Penske Automotive Reports Fourth Quarter and Full Year Results

Reports Record Fourth Quarter Income from Continuing Operations and Earnings per Share

Earnings per Share from Continuing Operations Rises 21.3% to $0.57


Completes Most Profitable Year in Company History

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)-- Penske Automotive Group, Inc. (NYSE: PAG):

     
Fourth Quarter 2012   Full Year 2012
  • Revenue Increases 17.9% to $3.4 Billion
 
  • Revenue Increases 18.3% to $13.2 Billion
  • Same-store Retail Revenue Increases 11.4 %
  • Same-store Retail Revenue Increases 9.9%
  • Income from Continuing Operations Increases 19.5% to $51.0 Million
  • Adjusted Inc. from Continuing Operations Increases 25.8% to $206.0 Million
  • EPS from Continuing Operations Increases 21.3% to $0.57 per share
  • Adjusted EPS from Continuing Operations Increases 26.7% to $2.28 per share
  • EBITDA Increases 14.4% to $102.2 Million
 
  • Adjusted EBITDA Increases 19.6% to $407.6 Million
 

Penske Automotive Group, Inc. (NYS: PAG) , an international automotive retailer, announced today record fourth quarter income from continuing operations and related earnings per share. For the fourth quarter 2012, income from continuing operations attributable to common shareholders increased 19.5% to $51.0 million and related earnings per share increased 21.3% to $0.57 per share. This compares to income from continuing operations attributable to common shareholders of $42.7 million, or $0.47 per share in the same period last year. Fourth quarter results include $1.7 million ($1.2 million after-taxes, or $0.01 per share) in expenses for insurance deductibles and clean-up costs associated with Superstorm Sandy.

Total revenue increased 17.9% to $3.4 billion, including a same-store retail revenue increase of 11.4% in the fourth quarter. The revenue increase was driven by a 19.3% increase in total retail unit sales, including an 11.5% increase on a same-store basis. Gross profit improved 16.9% to $515.1 million while operating income increased 19.9% to $91.5 million.

Highlights of the Fourth Quarter

  • Total Retail Unit Sales increased 19.3% to 81,383
    • +15.3% in the United States; +30.3% Internationally
    • New unit retail sales +21.7%
    • Used unit retail sales +16.2%
  • Same-store Retail Revenue increased 11.4%
    • New +16.1%; Used +6.0%; Finance & Insurance +13.0%; Service and Parts +3.2%
    • +12.8% in the United States; +8.5% Internationally
  • Average Transaction Price Per Unit
    • New $38,881; (0.4%)
    • Used $25,791; (2.5%)
  • Average Gross Profit Per Unit
    • New $3,197, ($58/unit); Gross Margin 8.2%, (10 basis points)
    • Used $1,857, ($61/unit); Gross Margin 7.2%, (10 basis points)
    • Finance & Insurance $986, +$1/unit

Chairman Roger Penske said, "I'm pleased that our retail automotive business reported record profitability in the fourth quarter, producing double-digit growth in operating income, income from continuing operations and earnings per share during the fourth quarter, despite the effects of Superstorm Sandy which impacted operations in the northeast U.S. during the quarter. I am particularly pleased that our same-store retail revenues improved by 11.4% while gross profit per retail unit stabilized, and service and parts margin improved 110 basis points to 58.8%."

For the year ended December 31, 2012, total revenue increased 18.3% to $13.2 billion. Adjusted income from continuing operations attributable to common shareholders increased 25.8% to $206.0 million and adjusted earnings per share attributable to common shareholders increased 26.7% to $2.28 per share. This compares to adjusted income from continuing operations attributable to common shareholders of $163.8 million, and adjusted earnings per share of $1.80 per share in the same period last year.

The full year 2012 results exclude after-tax costs of $13.0 million, or $0.14 per share, of debt redemption costs associated with the redemption of the Company's $375 million of 7.75% senior subordinated notes due 2016. The full year 2011 results exclude $11.0 million, or $0.12 per share, of net income tax benefits reflecting a positive adjustment from the resolution of certain tax items in the U.K. of $17.0 million, or $0.19 per share, partially offset by a reduction in deferred tax assets of $6.0 million, or $0.07 per share. Income from continuing operations attributable to common shareholders for the twelve months ended December 31, 2012, was $193.0 million, or $2.14 per share, compared to income from continuing operations attributable to common shareholders of $174.8 million, or $1.92 in the same period last year.

Penske continued, "2012 was a very solid year of growth and profitability for our Company. We expanded our presence globally by completing acquisitions in Northern Ireland and Italy, and we entered the Madison, Wisconsin, market in the U.S. In total, our business added $750 million in estimated annualized revenue through acquisitions during the year, and generated a 9.9% increase in same-store retail revenue, resulting in revenue growth of 18.3%, which contributed to a 23.4% increase in operating income and a 26.7% increase in adjusted earnings per share."

