Penske Automotive Group, Inc. · NYSE:PAG
Penske Automotive — Q3 2020 Earnings Presentation
37 slides from Penske Automotive's earnings presentation, Oct 22, 2020
Slide 1: Third Quarter 2020 Financial Results & Update
Third Quarter 2020 Financial Results & Update
Slide 2: Disclaimer
DISCLAIMER Statements in this presentation may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.’s liquidity, growth plans and assessment of business conditions in light of the COVID-19 pandemic. Actual results may vary materially becaus
Slide 3: Overview
OVERVIEW Q3 2020 3
Slide 4: At a Glance
• Operations across four continents and nine countries • 262 retail automotive locations worldwide • 246 franchised automotive dealerships • 16 used vehicle SuperCenters • 34 collision centers • 25 North American commercial truck dealerships • Own 28.9% of Penske Transportation Solutions AT A GLANCE
Slide 5: Worldwide Brand Mix
(% of Total Automotive Dealership Revenue) (9M YTD 2020) WORLDWIDE BRAND MIX • Premium – 71% • Volume Non-U.S. – 22% • U.S. – 1% • SuperCenters – 6% 22% 13% 10% 10% 9% 7% 7% 6% 4% 3% 3% 3% 1% 1% 1% Used Other Super Center Q3 2020 5
Slide 6: Cost Reduction Update
COST REDUCTION UPDATE • Reductions in travel, entertainment, marketing/advertising, vehicle maintenance and personnel costs Estimated Cost • Initially furloughed 54% of workforce Reduction of $125 to $150 Million Expected on an • Approximately 3% of work force remains on furlough Annualized Basis •
Slide 7: Third Quarter Overview
THIRD QUARTER OVERVIEW Q3 2020 7
Slide 8: Third Quarter 2020 Key Takeaways
THIRD QUARTER 2020 KEY TAKEAWAYS Actual Adjusted (1) Income from continuing ops +112% +99% Earnings per share +116% +102% Retail • All-Time Record Results Automotive Segment Income • Same-store retail automotive revenue +3.6% Increased 170% in Q3 2020 • SG&A expenses as a percent of gross profit Com
Slide 9: Q3 2020 Revenue & EBT
Q3 2020 REVENUE & EBT Revenue Revenue Earnings Before Tax $6.0 Billion $6.0 Billion $312 Million 8% 35% 10% 57% 88% 2% 69% 23% 8% North America Retail Retail Commercial Other* Automotive Truck United Kingdom Other *Includes equity income from joint venture investments, including Penske Transportatio
Slide 10: Q3 2020 Key Metrics
Q3 2020 KEY METRICS Q3 Total Units Q3 Income ($ in Millions) 130,257 130,993 131,310 123,322 $247 $130 $116 $94 Q3 '17 Q3 '18 Q3 '19 Q3 '20 Q3 '17 Q3 '18 Q3 '19 Q3 '20 Q3 EBT ($ in Millions) Q3 EPS $312 $3.07 $139 $157 $158 $1.53 $1.10 $1.42 Q3 '17 Q3 '18 Q3 '19 Q3 '20 Q3 '17 Q3 '18 Q3 '19 Q3 '20 Q3
Slide 11: Same-Store Retail Automotive
SAME-STORE RETAIL AUTOMOTIVE Same-Store Q2 2020 Q3 2020 Sequential New Units (43%) (6%) Improvement from Q2 2020 to Q3 2020 Used Units (40%) (4%) Compared to Same Period Last Year Revenue (38%) +4% Svc/Parts Gross (38%) +2% Q3 2020 11
Slide 12: Retail Automotive Key Metrics
