PENSKE AUTOMOTIVE GROUP EXPANDS PRESENCE IN FLORIDA [Accessibility Statement] Skip NavigationCompletes Acquisition of Two Lexus Dealerships in Central FloridaExpected to Add $450 Million in Annualized RevenueBrings Estimated Annualized Acquired Revenue to $2 Billion Since NovemberBLOOMFIELD HILLS, Mich., Feb. 24, 2026 /PRNewswire/ -- Penske Automotive Group, Inc. (NYSE: PAG), a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers ...

Core Insights - PlusAI has joined Daimler Truck North America and Penske Transportation Solutions as a presenting sponsor for ACT Expo 2026, emphasizing the industry's shift towards AI, automation, and digital tools in fleet operations [1][2] - The conference will focus on the integration of autonomous technology into commercial fleets, highlighting improvements in safety, productivity, and sustainability [2][3] Industry Trends - The trucking industry is experiencing a digital transformation with the introduction of advanced technologies such as autonomous trucks, AI-enabled safety systems, and predictive maintenance tools [2][3][4] - ACT Expo serves as a key platform for fleets to understand the implications of EPA 2027 emission standards and the integration of zero- and low-emission strategies into operations [2][4] Technology Focus - Key technologies showcased at ACT Expo include advanced telematics, connected vehicle platforms, AI-powered analytics, and over-the-air vehicle updates, which are essential for enhancing fleet efficiency and safety [5][6] - The conference will feature sessions on the practical applications of AI in fleet operations, with insights from industry leaders [6][7] Event Details - ACT Expo 2026 will take place from May 4 to 7 at the Las Vegas Convention Center, with registration currently open [8][9] - The event will also recognize fleets through its annual Fleet Awards, including a new category for Digital Technology Innovation Leader [7][9] Company Profile - PlusAI specializes in AI-based virtual driver software for autonomous trucks and has partnerships with major automotive manufacturers to accelerate the deployment of next-generation autonomous vehicles [10]

Summary of Penske Automotive Group (NYSE:PAG) FY Conference Call Company Overview - **Company**: Penske Automotive Group - **Ticker**: NYSE:PAG - **Shares Outstanding**: 66 million - **Current Share Price**: Approximately $160 - **Market Capitalization**: About $10.7 billion - **Net Debt**: $1.5 billion - **Ownership**: 28.9% of Penske Transportation Solutions - **Total Enterprise Value**: Approximately $10 billion - **Business Segments**: Retail automotive, commercial vehicle dealerships, and energy solutions [1][2] Core Business Insights - **Retail Automotive**: Operates 356 franchises, primarily in premium luxury segments across the U.S., U.K., Germany, Italy, Japan, and Australia [2] - **Commercial Trucks**: Sells around 20,000 commercial trucks annually through 45 dealerships, exclusively Freightliner [2] - **Recent Expansion**: Entered the Australian market with three Porsche dealerships [2] Financial Performance and Projections - **Cash Flow from Tax Deductions**: Estimated additional cash flow of $120 million to $150 million annually from accelerated depreciation on truck purchases, based on $3 billion in annual purchases [3][4] - **Investment in Penske Transportation Solutions**: Total cash invested is $956 million, with $2 billion withdrawn, indicating strong cash flow management [4] - **Flat Performance**: Penske Truck Leasing has seen flat performance this year, with a reduction in the vehicle fleet from 445,000 to 405,000 [5] Market Conditions and Inventory - **Inventory Levels**: Current industry inventory is 2.6 million units, down 35% from pre-pandemic levels. Penske's inventory is well-managed with a 49-day supply in the U.S. [11] - **Luxury Vehicle Market**: Average transaction prices have increased, with new vehicles averaging $60,000 and used vehicles at $40,000, reflecting a shift in consumer financing behavior [13][16] Consumer Behavior and Financing - **Financing Trends**: Increasing number of customers financing vehicles for longer terms (beyond 6-8 years), raising concerns about negative equity situations [14] - **Leasing**: Leasing has decreased from 40% to 32%, but remains a more affordable option for consumers [14] Challenges in Used Vehicle Market - **Low Lease Returns**: The availability of quality used vehicles is a challenge, with a focus on zero to four-year-old cars [23][24] - **Sourcing Strategy**: 84% of vehicles sold are self-sourced, primarily through trade-ins [23] International Operations - **U.K. Market**: Contributes about $9 billion in revenue (35% of total business). Facing challenges due to government policies on EV sales and higher taxes impacting consumer behavior [28][30] - **Chinese Dealerships**: Recently added eight Chinese brands in the U.K. to explore market potential, with limited capital investment [36][37] Parts and Service Business - **Revenue Growth**: Parts and service revenue has increased by 35% compared to 2019, driven by warranty and customer pay services [38] - **Warranty Issues**: Recent recalls (e.g., Toyota and Lexus) are expected to boost service revenue, although they pose brand management challenges [39][41] Conclusion - **Future Outlook**: Anticipates improved performance in the truck leasing segment as market conditions stabilize. The company is well-positioned to capitalize on its diversified business model and strong cash flow management [43]

