Penske Automotive Group, Inc. · NYSE:PAG
Penske Automotive — Q2 2020 Earnings Presentation
38 slides from Penske Automotive's earnings presentation, Jul 29, 2020
Slide 1: Second Quarter 2020 Financial Results & Update
Second Quarter 2020 Financial Results & Update
Slide 2: Forward-looking statements
Statements in this presentation may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.’s financial results, future sales, earnings potential, liquidity and assessment of business conditions in light of the Covid-19 pandemic. Actual result
Slide 3: Diversification
Diversification FRANCHISED AUTOMOTIVE DEALERSHIPS RETAIL COMMERCIAL LEASING, RENTAL & TRUCK LOGISTICS* DEALERSHIPS USED VEHICLE TRUCK DISTRIBUTION SUPERCENTERS & POWER SYSTEMS * PAG maintains a 28.9% ownership interest in Penske Transportation Solutions and records a share of earnings using the equi
Slide 4: Penske Automotive Group Overview
Penske Automotive Group Overview • A diversified transportation services company with annual revenues in 2019 of $23.2 billion • 265 retail automotive locations world-wide • 249 automotive dealerships • 16 used vehicle SuperCenters • 34 collision centers • 25 N.A. commercial truck dealerships 4
Slide 5: Revenue and Earnings History
Revenue and Earnings History REVENUE INCOME – CONT OPERATIONS ($ in Millions) ($ in Billions) $22.8 $23.2 $21.4 $613.6 $20.1 $19.3 $243.4* $470.5 $17.2 $11.6* $458.9 $435.5 $14.5 $370.2 $12.9 $344.0 $329.6 $10.9 $301.4 $9.7 $247.0 $194.2 $172.4 $119.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 201
Slide 6: Business Update and Q2 2020 Review
BUSINESS UPDATE and Q2 2020 REVIEW
Slide 7: Operations Highlights
Operations Highlights • Net income of $45 million and earnings per share of $0.56 in the second quarter • Sequential improvement from April – June in new and used units sold, Service/parts gross profit and earnings before taxes • Generated free cash flow(1) of $428 million for the six months ended J
Slide 8: COVID - Actions
COVID - Actions • Top priority - maintaining the health/safety of customers and employees • Starting in late March, furloughed approximately 15,000 employees, or 57% of work force • Approximately 14% of work force remains furloughed • Temporary pay reductions for employees not furloughed • Expense r
Slide 9: COVID - Actions
COVID - Actions • Solidified liquidity position • Reduced net CapEx by $65 million in 1st half of 2020 • Suspended 401K match representing $3.8 million per quarter • Suspended shareholder dividend representing $34 million per quarter • Increased availability on our U.S. Revolving Credit Agreement by
Slide 10: Same-store Units and Service/Parts Gross
Same-store Units and Service/Parts Gross • Sequential improvement during the second quarter April May June New Units (70%) (48%) (12%) Used Units (72%) (51%) +7% Service/Parts Gross (64%) (46%) Flat U.S. INTL. April May June April May June New Units (53%) (31%) (12%) (96%) (77%) (10%) Used Units (47
Slide 11: Q2 2020 Revenue & EBT
Q2 2020 Revenue & EBT Revenue Revenue Earnings Before Tax $3.7 Billion $3.7 Billion $61 Million 24% 23% 11% 19% 67% 86% 3% 10% 57% Retail North America Retail Commercial Other* Automotive United Kingdom Truck Other *Includes equity income from joint venture investments, including Penske Transportati
Slide 12: Capital Allocation
Capital Allocation ($ in Millions) Generated $428 Million in Free Cash Flow1 Capital Allocation $34 $223 $29 $57 Cap Ex, Net Share Repurchases Dividends Debt Repayment (1) Refer to Non-GAAP Reconciliation 12
Slide 13: Q2 2020 Same-Store Revenue
Q2 2020 Same-Store Revenue U.S. Intl Total April (48.9%) (93.9%) (68.3%) May (27.3%) (69.0%) (44.9%) June (5.5%) +11.2% +1.8% Q2 2020 Total (27.4%) (50.9%) (-37.5%) 13
Slide 14: Q2 2020 Retail Automotive Key Metrics
Q2 2020 Retail Automotive Key Metrics Same-Store Metrics Q2 ’20 Q2 ’19 Change Volume Metrics New Units 30,687 53,614 -42.8% Used Units 42,229 70,217 -39.9% Used to New Ratio 1.38 1.31 +5.3% Margin Metrics New Margin 7.7% 7.5% +20 bps Used Margin 4.8% 5.5% -70 bps Service & Parts Margin 58.3% 59.6% -
Slide 15: Q2 2020 Gross Profit Per Unit (Same-Store)
Q2 2020 Gross Profit Per Unit (Same-Store) U.S. Q2 ’20 Q2 ’19 Change New Vehicle $3,266 $2,907 +$359 Used Vehicle $1,390 $1,641 ($251) F&I $1,409 $1,397 +$12 Variable Gross(1) $3,692 $3,673 +$19 International Q2 ’20 Q2 ’19 Change New Vehicle $4,025 $3,618 +$407 Used Vehicle $1,199 $1,234 ($35) F&I $
Slide 16: Q2 2020 Results – Continuing Operations
