Penske Automotive Group, Inc. · NYSE:PAG

Penske Automotive — Q3 2022 Earnings Presentation

45 slides from Penske Automotive's earnings presentation, Oct 26, 2022

  1. Slide 1: Third Quarter 2022 Financial Results

    Third Quarter 2022 Financial Results

  2. Slide 2: Disclaimer

    DISCLAIMER Statements in this presentation may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.'s financial performance, acquisitions, and growth plans. Actual results may vary materially because of risks and uncertainties that are diff

  3. Slide 3: Overview, Highlights, Performance Review, Acquisitions, Digital, Non-GAAP

    Overview Highlights Performance Review Acquisitions Digital Marketing/Retailing Non-GAAP

  4. Slide 4: Company Overview

    COMPANY OVERVIEW A $26 billion annual revenue diversified international transportation services company and one of the world’s premier automotive and commercial truck retailers  Over 26,500 employees  Operations across four continents and nine countries  Retail Automotive  U.S., U.K., Germany, I

  5. Slide 5: Investment Overview

    INVESTMENT OVERVIEW  Diversified business mix provides multiple opportunities for growth  Operate in the highly fragmented automotive and commercial truck retail industries  Retail automotive segment focused on Premium/Luxury brands which generate more than 70% of automotive revenue  One of the

  6. Slide 6: Highlights

    Overview Highlights Performance Review Acquisitions Digital Marketing/Retailing Non-GAAP

  7. Slide 7: Q3 2022 Key Takeaways

    Q3 2022 KEY TAKEAWAYS ($ in millions, except EPS) Reported Excl. F/X Revenue $6,921 $7,270 EBT $467 $481 Net Income $340 $351 Earnings Per Share $4.61 $4.75  Repurchased 6.4 million shares of common stock for $675 million year-to-date through October 25, 2022  Year-to-date completed acquisitions a

  8. Slide 8: Q3 2022 Key Highlights

    Q3 2022 KEY HIGHLIGHTS Retail Automotive Retail Commercial Trucks Capital Allocation  Same-store total units retailed of  Retailed 6,031 new & used trucks, +25%;  Completed acquisitions and open points 103,937, -9% same-store units +14% representing approx. $1.3 billion YTD (Sept 2022) in 2022 an

  9. Slide 9: Q3 & 9M Performance Highlights

    Q3 & 9M PERFORMANCE HIGHLIGHTS Q3 Q3 9M 9M Chg Chg ($ in Millions, except Per Share Amount) 2022 2021 2022 2021 Revenue $6,921 $6,497 +7% $20,800 $19,259 +8% Ex cl F/ X $7,270 +12% $21,432 +11% Retail Auto Same-Store Revenue $5,452 $5,624 -3% $16,849 $16,917 -- Ex cl F/ X $5,828 +4% $17,597 +4% Inc.

  10. Slide 10: Q3 2022 Revenue & EBT

    Q3 2022 REVENUE & EBT Segment Segment Global Revenue Revenue Earnings Before Tax $6.9 Billion $6.9 Billion $467 Million 11% 15% 29% 64% 58% 83% 2% 31% 7% North America Retail Automotive Retail Commercial Truck United Kingdom Non-Automotive Investments & Other* Other International *Consists of non-au

  11. Slide 11: Retail Automotive Brand Mix

    RETAIL AUTOMOTIVE BRAND MIX (9M YTD 2022) (% of Total Worldwide Automotive Dealership Revenue)  Premium – 70%  U.S. – 1% 25%  Volume Non-U.S. – 21%  CarShop – 8% 11% 11% 10% 8% 7% 7% 6% 5% 3% 3% 1% 1% 1% 1% Other 11

  12. Slide 12: Long Term Debt and Leverage

    LONG TERM DEBT AND LEVERAGE 4 $2,500 $2,360 $2,163 $2,217 $2,000 3 2.9x $1,690 $1,638 2.7x 2.9x $1,500 $1,474 2 $1,000 1.8x 1 $500 0.8x 0.8x 0 $0 2017 2018 2019 2020 2021 9M 2022 -$500 -1 Debt Leverage Refer to non-gaap reconciliation schedule on pages 40-44 12

