Penske Automotive Group in Bloomfield Township today announced 2016 was the best year in the company’s history, with total automotive units retailed increasing 5.8 percent while revenue was up 4.3 percent to $20.1 billion. At the same time, same-store retail revenue declined 0.6 percent.
Excluding foreign exchange, total revenue increased 8.6 percent to $20.9 billion, and same-store retail revenue increased 3.8 percent. Income from continuing operations attributable to common shareholders increased 4.3 percent to $343.9 million, and related earnings per share increased 9.0 percent to $4.00 when compared to the same period in 2015.
“The recently completed year was the best in the history of our company,” says Roger S. Penske, chairman of Penske Automotive Group. “In addition to achieving new performance records, we took meaningful steps to expand, enhance, and further diversify our business through strategic investments and acquisitions, particularly within the used vehicle market in both the U.S. and U.K.
“In the fourth quarter, our retail automotive business continued to perform well, and I was particularly pleased to see increases in new vehicle, used vehicle, and finance and insurance gross profit per vehicle retailed when excluding foreign exchange.”
Among other updates, Penske today announced:
Retail Commercial Truck Operations
The company operates 20 locations in the U.S. and Canada under the “Premier Truck Group” brand name, offering primarily the Freightliner and Western Star brands. For the three and twelve months ending on December 31, 2016, Premier Truck Group retailed 1,562 and 7,110 units, generated $218.4 million and $1.0 billion of revenue, and $33.2 million and $142.9 million of gross profit, respectively, principally through the retail sale of new/used medium and heavy-duty trucks and service/parts sales. Service and parts gross profit represents approximately 82% and 79 percent of total Premier Truck Group gross profit for the three and 12 months ending on December 31, 2016, respectively.
Penske Truck Leasing
In July 2016, the company acquired an additional 14.4 percent interest in Penske Truck Leasing Co., L.P. (“PTL”), a leading provider of full-service truck leasing, truck rental, contract maintenance, and logistics services, bringing the ownership interest to 23.4 percent. PTL’s revenue in 2016 was $6.4 billion. PTL has $8.3 billion in revenue earning equipment assets and generated $2.3 billion in earnings before interest, taxes, depreciation, and amortization in 2016. The company accounts for its ownership interest in PTL using the equity method of accounting and accordingly recorded $25.0 million and $61.6 million in earnings as part of equity in earnings of affiliates for the three and twelve months ending on December 31, 2016, respectively.
Acquisitions and Open Points
During the 12 months ending on December 31, 2016, the company had acquisitions or opened new dealerships representing approximately $700 million in estimated annual revenue. Subsequent to December 31, 2016, the company completed the acquisition of U.S.-based CarSense, a specialty retailer of used vehicles, which is expected to generate $350 million in estimated annual revenue and accretion of $0.07 to $0.09 in earnings per share on an annualized basis.
Additionally, in January 2017, the company announced that it has signed an agreement to acquire CarShop, one of the U.K.’s leading retailers of used vehicles. CarShop has five large-scale retail locations operating in Cardiff, Swindon, Northampton, Norwich, and Doncaster, plus a 15-acre vehicle preparation center. The acquisition is subject to certain conditions and is expected to close by the end of the first quarter of 2017. CarShop is expected to generate estimated annualized revenue of approximately $340 million with accretion estimated to be $0.07 to $0.09 per share on an annualized basis.
During the 12 months ending on December 31, 2016, the company acquired 4.5 million shares of its common stock for approximately $167.9 million. As of December 31, 2016, the company has a remaining share repurchase authorization of approximately $32.1 million.