PENSKE AUTOMOTIVE GROUP, INC. - FORM 8-K - EX-99.1

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8-K - LIVE FILING - PENSKE AUTOMOTIVE GROUP, INC.	htm_42393.htm


FOR IMMEDIATE RELEASE

PENSKE AUTOMOTIVE REPORTS SECOND QUARTER RESULTS
____________________________________________________________

Total Revenue Increases 10.5% to $2.9 Billion

Total Same-Store Retail Revenue Increases 9.8%

EPS from Continuing Operations Increases 27% to $0.43

Repurchased $87.3 Million in Convertible Debt
____________________________________________________________

BLOOMFIELD HILLS, MI, July 21, 2011 – Penske Automotive Group, Inc. (NYSE:PAG), an international automotive retailer, today reported 2011 second quarter income from continuing operations attributable to common shareholders of $39.9 million, or $0.43 per share, which compares to income from continuing operations of $31.0 million, or $0.34 per share for the second quarter last year.

Total revenue increased by $273.8 million, or 10.5%, to $2.9 billion on a 6.3% increase in total retail unit sales. The revenue increase was highlighted by higher average transaction prices on both new and used vehicles during the quarter, including a 13.8% increase in same-store retail revenue from the Company’s premium/luxury brands. The parts and service business remained resilient, increasing 7.5% in the quarter; 6.0% on a same-store basis.


Highlights of the Second Quarter

•

Total retail unit sales increased 6.3% to 70,873

•

+7.4% in the United States; +3.7% Internationally

•

New unit retail sales (1.1%); Used unit retail sales +16.1%

•

Same-store retail revenue increased 9.8%

•

New +6.2%; Used +17.6%; Finance & Insurance +10.8%; Service and Parts +6.0%

•

+7.5% in the United States; +13.6% Internationally

•

Average Gross Profit Per Unit

•

New $3,196/unit, +12.4%; Gross Margin 8.5%

•

Used $2,194/unit, +6.0%; Gross Margin 8.2%

“Although we faced a challenging inventory situation as a result of the Japan earthquake, our business model continued to prove its resiliency and delivered another solid quarter,” said Penske Automotive Group Chairman Roger Penske. “We offset the 1.1% decline in new retail unit sales with a 16.1% increase in used retail vehicle sales and higher gross profit per new and used retail unit sold. Additionally, the Company’s premium luxury brand mix in the U.K. continued to perform well, as same-store retail sales of new units outperformed overall U.K market registrations, which declined by 5.2% in the second quarter according to industry data.”

Commenting on the impact of the earthquake and tsunami that struck Japan, Penske said, “Our OEM partners have made substantial progress in their ability to increase production earlier than originally anticipated. We continue to expect supply challenges of certain brands during the third quarter; however, we expect the situation to continue improving and remain confident in our ability to manage through any continued supply disruption.”

Total revenue for the six months ended June 30, 2011 increased 12.8% to $5.7 billion. Income from continuing operations attributable to common shareholders increased 41.7%, to $78.0 million or $0.84 per share, which compares to income from continuing operations of $55.0 million, or $0.60 per share for the six months ended June 30, 2010.

Acquisition Activity
As previously announced, the Company recently completed the acquisition of Crevier BMW-MINI, in Santa Ana, California, and Mercedes-Benz of Greenwich in Connecticut. In total, the Company has acquired seven franchises in 2011, which are expected to generate approximately $525 million of annual revenue. These transactions were financed using working capital and availability under the Company’s U.S. revolving credit facility.

Securities Repurchase Activity

During the second quarter of 2011, the Company acquired 618,209 shares of its common stock at an average price of $20.06 per share. Also during the quarter, holders of the Company’s 3.5% Senior Subordinated Convertible Notes Due 2026 (the “Notes”) tendered $87.3 million of the $150.6 million outstanding principal amount of the Notes to the Company. The Company completed the purchase of the Notes using its revolving credit facility and available cash on hand. The remaining $63.3 million of the Notes may be redeemed by the Company at any time by paying par value and any applicable conversion premium.

