Penske Automotive Group, Inc. (PAG) reported a net income of $56.7 million or 62 cents per share from continuing operations in the third quarter of 2011, significantly ahead of the year-ago level of $34.8 million or 38 cents. The reported quarter included a tax benefit of $11.0 million or 12 cents.
Excluding the tax benefit, Penske earned an adjusted income of $45.7 million or 50 cents per share in the reported quarter, beating the Zacks Consensus Estimate of 42 cents.
Revenues in the quarter climbed 10.5% year over year to $3.00 billion, mostly driven by a 6.2% rise in total retail sales to 72,204 units as well as strong performance of the parts and service business. Same-store retail revenue climbed 6.4% to $2.67 billion.
The growth in same-store revenue reflected improvements across all the company’s operating segments. Same-store retail revenue increased 15.0% for used vehicles, 9.3% for finance and insurance segment, 4.1% for service and parts and 2.2% for new vehicles. Region wise, same-store retail sales increased 5.1% in the U.S. and 8.7%in the international market.
New Vehicle revenues climbed 7.3% to $1.47 billion, despite new vehicle unit retail sales dropping marginally to 38,487. Used Vehicle revenues climbed 18.6% to $890.3 million on a 15.8% rise in unit sales to 33,717.
Revenues in the Service and Parts segment grew 8.6% to $354.6 million, while the same in the Finance and Insurance segment increased 12.4% to $73.3 million. Revenues from the Fleet and Wholesale Vehicle segment also surged 4.7% to $161.3 million.
Penske completed the acquisition of Crevier BMW-MINI, in Santa Ana, California in the first half of 2011, and Mercedes-Benz of Greenwich in Connecticut. Year-to-date, the company has acquired seven franchises. With these new developments, Penske expects to add almost $525 million to revenues on an annualized basis.
During the quarter, the company repurchased 1,831,559 shares at an average price of $17.39. Thus, the company has $106.8 million remaining for future repurchases. Penske’s board of directors also announced a 12.5% increase in quarterly dividend to 9 cents per share to be paid on December 1, 2011 to shareholders as of November 14, 2011.
Penske had cash and cash equivalents of $7.7 million as of September 30, 2011, which deteriorated substantially from $17.8 million as of December 31, 2010. However, long-term debt amounted to $841.9 million at the end of the third quarter of 2011 compared with $769.3 million at the end of the fourth quarter of 2010.
Based in Bloomfield Hills, Michigan, Penske Automotive, a Zacks #3 Rank (Hold rating) stock, was established in 1990 and is the second-leading automotive retailer in the U.S.
Following the acquisition of Fred Baker Porsche and Audi franchises in the Cleveland metropolitan area, Penske Automotive operates 172 franchises in 17 states and Puerto Rico and 154 franchises overseas, primarily in the U.K as well as Germany and Mexico.
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