Penske Automotive (PAG) 28 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Anthony Pordon	Executive Vice President, Investor Relations & Corporate Development
Roger Penske	Chair & Chief Executive Officer
Shelley Hulgrave	Executive Vice President & Chief Financial Officer
Tony Facione	Vice President & Corporate Controller
John Murphy	Bank of America
Rajat Gupta	JPMorgan
Daniel Imbro	Stephens Inc.
David Whiston	Morningstar
Glenn Chin	Seaport Global
Mike Ward	Benchmark

Call transcript

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Operator

Good afternoon. Welcome to the Penske Automotive Group Second Quarter 2022 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through August 3, 2022 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

Britney. you Thank and everyone, for us joining Good thank today. afternoon, you on detailing A this record posted understanding with the Penske you second to release presentation morning website designed the quarter is company's issued Group's in was Automotive press assist along results XXXX and results. our financial

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

and EVP Facione, today's our Chair Shelley President Hulgrave, Penske, our call Tony and and Roger Chief Controller. are for Officer; me Joining Financial Corporate Vice CEO;

Our and leverage discussion interest forward-looking before measures include ratio. also statements about future events, financial operations, outlook, our earnings today may business taxes, may earnings depreciation, growth assessment We non-GAAP as potential plans, conditions. amortization certain liquidity or discuss such and of EBITDA;

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

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

Roger Penske

record year. to delivered all-time joining share I'm pleased taxes, per second today. an us to the before income results, Tony. you for for and our and afternoon, earnings quarter Good diversified that you Thank last net second compared earnings business thank everyone, report quarter quarter

billion. exchange While billion, negatively revenue declined by foreign $X.X $XXX to impacted X% revenue

XX% increased before Net continuing continuing income -- X% $XXX increased million earnings to FX, to operations revenue $XXX increased $X.XX. Excluding taxes to our share increased and Earnings per from our X%. XX% million.

$X.XX. If increased increased up and up per to XX%, million; FX, income share earnings EBT XX% XX%, $XXX by net exclude to was $XXX our to up million; you

first the our earnings compare before Additionally quarter and when of share net taxes, we income sequentially. earnings per increased XXXX all

automotive QX, on same-store inventory retail our impact total has sold. during the supply our remains versus new a quarter. remains at constraints QX unit XXXX demand vehicles sales basis shortage of availability, forward the and Looking strong and operations impacted which declined Supply pipeline that continue vehicle to despite XX%

gross Our automotive and revenue X%. declined X% declined our profit

X% However, increased gross decreased X%. if exclude only and we profit revenue FX our

our Our Service revenue & X% or variable per was and Parts vehicle up XX% gross FX And up $X,XXX. without from $X,XXX increased it $XXX was X%. profit to

increased overall. the $X,XXX our profit gross costs CarShop and to our increased $XXX during and XX,XXX sales CarShop quarter to year. sales unit reconditioning the our X%. conditions, response Vehicle Same-store increased In to reconditioning last our was CarShop. prices revenue continue we logistics revenue second logistics the in improving our the along structure the same-store market units. quarter. our $X,XXX second in X% focused two efficiency, unit per compared million our flat satellite And with at to closed were to at on and improving are Looking and UK same-store retail cost operations impact acquisition variable unit profitability XX% current

commercial the truck business. Let's dealership retail to turn now

last from revenue, the second to at we business unit to XXX premier year. million. $XXX And up XX% Our truck looking very gross remains increased increased strong. XX% increased the total to X,XXX When in dealership and during units, sales million quarter, $XXX quarter profit our second

in and Approximately quarter. is million. our market $XX XX% strong our XXX,XXX and to and XX% remains of backlog included that the strong. market XX% trucks Class of XX% remains fixed taxes of are X covered commercial June the total Earnings that Service the second business. and XX. same-store XX% & a revenue cost increased increase Parts & sales truck Parts profit to Service Our in represented X Class gross before new of The new XX% units increased as XXX%

is X in entire the sold for out up our for open some product October time orders frame. XXXX fact, will In 'XX September and time allocation Class to

Let's turn now to Penske Transportation Solutions.

know, XX.X% from our of you increased XX% PTS business last produced of an and a PTS logistics Penske PTS by remarketing. of XX% -- $X.X with contract, driven to year. us to performance As of record increase $XXX to we XXX,XXX billion equity rental the a savings. currently compared distributions and operates units, XX,XXX end which quarter million. profit increased income strong Revenue commercial cash of and own fleet provides cash over

