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Penske Automotive Reports Record Results

2018 Revenue Increased 6.5% to $22.8 Billion

2018 Income From Continuing Operations of $470.5 Million and Earnings Per Share of $5.52

2018 Record Adjusted Income From Continuing Operations Increases 23% and Related Earnings Per Share Increases 24%

Fourth Quarter Income From Continuing Operations of $97.8 Million and Earnings Per Share of $1.15

Record Adjusted Fourth Quarter Income From Continuing Operations and Related Earnings Per Share Increases 10%

BLOOMFIELD HILLS, Mich., Feb. 7, 2019 /PRNewswire/ -- Penske Automotive Group, Inc. (PAG), a diversified international transportation services company, today announced record full year and fourth quarter 2018 adjusted results. For the twelve months ended December 31, 2018, total revenue increased 6.5% to $22.8 billion, including a 3.4% increase in same-store retail automotive revenue and a 28.8% increase in same-store retail commercial truck revenue. Income from continuing operations attributable to common shareholders was $470.5 million and related earnings per share was $5.52. As shown in the non-GAAP reconciliation table, adjusted income from continuing operations increased 22.9% to $454.9 million and adjusted earnings per share increased 23.9% to $5.34. Excluding foreign exchange, total revenue increased 4.9% and same-store retail automotive revenue increased 1.6%. Foreign exchange rates positively impacted earnings per share attributable to common shareholders by $0.07.

For the three months ended December 31, 2018, the company reported income from continuing operations attributable to common shareholders of $97.8 million, or $1.15 per share, compared to $330 million, or $3.85 per share in the prior year. As shown in the non-GAAP reconciliation table, adjusted income from continuing operations increased 10% to $94.9 million and related earnings per share increased 10% to $1.11 per share. Fourth quarter 2018 results include a net benefit totaling $2.9 million after tax, or $0.04 per share, consisting of an $8.2 million net gain related to dealership sales, partially offset by valuation adjustments on certain dealerships totaling $5.3 million. Fourth quarter 2017 results included a $243 million benefit related to the enactment of the 2017 U.S. Tax Cuts and Jobs Act. Total revenue increased 0.8% to $5.4 billion, while same-store retail automotive revenue decreased 1.1%. Product availability shortages and Worldwide Harmonized Light Vehicle Testing ("WLTP") certification delays in our Western European businesses are estimated to have impacted our operations by approximately $5 million, or $0.06 per share. Excluding foreign exchange, total revenue increased 2.2%, while same-store retail revenue increased 0.2%. Foreign exchange rates had no impact on earnings per share for the three months ended December 31, 2018.

 "2018 was the best year in the history of Penske Automotive Group, including record results for units retailed, revenue and earnings before taxes," said Chairman Roger S. Penske. "I am particularly pleased with the 10.2% growth in earnings before taxes and the $190.1 million our company returned to shareholders in dividends and share repurchases representing over 40% of our net income." Penske continued, "For the fourth quarter, our business was driven by continued growth in used vehicles, service and parts, the commercial truck operation and our equity investment in Penske Truck Leasing. However, product availability in Western Europe of certain brands, WLTP and the ongoing diesel challenges impacted our performance during the quarter."

Automotive Retail Highlights of the Fourth Quarter

  • Same-Store Retail Unit Sales -2.3% to 113,547
  • Same-Store Retail Revenue -1.1%; Excluding Foreign Exchange +0.2%
  • Same-Store Average Gross Profit Per Unit

Stand Alone Used SuperCenter Operations

The company operates fourteen stand-alone used vehicle supercenters, five of which are located in the U.S. and nine are located in the U.K., and one vehicle preparation center in the U.K. For the three and twelve months ended December 31, 2018, these supercenters retailed 14,940 and 71,013 units of the company's total automotive units retailed, and generated $261.3 million and $1.3 billion in revenue, respectively. The company is in the process of developing four new stand-alone used vehicle supercenters which are expected to open in 2019. The expansion includes two new sites in the U.S. and another two in the U.K.

Retail Commercial Truck Operations

Penske Automotive Group operates twenty medium and heavy-duty truck dealership locations in the U.S. and Canada offering primarily Freightliner and Western Star brands. For the twelve months ended December 31, 2018, total medium and heavy duty truck units retailed increased 35.3% and revenue increased 31.2% to $1.4 billion. Service and parts represented 26.5% of revenue and 66.6% of gross profit. For the three months ended December 31, 2018, total medium and heavy-duty units retailed increased 15.1%, and revenue increased 16.2% to $358.0 million. Service and parts represented 24.8% of revenue and 63.1% of gross profit.

