Penske Automotive (PAG) 31 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Anthony Pordon	executive
Roger Penske	executive
Richard Shearing	executive
Randall Seymore	executive
Michelle Hulgrave	executive
John Murphy	analyst
Michael Ward	analyst
Rajat Gupta	analyst
David Whiston	analyst

Call transcript

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Operator

Good afternoon. Welcome to the Penske Automotive Group Second Quarter 2024 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately 1 hour after completion through August 7, 2024, on the company's website under the Investors tab at www.penskeautomotive.com.

[Operator Instructions]

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

Anthony Pordon

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

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

and today's call Seymore Shelley are Roger Financial Chair from our Shearing CEO; EVP and from Tony Randall for Penske, Hulgrave, Facioni, and and North our Vice me Chief operations, Operations; Rich Officer; President Joining American Controller. Corporate international

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

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

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

Roger Penske

before history. and per X% our automotive our quarter continued XXX of for diversification, the XXXX, commercial the everyone, income million Good us Tony. you and of million in taxes to driven today. ended truck X business. the quarterly performance share PAG again, months income in were of company's retail $XXX second and afternoon, $X.XX strong company's net you, its XXXX. which grew June Thank the included XX, and and generated revenues $X.X joining highest performance The and financial was income for revenue billion thank In by our and

Highlights XX% $X.X billion in increase on first focus general Penske our and a controlling record our from compared new in automotive percentage $XX parts and expenses points to gross Also, during XX.X%. revenue and revenue in increased earnings gross drove selling the total million. quarterly XXX XX% vehicle a profit quarter, basis as administrative decline retail to quarter costs the record second of When profit include and by sequential equity retail service for a sequentially. efficiency of XX a to Solutions Transportation and improved

per As taxes increased increased earnings earnings and first compared before XXXX. of a to share when XX% the result, XX%, quarter

Let Total X% units turn XXX,XXX XX,XXX which me increased the units. includes agency our automotive units, quarter. delivered second now automotive the operations attention during to to

New $XX,XXX. units increased increased while vehicle units $XX,XXX, X% to Average X% used used prices transaction X% prices and declined were transaction new flat. with

vehicles XX% required XX% during while sold continue U.S. with U.S. bets discounting. at averaging the We new of take brand the significant were the and in of quarter depending and between XX% XX% in activity MSRP, forward to presold orders U.S. on the sold approximately the region. in the were

automotive X%. Same-store revenue retail increased

X%. and However, service parts increased

up was pay customer X%. increased is Our collision X%, up already XX% and repair

the while demonstrating used per market gross per now. mentioned, the the sequentially, premium of see profit vehicle that in right stability profit declined $XX As user at retail sequentially, new gross unit representing retail we mix, previously our increased already strength $XX

PTS. to Let in Solutions this I'm increase point. at another for me pleased turn Transportation report sequential to earnings

contract to XX%. X% but Logistics second rental $X.X During revenue billion XX%. service increased declined X%, full increased revenue the quarter, revenue increased

utilization to versus increased it the points earnings million still last increased XX.X% in of XXXX. we're the second XX QX year, and sequentially $XXX year. of basis by of but compared increased when XX.X% QX PTS fleet XX you utilization XX% the quarter to basis compare when sequentially of points $XX million rental first last However, to in quarter down

of million, quarter up $XX.X the PTS as from or $XX.X sequential first share was $XX.X Our in noted, earnings million a million XX%. increase representing

of PTS We the $XX QX rates XXXX, and interest XX,XXX client The earnings which a used Also sold a quarter. outstanding on bond more trucks second period the XX% from we year in due increase million refinancing did to last in mainly million gain expense than higher higher to debt. over in used sale trucks. $XX is and in decline related

We trucks weaker for reduced reduction XX,XXX various a with which lower gain. down order $XX,XXX XX% on the to values, XX,XXX and in XXXX, is in has contributed March ordered freight OEMs resulting demand to in new However, compared medium-duty market tractors obviously XXXX. June units in to of and of