As our in million year-to-date. million increased $XXX We've also million $XX earnings cash received equity a result to distributions. $XXX

Now Shelley, let Chief to Officer. over turn it our Financial me

Shelley Hulgrave

you, Thank everyone. afternoon Roger. Good

to additional shares and through shares on allocation XXX,XXX the million had great to in total strategy million capital and repurchase company's million. financial the performance At in XX, XXXX, our we repurchase In bringing Directors $XXX $XXX Our million our leave July spent from cash million, authority we sheet XX, repurchasing Year-to-date, June record for $XX.X to increased our continues shape. employees management $XXX $XXX and delegated of securities over outstanding million. billion balance Board July liquidity. X.X acquired authority by $X.X in to an

dividends. We also million in paid $XX

acquisitions increases looking so or future future from approach, to dividend sustainability this billion, year, $XXX maintain businesses; a initiatives; CapEx We've dividend with we securities across at year disciplined and long-term to December growth. authorized especially to shareholders investments, possible. where repurchases, for of our retail the which an of quarterly and far million in automotive allocation, focuses three Directors our our growing of on and In opportunistic $X.XX accretive $XXX on income. of debt net million support valuations last truck acquisitions a commercial the million additional retail $XX our that capital expenditures and to representing XX%. growth also year. end XX% $X.X our opportunities our shareholders; strong consistent returned to elevated When delivering spent far light land up we've of At reducing for June, current this in $X.XX is and below XX total remains the per dividend, our So acquisition market; has automotive our Board debt of share capital

debt commercial to Australian consists billion term X.X%, an we of notes, average secured rate total between average Our of and subordinated debt our $XXX long-term have rate agreement. $X.XX on XXXX; million mortgages; is which which fixed total for years. total at Debt and last of our from mature the interest The in million is X.X under acquisitions inventory remaining and XXXX an $XX year our XX credit with largely billion, of and last XX% At sits vehicles $X.X X.Xx. months. is December up XXXX, in June completed was which $XXX from increase capitalization XX leverage and consistent is of to the parts end June, related in million

at supply vehicles with premium eight volume domestic of XX-day a at have new and We XX. XX, at foreign

and vehicle New in UK. supply is at in XX days days US XX the the

into We support minimize our maximize future our our pipeline to customers, new continue inventory inventory vehicle to sell costs. turn and

back Used with our the good manageable demand the current supply. nine will at least to At keep for XX-day a low, new levels turn supply in supply to over XX We shape vehicle next vehicle I challenges at Roger. this months. with to but coupled the strong is call time, inventory expect

Roger Penske

Shelley. you, Thank

open representing far pleased report million revenue annual year. on to Let's completed points we've and development. business acquisitions I'm $XXX to in this turn new so

full our Additionally, dealership in are of we existing Audi dealership The West this Audi the London our generate expected locations the which factory. million after-sales largest Mercedes-Benz five revenue we've signed agreement the the after-sales XXXX. dealerships in UK. dealership, an and flagship approximately morning from for and acquired The acquire includes which acquisition in announced is UK located $XXX three to to is to adjacent year dealerships locations the

subject closing close during to the quarter, customary third transaction expect We to this conditions.

sustainability. Turning to

a important drive are to team to we've strategy and sustainability and initiatives sustainability our built on efforts future decarbonization. our Our dedicated

X,XXX build across to in sale electric to X% X,XXX the We To emissions. support government the incentives. stations and represent reduce throughout we vehicle units are sold we new OEM in units to service electrification sold vehicles while XXXX focused battery units, pure network. committed lower already the US gas also XX, at our XXXX use over by including installed recycling our working UK including XX,XXX in our cycle. and charging decarbonization which energy taxes through are and pure to infrastructure life management, June battery partners our supported We're renewable the greenhouse X,XXX their perspective through increasing of We've of vehicles electrification where locations electrified energy units put and with on programs electrification is improved of

to on initiatives. Moving our additional

We're using improve experience and satisfaction loyalty to cycle continues strategy to and with wherever evolves the landscape. drive life possible on the Our customer omnichannel our changing and automation focus customer customer retention. and improve to digitization

solutions dealerships and consistency our our digital that paper integrated document and organization. paper using and at output we're automate transaction during important control sales across physical more processing and the ensure -- minimize quality compliance Additionally, streamline

focus ratings X.X for dealership online our Star We is our continue on Google to where management, reputation US stars. lifetime

from Honda Lincoln For We OEM supporting sales and partner we are Porsche, our Lexus, programs currently continue to initiatives. and strategy, BMW, retailing enhance our while digital MINI embracing Toyota Nissan.

