PAG Penske Automotive Group Inc

Record Q4 Revenue and Earnings Per Share

Q4 Revenue Increased 11% to $7.0 Billion; Earnings Per Share Increased 6% to $4.21

Full Year 2022 Record Results for Revenue, Earnings Before Taxes, Income From Continuing Operations, and Earnings Per Share

Full Year 2022 Revenue Increased 9% to $27.8 Billion; Earnings Before Taxes Increased 16% to $1.9 Billion

Full Year 2022 Income From Continuing Operations Increased 16% to $1.4 Billion

Full Year 2022 Earnings Per Share Increased 25% to $18.55

Repurchased 8.2 Million Shares of Common Stock for $886.5 Million During 2022

BLOOMFIELD HILLS, Mich., Feb. 8, 2023 /PRNewswire/ -- Penske Automotive Group, Inc. (NYSE: PAG), a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers, today announced fourth quarter and twelve months 2022 results. For the quarter, revenue increased 11% to $7.0 billion, and related earnings per share increased 6% to $4.21 from $3.97 when compared to the same period of 2021. Foreign currency exchange negatively impacted revenue by $380.9 million and earnings per share by $0.09. Excluding the impact from foreign currency exchange, revenues increased 17%, and earnings per share increased approximately 8%.

Fourth Quarter 2022 Operating Highlights Compared to Fourth Quarter 2021

(Percentage Change Excluding Foreign Currency Exchange Shown in Parenthesis)

• Retail Automotive Same-Store Revenue – increased 4% (+10%)
• • New Vehicle +13% (+18%); Used Vehicle -9% (-2%); Finance & Insurance -1% (+4%); Service & Parts +6% (+11%)
• Retail Automotive Same-Store Gross Profit – decreased 5% (flat)
• • New Vehicle +4% (+9%); Used Vehicle -43% (-39%); Finance & Insurance -1% (+4%); Service & Parts +6% (+11%)
• Retail Commercial Truck Same-Store Revenue – increased 33%
• • New Vehicle +53%; Used Vehicle -40%; Finance & Insurance -19%; Service & Parts +16%

Commenting on the Company's performance, Chair and CEO Roger Penske said, "Our international diversified transportation services company produced record results in 2022. We retailed more than 447,000 new and used vehicles through our retail automotive operations and over 20,000 new and used commercial trucks through our commercial truck dealerships while our investment in Penske Transportation Solutions continues to benefit from the growth in its vehicle fleet. I am also pleased to report a strong fourth quarter driven by demand for new vehicles in both our automotive and commercial truck dealerships coupled with continued service and parts revenue growth and expense control. On a same-store basis, fourth quarter retail automotive new unit sales increased 11% and commercial truck new units increased 36% while service and parts revenue increased 6% for retail automotive and 16% for commercial trucks."

For the twelve months ended December 31, 2022, revenue increased 9% to $27.8 billion. Income from continuing operations before taxes increased 16% to $1,859.2 million from $1,607.7 million, income from continuing operations attributable to common stockholders increased 16% to $1,380.0 million from $1,186.5 million, and related earnings per share increased 25% to $18.55 from $14.88 when compared to the same period last year. Foreign currency exchange negatively impacted revenue by $1.0 billion, income from continuing operations before taxes by $38.0 million, income from continuing operations attributable to common stockholders by $29.4 million, and earnings per share by $0.40. Excluding the impact from foreign currency exchange, revenues increased 13%, income from continuing operations before taxes increased 18%, income from continuing operations attributable to common stockholders increased 19%, and earnings per share increased approximately 27%.

Full Year 2022 Operating Highlights Compared to Full Year 2021

(Percentage Change Excluding Foreign Currency Exchange Shown in Parenthesis)

• Retail Automotive Same-Store Revenue – increased 1% (+6%)
• • New Vehicle -3% (+1%); Used Vehicle +2% (+8%); Finance & Insurance +5% (+10%); Service & Parts +7% (+11%)
• Retail Automotive Same-Store Gross Profit – increased 2% (+7%)
• • New Vehicle +14% (+18%); Used Vehicle -21% (-17%); Finance & Insurance +5% (+10%); Service & Parts +5% (+9%)
• Retail Commercial Truck Same-Store Revenue – increased 29%
• • New Vehicle +37%; Used Vehicle -5%; Finance & Insurance +7%; Service & Parts +22%

Retail Automotive Dealerships

For the three months ended December 31, 2022, total retail automotive revenue increased 8% to $5.9 billion, including a 4% increase on a same-store basis. Total retail automotive gross profit decreased 1% to $1.0 billion, including a 5% decrease on a same-store basis. Excluding the impact from foreign currency exchange, total retail automotive revenue increased 14% (same-store +10%) and total retail automotive gross profit increased 4% (same-store flat).