Financial Data and Key Metrics Changes - Q3 revenue was $7.7 billion, up 1% year-over-year [5] - EBITDA for Q3 was $292 million, with net income of $213 million and earnings per share of $3.23 [5] - Retail automotive same-store revenue increased by 5%, with service and parts revenue also up by 5% [5] - Total new vehicle gross per unit was impacted by a higher percentage of BEV sales, reducing gross by approximately $100 [6][8] - Free cash flow for the nine months ended September 30, 2025, was $625 million, with adjusted EBITDA of $1.1 billion [20] Business Line Data and Key Metrics Changes - U.S. automotive retail same-store new and used unit sales increased by 5%, with new units up 9% and used units up 1% [10] - Premier Truck Group same-store unit sales declined by 19% during Q3, with EBITDA down $15 million [9][12] - International revenue was $2.9 billion, with a 7% decline in same-store units delivered in the UK [15] - Used vehicle gross profit in the UK increased by 19%, contributing to an overall increase in used vehicle gross per unit [16] Market Data and Key Metrics Changes - In the U.S., same-store new units delivered increased by 9%, while revenue increased by nearly 10% [7] - The UK retail automotive market faced challenges due to a cyber incident at Jaguar Land Rover, impacting new vehicle deliveries [8][15] - The Class 8 market saw a 30% decline in orders and a 22% decline in retail sales during Q3 [12] Company Strategy and Development Direction - The company remains committed to its diversification strategy and has acquired a Ferrari dealership in Modena, Italy [23] - The focus on electric vehicle sales increased, with BEV sales making up over 10% of total sales in Q3 [6] - The company is adjusting its cost structure in response to macroeconomic challenges and is well-positioned for a market rebound [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the diversified model's ability to adapt to market conditions [25] - The operating environment in the UK remains challenging due to inflation and interest rates, impacting consumer affordability [15] - Management anticipates a gradual recovery in the freight environment, with potential improvements in freight rates and capacity [51] Other Important Information - The company repaid $550 million of senior subordinated notes, reducing non-vehicle debt to $1.57 billion [21] - Total inventory was $4.7 billion, with retail automotive inventory down $9 million [23] - The company has $262 million remaining under the existing securities repurchase authorization [22] Q&A Session Summary Question: Clarification on Chinese brands and Sytner Select locations - Management confirmed the transition to Sytner Select involved reducing big-box retail stores to eight high-quality locations, with partnerships with Chinese brands like Chery and Geely [32][34] Question: Impact of tax deductions on Q4 demand - Management indicated that the tax deduction for depreciation would have an impact on Q4 demand, with production schedules filled for Q4 [38][40] Question: Visibility on recovery for Premier Truck Group - Management noted that freight rates have bottomed out and discussed potential capacity tightening due to regulatory changes affecting CDL drivers [49][50] Question: Growth in U.S. parts and service business - Management highlighted strong performance in customer pay and warranty services, driven by an aging vehicle fleet and operational efficiencies [54][56] Question: Trends in luxury vehicle sales and GPU - Management discussed the performance of luxury brands, particularly Jaguar Land Rover, and the impact of supply constraints on gross profit per unit [66][68]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $7.7 billion, consistent with Q2 2024, impacted by strategic divestitures of approximately $200 million in revenue [6][10] - Earnings before tax (EBT) increased by 4%, net income also increased by 4%, and earnings per share rose by 5% compared to 2024 [7] - Gross profit increased to $1.3 billion, with a gross profit margin of 16.9%, marking the eighth consecutive quarter of stable gross margin [8][9] - Selling, general and administrative expenses as a percentage of gross profit improved to 69.9%, a 30 basis point improvement [9] Business Line Data and Key Metrics Changes - North American retail automotive service and parts gross profit increased by 9%, with same-store service and parts revenue up by 7% [13] - Premier Truck Group sold 5,339 new and used units, with new units up 4% and used units down 8%, but used truck grosses increased over 50% [17] - Penske Transportation Solutions (PTS) revenue was $2.8 billion, with full-service revenue and contracts increasing by 4% [19] Market Data and Key Metrics Changes - In the U.K., new vehicle sales declined by 16% due to macroeconomic challenges and reduced incentives [21] - Same-store used units in the U.K. declined by 23%, attributed to the realignment of used-only dealerships [22] - In Australia, three Porsche dealerships generated $128 million in revenue, with a nearly one-to-one used-to-new ratio [24] Company Strategy and Development Direction - The company emphasizes diversification, with 61% of revenue from North America, 29% from the U.K., and 10% from other international markets [10] - The company is focused on capital allocation, with a disciplined approach to share buybacks and dividends, having increased dividends by 4.8% [29][30] - The acquisition of a Ferrari dealership in Modena, Italy, aligns with the company's strategy to enhance its premium brand presence [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the business and the benefits