we we digital that the programs captive for including credit some which integrate solution supports a sales X% an online online have that company etcetera. quarter, the proprietary retailing the In function X,XXX UK also for and from approvals and our CarShop. market. sales initiatives enable OEM franchise OEM in-house generated operations In X,XXX in offer second of online buy Our a UK, they as advantages approximately our rates system our transactions sites reflected versus with finance

Automotive of I'll XX, you you. dealerships else. continues are apart the confident like best today when Also, to of and people efficiency. the achievement last have one that the dedication so business continue Online joined encourage our and XXX,XXX. improve work work the about our an being I your recognized to all of XXXX. it On make continue by BDC our compared the record that any dealerships want us to online thank the I to across operator the we the is This appointments quarter outstanding and to for year. of from payments to us and for set for on and to of Thanks produced service year all News the opportunities they over to questions. turn were diversified reflect congratulate appointments the for companies In XXX increased the online everyone payments far them and closing, to Penske I'd XX% remain results side, to list best second see that enterprise. this I Thank results to of in

Operator

question Instructions] [Operator Murphy with of first Our comes the of line ahead. John Please America. from Bank go

Roger Penske

John. Hey

John Murphy

Tony. and Shelley Roger, – Roger afternoon, Good

the have in a of But one Roger, concerns what big recover – grosses people can you dynamic. of pressure control may SG&A and come market I costs. a volumes to eventually will that, bit are Just going significant then a is pretty your way think is be under which

So, this I'm if big inflating? going we or actions could lid that would do comes portion just plans us curious XXXX how take late rebuilds, as back generally until a that SG&A of And be kind maybe volume But maybe probably as inflate you that on out. inventory variable are you to on remind what to keep comp could of recover not can sales you theoretically structured them and because just not? in volumes be think figure all a

Roger Penske

our go let's of that back the from back get XX%. pre-COVID, And normal running to up think X% up XXs to SG&A It's business. tend first we John, to low we're end normal QX Today and at gross. I was somewhere -- look at in a as it's to sequentially. Well XX% going

and to pressure able we've to some opportunity obviously, Now people has SG&A. travel, to We've salaries impact had had to wages. open increased due which on that. of up our some our the There's be

Overall, XX% I standpoint, our Our including, that we marketing taxes But we've that we not acquisitions. had costs think news of the reduced SG&A and really our additions COVID, think people good has increased some. The the from obviously, advertising have our during I down. is is are that from which took tight. out today

is and country right comp you is the turnover about XX% When of overall XX% at. variable to about it our what year. Our about at XX%, the you service, compensation, of running it was you talk at on on with which consistent now depending XX%. about runs XX% growth, look and side, at we're it last gross to that's look and which When area fixed parts runs

big really news you see flat we So think because think mechanics, reduction on productivity these the about of the in those side, overall, part variable, And the drive those we've steady. I of us sales. when a some think has higher, but don't been of the our They're good able anything sales number more line you is been rate about are that's driving and people, of the more person, with get which helped of and per to reducing adding sales from people, our standpoint grosses key. units business

be We we're the probably driven a ability kept not acquisition we've advertising the that's at -- to a where XXX a hand and with here basis XX% from on the normal going need we expect those an a of marketplace. pre-COVID, pretty restructure the that that maintain how keep look business maybe shortages supply probably given and to going in in we to at business line, us points So as and parts SG&A our and we again, would we into with think really as operation marketing standpoint, and in business and looked from again reduction we're to better to much grow get anywhere I XXX that in think from we people. more the new

John Murphy

problem, year-to-date. a little billion relative Okay. that's just are hard net of of a to kind about million question, helpful. I high-class did $XXX this your of times, lot that's leverage, is what time incredibly in then reasonably a peers acquisitions X.X second in at. tough pretty buybacks it's a Admittedly, mean you you give -- and And and conservative kind a $X.X But this. bit running That's and your to

So actually you capital. are deploying

leverage even truck little I'm or commercial bit get opportunity pushing buybacks may you're it. aggressive on side. the be or and there it’d used to more new, maybe whether But So, just in if curious be even an on a acquisitions in maybe take

Roger Penske

we've of current billion conditions have a and XXXX, flexibility. $X debt And the out Well, and of worth think, and I in think to driven uncertainties, want safe right the secure. business of that to want basically, we be now we lot the continue to I since, almost end

a stock think numbers if But that But the opportunities think costs continue I it's to now, look we that high at that think for us something. our we'll even we'll some standpoint seen versus that some within prices, the world. making to -- to network lower further going around of really quarter-by-quarter. war was we've times acquisitions necessary. these back, buying now, gives our right on to, And look with it X.X here throughout see I have our that it like from with we're total lower the chest great underperforming acquisitions. at of I buyback we're maybe right do And

about XX So, billion overall, share if at look stock. $X.X we you last the made the which over months buyback, was acquisitions, of plus our X%

which the is main focus. going it's say, to hard be think me to fluid, to balance going that I And that. So, it'd it's for so between be

basis a I look we capital going to at on them our look think as structure. overall monthly at of all we're

John Murphy

were if the target swirling be think the normal to without times leverage and or moment. would of the think looking sort that Shelley be? you there? would to chaos all would you that of sort Roger, be net What at appears could at should What you be about

Roger Penske

what probably two, somewhere back when normal, I to get Well, guess Shelley? things at,

Shelley Hulgrave

Yes.

think accurate. two is I

X.X we I certainly a think on us to of remain runway to and an target lot have certainly there. below our adjusted get basis,

Anthony Pordon

did make acquisition if three But needed PTS acquisitions balance we go in to flexed the the past to. we we sheet to have with the like above

Shelley Hulgrave

right. That's

Roger Penske

agencies. we rating expectations the from are are might what the perspective, a from mention where credit You

Shelley Hulgrave

Yes.

levels. buybacks, mentioned, we've acquisitions, year, about operations that that X.X three we the runway that lot mentioned, to So from level if grade. a of has got cash to of the lot our remainder below for able the can finance and a of that flow could has there. keep talking share conversations been at adjusted kept through keep We've debt we've things that I times the room. And all to got And steady the investment get -- had, the we start we've dividend, of as all the

hasn't it leverage standpoint. from certainly at certainly X.Xx, So, a hasn't our hindered allocation keeping -- capital us

Roger Penske

and just our forward. in Directors careful. road want for to very to we there as the ability had stray from continues them UK we are doing we where what people the the we that are. the we don't overall, seeing be benefit PTS We opportunity and of And investment. grow Australia a off business. of standpoint grow, Obviously, look is move And at real of our there Board to we're

overall, So But overstretch in us, investment grade. to like position certainly John. we're secure acquisitions. to to come But into move if try get on to stay safe bigger and I to we'd going not we're think they're to going to We're to possible. a and going

John Murphy

I it. you Thank Okay. much. Thank very you. appreciate

Roger Penske

John. Thanks,

Operator

Thank Murphy. line ahead. from Please go with of Rajat question JPMorgan. you, the Next [Operator Gupta Mr. Instructions] comes

Roger Penske

Hi, Rajat.

Rajat Gupta

Good Tony, Hey. Shelley. Roger, afternoon,

Just the the had of the business quantify a different And one. the see quarter? see them some could lines excluding sale in across how you the have if the gain the a the follow-up. second us Really you color first Maybe question you trends what on again could do on year. for sale PTL, through progressing the Thanks. And year? gain remainder remainder trends of impact how I give you in quarter, like strong on was

Roger Penske

our And paying can revenue if rental for believe of perspective, been on that's our And dividends And think years rental business three up rental the from have vehicles now. lease Yeah. was rent about our and X% it. for XX% commercial daily from we've Good. on commercial commercial comes you with customers. From that lease had running XX,XXX XX%. full-service remember a perspective, over up real growth, the I a last us was

X% fleet the it two is in closest revenue competitor at have three We and out rental the to times look probably still largest from when take you when increase over the the look it at sale from than overall on that. coming our the just you – probably world our higher was you out the up to overall out take business gain years. of you if And if standpoint, – X%,

the been still quarter. we were that it's think we've business. And very XX% again, big So we growth impact logistics had in a up

the will good we're and Our consumer those obviously getting is, to into is fleet, But was on it margins sell, news – we're manufacturers from that's soon X,XXX we older into and which them the the only commercial able we're repurchase here rental trucks those we to truck fleet we being there. Probably, reduce our down as leave either them on it we where with add one have that. XX,XXX because good biggest impact we maintenance rent markup out our And units and get rental have which get units the get our backlogged order. cost. over unit an rental as

on we're normal a get OEMs before XXXX trucks. still the back and to that chain to probably see we hard supply we So on heavy be going through XXXX into for pushing us capability