Retail Commercial Truck Dealerships

As of December 31, 2022, Premier Truck Group operated 39 North American retail commercial truck locations. For the three months ended December 31, 2022, revenue increased 40% to $960.8 million, same-store revenue increased 33% to $887.4 million, and earnings before taxes increased 14% to $51.1 million when compared to the same period in 2021. For the twelve months ended December 31, 2022, revenue increased 44% to $3.5 billion, same-store revenue increased 29% to $2.8 billion, and earnings before taxes increased 34% to $214.7 million when compared to the same period in 2021.

Penske Transportation Solutions Investment

Penske Transportation Solutions ("PTS") is a leading provider of full-service truck leasing, truck rental, contract maintenance, and logistics services. Penske Automotive Group has a 28.9% ownership interest in PTS and accounts for its ownership interest using the equity method of accounting. For the three and twelve months ended December 31, 2022, the Company recorded $99.4 million and $490.0 million in earnings compared to $91.3 million and $365.8 million for the same periods in 2021, representing increases of 9% and 34%, respectively. During the fourth quarter, PTS continued to expand its managed fleet with over 414,500 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts. The increase in earnings was principally driven by increased demand for PTS' full-service leasing, rental and logistics services, and remarketing of used trucks.

Corporate Development and Capital Allocation

For the twelve months ended December 31, 2022, the Company added approximately $1.3 billion in annualized revenue consisting of 19 retail automotive franchises, two open points, and four full-service dealerships for commercial trucks.

Based on the Company's strong earnings and cash flow, the Board of Directors has increased the quarterly dividend, most recently approving a 7% increase in the quarterly dividend to $0.61 per share. During the twelve months ended December 31, 2022, the Company repurchased 8.2 million shares of common stock for approximately $886.5 million. From January 1, 2023, through February 7, 2023, the Company repurchased an additional 0.6 million shares for an aggregate purchase price of $70.7 million under our securities repurchase program.

Conference Call

Penske Automotive Group will host a conference call discussing financial results relating to the fourth quarter of 2022 on Wednesday, February 8, 2023, at 2:00 p.m. Eastern Standard Time. To listen to the conference call, participants must dial (877) 336-4436 [International, please dial (234) 720-6984] using access code 440822. The call will also be simultaneously broadcast over the Internet, available through the Investors section of the Penske Automotive Group website. Additionally, an investor presentation relating to the fourth quarter 2022 financial results has been posted to the Investors section of the Company's website. To access the presentation or to listen to the Company's webcast, please refer to www.penskeautomotive.com.

About Penske Automotive

Penske Automotive Group, Inc., (NYSE: PAG) headquartered in Bloomfield Hills, Michigan, is a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. PAG operates dealerships in the United States, the United Kingdom, Canada, Germany, Italy, and Japan and is one of the largest retailers of commercial trucks in North America for Freightliner. PAG also distributes and retails commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. PAG employs over 26,500 people worldwide. Additionally, PAG owns 28.9% of Penske Transportation Solutions ("PTS"), a business that employs over 41,500 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 414,500 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts and provides innovative transportation, supply chain, and technology solutions to its customers. PAG is a member of the Fortune 500, Russell 1000, and Russell 3000 indexes. For additional information, visit the Company's website at www.penskeautomotive.com.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations, adjusted earnings per share, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), adjusted EBITDA, and leverage ratio. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these widely accepted measures of operating profitability improve the transparency of the Company's disclosures and provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations and improve the period-to-period comparability of the Company's results from its core business operations. These non-GAAP financial measures are not substitutes for GAAP financial results and should only be considered in conjunction with the Company's financial information that is presented in accordance with GAAP.

Caution Concerning Forward Looking Statements

Statements in this press release may involve forward-looking statements, including forward-looking statements regarding Penske Automotive Group, Inc.'s financial performance and future plans. Actual results may vary materially because of risks and uncertainties that are difficult to predict. These risks and uncertainties include, among others, those related to macro-economic, geo-political and industry conditions and events, including their impact on new and used vehicle sales, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, personal discretionary spending levels, interest rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, the shortage of microchips or other components, the COVID-19 pandemic, the war in Ukraine, challenges in sourcing labor, or other disruptions; changes in the retail model either from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of electric vehicles; the continued effect of COVID-19 on the global economy, including our ability to react effectively to changing business conditions in light of the COVID-19 pandemic; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate and integrate acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes or work stoppages by its employees, a reduction in PTS' asset utilization rates, continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, changes in values of used trucks which affects PTS' profitability on truck sales and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investment in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to automotive dealerships and vehicles sales, including those related to emissions standards, as well as changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate trucks; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; the outcome of legal and administrative matters, and other factors over which management has limited control. These forward-looking statements should be evaluated together with additional information about Penske Automotive Group's business, markets, conditions, risks, and other uncertainties, which could affect Penske Automotive Group's future performance. The risks and uncertainties discussed above are not exhaustive and additional risk and uncertainties are addressed in Penske Automotive Group's Form 10-K for the year ended December 31, 2021, Form 10-Q for the quarterly periods ended March 31, 2022, June 30, 2022, and September 30, 2022, and its other filings with the Securities and Exchange Commission ("SEC"). This press release speaks only as of its date, and Penske Automotive Group disclaims any duty to update the information herein.