Press release·02/21/2025 23:06:24

Financial Overview of Penske Automotive Group

Penske Automotive Group, Inc. (PAG) is a diversified international transportation services company and one of the world’s premier automotive and commercial truck retailers. In 2024, the company generated $30.5 billion in total revenue, comprised of $26.2 billion from retail automotive dealerships, $3.5 billion from retail commercial truck dealerships, and $777.9 million from commercial vehicle distribution and other operations.

Retail Automotive Performance

PAG’s retail automotive business is a global operation, with 56% of revenue generated in the U.S. and Puerto Rico and 44% generated internationally, primarily in the U.K. The company offers over 40 vehicle brands, with 72% of revenue coming from premium brands like Audi, BMW, and Mercedes-Benz. In 2024, PAG retailed and wholesaled over 594,000 vehicles.

The retail automotive segment saw mixed performance in 2024. New vehicle retail unit sales (excluding agency units) increased 3.7% year-over-year, driven by a 7,372 unit increase from net dealership acquisitions, partially offset by a 2,121 unit, or 1.1%, decrease in same-store sales. The increase in same-store new retail units in the U.S. of 3.0% was offset by a 1.0% decrease internationally, primarily due to a decline in certain premium brand sales in the U.K.

New vehicle sales revenue increased 6.9% year-over-year, with a $597.7 million increase from net dealership acquisitions and a $184.9 million, or 1.7%, increase in same-store revenue. However, new vehicle gross profit decreased 7.3%, driven by a $151.7 million, or 12.5%, decrease in same-store gross profit, partially offset by a $61.6 million increase from net dealership acquisitions. The decrease in same-store gross profit was due to an $815 per unit decline in average gross profit per new vehicle, despite a $1,494 per unit increase in average selling price.

Used vehicle retail unit sales decreased 3.9% year-over-year, with an 11,393 unit, or 4.8%, decrease in same-store sales, partially offset by a 1,280 unit increase from net dealership acquisitions. Used vehicle retail sales revenue decreased 1.7%, with a $389.4 million, or 4.6%, decrease in same-store revenue, partially offset by a $240.6 million increase from net dealership acquisitions. However, used vehicle gross profit increased 5.2%, driven by a $21.7 million increase from net dealership acquisitions and a $1.0 million, or 0.2%, increase in same-store gross profit.

Finance and insurance revenue decreased 3.3%, with a $35.4 million, or 4.4%, decrease in same-store revenue, partially offset by a $7.9 million increase from net dealership acquisitions. The decrease was due to the decline in combined new and used retail unit sales and a $33 per unit decrease in same-store finance and insurance revenue per unit.

Service and parts revenue increased 11.5%, with a $165.8 million, or 6.2%, increase in same-store revenue and a $147.3 million increase from net dealership acquisitions. The increase was driven by higher warranty, customer pay, and vehicle preparation revenue. Service and parts gross profit increased 10.3%, with a $96.8 million, or 6.1%, increase in same-store gross profit and a $68.9 million increase from net dealership acquisitions.

Retail Commercial Truck Performance

PAG’s retail commercial truck business, Premier Truck Group (PTG), operates primarily Freightliner and Western Star truck dealerships across the U.S. and Canada. In 2024, PTG retailed and wholesaled 20,947 new and used trucks.

New commercial truck retail unit sales decreased 7.2% year-over-year, with a 2,020 unit, or 11.3%, decrease in same-store sales, partially offset by a 701 unit increase from net dealership acquisitions. New commercial truck retail sales revenue decreased 4.9%, with a $227.4 million, or 9.4%, decrease in same-store revenue, partially offset by a $106.7 million increase from net dealership acquisitions. New commercial truck gross profit increased 5.2%, driven by an $8.1 million increase from net dealership acquisitions, partially offset by a $0.4 million, or 0.3%, decrease in same-store gross profit.

Used commercial truck retail unit sales increased 15.6%, with a 389 unit, or 12.5%, increase in same-store sales and a 101 unit increase from net dealership acquisitions. Used commercial truck retail sales revenue decreased 1.3%, with a $10.5 million, or 4.6%, decrease in same-store revenue, partially offset by a $7.6 million increase from net dealership acquisitions. Used commercial truck gross profit decreased 14.8%, primarily due to a $2.6 million, or 13.2%, decrease in same-store gross profit.

Service and parts revenue for the commercial truck segment decreased 2.3%, with a $55.2 million, or 6.3%, decrease in same-store revenue, partially offset by a $34.2 million increase from net dealership acquisitions. Service and parts gross profit decreased 0.9%, with a $17.9 million, or 4.8%, decrease in same-store gross profit, partially offset by a $14.6 million increase from net dealership acquisitions.

Commercial Vehicle Distribution and Other

PAG’s commercial vehicle distribution and other operations, primarily in Australia and New Zealand, generated $777.9 million in revenue and $178.2 million in gross profit in 2024, increases of 22.7% and 7.9%, respectively, compared to 2023.

Equity Earnings and Other Expenses

Equity in earnings of affiliates, which primarily represents PAG’s 28.9% ownership interest in Penske Transportation Solutions (PTS), decreased 31.7% to $200.7 million in 2024. The decrease was primarily due to lower commercial and consumer rental revenue, higher interest expense, and lower gains from the sale of revenue-earning vehicles at PTS.

Selling, general, and administrative expenses increased 4.1% year-over-year, with a $139.5 million increase from net acquisitions, partially offset by a $1.6 million decrease in same-store expenses. As a percentage of gross profit, SG&A expenses increased to 70.6% in 2024 from 68.9% in 2023.

Floor plan interest expense increased 42.6% to $189.8 million, due to higher average amounts outstanding and higher applicable interest rates. Other interest expense decreased 5.2% to $87.8 million, due to lower average revolver borrowings.

Liquidity and Capital Resources

As of December 31, 2024, PAG had $72.4 million in cash and approximately $1.8 billion available for borrowing under its various credit facilities. The company paid $274.4 million in dividends to stockholders in 2024 and had $156.8 million remaining under its securities repurchase program.

PAG’s cash flows from operating activities, including all floor plan notes payable, were $1.16 billion in 2024, compared to $1.14 billion in 2023. Cash used in investing activities was $1.04 billion in 2024, primarily for capital expenditures and acquisitions. Cash used in financing activities was $164.7 million in 2024, including $58.7 million for stock repurchases and $274.4 million for dividends.

Outlook and Risks

PAG’s future success is dependent on various macroeconomic, industry, and company-specific factors, including:

• Macro-economic conditions and their impact on vehicle sales, consumer demand, and affordability
• Availability of vehicle inventory and parts from manufacturers
• Reliance on manufacturer relationships and franchise agreements
• Disruptions to information technology systems and cybersecurity threats
• Regulatory changes, including those related to vehicle emissions and sales processes
• Ability to successfully integrate acquisitions and realize synergies
• Performance of its Penske Transportation Solutions joint venture

The company faces risks related to supply chain disruptions, inflation, interest rate changes, and the transition to electric vehicles, among others. PAG’s geographic and product diversification, as well as its focus on higher-margin service and parts revenue, have helped mitigate the impact of cyclical trends in the automotive industry. However, an unfavorable resolution of legal and regulatory matters could have a material adverse effect on the company’s financial performance.

Overall, Penske Automotive Group’s 2024 financial results demonstrate the resilience of its diversified business model, with strength in its retail automotive and commercial vehicle distribution operations offsetting some softness in its retail commercial truck segment. The company’s liquidity position and capital allocation priorities position it well to navigate the evolving automotive landscape and pursue strategic growth opportunities.