Penske Automotive Reports Fourth Quarter Results
BLOOMFIELD HILLS, Mich.--Penske Automotive Group, Inc. , an international automotive retailer, today reported fourth quarter income from continuing operations attributable to PAG of $19.3 million, or $0.21 per share, which compares to an adjusted loss of $4.2 million, or $0.05 per share, in the fourth quarter last year as shown in the attached reconciliation tables. Net income attributable to common shareholders in the fourth quarter was $18.7 million, or $0.20 per share.
Total revenues in the fourth quarter increased 13.4% to $2.4 billion. Total retail revenues increased 18.2% to $2.3 billion, including a same-store retail revenue increase of 15.5%. During the quarter, selling, general and administrative expenses as a percentage of gross profit declined to 83.3%, due in part to the cost savings initiatives instituted over the last 18 months.
Commenting on the Company’s performance, Chairman Roger Penske said, “I am pleased by the strong fourth quarter results, which were driven by a strong performance in the U.K., as well as the continuing benefit from our cost-saving initiatives. In particular, our premium/luxury retail businesses performed well, generating a 20.4% increase in same-store new retail unit sales, including a 29.9% increase in the U.K. I am also pleased by the 18.2% increase in our retail revenues, including growth of 8.6% and 38.7% in the U.S. and U.K., respectively, despite the continuing economic challenges in all of our markets.”
Total revenues for the twelve months ended December 31, 2009, decreased 18.2% to $9.5 billion. Adjusted income from continuing operations attributable to PAG for the twelve months was $80.5 million, or $0.88 per share attributable to common shareowners, which compares to adjusted income of $92.7 million, or $0.99 per share, in the prior year as shown in the attached reconciliation tables. Actual income from continuing operations attributable to PAG and net income for the twelve months ended December 31, 2009, were $83.6 million, or $0.91 per share, and $76.5 million, or $0.83 per share, respectively.
smart USA
During the year, smart USA wholesaled 13,772 units, including 998 units in the fourth quarter. smart USA has increased incentives on the 2009 smart fortwo. As a result, smart USA recorded $1.4 million, or $0.02 per share, of after tax reserves in the fourth quarter.
Securities Repurchase Authority
The Company did not repurchase any securities during the fourth quarter of 2009. However, the Company purchased $44.1 million principal amount of its 3.5% Senior Subordinated Convertible Notes due 2026 for $44.4 million in cash during February 2010, which fully utilized the Company’s remaining securities repurchase authority. After these purchases, approximately $262 million principal amount of the 3.5% Senior Subordinated Convertible Notes due 2026 remain outstanding.
The Company’s Board of Directors has granted new authorization for the Company to repurchase up to $150.0 million of its outstanding common stock, debt and convertible debt, depending on market conditions, price and other factors. Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means. The Company currently contemplates purchasing any securities under this program using cash flow from operations and credit availability in the U.S.
Conference Call
Penske Automotive will host a conference call discussing financial results relating to the fourth quarter of 2009 on February 19, 2010, at 2:00 p.m. Eastern Time. To listen to the conference call, participants must dial (800) 230-1092 [International, please dial (612) 288-0329]. The call will also be simultaneously broadcast over the Internet through the Penske Automotive Group website at www.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc. (www.penskeautomotive.com), headquartered in Bloomfield Hills, Michigan, operates 312 retail automotive franchises, representing 40 different brands and 25 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 17 states and Puerto Rico and 148 franchises located outside the United States, primarily in the United Kingdom.
Penske Automotive, through its wholly-owned subsidiary smart USA Distributor LLC (www.smartusa.com), is the exclusive distributor of the smart fortwo vehicle and related parts in the United States. smart USA supports more than 75 smart retail centers in the United States.
Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 14,100 employees. smart and fortwo are registered trademarks of Daimler AG.
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. Actual results may vary materially because of risks and uncertainties, including external factors such as consumer credit conditions, adverse conditions affecting a particular manufacturer, macro-economic factors, interest rate fluctuations, changes in consumer spending and other factors over which management has no 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, 2008, 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.
