Penske Automotive Group, Inc. · NYSE:PAG
Penske Automotive — Q3 2021 Earnings Presentation
44 slides from Penske Automotive's earnings presentation, Oct 27, 2021
Slide 1: Third Quarter 2021 Financial Results
THIRD QUARTER 2021 FINANCIAL RESULTS
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, expected future operating results and growth plans. Actual results may vary materially because of risks
Slide 3: About Penske Automotive
ABOUT PENSKE AUTOMOTIVE A diversified international transportation services company and one the world’s premier automotive and commercial truck retailers MISSION Deliver excellence to our customers, value to our stakeholders, and opportunity to our team members everywhere we operate VISION Be the mo
Slide 4: Accolades
ACCOLADES 35 Dealers in 2021 Including six of top 10 and 12 of top 25 in overall rankings; top 3 places 7 of top 10 10+ Years Running Since 2018 ranked for efforts to promote Diversity, Equity & Inclusion Top 2 in Automotive Retailing, Services Top 5 in Specialty Retail category each year each year
Slide 5: Women at the Wheel
WOMEN AT THE WHEEL • We foster a workplace that harnesses the power of diversity and supports the inclusion of new ideas to meet the many needs of our customers • PAG is proud to have female leaders at every level of our organization • On social media, we highlighted many of the women at PAG who are
Slide 6: Investment Highlights
• Diversified portfolio and business mix provides multiple opportunities for INVESTMENT growth • Highly fragmented automotive and HIGHLIGHTS commercial truck retail industries provide multiple opportunities for expansion • Retail automotive segment focused on Premium/Luxury brands which generate mor
Slide 7: Global Reach
Operations across four GLOBAL REACH continents and nine countries • Retail Automotive • U.S., U.K., Germany, Italy, Spain, and Japan • Used Vehicle SuperCenters • U.S. and U.K. • Commercial Trucks • U.S. and Canada • Commercial Vehicles, Power Systems & Parts Distribution • Australia and New Zealand
Slide 8: SG&A to Gross Profit
SG&A TO GROSS PROFIT DROVE EXPENSE LEVERAGE OF 1,135 BPS SINCE 2019 77.94% 74.25% 66.59% 67.26% 65.00% FY '19 FY '20 9M '21 Q3 '20 Q3 '21 Q3 2021 8
Slide 9: Third Quarter 2021 Highlights
THIRD QUARTER 2021 HIGHLIGHTS Q3 2021 9
Slide 10: Third Quarter 2021 Highlights
THIRD QUARTER 2021 HIGHLIGHTS ($ in Millions, except Per Share Amount) Q3 ’21 Q3 ’20 Chg Income from Cont Ops Before Taxes $476 $312 +53% Income from Cont Ops $355 $247 +44% Adjusted Income from Cont Ops $355 $232 +53% Earnings Per Share $4.46 $3.07 +45% Adjusted Earnings Per Share $4.46 $2.90 +54%
Slide 11: Q3 2021 Key Takeaways
Q3 2021 KEY TAKEAWAYS Retail Automotive Premier Truck Group Capital Allocation • Retailed 114,823 units in Q3 • Retailed 4,820 new and used • Increased dividend (Oct.20th) to commercial trucks during Q3 $0.46 per share • Same-store revenue increased 6.6% • Same-store revenue increased 2% • Repurchas
Slide 12: Retail Automotive Overview
Revenue RETAIL AUTOMOTIVE 40% 41% OVERVIEW 5% 4% 10% • 326 retail automotive locations worldwide Gross Profit • 304 franchise dealerships 26% 19% • 22 CarShop locations 2% 20% 33% • 32 Collision Centers • Diversified revenue stream drives profitability New Used S&P F&I F&WH Q3 2021 12
Slide 13: Worldwide Automotive Brand Mix
WORLDWIDE AUTOMOTIVE BRAND MIX (% of Total Automotive Dealership Revenue) (YTD 2021) • Premium – 70% • U.S. – 1% 23% • Volume Non-U.S. – 23% • CarShop – 6% 12% 12% 10% 9% 7% 7% 6% 4% 3% 2% 1% 1% 1% 1% 1% Other Q3 2021 13
Slide 14: Retail Automotive Key Metrics
RETAIL AUTOMOTIVE KEY METRICS Same-Store Q3 ‘21 Q3 ’20 Chg Volume Metrics New Units (U.S. -3%; U.K. -33%) 44,107 51,736 -15% Used Units (U.S. +12%; U.K. -11%) 68,380 70,069 -2% Total (U.S. +4%; U.K. -18%) 112,487 121,805 -8% Gross Per Unit New $5,914 $3,695 +60% Used $2,762 $2,024 +36% F&I $1,771 $1
Slide 15: Retail Automotive Service & Parts
