Adjusted Income from Continuing Operations of $27.9 Million, or $0.30
Per Share
Adjusted Results Exclude $0.03 Per Share in Severance and Other
Charges
Worldwide Headcount Reduced By 4%
Company Repurchased 3.6 Million Shares for $50 Million
Penske Automotive Group, Inc. (NYSE: PAG), an international automotive
retailer, today reported third quarter 2008 adjusted income from
continuing operations of $27.9 million, or $0.30 per share, compared to
income from continuing operations of $42.9 million, or $0.45 per share,
in the third quarter last year. Adjusted third quarter 2008 earnings
exclude an aggregate of $2.7 million ($0.03 per share) of after-tax
severance costs, costs associated with the termination of an acquisition
agreement, and insurance deductibles relating to damage sustained at the
Company’s dealerships in the Houston market
during Hurricane Ike. Including these items, actual third quarter income
from continuing operations was $25.1 million, or $0.27 per share. Net
income in the third quarter was $24.2 million, or $0.26 per share,
compared with net income of $43.4 million, or $0.46 per share, in the
prior year.
Third quarter revenues were $3.0 billion, which compare to $3.4 billion
in the prior year. Same-store retail revenues decreased 17.0%, as
same-store unit sales of new vehicles fell 19.3% during the quarter. “Obviously,
it was a difficult quarter for auto retailers in our markets,”
said Penske Automotive Group Chairman Roger Penske. “We
experienced a rapid decline in consumer interest for new vehicles in
both the United States and the United Kingdom. We believe the challenges
in our markets relate mainly to consumer confidence, not credit
availability. In fact, the Company’s largest
captive finance partners are responsible for funding more than 75% of
the vehicles financed at our dealerships in the United States and remain
committed to the needs of our customers.”
During the third quarter, adjusted selling, general and administrative
expenses increased to 82.5% as a percentage of gross profit, due in part
to the decline in vehicle sales during the period. Penske continued, “In
an effort to address the impact of these challenging market conditions,
we took steps during the third quarter to better align variable expenses
with current business levels. These actions included a 4.3% reduction in
worldwide employment levels, resulting in an estimated $24.0 million
reduction in annualized personnel expense. We continue to evaluate
staffing levels and other selling, general and administrative expenses,
and are making further reductions as warranted by market conditions.”
For the nine months ended September 30, 2008, revenues were $9.6
billion, which compare to $9.8 billion in the prior year. Adjusted
income from continuing operations for the nine months was $102.3
million, or $1.09 per share, compared to adjusted income from continuing
operations of $112.0 million, or $1.18 per share, in the prior year.
Adjusted 2008 earnings exclude the severance, transaction termination
costs and deductibles outlined above, and adjusted 2007 earnings exclude
$12.3 million ($0.13 per share) of after-tax costs relating to the
redemption of the Company’s 9.625% Senior
Subordinated Notes in March of 2007. Actual income from continuing
operations and net income for the nine months ended September 30, 2008,
were $99.6 million, or $1.06 per share, and $98.0 million, or $1.04 per
share, respectively.
During the third quarter, the Company utilized $50 million of its
previously announced share buyback authority. In total, the Company
repurchased 3,565,143 shares of its common stock at an average price of
$14.04 per share, and currently has approximately 91.9 million shares
outstanding. The Company has an additional $100 million of repurchase
capacity outstanding under that program.
smartUSA
Commenting on smartUSA, Penske said, “During
the third quarter, our distribution business continued to perform well,
despite the difficult retail market conditions. The Company wholesaled
6,683 units in the quarter, bringing our total wholesale deliveries to
19,329 for the first nine months. During the quarter, smartUSA also
appointed three additional retail centers, bringing the total number of
retail centers to 73.”
During October, the smart fortwo was recognized as the most fuel
efficient, non-hybrid, all gas powered vehicle in the United States
according to the U.S. Environmental Protection Agency’s
2009 Fuel Economy Guide. The 2009 smart fortwo achieves an average of 41
miles per gallon on the highway, already exceeds the 2020 Corporate
Average Fuel Economy (CAFE) standards, and is classified as an Ultra-Low
Emissions Vehicle by the California Air Resources Board (CARB). The 2009
smart fortwo is expected to begin arriving at dealerships in November.