The Company currently has authorization to repurchase up to $138.6 million of its outstanding common stock, debt or convertible 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 second quarter of 2011 on July 21, 2011, at 2:00 p.m. Eastern Daylight Time. To listen to the conference call, participants must dial (800) 230-1096 [International, please dial (612) 332-0107]. 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 327 retail automotive franchises, representing 42 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 172 franchises in 17 states and Puerto Rico and 155 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 15,000 employees.

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 this measure to the most directly comparable GAAP measure in the release. The Company believes that this widely accepted measure of operating profitability improves the transparency of the Company’s disclosures. This non-GAAP financial measure is not a substitute 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. Actual results may vary materially because of risks and uncertainties as well as external factors such as consumer credit conditions; adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to the earthquake and tsunami that struck Japan in March 2011; 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, 2010, 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
Engage Penske Automotive: http://www.penskesocial.com
Like Penske Automotive on Facebook: https://facebook.com/PenskeCars
Follow Penske Automotive on Twitter: https://twitter.com/#!/Penskecarscorp
Visit Penske Automotive on YouTube: http://www.youtube.com/penskecars

Inquiries should contact:


David K. Jones Executive Vice President and Chief Financial Officer Penske Automotive Group, Inc. 248-648-2800 dave.jones@penskeautomotive.com		Anthony R. Pordon Executive Vice President Investor Relations and Corporate Development Penske Automotive Group, Inc. 248-648-2540 tpordon@penskeautomotive.com

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PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)


	Three Months Ended
	June 30,
		2011			2010
Revenues:
New Vehicle		$	1,422,267		$	1,314,904
Used Vehicle			879,907			736,336
Finance and Insurance, Net			69,202			61,666
Service and Parts			348,018			323,824
Fleet and Wholesale Vehicle			169,026			177,872

Total Revenues			2,888,420			2,614,602

Cost of Sales:
New Vehicle			1,301,352			1,206,216
Used Vehicle			807,425			677,382
Service and Parts			149,040			138,558
Fleet and Wholesale Vehicle			166,963			175,640

Total Cost of Sales			2,424,780			2,197,796

Gross Profit			463,640			416,806
SG&A Expenses			380,350			339,676
Depreciation			12,093			11,516

Operating Income			71,197			65,614
Floor Plan Interest Expense			(7,113	)		(7,983	)
Other Interest Expense			(10,575	)		(12,542	)
Debt Discount Amortization			—			(2,428	)
Equity in Earnings of Affiliates			7,882			4,784
Gain on Debt Repurchase			—			422

Income from Continuing Operations Before Income Taxes			61,391			47,867
Income Taxes			(20,996	)		(16,628	)

Income from Continuing Operations			40,395			31,239
Loss from Discontinued Operations, Net of Tax			(336	)		(1,555	)

Net Income			40,059			29,684
Income Attributable to Non-Controlling Interests			(499	)		(243	)

Net Income Attributable to Common Shareholders		$	39,560		$	29,441

Income from Continuing Operations Per Share		$	0.43		$	0.34

Income Per Share		$	0.43		$	0.32

Weighted Average Shares Outstanding			92,570			92,206

Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations		$	40,395		$	31,239
Income Attributable to Non-Controlling Interests			(499	)		(243	)

Income from Continuing Operations, net of tax			39,896			30,996
Loss from Discontinued Operations, net of tax			(336	)		(1,555	)

Net Income		$	39,560		$	29,441

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)


	Six Months Ended
	June 30,
		2011			2010
Revenues:
New Vehicle		$	2,823,614		$	2,516,795
Used Vehicle			1,692,501			1,421,466
Finance and Insurance, Net			135,676			119,550
Service and Parts			696,209			649,606
Fleet and Wholesale Vehicle			335,907			331,372

