Penske Automotive Reports Second Quarter 2007 Results
BLOOMFIELD HILLS, Mich.--Penske Automotive Group, Inc. , an international automotive retailer, today reported that second quarter income from continuing operations increased 8.1% to $39.3 million and related earnings per share increased 10.5% to $0.42. Second quarter net income increased 10.0% to $40.4 million and related earnings per share increased 10.3% to $0.43. Revenues in the second quarter increased 19.2% to $3.4 billion, including an 8.5% increase in same-store retail revenues. The increase in same-store retail revenues included:
- New Vehicles +6.3%
- Used Vehicles +14.9%
- Finance & Insurance +7.0%
- Service & Parts +6.6%
“Our results continue to showcase the strength of our brand mix and the diversity of our business,” said Penske Automotive Chairman Roger Penske. “Our same-store retail revenue growth was strong in each line of our business. Same-store retail revenue growth was 2.5% in the U.S. and 22.8% in our international markets. In addition, our pre-owned vehicle business continued to be exceptionally strong, particularly at our international locations where total pre-owned retail vehicle revenues increased 56.6%, including same-store growth of 24.6%. The increased level of contribution from the pre-owned business, coupled with a challenging marketplace, contributed to an overall decrease in our gross margin during the second quarter.”
For the six months ended June 30, 2007, revenues increased 20.4% to $6.5 billion. Income from continuing operations and related earnings per share for the six months were $55.2 million and $0.58, respectively. Adjusted to exclude the $12.3 million ($0.13 per share) of after-tax costs resulting from the March 2007 redemption of the Company’s 9.625% Senior Subordinated Notes, income from continuing operations for the six months increased 8.6% to $67.5 million and related earnings per share increased 7.6% to $0.71. Net income and related earnings per share for the six months were $54.9 million and $0.58 respectively. Adjusted for the debt redemption charge, net income increased 10.9% to $67.2 and related earnings per share increased 10.9% to $0.71.
The Company currently projects earnings from continuing operations in the third quarter to be in the range of $0.40 to $0.44 per share. The Company continues to project earnings from continuing operations for the year in the range of $1.40 to $1.50 per share, excluding the $12.3 million ($0.13 per share) debt redemption charge. These estimates include costs associated with developing the distribution network for the smart® product launch in the U.S. and are based on an estimated average of 94.6 million shares outstanding.
Penske Automotive will host a conference call discussing financial results relating to the second quarter of 2007 on Tuesday, July 31, 2007 at 1:00 p.m. EDT. To listen to the conference call, participants must dial (800) 553-0327 [International, please dial (612) 332-0932]. The call will be simultaneously broadcast over the Internet through the Penske Automotive website at www.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 311 retail automotive franchises, representing 40 different brands, and 26 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 164 franchises in 19 states and Puerto Rico and 147 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 16,000 employees.
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PENSKE AUTOMOTIVE GROUP, INC.
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Second Quarter |
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| 2007 | 2006 | |||||
| Revenues: | ||||||
| New Vehicle | $ | 1,831,369 | $ | 1,583,639 | ||
| Used Vehicle | 829,057 | 631,982 | ||||
| Finance and Insurance, Net | 75,698 | 65,680 | ||||
| Service and Parts | 357,377 | 306,924 | ||||
| Fleet and Wholesale Vehicle | 288,137 | 249,502 | ||||
| Total Revenues | 3,381,638 | 2,837,727 | ||||
| Cost of Sales: | ||||||
| New Vehicle | 1,678,521 | 1,444,861 | ||||
| Used Vehicle | 763,636 | 577,581 | ||||