RETAIL AUTOMOTIVE SERVICE & PARTS RECOVERY UNDERWAY $1,600 $2,500 $2,250 $1,400 $2,000 $1,200 $1,750 $1,000 $1,500 Gross Profit Revenue $800 $1,250 $1,000 $600 $750 $400 $500 $200 $250 $0 $0 2011 2013 2014 2015 2016 2017 2018 2019 2020 9M 9M 2020 2021 Revenue Gross Profit Q3 2021 15
Slide 16: Premier Truck Group
• One of the largest PREMIER TRUCK dealership groups for Daimler Trucks N.A. GROUP • Retailed 4,820 new and used commercial trucks in Q3 2021 • Q3 2021 revenue increased 21% to $717 million • Service and parts gross profit provides 59% of total gross profit • Return on sales of 6.7% Q3 2021 16
Slide 17: Retail Truck Key Metrics
RETAIL TRUCK KEY METRICS Same-Store Q3 ‘21 Q3 ‘20 Chg Volume Metrics New Units 3,078 3,196 -4% Used Units 843 1,284 -34% New Vehicle (Gross/Unit) $6,456 $3,856 +67% Used Vehicle (Gross/Unit) $18,161 $626 +2,801% F&I (Gross/Unit) $1,173 $923 +27% Q3 2021 17
Slide 18: CarShop
CARSHOP • Operate 22 CarShop used vehicle locations • Fully digital solution available through www.carshop.com • Retailed 18,451 units in Q3 2021 • U.S. +21%; U.K. -5% • Same-store variable gross profit per unit +14% to $2,700/unit • Revenue increased 24% to $438 million Q3 2021 18
Slide 19: Growth Plan
GROWTH PLAN • Opened 5 locations so far in 2021 • Expect to open 1 additional location by end of the year • Goal through end of 2023: • 150,000 in unit sales • $2.5 to $3.0 billion in revenue • Income before taxes of approximately $100 million Q3 2021 19
Slide 20: Q3 2021 CarShop Performance
Q3 2021 CARSHOP PERFORMANCE Q3 ‘21 Q3 ‘20 Chg. % Used Units Retailed 18,451 18,372 --- Revenue (in millions) $438 $352 +24% Avg. Transaction Price $19,820 $15,776 +26% Total Variable Gross/Unit $2,668 $2,378 +12% Q3 2021 20
Slide 21: Penske Australia
Distributor of heavy and medium PENSKE duty trucks, buses and diesel/gas engines and power systems in AUSTRALIA Australia and New Zealand • Western Star, MAN Truck and Bus, Dennis Eagle • MTU, Detroit Diesel, Allison Transmission, Bergen Onsite Energy, Rolls Royce Power Systems On-Highway Power Syst
Slide 22: Penske Transportation Solutions
• Over 350,000 vehicles on the road • Q3 total revenue up 26% to $2.9B • Q3 income $409M up 83% • Return on sales +14% PENSKE • PAG recorded equity income of TRANSPORTATION $118 M in Q3 2021 SOLUTIONS Q3 2021 22
Slide 23: PTS Performance Summary
PTS PERFORMANCE SUMMARY Q3 Total Revenue 9M Total Revenue ($ in Billions) ($ in Billions) $2.9 $8.2 $2.3 $2.3 $6.7 $6.5 Q3 '19 Q3 '20 Q3 '21 9M '19 9M '20 9M '21 Q3 Income 9M Income ($ in Millions) ($ in Millions) $949 $409 $223 $367 $373 $146 Q3 '19 Q3 '20 Q3 '21 9M '19 9M '20 9M '21 Q3 2021 23
Slide 24: PTS Earnings Contribution
($ in millions) PTS EARNINGS CONTRIBUTION $274 $165 $142 $130 $102 $108 $62 2016 2017 2018 2019 2020 9M '20 9M '21 Q3 2021 24
Slide 25: Omni Channel and Digital
OMNI CHANNEL AND DIGITAL Q2 2021 25
Slide 26: Our Omnichannel Marketing
OUR OMNICHANNEL MARKETING MARKETING PRODUCT Focus on the Vehicles for Every Customer Need CUSTOMER DATA ANALYTICS SUPPORT Listen and Learn Count on Us, Anytime CUSTOMER FLEXIBLE BUYING SATISFACTION Buy on Your Terms, Feedback Matters Online or In-Store SERVICE IN-STORE Keep Our Customers EXPERIENCE
Slide 27: Leader in Online Reputation
(Q3 2021) LEADER IN ONLINE REPUTATION OUTPERFORMING PEER GROUP ON GOOGLE 92% of all U.S. online searches are done through Google* 1,012 4.69 4.65 Lifetime Avg. Google Q3 Avg. Google Lifetime Avg. Google Reviews per Store Star Rating per Store Star Rating per Store • PAG stores received nearly 161K G
Slide 28: Digital Retailing
DIGITAL RETAILING UNITED STATES UNITED KINGDOM • Preferred Purchase – Franchise Stores • Browse – Buy – Collect • Available for all new and used vehicles • Flexible buying - In-store or online • Flexible buying - In-store, online, or hybrid model hybrid model • £99 Reservation • Transparent and stre
Slide 29: CarShop – 100% Online Buying