Q2 2020 Results – Continuing Operations ($ in Millions, except per share amounts) Q2 2020 Q2 2019 Chg. % Revenue $3,651 $5,759 (37%) Gross Profit $553 $868 (36%) Gross Margin % 15.1% 15.1% --- SG&A as % of GP 82.0% 77.1% +490bps Operating Income $71 $172 (59%) Earnings Before Taxes $61 $160 (62%) In
Slide 17: Used SuperCenters
USED SUPERCENTERS
Slide 18: Used Vehicle SuperCenters
Used Vehicle SuperCenters • Operate 16 SuperCenter locations • U.S. – CarSense (6) • U.K. – CarShop (10) • 4 sites under development • 2019 Unit Sales 70,948 • 2019 Revenue $1.25 Billion 18
Slide 19: Used Vehicle SuperCenters
Used Vehicle SuperCenters Q2 ‘20 Q2 ‘19 Chg % Used Units Retailed 6,600 17,775 (63%) Revenue (in Millions) $133 $312 (57%) Avg. Transaction Price $16,546 $14,797 +11.8% Total Variable Gross/Unit $2,307 $2,158 +6.9% Vehicle Margin 13.9% 14.6% -70 bps 19
Slide 20: Commercial Trucks
COMMERCIAL TRUCKS
Slide 21: Premier Truck Group
Premier Truck Group Truck Sales Service Parts Body Shop • Largest Dealership Group for Daimler Trucks N.A. • New and used retail sales; service and parts operations • Revenue of $2.1B in 2019 • 25 Dealerships in North America • Georgia, Oklahoma, Tennessee, Texas, Utah, Idaho, • Canada 21
Slide 22: Q2 2020 Retail Truck Key Metrics
Q2 2020 Retail Truck Key Metrics Same- Q2 ’20 Q2 ’19 Chg. Store Chg. Volume Metrics New Units 2,063 2,647 (22%) (52%) Used Units 773 441 +75% +14% Gross Per Unit New Vehicle $4,640 $4,461 +4% +5% Used Vehicle ($3,731) $6,575 (157%) (164%) F&I $1,134 $926 +22% +50% 22
Slide 23: Retail Commercial Truck Revenue & Gross
Retail Commercial Truck Revenue & Gross Q2 2020 82% of Gross Profit From Service & Parts Service Absorption Revenue Gross Profit New 59.0% 15.9% Used 9.2% (4.8%) F&I 0.8% 5.3% S&P 28.0% 81.7% Other 3.0% 1.9% Total 100.0% 100.0% 23
Slide 24: Penske Transportation Solutions
PENSKE TRANSPORTATON SOLUTIONS
Slide 25: Penske Transportation Solutions Overview
Penske Transportation Solutions Overview Full-Service Contract Truck Logistics Leasing Maintenance Rental Services Operating Revenue For the Six Months Ended June 30, 2020 • $15.5 billion total assets Logistics 27% • $8.8 billion in annual revenue1 52% 21% • Over 320,000 vehicles on the road Rental
Slide 26: PTS Performance Summary
PTS Performance Summary Q2 Total Revenue 6M Total Revenue ($ in Billions) ($ in Billions) $2.1 $2.3 $2.0 $4.4 $4.2 $1.8 $3.9 $3.3 Q2 '17 Q2 '18 Q2 '19 Q2 '20 6M '17 6M '18 6M '19 6M '20 Q2 Income 6M Income ($ in Millions) ($ in Millions) $132 $221 $109 $121 $162 $176 $104 $151 Q2 '17 Q2 '18 Q2 '19 Q
Slide 27: Digital Initiatives
DIGITAL INITIATIVES
Slide 28: Digital/Omni-Channel Initiatives
Digital/Omni-Channel Initiatives • 42,000 vehicles on-line through digital channels • 58% of U.S. unit sales were from digital initiatives in the second quarter 2020 • Preferred Purchase sales increased more than 40% when compared to Q1 2020 • “Click and Collect” vehicle buying in the U.K. accounted
Slide 29: Buy Online
Buy Online Home New Cars & Trucks Used Cars & Trucks Locate A Dealership Careers Vehicle Shipping Employee/Partner Programs 29
Slide 30: Penske Cars App
Penske Cars App 2016 Bentley Flying Spur W12 NEW U SE D Sedan CARS CARS eels os EMCEE eee cote SEARCH INVENTORY 2019 BMW 2 Series M240i CARS UNDER $15,000 Convertible Enter Keyword(e) to Search: Example: 2013 Audi S4 [co] Or Browse by Category: NEW CARS CARS UNDER $1 FO R T U N E List Price $67,320
Slide 31: CarSense Home Delivery
CarSense Home Delivery Shop Trade/Sell Finance About Careers Service Stores Home Delivery Car delivery the CarSense way 31
Slide 32: U.K. Digital
U.K. DIGITAL PENSKE
Slide 33: Sytner (U.K.) Click and Collect
Sytner (U.K.) Click and Collect 33
Slide 34: Sytner (U.K.) Reserve or Purchase
Sytner (U.K.) Reserve or Purchase buyonline@sytner.co.uk 34
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 36: EBITDA Reconciliation
EBITDA Reconciliation ($ in Millions) Q2 ’20 Q2 ’19 6M ’20 6M ’19 Net Income $44.8 $118.5 $96.3 $217.7 Depreciation $27.9 $27.1 $56.4 $53.5 Other Interest $28.4 $30.4 $60.1 $60.3 Income Taxes $16.5 $41.5 $36.6 $76.2 (Inc)/Loss from Disc. Ops. ($0.1) ($0.1) ($0.2) ($0.2) EBITDA $117.5 $217.4 $249.2 $
Slide 37: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation The following table reconciles net cash provided by continuing operating activities to free cash flow for the six months ended June 30, 2020 ($ In Millions) Net cash provided by continuing operating activities $784.4 Add: Proceeds from sale of dealerships $10.3 Add: Pro
Slide 38: Penske Automotive
Automotive
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