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Penske Automotive Group (NYSE:PAG) FY Conference November 03, 2025 07:00 PM ET Speaker3All right, moving along. Another great privilege to have Tony Pordon back from Penske Automotive Group. One of the most unique companies within the automotive and vehicular space. Company has 66 million shares. Trades around $160, about $10.7 billion equity cap. Has $1.5 billion in net debt and also owns 28.9% of Penske Transportation Solutions. Total enterprise value is in the $10 billion range. Apart from being one of t ...

Table of Contents 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 For the quarterly period ended September 30, 2025 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Penske Automotive Group, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organizati ...

Core Insights - The individual has extensive experience in the energy industry, having worked for 22 years in various roles including engineering, planning, and financial analysis [1] - The investment strategy focuses on achieving returns that match the S&P 500 while maintaining lower volatility and higher income [1] - The approach emphasizes long-term holding of investments unless there is a compelling reason to sell, with a focus on intrinsic value [1] Investment Strategy - The individual manages a personal portfolio since 1998, aiming for total return maximization by purchasing assets when prices are low relative to their intrinsic value [1] - There is no specific preference for asset class, market cap, sector, or yield, indicating a broad investment approach [1] Position Disclosure - The individual holds a beneficial long position in the shares of PAG, indicating confidence in the stock's performance [2]

Financial Data and Key Metrics Changes - Q3 revenue was $7.7 billion, up 1% year-over-year [5] - EBITDA for Q3 was $292 million, with net income of $213 million and earnings per share of $3.23 [5] - Retail automotive same-store revenue increased by 5%, with service and parts revenue also up by 5% [5] - Total new vehicle gross per unit was impacted by a higher percentage of BEV sales, reducing gross by approximately $100 [6][8] - Free cash flow for the nine months ended September 30, 2025, was $625 million, with adjusted EBITDA of $1.1 billion [20] Business Line Data and Key Metrics Changes - U.S. automotive retail same-store new and used unit sales increased by 5%, with new units up 9% and used units up 1% [10] - Premier Truck Group same-store unit sales declined by 19% during Q3, with EBITDA down $15 million [9][12] - International revenue was $2.9 billion, with a 7% decline in same-store units delivered in the UK [15] - Used vehicle gross profit in the UK increased by 19%, contributing to an overall increase in used vehicle gross per unit [16] Market Data and Key Metrics Changes - In the U.S., same-store new units delivered increased by 9%, while revenue increased by nearly 10% [7] - The UK retail automotive market faced challenges due to a cyber incident at Jaguar Land Rover, impacting new vehicle deliveries [8][15] - The Class 8 market saw a 30% decline in orders and a 22% decline in retail sales during Q3 [12] Company Strategy and Development Direction - The company remains committed to its diversification strategy and has acquired a Ferrari dealership in Modena, Italy [23] - The focus on electric vehicle sales increased, with BEV sales making up over 10% of total sales in Q3 [6] - The company is adjusting its cost structure in response to macroeconomic challenges and is well-positioned for a market rebound [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified model's ability to adapt to market conditions [25] - The operating environment in the UK remains challenging due to inflation and interest rates, impacting consumer affordability [15] - Management anticipates a gradual recovery in the freight environment, with potential improvements in freight rates and capacity [51] Other Important Information - The company repaid $550 million of senior subordinated notes, reducing non-vehicle debt to $1.57 billion [21] - Total inventory was $4.7 billion, with retail automotive inventory down $9 million [23] - The company has $262 million remaining under the existing securities repurchase authorization [22] Q&A Session Summary Question: Clarification on Chinese brands and Sytner Select locations - Management confirmed the transition to Sytner Select involved reducing big-box retail stores to eight high-quality locations, with partnerships with Chinese brands like Chery and Geely [32][34] Question: Impact of tax deductions on Q4 demand - Management indicated that the tax deduction for depreciation would have an impact on Q4 demand, with production schedules filled for Q4 [38][40] Question: Visibility on recovery for Premier Truck Group - Management noted that freight rates have bottomed out and discussed potential capacity tightening due to regulatory changes affecting CDL drivers [49][50] Question: Growth in U.S. parts and service business - Management highlighted strong performance in customer pay and warranty services, driven by an aging vehicle fleet and operational efficiencies [54][56] Question: Trends in luxury vehicle sales and GPU - Management discussed the performance of luxury brands, particularly Jaguar Land Rover, and the impact of supply constraints on gross profit per unit [66][68]

Financial Data and Key Metrics Changes - Q3 revenue was $7.7 billion, up 1% year-over-year [4] - EBITDA for the quarter was $292 million, with net income of $213 million and earnings per share of $3.23 [4] - Retail automotive same-store revenue increased by 5%, with service and parts revenue also up by 5% [4] - The average discount from MSRP on BEVs sold in the U.S. was $7,100, impacting new vehicle gross per unit by approximately $100 [5][6] Business Line Data and Key Metrics Changes - U.S. retail automotive same-store new units delivered increased by 9%, with revenue up by $300 million, nearly 10% [5] - Premier Truck Group same-store unit sales declined by 19%, with EBITDA down by $15 million [7][12] - In the UK, same-store units delivered declined by 7%, with a significant impact from a cyber incident at Jaguar Land Rover [14] Market Data and Key Metrics Changes - The U.S. retail automotive business showed strong performance, while the UK faced challenges due to inflation and a cyber incident [5][14] - International revenue was $2.9 billion, with a 23% increase in revenue from operations in Italy, Germany, and Japan [16] - The Class 8 market saw a 30% decline in orders and a 22% decline in retail sales during Q3 [11] Company Strategy and Development Direction - The company remains committed to its diversification strategy and has acquired a Ferrari dealership in Modena, Italy [23] - The focus is on enhancing relationships with brands and driving efficiencies in operations [18][19] - The company is adjusting its cost structure in response to market conditions and preparing for a rebound in the freight environment [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified model's ability to adapt to market conditions [25] - The freight environment is expected to improve as capacity tightens due to regulatory changes affecting CDL drivers [42] - The company anticipates a gradual recovery in the used vehicle market as lease returns increase [71] Other Important Information - The company generated $852 million in cash flow from operations for the nine months ended September 30, 2025 [19] - Total debt was $5.6 billion, with a significant portion related to floor plans [20] - The company has returned over $2.5 billion to shareholders through dividends and share repurchases over the last four years [22] Q&A Session Summary Question: Clarification on Chinese brands and Sytner Select - Management confirmed the transition to Sytner Select involved reducing inventory while improving quality, with partnerships established with Chinese brands like Chery and Geely [29][30] Question: Impact of tax deductions on demand - Management indicated that the tax deduction for depreciation would have a positive cash flow impact, with expectations for continued demand in Q4 [33][36] Question: Visibility on recovery in Premier Truck Group - Management noted that freight rates have likely bottomed out, with expectations for capacity tightening and improved freight rates in the future [42] Question: Trends in luxury vehicle sales - Management highlighted strong performance in premium luxury sales, with expectations for continued demand despite challenges from specific brands [55][56] Question: Used vehicle gross profit increase - Management attributed the increase in used vehicle gross profit primarily to the Sytner Select strategy and improved inventory management [70][71]

Financial Performance - Revenue increased by 1% to $7.7 billion for Q3 2025 compared to the same period last year[15] - For the nine months ended September 30, 2025, total revenue increased by 1% to $23 billion[28] - Q3 2025 net income attributable to common stockholders was $213 million, a decrease of 6% compared to $226 million in Q3 2024[28] - Income per share for Q3 2025 was $323, a decrease of 5% compared to $339 in Q3 2024[28] - For the nine months ended September 30, 2025, net income attributable to common stockholders was $707 million, a 4% increase compared to $683 million in the same period of 2024[28] - Income per share for the nine months ended September 30, 2025, was $1066, a 5% increase compared to $1020 in the same period of 2024[28] Retail Automotive - Retail automotive same-store revenue increased by 51%, with related gross profit up by 30%[15] - Same-store new units delivered increased by 39%[15] - Same-store service & parts revenue increased by 49%, with related gross profit up by 75%[15] Capital Allocation - Repaid $550 million of 35% senior subordinated notes due September 1, 2025, at scheduled maturity[15] - Through October 24, 2025, repurchased 1086560 shares of common stock for $167 million[15] - On October 15, 2025, the company announced a 45% increase in the quarterly dividend, representing $006 per share, to $138[15]