Non-GAAP Financial Measures
This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations attributable to PAG and related earnings per share. The Company has reconciled these measures to the most directly comparable GAAP measures in the attached reconciliation tables. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure by providing period-to-period comparability of the Company's results from operations.
| PENSKE AUTOMOTIVE GROUP, INC. | |||||
| Consolidated Statements of Income | |||||
| (Amounts In Thousands, Except Per Share Data) | |||||
| (Unaudited) | |||||
|
Fourth Quarter |
|||||
|
2009 |
2008 |
||||
| Revenues: | |||||
| New Vehicle | $1,256,841 | $1,040,676 | |||
| Used Vehicle | 648,469 | 528,360 | |||
| Finance and Insurance, Net | 58,364 | 42,411 | |||
| Service and Parts | 324,124 | 324,406 | |||
| Distribution | 9,443 | 101,051 | |||
| Fleet and Wholesale Vehicle | 146,932 | 117,689 | |||
| Total Revenues | 2,444,173 | 2,154,593 | |||
| Cost of Sales: | |||||
| New Vehicle | 1,151,317 | 961,706 | |||
| Used Vehicle | 599,195 | 492,834 | |||
| Service and Parts | 142,780 | 147,469 | |||
| Distribution | 10,631 | 85,951 | |||
| Fleet and Wholesale Vehicle | 145,832 | 119,117 | |||
| Total Cost of Sales | 2,049,755 | 1,807,077 | |||
| Gross Profit | 394,418 | 347,516 | |||
| SG&A Expenses | 328,710 | 968,678 | |||
| Depreciation and Amortization | 13,523 | 13,120 | |||
| Operating Income (Loss) | 52,185 | (634,282) | |||
| Floor Plan Interest Expense | (8,099) | (15,649) | |||
| Other Interest Expense | (13,524) | (13,928) | |||
| Debt Discount Amortization | (3,135) | (3,496) | |||
| Equity in Earnings of Affiliates | 2,092 | 3,191 | |||
|
Income (Loss) from Continuing Operations Before Income Taxes |
29,519 |
(664,164) |
|||
| Income Taxes | (9,984) | 157,569 | |||
| Income (Loss) from Continuing Operations | 19,535 | (506,595) | |||
| Loss from Discontinued Operations, Net of Tax | (646) | (5,268) | |||
| Net Income (Loss) | 18,889 | (511,863) | |||
| Income Attributable to Non-Controlling Interests | (212) | (81) | |||
| Net Income (Loss) Attributable to Common Shareholders | $18,677 | ($511,944) | |||
| Income (Loss) from Continuing Operations Per Share | $0.21 | ($5.53) | |||
| Income (Loss) Per Share | $0.20 | ($5.59) | |||
| Weighted Average Shares Outstanding | 91,780 | 91,633 | |||
| Amounts Attributable to Common Shareholders: | |||||
| Reported Income (Loss) from Continuing Operations | $19,535 | ($506,595) | |||
| Income Attributable to Non-Controlling Interests | (212) | (81) | |||
| Income (Loss) from Continuing Operations, net of tax | 19,323 | (506,676) | |||
| Income (Loss) from Discontinued Operations, net of tax | (646) | (5,268) | |||
| Net Income (Loss) | $18,677 | ($511,944) | |||
| PENSKE AUTOMOTIVE GROUP, INC. | |||||
| Consolidated Statements of Income | |||||
| (Amounts In Thousands, Except Per Share Data) | |||||
| (Unaudited) | |||||
|
Twelve Months |
|||||
|
2009 |
2008 |
||||
| Revenues: | |||||
| New Vehicle | $4,662,418 | $5,935,857 | |||
| Used Vehicle | 2,600,691 | 2,848,053 | |||
| Finance and Insurance, Net | 222,672 | 259,255 | |||
