Table of Contents For the quarterly period ended June 30, 2025 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Penske Automotive Group, Inc. (Exact name of registrant as specified in its charter) or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of incorporation or organization) 2555 Telegraph Road Bloomfield Hill ...

Core Viewpoint - Penske Automotive Group (NYSE: PAG) has underperformed over the past year, remaining largely flat and missing out on significant market rallies despite reporting solid Q2 results [1] Company Performance - The company's stock has not shown meaningful growth, indicating potential challenges in capitalizing on market opportunities [1] Market Context - The broader market has experienced rallies, yet Penske Automotive Group's performance has not aligned with these trends, raising questions about its competitive positioning [1]

My "Buy" call on Penske Automotive Group (NYSE: PAG ) in February was premature, as it was basically the top tick before the stock turned down, providing much better buying opportunities after the April Liberation DayI retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions ...

Penske Automotive Group (PAG) Q2 2025 Earnings Call July 30, 2025 02:00 PM ET Company ParticipantsAnthony Pordon - EVP - IR & Corporate DevelopmentRoger Penske - Chairman & CEORichard Shearing - Chief Operating Officer of North American OperationsRandall Seymore - COO - International OperationsShelley Hulgrave - EVP & CFOJeff Lick - Managing DirectorRajat Gupta - Executive Director - AutosConference Call ParticipantsMichael Ward - Financial AnalystRonald Jewsikow - Director - Equity Research AnalystDavid Wh ...

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $7.7 billion, consistent with Q2 2024, impacted by strategic divestitures of approximately $200 million in revenue [6][7] - Earnings before taxes (EBT) increased by 4%, net income also increased by 4%, and earnings per share rose by 5% compared to 2024 [7] - Gross profit increased to $1.3 billion, with a gross profit margin of 16.9%, marking the eighth consecutive quarter of stable gross margin [8][9] - Selling, general and administrative expenses as a percentage of gross profit improved by 30 basis points to 69.9% [9] Business Line Data and Key Metrics Changes - North American retail automotive service and parts gross profit increased by 9%, with same-store service and parts revenue up by 7% [14] - Premier Truck Group's new unit sales increased by 4%, while used unit sales decreased by 8%, but used truck grosses increased over 50% [17] - Penske Transportation Solutions (PTS) revenue was $2.8 billion, with full-service revenue and contracts increasing by 4% [19] Market Data and Key Metrics Changes - Approximately 61% of revenue is generated in North America, 29% in the UK, and 10% from other international markets [11] - In the UK, new unit deliveries declined by 16% due to OEM product changes and reduced incentives [21] - Same-store used units in the UK declined by 23%, attributed to the realignment of the company's used-only dealerships [22] Company Strategy and Development Direction - The company focuses on diversification across retail automotive and commercial truck industries, leveraging a highly variable cost structure [12][34] - Recent trade agreements, particularly with the EU, are expected to benefit major partners by enhancing U.S. production exports [10] - The company is actively pursuing acquisitions and has a pipeline for potential M&A opportunities [104][112] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business and the benefits of diversification, cost control, and a strong balance sheet [34] - The operating environment remains fluid, with OEMs adjusting pricing strategies amid tariff negotiations [10][42] - Management anticipates a gradual improvement in used vehicle sourcing as lease returns increase in 2026 [13] Other Important Information - The company generated $472 million in cash flow from operations for the first half of 2025, with a trailing twelve-month EBITDA of over $1.5 billion [27] - The dividend was increased by 4.8% to $1.32 per share, marking the nineteenth consecutive quarterly increase [29] - The company has a backlog of $350 million for 2025 delivery in its commercial vehicle and power systems business [25] Q&A Session Summary Question: Can you quantify the moving pieces affecting unit sales in the US and the UK? - Management noted approximately $200 million in revenue loss due to divestitures and store closures, impacting new and used vehicle units sold [38][40] Question: What about the impact of the UK market? - The UK faced challenges with mobility credits and OEMs suspending wholesales, affecting premium sector sales [42] Question: How do you see GPU trajectory and cadence throughout the quarter? - Management indicated stable grosses throughout the quarter, with the highest in April, and noted a potential for gross compression moving forward [62] Question: What is the outlook for capital allocation with the additional cash flow? - Management stated that the additional cash flow provides more opportunities for capital allocation, including share buybacks and acquisitions [100][103] Question: Is the $1.5 billion acquisition target still realistic? - Management indicated that while the target may not be met, they remain focused on organic growth and acquisitions [110][112]