Rajat Gupta

on Got much how in And XQ? it. year-over-year? that the And gain sale was

Roger Penske

it $XX Well, was $XXX million it million. was and up

that would we – accrue get of from to Now, the get quarter. we PAG, for Tony? in the what million our profitability $XX standpoint of

Anthony Pordon

Correct.

a the in increased quarter. $XX $XX percentage million. Our on have is That times year-over-year would the second of XX.X% basis million ownership

Rajat Gupta

those could question. educational how of like bit to Got months. bit it. store, vehicles There's going if market be little a just customers. just the give sense little payroll to XX us next SG&A changes are require to in of and in of the just Maybe productivity electric more maybe of the months follow-up new coming the of given the those number on a Got XX hand-holding going you to an to units more hitting experience a composition, of headcount relative models eyes it. maybe And a structure the

you of feel look on how thoughts and that just dealership? maybe changing see So Thanks. progressing that any the and the

Roger Penske

have the to see think to is facility point. a good and handle vehicle necessary. to electric a some warranty. And We back out take electrification. to that I going that into the because able BEV initially see – also all training tools will vehicle vehicle be into of as under Well, the that's make of go But of the be changes We it's – a life the longer shops. those come we at will least we

that feel I will be benefit. So a

have and train as of the – in of fast based go from to training OEMs' perspective with charging have our to talked the electrification number forward. But this about add meet OEM. We on people standpoint we arm and We continue requirements arm many requirements. OEM the of to to that's the points we'll always we from accomplished that with a for – is already

Rajat Gupta

color. for Thanks And Got I’ll it. jump the back queue. Great. in

Roger Penske

Thanks, right. Rajat. All

Operator

Thank you, Mr. Gupta.

comes go from line Inc. Imbro next question of Daniel Stephens ahead. with Our Please the

Roger Penske

Daniel. Hey,

Daniel Imbro

Congrats on the quarter.

Roger Penske

Thanks, Daniel.

Daniel Imbro

the on into amount demand – how demand equation. Roger side? how of you have I back the basically auto presold and the you maybe the the you side want half many however provide differs? of can an start on or then measure touch it and to that the how maybe Can on of truck commercial update And year on much just you to visibility inventory

Roger Penske

of we allocations cars. maybe it it now might get auto and here the And allocation -- a Right pull days now, look they give US. XX giving week, let's an and in Well, back. they within at XX XXX to

typically, So coming back look we really everything XX our a a And again at that's it's in basis. going on variable. as allocation, out. into inventory day-to-day selling that at We're days, is

high-priced the I Corvettes we months a fact, cars of luxury at and the year. obviously, have probably I at fancier lookout, some that's running cars From think driving a six inventory. XX% of turning we're some when allocation In the look how we're and we're -- to of

UK that where flow-through look standpoint. going from it today go have at roughly, if hand, when have a about build we we spec XX% it, million On in the the car forward. typically their and look US$XXX to And on as we at representing people you a UK, the we XX,XXX forward it other orders sold

So heavy-duty what's see quite XXXX truck And we're as sold that we and truck available I earlier, starting again From on of positive. said have XXXX I across our side. allocation can September, the leasing through the business. to -- all we're going out from into the side, October to be we're think even standpoint

Daniel Imbro

That's helpful. on it. And Got to side, maybe the -- used the CarShop. auto on touch wanted on I

of think said units slide I the obviously, think that but retail still same-store same-store flat I XX%. were down was overall

outperform how or was materially? of the across rest able that some the So channel? use segment so to And can of dealership you growth accelerate that learnings back those