| Service and Parts | 1,321,580 | 1,403,545 | |||
| Distribution | 179,159 | 348,809 | |||
| Fleet and Wholesale Vehicle | 536,585 | 841,617 | |||
| Total Revenues | 9,523,105 | 11,637,136 | |||
| Cost of Sales: | |||||
| New Vehicle | 4,286,224 | 5,449,476 | |||
| Used Vehicle | 2,376,358 | 2,634,607 | |||
| Service and Parts | 593,463 | 623,032 | |||
| Distribution | 161,000 | 294,535 | |||
| Fleet and Wholesale Vehicle | 523,749 | 845,282 | |||
| Total Cost of Sales | 7,940,794 | 9,846,932 | |||
| Gross Profit | 1,582,311 | 1,790,204 | |||
| SG&A Expenses | 1,318,980 | 2,137,362 | |||
| Depreciation and Amortization | 54,234 | 53,877 | |||
| Operating Income (Loss) | 209,097 | (401,035) | |||
| Floor Plan Interest Expense | (35,662) | (64,188) | |||
| Other Interest Expense | (55,201) | (54,504) | |||
| Debt Discount Amortization | (13,043) | (13,984) | |||
| Equity in Earnings of Affiliates | 13,808 | 16,513 | |||
| Gain on Debt Repurchase | 10,429 | -- | |||
|
Income (Loss) from Continuing Operations Before Income Taxes |
129,428 |
(517,198) |
|||
| Income Taxes | (45,386) | 105,741 | |||
| Income (Loss) from Continuing Operations | 84,042 | (411,457) | |||
| Loss from Discontinued Operations, Net of Tax | (7,122) | (7,446) | |||
| Net Income (Loss) | 76,920 | (418,903) | |||
| Income Attributable to Non-Controlling Interests | (459) | (1,133) | |||
| Net Income (Loss) Attributable to Common Shareholders | $76,461 | ($420,036) | |||
| Income (Loss) from Continuing Operations Per Share | $0.91 | ($4.39) | |||
| Income (Loss) Per Share | $0.83 | ($4.47) | |||
| Weighted Average Shares Outstanding | 91,653 | 93,958 | |||
| Amounts Attributable to Common Shareholders: | |||||
| Reported Income (Loss) from Continuing Operations | $84,042 | ($411,457) | |||
| Income Attributable to Non-Controlling Interests | (459) | (1,133) | |||
| Income (Loss) from Continuing Operations, net of tax | 83,583 | (412,590) | |||
| Loss from Discontinued Operations, net of tax | (7,122) | (7,446) | |||
| Net Income (Loss) | $76,461 | ($420,036) | |||
| PENSKE AUTOMOTIVE GROUP, INC. | ||||||
| Consolidated Condensed Balance Sheets | ||||||
| (Amounts In Thousands) | ||||||
| (Unaudited) | ||||||
|
12/31/09 |
12/31/08 |
|||||
| Assets | ||||||
| Cash and Cash Equivalents | $13,769 | $17,108 | ||||
| Accounts Receivable, Net | 322,598 | 294,230 | ||||
| Inventories | 1,306,532 | 1,586,914 | ||||
| Other Current Assets | 95,560 | 88,437 | ||||
| Assets Held for Sale | 5,005 | 20,574 | ||||
| Total Current Assets | 1,743,464 | 2,007,263 | ||||
| Property and Equipment, Net | 726,835 | 662,898 | ||||
| Intangibles | 1,012,079 | 973,041 | ||||
| Other Long-Term Assets | 313,629 | 318,947 | ||||
| Total Assets | $3,796,007 | $3,962,149 | ||||
| Liabilities and Equity | ||||||
| Floor Plan Notes Payable | $772,926 | $961,993 | ||||
| Floor Plan Notes Payable – Non-Trade | 423,316 | 507,404 | ||||
| Accounts Payable | 190,325 | 178,994 | ||||
| Accrued Expenses | 227,725 | 196,704 | ||||
| Current Portion Long-Term Debt | 12,442 | 11,305 | ||||
| Liabilities Held for Sale | 3,083 | 24,289 | ||||