Consistent with recent practice, the Company is not providing quarterly
earnings guidance for the upcoming quarter, and is therefore withdrawing
previously issued guidance relating to the full year. It is the Company’s
current intention to provide annual earnings guidance for 2009 at a
later date.
Penske Automotive will host a conference call discussing financial
results relating to the third quarter of 2008 on October 30, 2008, at 2:00
p.m. EDT. To listen to the conference call, participants must
dial (866) 205-3921 [International, please
dial (612) 332-0923]. The call will be
simultaneously broadcast over the Internet through the Penske Automotive
Group website at www.penskeautomotive.com.
About Penske Automotive
Penske Automotive Group, Inc., headquartered in Bloomfield Hills,
Michigan, operates 307 retail automotive franchises, representing more
than 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 160 franchises in 19
states and Puerto Rico and 147 franchises located outside the United
States, primarily in the United Kingdom. Penske Automotive is also the
exclusive distributor of the smart fortwo through its wholly-owned
subsidiary smartUSA Distributor LLC. smartUSA operates 73 smart centers
across the United States. Penske Automotive is a member of the Fortune
200 and Russell 1000 and has approximately 15,000 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 and earnings potential
and its ability to reduce its variable expenses. Actual results may vary
materially because of risks and uncertainties, including external
factors such as 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, 2007, 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.
This release contains certain non-GAAP financial measures as defined
under SEC rules, such as adjusted income from continuing operations and
related earnings per share, which exclude certain items disclosed in the
release. The Company has reconciled these measures to the most directly
comparable GAAP measures in the release. The Company believes that these
non-GAAP financial measures improve the transparency of the Company's
disclosure and the 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)
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
2008
|
|
2007
|
|
Revenues:
|
|
|
|
|
|
New Vehicle
|
|
$1,556,198
|
|
|
$1,882,971
|
|
|
Used Vehicle
|
|
721,075
|
|
|
785,598
|
|
|
Finance and Insurance, Net
|
|
68,135
|
|
|
78,400
|
|
|
Service and Parts
|
|
363,067
|
|
|
355,348
|
|
|
Distribution
|
|
85,567
|
|
|
- -
|
|
|
Fleet and Wholesale Vehicle
|
|
202,401
|
|
|
283,538
|
|
|
Total Revenues
|
|
2,996,443
|
|
|
3,385,855
|
|
|
Cost of Sales:
|
|
|
|
|
|
New Vehicle
|
|
1,428,921
|
|
|
1,723,615
|
|
|
Used Vehicle
|
|
668,443
|
|
|
723,137
|
|
|
Service and Parts
|
|
161,252
|
|
|
157,734
|
|
|
Distribution
|
|
72,362
|
|
|
- -
|
|
|
Fleet and Wholesale Vehicle
|
|
204,352
|
|
|
281,877
|
|
|
Total Cost of Sales
|
|
2,535,330
|
|
|
2,886,363
|
|
|
Gross Profit
|
|
461,113
|
