Penske Automotive Group, Inc. · NYSE:PAG
Penske Automotive — Q4 2019 Earnings Presentation
38 slides from Penske Automotive's earnings presentation, Feb 5, 2020
Slide 1: Fourth Quarter and Full Year 2019 Financial Results & Update
Fourth Quarter and Full Year 2019 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, and liquidity. Actual results may vary materially because of risks and uncertainties that are di
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 Truck Leasing and records a share of earnings using the equity method.
Slide 4: Penske Automotive Group Overview
Penske Automotive Group Overview • A diversified transportation services company with annual revenues in 2019 of $23.2 billion • 265 Retail automotive locations world-wide • 249 Automotive dealerships • 16 Used vehicle supercenters • 34 Collision centers • 25 N.A. commercial truck dealerships • Near
Slide 5: 33 Dealerships Named Best To Work
33 Dealerships Named “Best To Work” Audi Turnersville Named #1 Best To Work For 5
Slide 6: Recognitions
Recognitions Ranked #136 for 2019 6
Slide 7: Full Year 2019 Financial Review
FULL YEAR 2019 FINANCIAL REVIEW
Slide 8: Revenue and Earnings History
Revenue and Earnings History REVENUE INCOME – CONT OPERATIONS ($ 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 $14.5 $435.5 $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 9: 12M Highlights
12M Highlights • Retailed more than 500,000 new and used units • Increased the Used to New ratio to 1.28 from 1.20 • $23.2B in revenue, earned $435.5M in income from continuing operations and generated $5.28 in earnings per share • Opened two Greenfield Used SuperCenters • Generated nearly $700M in
Slide 10: 12M Revenue & EBT
12M Revenue & EBT Revenue Revenue Earnings Before Tax $23.2 Billion $23.2 Billion $592 Million 15% 33% 9% 59% 89% 57% 2% 28% 8% Retail North America Retail Commercial Other* Automotive United Kingdom Truck Other *Includes equity income from joint venture investments, including Penske TransportationS
Slide 11: 12M Service & Parts Gross Profit
12M Service & Parts Gross Profit Service & Parts Generated 46% of Total Gross Profit ($ in Millions) Service/Parts Gross Profit Retail Automotive $1,305.8 Retail Commercial Truck $182.4 Australia/New Zealand $102.9 Total Service & Parts Gross $1,591.1 Total Gross Profit $3,455.5 Service & Parts (as
Slide 12: 12M 2019 Cash Flow
12M 2019 Cash Flow ($ in Millions) Cash Flow Capital Allocation $226 $519 $177 $174 $188* $131 Cash From Operations Acquisitions Cap Ex, Net Non-Trade FloorPlan Share Repurchases Dividends *Net of seller’s floorplan notes 12
Slide 13: Q4 2019 Financial Review
Q4 2019 FINANCIAL REVIEW
Slide 14: Q4 2019 Highlights
Q4 2019 Highlights • Record fourth quarter revenue of $5.9B, +8.1% • Selling, General & Administrative (SG&A) expenses as a percentage of Gross Profit declined 70 Bps • SG&A expenses as a percentage of Gross Profit declined 110 Bps on an adjusted basis • Earnings before tax of $139.4, +10.2% • Recor
Slide 15: Q4 2019 Key Takeaways
Q4 2019 Key Takeaways Selling, General and Administrative Expenses as a Percentage of Gross Profit Declined 110 Bps On Adjusted Basis* Franchised Retail Retail Capital Allocation Automotive Commercial Trucks • Same-store retail • Revenue up 67.3% • Shareholder dividend automotive revenue increased 4
Slide 16: Q4 Revenue & EBT
Q4 Revenue & EBT Revenue Revenue Earnings Before Tax $5.9 Billion $5.9 Billion $139.4 Million 15% 63% 10% 29% 88% 2% 55% 30% 8% Retail North America Retail Commercial Other* Automotive United Kingdom Truck Other *Includes equity income from joint venture investments, including Penske Truck Leasing 1
Slide 17: Q4 2019 Results – Continuing Operations
Q4 2019 Results – Continuing Operations ($ in Millions, except per share amounts) Q4 2019 Chg % Revenue $5,881 +8.1% Gross Profit $867 +7.2% Gross Margin % 14.7% -20 Bps SG&A as % of GP 79.1% -70 Bps Operating Income $153 +11.9% Earnings Before Taxes $139 +10.2% Income from Cont. Oper. $102 +3.9% Ea
Slide 18: Q4 2019 Retail Automotive Key Metrics
Q4 2019 Retail Automotive Key Metrics Same-Store Metrics Q4 ’19 Q4 ’18 Change Volume Metrics New Units 54,928 54,516 +0.8% Used Retail Units 63,670 61,893 +2.9% Used to New Ratio 1.16 1.14 nm Margin Metrics New Margin 7.5% 7.3% +20 Bps Used Margin 4.8% 4.9% (10 Bps) Service & Parts Margin 59.7% 59.4
Slide 19: Q4 2019 Gross Profit (Same-Store)