| Total Current Liabilities | 1,629,817 | 1,880,689 | ||||
| Long-Term Debt | 933,966 | 1,052,060 | ||||
| Other Long-Term Liabilities | 286,185 | 220,979 | ||||
| Total Liabilities | 2,849,968 | 3,153,728 | ||||
| Equity | 946,039 | 808,421 | ||||
| Total Liabilities and Equity | $3,796,007 | $3,962,149 | ||||
| PENSKE AUTOMOTIVE GROUP, INC. | ||||||||||||
| Selected Data | ||||||||||||
|
Fourth Quarter |
Twelve Months |
|||||||||||
|
2009 |
2008 |
2009 |
2008 |
|||||||||
| Total Retail Units: | ||||||||||||
| New Retail | 35,252 | 31,275 | 140,914 | 171,554 | ||||||||
| Used Retail | 23,450 | 21,668 | 102,457 | 102,032 | ||||||||
| Total Retail | 58,702 | 52,943 | 243,371 | 273,586 | ||||||||
| smart Wholesale Units | 998 | 7,725 | 13,772 | 27,052 | ||||||||
| Same-Store Retail Units: | ||||||||||||
| New Same-Store Retail | 34,282 | 31,025 | 133,317 | 167,232 | ||||||||
| Used Same-Store Retail | 22,689 | 21,448 | 95,731 | 99,343 | ||||||||
| Total Same-Store Retail | 56,971 | 52,473 | 229,048 | 266,575 | ||||||||
| Same-Store Retail Revenue: | ||||||||||||
| New Vehicles | $1,220,792 | $1,033,030 | $4,388,636 | $5,776,277 | ||||||||
| Used Vehicles | 623,957 | 523,754 | 2,406,759 | 2,763,296 | ||||||||
| Finance and Insurance, Net | 56,608 | 42,214 | 211,028 | 253,797 | ||||||||
| Service and Parts | 315,673 | 320,807 | 1,236,194 | 1,352,302 | ||||||||
| Total Same-Store Retail | $2,217,030 | $1,919,805 | $8,242,617 | $10,145,672 | ||||||||
| Same-Store Retail Revenue Growth: | ||||||||||||
| New Vehicles | 18.2% | (39.8%) | (24.0%) | (18.3%) | ||||||||
| Used Vehicles | 19.1% | (30.4%) | (12.9%) | (10.6%) | ||||||||
| Finance and Insurance, Net | 34.1% | (38.7%) | (16.9%) | (12.9%) | ||||||||
| Service and Parts | (1.6%) | (9.3%) | (8.6%) | (2.5%) | ||||||||
| Revenue Mix: | ||||||||||||
| New Vehicles | 51.4% | 48.3% | 49.0% | 51.0% | ||||||||
| Used Vehicles | 26.5% | 24.5% | 27.3% | 24.5% | ||||||||
| Finance and Insurance, Net | 2.4% | 2.0% | 2.3% | 2.2% | ||||||||
| Service and Parts | 13.3% | 15.1% | 13.9% | 12.1% | ||||||||
| Distribution | 0.4% | 4.7% | 1.9% | 3.0% | ||||||||
| Fleet and Wholesale | 6.0% | 5.4% | 5.6% | 7.2% | ||||||||
| Average Retail Selling Price: | ||||||||||||
| New Vehicles | $35,653 | $33,275 | $33,087 | $34,601 | ||||||||
| Used Vehicles | 27,653 | 24,384 | 25,383 | 27,913 | ||||||||
| Gross Margin | 16.1% | 16.1% | 16.6% | 15.4% | ||||||||
| Retail Gross Margin – by Product: | ||||||||||||
| New Vehicles | 8.4% | 7.6% | 8.1% | 8.2% | ||||||||
| Used Vehicles | 7.6% | 6.7% | 8.6% | 7.5% | ||||||||
| Service and Parts | 55.9% | 54.5% | 55.1% | 55.6% | ||||||||
| PENSKE AUTOMOTIVE GROUP, INC. | ||||||||||||||
| Selected Data (Continued) | ||||||||||||||
|
Fourth Quarter |
Twelve Months |
|||||||||||||
|
2009 |
2008 |
2009 |
2008 |
|||||||||||
| Gross Profit per Retail Transaction: | ||||||||||||||
| New Vehicles | $2,993 | $2,525 | $2,670 | $2,835 | ||||||||||
| Used Vehicles | 2,101 | 1,639 | 2,190 | 2,092 | ||||||||||
| Finance and Insurance | 994 | 801 | 915 | 948 | ||||||||||
| Brand Mix: | ||||||||||||||
| BMW | 22% | 23% | 21% | 22% | ||||||||||