Roger Penske

really CarShop, Well, those We US, the vehicle guest we wholesale. to and the the to £XX,XXX say me, huge look £XX,XXX $XX,XXX people a I seen we've the they're had a within tried we can't £XX,XXX today normally $XX,XXX $XX,XXX. our experience, we cars focus, UK go the because told would in to in move both But the from back at UK And or of on car $XX,XXX those them. vehicles. policy in to up say we've vehicles. way US buy our cost experience, to types and just has just a up $X,XXX up to buying And customer along to these the farm where

think into several that next being the market. the we're to the over the volume therefore, to car buy technology. that this we pull potentially looking of to And them had locations because just just cars the because at back, really to time down We're new we've have to into shorten whole changes. want market ability there of cars lower of got the that we logistics, we're for used the So until volumes that's to months, really don't able reducing the But we going number customers. we've because because use properly between losing getting reconditioning, our recondition we're be up going money

bit So, of a opportunity. there's quite

self-sourcing we're to I think in key. been -- We're which focus us. about that using In the XX% of for up the it's we've UK, more up. to certainly move able to got XX%, We're we're continue more staying we've that is here -- look is foundation, is We're auctions. now our enhance US, good. But to a But and business. We're for say, turmoil would gross the that thing that margin. doing have all to I to the better the building stronger think with best ways right in us it. in we'll making a we it's can I use

Daniel Imbro

last for strong. side, or me commercial as And the But one you truck to the of just real softening the begin softened, prices side, is on the mentioned fall seeing there market still used truck as anything you demand backlog new Great. see we any changing on used freight Great. side? used are in

Roger Penske

payments these some were customers think reason I I Well, that purchased higher-priced rates is overall their being themselves. or that's on these and right at now with people price the a high selling market. now, being Right too on these freight high. just been were because I these way falling PTG used trucks afford of they're But think trucks realistically, from with have impact lot we're down, these having freight seeing big can't just the availability our mean margins owner operators.

that's say, to trucks as not yet at opportunity, inventory those to and trucks. accordingly. trade continue the action forward, some we and some But have a on newer would XXX XX-day low we than And years what we trucks, of those adjust and days trucks of we're some or mileage made and more higher those we've down that on on which have those Portland we now. giving in obviously, XX our into I meaning a our to two are Salem basis, acquisition, on took we'll impact right seem to price three out today old So come some you go that pricing west a an margins we're and to and seen XXX South rates

pretty we we'll at get as be much So through the back level. those,

to to be On the to PTS look it four years on five very very that those at you mentioned old we're We little when strong. other and leasing at I see moment. the trucks at that deterioration earlier, truck continue those six think selling are hand, margins our business, I

shape. in overall I pretty So good think we're

Daniel Imbro

Great. Good going much, Thanks forward so guys. luck

Roger Penske

Thanks.

Operator

Mr. you, Thank Imbro.

Our ahead. with line Whiston next question of comes from Morningstar. the Please David go

Roger Penske

David Hi,

David Whiston

that's start everyone. I used But a both the to the right customer? the more guess, for are it than I buy franchise any seeing now. retailers car that for with vehicle you want -- is customer affordability is a and it's CarShop very at consumers Hi, question. issue? indication Is expensive that Obviously, to hitting level

Roger Penske

so for sure. say, would you Tony? Wouldn't I

Anthony Pordon

absolutely. Yes

Roger Penske

of sale. someone UK, margin in they squeezing but And time. Well, say say with $XX,XXX And it's talking as gone days, sold they're XX CarShop has our inventory I market. X,XXX UK, margin impacted with between that's cost XX a -- has the some we're out the now and say I'd turning of I'm just or in people up the acquisition we're have same the really the always the unit at overall at per £XX,XXX that right looking obviously, -- look our too at taking in been about it the business the costs, US, in buying $XX,XXX. being because at remember and to cars considerably car we're of Basically revenue and -- £XX,XXX. the obviously, and about talking And we looking

David Whiston

back I without to reducing you I more going SG&A out hear you there. earlier discussion, is any on take guess Yes, headcount? can there that

Roger Penske

think now, last other of going business out. we our can take some and mean, look, things with Zoom out. want always and inflation them want important, People our and people right things doing there's I when traveling different with to the wage these that to. people more standpoint. XX to lot to think from there's with I this in months that's We environment. Well, to a XX about continue training the said, that We OEMs certainly we get grow the is living pressures I run out. we for a of a people want We are we're now. think

those providing several there. look and -- we customers. company forget I you don't many costs look additional at our having the I And when thousand we're know to how cars at loaner -- certainly So many of how costs fuel we have, vehicles, are our cost you but just

will So to these go costs continue up.

can On able technology customer things our going to it's business costs I will the that reduce our where and it. pays or to either we used the think overall we're we'll we come online, he in service. his even time ways a he certainly And point overall can costs -- to for other drops our and to deliver service do on be I looking car appointment new the mean, he doing got that to other makes his now reduce we're parts across off, we as shop. doesn't Right through whether do that We have to and margin, that. be hand, online customer