|
|
499,492
|
|
|
SG&A Expenses
|
|
384,533
|
|
|
390,523
|
|
|
Depreciation and Amortization
|
|
14,133
|
|
|
12,556
|
|
|
Operating Income
|
|
62,447
|
|
|
96,413
|
|
|
Floor Plan Interest Expense
|
|
(15,557
|
)
|
|
(19,235
|
)
|
|
Other Interest Expense
|
|
(16,358
|
)
|
|
(12,409
|
)
|
|
Equity in Earnings of Affiliates
|
|
8,995
|
|
|
1,475
|
|
|
Income from Continuing Operations Before Income Taxes and Minority
Interests
|
|
39,527
|
|
|
66,244
|
|
|
Income Taxes
|
|
(14,190
|
)
|
|
(22,814
|
)
|
|
Minority Interests
|
|
(189
|
)
|
|
(531
|
)
|
|
Income from Continuing Operations
|
|
25,148
|
|
|
42,899
|
|
|
Income (Loss) from Discontinued Operations, Net of Tax
|
|
(932
|
)
|
|
501
|
|
|
Net Income
|
|
$24,216
|
|
|
$43,400
|
|
|
Income from Continuing Operations Per Diluted Share
|
|
$0.27
|
|
|
$0.45
|
|
|
Diluted EPS
|
|
$0.26
|
|
|
$0.46
|
|
|
Diluted Weighted Average Shares Outstanding
|
|
93,134
|
|
|
94,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
2008
|
|
2007
|
|
Revenues:
|
|
|
|
|
|
New Vehicle
|
|
$4,922,718
|
|
|
$5,318,796
|
|
|
Used Vehicle
|
|
2,339,925
|
|
|
2,387,664
|
|
|
Finance and Insurance, Net
|
|
218,474
|
|
|
221,130
|
|
|
Service and Parts
|
|
1,088,277
|
|
|
1,055,177
|
|
|
Distribution
|
|
247,758
|
|
|
- -
|
|
|
Fleet and Wholesale Vehicle
|
|
735,028
|
|
|
838,918
|
|
|
Total Revenues
|
|
9,552,180
|
|
|
9,821,685
|
|
|
Cost of Sales:
|
|
|
|
|
|
New Vehicle
|
|
4,512,354
|
|
|
4,871,488
|
|
|
Used Vehicle
|
|
2,159,328
|
|
|
2,200,786
|
|
|
Service and Parts
|
|
479,678
|
|
|
466,327
|
|
|
Distribution
|
|
208,585
|
|
|
- -
|
|
|
Fleet and Wholesale Vehicle
|
|
738,132
|
|
|
831,021
|
|
|
Total Cost of Sales
|
|
8,098,077
|
|
|
8,369,622
|
|
|
Gross Profit
|
|
1,454,103
|
|
|
1,452,063
|
|
|
SG&A Expenses
|
|
1,179,670
|
|
|
1,143,756
|
|
|
Depreciation and Amortization
|
|
41,125
|
|
|
37,657
|
|
|
Operating Income
|
|
233,308
|
|
|
270,650
|
|
|
Floor Plan Interest Expense
|
|
(49,378
|
)
|
|
(54,206
|
)
|
|
Other Interest Expense
|
|
(40,962
|
)
|
|
(44,053
|
)
|
|
Equity in Earnings of Affiliates
|
|
13,322
|
|
|
3,183
|
|
|
Debt Redemption Charge
|
|
- -
|
|
|
(18,634
|
)
|
|
Income from Continuing Operations Before
Income Taxes and Minority Interests
|
|
156,290
|
|
|
156,940
|
|
|
Income Taxes
|
|
(55,632
|
)
|
|
(55,746
|
)
|
|
Minority Interests
|
|
(1,052
|
)
|
|
(1,527
|
)
|
|
Income from Continuing Operations
|
|
99,606
|
|
|
99,667
|
|
|
Loss from Discontinued Operations, Net of Tax
|
|
(1,597
|
)
|
|
(1,330
|
)
|
|
Net Income
|
|
$98,009
|
|
|
$98,337
|
|
|
Income from Continuing Operations Per Diluted Share
|
|
$1.06
|
|
|
$1.05
|
|
|
Diluted EPS
|
|
$1.04
|
|
|
$1.04
|
|
|
Diluted Weighted Average Shares Outstanding
|
|
94,215
|
|
|
94,512
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSKE AUTOMOTIVE GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)
|
|
|
|
|
|
9/30/08
|
|
12/31/07
|
|
Assets
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$27,772
|
|
$13,267
