Penske Automotive Group, Inc. · NYSE:PAG
Penske Automotive — Q4 2020 Earnings Presentation
47 slides from Penske Automotive's earnings presentation, Feb 10, 2021
Slide 1: Fourth Quarter and Full Year 2020 Financial Results & Update
Fourth Quarter and Full Year 2020 Financial Results & Update
Slide 2: Disclaimer
Statements in this presentation may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.’s liquidity, assessment of business conditions in light of the COVID-19 pandemic, growth plans and the closing of the potential acquisition. Actual res
Slide 3: Penske Automotive at a Glance
• Operations across four continents PENSKE AUTOMOTIVE • and nine countries 322 retail automotive locations AT A GLANCE • worldwide 304 franchised automotive dealerships • 17 used vehicle SuperCenters • 30 collision centers • 25 N.A. commercial truck dealerships • Own 28.9% of Penske Transportation S
Slide 4: Worldwide Automotive Brand Mix
WORLDWIDE AUTOMOTIVE BRAND MIX (% of Total Automotive Dealership Revenue) (12 Months 2020) 23% • Premium – 71% • U.S. – 1% • Volume Non-U.S. – 22% • SuperCenters – 6% 12% 11% 10% 9% 7% 7% 6% 4% 3% 3% 2% 1% 1% 1% Used Other Super Center Q4 2020 4
Slide 5: Cost Reduction Update
COST REDUCTION UPDATE • Reductions in travel, entertainment, marketing/advertising, vehicle maintenance and personnel costs Estimated Cost Reduction of $125 to $150 Million • Net headcount reduction of 3,300 to nearly Expected on an 23,500 which represents approximately Annualized Basis 12% of the w
Slide 6: Q4 2020 Revenue & EBT
Q4 2020 REVENUE & EBT Revenue Revenue Earnings Before Tax $5.8 Billion $5.8 Billion $263 Million 10% 88% 10% 61% 30% 67% 2% 23% 9% North America Retail Retail Commercial Other* Automotive Truck United Kingdom Other *Includes equity income from joint venture investments, including Penske Transportati
Slide 7: Fourth Quarter Overview
FOURTH QUARTER OVERVIEW Q4 2020 7
Slide 8: Fourth Quarter 2020 Key Takeaways
FOURTH QUARTER 2020 KEY TAKEAWAYS ($ in Millions, except Per Share Amount) Actual Adjusted (1) Earnings Before Taxes $263, +89% $257, +85% Income from Continuing Ops $200, +97% $200, +97% Earnings Per Share $2.49, +99% $2.49, +99% (1) Refer to Non-GAAP Reconciliation Retail Automotive Income from Ad
Slide 9: Q4 2020 Key Metrics
Q4 2020 KEY METRICS Q4 Total Units (In Millions) Q4 Income ($ in Millions) 120,869 121,258 109,054 $200 $98 $102 Q4 '18 Q4 '19 Q4 '20 Q4 '18 Q4 '19 Q4 '20 Q4 EBT ($ in Millions) Q4 EPS $263 $2.49 $127 $139 $1.15 $1.25 Q4 '18 Q4 '19 Q4 '20 Q4 '18 Q4 '19 Q4 '20 Q4 2020 9
Slide 10: Retail Automotive Key Metrics
RETAIL AUTOMOTIVE KEY METRICS Same-Store Q4 ’20 Q4 ’19 Change Volume Metrics New Units 51,751 54,257 (4.6%) Used Units 55,901 63,538 (12.0%) TOTAL 107,652 117,795 (8.6%) Margins New 8.7% 7.6% +110 bps Used 6.2% 4.8% +140 bps Service & Parts 59.7% 59.7% Flat Q4 2020 10
Slide 11: Retail Automotive Revenue
RETAIL AUTOMOTIVE REVENUE Same-Store ($ in Millions) Q4 ’20 Q4 ’19 Change New Vehicle $2,471.8 $2,388.0 +3.5% Used Vehicle $1,655.3 $1,673.5 (1.1%) F&I $158.7 $157.4 +0.8% Service & Parts $501.2 $530.8 (5.6%) Fleet & Wholesale $279.1 $285.0 (2.1%) Total $5,066.1 $5,034.7 +0.6% Q4 2020 11
Slide 12: SG&A Expenses as a % of Gross Profit
SG&A EXPENSES AS A % OF GROSS PROFIT Reported Adjusted 79.1% 79.1% Adjusted SG&A expenses improved by 800 71.1% basis points 69.7% Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2020 12
Slide 13: Premier Truck Group (PTG)
PREMIER TRUCK GROUP (PTG) Q4 2020 13
Slide 14: Retail Commercial Trucks Overview
RETAIL COMMERCIAL TRUCKS OVERVIEW 1 4 • Represents 10% of PAG Revenue; 10% of PAG Earnings Before Taxes • Largest Dealership Group for Daimler Trucks N.A. representing 25 dealerships • Retailed over 15,000 new and used commercial trucks in 2020 • Revenue of $2.1 billion • Service and Parts gross pro
Slide 15: PTG Performance Summary