We sale June at currently units XX,XXX have XX,XXX year. compared for last to

to Rich over call the turn now Shearing. me Let

Richard Shearing

and Roger, you, everyone. afternoon, good Thank

diversified commercial North is the Trucks one pillars and We business largest of America, truck of retailers of core retail the our model. truck the Daimler are in for one

revenue, we to in X North X PTG's America. representing States from million operating facilities and Western & second Wisconsin River bringing XX quarter, and repair the Truck $XXX Freightliner acquired operating Minnesota, Trailer independent During and locations in estimated Star in dealerships annualized

than XXXX. revenue to in revenue business in in we acquiring in million EBT and EBT have billion million year calendar approximately estimated $XX revenue and an more and $XXX million Since $XXX from $X of in retail Xx XXXX, the grown truck EBT

was Premier in X,XXX During pace, QX, that We X of end at and the was months the American and and end sales. impacted sales QX at of sold news and industry of disruption units, temporary production. the used challenges second was to QX backlog were been the good XXXX. Western of believe a flat June, units this the units backlog pace year, Class a approximately Freightliner disrupted resolved. compares which fire representing Amira net with availability trucks the of new orders X This At XXXX. last as XX%, during same-store declined by current XXX,XXX Star from June declined while XXX,XXX sales North has increased strong strong retail from of quarter, factory But XX% X%. XX% is Truck the

Same-store XXX%. SG&A and Group be the demand on return remained of to We And well Premier fixed at by profit truck X.X%. year. of the remainder QX primarily commercial absorption a million will controlled gross replacement a XX.X% throughout demand EBT Truck and $XX was solid produced driven to continue with of sales believe

drive and we sales. prebuy and 'XX As strong retail 'XX, the look emissions towards should XXXX change a for anticipated

in the Truck XXXX. incident CDK our business Lastly, June Premier of impacted was temporarily by cybersecurity

incident to processes early open. through operations implemented were our teams plan resumed response CDK system. Systems July, Our we alternative and the transactions quickly and processing keep in restored

impact the to for to working through this the believe I'd material thank be not I and like Randall the to do quarter. like call to now in would our over incredible disruption. Seymore. We collective efforts financial turn their team

Randall Seymore

taking Rich. Thanks, discuss operations. Good afternoon, everyone. our place now in activities I'll several international

know, operation we the As we in estimated dealerships this earlier added the and U.K., of pleased XX The very dealerships year most with continue, annualized with integration those in are of you revenues. $X billion Select and returns. to operations and initial to car to with rebranded CarShop our the the franchise in we used base. transitioned the more dealership reduce Sytner cost Also closely align U.K., of

sold third party. and transitioned remaining successfully to X the a locations locations We X

[ U.K. operate in will X Going Sytner market. ] forward, select the locations we

Australia. to Turning

we For diverse built over and a XX years, Systems Power have business. vehicle strategically commercial

acquisition, the During expand drive to cities. of our our expected footprint estimated existing largest automotive the to XX These and X to locations. in dealerships with efficiencies. the $XXX scale, we our retail With infrastructure Melbourne, X growth about we million leverage expanded second in one will further Force generate this revenues. With quarter, we operations portion our annual acquisition are dealerships worldwide of Australia,

on- the to off-highway Turning markets. and

full and We mining, in represents and continue our region. products service parts gross defense, XX% sectors the parts rail across marine, to Service the and profit. and generation, aftersales sell about of construction power support trucking,

focus named in new of for the the in the our Series In in be MAN is on-highway and a Year XXXX. to business. Truck expected X truck Star units record key sold we the So sales the driver a to increasing are on was sell truck market, operation brand Western Australasia, units number

our turnkey solutions solutions, grow for mining power applications. with operations hyperscale battery centers, storage and to military In data off-highway, continues system

a deliveries of be make in continue critical into power to generators market continue leader power, We standby hybrid to and centers applications. especially and data prime for

horsepower We high are the of market leader with XX% power generation market share the segment.