| Service and Parts | 156,407 | 137,730 | ||||
| Fleet and Wholesale Vehicle | 287,089 | 248,064 | ||||
| Total Cost of Sales | 2,885,653 | 2,408,236 | ||||
| Gross Profit | 495,985 | 429,491 | ||||
| SG&A Expenses | 389,276 | 334,600 | ||||
| Depreciation and Amortization | 13,337 | 10,805 | ||||
| Operating Income | 93,372 | 84,086 | ||||
| Floor Plan Interest Expense | (19,546) | (16,218) | ||||
| Other Interest Expense | (12,917) | (11,436) | ||||
| Equity in Earnings of Affiliates | 2,529 | 1,968 | ||||
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Income from Continuing Operations Before Income Taxes and Minority Interests
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63,438 |
58,400 |
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| Income Taxes | (23,473) | (21,457) | ||||
| Minority Interests | (702) | (636) | ||||
| Income from Continuing Operations | 39,263 | 36,307 | ||||
| Income from Discontinued Operations, Net of Tax | 1,092 | 386 | ||||
| Net Income | $ | 40,355 | $ | 36,693 | ||
| Income from Continuing Operations Per Diluted Share | $ | 0.42 | $ | 0.38 | ||
| Diluted EPS | $ | 0.43 | $ | 0.39 | ||
| Diluted Weighted Average Shares Outstanding | 94,532 | 94,636 | ||||
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PENSKE AUTOMOTIVE GROUP, INC. |
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| Six Months | ||||||
| 2007 | 2006 | |||||
| Revenues: | ||||||
| New Vehicle | $ | 3,479,067 | $ | 3,017,486 | ||
| Used Vehicle | 1,617,464 | 1,187,322 | ||||
| Finance and Insurance, Net | 144,666 | 123,745 | ||||
| Service and Parts | 710,310 | 600,905 | ||||
| Fleet and Wholesale Vehicle | 538,570 | 462,725 | ||||
| Total Revenues | 6,490,077 | 5,392,183 | ||||
| Cost of Sales: | ||||||
| New Vehicle | 3,187,699 | 2,752,530 | ||||
| Used Vehicle | 1,490,807 | 1,082,744 | ||||
| Service and Parts | 313,501 | 269,806 | ||||
| Fleet and Wholesale Vehicle | 534,586 | 458,554 | ||||
| Cost of Sales | 5,526,593 | 4,563,634 | ||||
| Gross Profit | 963,484 | 828,549 | ||||
| SG&A Expenses | 764,862 | 657,345 | ||||
| Depreciation and Amortization | 26,147 | 20,982 | ||||
| Operating Income | 172,475 | 150,222 | ||||
| Floor Plan Interest Expense | (35,721) | (30,191) | ||||
| Other Interest Expense | (31,776) | (23,383) | ||||
| Equity in Earnings of Affiliates | 1,708 | 3,118 | ||||
| Debt Redemption Charge | (18,634) | -- | ||||
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Income from Continuing Operations Before Income Taxes and Minority Interests
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88,052 |
99,766 |
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| Income Taxes | (31,829) | (36,521) | ||||
| Minority Interests | (996) | (1,058) | ||||
| Income from Continuing Operations | 55,227 | 62,187 | ||||
| Loss from Discontinued Operations, Net of Tax | (290) | (1,539) | ||||
| Net Income | $ | 54,937 | $ | 60,648 | ||
| Income from Continuing Operations Per Diluted Share | $ | 0.58 | $ | 0.66 | ||
| Diluted EPS | $ | 0.58 | $ | 0.64 | ||
| Diluted Weighted Average Shares Outstanding | 94,483 | 94,499 | ||||
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PENSKE AUTOMOTIVE GROUP, INC. |
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| 6/30/07 | 12/31/06 | |||||
| Assets | ||||||
| Cash and Cash Equivalents | $ | 18,256 | $ | 13,147 | ||
| Accounts Receivable, Net | 474,674 | 470,301 | ||||
| Inventories | 1,635,690 | 1,525,800 | ||||
| Other Current Assets | 99,653 | 71,526 | ||||
| Assets Held for Sale | 139,907 | 190,881 | ||||
| Total Current Assets | 2,368,180 | 2,271,655 | ||||
| Property and Equipment, Net | 563,548 | 582,407 | ||||
| Intangibles | 1,626,259 | 1,506,004 | ||||
| Other Assets | 93,094 | 109,736 | ||||
| Total Assets | $ | 4,651,081 | $ | 4,469,802 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Floor Plan Notes Payable | $ | 1,108,688 | $ | 874,326 | ||
| Floor Plan Notes Payable – Non-Trade | 452,850 | 298,703 | ||||
| Accounts Payable | 290,911 | 301,592 | ||||
| Accrued Expenses | 257,126 | 214,544 | ||||
