Company Overview - Penske Automotive Group, Inc. operates automotive and commercial truck dealerships across multiple countries including the United States, United Kingdom, Canada, Germany, Italy, and Japan, and also distributes commercial vehicles and related services primarily in Australia and New Zealand [12] Investment Ratings - Penske Automotive is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A, indicating a solid overall performance [13] - The company has a Momentum Style Score of B, with shares increasing by 6.8% over the past four weeks [13] Earnings Estimates - For fiscal 2025, four analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate increasing by $0.14 to $13.94 per share [13] - Penske Automotive has an average earnings surprise of 2.6%, suggesting a positive trend in earnings performance [13] Investment Considerations - With a strong Zacks Rank and high Momentum and VGM Style Scores, Penske Automotive is recommended for investors looking for potential opportunities [14]

Industry Trends - Meetings with top management of Group 1 Automotive Inc (GPI) and Penske Automotive Group Inc (PAG) highlighted industry trends in tariff responses by OEMs, new and used vehicle sales, and parts and service trends [1] - Both companies experienced increased buying by OEMs in anticipation of tariffs being imposed [2] Sales Performance - There was a sharp uptick in sales during late March, but the trend began to normalize by mid-April, establishing a new normalized run-rate by mid- to late-May and into June [3] - Consumer health remains resilient with strong in-store traffic [3] - The used car market continues to be challenging for both Group 1 Automotive and Penske Automotive [3] Stock Performance - Shares of Group 1 Automotive declined by 0.48% to $446.20, while Penske Automotive's stock increased by 1.25% to $177.56 at market close on Tuesday [4] Analyst Ratings - Analyst Rajat Gupta reiterated an Overweight rating and price target of $435 for Group 1 Automotive, while maintaining an Underweight rating and price target of $160 for Penske Automotive [1]

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Dividend Announcement - Penske Automotive Group, Inc. has approved a quarterly dividend of $1.26 per share, marking a 3.3% increase or $0.04 per share, which is the 18th consecutive quarterly increase [1] - The dividend is payable on June 3, 2025, to shareholders of record as of May 27, 2025 [1] Securities Repurchase Authorization - The Board of Directors has authorized an additional $250 million in securities repurchase, increasing the total current authorization to $295.8 million [2] - The company may repurchase its outstanding common stock or debt through various means including open market transactions and accelerated share repurchase programs [2] Company Overview - Penske Automotive Group, Inc. is a diversified international transportation services company and a leading automotive and commercial truck retailer [3] - The company operates dealerships in multiple countries including the United States, Canada, Germany, and Japan, and is one of the largest retailers of commercial trucks in North America [3] - Penske Automotive employs over 28,700 people globally and owns 28.9% of Penske Transportation Solutions, which manages a large trucking fleet in North America [3]

Group 1 - Penske Automotive Group (NYSE: PAG) is highlighted as a noteworthy player in the automotive retail space despite not being the favorite [1] - The management of Penske Automotive Group has a solid track record, indicating reliability and potential for growth [1] Group 2 - Crude Value Insights focuses on cash flow and companies in the oil and natural gas sector, emphasizing value and growth prospects [1] - The service offers subscribers access to a 50+ stock model account and in-depth cash flow analyses of exploration and production firms [2]

