Penske Automotive Reports Third Quarter and Nine Month Results

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Penske Automotive Reports Third Quarter and Nine Month Results

Reports Record Third Quarter Adjusted Income from Continuing Operations

Adjusted Earnings per Share from Continuing Operations Rises to $0.60


BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)-- Penske Automotive Group, Inc. (NYSE: PAG):

    
Third Quarter 2012  Nine Months 2012
  • Revenue Increases 17.4% to $3.4 Billion
  
  • Revenue Increases 18.2% to $10.0 Billion
  • Same-store Retail Revenue Increases 11.7%
  • Same-store Retail Revenue Increases 9.6%
  • Adjusted Inc. from Continuing Operations Increases 19.1% to $54.3 Million
  • Adjusted Inc. from Continuing Operations Increases 27.1% to $153.8 Million
  • Adjusted EPS from Continuing Operations Increases 20% to $0.60 per share
  • Adjusted EPS from Continuing Operations Increases 29.8% to $1.70 per share
  • Adjusted EBITDA Increases 7.0% to $100.3 Million
  
  • Adjusted EBITDA Increases 20.6% to $305.1 Million
 

Penske Automotive Group, Inc. (NYS: PAG) , an international automotive retailer, announced today record third quarter adjusted income from continuing operations and related earnings per share. For the third quarter 2012, adjusted income from continuing operations attributable to common shareholders increased 19.1% to $54.3 million and related earnings per share increased 20.0% to $0.60 per share. This compares to adjusted income from continuing operations attributable to common shareholders of $45.6 million, or $0.50 per share in the same period last year.

Adjusted income from continuing operations attributable to common shareholders for the third quarter and nine months ended September 30, 2012, excludes after-tax costs of $13.0 million, or $0.14 per share, of debt redemption costs associated with the redemption of the Company's $375 million of 7.75% senior subordinated notes due 2016. Adjusted income from continuing operations attributable to common shareholders for the third quarter and nine months ended September 30, 2011 excludes $11.0 million, or $0.12 per share, of net income tax benefits reflecting a positive adjustment from the resolution of certain tax items in the U.K. of $17.0 million, or $0.19 per share, partially offset by a reduction in deferred tax assets of $6.0 million, or $0.07 per share. Actual third quarter 2012 income from continuing operations was $41.3 million, or $0.46 per share, compared to income from continuing operations of $56.6 million, or $0.62 per share in the same period last year.

Total revenue increased 17.4% to $3.4 billion, including a same-store retail revenue increase of 11.7% in the third quarter. The revenue increase was driven by a 23.6% increase in total retail unit sales, including 16.6% on a same-store basis. Gross profit improved 10.9% to $511.0 million while operating income increased 11.4% to $87.5 million.

Highlights of the Third Quarter

  • Total Retail Unit Sales increased 23.6% to 88,151
    • +21.1% in the United States; +29.1% Internationally
    • New unit retail sales +26.3%
    • Used unit retail sales +20.4%
  • Same-store Retail Revenue increased 11.7%
    • New +15.9%; Used +8.4%; Finance & Insurance +13.0%; Service and Parts +1.9%
    • +16.6% in the United States; +3.6% Internationally
  • Average Transaction Price Per Unit
    • New $36,497; -3.8%
    • Used $24,982; -4.8%
  • Average Gross Profit Per Unit
    • New $2,821; Gross Margin 7.7%; down 80 bps
    • Used $1,824; Gross Margin 7.3%; down 20 bps
    • Finance & Insurance $969; down $57/unit

Chairman Roger Penske said, "The Company's third quarter results continue to demonstrate the strength of the auto retail sales environment in both the U.S. and our international markets. We experienced strong new unit sales throughout the quarter, particularly through our volume foreign brands which increased 33.9%, including 30.7% on a same-store basis. Additionally, our retail used vehicle unit sales continue to be very strong, increasing 20.4%, including 13.3% on a same-store basis. I was particularly pleased to see service and parts gross margin improve by 80 basis points to 57.8% and a 1.9% improvement in same-store service and parts revenue."

Penske continued, "While new and used unit sales were strong, we experienced pricing pressure in our markets, especially when compared to the third quarter last year, when a lack of inventory at our Toyota, Honda and Nissan dealerships drove higher gross profits per unit."

For the nine months ended September 30, 2012, total revenue increased 18.2% to $10.0 billion. Adjusted income from continuing operations attributable to common shareholders increased 27.1% to $153.8 million and adjusted earnings per share attributable to common shareholders increased 29.8% to $1.70 per share. This compares to adjusted income from continuing operations attributable to common shareholders of $121.0 million, and related earnings per share of $1.31 per share in the same period last year. Actual income from continuing operations for the nine months ended September 30, 2012, was $140.8 million, or $1.56 per share, compared to income from continuing operations of $132.0 million, or $1.43 in the same period last year.

Securities Repurchase Activity

During the third quarter ended September 30, 2012, the Company completed the redemption of the remaining $25.5 million in outstanding 3.5% senior subordinated convertible notes. No shares of common stock were issued in the redemption. Additionally, the Company redeemed $375 million of 7.75% senior subordinated notes in connection with the issuance of $550 million of 5.75% senior subordinated notes.

The Company currently has remaining authorization from its Board of Directors to repurchase up to $98.3 million of its outstanding common stock or debt. Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means.