| Current Portion Long-Term Debt | 14,725 | 13,385 | ||||
| Liabilities Held for Sale | 69,959 | 50,560 | ||||
| Total Current Liabilities | 2,194,259 | 1,753,110 | ||||
| Long-Term Debt | 831,771 | 1,168,666 | ||||
| Other Long-Term Liabilities | 277,135 | 252,373 | ||||
| Total Liabilities | 3,303,165 | 3,174,149 | ||||
| Stockholders’ Equity | 1,347,916 | 1,295,653 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 4,651,081 | $ | 4,469,802 | ||
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PENSKE AUTOMOTIVE GROUP, INC. |
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| Second Quarter | Six Months | |||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||
| Total Retail Units | ||||||||||||
| New Retail | 51,449 | 47,508 | 97,033 | 89,850 | ||||||||
| Used Retail | 26,862 | 22,364 | 52,559 | 42,361 | ||||||||
| Total Retail | 78,311 | 69,872 | 149,592 | 132,211 | ||||||||
| Same-Store Retail Units | ||||||||||||
| New Same-Store Retail | 46,808 | 46,884 | 88,390 | 87,701 | ||||||||
| Used Same-Store Retail | 23,471 | 22,028 | 44,585 | 40,665 | ||||||||
| Total Same-Store Retail | 70,279 | 68,912 | 132,975 | 128,366 | ||||||||
| Same-Store Retail Revenue | ||||||||||||
| New Vehicles | $ | 1,662,883 | $ | 1,563,628 | $ | 3,129,150 | $ | 2,931,834 | ||||
| Used Vehicles | 717,171 | 624,360 | 1,327,178 | 1,130,131 | ||||||||
| Finance and Insurance, Net | 69,680 | 65,122 | 131,031 | 120,858 | ||||||||
| Service and Parts | 323,390 | 303,413 | 629,556 | 582,177 | ||||||||
| Total Same-Store Retail | $ | 2,773,124 | $ | 2,556,523 | $ | 5,216,915 | $ | 4,765,000 | ||||
| Same-Store Retail Revenue Growth | ||||||||||||
| New Vehicles | 6.3% | 1.5% | 6.7% | 2.3% | ||||||||
| Used Vehicles | 14.9% | 8.8% | 17.4% | 7.3% | ||||||||
| Finance and Insurance, Net | 7.0% | 8.5% | 8.4% | 7.3% | ||||||||
| Service and Parts | 6.6% | 8.0% | 8.1% | 8.1% | ||||||||
| Revenue Mix | ||||||||||||
| New Vehicles | 54.2% | 55.8% | 53.6% | 56.0% | ||||||||
| Used Vehicles | 24.5% | 22.3% | 24.9% | 22.0% | ||||||||
| Finance and Insurance, Net | 2.2% | 2.3% | 2.2% | 2.3% | ||||||||
| Service and Parts | 10.6% | 10.8% | 11.0% | 11.1% | ||||||||
| Fleet and Wholesale | 8.5% | 8.8% | 8.3% | 8.6% | ||||||||
| Average Retail Selling Price | ||||||||||||
| New Vehicles | $ | 35,595 | $ | 33,334 | $ | 35,854 | $ | 33,584 | ||||
| Used Vehicles | $ | 30,863 | $ | 28,259 | $ | 30,774 | $ | 28,029 | ||||
| Gross Margin | 14.7% | 15.1% | 14.9% | 15.4% | ||||||||
| Retail Gross Margin – by Product | ||||||||||||
| New Vehicle | 8.3% | 8.8% | 8.4% | 8.8% | ||||||||
| Used Vehicle | 7.9% | 8.6% | 7.8% | 8.8% | ||||||||
| Service and Parts | 56.2% | 55.1% | 55.9% | 55.1% | ||||||||
| Gross Profit per Retail Transaction | ||||||||||||
| New Vehicles | $ | 2,971 | $ | 2,921 | $ | 3,003 | $ | 2,949 | ||||
| Used Vehicles | 2,435 | 2,433 | 2,410 | 2,469 | ||||||||
| Finance and Insurance | 967 | 940 | 967 | 936 | ||||||||
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PENSKE AUTOMOTIVE GROUP, INC. |
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| Second Quarter | Six Months | |||||||
| 2007 | 2006 | 2007 | 2006 | |||||
| Brand Mix: | ||||||||
| BMW | 22% | 16% | 22% | 16% | ||||
| Toyota/Lexus | 20% | 22% | 19% | 22% | ||||
| Honda/Acura | 15% | 16% | 14% | 16% | ||||
| DCX | 11% | 11% | 12% | 11% | ||||
| Ford | 9% | 10% | 10% | 11% | ||||
| Audi | 7% | 7% | 8% | 7% | ||||
| Porsche | 4% | 4% | 4% | 4% | ||||
| General Motors | 3% | 4% | 3% | 4% | ||||
| Nissan/Infiniti | 3% | 3% | 3% | 3% | ||||
| Other | 6% | 7% | 5% | 6% | ||||
| 100% | 100% | 100% | 100% | |||||
| Premium | 65% | 60% | 66% | 61% | ||||
| Foreign | 30% | 33% | 29% | 32% | ||||
| Domestic Big 3 | 5% | 7% | 5% | 7% | ||||
| 100% | 100% | 100% | 100% | |||||
| Revenue Mix: | ||||||||
| U.S. | 63% | 71% | 62% | 70% | ||||
| International | 37% | 29% | 38% | 30% | ||||
| 100% | 100% | 100% | 100% | |||||
| Debt to Total Capital Ratio | 39% | 37% | 39% | 37% | ||||
| Rent Expense | $37,914 | $33,423 | $74,851 | $65,351 | ||||