XXXX current and base to like hyperscale data $XXX is the beyond. storage Our for and million now I'd to systems call Hulgrave. for Shelley centers turn over battery order

Michelle Hulgrave

everyone. afternoon, our Good will sheet allocation Randall. strategy. balance I discuss capital you, and and flow cash review our Thank

and dividends our grow strong and Our shareholders balance acquisitions while through sheet to to repurchases. cash we and return remains flow through capital business continue securities

As was $XXX our cash of and of had billion. XX, June liquidity we million $X.X

generated months we flow $XXX months, in from XX operations, $X.X EBITDA X was first billion. million and cash the our During trailing

last XX% dividend Just we $X.XX increase week, announced in the an per share. to cash

XX% increased end in year the far, of share $X.XX, we last $X.XX cash So X dividend the XXXX, increasing per at times while increase. have payout from to the a

XXX,XXX $XX million will security approximately distribution XXXX, repurchases, company's and have So in far, we the returned year. Including shares we to have this so $XXX far for shareholders repurchased million. dividend this

acquisitions revenues. in the shareholders, completed for annualized to billion return addition, $X estimated have In we representing

up It's to to June, and lease-adjusted December leverage that debt from million sits up reiterate we total $XXX our to XXXX. non-vehicle the have on our to capitalization end to was of cash allowed leverage billion, debt has strong the the Our Xx and leverage PAG at flow keep $X.XX its of a At long-term important end Debt basis. flex was low. XX.X% X.Xx. ability

December. New million from vehicle inventory end of $XXX the increased

$X.X approximately last Total plan year. $XXX December inventory was billion. $X.X Floor of the up from debt million end was billion,

was The supply the supply for Days to a of turn supply this back XX% XX and At for million. a final used. and XX-day of days. in Importantly, we premium remarks. had battery volume was vehicles new XX-day electric the $XX some Roger I will new vehicles new foreign U.S. supply call of of was time, days vehicles

Roger Penske

Shelly. Thanks,

benefit our businesses, our allocation retail the model disciplined cost commercial to and a capital of results the control the continue Our and in demonstrate I across our the of remain strategy. diversification truck and business. confident automotive performance

XXXX. U.S. from automotive news work named for that Finally, XX that received to our notification have Dealerships in XXX have of they I'd Best the to like dealerships to been announce

this of achievement. proud incredibly I'm

teamwork for committed culture best. efforts fosters turn call level all the and you. to highest together their for to it We Congratulations of be that to today. our the commitment, Thank creating are the integrity. to operator. I'll while carrying in and working to very opportunity ourselves back joining the a drive team Thanks

Operator

Instructions] [Operator

And Murphy John question. the go to with For first we America. of Bank

John Murphy

it's dealership Ford question Ford and it's just first new in direction you what much Brown. little acquisition afternoon, change could see this, everybody. Pro just on different more I'm Roger, it's very of a a Good as Bill country. is or large its division? be It's obviously, the opportunity, this commercial curious a largest bit particularly if and this in a vehicles the Roger. dealership on because focus of in potentially through opportunity. a sort And

Roger Penske

have capabilities leasing port we'd commercial us, we now also be and interested, contacted mentioned important really dealer, we're -- a you we the -- the able saw really Well, We business. pro and a which numbers. to that the a that owned the I NDA. gave volume that business business fact truck they business, I'd was but to commercial within by the obviously, is sales -- were an in say leverage rental that think year knowledge and and our because the truck family we're signed initially, went that through We opportunistic. didn't

support headquarters. world located plants The and a also business the the is Ford majority near of

So XX% goes business that business almost the of family. is employee through that and

were sustained team. obviously, upside management the opportunity new that's that car that's real to business X business. used doing of part a and a We X spot we had continued had business. sweet great probably So great our the a felt used in because for basically when

be for us grow opportunity will facilities. think obviously, I the the to there,

we need there. investment think make I an to

XX% what what are internationally domestically? or you us, the -- the But premium would multiples, luxury for of paying line this say I hometown. of we -- we've as what are is was so for is think I the in think of in businesses volumes It's again, it's would pay again, far for opportunity and billion normally the that us. $X done our transaction of And premium the bottom XX% be I our to ask And that so new part people goodwill premium. going acquisitions for an that year, is

stores for there. Australia. in you track purchased we on where still we're So saw Obviously, X

John Murphy

That's very helpful. question. strong. And up. GPUs then just pricing remains very second a were

this, all basis GPs the kind but this new keep is maybe seems in rate that higher happening environment years. to doing X much Our strength points interest sequentially, a forgetting up over XXX of everybody up almost were last

your at these really what just potential you the maybe big for business is these it business levels, be given is how you the to higher operate So your here. the stabilizing and sustainability mix, we GPUs and question take sustain and might just