Conference Call

Penske Automotive will host a conference call discussing financial results relating to the fourth quarter of 2012 on February 6, 2013, at 2:00 p.m.Eastern Standard Time. To listen to the conference call, participants must dial (800) 230-1092 [International, please dial (612) 234-9959]. The call will also be simultaneously broadcast over the Internet through the Investors Relations section of the Penske Automotive Group website. Additionally, an investor presentation relating to the fourth quarter and full year 2012 financial results has been posted to the Company's website. To access the presentation or to listen to the Company's webcast, please refer to www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 344 retail automotive franchises, representing 40 different brands and 30 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 173 franchises in 18 states and Puerto Rico and 171 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 16,700 employees.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations, adjusted earnings per share from continuing operations, and adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"). The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these widely accepted measures of operating profitability improve the transparency of the Company's disclosures and provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations. These non-GAAP financial measures are not substitutes 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 and outlook. Actual results may vary materially because of risks and uncertainties that are difficult to predict. These risks and uncertainties include, among others: economic conditions generally, conditions in the credit markets and changes in interest rates, adverse conditions affecting a particular manufacturer, including the adverse impact to the vehicle and parts supply chain due to natural disasters or other disruptions that interrupt the supply of vehicles or parts to us; changes in consumer credit availability, the outcome of legal and administrative matters, and other factors over which management has limited 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, 2011, 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.

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PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Thousands, Except Per Share Data)

(Unaudited)

 
Three Months Ended Twelve Months Ended
December 31, December 31,
2012   2011 2012   2011
Revenues:
New Vehicle $ 1,803,763 $ 1,487,524 $ 6,782,389 $ 5,639,381
Used Vehicle 902,471 797,005 3,747,236 3,238,152
Finance and Insurance, Net 80,244 67,240 322,567 270,579
Service and Parts 363,528 332,770 1,446,729 1,329,064
Fleet, Wholesale and Other   221,246     173,928     864,596     650,316  
Total Revenues $ 3,371,252 $ 2,858,467 $ 13,163,517 $ 11,127,492
Cost of Sales:
New Vehicle $ 1,655,437 $ 1,363,453 $ 6,233,338 $ 5,169,968
Used Vehicle 837,498 739,212 3,462,908 2,984,267
Service and Parts 149,791 140,915 603,682 566,380
Fleet, Wholesale and Other   213,413     174,394     850,641     645,055  
Total Cost of Sales 2,856,139 2,417,974 11,150,569 9,365,670
Gross Profit 515,113 440,493 2,012,948 1,761,822
SG&A Expenses 409,505 352,076 1,594,095 1,419,123
Depreciation   14,140     12,141     53,995     47,101  
Operating Income 91,468 76,276 364,858 295,598
Floor Plan Interest Expense (9,584 ) (7,001 ) (38,797 ) (27,218 )
Other Interest Expense (11,656 ) (11,657 ) (46,892 ) (44,256 )
Equity in Earnings of Affiliates 6,180 7,924 27,572 25,451
Debt Redemption Costs --- --- (17,753 ) ---
Debt Discount Amortization   ---     ---     ---     (1,718 )
Income from Continuing Operations Before Income Taxes 76,408 65,542 288,988 247,857
Income Taxes   (24,726 )   (22,373 )   (94,330 )   (71,690 )
Income from Continuing Operations 51,682 43,169 194,658 176,167
(Loss) Income from Discontinued Operations, Net of Tax   (2,446 )   4,988     (7,491 )   2,091  
Net Income 49,236 48,157 187,167 178,258
Less: Income Attributable to Non-Controlling Interests   (637 )   (470 )   (1,627 )   (1,377 )
Net Income Attributable to Common Shareholders $ 48,599   $ 47,687   $ 185,540   $ 176,881  
Income from Continuing Operations Per Share $ 0.57   $ 0.47   $ 2.14   $ 1.92  
Income Per Share $ 0.54   $ 0.53   $ 2.05   $ 1.94  
Weighted Average Shares Outstanding   90,291     90,553     90,342     91,274  
Amounts Attributable to Common Shareholders:
Reported Income from Continuing Operations $ 51,682 $ 43,169 $ $ 194,658 $ 176,167
Less: Income Attributable to Non-Controlling Interests   (637 )   (470 )   (1,627 )   (1,377 )
Income from Continuing Operations, net of tax $ 51,045 $ 42,699 $ 193,031 $ 174,790
(Loss) Income from Discontinued Operations, net of tax   (2,446 )   4,988     (7,491 )   2,091  
Net Income $ 48,599   $ 47,687   $ 185,540   $ 176,881  
   

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Balance Sheets

(Amounts In Thousands)

(Unaudited)

 
December 31, December 31,
2012 2011
Assets
Cash and Cash Equivalents $ 43,753 $ 27,201
Accounts Receivable, Net 552,868 429,633
Inventories 1,991,167 1,535,386
Other Current Assets 90,854 72,981
Assets Held for Sale   94,441   159,243
Total Current Assets 2,773,083 2,224,444
Property and Equipment, Net 1,023,781 839,630
Intangibles 1,258,012 1,123,206
Other Long-Term Assets   324,114   312,121
Total Assets $ 5,378,990 $ 4,499,401
 
Liabilities and Equity
Floor Plan Notes Payable $ 1,408,363 $ 966,579
Floor Plan Notes Payable - Non-Trade 716,621 668,581
Accounts Payable 263,349 214,870
Accrued Expenses 223,574 195,108
Current Portion Long-Term Debt 19,493 3,414
Liabilities Held for Sale   62,156   103,001
Total Current Liabilities 2,693,556 2,151,553
Long-Term Debt 918,024 846,777
Other Long-Term Liabilities   451,089   351,499
Total Liabilities 4,062,669 3,349,829
Equity   1,316,321   1,149,572
Total Liabilities and Equity $ 5,378,990 $ 4,499,401
 

PENSKE AUTOMOTIVE GROUP, INC.

Consolidated Condensed Statements of Income

(Amounts In Thousands, Except Per Share Data)

(Unaudited)

 
Three Months Ended
December 31,
  % Increase/
2012 2011

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