Penske Automotive Reports First Quarter Results

BLOOMFIELD HILLS, Mich.--Penske Automotive Group, Inc. , an international automotive retailer, today reported first quarter income from continuing operations of $16.2 million, or $0.18 per share. This compares to income from continuing operations of $32.3 million, or $0.33 per share, in the first quarter last year. In the quarter, the Company recorded a $6.5 million, or $0.07 per share, after-tax gain relating to the repurchase of $69 million principal amount of the Company’s 3.5% Senior Subordinated Convertible Notes due 2026. Excluding this gain, adjusted income from continuing operations amounted to $9.7 million, or $0.11 per share.

Total revenue was $2.2 billion compared to $3.2 billion in the same period last year. The decline in revenue versus the comparable prior year period was driven principally by a 31.2% decrease in total retail sales. The retail sales decline included a 34.5% same-store retail revenue decrease, due largely to a 35.1% decrease in same-store new vehicle unit sales and changes in exchange rates. Despite broad weakness in the new vehicle market in the U.S. and the U.K., the Company’s used vehicle business performed relatively well. Retail used units sold increased 1.6%, despite a 4.2% decrease on a same-store basis, as customers looked for value-priced alternatives to meet their transportation needs. The service and parts business also performed well, declining 8.8% in total, but only 2.6% on a same-store basis excluding changes relating to exchange rates.

“In light of the challenging economic conditions in all of our markets, we are pleased with the performance of our business in the first quarter,” said Penske Automotive Group Chairman Roger Penske. “Despite new vehicle sales approaching a 30 year low in the U.S. and a 30% decline in new vehicle registrations in the U.K. in the March registration period, our ability to reduce costs and inventory levels helped us achieve profitability in the first quarter. In total, we reduced our inventories by $233 million and improved our days supply of new vehicles to 69 days from 105 days at the end of 2008. I am particularly pleased to note that the cost reduction initiatives implemented by the Company have resulted in a decrease in SG&A as a percentage of gross profit to 85.0% in the first quarter, compared to 89.4% on an adjusted basis in the fourth quarter of 2008.”

Mr. Penske continued, “We continue to evaluate ways to operate more efficiently, and remain focused on maintaining liquidity and flexibility. I am pleased to report that we are in compliance with all of our debt covenants, and expect to remain in compliance over the next twelve months.”

Securities Repurchase Authority

The Company’s Board of Directors previously approved repurchases of up to $150 million of our outstanding common stock, debt and convertible debt. During the first quarter, the Company repurchased $69 million principal amount of its 3.5% Senior Subordinated Convertible Notes due 2026 for $52 million in cash. After these purchases, the Company has an additional $44 million remaining under its securities repurchase authority. As of March 31, 2009, approximately $306 million principal amount of the 3.5% Senior Subordinated Convertible Notes due 2026 remained outstanding.

smart USA

During the first quarter, smart USA wholesaled 5,714 units, and for the year expects to wholesale approximately 20,000 units. In addition, smart USA’s distribution of parts is increasing due to the growing number of smart units in operation. During the quarter, smart USA approved two new retail centers, expanding the smart retail network in the U.S. to 75 franchises.

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the first quarter of 2009 on May 5, 2009, at 2:00 p.m. EDT. To listen to the conference call, participants must dial (800) 230-1096 [International, please dial (612) 332-7515]. The call will be simultaneously broadcast over the Internet through the Penske Automotive Group website at PENSKE.