Financial Performance - Revenue remained relatively flat at $7662 million for Q2 2025 compared to $7697 million in Q2 2024, while six-month revenue increased by 1% to $15267 million[15] - Income attributable to common stockholders increased by 4% to $250 million in Q2 2025 and by 8% to $494 million for the six months ended June 30, 2025[15] - Penske Transportation Solutions (PTS) equity earnings increased to $535 million in Q2 2025 from $529 million, and $867 million for the six months ended June 30, 2025[14,47] - Adjusted EBITDA for the six months ended June 30, 2025, was $773 million, a 48% increase compared to $7379 million in the same period of 2024[55] Retail Automotive - Retail automotive same-store revenue decreased by 1% to $6319 million in Q2 2025[21] - Gross margin increased by 50 bps to 169%[14] - Same-store retail automotive service and parts revenue increased by 7%, with related gross profit up by 9%[14] Retail Commercial Trucks - Retail commercial truck revenue increased to $944 million in Q2 2025 from $892 million in Q2 2024[31] - Same-store total units decreased by 4% to 4995 in Q2 2025[32] - Same-store used units gross per unit increased by 56% to $7016[32] Capital Allocation - Dividends paid were $165 million for the six months ended June 30, 2025[9] - Share repurchases totaled $133 million for the six months ended June 30, 2025[9] - Capital expenditures were $147 million for the six months ended June 30, 2025[9]

