Penske Automotive Group in Bloomfield Township reported the highest first quarter revenue, income from continuing operations, and earnings per share in company history.
For the three months ended March 31, the company reported a 253.7 percent increase in income from continuing operations attributable to common shareholders to $182.5 million and a 253.1 percent increase in related earnings per share to $2.26.
This compares to income from continuing operations attributable to common shareholders of $51.6 million, or $0.64 per share in the prior year. Foreign exchange positively impacted earnings per share by $0.05 in the first quarter of 2021. Total revenue increased 15.3 percent to $5.8 billion.
New and used retail automotive same-store unit sales increased 5.5 percent with an 18.8 percent increase (a jump of 25.5 percent in the U.S. and 7.8 percent in the U.K.). Used decreased 3.6 percent (an increase of 14.5 percent in the U.S. and a decrease of 18.2 percent in the U.K.).
Retail automotive same-store revenue and gross profit increased 19.2 percent. Retail automotive same-store variable gross profit per unit retailed increased 25.3 percent.
“Despite our dealership showrooms being closed in the U.K. for the entire first quarter due to COVID restrictions, we used our online tools to deliver 40,000 new and used vehicles in the U.K. market,” says Roger Penske, chairman of Penske Corp.
“Importantly, new same-store units in the U.K. increased 7.8 percent compared to the U.K. market which declined 12 percent. Further, our commercial truck dealerships improved their profitability by 101 percent while the earnings from our investment in Penske Transportation Solutions increased 295 percent, demonstrating the strength of the company’s diversified business model.”
Penske operates 17 CarShop Used Vehicle SuperCenters in the U.S. and U.K. During the first quarter, the company renamed its U.S. centers from CarSense to CarShop to align with the existing 11 U.K.-based CarShop Used Vehicle SuperCenters. In the first quarter, retail unit sales decreased by 30.1 percent to 11,395 while revenue decreased by 20.6 percent to $242.6 million, principally due to a 43 percent decline in used unit sales in the U.K. as a result of COVID-19 related showroom closures, partially offset by a 25 percent increase in used unit sales in the U.S. during the quarter.
For retail commercial truck dealerships, earnings before taxes increased 101 percent to $27.5 million compared to $13.7 million in the same period last year. Return on sales was 6.3 percent, and fixed cost absorption was 125 percent. The 101 percent increase in earnings before taxes was principally driven by an increase in used truck unit sales coupled with improved gross margin from new and used truck sales.
On April 13, the company announced it had completed its acquisition of Kansas City Freightliner, which is expected to add about $450 million in annualized revenue and increase Penske’s medium and heavy-duty commercial truck dealership count to 29 locations throughout the U.S. and Canada.
Penske Transportation Solutions, a truck leasing and rental, contract maintenance, and logistics services company, recorded $53.7 million in earnings compared to 13.6 million year-over-year. The 295 percent increase in the first quarter was principally driven by improved operating results across Penske Transportation Solutions’ leasing, rental, and logistics and a reduction in operating expenses. Penske has a 28.9 percent ownership interest in Penske Transportation Solutions.
Penske opened its second Porsche dealership in the Washington, D.C. market, which is expected to generate $50 million in annualized revenue. It also has an Audi dealership under construction in southern California and a Honda dealership under construction in Texas. Both are expected to open by the end of the year and generate about $100 million in annualized revenue.
The company also expects to open two CarShop Used Vehicle SuperCenter locations in the second quarter and an additional two locations by the end of 2021. It is targeting 40 locations, 150,000 in unit sales, and $100 million of earnings before taxes in the CarShop Used Vehicle SuperCenter operations by the end of 2023.
Penske is also targeting organic and acquisition growth coupled with operating efficiencies to drive income from continuing operations before taxes to at least $1 billion by the end of 2023, which compares to $708 million last year.
As of March 31, the company had available liquidity under its credit agreements of about $1.1 billion. About $171 million remains available to repurchase shares under the company’s existing share repurchase program.
Penske is a diversified transportation services company that operates automotive and commercial truck dealerships principally in the U.S., U.K., Canada, and Western Europe. It distributes commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand.