BLOOMFIELD HILLS, Mich. - Penske Automotive Group, Inc. (NYSE: NYSE:PAG), a global player in the transportation services industry, disclosed its financial results for the first quarter of 2024 today.
The company reported a decrease in net income attributable to common stockholders to $215.2 million, or $3.21 per share, from $298.3 million, or $4.31 per share, in the first quarter of 2023. This quarter's earnings per share fell short of the analyst consensus of $3.39. Revenue saw a slight uptick of 1.5% to $7.4 billion, but still did not meet the analyst expectations of $7.57 billion.
The company's performance in the first quarter was marked by robust service and parts revenue in the retail automotive sector, which grew 9% to a record $746 million. Despite this, profitability was hampered by higher interest costs and lower equity earnings from Penske Transportation Solutions (PTS), primarily due to decreased commercial rental utilization and consumer rental revenue, alongside higher interest rates and average debt balances.
Roger Penske, Chair and CEO, commented on the cost control measures, noting the improvement in selling, general, and administrative expenses as a percentage of gross profit to 70.7%.
Retail automotive dealerships delivered 126,864 new and used units, a 4% increase, with revenue in this segment rising 3% to $6.5 billion. However, same-store retail automotive gross profit declined by 1%, including a 4% decrease on a same-store basis.
The retail commercial truck segment faced challenges with a 12% decline in unit sales due to inventory shortages, although a stronger sales mix led to a 190 basis points increase in gross margin.
The company's liquidity remained strong at $1.7 billion, and it continued its capital allocation strategy by repurchasing shares and completing strategic acquisitions. Penske Automotive acquired Rybrook Group Limited, which is expected to contribute an estimated annualized revenue of approximately $1 billion, and announced the pending acquisition of additional dealerships in Australia.
Despite the mixed financial results, Penske Automotive's focus on cost control and strategic growth through acquisitions indicates a forward-looking approach to navigating the current market challenges. The company's ability to maintain liquidity and manage leverage, with a leverage ratio of 1.1x, demonstrates financial prudence in a fluctuating economic landscape.
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