Revenue Growth: Increased by nearly 2% to $7.4 billion.
Gross Margin: Improved by 40 basis points to 16.7% compared to Q4 of the previous year.
Income Before Taxes: Generated $295 million.
Net Income: Reached $215 million.
Earnings Per Share (EPS): Reported at $3.21.
New and Used Vehicles Delivered: 126,800 vehicles, including 4,500 commercial trucks.
Automotive Operations: Total automotive units delivered increased by 4% to 126,864 units, with new units up by 6% and used units up by 2%.
Gross Profit for New Unit Retail: Declined only $302 sequentially.
Gross Profit per Used Unit Retail: Increased during the quarter sequentially.
Service & Parts Revenue Growth: Increased by 5%.
Penske Transportation Solutions (PTS): Operating revenue increased 3% to $2.7 billion, with full-service contract revenue up by 12%.
Future Guidance
Expectation of Sequential Increase in Earnings from PTS: Anticipated improvement due to a reduction in the rental fleet and new replacement vehicles reducing maintenance expense.
Capital Allocation Strategy: Continued investment for growth through capital expenditures, acquisitions, and returning capital to shareholders through dividends and share repurchases.
Inventory Levels: New vehicle inventory increased by $50 million from the end of the previous quarter to $4.4 billion.
Dividend Increases: Raised 5 times from $0.57 to $0.87 per share since the end of 2022, reflecting a 53% increase.
Trends, Market Conditions, Sentiment
Market Headwinds: Faced challenges from port holes, product recalls, supply and production issues, particularly in premium vehicles and a strike at a plant in Mexico.
Interest Costs Impact: Higher interest costs for the quarter at $17.4 million, primarily due to an increase in interest rates, higher inventory levels, and lower equity earnings from PTS investments.
Strategic Acquisitions: Added 24 automotive franchises and entered into an agreement to acquire 2 Porsche dealerships and 1 Ducati dealership in Melbourne, Australia.
BEV Sales: 87% required significant discounting, with an estimated 90% being leased.
Service & Parts Revenue Growth: Continued growth across customer pay, OREO, collision repair business, and overall service.
Notable Quotes
Roger Penske: “Our results continue to demonstrate the benefit of our diversification across retail, automotive, commercial truck, cost control, and disciplined capital allocation strategies.”
Michelle Hulgrave: “Our balance sheet remains strong, safe, and secure. Our approach to capital allocation balances investing for growth through capital expenditures, investing in diversified and opportunistic acquisitions, and returning capital to shareholders through dividends and securities repurchases.”
Randall Seymore: “Our current order bank for hyperscale data centers and battery storage systems combined is over $550 million for 2024 and beyond.”
Richard Shearing: “We believe commercial truck demand will continue to be driven primarily by replacement needs.”