RETAIL AUTOMOTIVE KEY METRICS Q3 ’20 Q3 ’19 Change Volume Metrics New Units 52,502 55,752 (5.8%) Used Units 69,766 72,336 (3.6%) Used to New Ratio 1.33 1.30 +2.3% Margins New Margin 8.2% 7.0% +120 bps Used Margin 7.3% 4.9% +240 bps Service & Parts Margin 61.7% 59.2% +250 bps Q3 2020 12
Slide 13: Retail Automotive Gross Per Unit
RETAIL AUTOMOTIVE GROSS PER UNIT Q3 2020 Same-Store Total Q3 ’20 Q3 ’19 Change Excl F/X New Vehicle $3,670 $2,881 +$789 +$727 Used Vehicle $2,040 $1,224 +$816 +$768 F&I $1,416 $1,277 +$139 +$111 Variable Gross(1) $4,156 $3,221 +$935 +$852 (1) Variable Gross: new vehicle gross profit, used retail gro
Slide 14: SG&A Expenses as a % of Gross Profit
SG&A EXPENSES AS A % OF GROSS PROFIT 80.0% 77.4% 70.0% 67.3% 60.0% SG&A expenses 50.0% improved by 1,010 basis points 40.0% 30.0% 20.0% Q3 2019 Q3 2020 Compensation Advertising Rent Other Q3 2020 14
Slide 15: Long Term Debt Reduction
LONG TERM DEBT REDUCTION Debt reduced by $407 million from December 31, 2019 $2,360 $2,302 $2,217 $1,953 Dec 31 '18 Dec 31 '19 Sept 30 '20 Oct 1 '20 Proforma Q3 2020 15
Slide 16: Used SuperCenters
USED SUPERCENTERS Q3 2020 16
Slide 17: Used SuperCenters Operating Highlights
• Operate 16 SuperCenters • Q3 average unit sales per SuperCenter approximately 1,100 • Q3 average earnings before taxes per SuperCenter approximately $1 million • Q3 return on sales 4.5% • Expect to increase footprint approx. 40% by the end of 2022 • Forecast unit sales to be 80,000 in 2021 and 100
Slide 18: Q3 2020 SuperCenter Performance
Q3 2020 SuperCenter Performance Q3 ‘20 Q3 ‘19 Chg. Chg. % Used Units Retailed 18,372 19,728 (1,356) (6.9%) Revenue (in millions) $352.5 $327.6 +$24.9 +7.6% Avg. Transaction Price $15,776 $14,121 +$1,655 +11.7% Total Variable Gross/Unit $2,378 $1,760 +$618 +35.1% Variable Margin 15.1% 12.5% +20.8% +2
Slide 19: Retail Commercial Trucks
RETAIL COMMERCIAL TRUCKS Q3 2020 19
Slide 20: Premier Truck Group Overview
PREMIER TRUCK GROUP OVERVIEW 20 • Represents 10% of PAG Revenue; 8% of PAG Earnings Before Taxes • Largest Dealership Group for Daimler Trucks N.A. representing 25 dealerships • Retails over 14,0001 new and used commercial truck • Revenue of $2.01 billion • Service and Parts gross profit provides ov
Slide 21: PTG Performance Summary
PTG PERFORMANCE SUMMARY Q3Q3 Revenue Revenue ($ in Billions) 9M9M Revenue Revenue ($ in Billions) $692 $1,482 $591 $1,451 $385 $1,017 Q3 '18 Q3 '19 Q3 '20 Q3 '18 Q3 '19 Q3 '20 Q3 EBT ($ in Millions) 9M EBT ($ in Millions) $30.7 $65.5 $19.1 $23.4 $47.2 $51.7 Q3 '18 Q3 '19 Q3 '20 Q3 '18 Q3 '19 Q3 '20
Slide 22: Retail Truck Key Metrics
RETAIL TRUCK KEY METRICS Q3 Q3 Same-Store Chg. 2020 2019 Chg. Volume Metrics New Units 3,196 4,154 (23%) (16%) Used Units 1,284 578 +122% +110% Gross Per Unit New Vehicle $3,856 $5,244 (27%) (9%) Used Vehicle $626 $5,684 (89%) (52%) F&I $923 $658 +40% +24% Q3 2020 22 22
Slide 23: Commercial Truck Revenue & Gross Mix
COMMERCIAL TRUCK REVENUE & GROSS MIX Gross Revenue Profit New 63.7% 16.8% Used 10.8% 1.1% 72% of Gross Profit From F&I 0.7% 5.6% Service & Parts S&P 20.7% 72.4% Other 4.1% 4.1% Total 100.0% 100.0% Q3 2020 23
