BLOOMFIELD HILLS, Mich., Feb. 9, 2022 — 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 record fourth quarter and twelve months 2021 results. In the fourth quarter, the company reported a 55.1% increase in income from continuing operations attributable to common shareholders to $310.4 million and a 59.4% increase in related earnings per share to $3.97. As reconciled in the attached schedules, adjusted income from continuing operations attributable to common shareholders increased 60.3% to $320.5 million and adjusted earnings per share increased 64.7% to $4.10. Foreign exchange positively impacted earnings per share by $0.01.
Fourth Quarter 2021 Operating Highlights versus Fourth Quarter 2020
Total Revenue – increased 8.3% to $6.3 billion from $5.8 billion Total Gross Profit – increased 31.3%; Gross Margin – increased 320 basis points to 18.7% Retail Automotive Gross Profit – increased 29.4% Retail Commercial Truck Dealership Earnings Before Taxes – increased 68.9% Penske Transportation Solutions Equity Earnings – increased 61.6% Selling, General & Administrative Expenses as a Percentage of Gross Profit – improved by 260 basis points to 67.1%
Fourth Quarter 2021 Same-Store Highlights versus Fourth Quarter 2020
Retail Automotive Same-Store Revenue – increased 4.1% New Vehicle -8.4%; Used Vehicle +21.7%; Finance & Insurance +20.3%; Service & Parts +9.7%Retail Automotive Same-Store Gross Profit – increased 25.6% New Vehicle +33.4%; Used Vehicle +56.6%; Finance & Insurance +20.3%; Service & Parts +8.6%Commercial Truck Same-Store Gross Profit – increased 29.4%
Commenting on the Company’s results, Chair and CEO Roger Penske said, “During the fourth quarter, our diversified business and strong execution by our team produced record revenue, earnings before taxes, net income, and earnings per share, driven by strong retail automotive and commercial truck vehicle margins, a 26% increase in same-store retail automotive gross profit, and continued strong earnings from Penske Transportation Solutions which increased 62%.” Penske continued, “For the year, I am pleased to report all-time record profitability including a 127% increase in earnings before taxes to over $1.6 billion and a 118% increase in income from continuing operations to $1.2 billion. Over the last two years we have paid down nearly $900 million in non-vehicle debt, reduced our debt to total capitalization to 26% from 46%, and improved our leverage ratio from 2.9x to 0.8x and as of December 31, 2021, returned over $530 million to shareholders through share repurchases and cash dividends.”
For the twelve months ended December 31, 2021, the company reported a 118.4% increase in income from continuing operations attributable to common shareholders to $1.2 billion and a 120.8% increase in related earnings per share to $14.88. This compares to income from continuing operations attributable to common shareholders of $543.2 million, or $6.74 per share, in the prior year. As reconciled in the attached schedules, adjusted income from continuing operations increased 127.9% to $1.2 billion, and adjusted earnings per share increased 130.1% to $15.28. Foreign exchange positively impacted earnings per share by $0.24.
Full Year 2021 Operating Highlights
Retail Automotive Unit Sales – increased 11.7%, including 11.1% on a same-store basis Total Revenue – All-time record revenue increased 25.0% to $25.6 billion from $20.4 billion Total Gross Profit – increased 39.5%; Gross Margin – increased 180 basis points to 17.4% Retail Automotive Gross Profit – increased 39.2% Retail Commercial Truck Dealership Earnings Before Taxes – increased 105.0% Penske Transportation Solutions Equity Earnings – increased 122.4% Selling, General & Administrative Expenses as a Percentage of Gross Profit – improved by 760 basis points to 66.7%
Retail Automotive Dealerships
For the three months ended December 31, 2021, total retail automotive revenue increased 7.3% to $5.5 billion, or 4.1% on a same-store basis, including 61.0% for CarShop. Total retail automotive gross profit increased 29.4% to $1.0 billion, including 25.6% on a same-store basis. Gross margin increased 320 basis points to 18.6% as variable gross profit per unit retailed increased 49.0%, or $2,155, to $6,552.
CarShop Used Vehicle Centers
We currently operate twenty-three CarShop used vehicle locations including the six locations we added during 2021. We are targeting 150,000 in unit sales and $100 million of earnings before taxes for CarShop by the end of 2023. For the three months ended December 31, 2021, retail unit sales increased by 24.3% to 14,815 while revenue increased by 61.0% to $393.9 million, including an increase of 38.4% on a same-store basis. For the twelve months ended December 31, 2021, retail unit sales increased by 19.2% to 63,403 while revenue increased by 43.2% to $1.5 billion, including 30.9% on a same-store basis.
Retail Commercial Truck Dealerships
For the three months ended December 31, 2021, earnings before taxes increased 68.9% to $44.8 million compared to $26.5 million in the same period last year, for a return on sales of 6.5%. The increase in earnings before taxes was principally driven by a 50.9% increase in gross profit, including a 29.4% increase in same-store gross profit. For the twelve months ended December 31, 2021, earnings before taxes increased 105.0% to $160.3 million compared to $78.2 million in the same period last year and return on sales was 6.5%. The increase in earnings before taxes was principally driven by a 48.4% increase in gross profit, including a 34.0% increase on a same-store basis.
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, 2021, the company recorded $91.3 million and $365.8 million in earnings compared to $56.5 million and $164.5 million for the same period last year, representing increases of 61.6% and 122.4%, respectively. The increase was principally driven by increased demand for the company’s full-service leasing, rental, and logistics services, coupled with improved efficiency and a reduction in operating expenses which drove a 11% return on sales for PTS during the fourth quarter 2021.
Corporate Development and Capital Allocation
During the twelve months ended December 31, 2021, we completed acquisitions and new dealership open points representing approximately $1.3 billion in annualized revenues within our retail automotive and commercial truck dealership businesses.
In addition to our efforts to grow the business, on January 26, 2022, we announced an increase in the quarterly dividend to $0.47 per share, payable on March 1, 2022, to shareholders of record as of February 10, 2022. During 2021, the company increased the dividend four times, returning $142.5 million to shareholders. Also, the company repurchased 3,261,580 shares (approximately 4.2% of shares outstanding) for $293.5 million representing an average price of $89.98 per share.
From January 1, 2022, through February 8, 2022, Penske Automotive repurchased an additional 0.4 million shares for an aggregate purchase price of $36.1 million. As of February 8, 2022, approximately $194.3 million remains available to repurchase additional shares under the company’s existing share repurchase authorization.
Penske Automotive Group will host a conference call discussing financial results relating to the fourth quarter of 2021 on Wednesday, February 9, 2022, at 2:00 p.m. Eastern Time. To listen to the conference call, participants must dial (866) 996-5381 [International, please dial (602) 585-9891] using access code 7854768. The call will also be simultaneously broadcast over the Internet through the Investors section of the Penske Automotive Group website. Additionally, an investor presentation relating to the fourth quarter 2021 financial results has been posted to 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 principally 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.
Additionally, PAG owns 28.9% of Penske Transportation Solutions, a business that manages a fleet of over 360,000 vehicles providing innovative transportation, supply chain, and technology solutions to North American fleets. PAG is a member of the Fortune 500, Russell 1000, and Russell 3000 indexes and is ranked among the World’s Most Admired Companies by Fortune Magazine. 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”), and adjusted earnings before interest, taxes, depreciation, and amortization. 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.
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