Total Revenues			5,683,907			5,038,789

Cost of Sales:
New Vehicle			2,591,388			2,308,806
Used Vehicle			1,554,114			1,306,620
Service and Parts			299,014			281,113
Fleet and Wholesale Vehicle			330,674			325,392

Total Cost of Sales			4,775,190			4,221,931

Gross Profit			908,717			816,858
SG&A Expenses			738,462			666,039
Depreciation			24,031			23,374

Operating Income			146,224			127,445
Floor Plan Interest Expense			(14,131	)		(16,125	)
Other Interest Expense			(21,976	)		(25,262	)
Debt Discount Amortization			(1,718	)		(5,343	)
Equity in Earnings of Affiliates			7,904			4,355
Gain on Debt Repurchase			—			1,027

Income from Continuing Operations Before Income Taxes			116,303			86,097
Income Taxes			(37,784	)		(30,878	)

Income from Continuing Operations			78,519			55,219
Loss from Discontinued Operations, Net of Tax			(4,463	)		(5,203	)

Net Income			74,056			50,016
Income Attributable to Non-Controlling Interests			(569	)		(221	)

Net Income Attributable to Common Shareholders		$	73,487		$	79,795

Income from Continuing Operations Per Share		$	0.84		$	0.60

Income Per Share		$	0.79		$	0.54

Weighted Average Shares Outstanding			92,514			92,086

Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations		$	78,519		$	55,219
Income Attributable to Non-Controlling Interests			(569	)		(221	)

Income from Continuing Operations, net of tax			77,950			54,998
Loss from Discontinued Operations, net of tax			(4,463	)		(5,203	)

Net Income		$	73,487		$	49,795

PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)


	June 30,		December 31,
	2011		2010
Assets
Cash and Cash Equivalents	$	3,346	$	17,868
Accounts Receivable, Net		365,794		383,675
Inventories		1,456,409		1,453,546
Other Current Assets		91,772		68,457
Assets Held for Sale		56,826		110,485

Total Current Assets		1,974,147		2,034,031
Property and Equipment, Net		776,386		720,834
Intangibles		1,032,914		1,011,889
Other Long-Term Assets		303,432		303,078

Total Assets	$	4,086,879	$	4,069,832

Liabilities and Equity
Floor Plan Notes Payable	$	854,224	$	922,295
Floor Plan Notes Payable – Non-Trade		562,906		492,595
Accounts Payable		215,923		253,424
Accrued Expenses		232,431		202,644
Current Portion Long-Term Debt		10,285		10,593
Liabilities Held for Sale		52,480		79,455

Total Current Liabilities		1,928,249		1,961,006
Long-Term Debt		706,522		769,285
Other Long-Term Liabilities		331,877		293,688

Total Liabilities		2,966,648		3,023,979
Equity		1,120,231		1,045,853

Total Liabilities and Equity	$	4,086,879	$	4,069,832

PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Total Retail Units:
New Retail		37,830			38,238			76,703			73,307
Used Retail		33,043			28,466			63,954			54,569

Total Retail		70,873			66,704			140,657			127,876

Same-Store Retail Units:
New Same-Store Retail		37,231			38,238			73,543			72,200
Used Same-Store Retail		32,524			28,466			61,131			53,825

Total Same-Store Retail		69,755			66,704			134,674			126,025

Same-Store Retail Revenue:
New Vehicles	$	1,396,807		$	1,314,904		$	2,701,047		$	2,479,693
Used Vehicles		866,181			736,332			1,624,448			1,404,974
Finance and Insurance, Net		68,336			61,668			131,976			118,439
Service and Parts		343,327			323,821			670,260			642,733