Slide 24: Penske Transportation Solutions
PENSKE TRANSPORTATION SOLUTIONS Q3 2020 24
Slide 25: Penske Transportation Solutions Overview
• $15.6 billion total assets • $8.8 billion 1 in annual revenue • 9 month 2020 YTD income of $373 million • Over 321,000 vehicles on the road PENSKE • Recorded equity income of $64.5 million in Q3 TRANSPORTATION 2020, +53% SOLUTIONS OVERVIEW 1Last 12 months ended September 30, 2020 Q3 2020 25
Slide 26: Penske Transportation Solutions
PENSKE TRANSPORTATION SOLUTIONS Logistics 26% 52% Operating Revenue For the Nine Months Ended September 30, 2020 22% Lease Rental Q3 2020 26
Slide 27: PTS Performance Summary
PTS PERFORMANCE SUMMARY Q3 Revenue ($ in Billions) 9M Revenue ($ in Billions) $2.2 $2.3 $2.3 $6.2 $6.7 $6.5 $1.8 $5.2 Q3 '17 Q3 '18 Q3 '19 Q3 '20 9M '17 9M '18 9M '19 9M '20 Q3 Income ($ in Millions) 9M Income ($ in Millions) $222 $367 $373 $286 $317 $124 $141 $146 Q3 '17 Q3 '18 Q3 '19 Q3 '20 9M '17
Slide 28: Multi-Channel Marketing and Digital Focus
MULTI-CHANNEL MARKETING AND DIGITAL FOCUS Q3 2020 28
Slide 29: Multi-Channel Marketing
MULTI-CHANNEL MARKETING PREFERRED PURCHASE DATA ANALYTICS Buying on Your Terms: We Listen and Learn Online and In-Store Comprehensive data analysis and reporting generates actions to enhance A pressure-free and flexible way to ROI and increase engagement. personalize payments, value a trade, and sec
Slide 30: Digital Retailing
• 42,000 vehicles online through digital channels • Digital initiatives accounted for 52% of U.S. unit sales in Q2 2020 • Preferred Purchase vehicle buying in the U.S. • “Buy Online” in the U.K. – 1,000 transactions year to DIGITAL RETAILING date Q3 2020 30
Slide 31: Online Buying in 5 Easy Steps
ONLINE BUYING IN 5 EASY STEPS Q3 2020 31
Slide 32: Customize Your Journey
CUSTOMIZE YOUR JOURNEY • Preferred Purchase is “Flexible Car Buying” • Tool offers a customized buying journey – flexibility drives engagement and conversion • Complete each step in any order, at your leisure, directly from the site • Personalize payments, value a trade, apply for credit, explore pr
Slide 33: buyonline@sytner.co.uk
buyonline@sytner.co.uk Q3 2020 33
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Q3 2020 34
Slide 35: Income/EPS from Continuing Operations
INCOME/EPS FROM CONTINUING OPERATIONS ($ 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 nine months ended Se
Slide 36: EBITDA Reconciliation
EBITDA RECONCILIATION ($ in Millions) Q3 ’20 Q3 ’19 9M ’20 9M ’19 Net Income $247.6 $116.1 $343.9 $333.8 Depreciation $29.0 $27.5 $85.4 $81.0 Other Interest $30.8 $32.9 $90.9 $93.2 Income Taxes $64.1 $42.4 $100.7 $118.6 (Income)/Loss from Disc. Ops. ($0.1) ($0.1) ($0.3) ($0.3) EBITDA $371.4 $218.8 $
Slide 37: Investor Relations Contact
Investor Relations Contact: www.penskeautomotive.com Anthony R. Pordon Exec 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 Q3 2020 37
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