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2025, highlighting total assets of $16.9 billion, revenue of $7.6 billion, and net income of $245.0 million Consolidated Condensed Balance Sheet Highlights (Unaudited) | Metric (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $6,053.6 | $5,927.8 | | **Total assets** | $16,931.9 | $16,720.9 | | **Total current liabilities** | $6,702.1 | $6,485.9 | | **Total liabilities** | $11,519.2 | $11,493.6 | | **Total equity** | $5,412.7 | $5,227.3 | Consolidated Condensed Statement of Income Highlights (Unaudited) | Metric (In millions, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenues** | $7,604.5 | $7,447.8 | | **Gross profit** | $1,269.0 | $1,245.2 | | **Operating income** | $315.5 | $327.6 | | **Gain on sale of dealership** | $52.3 | $— | | **Net income** | $245.0 | $216.2 | | **Diluted earnings per share** | $3.66 | $3.21 | Consolidated Condensed Statement of Cash Flows Highlights (Unaudited) | Metric (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $282.7 | $456.0 | | **Net cash provided by (used in) investing activities** | $3.5 | $(352.4) | | **Net cash used in financing activities** | $(241.7) | $(82.1) | | **Net change in cash and cash equivalents** | $46.0 | $20.5 | [Notes to Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) These notes detail the company's business structure, accounting policies, and financial components, including segment performance, lease obligations, and debt structure - The company is a diversified transportation services firm with operations in the U.S., U.K., Canada, Germany, Italy, Japan, and Australia, holding a **28.9% ownership interest** in Penske Transportation Solutions (PTS)[25](index=25&type=chunk)[30](index=30&type=chunk) - As of March 31, 2025, the company operated **352 retail automotive franchised dealerships** and **16 used vehicle dealerships**[26](index=26&type=chunk) Segment Income (EBT) for Three Months Ended March 31 (In millions) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Retail Automotive | $252.2 | $198.4 | | Retail Commercial Truck | $45.1 | $50.5 | | Other | $6.8 | $13.6 | | Non-Automotive Investments | $33.0 | $32.3 | | **Total** | **$337.1** | **$294.8** | - **Total long-term debt** as of March 31, 2025, was **$1,771.5 million**, with the **current portion** being **$778.5 million**, including senior subordinated notes, credit agreements, and mortgage facilities[75](index=75&type=chunk) - During Q1 2025, the company repurchased **254,406 shares** for **$39.9 million**, with **$117.0 million** remaining available under the repurchase program as of March 31, 2025[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, including a 2.1% revenue increase to $7.6 billion, segment results, and the impact of new U.S. tariffs and EV regulations [Outlook and Recent Developments](index=25&type=section&id=Outlook%20and%20Recent%20Developments) The company's outlook is shaped by new U.S. tariffs on imported autos and parts, expected to impact vehicle demand, and evolving EV regulations - The U.S. imposed a **25% tariff** on imported automobiles and parts effective April/May 2025, expected to increase vehicle costs and potentially lower new vehicle demand[113](index=113&type=chunk)[114](index=114&type=chunk) - The company anticipates that tariffs may reduce new vehicle demand but could potentially increase demand for used vehicles and its service and parts operations[114](index=114&type=chunk)[118](index=118&type=chunk) - Significant regulatory uncertainty exists regarding electric vehicle mandates and emissions standards in both the U.S. and the U.K., with potential policy shifts impacting the automotive industry[115](index=115&type=chunk)[116](index=116&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q1 2025 total revenue grew 2.1% to $7.6 billion, driven by new vehicle sales and a $52.3 million gain from a dealership sale, despite rising SG&A expenses - Q1 2025 results include a pre-tax gain of **$52.3 million** from a dealership sale, resulting in a net after-tax gain of **$18.0 million**, or **$0.27 per share**[137](index=137&type=chunk) Retail Automotive New Vehicle Performance (Q1 2025 vs Q1 2024) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | New retail unit sales | 50,602 | 48,667 | 4.0% | | New sales revenue (M) | $3,022.1 | $2,802.6 | 7.8% | | Avg. gross profit per new vehicle | $5,059 | $5,229 | (3.3)% | Retail Automotive Used Vehicle Performance (Q1 2025 vs Q1 2024) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Used retail unit sales | 58,486 | 69,265 | (15.6)% | | Used retail sales revenue (M) | $2,200.5 | $2,336.2 | (5.8)% | | Avg. gross profit per used vehicle | $2,149 | $1,876 | 14.6% | Retail Commercial Truck New Vehicle Performance (Q1 2025 vs Q1 2024) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | New retail unit sales | 3,739 | 3,491 | 7.1% | | New retail sales revenue (M) | $527.2 | $494.2 | 6.7% | | Avg. gross profit per new truck | $8,960 | $9,909 | (9.6)% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $118.4 million cash and $2.0 billion available credit, planning to repay or refinance $550 million senior notes - As of March 31, 2025, the company had **$118.4 million** in cash and approximately **$2.0 billion** available for borrowing under its credit agreements[178](index=178&type=chunk) - The company expects to repay or refinance its **$550 million** of 3.50% senior subordinated notes due September 1, 2025, using cash from operations or borrowings[175](index=175&type=chunk) - In Q1 2025, the company paid cash dividends of **$1.22 per share**, totaling **$81.8 million**, and repurchased **$39.9 million** of its common stock[181](index=181&type=chunk)[202](index=202&type=chunk) - The company received **$26.2 million** in cash distributions from its investment in Penske Transportation Solutions (PTS) in April 2025[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203%2E%20Quantitative%20%26%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations, impacting debt expenses, and foreign currency exchange rates, affecting international revenues - A **100-basis-point change** in interest rates would result in an approximate **$37.9 million** annual change to floor plan interest expense[223](index=223&type=chunk) - A **100-basis-point change** in interest rates would result in an approximate **$5.1 million** annual change to other interest expense on revolving credit facilities[222](index=222&type=chunk) - A **10% change** in average foreign currency exchange rates versus the U.S. Dollar would have impacted Q1 2025 revenues by approximately **$320.9 million**[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[230](index=230&type=chunk) - There were no changes in internal control over financial reporting during the most recent quarter that materially affected, or are reasonably likely to materially affect, internal controls[230](index=230&type=chunk) [PART II — OTHER INFORMATION](index=49&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are currently expected to have a material adverse effect on its financial condition - The company is not a party to any legal proceedings that are individually or in the aggregate reasonably expected to have a material effect on its financial condition or results of operations[232](index=232&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A%2E%20Risk%20Factors) This section updates key risk factors, including a UK FCA investigation into auto finance commissions and the impact of new 25% U.S. tariffs on imported autos - The U.K. Financial Conduct Authority (FCA) is investigating historical discretionary commission arrangements, potentially leading to an industry-wide redress scheme and compensation payments[235](index=235&type=chunk)[237](index=237&type=chunk) - A recent U.K. court judgment requiring lenders to repay commissions is pending appeal before the U.K. Supreme Court, creating uncertainty[236](index=236&type=chunk) - Newly imposed **25% U.S. tariffs** on imported automobiles and parts represent a significant risk, likely increasing vehicle costs, reducing consumer demand, and negatively impacting gross profit[239](index=239&type=chunk)[240](index=240&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased 255,228 shares of common stock, with $117.0 million remaining available under its repurchase program Share Repurchases for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 25,271 | $149.95 | | Feb 2025 | 91,887 | $166.01 | | Mar 2025 | 138,070 | $152.18 | | **Total** | **255,228** | | - As of March 31, 2025, **$117.0 million** remained available for repurchases under the company's securities repurchase program[245](index=245&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205%2E%20Other%20Information) On April 29, 2025, the company amended its U.S. credit agreement, lowering the interest rate margin on certain revolving loans while maintaining capacity - On April 29, 2025, the company amended its U.S. credit agreement to lower the interest rate on certain uncollateralized borrowings[247](index=247&type=chunk) - The interest rate margin for certain borrowings was changed from a flat adjusted SOFR + 2.00% to a range of **adjusted SOFR + 1.50% to 2.00%**, based on a leverage ratio[248](index=248&type=chunk) [Item 6. Exhibits](index=53&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Twelfth Amendment to the U.S. Credit Agreement and CEO/CFO certifications - Exhibit 4.1 is the Twelfth Amendment to the Fifth Amended and Restated Credit Agreement[255](index=255&type=chunk) - Exhibits 31.1, 31.2, and 32 are certifications by the CEO and CFO as required by securities regulations[255](index=255&type=chunk)