Roger Penske

that have think, opportunity our money. our comp you team number look business to the what able at do most at make has have better one, you I on we've given our we number Well, to SG&A, gross is been more look an of salespeople and sales, to of reduce more sales

our last sales We of think And focused. XX% realize that. the of year. I down. come MSRP premium they're That other So because the at were versus things, will X QX of

XX% region. or the Our business is presold the about brand depending on

lease when our brand our mix, it over XX% And of side, leased. back it's And think I last which business It when all to us gives you the XX%. was of the to us luxury you returns, powerful. help it feed importantly, years, is where think was at probably that's of car which on used premium about More our apartment. couple look these

forward. helps me, we our as go that to us So margins stabilize

me, couple normal thing dollars that a to the now, about be and right probably highest So up there's The hundreds the that see the that over we're X,XXX or be between that a vehicle, you And MSRP. and next to the discount has would would quarters. I if down $X,XXX at under BEV negative, it's vehicles ICE think going of thing X,XXX. don't somewhere look only of only

at So he it, look that and compare I profit Tony, I think went me, when from overall, looked at back and back you XXXX. -- you the went gross we

you when to X,XXX. selling at obviously, at at is look today, it's look to have you you and the up When And back that margin this, is gross 'XX up it look price, today the almost XX,XXX. where we

So we're holding the growth.

the think of obviously, and in Some of we we're in sequentially, by we on not deal. -- down of in think volume pull little mix for with of volume good is it's them. because of days, our good the in and X. don't your our depending shape. big bigger But it a that MSRP. deal could business, But to volume -- to grosses. the the We we're don't we're be again, shape, has sitting We're such inventory I have But increase very lot have foreign. one They keep we a your have our -- going Chile, there. race XX

are of sale that we're we world which better side, hopefully, waiting when certainly, the in... vehicles, stop well, help portion, going to And managing that premium results, vehicles for look quite some still are on around at the drive other some key with the

John Murphy

in levels see bit? but in may mean, take XXX heading support is another -- rates actually be XXX, these your.[indiscernible] point grosses total. on points all XXX the see I rate starting a into we much of know, we maybe we follow how decline to to environment X just help to rates can sorry, the actually basis obviously, and what kind years, to run up, your help in pricing that or of Roger, the the demand if XXX could we I And next in and X What's basis that

Roger Penske

will it used buyer car the help for think I sure.

you to maintain OEMs the now right up it up that we're year-to-date. when look about at in were now, think I X% order

use a think X yesterday X% about are of on months because grow If up I and has continue to the actually which used affordability, problem. you at been will through look

our taking increasing On news been leasing, by that some side, the of interest finance because of the companies hit have residuals. rate

of get the of from in and So their and the buy the out. driving balance Europe back people Porsche been from I hasn't I will think them case. seeing here going them, what most Ferraris and some us. But where consumer cars, and the it's money Lambourgines, help bring we're think Again, could That perspective, to high-priced that back. a definitely,

business So cost a the basis interest because we've some think, of to I on and temporary do business. lost cost the

So over not certainly over right level SAAR the to is me, a -- $XX you now million. and is is don't monthly look pre-cohort the average I at that think which [indiscernible] as $XXX. that's And really payment, if

a to down that So big make has to come difference.

for average the is to business a we're a So going the from X service benefit get to because we service X-year we've year that today, current business gone roughly. think

top think, with, some the line. combined that I on stability So

it long grosses going you're inventory, going as and discount to much gives lower our to As inventory, it, you're we be would it mix. and you too keep your

to But interest some will where we'll floor month held on rates, it Fed noise here plan on deal, will they're help us I going in benefit obviously, help so, next a the today, hopefully, assume finance and the make our immensely. that or see

us hurt So sure. it for can't

Operator

we Freedom Mike to Next, go Ward Capital. with

Michael Ward

-- the look Or and the at you're that I share Should When repurchase. year-to-date, in you're capital? there? allocating thinking to how in XX% into a as shift you is dividend that that up what compare your is I read increase increase anything

Roger Penske

that why you Go take one. don't ahead, Shelly,

Michelle Hulgrave

Sure.

about favorite opportunistic, Mike, capital here opportunities. had We've lot really our opportunities. Roger lifetime a and of acquisition Brown on those it's allocation X word a the Board So those bit and around is of Bill talked --

purchases. be top and get do key revenue presence so new and in was Australia, billion that do the expand to share it of able in our focus a in it dividends And $X and internationally, to acquire versus terms with