-- from in these able do shops. our take before we'll to the all been where across things UK, a efficient difference our the body shops we're I margin. piling they're a the services And will now, technology we've been are which think that it commitment honestly, high less doing be as far quite hadn't as more of but German So really big our made And people, the brands training and are and we and of made in the lot standpoint in doing that big parts a difference. wheelwork

Anthony Pordon

working move processes some Tony. too. to that automation should help of we're David, also the There's that is costs as improve other this forward reduce on we

the to So you future. can come look in for that

David Whiston

think or Do years story on of realized six-month won't be of that's a more another the automation? couple more for Yes. you

Anthony Pordon

Both to that.

Roger Penske

happening going it's getting I every but up. we're think costs also day,

looking XX% We're XXs the pre-COVID. And you. have -- So, We've now we come to which it's opened we XX% and on be some high rents reduction XX% that QX. I we'd XX%, conversation, in. higher -- still got what earlier have we're remember went is travel said settle XX% we to a were around to from in were where is We somewhere our which up in in XX%. before at significant.

David Whiston

the been balance down. It's with also really going cool costs on leverage to Yes. ratio all both and improvement on sheet your see the

curious just a were grow EBT Just how to top line other I'm one able On one. you X% XX% despite decline. quick Australia,

Roger Penske

we right would over XXX We've truck think X,XXX using overall is annuity. and to fusion, meaning getting I had we're on-highway. even us perspective has would for you Australia X,XXX is in service repowers. is XXX% own business be on we're big think and businesses business again, before look together the is business the us now I so volume. made running network get -- got probably merged and more in think course, on we is Zealand off-highway though lot Zealand coverage which margins within volume that New we're commercial on again the Well, what we're We And a though the better that our which getting the we our of is down, giving the of And business. truck that is us which even and we down. I the New to truck mix parts XX% cost MTU the really helped a two single where our the kW, we the doing margin you about after-sale our trucks service are When Australia margins has from the key repowers, with off-highway merged and was about got when And hurt and the continue more about the big trucks and it facilities, say down had market, a at which engines. will think, in basically, when we're we XXX%. gensets the available as there businesses those doing fixed and fixed is parts coverage difference Again

have power think we that of on from have going provide just those the next We're combat the vehicles, on on the to packs, XX repower think at government. for Collins spend we you of getting those for we look contracts, the things when these some and our of business. working about a government go the labor billion dollar. sales So the things key $XXX the And many offshore is you that there submarines, all are as got forward. won -- over the standpoint solid and Then a of years the of paid we've don't on we patrol vessels we're take class hours you that the

be you flow year. as and will we it this of go see of reasons the So the rest ebb But benefit. some might through that the

David Whiston

Okay. Thanks a lot.

Roger Penske

Okay. Thanks, David.

Operator

Thank you, Mr. Whiston.

of ahead. line Glenn the from Seaport with Please comes question Chin Global. go next Our

Glenn Chin

you. Thank afternoon Great. Good folks.

Roger Penske

Hi Glenn.

Tony Facione

Glenn. Hi

Shelley Hulgrave

Hi Glenn.

Glenn Chin

And or what of valuations just versus underleveraged all? seeing preference Maybe maybe preference and versus commercial guess given some what on the on to that, may abundance in vehicle? status whether what light deals given seeing your can Roger what you be you're U.S. done Canada? your I us come terms maybe Shelley in fill just they've you're at the not you've of or availability? up in capital then, vehicle to have further pipeline, then, deploy, And you that your in North

Shelley Hulgrave

Sure the dealership. are multiple of can requirements in XX billion typically about multiple months. the the Trucks auto cheaper see XX% truck. side. acquired the Glenn it this one. We've of take They the on $X.X I auto the -- CI or that a have -- an trailing automotive CPI in really there. It's don't we roughly like And and last XX-XX we

on However at us. that valuations side, some are great to attractive we've acquisitions the made auto really

those been our highway of both truck the major Canada have and on along acquisitions side U.S. routes. So

able service. important we to on of take finish gross very customer a to both to and it's a Canada us profit all his XX% from related trucker And start care see -- be standpoint to to run. from So that U.S. the

really that's us. So important to

acquisitions side. quite automotive We earlier this BMW And announced plan made with on morning a one that's also have QX. the We here make we the before few the to and Mercedes one one of and end made [indiscernible].

