Penske Automotive (PAG) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights Q2 2025 Financial & Operational Performance 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] Segment Performance Retail Automotive Dealerships 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] Retail Commercial Truck Dealerships 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 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][14] Equity Earnings from PTS Investment | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 Earnings | $53.5M | $52.9M | | H1 Earnings | $86.7M | $85.4M | Corporate Development & Capital Allocation Share Repurchases, Dividends, and Liquidity 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][11][35] - 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] - 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] - Acquisition: Completed the acquisition of a Ferrari dealership in Italy with expected annualized revenue of $40 million in July 2025[12] Consolidated Financial Statements Consolidated Condensed Statements of Income 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 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 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 Retail Automotive Operations (Total & Same-Store) 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) 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 Supplemental Data 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] 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 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]