Q4 2019 Gross Profit (Same-Store) U.S. Q4 ’19 Q4 ’18 Change Excl F/X New Vehicle $3,031 $2,929 +$102 n/a Used Vehicle $1,460 $1,466 ($6) n/a F&I $1,419 $1,329 +$90 n/a Variable Gross(1) $3,715 $3,591 +$124 n/a International Q4 ’19 Q4 ’18 Change Excl F/X New Vehicle $3,687 $3,184 +$503 +$507 Used Veh
Slide 20: Used Supercenters
USED SUPERCENTERS
Slide 21: Used Vehicle SuperCenters
Used Vehicle SuperCenters Q4 ‘19 Q4 ‘18 Chg. Chg. % Used Units Retailed 15,405 14,940 +465 +3.1% Revenue (in millions) $293 $261 +$32 +12.3% Avg. Transaction Price $15,709 $14,573 +$1,136 +7.8% Total Variable Gross/Unit $1,951 $1,890 +$61 +3.2% • U.S. $2,598 $2,862 ($264) (9.2%) • U.K. $1,750 $1,631
Slide 22: Used Vehicle SuperCenters Revenue & Gross
Used Vehicle SuperCenters Revenue & Gross (Q4 2019) Revenue Gross Profit 21% 9% 83% 49% 6% 29% 2% 1% Used Wholesale F&I S&P 22
Slide 23: Commercial Trucks
COMMERCIAL TRUCKS
Slide 24: Q4 2019 Retail Truck Key Metrics
Q4 2019 Retail Truck Key Metrics Q4 ’19 Q4 ’18 Chg Chg % Volume Metrics New Retail Units 3,209 2,184 +1,025 +46.9% Used Retail Units 519 457 +62 +13.6% Gross Per Unit New Vehicle $5,505 $5,745 ($240) (4.2%) Used Vehicle $546 $6,243 ($5,697) (91.3%) F&I $917 $1,107 ($190) (17.2%) 24
Slide 25: Q4 2019 Same-Store Key Metrics
Q4 2019 Same-Store Key Metrics Q4 ’19 Q4 ’18 Chg Chg % Volume Metrics New Retail Units 1,475 2,184 (709) (32.5%) Used Retail Units 389 457 (68) (14.9%) Gross Per Unit New Vehicle $4,905 $5,745 ($840) (14.6%) Used Vehicle $1,183 $6,243 ($5,060) (81.1%) F&I $1,256 $1,107 +$149 +13.5% 25
Slide 26: Retail Commercial Truck Revenue & Gross
Retail Commercial Truck Revenue & Gross Q4 2019 69% of Gross Profit From Service & Parts Revenue Gross Profit 5% 4% 4% 27% 69% 61% 23% New Used S&P F&I Other 26
Slide 27: Penske Transportation Solutions
PENSKE TRANSPORTATON SOLUTIONS
Slide 28: Penske Transportation Solutions Overview
Penske Transportation Solutions Overview Full-Service Contract Truck Logistics Leasing Maintenance Rental Services • $16 billion total assets Operating Revenue Logistics • $9 billion in annual revenue, +7% 27% 46% • Over 321,000 vehicles on the road 27% • PAG recorded equity income of Rental $142.4
Slide 29: PTS Performance Summary
PTS Performance Summary Q4 Total Revenue 12M Total Revenue ($ in Billions) ($ in Billions) $2.2 $2.3 $9.0 $1.9 $8.4 $7.1 Q4 '17 Q4 '18 Q4 '19 12M '17 12M '18 12M '19 Q4 Net Income 12M Net Income ($ in Millions) ($ in Millions) $120 $131 $126 $492 $448 $406 Q4 '17 Q4 '18 Q4 '19 12M '17 12M '18 12M '1
Slide 30: Digital Initiatives
DIGITAL INITIATIVES
Slide 31: Digital/Omni-Channel Initiatives
Digital/Omni-Channel Initiatives • Over 58,000 new and used vehicles available online via websites and social channels • Over 40% of U.S. unit sales were from digital sources in Q4 2019 • Online buying through Preferred Purchase closing rate over 20% • Initiated “Get My Certificate” which allows cus
Slide 32: Digital/Omni-Channel Initiatives
Digital/Omni-Channel Initiatives • Real-time status updates & online approvals for service work • Online service/parts payments +92% in Q4 2019 Here are your CAMRY’s inspection results: 32
Slide 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
Slide 34: Income/EPS from Continuing Operations
Income/EPS from Continuing Operations ($ in Millions, except per share amounts) 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
Slide 35: Selling, General and Admin Expenses
Selling, General and Admin Expenses ($ in Millions) The following table reconciles reported selling, general and administrative expenses as a percent of gross profit to adjusted selling, general and administrative expenses as a percent of gross profit for the three months and twelve months ended Dec
Slide 36: Tax Expense and Effective Tax Rate
Tax Expense and Effective Tax Rate ($ in Millions) The following tables reconcile reported income tax expense to adjusted income tax expense for the three and twelve months ended December 31, 2019 and 2018: Three Months Ended December 31, 2019 vs. 2018 2019 2018 Change % Change Tax Expense $38.1 $29
Slide 37: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation Three Mos. Ended Twelve Mos. Ended December 31, December 31, ($ in Millions) 2019 2018 2019 2018 Net Income $101.3 $97.2 $435.1 $470.3 Depreciation $28.6 $26.5 $109.6 $103.7 Other Interest $31.0 $28.0 $124.2 $114.7 Income Taxes $38.1 $29.6 $156.7 $134.3 (Inc
Slide 38: Automotive
Automotive
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