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Penske Automotive Group Inc. Reports Operating Results (10-Q)

May 03, 2010 | About:
10qk

10qk

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Penske Automotive Group Inc. (PAG) filed Quarterly Report for the period ended 2010-03-31.

Penske Automotive Group Inc. has a market cap of $1.38 billion; its shares were traded at around $14.98 with a P/E ratio of 15.13 and P/S ratio of 0.14. PAG is in the portfolios of Ron Baron of Baron Funds, Chuck Royce of Royce& Associates, Murray Stahl of Horizon Asset Management, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Our results for the three months ended March 31, 2010 include a gain of $0.6 million ($0.4 million after-tax) relating to the repurchase of $71.1 million aggregate principal amount of our 3.5% senior subordinated convertible notes. Our results for the three months ended March 31, 2009 include a gain of $10.4 million ($6.5 million after-tax), or $0.07 per share, relating to the repurchase of $68.7 million aggregate principal amount of our 3.5% senior subordinated convertible notes.

New vehicle retail sales revenue increased $262.9 million, or 27.1%, from 2009 to 2010. The increase is due to a $238.6 million, or 24.7%, increase in same store revenues, coupled with a $24.3 million increase from net dealership acquisitions. The same store revenue increase is due primarily to the 15.7% increase in retail unit sales, which increased revenue by $163.3 million, coupled with the $2,455, or 7.8%, increase in average selling prices per unit, which increased revenue by $75.3 million.

Finance and insurance revenue increased $11.1 million, or 22.9%, from 2009 to 2010. The increase is due to a $10.0 million, or 20.7%, increase in same store revenues during the period, coupled with a $1.1 million increase from net dealership acquisitions. The same store revenue increase is due to the $102, or 12.1%, increase in comparative average finance and insurance revenue per unit which increased revenue by $5.9 million, coupled with the 7.5% increase in retail unit sales which increased revenue by $4.1 million.

Distribution units wholesaled during the quarter decreased 4,758 units, or 83.3%, from 5,714 during the three months ended March 31, 2009 to 956 during the three months ended March 31, 2010. During the three months ended March 31, 2010, smart USA recorded $1.1 million of incentives relating to 2009 model year inventory which decreased gross profit. Due largely to the reduction in units wholesaled and the incentives on 2009 model year inventory distribution segment revenue decreased $73.5 million, or 83.0%, from $88.6 million during the three months ended 2009 to $15.1 million during the three months ended 2010, and segment gross profit decreased $11.7 million, or 97.5%, from $12.0 million during the three months ended March 31, 2009 to $0.3 million during the three months ended March 31, 2010. In total, the distribution segment generated a loss of $5.6 million in the first quarter of 2010 compared with income of $6.3 million in the first quarter of 2009. In response to the reduced sales activity, smart USA has effected several changes in management, and instituted a number of initiatives designed to enhance sales and reduce expenses.

Depreciation and amortization decreased $0.5 million, or 3.9%, from $12.9 million to $12.4 million. The decrease is due to a $0.6 million, or 4.9%, decrease in same store depreciation and amortization, offset by a $0.1 million increase from net dealership acquisitions. The same store decrease was due to a $1.4 million decrease due to a change in the estimated useful lives of certain fixed assets effective January 1, 2010, offset by a $0.8 million increase resulting from assets placed in service.

Other interest expense decreased $1.8 million, or 12.3%, from $14.5 million to $12.7 million. The decrease is due primarily to $50.0 million of our U.S. credit agreement term loan repayments since the first quarter of 2009, the repurchases of $71.1 million and $68.7 million aggregate principal amount of our 3.5% senior subordinated convertible notes during the three months ended March 31, 2010 and 2009, respectively, and a reduction in interest rates.

Read the The complete Report

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