[Financial & Operational Highlights](index=1&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%20REPORTS%20QUARTERLY%20RESULTS) [Q2 2025 Financial & Operational Performance](index=1&type=section&id=Second%20Quarter%202025%20Operating%20Highlights) PAG reported flat Q2 2025 revenue at $7.7 billion, with gross profit up 3% to $1.3 billion, net income up 4% to $250 million, and EPS up 5% to $3.78 Q2 & H1 2025 Key Financial Results (vs. Prior Year) | Metric | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $7.7B | $7.7B | 0.0% | $15.3B | $15.1B | +1.0% | | Gross Profit | $1.3B | - | +3.0% | $2.57B | $2.51B | +2.2% | | Net Income (to Common Stockholders) | $250.0M | $241.2M | +4.0% | $494.3M | $456.4M | +8.0% | | Earnings Per Share (EPS) | $3.78 | $3.61 | +5.0% | $7.44 | $6.81 | +9.0% | Q2 2025 Same-Store Operating Highlights (vs. Q2 2024) | Metric | Change | | :--- | :--- | | Retail Automotive Revenue | -1% | | Retail Automotive Gross Profit | +3% | | Service & Parts Revenue | +7% | | Service & Parts Gross Profit | +9% | | Overall Gross Margin | +50 bps | | SG&A as % of Gross Profit | -30 bps | - Management highlighted that the strong results were driven by **gross margin expansion** and **improved SG&A leverage** The company's diversification across premium brands, geographic markets (U.S. and international), and business lines (new/used vehicles, service, F&I) provides resilience against market changes like potential tariffs[3](index=3&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) [Retail Automotive Dealerships](index=3&type=section&id=Retail%20Automotive%20Dealerships) Retail Automotive revenue decreased 1% to $6.5 billion in Q2 2025, but gross profit rose 3% to $1.1 billion, primarily from a 9% increase in service and parts gross profit Retail Automotive Performance - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Total Revenue | $6.5B | -1% | | Total Gross Profit | $1.1B | +3% | | New Units Delivered | - | -6% | | Used Units Delivered | - | -16% | | Same-Store Service & Parts Gross Profit | - | +9% | - The **27% decrease** in international used unit sales was largely due to the realignment of the U.K. Sytner Select dealerships, which now focus on **higher margins and lower costs** rather than volume[6](index=6&type=chunk) [Retail Commercial Truck Dealerships](index=3&type=section&id=Retail%20Commercial%20Truck%20Dealerships) Retail Commercial Truck revenue increased 6% to $943.6 million in Q2 2025, with retail unit sales up 2%, and earnings before taxes growing to $54.2 million Retail Commercial Truck Performance - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $943.6M | +6% | | Same-Store Revenue | - | 0% (Flat) | | Retail Unit Sales | 5,339 | +2% | | Same-Store Unit Sales | - | -4% | | Earnings Before Taxes | $54.2M | +4.8% | [Penske Transportation Solutions (PTS) Investment](index=3&type=section&id=Penske%20Transportation%20Solutions%20Investment) PAG recorded $53.5 million in equity earnings from its 28.9% stake in PTS for Q2 2025, driven by higher leasing and maintenance revenue, despite declines in truck rental and used truck sales - PAG has a **28.9% ownership stake** in PTS, which operates a managed fleet of **over 414,000 trucks, tractors, and trailers**[9](index=9&type=chunk)[14](index=14&type=chunk) Equity Earnings from PTS Investment | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 Earnings | $53.5M | $52.9M | | H1 Earnings | $86.7M | $85.4M | [Corporate Development & Capital Allocation](index=3&type=section&id=Corporate%20Development%2C%20Capital%20Allocation%2C%20Liquidity%2C%20and%20Leverage) [Share Repurchases, Dividends, and Liquidity](index=3&type=section&id=Corporate%20Development%2C%20Capital%20Allocation%2C%20Liquidity%2C%20and%20Leverage) In H1 2025, PAG repurchased 885,272 shares for $133.3 million, increased its quarterly dividend by 4.8% to $1.32, and maintained strong liquidity of $2.3 billion with a 1.2x leverage ratio - Share Repurchases: Repurchased **885,272 shares** (**1.3% of outstanding**) for **$133.3 million** in H1 2025 **$295.7 million** remains available under the repurchase program[10](index=10&type=chunk)[11](index=11&type=chunk)[35](index=35&type=chunk) - Dividend Increase: The quarterly dividend was increased by **4.8%** to **$1.32 per share**, representing a **3.1% forward yield** and the **19th consecutive quarterly increase**[12](index=12&type=chunk) - Liquidity and Leverage: The company has approximately **$2.3 billion** in liquidity and a leverage ratio of **1.2x** as of June 30, 2025[11](index=11&type=chunk) - Acquisition: Completed the acquisition of a Ferrari dealership in Italy with expected annualized revenue of **$40 million** in July 2025[12](index=12&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Condensed Statements of Income](index=8&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Consolidated%20Condensed%20Statements%20of%20Income) Q2 2025 revenue was flat at $7.66 billion, with gross profit up 2.6% to $1.30 billion, and net income up 3.6% to $250.0 million, resulting in $3.78 EPS Consolidated Income Statement Summary - Q2 2025 vs Q2 2024 (in Millions) | Account | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $7,662.3 | $7,696.7 | (0.4)% | | Gross Profit | $1,296.6 | $1,264.1 | 2.6% | | Operating Income | $348.2 | $338.0 | 3.0% | | Income Before Taxes | $336.9 | $325.5 | 3.5% | | Net Income to Common Stockholders | $250.0 | $241.2 | 3.6% | [Consolidated Condensed Balance Sheets](index=9&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Consolidated%20Condensed%20Balance%20Sheets) As of June 30, 2025, total assets reached $17.39 billion, up from $16.72 billion, with inventories at $4.85 billion and total equity at $5.63 billion Balance Sheet Summary (in Millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $155.3 | $72.4 | | Inventories | $4,849.6 | $4,640.2 | | Total Assets | $17,393.4 | $16,720.9 | | Total Liabilities | $11,762.0 | $11,493.6 | | Total Equity | $5,631.4 | $5,227.3 | [Consolidated Operations Selected Data](index=10&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Consolidated%20Operations%20Selected%20Data) Q2 2025 saw North America's revenue share rise to 61.8%, total gross margin improve to 16.9%, and SG&A as a percentage of gross profit improve to 69.9% Q2 2025 Revenue & Gross Profit by Segment (in Millions) | Segment | Revenue | Gross Profit | | :--- | :--- | :--- | | Retail Automotive | $6,517.5 | $1,108.8 | | Retail Commercial Truck | $943.6 | $143.6 | | Commercial Vehicle Distribution & Other | $201.2 | $44.2 | Q2 Geographic Revenue Mix | Region | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | North America | 61.8% | 59.8% | | U.K. | 27.2% | 31.2% | | Other International | 11.0% | 9.0% | [Detailed Operational Metrics](index=12&type=section&id=Detailed%20Operational%20Metrics) [Retail Automotive Operations (Total & Same-Store)](index=12&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Retail%20Automotive%20Operations) Q2 2025 total retail automotive unit sales declined 11.9%, but gross profit per used vehicle surged 27.7% to $2,326, and service and parts gross profit rose 9.4% Q2 2025 Total Retail Automotive Performance Highlights | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Units Retailed | 102,545 | 116,432 | (11.9)% | | Service & Parts Revenue | $816.6M | $752.8M | +8.5% | | Gross Profit per Used Vehicle | $2,326 | $1,822 | +27.7% | | Service & Parts Gross Margin | 58.9% | 58.4% | +50 bps | Q2 2025 Same-Store Retail Automotive Performance Highlights | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Same-Store Revenue | $6,318.9M | $6,400.6M | (1.3)% | | Total Same-Store Gross Profit | $1,080.1M | $1,048.4M | +3.0% | | Same-Store Service & Parts Gross Profit | $469.0M | $431.1M | +8.8% | [Retail Commercial Truck Operations (Total & Same-Store)](index=18&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Retail%20Commercial%20Truck%20Operations) Q2 2025 total commercial truck revenue grew 5.7%, driven by new vehicle revenue, with gross profit per used vehicle surging 56.3%, despite a slight 0.6% decline in total gross profit Q2 2025 Total Retail Commercial Truck Performance Highlights | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $943.6M | $892.3M | +5.7% | | Total Gross Profit | $143.6M | $144.5M | (0.6)% | | Gross Profit per New Vehicle | $7,889 | $8,765 | (10.0)% | | Gross Profit per Used Vehicle | $7,037 | $4,502 | +56.3% | Q2 2025 Same-Store Retail Commercial Truck Performance Highlights | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Same-Store Revenue | $883.9M | $887.3M | (0.4)% | | Total Same-Store Gross Profit | $135.6M | $143.1M | (5.2)% | | Same-Store New Vehicle Gross Profit | $33.2M | $39.0M | (14.9)% | [Supplemental Information](index=23&type=section&id=Supplemental%20Information) [Supplemental Data](index=23&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Supplemental%20Data) Q2 2025 retail automotive revenue from premium brands was 72%, with $93.3 million in share repurchases, and new vehicle days' supply at 57 days - The retail automotive revenue mix remains heavily weighted towards premium brands, which constituted **72% of revenue** in Q2 2025, consistent with the prior year[35](index=35&type=chunk) Inventory Days' Supply | Vehicle Type | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | New Vehicle | 57 days | 49 days | | Used Vehicle | 44 days | 47 days | Q2 2025 Capital Allocation (in Millions) | Item | Amount | | :--- | :--- | | Capital Expenditures | $70.8 | | Stock Repurchases | $93.3 | [Non-GAAP Reconciliations](index=25&type=section&id=PENSKE%20AUTOMOTIVE%20GROUP%2C%20INC.%20Consolidated%20Non-GAAP%20Reconciliations) H1 2025 GAAP net income of $494.3 million and EPS of $7.44 are adjusted for a $52.3 million gain and $25.2 million in impairments, yielding adjusted net income of $476.3 million and EPS of $7.17 H1 2025 GAAP to Non-GAAP Reconciliation | Metric | Reported (GAAP) | Adjustments | Adjusted (Non-GAAP) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $494.3M | ($18.0M) | $476.3M | +4.4% | | EPS | $7.44 | ($0.27) | $7.17 | +5.3% | - Adjustments for H1 2025 include excluding a **$38.9 million** after-tax gain on a dealership sale and adding back **$20.9 million** in after-tax impairments and other charges[39](index=39&type=chunk)