PTG PERFORMANCE SUMMARY Q4 Q4 Revenue Revenue ($ in Millions) 12M9M Revenue Revenue ($ in Millions) $599 $579 $2,051 $2,061 $358 $1,375 Q4 '18 Q4 '19 Q4 '20 2018 2019 2020 Q4 EBT ($ in Millions) 12M EBT ($ in Millions) $27 $21 $15 $62 $87 $78 Q4 '18 Q4 '19 Q4 '20 2018 2019 2020 Q4 2020 15
Slide 16: Retail Truck Key Metrics
RETAIL TRUCK KEY METRICS Q4 Q4 Same-Store Chg. 2020 2019 Volume Metrics New Units 3,254 3,209 +1.4% Used Units 1,071 519 +106.4% Gross Per Unit New Vehicle $4,911 $5,505 (10.8%) Used Vehicle $4,578 $546 +738.5% F&I $925 $917 +0.9% Q4 2020 16
Slide 17: Commercial Truck Revenue & Gross Mix
COMMERCIAL TRUCK REVENUE & GROSS MIX Gross Q4 2020 Revenue Profit New 66.5% 20.3% 65.9% of Gross Used 10.1% 6.2% Profit From Service & Parts in F&I 0.7% 5.1% Q4 2020 S&P 20.7% 65.9% Other 2.0% 2.5% Total 100.0% 100.0% Q4 2020 17
Slide 18: Used SuperCenters
USED SUPERCENTERS Q4 2020 18
Slide 19: Used SuperCenters
USED • Operate 17 SuperCenters SUPERCENTERS • Nearly 12,000 vehicles online • No haggle pricing • 2020 Highlights • Retailed 53,207 units • Average ~ 3,000 units per location • Revenue ~ $1.0 billion Q4 2020 19
Slide 20: Q4 2020 SuperCenter Performance
Q4 2020 SUPERCENTER PERFORMANCE Note: U.K. SuperCenters were operating under a mandatory government lockdown in November 2020 Q4 ‘20 Q4 ‘19 Chg. % Used Units Retailed 11,923 15,405 (22.6%) Revenue (in millions) $244.7 $292.7 (16.4%) Avg. Transaction Price $16,754 $15,709 +6.7% Total Variable Gross/U
Slide 21: CarShop Nottingham
• Opened December 3, 2020 CARSHOP NOTTINGHAM • Largest single site for CarShop in the U.K. • 7 acre site • Indoor service drive • 900 vehicles in inventory, access to over 9,000 vehicles on- line • Expect to retail approximately 6,000 vehicles annually Q4 2020 21
Slide 22: Growth Plan Goal
GROWTH • U.S. Used SuperCenter PLAN GOAL business to be re-named CarShop • One global brand • Currently operate 17 used vehicle SuperCenters • Our goal is to increase the number of locations to 40 by the end of 2023 with: • 150,000 in unit sales • $2.5 to $3.0 billion in revenue • Earnings before ta
Slide 23: Penske Australia
PENSKE AUSTRALIA Q4 2020 23
Slide 24: Penske Australia
PENSKE AUSTRALIA Distributor of heavy and medium duty trucks, buses and diesel/gas engines and power systems in Australia and New Zealand • Western Star, MAN Truck and Bus, Dennis Eagle • MTU, Detroit Diesel, Allison Transmission, Bergen Onsite Energy, Rolls Royce Power Systems • Parts & service gro
Slide 25: Penske Transportation Solutions (PTS)
PENSKE TRANSPORTATION SOLUTIONS (PTS) Q4 2020 25
Slide 26: PTS Overview
• 327,500 vehicles on the road • $8.9 billion in revenue for the 12 months ended December 31, 2020 • 2020 YTD income of $569 million, or 6.4% return on sales • Recorded equity income of $164.5 million in 2020, +16% PTS OVERVIEW • Recorded equity income of $56.5 million in Q4 2020, +55% Q4 2020 26
Slide 27: Penske Transportation Solutions
PENSKE TRANSPORTATION SOLUTIONS Logistics 26% 51% Operating Revenue For the Twelve Months Ended December 31, 2020 23% Lease Rental Q4 2020 27
Slide 28: PTS Performance Summary
PTS PERFORMANCE SUMMARY Q4 Revenue ($ in Millions) 12M Revenue ($ in Millions) $2,243 $2,300 $2,374 $9,001 $8,916 $8,401 Q4 '18 Q4 '19 Q4 '20 2018 2019 2020 Q4 Income ($ in Millions) 12M Income ($ in Millions) $196 $492 $569 $448 $131 $126 Q4 '18 Q4 '19 Q4 '20 2018 2019 2020 Q4 2020 28
Slide 29: Digital Marketing Initiatives
DIGITAL MARKETING INITIATIVES Q4 2020 29
Slide 30: Digital Retailing
DIGITAL RETAILING • Preferred Purchase is flexible and offers consumers options: • Fully online experience: • Transparent buying process • Self-directed experience • Low-pressure sales environment • Shorter buying process • Home delivery • Online and in-store experience: • Resume in-store where left
Slide 31: Online Buying in 5 Easy Steps
ee ONLINE BUYING IN 5 EASYSTEPS —_—_ 5 Flexible Buying Convenient. Flexible. Personalized. No Pressure. Penske's Preferred Purchase is designed to make your experience fast. No Constraints transparent and convenient, whether you're buying from home or visiting one of - : a 100% Control. our dealersh