X to split part growth a stock We've than remain that have on a out an terms a than bit. where said the around for us. XX-XX acquisition was going level high along is on dividends versus of what when it, have less that year-to-date, seen always we've presentation, for been but were acquisition, but the the strategy. looked multiples in key we dividends all those bit our little were Street priority the across focus hovered had on higher X, We multiples our a this and of year, a the

Michael Ward

Okay.

more just the same. of it's So

and too timing the just read don't the little catch it? a just the up it's what So dividend, there's return but rate, into on much maybe

Michelle Hulgrave

Yes. No.

at particular, look space. in look ratio, I you yield, like remained dividend think highest at being We fairly if the tier you payout our our steady. that's

something to at a returning from shareholders And on we look also that's point. that to metric So capital we'll acquisition. continue focus in

Michael Ward

Randall, has car shop and with was What that? what dividing the getting was the with rebranding And been X completed X? thinking rid stores? behind of the keeping kind of the line the

Randall Seymore

Yes.

So we QX, done last last but of were we one finished X are the X April, the we're we We now. an one did opportunity. in week, first had the in just finished -- XXX%

"Hey, said, to and us locations ones. X to would came really X look willing sense you And sell? be made other at in actually X Somebody these geographically, of the to of

deal. ended we up making a So

other And that of -- going and from we one. the benefit closed is

of having dealerships. sourcing other our is vehicles instead we're of the benefit them able the these from less franchise trades So auction the of at take to buying contiguous

reputation market. to very cachet #X, So Sytner from has we U.K. Sytner has high-quality went a CarShop Select, within the a

we'd some X is get we sourcing, So that. huge. was from the benefit thought Number which

And of increase those vehicles. profit say noncertifiable gross pretty unit cars. of And the getting I the the the we're significant So when it's sourcing a already dealerships. in we seeing per trades get our trades, franchise from a because

auction. a wholesaling So you or a reason through little we higher Historically, trade it. were Audi, if electronic bit on certify you've our mileage can't has those taken it's at the

them, We with to You Select But our products now able retail couple make sell hundred of them gross Sytner increase profit. take it. can F&I and a pounds. more at we're

so And the benefit. that's

head the centralized our the a eliminate within And able this point for then which was current leverage business. infrastructure infrastructure were third office we franchise and infrastructure car of we had or -- shop, to

more make model able really much So business too. we efficient to were our model or our expense

Roger Penske

at want. XX,XXX, think, months areas continue Mike, And sourcing. on CarShop business, that during but just XX the buybacks, tough trying the we last U.S. making at we wanted got to had and the But X,XXX, the couldn't we the the in trim following customer quality expectations U.K., a source as we where I and to we're we the Obviously, with the returns not we issues timing was great in were traction a we look XX,XXX we look and to company. as and saw pound source with And get policy vehicles. you car. right the have to

if that think into side about it. we our file them So OEM could you because feeling

BMW, all Now -- there go when you'll at that and $XX,XXX that's a sitting the see has you OEM store BMW at select. down certified sitter go maybe you see are to BMW not way and the not

So with they feel same like business. the organization. they're doing

of lots that Then have have of lot contiguous small locations. body are OEM locations do the there's Don't shops. used So there. ability also we reconditioning, the car benefits a got to for we've because

utilize So other even and some those used our of plus cars, the we'll we're companies we'll that start with. reconditioning doing some leasing work reconditioning maybe or do those do that business of to we for use operations big this

real and return. have I we'll good opportunity it a So as I to a service plus expand very our see parts think

Randall a had very you leave. there in walk little it's a ago, spent with days few couple or so week Ironically, of we've people I professional.

work more than for they're Sytner for think, In Carshop. fact, were, they excited I to

