Penske Automotive (US:PAG)2023-02-21 21:11Revenue and Sales Performance - In 2022, the company generated total revenue of $27.8 billion, with $23.7 billion from retail automotive dealerships, $3.5 billion from retail commercial truck dealerships, and $578.8 million from commercial vehicle distribution and other operations[14]. - The retail automotive segment represented 85.2% of total revenues and 85.3% of total gross profit in 2022, with 71% of revenue coming from premium brands[17]. - The company retailed and wholesaled over 539,000 vehicles in 2022, with 338 retail automotive franchised dealerships operating globally[15][17]. - In 2022, the retail commercial truck business accounted for 12.7% of total revenues, with 21,002 new and used trucks sold[19]. - The North American sales of Class 6-8 medium- and heavy-duty trucks increased by 12.1% in 2022, totaling 448,723 units sold[28]. - In 2022, the company retailed 185,831 new vehicles, generating 42.4% of retail automotive dealership revenue and 30.2% of gross profit[57]. - The company retailed 261,739 used vehicles in 2022, contributing 38.0% of retail automotive dealership revenue and 13.2% of gross profit[58]. - Finance and insurance sales accounted for 3.6% of retail automotive dealership revenue and 20.6% of gross profit in 2022[59]. - Service and parts sales represented 10.2% of retail automotive dealership revenue and 34.9% of gross profit in 2022[62]. - Approximately 23.4% of new vehicles sold in the U.S. and U.K. in 2022 were either pure electric or hybrid electric vehicles[52]. - The U.S. retail automotive dealership revenues are primarily derived from 49% new vehicle sales, 40% used vehicle sales, and 11% service and parts sales[82]. - In 2022, revenue from BMW/MINI, Audi/Volkswagen/Porsche/Bentley, Toyota/Lexus, and Mercedes-Benz/Sprinter/smart dealerships accounted for 26%, 21%, 14%, and 10% of total automotive dealership revenues, respectively[142]. Acquisitions and Expansion - The company acquired 19 retail automotive franchises in 2022, including 15 in the U.K. and four in the U.S.[17]. - The company operates 338 retail automotive franchises worldwide as of December 31, 2022[56]. - The company has 21 CarShop used vehicle dealerships, with 8 located in the U.S. and 13 in the U.K.[57]. - The company has diversified revenue streams across traditional vehicle and commercial truck dealerships, finance and insurance, and service and parts operations[40]. Financial Performance and Dividends - The quarterly stock dividend was increased four times in 2022 from $0.46 to $0.57 per share, with a latest declared dividend of $0.61 per share payable on March 1, 2023[34]. - The company recorded $490 million in equity earnings from its investment in Penske Truck Leasing in 2022, up from $365.8 million in 2021[24]. - The company has significant financial commitments, including $3.0 billion in floor plan notes payable, $1.6 billion in non-vehicle long-term debt, and $5.4 billion in future lease commitments[167]. - The company has a cash dividend of $0.61 per share announced for payment on March 1, 2023, with expectations to continue comparable dividends in the future[203]. Market Trends and Competition - The company faces increased competition from online vehicle websites and other dealership groups, impacting new and used vehicle sales[119]. - The company competes in a fragmented used vehicle market, selling approximately 36.2 million units annually in the U.S.[116]. - The franchised automotive dealer industry in the U.S. is valued at approximately $1.2 trillion, with public automotive retail groups accounting for less than 10% of total industry revenue[83]. - The company faces competition from various channels, including direct sales by manufacturers and independent used vehicle dealers[115]. - The company competes with various logistics providers and seeks to integrate its logistics services with its full-service truck leasing and rental business[123]. Operational and Regulatory Risks - The company is subject to numerous environmental laws and regulations, which may require significant capital and operating expenditures[130]. - The company is exposed to risks related to regulatory compliance, particularly with new FTC regulations that may complicate vehicle sales transactions[129]. - The company faces risks from regulatory changes regarding zero-emission vehicles, which could increase costs and affect demand for its services[153]. - The company is subject to various legal and regulatory risks that could adversely affect operations, including potential changes in franchise laws[183]. - Climate change and environmental regulations may lead to increased operational costs and stricter compliance requirements in the future[186]. Employee and Corporate Culture - As of December 31, 2022, the company employed over 26,500 people, reflecting a 7.4% increase from December 31, 2021[125]. - The company maintains an employee turnover rate of approximately 21%, which is below the industry average[127]. - The company believes its inclusive culture enhances its ability to attract and retain talent, which is crucial for delivering exceptional customer service[124]. Cybersecurity and Information Systems - The company has implemented a comprehensive Information Security Program, including annual cybersecurity risk assessments to evaluate risks and their potential impacts[95]. - The company employs multi-layered preventive controls, such as web and cloud application firewalls, to detect and block cyber-attacks[96]. - The company relies heavily on centralized information systems for operations, and any failure or disruption could adversely affect business operations and sales[194]. - Cybersecurity threats pose significant risks to the company, with potential impacts on operations, sales, and reputation due to data breaches or cyber-attacks[195]. Future Outlook and Challenges - The company expects increased new vehicle availability in 2023, but ongoing production disruptions and supply shortages may suppress sales volumes[145]. - The company anticipates that increasing consumer adoption of electric vehicles may present new service opportunities but could also lead to a decline in service revenues over time[134]. - The impact of driverless vehicles on sales and service levels remains uncertain, with potential significant effects on the automotive retail and trucking industries[164]. - The company faces risks from potential tariffs and trade restrictions that may affect the profitability of selling foreign vehicles[182].