Penske Truck Leasing

Penske Truck Leasing Co., L.P. ("PTL") is a leading provider of full-service truck leasing, truck rental, contract maintenance, and logistics services. During the third quarter of 2017, the company increased its ownership interests in PTL by 5.5%, bringing our total ownership interest in PTL to 28.9%. The company accounts for its ownership interest in PTL using the equity method of accounting. For the three and twelve months ended December 31, 2018, the company recorded $37.8 million and $129.5 million in earnings from this investment compared to $34.7 million and $101.6 million for the same periods last year, respectively.

Dividend and Share Repurchases

On January 30, 2019, the company announced that its Board of Directors increased the dividend to its common stock shareholders to $0.38 per share, the 31st consecutive increase in the quarterly dividend.

During the three and twelve months ended December 31, 2018, the company repurchased 334,870 shares for $13.1 million, and 1,587,494 shares for $68.9 million, respectively. Approximately $136.9 million remains available to repurchase shares under the company's existing share repurchase authorization.

Conference Call

Penske Automotive Group will host a conference call discussing financial results relating to the fourth quarter of 2018 on Thursday, February 7, 2019, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230‑1085 – [International, please dial (612) 332‑0335]. The call will also be simultaneously broadcast over the Internet through the Investor's section of the Penske Automotive Group website. Additionally, an investor presentation relating to the fourth quarter 2018 financial results has been posted to the company's website. To access the presentation or to listen to the company's webcast, please refer to www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., (PAG) headquartered in Bloomfield Hills, Michigan, is an international transportation services company that operates automotive and commercial truck dealerships principally in the United States, Canada, and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. PAG employs nearly 27,000 people worldwide and is a member of the Fortune 500 and Russell 2000, and is ranked among the World's Most Admired Companies by Fortune Magazine. For additional information, visit the company's website at www.penskeautomotive.com.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as earnings before interest, taxes, depreciation and amortization ("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 and earnings potential. 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 and foreign currency exchange rates, changes in tariff rates, adverse impacts related to the outcome of the United Kingdom's scheduled departure from the European Union on March 29, 2019, adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to limited vehicle availability due to WLTP, natural disasters such as the recent hurricanes, recall 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 Group's business, markets, conditions and other uncertainties, which could affect Penske Automotive Group's future performance. These risks and uncertainties are addressed in Penske Automotive Group's Form 10‑K for the year ended December 31, 2017, and its other filings with the Securities and Exchange Commission ("SEC"). This press release speaks only as of its date, and Penske Automotive Group disclaims any duty to update the information herein.

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Inquiries should contact:




J.D. Carlson

Anthony R. Pordon

Executive Vice President and

Executive Vice President Investor Relations

Chief Financial Officer

and Corporate Development

Penske Automotive Group, Inc.

Penske Automotive Group, Inc.

248-648-2810

248-648-2540

jcarlson@penskeautomotive.com

tpordon@penskeautomotive.com

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

 (Amounts In Millions, Except Per Share Data)

(Unaudited)























Three Months Ended



Twelve Months Ended



December 31,



December 31,



2018


2017


Change



2018


2017


Change

Revenue


$

5,439.3


$

5,398.0


0.8

%



$

22,785.1


$

21,386.9


6.5

%

Cost of Sales



4,631.2



4,589.7


0.9

%




19,370.2



18,164.4


6.6

%

Gross Profit


$

808.1


$

808.3


(0.0)

%



$

3,414.9


$

3,222.5


6.0

%

SG&A Expenses



645.0



646.2


(0.2)

%




2,646.3



2,516.0


5.2

%

Depreciation



26.5



25.1


5.6

%




103.7



95.1


9.0

%

Operating Income


$

136.6


$

137.0


(0.3)

%



$

664.9


$

611.4


8.8

%

Floor Plan Interest Expense



(21.9)



(17.8)


23.0

%




(80.9)



(63.4)


27.6

%

Other Interest Expense



(28.0)



(28.2)


(0.7)

%




(114.7)



(107.4)


6.8

%

Equity in Earnings of Affiliates



39.8



36.7


8.4

%




134.8



107.6


25.3

%

Income from Continuing Operations Before Income Taxes


$

126.5


$

127.7


(0.9)

%



$

604.1


$

548.2


10.2

%

Income Taxes



(29.6)



200.8


114.7

%




(134.3)



64.8


307.3

%

Income from Continuing Operations


$

96.9


$

328.5


(70.5)

%



$

469.8


$

613.0


(23.4)

%

Income (Loss) from Discontinued Operations, net of tax



0.3



0.1


nm





0.5



(0.2)


nm


Net Income


$

97.2


$

328.6


(70.4)