  13. Slide 13: Performance Review

    Overview Highlights Performance Review Acquisitions Digital Marketing/Retailing Non-GAAP

  14. Slide 14: Retail Automotive Revenue

    RETAIL AUTOMOTIVE REVENUE Diversified Revenue Stream Drives Profitability 6% New 1% 3% 11% Used 21% 29% 42% GROSS REVENUE S&P PROFIT F&I 13% 38% 36% F&WH 14

  15. Slide 15: Sequential Retail Automotive Key Metrics

    SEQUENTIAL RETAIL AUTOMOTIVE KEY METRICS Same-Store Q3 ‘22 Q3 ’21 Q4 ’21 Q1 ’22 Q2 ‘22 Q3 ‘22 Exc. F/X VOLUME METRICS New Units 44,372 41,985 43,804 42,980 41,542 -- Used Units 70,047 55,921 65,414 66,479 62,395 -- Total Units 114,419 97,816 109,218 109,459 103,937 -- GROSS PER UNIT New $5,948 $6,83

  16. Slide 16: Q3 & 9M Retail Automotive Key Metrics

    Q3 & 9M RETAIL AUTOMOTIVE KEY METRICS Same-Store Q3 ’22 Q3 ’21 Chg 9M ’22 9M ’21 Chg VOLUME METRICS New Units 41,452 44,372 -6% 127,950 152,051 -16% Used Units 62,395 70,047 -11% 193,597 203,791 -5% Total Units 103,937 114,419 -9% 321,547 355,842 -10% GROSS PER UNIT New $6,730 $5,948 +13% $6,761 $4,

  17. Slide 17: Retail Automotive Same-Store Revenue

    RETAIL AUTOMOTIVE SAME-STORE REVENUE Ex cl Ex cl Q3 ’22 Q3 ’21 CHG 9M ’22 9M ’21 CHG F/ X F/ X New Vehicle $2,246 $2,275 -1% +4% $6,860 $7,464 -8% -5% Used Vehicle $2,113 $2,294 -8% -- $6,692 $6,380 +5% +11% F&I $200 $202 -1% +5% $622 $580 +7% +11% Service & Parts $577 $554 +4% +10% $1,704 $1,594 +7

  18. Slide 18: Stand Alone Used

    STAND ALONE USED  Operate stand-alone used vehicle centers across U.S./U.K.  One price; no haggle approach  In-store or 100% on-line TOTAL SAME-STORE Q3 ’22 Q3 ’21 Chg Q3 ’22 Q3 ’21 Chg Units 17,567 18,451 -5% 16,415 18,112 -9% Revenue ($ in Millions) $406 $438 -7% $380 $431 -12% Avg Trans Price

  19. Slide 19: Premier Truck Group

    PREMIER TRUCK GROUP  One of the largest dealership groups for Daimler Trucks N.A.  Retails new and used Freightliner and Western Star Trucks  39 locations across North America  Service and parts gross profit provides 68% of total gross profit in Q3 2022  5.2% return on sales in Q3  Q3 fixed co

  20. Slide 20: Q3 & 9M 2022 Retail Commercial Truck Key Metrics

    Q3 & 9M 2022 RETAIL COMMERCIAL TRUCK KEY METRICS Same-Store Q3 ’22 Q3 ’21 CHG 9M ’22 9M ’21 CHG VOLUME METRICS New Units 4,881 3,892 +25% 10,018 8,013 +25% Used Units 592 928 -36% 1,679 2,487 -33% TOTAL 5,473 4,820 +14% 11,697 10,500 +11% GROSS PER UNIT New $6,485 $5,700 +14% $7,369 $6,493 +14% Used

  21. Slide 21: PTG Performance Summary

    PTG PERFORMANCE SUMMARY Q3 Total Revenue 9M Total Revenue ($ in Millions) ($ in Millions) $1,020 $2,581 $717 $1,777 $591 $1,482 Q3 '20 Q3 '21 Q3 '22 9M '20 9M '21 9M '22 Q3 Earnings Before Taxes 9M Earnings Before Taxes ($ in Millions) ($ in Millions) $48 $53 $164 $116 $23 $52 Q3 '20 Q3 '21 Q3 '22 9