| Toyota / Lexus | 19% | 19% | 19% | 19% | ||||||||||
| Honda / Acura | 13% | 15% | 14% | 15% | ||||||||||
| Mercedes Benz | 11% | 10% | 10% | 10% | ||||||||||
| Audi | 10% | 9% | 10% | 9% | ||||||||||
| Land Rover | 5% | 3% | 4% | 4% | ||||||||||
| Porsche | 4% | 3% | 4% | 3% | ||||||||||
| Ferrari / Maserati | 3% | 3% | 3% | 3% | ||||||||||
| Other | 13% | 15% | 15% | 15% | ||||||||||
| 100% | 100% | 100% | 100% | |||||||||||
| Premium | 67% | 65% | 65% | 65% | ||||||||||
| Foreign | 29% | 31% | 30% | 30% | ||||||||||
| Domestic Big 3 | 4% | 4% | 5% | 5% | ||||||||||
| 100% | 100% | 100% | 100% | |||||||||||
| Revenue Mix: | ||||||||||||||
| U.S. | 62% | 69% | 63% | 64% | ||||||||||
| International | 38% | 31% | 37% | 36% | ||||||||||
| 100% | 100% | 100% | 100% | |||||||||||
| Rent Expense | $41,790 | $39,659 | $165,256 | $160,113 | ||||||||||
|
12/31/09 |
12/31/08 |
|||||||||||||
| Debt to Total Capital Ratio | 50% | 57% | ||||||||||||
| Debt Covenant Compliance (U.S.): | ||||||||||||||
| Current Ratio (min 1.00:1) | 1.07:1 | 1.07:1 | ||||||||||||
| Fixed Charge Coverage Ratio (min 1.00:1) | 1.29:1 | 1.24:1 | ||||||||||||
|
Ratio of Non-Floorplan Debt to Stockholders’ Equity (max 1.30:1) |
0.66:1 | 0.86:1 | ||||||||||||
| Funded Debt to EBITDA Ratio (max 2.50:1) | 1.11:1 | 1.26:1 | ||||||||||||
| Debt Covenant Compliance (U.K.): | ||||||||||||||
| Capital Expenditures (max £50 million) | £12.7 | £29.5 | ||||||||||||
| EBITAR to Fixed Charges (min 1.50:1) | 2.72x | 1.76x | ||||||||||||
| Debt to EBITAR (max 3.25:1) | 0.77x | 1.45x | ||||||||||||
| PENSKE AUTOMOTIVE GROUP, INC. | |||||||
| Selected Data (Continued) | |||||||
|
Reconciliation of reported income from continuing operations attributable to PAG and related earnings per share to adjusted income from continuing operations attributable to PAG and related earnings per share for 2009: |
|||||||
|
Twelve Months 2009 |
|||||||
|
Earnings |
EPS |
||||||
| Income from continuing operations attributable to PAG |
$83,583 |
$0.91 |
|||||
| Gain on debt repurchase | (6,518) | (0.07) | |||||
| Costs relating to terminated Saturn transaction |
1,926 |
0.02 |
|||||
| Franchise closure/relocation costs | 778 | 0.01 | |||||
| Hedge de-designation costs | 686 | 0.01 | |||||
| Adjusted income from continuing operations attributable to PAG |
$80,455 |
$0.88 |
|||||
|
Reconciliation of reported income from continuing operations attributable to PAG and related earnings per share to adjusted income from continuing operations attributable to PAG and related earnings per share for 2008: |
||||||||
|
Fourth Quarter 2008 |
Twelve Months 2008 |
|||||||
|
Earnings |
EPS |
Earnings |
EPS |
|||||
| Income from continuing operations attributable to PAG |
($506,676) |
($5.53) |
($412,590) |
($4.39) |
||||
| Intangible asset impairments | 493,143 | 5.38 | 493,143 | 5.25 | ||||
| Franchise closure/relocation costs | 5,785 | 0.06 | 5,785 | 0.06 | ||||
| Severance costs | 2,514 | 0.03 | 3,813 | 0.04 | ||||
| Other asset impairments | 992 | 0.01 | 2,532 | 0.03 | ||||
| Adjusted income from continuing operations attributable to PAG | ($4,242) | ($0.05) | $92,683 | $0.99 | ||||