There's know it not particular we're like following a disciplined, sound it's record only as really has saying broken but come So We're bag. we're proven no they I each opportunity mixed for I any a really discipline us. script. that in evaluating out up. And

Glenn Chin

you Okay. recently? speak what to last And about in up? of valuations in can you're speaking versus terms come just year? seeing they of us discipline, Have Holding

Roger Penske

would they're trailing been for me Audi at Mercedes, this acquisitions see. EBT answer German a plus brand, We've probably less premium Toyota one, make point. Honda are maybe just to that be so Glenn. business of people luxury that times you're at that say And side. at where you're smaller for strong. me, XX going assets there or the than luxury, I looking if Porsche, we looking are and would nine Let what get eight BMW premium in to to able very not some and and out are goodwill the

which market competition is factor. of these happening But particular running to there think is of other we some your, many limit what's call and stores you a or components into agreements the there have of I of amount become on us framework brand. what that points. particular And are out buy in a customer a CSI the of can satisfaction with top better

that. don't we as the one. So side high the that will just all a play forward. it we're into But now think multiple experiencing premium right and go only I we're is at

from what we On we're other as we the Europe go down the to in significantly see that paying U.K. hand here.

Shelley Hulgrave

And it has perspective. from to make an SG&A sense

taking acquisitions using them we're and additional what that costs we have but made not from area made the We markets so that we sense, on have our purchased. administrative have

nicely mall. really well in there. holding have auto fits that really of example. the great Escondido into a So dealerships the well Mercedes Management as BMW We is And U.K. Group SoCal BMW we have as and that it to structure presence in already already our the

make So sense continue we'll reduce one make standpoint is costs that way is a from for that us to cost to too. acquisitions

Glenn Chin

good. Very Thank Okay. you.

Shelley Hulgrave

Thanks.

Operator

Thank you, Mr. Chin.

question with Ward Our ahead. from line of the next Please comes go Mike Benchmark.

Roger Penske

Hey, Mike.

Mike Ward

Good much. afternoon, very everyone. you Thank

Tony Facione

Hey, Mike.

Mike Ward

from you the else announced have anything makes you you a billion opportunities the growth businesses curious -- curious what financing just of It about that additional getting that captive into or is other alternate that Mercedes about lot like at. with you you're $X.X in dealers an your of of it's seems some think just I'm just revenue and structure. financing with U.K. looking whether see stores -- I'm acquisition

Roger Penske

is And are we've but different business our that in into the bad D from that just think at it And diversified. And the used in XX makes you're in business in that we buy And had XX take going we'll a it talked I've finance our XXX. been idea. hand. when years that company half premium XXXXX is this over say to or to at probably brand what think don't delinquencies and won't to that standpoint average going captive But us our our into with last months. it are ourselves length I'm of inflation And XX% the business, big that over not factor but buy market them the is XXXXX securitize of sheet. on I to to to XX-month calling now We're from now at five is off hat we standpoint many, get have your my it big say mix Board time but the six the or months the business in We've probably a CarShop glad retail of to because have that group. – think or take don't people -- car when really it's our one-fourth our really certified. looked the the times. want we when car top And we that And sense all glove at on this just volume. going you we our other enough -- we're financing we I'd peer when up today route. a fits We've the look XX-month say with business prices? of at many we same think balance don't you the credit to look customer below So the premium. UK. score of you have and along following see markets with calling growing Right of leasing reasons. the people going it up units other on-third for ever it's -- look look And us it. that look side And the next of sell across then doing today do you're look that the on blow I all wonder at is to paper

Mike Ward

the think expected That of PTL? sense. what cadence can second quarter? a million. it little bit was Okay. was from I makes you dividends $XXX in the Is it that about Shelley, talk

Shelley Hulgrave

Yes.

So we received $XXX million.

earnings. our to XXXX that QX So QX related our of and

it's dividend a XX% policy. straight so And

can August just And that November. we'll in receive dividends and we and follow cadence so additional

Mike Ward

November? and August Thanks Super. much. very

Roger Penske

Mike. Thanks,

Operator

this Thank the time. for you to [Operator are comments. Mr. like no at Penske Ward. waiting Instructions] to pass final Currently, would I questions there back any conference Mr.

Roger Penske

see we'll Thanks everyone you. Bye-bye. day. joining at and good the you thank Bethany, Have quarter. end us for the next of a

Operator

all conference rest call. enjoy today's the you hope I of day. concludes That your

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