Rich U.S. a about Let the bit in me talk the little let change Carshop

Richard Shearing

Yes. Mike. Roger. Thanks,

actions. similar you at U.S., If the look

-- taken taken doing our advertising control, by is operating been been has other all in probably we're close recall, But January made those think if us market closed actions, able tight, year, open. very honest, under head you Brunswick the didn't last If we the mitigate the the team the South the inventory we with year, to with count overbuilt I've managed along we've and And Scottsdale expenses, have location. that location. to the this certainly, January, those, we the of those help that well. decision I timing actions

traditional XX that unit points channels percentage fleet now been profit through the lowest gross dealers opening of GPD seen we're the traditionally unit. months on consecutive so have. and and up, see sourced in up $X,XXX we We've vehicle we which of X source flat auction, And has now sourcing above some per

to year, prior sustaining a on good the And Our half feel of the sales current we about above basis. second we XX% performance XX% year have are we to as trending look monthly that there. the

So shape. in good

Michael Ward

Is do using success -- have do in direct transitioning you together more to assuming look the of the the example get stick to that name Are if brand in it U.K. you pulling with something CarShop? with you started Penske in benefits the you Center, a same at like in the the locations? would the closer vehicle U.S.? U.S. you them new Or

Roger Penske

Mike, they're same. continue I car the don't branding We'll here. think for the quite

We place have cost Carshop the And I think we structure. number to for right a under in point, up Ares -- of was would open at maybe it look remember a successful a this [ years. at ]

we overbuilt that brands too. all I just can and think stores, we tell the think U.S. -- in I

think really good that So have. we opportunity I there's here that

their the think management in -- I And costs. job team the a terrific done has acquisition

comp we think it is site, our big where in to reconditioning over preparation. the I more one use fleet site major for U.K., Buzzard was think in almost we're going plans, here by the I site have

Michael Ward

-- thing? did automotive in you XX. clarify just XX the locations your say Roger, said one of I you news were Can top

Penske? dealers for XXX So news of top XX XXX automotive the

Roger Penske

last -- on XXX they of correct. XX we bar out were we I raised had and XX out I because the was think of concerned year, XXX,

Operator

move Gupta JPMorgan. will And next, to with we Rajat

Rajat Gupta

one and versus U.K., more that sales in seeing could give that resilient Great And are I repair parts U.K. question. Anything could And also was trend if being the dissect on vehicle follow-up. business. and Roger, Curious would frequency, there services, be U.S. you severity? the a there. those have vehicles. some curious that order good helpful. in you're pretty had a size, the more metrics around if where I I you done else electric work on just us

Roger Penske

parts performance same-store in the service. at look I and When

approximately Our customer was pay up X.X%.

X.X% I think X% us just in internationally, which it was U.S., a the up gave over increase.

up, was significantly, up Our the we then up And warranty obviously collision our and X.X% it internationally. almost U.S. in and XX% was up internationally. X% X% about repair talked

I year-over-year the of when big difference. we we were news up our of our has certainly, mechanics, good though on over our we which is months, look at at in we not And look made think I repair labor talk effective about And terrific. discounting up think X% counts rates, $X.XX, up the X order numbers mechanics, dealerships, is our we're discipline a X%.

Rajat Gupta

And Like on the just versus different couple on is? vehicles of of color things dollars Any on years? That's helpful. [indiscernible] electric the eye. side over last maybe how there? changed like it the that's And how

Roger Penske

each Well, let's other. be honest with

years going I OEMs, by were domestics we grow at X us. other were we're to if hasn't opportunities. when They market electric the vehicle, the share certainly, had Mercedes of think to chest be fully here preponing the sitting all it, with EV look some expectation and XXXX Obviously, the they ago their felt on what had invested GM big you grown. and market, in

day, the talked I of don't that. about we've have the customers don't the at we And infrastructure, have the coming we in. So end think

electric. anxiety. offense pricing than Consumer taken less has an we been Tesla bridging price to will be that hoping think time for And and obviously, which look fully And I We MSRP, I the talked at that we range long us is selling at hybrids. before I acceptance, [indiscernible] because the when strategy what strategy has $X,XXX a the for look to downward anybody affects long-term And the it. certainly have we here plug-in think it. to I'm see really today domestics think to aspects, margin us. sure get bridging have it, about the that what's has get you it. And we're

works, it's a payload, battery hub trailer them. driven you it trucks, to your spoke tractor weight a put think it's a I've heavy-duty into that nice trucks right and pole look the or But now, and we Look, reduces basically, days X,XXX we They're thousand we've again, if days economic X,XXX our XX drive. got the on when about for long is U.K., But roughly a We've bev supply XX XX got which U.S. on again, also in days obviously at versus us. in in X,XXX the couple of U.S. not inventory, we've good. got because

more can Rich, on In you fact, the new. to? and users make than buy can money we got we