  22. Slide 22: Penske Australia

    PENSKE AUSTRALIA Exclusive importer and distributor of certain heavy/medium-duty trucks, buses and refuse collection vehicles; distributor of diesel/gas engines and power systems On-Highway Power Systems across Australia, New Zealand and portions of the Pacific  Western Star, MAN, Dennis Eagle  MT

  23. Slide 23: Penske Transportation Solutions

    PENSKE TRANSPORTATION SOLUTIONS  Fleet of over 400,000 trucks, tractors and trailers  Over 850 electric light, medium and heavy-duty vehicles in service test fleet or on order  Q3 total revenue +19% to $3.5 billion  Record Q3 net income of $468 million, +15%  Return on sales 14%  PAG recorded

  24. Slide 24: PTS Performance Summary

    PTS PERFORMANCE SUMMARY Q3 Total Revenue 9M Total Revenue ($ in Billions) ($ in Billions) $3.5 $9.9 $2.9 $8.2 $2.3 $2.3 $6.7 $6.5 Q3 '19 Q3 '20 Q3 '21 Q3 '22 9M '19 9M '20 9M '21 9M '22 Q3 Income 9M Income ($ in Millions) ($ in Millions) $409 $468 $1,350 $949 $223 $146 $367 $373 Q3 '19 Q3 '20 Q3 '21

  25. Slide 25: PTS Earnings Contribution – 9M YTD September 2022

    PTS EARNINGS CONTRIBUTION – 9M YTD SEPTEMBER 2022 ($ in millions) $391 $274 $106 $108 $91 2018 2019 2020 2021 2022 25

  26. Slide 26: PTS Fleet Growth

    PTS FLEET GROWTH (Units in Thousands) Fleet consists of trucks, tractors and trailers 403 360 327 327 297 271 247 231 215 205 201 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sep '22 26

  27. Slide 27: PTS Strategic Opportunities

    PTS STRATEGIC OPPORTUNITIES An expert voice in transportation & logistics The provider of choice for Data & Digital Alternative Autonomy Clean Energy Transportation care and use of vehicles. The provider of choice for management of supply chains. Complexity Resilience Visibility Sustainability

  28. Slide 28: PTS Connected Data & Digital Leadership

    PTS CONNECTED DATA & DIGITAL LEADERSHIP  Unique Market Position  Industry’s Leading Data Platform  Data into Useful Digital Tools  Remote Diagnostics  Vehicle Recovery  Proactive/Predictive Diagnostics 28

  29. Slide 29: PTS Customer Applications & Tools

    PTS CUSTOMER APPLICATIONS & TOOLS Penske Driver™  Meets ELD mandate for rental drivers  16,700+ unique monthly users Fleet Insight™  Fleet data in real-time and all in one place  13,500+ unique monthly users

  30. Slide 30: Acquisitions

    Overview Highlights Performance Review Acquisitions Digital Marketing/Retailing Non-GAAP

  31. Slide 31: Acquisitions

    ACQUISITIONS  $1.3 billion in annualized revenue, including  Acquired 17 retail automotive franchises consisting of 13 franchises in the U.K. and four franchises in the U.S.; representing $995 million in annualized revenue which includes approximately $550 million in annualized revenue expected th

  32. Slide 32: Recent Acquisitions and Open Points

    BMW/MINI Escondido Honda Leander Audi North Orange County Hyundai Noblesville BMW/MINI S.E. London Genesis Noblesville Team Truck Centers, Ontario Canada Mercedes-Benz North London

  33. Slide 33: Digital Marketing/Retailing

    Overview Highlights Performance Review Acquisitions Digital Marketing/Retailing Non-GAAP

  34. Slide 34: Global Reputation Focus

    GLOBAL REPUTATION FOCUS TOP-DOWN FOCUS ON EXCELLENT CUSTOMER SERVICE DRIVES POSITIVE REPUTATION SCORES U.S. FRANCHISE UNITED CARSHOP LOCATIONS KINGDOM GLOBAL 4.7 4.4 4.7 Lifetime Avg. Google Lifetime Avg. Google Lifetime Avg. Google Star Rating Star Rating Star Rating 34