|
|
Accounts Receivable, Net
|
|
371,557
|
|
447,717
|
|
Inventories
|
|
1,721,833
|
|
1,680,062
|
|
Other Current Assets
|
|
80,689
|
|
65,756
|
|
Assets Held for Sale
|
|
7,496
|
|
90,987
|
|
Total Current Assets
|
|
2,209,347
|
|
2,297,789
|
|
Property and Equipment, Net
|
|
701,480
|
|
617,707
|
|
Intangibles
|
|
1,691,002
|
|
1,668,163
|
|
Other Assets
|
|
327,853
|
|
84,894
|
|
Total Assets
|
|
$4,929,682
|
|
$4,668,553
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
Floor Plan Notes Payable
|
|
$1,077,639
|
|
$1,069,710
|
|
Floor Plan Notes Payable – Non-Trade
|
|
537,095
|
|
476,028
|
|
Accounts Payable
|
|
233,496
|
|
266,251
|
|
Accrued Expenses
|
|
239,663
|
|
211,588
|
|
Current Portion Long-Term Debt
|
|
13,444
|
|
14,522
|
|
Liabilities Held for Sale
|
|
11,419
|
|
57,940
|
|
Total Current Liabilities
|
|
2,112,756
|
|
2,096,039
|
|
Long-Term Debt
|
|
1,073,878
|
|
830,106
|
|
Other Long-Term Liabilities
|
|
351,392
|
|
320,949
|
|
Total Liabilities
|
|
3,538,026
|
|
3,247,094
|
|
Stockholders’ Equity
|
|
1,391,656
|
|
1,421,459
|
|
Total Liabilities and Stockholders’ Equity
|
|
$4,929,682
|
|
$4,668,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months
|
|
|
|
2008
|
|
2007
|
|
|
2008
|
|
2007
|
|
Total Retail Units
|
|
|
|
|
|
|
|
|
|
|
New Retail
|
|
45,416
|
|
|
53,168
|
|
|
|
141,164
|
|
|
149,362
|
|
|
Used Retail
|
|
26,411
|
|
|
25,648
|
|
|
|
81,359
|
|
|
77,945
|
|
|
Total Retail
|
|
71,827
|
|
|
78,816
|
|
|
|
222,523
|
|
|
227,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
smart Wholesale Units
|
|
6,683
|
|
|
- -
|
|
|
|
19,329
|
|
|
- -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store Retail Units
|
|
|
|
|
|
|
|
|
|
|
New Same-Store Retail
|
|
42,733
|
|
|
52,923
|
|
|
|
126,512
|
|
|
142,993
|
|
|
Used Same-Store Retail
|
|
25,390
|
|
|
25,515
|
|
|
|
76,896
|
|
|
74,724
|
|
|
Total Same-Store Retail
|
|
68,123
|
|
|
78,438
|
|
|
|
203,408
|
|
|
217,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store Retail Revenue
|
|
|
|
|
|
|
|
|
|
|
New Vehicles
|
|
$1,473,271
|
|
|
$1,874,985
|
|
|
|
$4,493,349
|
|
|
$5,122,145
|
|
|
Used Vehicles
|
|
681,034
|
|
|
782,675
|
|
|
|
2,192,650
|
|
|
2,303,289
|
|
|
Finance and Insurance, Net
|
|
65,554
|
|
|
78,128
|
|
|
|
204,076
|
|
|
216,035
|
|
|
Service and Parts
|
|
342,836
|
|
|
352,931
|
|
|
|
1,018,308
|
|
|
1,023,544
|
|
|
Total Same-Store Retail
|
|
$2,562,695
|
|
|
$3,088,719
|
|
|
|
$7,908,383
|
|
|
$8,665,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-Store Retail Revenue Growth
|
|
|
|
|
|
|
|
|
|
|
New Vehicles
|
|
(21.4
|
%)
|
|
8.7
|
%
|
|
|
(12.3
|
%)
|
|
7.4
|
%
|
|
Used Vehicles
|
|
(13.0
|
%)
|
|
12.5
|
%
|
|
|
(4.8
|
%)
|
|
15.9
|
%
|
|
Finance and Insurance, Net
|
|
(16.1
|
%)
|
|
11.6
|
%
|
|
|
(5.5
|
%)
|
|
9.6
|
%
|
|
Service and Parts
|
|
(2.9
|
%)
|
|
7.1
|
%
|
|
|
(0.5
|
%)
|
|
8.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix
|
|
|
|
|
|
|
|
|
|
|
New Vehicles
|
|
51.9
|
%
|
|
55.6
|
%
|
|
|
51.5