%



$

470.3


$

612.8


(23.3)

%

Less: (Loss) Income Attributable to Non-Controlling Interests



(0.9)



(1.5)


nm





(0.7)



(0.5)


nm


Net Income Attributable to Common Shareholders


$

98.1


$

330.1


(70.3)

%



$

471.0


$

613.3


(23.2)

%





















Amounts Attributable to Common Shareholders:




















Reported Income from Continuing Operations


$

96.9


$

328.5


(70.5)

%



$

469.8


$

613.0


(23.4)

%

Less: (Loss) Income Attributable to Non-Controlling Interests



(0.9)



(1.5)


nm





(0.7)



(0.5)


nm


Income from Continuing Operations, net of tax


$

97.8


$

330.0


(70.4)

%



$

470.5


$

613.5


(23.3)

%

Income (Loss) from Discontinued Operations, net of tax



0.3



0.1


nm





0.5



(0.2)


nm


Net Income Attributable to Common Shareholders


$

98.1


$

330.1


(70.3)

%



$

471.0


$

613.3


(23.2)

%

Income from Continuing Operations Per Share


$

1.15


$

3.85


(70.1)

%



$

5.52


$

7.14


(22.7)

%

Income Per Share


$

1.16


$

3.85


(69.9)

%



$

5.53


$

7.14


(22.5)

%

Weighted Average Shares Outstanding



84.8



85.8


(1.2)

%




85.2



85.9


(0.8)

%





















nm – not meaningful




















 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Millions)

(Unaudited)










December 31,


December 31,



2018


2017

Assets:







Cash and Cash Equivalents


$

39.4


$

45.7

Accounts Receivable, Net



929.1



954.9

Inventories



4,040.1



3,944.1

Other Current Assets



86.6



81.8

Total Current Assets



5,095.2



5,026.5

Property and Equipment, Net



2,250.0



2,108.6

Intangibles



2,238.2



2,134.5

Other Long-Term Assets



1,321.1



1,271.0

Total Assets


$

10,904.5


$

10,540.6








Liabilities and Equity:







Floor Plan Notes Payable


$

2,362.2


$

2,343.2

Floor Plan Notes Payable – Non-Trade



1,428.6



1,418.6

Accounts Payable



598.2



641.6

Accrued Expenses



566.6



523.5

Current Portion Long-Term Debt



92.0



72.8

Liabilities Held for Sale



0.7



0.7

Total Current Liabilities



5,048.3



5,000.4

Long-Term Debt



2,124.7



2,090.4

Other Long-Term Liabilities



1,096.8



1,021.8

Total Liabilities



8,269.8



8,112.6

Equity



2,634.7



2,428.0

Total Liabilities and Equity


$

10,904.5


$

10,540.6








Supplemental Balance Sheet Information







New vehicle days' supply



72



67

Used vehicle days' supply



57



55

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Operations

Selected Data

(Unaudited)

















Three Months Ended


Twelve Months Ended




December 31,


December 31,




2018


2017


2018


2017


Geographic Revenue Mix:














North America



60.0

%


61.0

%


56.5

%


59.2

%

U.K.



31.6

%


30.3

%


35.0

%


33.0

%

Other International



8.4

%


8.7

%


8.5

%


7.8

%

Total



100.0

%


100.0

%


100.0

%


100.0

%















Revenue: (Amounts in Millions)














Retail Automotive


$

4,949.2


$

4,941.8


$

20,849.2


$

19,824.3


Retail Commercial Trucks



358.0



308.2



1,374.5



1,048.0


Commercial Vehicles Australia/Power Systems and Other



132.1



148.0



561.4



514.6


Total


$

5,439.3


$

5,398.0


$

22,785.1


$

21,386.9
















Gross Profit: (Amounts in Millions)














Retail Automotive


$

720.1


$

726.3


$

3,058.6


$

2,924.8


Retail Commercial Trucks



54.7



45.1



211.5



165.8


Commercial Vehicles Australia/Power Systems and Other



33.3



36.9



144.8



131.9


Total


$

808.1


$

808.3


$

3,414.9


$

3,222.5
















Gross Margin:














Retail Automotive



14.5

%


14.7

%


14.7

%


14.8

%

Retail Commercial Trucks



15.3

%


14.6

%


15.4

%


15.8

%

Commercial Vehicles Australia/Power Systems and Other



25.2

%


24.9

%


25.8

%


25.6

%

Total



14.9

%


15.0

%


15.0

%


15.1

%
























Three Months Ended


Twelve Months Ended



December 31,


December 31,














2018


2017



2018


2017


Operating Items as a Percentage of Revenue:











