing Thank for

now disconnect. You may

Penske Automotive (PAG) 5 Feb 202019 Q4 Earnings call transcript