  35. Slide 35: Vehicle Sourcing

    VEHICLE SOURCING Trade/Sell Opportunities  Vehicle evaluation tools available on every dealer website  Trade-ins, lease returns, off-street purchases directly from consumers Self-Sourced 9M 2022 U.S. Franchised 89% U.K. Franchised 88% CarShop U.S. 72% CarShop U.K. 38% 35

  36. Slide 36: U.S. Digital Retailing

    U.S. DIGITAL RETAILING Preferred Purchase  Current platform on our franchise websites where an OEM solution is not yet offered  Offers a hybrid model so customers can shop however they choose OEM Programs  Benefit from OEM marketing  Leading technology  Enables “Buy online” from OEM sites  Int

  37. Slide 37: Browse – Buy – Connect (U.K.)

    BROWSE – BUY – CONNECT (U.K.) Buy & Reserve Online (www.sytner.co.uk)  Reserve for £99 allowing customer to choose pick-up dealership  Buy online via fully integrated finance application or by card  Omni-channel approach enabling customers to shop how they choose CarShop Platform (www.carshop.co.

  38. Slide 38: Hybrid/Electric Focus

    HYBRID/ELECTRIC FOCUS  Educate consumers on hybrid/EV and drive business  Added feature page and videos on PenskeCars.com  EV ownership tips  Potential incentives  Dynamic charging station map  Inventory links throughout page  Featured shopping inventory button on home page  Link on Penske A

  39. Slide 39: Non-GAAP

    Overview Highlights Performance Review Acquisitions Digital Marketing/Retailing Non-GAAP

  40. Slide 40: Consolidated Non-GAAP Reconciliations

    CONSOLIDATED NON-GAAP RECONCILIATIONS The following tables reconcile reported income from continuing operations and earnings per share to adjusted income from continuing operations and adjusted earnings per share for the three and nine months ended September 30, 2022 and 2021 ($ in millions, except

  41. Slide 41: EBITDA and Adjusted EBITDA Reconciliation

    EBITDA AND ADJUSTED EBITDA RECONCILIATION The following tables reconcile reported net income to earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and adjusted EBITDA for the three and nine months ended September 30, 2022 and 2021 Three Months Ended ($ in Millions) September

  42. Slide 42: EBITDA, Adj. EBITDA & Leverage Ratio Reconciliation

    EBITDA, ADJ. EBITDA & LEVERAGE RATIO RECONCILIATION The following table reconciles EBITDA, adj EBITDA and the leverage ratio as of September 30, 2022 and December 31, 2021 (1) Loss on investment for the revaluation of the Nicole Group (2) Related to expenses in connection with the redemption of our

  43. Slide 43: EBITDA, Adj. EBITDA & Leverage Ratio Reconciliation

    EBITDA, ADJ. EBITDA & LEVERAGE RATIO RECONCILIATION The following table reconciles EBITDA, Adj. EBITDA and Leverage Ratio as of December 31, 2021, 2020 and 2019 ($ in Millions) 12M ’21 12M ’20 12M ‘19 Net Income $1,192.7 $ 545.3 $ 435.1 Add: Depreciation $ 121.5 $ 115.5 $ 109.6 Add: Other Interest $

  44. Slide 44: EBITDA, Adj. EBITDA & Leverage Ratio Reconciliation

    EBITDA, ADJ. EBITDA & LEVERAGE RATIO RECONCILIATION The following table reconciles EBITDA, Adj. EBITDA, and Leverage Ratio as of December 31, 2018 and 2017 ($ in Millions) 12M ’18 12M ‘17 Net Income $ 470.3 $ 612.8 Depreciation $ 103.7 $ 95.1 Other Interest $ 114.7 $ 107.4 Income Taxes $ 134.3 ($64.

  45. Slide 45: Penske Automotive

Penske Automotive Group — Q3 2022 Earnings Presentation on 6ix