Gross Profit


14.9

%

15.0

%


15.0

%

15.1

%

Selling, General and Administrative Expenses


11.9

%

12.0

%


11.6

%

11.8

%

Operating Income


2.5

%

2.5

%


2.9

%

2.9

%

Income from Continuing Operations Before Income Taxes


2.3

%

2.4

%


2.7

%

2.6

%












Operating Items as a Percentage of Total Gross Profit:











Selling, General and Administrative Expenses


79.8

%

79.9

%


77.5

%

78.1

%

Operating Income


16.9

%

16.9

%


19.5

%

19.0

%























Three Months Ended


Twelve Months Ended



December 31,


December 31,
















(Amounts in Millions)


2018


2017



2018


2017

















EBITDA*


$

181.0


$

181.0



$

822.5


$

750.7


Floorplan Credits


$

10.4


$

11.1



$

40.3


$

40.4


Rent Expense


$

56.8


$

57.3



$

232.1


$

225.4


Capital Expenditures


$

117.1


$

66.9



$

305.6


$

247.0


Stock Repurchases


$

13.1


$



$

68.9


$

18.5


_________________________

* See the following Non-GAAP reconciliation table.

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations

Selected Data – Revenue and Gross Profit Mix

(Unaudited)













Three Months Ended


Twelve Months Ended




December 31,


December 31,




2018


2017


2018


2017


Retail Automotive Revenue Mix:










Premium:










BMW / MINI


23

%

23

%

23

%

23

%

Audi


12

%

15

%

13

%

14

%

Mercedes-Benz


10

%

10

%

9

%

10

%

Land Rover / Jaguar


10

%

8

%

9

%

8

%

Porsche


5

%

6

%

6

%

6

%

Ferrari / Maserati


3

%

3

%

3

%

3

%

Lexus


3

%

3

%

3

%

3

%

Acura


1

%

1

%

1

%

1

%

Bentley


1

%

1

%

1

%

1

%

Others


2

%

1

%

2

%

1

%

Total Premium


70

%

71

%

70

%

70

%

Volume Non-U.S.:










Toyota


10

%

10

%

10

%

10

%

Honda


7

%

7

%

6

%

7

%

Volkswagen


4

%

3

%

4

%

3

%

Nissan


1

%

1

%

1

%

1

%

Others


1

%

2

%

1

%

2

%

Total Volume Non-U.S.


23

%

23

%

22

%

23

%

U.S.:










General Motors / Chrysler / Ford


2

%

2

%

2

%

3

%

Stand-Alone Used


5

%

4

%

6

%

4

%

Total


100

%

100

%

100

%

100

%











Retail Automotive Geographic Revenue Mix:










U.S.


59

%

60

%

55

%

59

%

U.K.


35

%

33

%

38

%

35

%

Other International


6

%

7

%

7

%

6

%

Total


100

%

100

%

100

%

100

%











Retail Automotive Geographic Gross Profit Mix:










U.S.


63

%

65

%

59

%

63

%

U.K.


31

%

29

%

35

%

32

%

Other International


6

%

6

%

6

%

5

%

Total


100

%

100

%

100

%

100

%

 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations

(Unaudited)























Three Months Ended



Twelve Months Ended



December 31,



December 31,



2018


2017


Change



2018


2017


Change

Retail Automotive Units:




















New Retail



56,698



61,397


(7.7)

%




235,964



248,774


(5.1)

%

Used Retail



64,171



58,538


9.6

%




282,542



252,922


11.7

%

Total



120,869



119,935


0.8

%




518,506



501,696


3.4

%





















Retail Automotive Revenue: (Amounts in Millions)




















New Vehicles


$

2,340.8


$

2,488.6


(5.9)

%



$

9,666.4


$

9,678.5


(0.1)

%

Used Vehicles



1,663.2



1,536.2


8.3

%




7,252.1



6,386.8


13.5

%

Finance and Insurance, Net



147.4



145.2


1.5

%




629.6



581.8


8.2

%

Service and Parts



536.3



517.4


3.7

%




2,151.4



2,057.5


4.6

%

Fleet and Wholesale



261.5



254.4


2.8

%




1,149.7



1,119.7


2.7

%

Total Revenue


$

4,949.2


$

4,941.8


0.1

%



$

20,849.2


$

19,824.3


5.2

%





















Retail Automotive Gross Profit: (Amounts in Millions)




















New Vehicles


$

171.8


$

193.6


(11.3)

%



$

724.6


$

746.2


(2.9)