Penske Automotive Group (PAG) reported first-quarter 2025 adjusted earnings of $3.39 per share, which increased 6% year over year and beat the Zacks Consensus Estimate of $3.27. Better-than-expected results from the Retail Automotive segment, the Retail Commercial Truck segment and the Commercial Vehicle Distribution and Other segment contributed to the outperformance. The company registered net sales of $7.60 billion, beating the Zacks Consensus Estimate of $7.59 billion. The top line rose 2.1% from the ye ...

Financial Data and Key Metrics Changes - The company reported record first quarter revenue of $7.6 billion, a 2% increase year-over-year [5][6] - Earnings before taxes reached $337 million, with net income at $244 million, resulting in earnings per share of $3.66, a 14% increase [6][8] - Adjusted earnings before taxes increased 5% to $310 million, and adjusted net income also rose 5% to $226 million, with adjusted earnings per share increasing 6% to $3.39 [6][8] - The company achieved a stable gross margin for the seventh consecutive quarter, with a 70 basis point improvement in adjusted selling, general and administrative expenses as a percentage of gross profit compared to the previous year [5][6] Business Line Data and Key Metrics Changes - Same store retail automotive revenue increased by 2%, with related gross profit up 3% [5][6] - Same store retail automotive service and parts revenue rose 4%, with gross profit increasing by 6% [6][10] - New automotive units delivered increased by 68% on a same store basis, while used automotive units declined by 16% on a same store basis due to strategic realignment [8][9] - Average transaction prices for new vehicles increased by 4% to $59,202, while used vehicle transaction prices rose by 12% to $37,624 [9][10] Market Data and Key Metrics Changes - Approximately 59% of revenue was generated in North America, 30% in the UK, and 9% in other international markets [7] - In the UK, new vehicle market registrations increased by 6%, with the company outperforming the market with a 9% increase in same store new units delivered [21][22] - The US market saw an 8% increase in new units sold, with leasing on new vehicles rising to 33% [13][15] Company Strategy and Development Direction - The company emphasizes diversification as a key differentiator, with a premium brand mix and investments in various markets [7][8] - The focus on inventory management and cost control is critical for sustaining profitability and efficiency [38][60] - The company is committed to maintaining a strong balance sheet and cash flow to support growth through acquisitions and shareholder returns [26][28] Management's Comments on Operating Environment and Future Outlook - Management noted that the automotive and commercial truck markets remain fluid, with ongoing tariff negotiations impacting pricing strategies [6][7] - The company is optimistic about its diversified model's ability to adapt to changing market conditions [32] - Management highlighted the importance of technician recruitment and training to support service and parts operations [41][89] Other Important Information - The company generated $283 million in cash flow from operations, with EBITDA at $400 million [27] - Capital expenditures were down $26 million year-over-year, with $82 million paid in dividends during the quarter [27][28] - The company repurchased 255,000 shares for $40 million during the quarter, with a total of 750,000 shares repurchased year-to-date [27][28] Q&A Session Summary Question: Update on the UK market and Sytner Select - Management reported a 9% increase in same store new units delivered in the UK, with improved inventory management contributing to better gross profit [36][38] Question: Impact of warranty work on customer pay - Warranty work has increased significantly, impacting customer pay growth, but management noted improvements in gross profit per technician and service absorption [41][45] Question: Price elasticity of demand amid tariff discussions - Management indicated that while price increases are expected, the premium luxury segment may absorb these changes better due to higher residual values [47][49] Question: Sustainability of SG&A costs - Management expressed confidence in maintaining flat SG&A costs as a percentage of gross profit, attributing this to effective cost control measures [59][60] Question: Opportunities in the used vehicle market - Management emphasized a focus on younger used vehicles (0-4 years old) to maintain profitability and avoid brand damage from older inventory [82][84] Question: Capacity for parts and service growth - Management confirmed that there is capacity to grow service operations, with plans to continue increasing technician headcount [88][89] Question: Tariff impact on parts and service inflation - Management acknowledged potential parts inflation due to tariffs but noted that labor costs dominate repair orders, which may mitigate the impact [93][94] Question: Outlook for new GPU trends - Management indicated that new GPU trends are stabilizing, with expectations for continued improvement in gross profit margins [99][100]