from recent trade agreements [9][10] - The company anticipates improvements in used vehicle sourcing due to increasing lease returns starting in 2026 [12] - Management noted that the operating environment in the U.K. remains challenging due to inflation and interest rates impacting consumer affordability [21] Other Important Information - The company generated $472 million in cash flow from operations for the first half of 2025, with EBITDA over $1.5 billion on a trailing twelve-month basis [28] - The company has a backlog of $350 million for 2025 delivery in its commercial vehicle and power systems business [27] - The company has returned over $2.5 billion to shareholders through dividends and share repurchases over the last four years [29] Q&A Session Summary Question: Can you quantify the moving pieces affecting unit sales in the U.S. and the U.K.? - Management noted approximately $200 million in revenue loss due to divestitures and store closures, impacting new and used vehicle units sold [40][41] Question: What about the impact of mobility credits in the U.K.? - Management indicated that mobility credits were slowed down by certain brands, but expect recovery in the current quarter [44] Question: How do you see GPU trajectory and adjustments from OEMs regarding warranty claims? - Management stated that warranty claims are not seeing adjustments from OEMs, but customer demand remains strong [88] Question: What is the outlook for capital allocation with the additional cash flow? - Management indicated that the additional cash flow provides more opportunities for capital allocation, including share buybacks and acquisitions [111] Question: Is the $1.5 billion acquisition target still realistic? - Management suggested that while the target may not be realistic for 2025, they remain focused on acquisitions and organic growth [120][123]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $7.7 billion, consistent with Q2 2024, impacted by strategic divestitures of approximately $200 million in revenue [6][7] - Earnings before taxes (EBT) increased by 4%, net income also increased by 4%, and earnings per share rose by 5% compared to 2024 [7] - Gross profit increased to $1.3 billion, with a gross profit margin of 16.9%, marking the eighth consecutive quarter of stable gross margin [8][9] - Selling, general and administrative expenses as a percentage of gross profit improved by 30 basis points to 69.9% [9] Business Line Data and Key Metrics Changes - North American retail automotive service and parts gross profit increased by 9%, with same-store service and parts revenue up by 7% [14] - Premier Truck Group's new unit sales increased by 4%, while used unit sales decreased by 8%, but used truck grosses increased over 50% [17] - Penske Transportation Solutions (PTS) revenue was $2.8 billion, with full-service revenue and contracts increasing by 4% [19] Market Data and Key Metrics Changes - Approximately 61% of revenue is generated in North America, 29% in the UK, and 10% from other international markets [11] - In the UK, new unit deliveries declined by 16% due to OEM product changes and reduced incentives [21] - Same-store used units in the UK declined by 23%, attributed to the realignment of the company's used-only dealerships [22] Company Strategy and Development Direction - The company focuses on diversification across retail automotive and commercial truck industries, leveraging a highly variable cost structure [12][34] - Recent trade agreements, particularly with the EU, are expected to benefit major partners by enhancing U.S. production exports [10] - The company is actively pursuing acquisitions and has a pipeline for potential M&A opportunities [104][112] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business and the benefits of diversification, cost control, and a strong balance sheet [34] - The operating environment remains fluid, with OEMs adjusting pricing strategies amid tariff negotiations [10][42] - Management anticipates a gradual improvement in used vehicle sourcing as lease returns increase in 2026 [13] Other Important Information - The company generated $472 million in cash flow from operations for the first half of 2025, with a trailing twelve-month EBITDA of over $1.5 billion [27] - The dividend was increased by 4.8% to $1.32 per share, marking the nineteenth consecutive quarterly increase [29] - The company has a backlog of $350 million for 2025 delivery in its commercial vehicle and power systems business [25] Q&A Session Summary Question: Can you quantify the moving pieces affecting unit sales in the US and the UK? - Management noted approximately $200 million in revenue loss due to divestitures and store closures, impacting new and used vehicle units sold [38][40] Question: What about the impact of the UK market? - The UK faced challenges with mobility credits and OEMs suspending wholesales, affecting premium sector sales [42] Question: How do you see GPU trajectory and cadence throughout the quarter? - Management indicated stable grosses throughout the quarter, with the highest in April, and noted a potential for gross compression moving forward [62] Question: What is the outlook for capital allocation with the additional cash flow? - Management stated that the additional cash flow provides more opportunities for capital allocation, including share buybacks and acquisitions [100][103] Question: Is the $1.5 billion acquisition target still realistic? - Management indicated that while the target may not be met, they remain focused on organic growth and acquisitions [110][112]