Penske Automotive Group Inc (PAG, Financial) released its 8-K filing on July 31, 2024, reporting a 3% increase in revenue to $7.7 billion for the second quarter of 2024, setting a new quarterly record. However, earnings per share (EPS) fell to $3.61, down from $4.41 in the same period last year, missing the analyst estimate of $3.80. The company operates in nearly 20 U.S. states and overseas, with a significant presence in the United Kingdom, Continental Europe, and Japan.
Company Overview
Penske Automotive Group Inc (PAG, Financial) is a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. The company operates approximately 150 U.S. light-vehicle stores, including in Puerto Rico, and 189 franchised dealerships overseas. Penske is the third-largest U.S.-based dealership in terms of light-vehicle revenue, selling more than 35 brands, with over 90% of retail automotive revenue coming from luxury and import names. The company also owns 44 truck dealerships under the Premier Truck Group and 19 CarShop used-vehicle stores in the U.S. and UK. Penske is headquartered in Bloomfield Hills, Michigan.
Performance and Challenges
For the second quarter of 2024, Penske Automotive Group Inc (PAG, Financial) reported a net income attributable to common stockholders of $241.2 million, down from $300.8 million in the prior year period. The decline in net income was partly due to foreign currency exchange impacts, which negatively affected revenue by $0.8 million and net income by $0.4 million. Despite these challenges, the company achieved record retail automotive service and parts revenue of $753 million, up 10% year-over-year.
Financial Achievements
The company's total revenue for the quarter reached $7.7 billion, a 3% increase from the second quarter of 2023. This growth was driven by a 2% increase in new and used retail automotive units delivered and a 10% increase in retail automotive service and parts revenue. Sequentially, earnings before taxes increased by 10%, and EPS improved by 12% from the first quarter of 2024.
"I am pleased to see that our service and parts business remains strong and contributed to our record total quarterly revenue of $7.7 billion. In addition, our focus on efficiency and controlling costs drove a sequential decline in selling, general, and administrative expenses as a percentage of gross profit by 50 basis points to 70.2%," said Chair and CEO Roger Penske.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $7.7 billion | $7.5 billion |
| Net Income | $241.2 million | $300.8 million |
| Earnings Per Share | $3.61 | $4.41 |
Balance Sheet and Cash Flow
As of June 30, 2024, Penske Automotive Group Inc (PAG, Financial) had approximately $1.7 billion in liquidity, including $115 million in cash and $1.6 billion of availability under its U.S. and international credit agreements. The company's leverage ratio stood at 1.2x. During the first half of 2024, Penske repurchased 0.4 million shares of common stock for approximately $58.1 million and acquired 0.1 million shares for $18.3 million from employees.
Corporate Development and Capital Allocation
In June 2024, Penske acquired three full-service Freightliner and Western Star dealerships and two independent repair facilities, representing $200 million in estimated annualized revenue. Additionally, the company announced the acquisition of Bill Brown Ford in July 2024, representing $550 million in estimated annualized revenue. Year-to-date, Penske has completed acquisitions representing nearly $2 billion in estimated annualized revenue.
Analysis
Penske Automotive Group Inc (PAG, Financial) continues to demonstrate resilience and growth in a challenging market environment. The company's diversification strategy, focusing on both retail automotive and commercial truck businesses, has contributed to its record revenue. However, the decline in net income and EPS highlights the impact of external factors such as foreign currency exchange and market conditions. Moving forward, Penske's strategic acquisitions and focus on efficiency are likely to play a crucial role in sustaining its growth trajectory.
Explore the complete 8-K earnings release (here) from Penske Automotive Group Inc for further details.