Slide 32: Click and Collect
CLICK AND COLLECT Desktop Design Mobile Design Q4 2020 32
Slide 33: UK Buy Online Program
UK BUY ONLINE PROGRAM Car Search Trade-In Finance Application (instant decision) Multiple Finance Co. Integration £99 Reservation Buy Outright (Credit Card) Collection Location Customer Account Area Digital Documentation Digital Signature Additional Products Q4 2020 33
Slide 34: By the Numbers
BY THE NUMBERS • 54,000 vehicles available online through digital channels • All digital initiatives accounted for 50% of U.S. unit sales in Q4 2020 • Preferred Purchase sales in Q4 2020 increased more than 25% over Q4 2109 • Click & Collect/Buy On-Line in the U.K. and Preferred Purchased in the U.S
Slide 35: Full Year Financial Review
FULL YEAR FINANCIAL REVIEW Q4 2020 35
Slide 36: Full Year 2020 Key Takeaways
FULL YEAR 2020 KEY TAKEAWAYS ($ in Millions, except Per Share Amount) Actual Adjusted (1) Earnings Before Taxes $708 $711 Income from Continuing Ops $543 $535 Earnings Per Share $6.74 $6.64 Retail Automotive Earnings Per Adjusted SG&A expenses as a Operating income Share increased percent of gross p
Slide 37: 12M Revenue & EBT
12M REVENUE & EBT Revenue Revenue Earnings Before Tax $20.4 Billion $20.4 Billion $708 Million 11% 31% 10% 88% 2% 63% 26% 60% 9% North America Retail Retail Commercial Other* Automotive Truck United Kingdom Other *Includes equity income from joint venture investments, including Penske Transportation
Slide 38: F&I Growth
F&I GROWTH Full Year 2020 ($ Per Retail Unit Sold) $1,399 $1,287 $1,214 $1,160 $1,082 2016 2017 2018 2019 2020 Q4 2020 38
Slide 39: Cash Flow from Operations
CASH FLOW FROM OPERATIONS ($ In Millions) $1,202 $623 $614 $518 $371 2016 2017 2018 2019 2020 Q4 2020 39
Slide 40: Net Capex
($ In Millions) NET CAPEX $306 $247 $245 $225 $226 Net Capital $198 $186 Expenditures were $142 $142 million in 2020 2017 2018 2019 2020 Gross Net Q4 2020 40
Slide 41: Long Term Debt and Leverage
LONG TERM DEBT AND LEVERAGE 3.5 $2,500 $2,360 $2,163 $2,217 3 $2,000 2.9x 2.9x $1,690 2.7x 2.5 $1,500 $1,000 2 $500 1.8x 1.5 $0 2017 2018 2019 2020 Debt Leverage -$500 1 Q4 2020 41
Slide 42: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Q4 2020 42
Slide 43: Income/EPS from Continuing Operations
INCOME/EPS FROM CONTINUING OPERATIONS The following tables reconcile reported income from continuing operations and earnings per share to adjusted income from continuing operations and adjusted earnings per share for the three months and twelve months ended December 31, 2020 and 2019: Income From Co
Slide 44: Income from Continuing Operation Before Taxes
INCOME FROM CONTINUING OPERATION BEFORE TAXES The following tables reconcile reported income from continuing operations before taxes to adjusted income from continuing operations before taxes for the three months and twelve months ended December 31, 2020 and 2019: Income From Continuing Operations B
Slide 45: Reconciled SG&A
RECONCILED SG&A The following tables reconcile reported selling, general and administrative expenses (SG&A) and SG&A to gross profit to adjusted SG&A and adjusted SG&A to gross profit for the three months and twelve months ended December 31, 2020 and 2019: Three Months Ended (Amounts in Millions) 20
Slide 46: EBITDA and Adjusted Reconciliation
EBITDA AND ADJUSTED RECONCILIATION ($ in Millions) Q4 ’20 Q4 ’19 12M ’20 12M ’19 Net Income $201.4 $101.3 $545.3 $435.1 Depreciation $30.1 $28.6 $115.5 $109.6 Other Interest $28.7 $31.0 $119.6 $124.2 Income Taxes $62.0 $38.1 $162.7 $156.7 (Income)/Loss from Disc. Ops. ($0.1) -- ($0.4) ($0.3) EBITDA
Slide 47: Investor Relations Contact
Investor Relations Contact: Anthony R. Pordon Executive VP-Investor Relations and Corporate Development Phone: 248-648-2540 Email: tpordon@penskeautomotive.com Penske Automotive Group, Inc. 2555 S. Telegraph Road Bloomfield Hills, MI 48302 www.penskeautomotive.com Q4 2020 47
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