Penske says Q3 most profitable in company history

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Penske Automotive Group Inc. reported Thursday that its third quarter was the most profitable quarter in company history, driven by big per-vehicle profit gains, higher finance-and-insurance income and lower costs.

Penske, the second-largest new-vehicle retailer in the U.S., said third-quarter net income more than doubled to $247.6 million. Revenue fell 0.1 percent to $5.97 billion.

Adjusted net income from continuing operations rose 99 percent to $231.1 million. That figure excluded a $15.4 million tax benefit related to changes in tax legislation in the U.S. and abroad.

Penske’s third-quarter gains “were primarily driven by same-store retail automotive revenue and margin expansion, coupled with expense reductions,” CEO Roger Penske said in a statement.

The company’s 16 standalone used-vehicle supercenters in the U.S. and the U.K. generated higher revenue and profits. Penske said sales slipped 6.9 percent to 18,372 vehicles at its standalone used-vehicle store unit, but revenue for the supercenters jumped 7.6 percent to $352.5 million. Profits for the unit more than tripled to $16 million compared with the same period a year earlier.

Penske said it plans to open two additional used-vehicle supercenters in the next 90 days. Four other sites are under development.

The company’s retail commercial trucks division reported a 24 percent decline in earnings before taxes compared with a year earlier, as retail unit sales and revenue both dropped. But Penske reported a 53 percent jump in equity income from its ownership stake in Penske Transportation Solutions.

Earlier this month, Penske reinstated its dividend and said it will pay 42 cents a share Dec. 1 to shareholders of record on Nov. 10. The retailer this spring axed the dividend amid cost-savings efforts early in the coronavirus pandemic.

Shares of Penske closed at $56.32 on Wednesday, up 22 cents.

Records: All-time records for net income, earnings before taxes and earnings per share.

Sales: New-vehicle sales in all markets dropped 8.2 percent to 52,522 vehicles. Used-vehicle sales slipped 4.4 percent to 70,800 vehicles.

Same-store sales: New-vehicle sales on a same-store basis fell 5.8 percent to 52,502 vehicles. U.S. new light-vehicle sales across the industry declined by 9.5 percent during the third quarter, according to the Automotive News Data Center. Used-vehicle sales on a same-store basis dipped 3.6 percent to 69,766 vehicles.

Penske didn’t break out exact vehicle sales for the U.S.

Penske, of Bloomfield Hills, Mich., ranks No. 2 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 222,800 new vehicles in 2019.

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