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the third quarter of 2012 on November 2, 2012, at 11:00 a.m.Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1096 [International, please dial (612) 288-0337]. The call will also be simultaneously broadcast over the Internet through the Investors Relations section of the Penske Automotive Group website at www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 341 retail automotive franchises, representing 40 different brands and 30 collision repair centers. Penske Automotive, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 171 franchises in 17 states and Puerto Rico and 170 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is a member of the Fortune 500 and Russell 2000 and has approximately 16,000 employees.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations, adjusted earnings per share from continuing operations, and adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"). The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these widely accepted measures of operating profitability improve the transparency of the Company's disclosures and provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations. These non-GAAP financial measures are not substitutes for GAAP financial results, and should only be considered in conjunction with the Company's financial information that is presented in accordance with GAAP.

Caution Concerning Forward Looking Statements

Statements in this press release may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.'s future sales potential and outlook. Actual results may vary materially because of risks and uncertainties that are difficult to predict. These risks and uncertainties include, among others: economic conditions generally, conditions in the credit markets and changes in interest rates, adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to natural disasters or other disruptions that interrupt the supply of vehicles or parts to us; changes in consumer credit availability, the outcome of legal and administrative matters, and other factors over which management has limited control. These forward-looking statements should be evaluated together with additional information about Penske Automotive's business, markets, conditions and other uncertainties, which could affect Penske Automotive's future performance. These risks and uncertainties are addressed in Penske Automotive's Form 10-K for the year ended December 31, 2011, and its other filings with the Securities and Exchange Commission ("SEC"). This press release speaks only as of its date, and Penske Automotive disclaims any duty to update the information herein.

Find a vehicle: http://www.penskecars.com

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Visit Penske Automotive on YouTube: http://www.youtube.com/penskecars

 
 
 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Thousands, Except Per Share Data)


(Unaudited)

 
Three Months EndedNine Months Ended
September 30,September 30,
2012 20112012 2011
Revenues:
New Vehicle$1,763,050$1,451,177$5,066,417$4,229,192
Used Vehicle995,376867,9692,926,5232,511,573
Finance and Insurance, Net85,42073,191247,906208,540
Service and Parts372,032347,4321,109,1221,027,120
Fleet and Wholesale 185,531  158,672  656,663  490,135 
Total Revenues3,401,4092,898,44110,006,6318,466,560
Cost of Sales:
New Vehicle1,626,7591,327,9684,659,4903,877,615
Used Vehicle922,703802,5422,701,6452,310,147
Service and Parts156,942149,429465,620440,392
Fleet and Wholesale 184,009  157,739  650,302  484,222 
Total Cost of Sales2,890,4132,437,6788,477,0577,112,376
Gross Profit510,996460,7631,529,5741,354,184
SG&A Expenses409,432369,7831,216,2311,098,132
Depreciation 14,037  12,427  41,013  36,132 
Operating Income87,52778,553272,330219,920
Floor Plan Interest Expense(10,055)(6,837)(29,675)(20,617)
Other Interest Expense(11,689)(11,153)(35,474)(32,889)
Debt Discount Amortization---------(1,718)
Equity in Earnings of Affiliates8,8149,62321,39217,527
Debt Redemption Costs (17,753) ---  (17,753) --- 
Income from Continuing Operations Before Income Taxes56,84470,186210,820182,223
Income Taxes (15,308) (13,246) (69,052) (49,289)
Income from Continuing Operations41,53656,940141,768132,934
Loss from Discontinued Operations, Net of Tax (223) (895) (3,837) (2,833)
Net Income41,31356,045137,931130,101
Less: Income Attributable to Non-Controlling Interests 282  338  990  907 
Net Income Attributable to Common Shareholders$41,031 $55,707 $136,941 $129,194 
Income from Continuing Operations Per Share$0.46 $0.62 $1.56 $1.43 
Income Per Share$0.45 $0.61 $1.52 $1.40 
Weighted Average Shares Outstanding 90,296  91,431  90,362  92,169 
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations$41,536$56,940$$141,768$132,934
Less: Income Attributable to Non-Controlling Interests 282  338  990  907 
Income from Continuing Operations, net of tax$41,254$56,602$140,778$132,027
Loss from Discontinued Operations, net of tax (223) (895) (3,837) (2,833)
Net Income$41,031 $55,707 $136,941 $129,194 
 
 
 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Thousands)


(Unaudited)

  
September 30,December 31,
20122011
Assets
Cash and Cash Equivalents$25,935$28,676
Accounts Receivable, Net505,770438,769
Inventories1,864,7731,572,568
Other Current Assets91,20480,179
Assets Held for Sale 38,005 81,122
Total Current Assets2,525,6872,201,314
Property and Equipment, Net961,488856,674
Intangibles1,210,9591,132,181
Other Long-Term Assets 326,046 312,130
Total Assets$5,024,180$4,502,299
 
Liabilities and Equity
Floor Plan Notes Payable$1,254,895$977,548
Floor Plan Notes Payable - Non-Trade704,280691,888
Accounts Payable275,032220,538
Accrued Expenses259,146201,179
Current Portion Long-Term Debt14,9293,414
Liabilities Held for Sale 34,124 55,820
Total Current Liabilities2,542,4062,150,387
Long-Term Debt815,918846,777
Other Long-Term Liabilities 397,465 364,722
Total Liabilities3,755,7893,361,886
Equity 1,268,391 1,140,413
Total Liabilities and Equity$5,024,180$4,502,299
 
 
 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Thousands, Except Per Share Data)


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