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Penske Automotive Reports Record Results

Stocks in this article: PAG

Penske Automotive Group, Inc. (NYSE:PAG), an international automotive retailer, today reported record third quarter results including the highest quarterly profit in company history. For the third quarter of 2011, income from continuing operations attributable to common shareholders was $56.7 million, or $0.62 per share, which compares to income from continuing operations attributable to common shareholders of $34.8 million, or $0.38 per share for the third quarter last year. During the quarter, the Company recognized a net income tax benefit of $11.0 million, or $0.12 per share, 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. After adjusting for these items, adjusted income from continuing operations attributable to common shareholders was a record $45.7 million, or $0.50 per share, representing an increase of 31.3% compared to the third quarter last year.

Total revenue increased by 10.5%, to $3.0 billion as total retail unit sales increased 6.2%. The increase in retail unit sales was highlighted by a 16.0% increase in used retail unit sales, which drove the Company’s used-to-new ratio to 0.88 to 1. During the quarter, higher average transaction prices on both new and used vehicles also contributed to the revenue increase, including an 8.8% increase in same-store retail revenue from the Company’s premium/luxury brands. The parts and service business remained strong, increasing 8.6% in the quarter and 4.1% on a same-store basis.

Highlights of the Third Quarter

  • Total retail unit sales increased 6.2% to 72,204
    • +5.9% in the United States; +6.8% Internationally
    • New unit retail sales (1.2%)
    • Used unit retail sales +16.0%
  • Same-store retail revenue increased 6.4%
    • New +2.2%; Used +15.0%; Finance & Insurance +9.3%; Service and Parts +4.1%
    • +5.1% in the United States; +8.7% Internationally
  • Average Transaction Price Per Unit
    • New $38,236, +8.4%
    • Used $26,404, +2.2%
  • Average Gross Profit Per Unit
    • New $3,238/unit, +14.8%; Gross Margin 8.5% +50 bps
    • Used $1,978/unit, +2.8%; Gross Margin 7.5% +10 bps
  • Inventory Days’ Supply
    • New 43 days; Used 47 days

Commenting on the Company’s performance in the third quarter, Chairman Roger Penske said, “Our business produced another outstanding quarter of results in both the United States and Internationally. Although we faced a challenging new vehicle inventory situation throughout the quarter as a result of the earthquake and tsunami that struck Japan, the Company generated same-store retail revenue increases in each area of the business and leveraged our cost structure by 70 basis points, improving operating income by 17.6%. Going forward, we believe the inventory supply of new vehicles for the affected brands is improving and should normalize in the first quarter of 2012.”

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