Revenue Performance - Retail automotive same-store revenue increased by 5% in Q3 2025, reaching a total of $7.7 billion compared to $7.6 billion in Q3 2024[2]. - Total retail automotive revenue for the nine months ended September 30, 2025, increased by 1% to $23.0 billion, while net income attributable to common stockholders rose by 4% to $707.3 million[5]. - Revenue for the three months ended September 30, 2025, was $7,695.3 million, a 1.4% increase from $7,590.8 million in 2024[20]. - Total revenue for the three months ended September 30, 2025, was $6,570.1 million, reflecting a 3.6% increase compared to the prior year[29]. - Total Revenue for the three months ended September 30, 2025, was $6,394.4 million, a 5.1% increase from $6,083.9 million in the same period last year[31]. - New retail vehicle revenue increased by 2.5% to $2,961.1 million, while used vehicle revenue rose by 5.6% to $2,242.8 million for the same period[29]. - New Vehicles revenue increased by 3.5% to $2,863.0 million, while Used Vehicles revenue increased by 7.5% to $2,196.5 million[31]. - Total revenue for retail commercial trucks fell by 13.6% to $918.6 million for the three months ended September 30, 2025, compared to $1,063.3 million in the same period last year[33]. Profitability Metrics - Net income attributable to common stockholders decreased by 6% to $213.0 million, with earnings per share down 5% to $3.23[2]. - Operating income decreased by 5.9% to $298.7 million for the three months ended September 30, 2025, down from $317.4 million in 2024[20]. - Net income attributable to common stockholders for the three months ended September 30, 2025, was $213.0 million, a decrease of 5.8% from $226.1 million in 2024[20]. - Gross profit for the nine months ended September 30, 2025, was $3,814.7 million, reflecting a 1.7% increase compared to $3,752.5 million in 2024[20]. - Retail automotive gross profit increased by 2.4% to $1,066.3 million, with service and parts gross profit rising by 7.2% to $482.2 million[29]. - Total gross profit for the three months ended September 30, 2025, was $1,042.9 million, reflecting a 3.0% increase from $1,012.1 million in the prior year[31]. - Gross profit from new vehicles declined by 24.6% to $34.7 million for the three months ended September 30, 2025[33]. - Total gross profit for retail commercial trucks was $136.3 million, down 13.2% from $157.1 million in the same period last year[33]. Shareholder Returns - The quarterly dividend was increased by 4.5% to $1.38 per share, representing a forward dividend yield of 3.2%[12]. - The company repurchased 1,086,560 shares, representing 1.6% of outstanding shares, and had a leverage ratio of 1.0x as of September 30, 2025[2][12]. - The company repurchased 48,850 shares at an aggregate purchase price of $8.3 million in Q3 2025[38]. Asset and Liability Management - Total assets as of September 30, 2025, were $17,118.8 million, up from $16,720.9 million at the end of 2024[22]. - Total liabilities decreased to $11,393.5 million as of September 30, 2025, from $11,493.6 million at the end of 2024[22]. - Total long-term debt decreased to $1,571.0 million as of September 30, 2025, from $1,852.0 million at the end of 2024[39]. - The debt to total capitalization ratio improved to 21.5% in Q3 2025 from 26.2% at the end of 2024[39]. Operational Efficiency - Retail automotive same-store gross profit increased by 3%, driven by an 8% increase in same-store service and parts[8]. - EBITDA for the three months ended September 30, 2025, was $357.1 million, down from $367.9 million in 2024[26]. - Selling, general, and administrative expenses for the nine months ended September 30, 2025, totaled $2,727.4 million, a 2.8% increase from $2,652.5 million in 2024[42]. - Selling, general, and administrative expenses to gross profit for the nine months ended September 30, 2025, was 71.5%, an increase of 80 basis points from 70.7% in 2024[42]. Market Trends - Retail commercial truck unit sales decreased by 19% in Q3 2025, with earnings before taxes dropping to $41.5 million from $56.5 million in the prior year[9]. - New retail commercial truck units sold decreased by 20.5% year-over-year to 4,298 units for the three months ended September 30, 2025[33]. - Used retail automotive units saw a significant decline of 5.2% year-over-year, totaling 54,708 for the three months ended September 30, 2025[29]. - Retail Automotive Same-Store Units for New Retail increased by 0.3% to 47,115 units compared to 46,969 units in the previous year[31].

For the quarter ended September 2025, Penske Automotive (PAG) reported revenue of $7.7 billion, up 1.4% over the same period last year. EPS came in at $3.23, compared to $3.36 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $7.74 billion, representing a surprise of -0.58%. The company delivered an EPS surprise of -7.18%, with the consensus EPS estimate being $3.48.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall St ...

Core Viewpoint - Penske Automotive reported quarterly earnings of $3.23 per share, missing the Zacks Consensus Estimate of $3.48 per share, representing a -7.18% earnings surprise [1]. Financial Performance - The company posted revenues of $7.7 billion for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.58%, compared to $7.59 billion in the same quarter last year [2]. - Over the last four quarters, Penske has surpassed consensus EPS estimates three times and topped revenue estimates two times [2]. Stock Performance - Penske shares have increased by approximately 7% since the beginning of the year, while the S&P 500 has gained 17.2% [3]. - The stock currently holds a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.45 on revenues of $7.63 billion, and for the current fiscal year, it is $14.10 on revenues of $30.67 billion [7]. - The trend of estimate revisions for Penske was unfavorable prior to the earnings release, which may impact future stock performance [6]. Industry Context - The Automotive - Retail and Whole Sales industry is currently ranked in the bottom 24% of over 250 Zacks industries, suggesting potential challenges for stocks within this sector [8].