EX-99.1 2 exhibit1.htm EX-99.1 EX-99.1

FOR IMMEDIATE RELEASE

PENSKE AUTOMOTIVE REPORTS FOURTH QUARTER RESULTS
____________________________________________________________

Same-Store Retail Revenues Increase 15.5%

Income From Continuing Operations Increases to $19.3 Million and
Related Earnings Per Share Increases to $0.21

SG&A Improves to 83.3% of Gross Profit

$44.1 Million of Convertible Notes Purchased in Q1 2010
___________________________________________________________

BLOOMFIELD HILLS, MI, February 19, 2010 – Penske Automotive Group, Inc. (NYSE: PAG), 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.”

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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.

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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.

     
Contacts:  
Bob O’Shaughnessy
Chief Financial Officer
248-648-2800
boshaughnessy@penskeautomotive.com
   
 
   
or
   
Anthony R. Pordon
Senior Vice President
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)

                         
    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
             29,519       (664,164 )
Income Taxes
                        
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
             129,428       (517,198 )
Income Taxes
                        
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  
 
                

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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 %

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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  

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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
     ($4,242 )     ($0.05 )   $ 92,683     $ 0.99  
operations attributable to PAG
                                
 
                                

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