Financial Data and Key Metrics Changes - The company reported record first quarter revenue of $7.6 billion, a 2% increase year-over-year [6][7] - Earnings before taxes were $337 million, with net income of $244 million, resulting in earnings per share of $3.66, a 14% increase [7] - Adjusted earnings before taxes increased 5% to $310 million, and adjusted net income also rose 5% to $226 million, with adjusted earnings per share up 6% to $3.39 [7][29] Business Line Data and Key Metrics Changes - Same store retail automotive revenue increased by 2%, with related gross profit up 3% [6][7] - Same store retail automotive service and parts revenue rose 4%, with gross profit increasing by 6% [7] - New automotive units delivered increased by 68% on a same store basis, while used automotive units declined by 16.1% [9][10] Market Data and Key Metrics Changes - Approximately 59% of revenue was generated in North America, 30% in the UK, and 9% in other international markets [8] - In the UK, new vehicle market registrations increased by 6%, with same store new units delivered up by 9% [22][23] - In Australia, the company gained 150 basis points of market share in the on-highway market [26] Company Strategy and Development Direction - The company emphasizes diversification as a key differentiator, with a premium brand mix and investments in various markets [8] - The focus on inventory management and cost control is expected to sustain profitability [40][41] - The company is committed to maintaining a strong balance sheet and capital allocation strategy, including share repurchases and dividends [28][29] Management's Comments on Operating Environment and Future Outlook - The management noted that the automotive and commercial truck markets remain fluid, with ongoing tariff negotiations impacting pricing strategies [7][8] - The company is optimistic about its diversified model's ability to adapt to changing market conditions [34] - Management highlighted the importance of technician recruitment and training to support service operations [44][90] Other Important Information - The company generated $283 million in cash flow from operations during Q1, with EBITDA of $400 million [29] - The company repurchased 255,000 shares for $40 million during the quarter, with plans for continued opportunistic buybacks [29][30] - The dividend was increased by 54% since the end of 2023, with a current yield of approximately 3.1% [30][31] Q&A Session Summary Question: Update on the UK market and Sytner Select - Management reported a 9% increase in same store new units delivered in the UK, with improved inventory management contributing to better gross profit [39][40] Question: Impact of warranty work on customer pay in parts and service - Management acknowledged that warranty work has increased, impacting customer pay growth, but noted improvements in gross profit per technician [42][44] Question: Price elasticity of demand amid tariff discussions - Management indicated that while there may be some impact on pricing, the premium luxury segment remains resilient, with leasing options helping mitigate costs [49][50] Question: Sustainability of SG&A costs - Management expressed confidence in maintaining flat SG&A costs as a percentage of gross profit, attributing this to effective cost control measures [63][66] Question: Opportunities in the used vehicle market - Management emphasized a focus on younger used vehicles (zero to four years old) to maintain profitability and avoid brand damage [84][88] Question: Parts inflation and customer willingness to pay - Management noted that parts inflation could be influenced by tariffs, but customer willingness to pay remains strong [93][94]