Richard Shearing

I'll Rajat, top add side something the from relative Yes. fixed be. just

on, overall and early presently still that operations battery early it's total deployment away opposite go there the is see that. the in percentage there's respect fixed all vehicles. to business I But still their what think market. we was would electric the with low of concerns a Obviously,

If comparative RO, hours per compared an at X.X then RO all our X.X you versus the a per across at electric at $XXX to dollars [ for vehicle look on about XX ICE we're electric repair hours battery we've for to as repair. RO, And vehicles per done X,XXX look the battery orders we're million X.X you at date. ] hours average

So right taking longer now, money. and bevs are costing are more more repair to

the if certainly different time. at So [indiscernible] than it's that we'll present, IC over normalizes see But

Roger Penske

the pay. It's shops I cost can majority work in of the the Which to already correct. I thought more not customer the is than also tractors on we're money doing tell you

Rajat Gupta

that CDK Netcare to at follow-up That's of in the the any June, was of to helpful. U.S. some the curious the during business end And automotive outages outage. was benefit on you if I on benefit Curious the business the stores. business July sense if any just your in there occurring one early the

Unknown Executive

in opening our the the think definitely benefit remarks not I our comments there to being I I automotive on reaction commercial back business. were think on made a the side. of by I was Obviously, side on CDK that in repair or what whether truck the the accomplished level back of team, short XX benchmark go impacted we But really it and generate in folks a my hours us where operating of we truck IT staff to operational orders, our was within was deal. open tickets book period could parts an to of opinion they get to time Well,

to a end overall, June we of impact. outage of period the the it as from middle we didn't had the material the So see quarter, for

Rajat Gupta

your dealerships a store. at you automotive from traffic not might CDK you've otherwise consumers But any have sent gone increased through

Unknown Executive

we no, measure. could that No, nothing

Operator

Morningstar. Next, to with Weston we move David

David Whiston

first. Tony, used everyone. on just Hi, curious vehicles

customers Your affluent. generally are more

struggling used handle are -- So the are they say of the can a higher better in than the still rates -- the used they just would with use you and higher or affordability lot consumer? used on are they're prices they though, typical much Americans side, market like

Unknown Executive

David, So is Tony. this

is concern when used out are a that vehicle you So definitely affordability there. I prices at look think the

than months more see I did today think stable we a market ago. we X

of that's look on our our vehicles franchise when XX% about take today those And good a sourcing we're vehicles. thing. of So a you stores, overall self-sourcing at

part of most in your in big pretty lease our used them get buy great loaners comes that directly of our into available also But sourcing We Street. car those a from doing a is of terms from loaners the cars little in taking strategy sale dealerships. bit of and returns. our and And trades we're for then turning terms become

loaners. X,XXX we U.S., have the in about got think I

so, months turn you or concerns. to become X used these with affordability If or every X,XXX help X and great car things a they miles that they months

sources to consumers. try it at available have those look that affordable doing we're make we think business all what more and to for with I So to

Roger Penske

the you we've I not better to at had success we're look we've use that more and the think, availability, in when margin. the by getting higher Carshop having seen guys auction David, cars,

say, in MSRP a, to car. that's XX,XXX XX,XXX Now XX,XXX,

to where to couple I used think and months, loaners, a spec hurt buying X%, X% i.e., end new mentioned for car, depreciation those cost putting of really X% market on of you've leasing those incentives, And about is and Tony the allows that think we all loaner X%, the cars X% over benefit properly, use a we've it's X.X%, been us us X,XXX or or a because cars. years OEM X we depreciated the the from really it's can take last plus turn, cars tremendous got we which us. of

Unknown Executive

the preowned. it's at One our overall vehicle as the that take the U.S. these are units preowned XX%, you when of look that a number other certified of point, market of that certified is a U.S. some XX% of result in programs, we sales sell used in David,

service So parts helps too. that our and drive

David Whiston

income year? for something equity QX is income, at this is I weak of probably this it different Or is least, seasonally generally On second higher to year, half than know fair think still equity being half? first