Total Same-Store Retail	$	2,674,651		$	2,436,725		$	5,127,731		$	4,645,839

Same-Store Retail Revenue Growth:
New Vehicles		6.2	%		19.5	%		8.9	%		22.1	%
Used Vehicles		17.6	%		10.3	%		15.6	%		10.4	%
Finance and Insurance, Net		10.8	%		13.4	%		11.4	%		16.4	%
Service and Parts		6.0	%		-2.2	%		4.3	%		-0.3	%
Revenue Mix:
New Vehicles		49.2	%		50.3	%		49.7	%		49.9	%
Used Vehicles		30.5	%		28.2	%		29.8	%		28.2	%
Finance and Insurance, Net		2.4	%		2.4	%		2.4	%		2.4	%
Service and Parts		12.0	%		12.4	%		12.2	%		12.9	%
Fleet and Wholesale		5.9	%		6.7	%		5.9	%		6.6	%
Average Retail Selling Price:
New Vehicles	$	37,596		$	34,387		$	36,812		$	34,332
Used Vehicles		26,629			25,867			26,464			26,049
Operating items as a percentage of revenue:
New Vehicle Gross Profit		8.5	%		8.3	%		8.2	%		8.3	%
Used Vehicle Gross Profit		8.2	%		8.0	%		8.2	%		8.1	%
Service and Parts Gross Profit		57.2	%		57.2	%		57.1	%		56.7	%
Total Gross Profit		16.1	%		15.9	%		16.0	%		16.2	%
Selling, general and		13.2	%		13.0	%		13.0	%		13.2	%
administrative expenses
Operating income		2.5	%		2.5	%		2.6	%		2.5	%
Operating items as a percentage of total gross profit:
Selling, general and		82.0	%		81.5	%		81.3	%		81.5	%
administrative expenses
Operating income		15.4	%		15.7	%		16.1	%		15.6	%

PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Gross Profit per Retail Transaction:
New Vehicles	$	3,196		$	2,842		$	3,028		$	2,837
Used Vehicles		2,194			2,071			2,164			2,105
Finance and Insurance		976			924			965			935
Brand Mix:
BMW		24	%		21	%		23	%		21	%
Toyota / Lexus		15	%		17	%		15	%		17	%
Honda / Acura		13	%		15	%		13	%		14	%
Audi		12	%		11	%		12	%		11	%
Mercedes-Benz		9	%		9	%		9	%		9	%
Land Rover		4	%		4	%		5	%		5	%
General Motors / Chrysler / Ford		5	%		5	%		5	%		5	%
Porsche		5	%		4	%		5	%		4	%
Ferrari / Maserati		3	%		3	%		3	%		3	%
Nissan / Infiniti		2	%		3	%		2	%		3	%
Bentley / Aston Martin		2	%		2	%		2	%		2	%
Volkswagen		2	%		2	%		2	%		2	%
Other		4	%		4	%		4	%		4	%
Premium		68	%		65	%		68	%		66	%
Foreign		27	%		30	%		27	%		29	%
Domestic Big 3		5	%		5	%		5	%		5	%
Revenue Mix:
U.S.		62	%		63	%		61	%		62	%
International		38	%		37	%		39	%		38	%
EBITDA (Amounts in thousands)*	$	84,059		$	74,353		$	164,028		$	140,076
Rent Expense (Amounts in thousands)	$	42,907		$	40,117		$	85,581		$	80,095

• See the following Non-GAAP reconciliation tables

PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Concluded)
(Unaudited)

Reconciliation of 2011 and 2010 net income to EBITDA:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Amounts in thousands)	2011		2010		2011		2010
Net income	$	40,059	$	29,684	$	74,056	$	50,016
Depreciation		12,093		11,516		24,031		23,374
Other interest expense		10,575		12,542		21,976		25,262
Debt discount amortization		—		2,428		1,718		5,343
Income taxes		20,996		16,628		37,784		30,878
Loss from discontinued		336		1,555		4,463		5,203
operations, net of tax

EBITDA	$	84,059	$	74,353	$	164,028	$	140,076

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PENSKE AUTOMOTIVE GROUP, INC. - FORM 8-K - EX-99.1 - July 21, 2011

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PENSKE AUTOMOTIVE GROUP, INC. Reports