|
%
|
|
54.2
|
%
|
|
Used Vehicles
|
|
24.1
|
%
|
|
23.2
|
%
|
|
|
24.5
|
%
|
|
24.3
|
%
|
|
Finance and Insurance, Net
|
|
2.3
|
%
|
|
2.3
|
%
|
|
|
2.3
|
%
|
|
2.3
|
%
|
|
Service and Parts
|
|
12.1
|
%
|
|
10.5
|
%
|
|
|
11.4
|
%
|
|
10.7
|
%
|
|
Distribution
|
|
2.9
|
%
|
|
--
|
%
|
|
|
2.6
|
%
|
|
--
|
%
|
|
Fleet and Wholesale
|
|
6.7
|
%
|
|
8.4
|
%
|
|
|
7.7
|
%
|
|
8.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Retail Selling Price
|
|
|
|
|
|
|
|
|
|
|
New Vehicles
|
|
$34,265
|
|
|
$35,415
|
|
|
|
$34,872
|
|
|
$35,610
|
|
|
Used Vehicles
|
|
27,302
|
|
|
30,630
|
|
|
|
28,760
|
|
|
30,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
15.4
|
%
|
|
14.8
|
%
|
|
|
15.2
|
%
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Gross Margin – by Product
|
|
|
|
|
|
|
|
|
|
|
New Vehicles
|
|
8.2
|
%
|
|
8.5
|
%
|
|
|
8.3
|
%
|
|
8.4
|
%
|
|
Used Vehicles
|
|
7.3
|
%
|
|
8.0
|
%
|
|
|
7.7
|
%
|
|
7.8
|
%
|
|
Service and Parts
|
|
55.6
|
%
|
|
55.6
|
%
|
|
|
55.9
|
%
|
|
55.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSKE AUTOMOTIVE GROUP, INC.
Selected Data (Continued)
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months
|
|
|
|
2008
|
|
2007
|
|
|
2008
|
|
2007
|
|
Gross Profit per Retail Transaction
|
|
|
|
|
|
|
|
|
|
|
New Vehicles
|
|
$2,802
|
|
|
$2,997
|
|
|
|
$2,907
|
|
|
$2,995
|
|
|
Used Vehicles
|
|
1,993
|
|
|
2,435
|
|
|
|
2,220
|
|
|
2,398
|
|
|
Finance and Insurance
|
|
949
|
|
|
995
|
|
|
|
982
|
|
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand Mix:
|
|
|
|
|
|
|
|
|
|
|
BMW
|
|
23
|
%
|
|
22
|
%
|
|
|
22
|
%
|
|
22
|
%
|
|
Toyota / Lexus
|
|
19
|
%
|
|
20
|
%
|
|
|
20
|
%
|
|
20
|
%
|
|
Honda / Acura
|
|
15
|
%
|
|
15
|
%
|
|
|
15
|
%
|
|
15
|
%
|
|
Mercedes Benz
|
|
10
|
%
|
|
10
|
%
|
|
|
10
|
%
|
|
11
|
%
|
|
Audi
|
|
9
|
%
|
|
8
|
%
|
|
|
9
|
%
|
|
8
|
%
|
|
Land Rover
|
|
4
|
%
|
|
5
|
%
|
|
|
4
|
%
|
|
5
|
%
|
|
Ferrari / Maserati
|
|
3
|
%
|
|
2
|
%
|
|
|
3
|
%
|
|
2
|
%
|
|
Porsche
|
|
3
|
%
|
|
3
|
%
|
|
|
3
|
%
|
|
4
|
%
|
|
Other
|
|
14
|
%
|
|
15
|
%
|
|
|
14
|
%
|
|
13
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium
|
|
64
|
%
|
|
64
|
%
|
|
|
64
|
%
|
|
65
|
%
|
|
Foreign
|
|
31
|
%
|
|
30
|
%
|
|
|
31
|
%
|
|
29
|
%
|
|
Domestic Big 3
|
|
5
|
%
|
|
6
|
%
|
|
|
5
|
%
|
|
6
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix:
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
64
|
%
|
|
63
|
%
|
|
|
63
|
%
|
|
62
|
%
|
|
International
|
|
36
|
%
|
|
37
|
%
|
|
|
37
|
%
|
|
38
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt to Total Capital Ratio
|
|
44
|
%
|
|
37
|
%
|
|
|
44
|
%
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent Expense
|
|
$40,922
|
|
|
$38,422
|
|
|
|
$121,216
|
|
|
$111,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Penske Automotive Group, Inc.
Bob O’Shaughnessy,
248-648-2800
Chief Financial Officer
boshaughnessy@penskeautomotive.com
or
Tony
Pordon, 248-648-2540
Senior Vice President
tpordon@penskeautomotive.com