Roger Penske

structure, of my it see interest logistics the us cost also and major of our tunnel a revenue trucks And year depreciation, eat we had de-fleeted part talked X,XXX about trucks. stabilize contract we we the rental Truck the quarter of ago, can in Those both Penske Remember, we I in as we sold would we light about rental maintenance. and of the and notes is XX,XXX end X%. us income and maintenance some investment. some Leasing Well, X trucks. think on our of all in revenue keep a and full-service we used the just maintenance some grew with Obviously, leasing

in school, So always our overall, half second out we because that et one-way units I grown coming we X.X%. quarter June, we're we've a a shape, But benefit in continue think leastly are see that business. X,XXX to we'll Obviously, it's kids of think big with or in the have going good cetera,

brought we down, also as brought fleet lease we've the up. So rental the fleet

I commercial mentioned and done think earlier we've some bonds the paper. funding primarily paper, that it retail been and is I by

going hit at $XX on from when to interest. and to sure, impact a able our units look we million quarter, move, the company because we year-over-year, us that that's stable the does but about if if cover we an billion -- go at on had have, on the that gain then to been debt had Fed XXX,XXX And up. interest you we we $XX had sale would that help We've in our thought keep

we were million, and $XX operations, do down to only So XX. nothing with

capability. we good obviously, So had operating

David Whiston

on as got news raised then bar just mentioned And quickly I the automotive you top list. know the stores. XXX it's now

the in new of do increase employee always just an they going addition list, in did this and stores, why to the that they to up the you count You But it have overall the probably in place. stores benefit guys -- had making guys the have list? might you're XX well in curious, to number past of year, done I'm change instituted driven really first any kind on

Unknown Executive

do as be to nothing survey committees that on could can an I approved to year, David, organization obviously, needs employees of are and what the survey, an the employee what our upon. employee every improve that Out business gain we're employee annual upon. that feedback but areas focusing well aimed on we to, from doing point involvement at form we

continuous And learning. improvement of a so it's culture

just would our consider XX% see at last the we which obviously, couple we under turnover, benchmark years. for And of

with want think So keeping job happy environment and people a of stay we've I making that we're doing an us good that sure in. to the employees got

Roger Penske

parts people take I operations. think for extra when facilities servicing, of parts our back in there back and actually we you look our also the you and at spend our also technicians and end the

I think trucks them in and equipment clean company. in giving the the good a image for makes big parts difference

So it's loaded. front-end just not all

Operator

a And with we have Gupta JPMorgan. follow-up from Rajat

Rajat Gupta

I on just the wanted to follow comment. PTS up

should next year-over-year, we mentioned, an into that you on share should if could Just continue grew there? to year? earnings in half thoughts that year-over-year curious second expect the we any curious forward-looking any the and Has And normalized in interest color perspective? half? pressure the actually business gain excluding from any get sale You you how the business second or

Roger Penske

at fundamentally. look business the Let's

contractual. XX% about leasing. and on the think business I That's both of is logistics

months And So I vehicles the XX because we we replace over that we we us last now, going have to have. said been have challenges. say, away. economic escalators supply has XX about away It's That's the of XX,XXX gone fact that vehicles drive that couldn't what's hurt that.

of used of no we're look we're it that selling, hoping question think that, impacting I truck that you when We've think I the market that -- probably tractors there's been actually number stabilize. business, at going the our for will because when the We bit truck want week. you rent you the pure rental rental, to fundamentals in remember, you And little get go where continue. help. commercial to a a at have look to a are

vehicles business look year-over-year lease was down you then for extra have million $XXX run when at that second So it are you our quarter. by the the That customers.

we when think allocation And months, going to going in next bond I in general marketplace that the good had that is is next probably to the that's So X that sale to Interest in a direction won't our that going the due go need to that of we to will to ability hopefully, rates, transportation for place that the some probably us. And do second the we we at were because benefit as shape. to flat fleet X and look means our our of for capital -- million -- deliver months turns, $XXX were equipment. of our the down. us in

we X have say will So would grow that next business the a during I better the to months return. and continue

Operator

Penske And we will remarks. turn back Mr. closing the conference to for

Roger Penske

Thank quarter, look we'll you to Thanks. We much, and see everybody. next a I very then. All had the the quarter. best. great forward you

Operator

your for and today. your gentlemen, that conclude participation. for Thank does you conference Ladies

You may now disconnect.

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