Group 1 - Penske Automotive reported quarterly earnings of $3.78 per share, exceeding the Zacks Consensus Estimate of $3.56 per share, and showing an increase from $3.61 per share a year ago, resulting in an earnings surprise of +6.18% [1] - The company posted revenues of $7.66 billion for the quarter ended June 2025, which was a 2.63% miss compared to the Zacks Consensus Estimate, and a slight decrease from $7.7 billion year-over-year [2] - Penske shares have increased by approximately 10.2% since the beginning of the year, outperforming the S&P 500's gain of 8.3% [3] Group 2 - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The trend of estimate revisions for Penske was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $3.51 on revenues of $7.69 billion, and for the current fiscal year, it is $13.73 on revenues of $30.78 billion [7] Group 3 - The Automotive - Retail and Whole Sales industry, to which Penske belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, which may negatively impact stock performance [8] - Worksport Ltd., another company in the same industry, is expected to report a quarterly loss of $0.76 per share, reflecting a year-over-year change of +49.3%, with revenues anticipated to be $4.07 million, up 112% from the previous year [9]

Core Insights - Penske Automotive Group reported a record gross profit of $1.3 billion, reflecting a 3% increase year-over-year [1] - The company achieved a 4% increase in earnings before taxes to $337 million and a 5% increase in earnings per share to $3.78 [1] - Revenue remained flat at $7.7 billion compared to the same period in 2024, with net income attributable to common stockholders increasing by 4% to $250 million [1][3] Financial Performance - For the second quarter of 2025, total revenue was $7.7 billion, unchanged from the previous year, while net income rose to $250 million from $241.2 million [1][3] - Earnings per share increased to $3.78 from $3.61, driven by a positive impact from foreign currency exchange of $136.6 million [1][3] - For the first half of 2025, revenue increased by 1% to $15.3 billion, with net income rising 8% to $494.3 million [3][4] Retail Automotive Operations - Retail automotive same-store revenue decreased by 1%, with new vehicle sales down 2% and used vehicle sales down 1% [5][6] - Retail automotive gross profit increased by 3% to $1.1 billion, driven by a 9% increase in service and parts revenue [6][7] - Total new units delivered decreased by 6%, while used units delivered decreased by 16% [4][20] Retail Commercial Truck Dealerships - Retail commercial truck revenue increased by 6% to $943.6 million, with retail unit sales rising 2% [8][19] - For the first half of 2025, revenue from retail commercial trucks increased by 5% to $1.8 billion [8][19] Penske Transportation Solutions - Penske Transportation Solutions recorded earnings of $53.5 million for the second quarter, up from $52.9 million in the previous year [9] - The company operates a managed fleet of over 414,000 trucks, tractors, and trailers [9] Share Repurchase and Capital Allocation - The company repurchased 885,272 shares of common stock in the first half of 2025, representing approximately 1.3% of its outstanding shares [10] - As of June 30, 2025, the company had approximately $2.3 billion in liquidity, including $155 million in cash [10] Corporate Developments - The company completed the acquisition of a Ferrari dealership in Italy, expected to generate annualized revenue of $40 million [11] - The Board of Directors approved a 4.8% increase in the quarterly dividend to $1.32 per share, marking the 19th consecutive quarterly increase [11]

Group 1 - Penske Automotive Group, Inc. announced a quarterly dividend increase of 4.8% to $1.32 per share, marking the 19th consecutive quarterly increase [1][2] - The dividend is payable on September 3, 2025, to shareholders of record as of August 15, 2025 [1] - The increase reflects the company's strong balance sheet and cash flow, as stated by President Robert H. Kurnick, Jr. [2] Group 2 - Penske Automotive Group operates internationally, with dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia [2] - The company is one of the largest retailers of commercial trucks in North America and employs over 28,700 people worldwide [2] - Penske Automotive owns 28.9% of Penske Transportation Solutions, which manages a large trucking fleet and provides transportation and supply chain solutions [2]