CARSHOP – 100% ONLINE BUYING Intuitive digital platform developed by Penske and Cox Automotive Transparent personalized Digital signatures, Home delivery payments across including available in entire inventory authoritative finance continental USA contracts for over 15 No haggle pricing lenders 6 mo
Slide 30: Preferred Purchase
PREFERRED PURCHASE • Flexible, convenient car buying • Available on PenskeCars.com and U.S. PAG dealership websites • Includes programs from captive and preferred lenders • 14% of customers use Preferred during their buying journey Q3 2021 30
Slide 31: U.K. Digital Retailing
U.K. DIGITAL RETAILING • Intuitive mobile and desktop design • Flexible buying - In-store or online hybrid model • £99 Reservation • Multiple Finance Co. Integration • Buy Outright (Credit Card) Q3 2021 31
Slide 32: 9M 2021 Financial Review
9M 2021 FINANCIAL REVIEW Q3 2021 32
Slide 33: 9M 2021 Highlights
9M 2021 HIGHLIGHTS ($ in Millions, except Per Share Amount) 9M ’21 9M ’20 Chg vs ‘20 Revenue $19,259 $14,632 +32% Income from Cont Ops Before Taxes $1,187 $444 +167% Income from Cont Ops $876 $343 +155% Adjusted Income from Cont Ops $898 $329 +173% Earnings Per Share $10.91 $4.27 +155% Adjusted Earn
Slide 34: 9M 2021 Revenue & EBT
9M 2021 REVENUE & EBT Revenue Revenue Earnings Before Tax $19.3 Billion $19.3 Billion $1.2 Billion 10% 61% 32% 88% 9% 65% 3% 25% 7% North America Retail Retail Commercial Other* Automotive Truck United Kingdom Other *Includes equity income from joint venture investments, including Penske Transportat
Slide 35: Cash Flow from Operations
CASH FLOW FROM OPERATIONS ($ In Millions) $1,326 $1,202 $623 $614 $518 2017 2018 2019 2020 9M 2021 Q3 2021 35
Slide 36: Net Capex
($ In Millions) NET CAPEX $306 $247 $245 $225 $226 $186 Net Capital $198 $157 Expenditures for 9M 2021 $142 were $84 million $84 2017 2018 2019 2020 9M YTD 2021 Gross Net Net capital expenditures exclude $55 million in proceeds from sale leasebacks and $18 million in land purchases for future expans
Slide 37: 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 2.7x 2.9x $1,500 $1,425 2 $1,000 1.8x 1 $500 0.9x 0 $0 2017 2018 2019 2020 Sep-21 -$500 -1 Debt Leverage Refer to non-gaap reconciliation schedule on pages 41 and 42 Q3 2021 37
Slide 38: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Q3 2021 38
Slide 39: Income/EPS from Continuing Operations
INCOME/EPS FROM CONTINUING OPERATIONS The following tables reconcile reported income from continuing operations and earnings per share to adjusted income from continuing operations and adjusted earnings per share for the three months and nine months ended September 30, 2021 and 2020: Income From Con
Slide 40: EBITDA and Adjusted EBITDA Reconciliation
EBITDA AND ADJUSTED EBITDA RECONCILIATION ($ in Millions) Q3 ’21 Q3 ’20 % Chg 9M ’21 9M ’20 % Chg Net Income $356.3 $247.6 +44% $879.8 $343.9 +156% Depreciation $30.2 $29.0 +4% $89.7 $85.4 +5% Other Interest $16.2 $29.1 (44%) $53.8 $89.2 (40%) Income Taxes $120.1 $64.1 +87% $308.0 $100.7 +206% (Inco
Slide 41: EBITDA Reconciliation
EBITDA RECONCILIATION The following table reconciles the leverage ratio as of September 30, 2021 and December 31, 2020 Three Nine Trailing Twelve Trailing Twelve Months Ended Months Ended Months Ended Months Ended December 31, September 30, September 30, December 31, ($ in Millions) 2020 2021 2021 2
Slide 42: EBITDA and Adjusted EBITDA Reconciliation
EBITDA AND ADJUSTED EBITDA RECONCILIATION The following table reconciles the leverage ratio as of December 31, 2017, 2018 and 2019 ($ in Millions) 12M ‘17 12M ’18 12M ’19 Net Income $612.8 $470.3 $435.1 Depreciation $95.1 $103.7 $109.6 Other Interest $107.4 $114.7 $124.2 Income Taxes (1) ($64.8) $13
Slide 43: Investor Relations Contact
Anthony R. Pordon Exec. Vice President-Investor Relations and Corporate Development Phone: 248-648-2540 Email: tpordon@penskeautomotive.com Penske Automotive Group, Inc. 2555 S. Telegraph Road INVESTOR RELATIONS Bloomfield Hills, MI 48302 CONTACT Q3 2021 43
Slide 44: Penske logo
Penske Automotive Group — Q3 2021 Earnings Presentation on 6ix