%

Used Vehicles



81.6



75.6


7.9

%




409.1



358.0


14.3

%

Finance and Insurance, Net



147.4



145.2


1.5

%




629.6



581.8


8.2

%

Service and Parts



317.8



308.3


3.1

%




1,277.3



1,219.7


4.7

%

Fleet and Wholesale



1.5



3.6


(58.3)

%




18.0



19.1


(5.8)

%

Total Gross Profit


$

720.1


$

726.3


(0.9)

%



$

3,058.6


$

2,924.8


4.6

%





















Retail Automotive Revenue Per Vehicle Retailed:




















New Vehicles


$

41,285


$

40,533


1.9

%



$

40,966


$

38,905


5.3

%

Used Vehicles



25,919



26,242


(1.2)

%




25,667



25,252


1.6

%





















Retail Automotive Gross Profit Per Vehicle Retailed:




















New Vehicles


$

3,029


$

3,153


(3.9)

%



$

3,070


$

2,999


2.4

%

Used Vehicles



1,272



1,290


(1.4)

%




1,448



1,415


2.3

%

Finance and Insurance



1,219



1,211


0.7

%




1,214



1,160


4.7

%





















Retail Automotive Gross Margin:




















New Vehicles



7.3

%


7.8

%

-50

bps




7.5

%


7.7

%

-20

bps

Used Vehicles



4.9

%


4.9

%

---

bps




5.6

%


5.6

%

---

bps

Service and Parts



59.3

%


59.6

%

-30

bps




59.4

%


59.3

%

+10

bps

Fleet and Wholesale



0.6

%


1.4

%

-80

bps




1.6

%


1.7

%

-10

bps

Total Gross Margin



14.5

%


14.7

%

-20

bps




14.7

%


14.8

%

-10

bps





















Retail Automotive Revenue Mix Percentages:




















New Vehicles



47.3

%


50.4

%

-310

bps




46.4

%


48.8

%

-240

bps

Used Vehicles



33.6

%


31.1

%

+250

bps




34.8

%


32.2

%

+260

bps

Finance and Insurance, Net



3.0

%


2.9

%

+10

bps




3.0

%


2.9

%

+10

bps

Service and Parts



10.8

%


10.5

%

+30

bps




10.3

%


10.4

%

-10

bps

Fleet and Wholesale



5.3

%


5.1

%

+20

bps




5.5

%


5.7

%

-20

bps

Total



100.0

%


100.0

%






100.0

%


100.0

%























Retail Automotive Gross Profit Mix Percentages:




















New Vehicles



23.9

%


26.7

%

-280

bps




23.7

%


25.5

%

-180

bps

Used Vehicles



11.3

%


10.4

%

+90

bps




13.4

%


12.2

%

+120

bps

Finance and Insurance, Net



20.5

%


20.0

%

+50

bps




20.6

%


19.9

%

+70

bps

Service and Parts



44.1

%


42.4

%

+170

bps




41.8

%


41.7

%

+10

bps

Fleet and Wholesale



0.2

%


0.5

%

-30

bps




0.5

%


0.7

%

-20

bps

Total



100.0

%


100.0

%






100.0

%


100.0

%



 

 

PENSKE AUTOMOTIVE GROUP, INC.

Retail Automotive Operations Same-Store

(Unaudited)























Three Months Ended



Twelve Months Ended



December 31,



December 31,



2018


2017


Change



2018


2017


Change

Retail Automotive Same-Store Units:




















New Retail



55,290



59,424


(7.0)

%




227,201



236,163


(3.8)

%

Used Retail



58,257



56,778


2.6

%




205,081



201,031


2.0

%

Total



113,547



116,202


(2.3)

%




432,282



437,194


(1.1)

%





















Retail Automotive Same-Store Revenue: (Amounts in Millions)




















New Vehicles


$

2,271.2


$

2,417.0


(6.0)

%



$

9,186.1


$

9,163.7


0.2

%

Used Vehicles



1,576.6



1,500.9


5.0

%




5,979.3



5,539.2


7.9

%

Finance and Insurance, Net



142.0



141.0


0.7

%




538.8



509.0


5.9

%

Service and Parts



525.2



505.6


3.9

%




2,046.0



1,950.4


4.9

%

Fleet and Wholesale



249.5



243.4


2.5

%




959.2



973.5


(1.5)

%

Total Revenue


$

4,764.5


$

4,807.9


(0.9)

%



$

18,709.4


$

18,135.8


3.2

%





















Retail Automotive Same-Store Gross Profit: (Amounts in Millions)




















New Vehicles


$

165.6


$

189.2


(12.5)

%



$

680.9


$

707.2


(3.7)

%

Used Vehicles



76.1



...