Penske Automotive (PAG) 26 Jul 232023 Q2 Earnings call transcript

Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to the Penske Automotive Group Second Quarter 2023 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through August 2, 2023, on the company's website under the Investors tab at www.penskeautomotive.com. [Operator Instructions]

I will now introduce Anthony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. ahead. go please Sir,

and Good in A and Automotive press financial designed this quarter Leah. along our joining the the with Group's you company's us XXXX presentation morning issued was today. release assist results posted afternoon, you, on thank website, you everyone, to for second is understanding Thank detailing Penske results.

email follow-up questions have. As any always, you for I'm or phone available by may

and today's call International CEO; are Roger Financial Chair North our Shearing, our EVP Facione, Operations; our Seymore, for Penske, Shelley Vice Controller. and American Hulgrave, President me Chief Tony Randall Rich Officer; and Joining Operations, and

discuss Our discussion such as non-GAAP before potential, liquidity earnings growth leverage financial interest, today operations, earnings plans, amortization and taxes, our may also include and and assessment about conditions. or certain our future ratio. business EBITDA events, statements measures outlook, of depreciation forward-looking may We

measures the measures. press have – website comparable we displayed or on GAAP available most investor this to morning's the presented in our the reconciled directly and GAAP release which are measures comparable We have presentation, and prominently non-GAAP

Our in future filings, under XX-K press to additional discussion our vary could future results materially statements. that because our cause forward-looking today's to direct previously results I differ you release Form including and uncertainties expectations. our our XX-Qs for of SEC expectations risks may Form filed outlined and from and factors from

Roger. to I over will now the turn call

everyone, and Good for Thank afternoon, you, us Tony. thanks joining today.

quarter today. and Shearing call Rich we results, wanted Seymore Randall to discuss I Before our to second welcome the

depth additional we team. recall, leadership you earlier may As year, our added this to

me, Commercial in best further These in we support team executive our President International Power will to Operations leadership American Truck Truck with Global supports depth of place. Operations, and President, our Systems the leadership while tandem team President, building roles Rich Kurnik Vice will Commercial for Executive formerly Former Truck Seymore, Automotive our Rob Group North Premier Shearing and ensure and work our now Operations. Randall have

really financial me diversified report now PAG's Let second strong discuss business I'm performance our results the quarter model. second pleased to quarter. for from

the with equity the performance commercial offset Penske expense highlighted As of higher and we was truck was our for and interest Truck was operations our partially investment lower will discuss, automotive earnings Leasing. and by quarter

During the which XXX,XXX X% quarterly delivered in the which X,XXX Revenue agency total $X.X billion. quarter, second increased units increased units, to were includes record to U.K. units, a of

the increased service $XXX revenue Our retail X%, increased Same-store increase profit parts. variable when same-store compared XX% first and to gross retailed of an quarter XXXX. in per unit including

gross SG&A per improved $XXX Net was million. and repurchased as profit X.X was earnings XX sequentially. share basis a percentage of for through June million XX, and we've Year-to-date was million shares $X.XX. income $XXX XX.X% points

automotive Let to operations. me turn our now

and strong remain vehicles new is availability for demand improving. Our vehicle new

to below that represent. XXXX supply expect during of remain historical averages we we for most However, the brands

take continue and see orders We demand. forward strong to vehicle continue to

vehicle U.S., our U.K. the to Beginning Grosses million the in activity In for U.K., approximately of orders at time our current XX,XXX model represents $XXX XXXX, forward bank first sales. new presold $XXX is brands approximately the forward certain in XXXX. XX%. same million on units. quarter compared we in an the these transitioned the to order agency In is

recorded Under for each in record of manufacturer price agency vehicle, profit. of a vehicles. and we new received not delivery do the sale from revenue the the We for fee these gross is which

units versus retail X%, retail automotive basis X%, increased at used delivered however, 'XX, automotive revenue, down QX up new Looking increased for total same-store retail QX a our X%. on repair. operations by and 'XX in parts pay, and an business collision our XX% in being XX% is service increase of XX% and X%, warranty in in including an increase Service driven XX% parts. Retail customer

experienced service operations higher the our and than of levels. Total parts and profit in months quarter. remained historical In during fact, strong gross record many

than it is variable $X,XXX vehicle $X,XXX higher were than For was per XXXX. in profit example, more QX of

Taking down challenging. the as our model availability vehicles Revenue a late mileage vehicle profit remains of per to unit very declined sales million look per XX% variable lower unit continued were increased at $XXX XX,XXX, CarShop, X% gross X%. and

continue focus remain We CarShop digitization programs, and vehicle We locations improve the to sourcing and improvement on the brand. to efficiency. XX to committed including cost operate

improves. ready open store in to used one U.K. availability have the the when We vehicle

business turn truck now. our Let's to retail commercial

dealership XX Our locations an in truck important America business part is represents and diversification. North premier our of

five into acquiring new greater market locations Winnipeg, the annualized Manitoba million quarter, revenue. expanded $XXX estimated During and area, in we second

New replacement commercial by truck demand remains driven demand. solid as being

fact, out. units, Through entire Class sold to up for truck Class product American look is units. our sales of at allocation June The XXX,XXX representing X were XXXX XX% industry retail we is In X North XXX,XXX of six X sales. current backlog months XX, Class approximately

XX%. in gross total including revenue for increase up in business the parts Same-store X% cost During at XX%, that and of service increased unit looking XX% the up were profit represented the XXX% and parts. covered fixed service same-store was the a X%, quarter, and second second gross Same-store quarter. profit sales of

in year. compared represented second EBT last was $X second and up to parts million, gross Service when the XXX% million quarter covered profit as total quarter. of I earlier, $XX and the XX% said QX

month a EBT the second As the of XXXX June best point, was company's data in history.

with now to owns us savings. and Penske PTS PTS, you over goal with turn the XXX,XXX know, cash Transportation PAG manages of and cash XX.X% currently by distributions fleet as which XXXX. trucks, a of Let Solutions. Group, tractors provides of trailers, to a increasing income fleet equity XXX,XXX me

increased at earnings four to PTS increased revenue X%. Full-service The XX%, income, X% logistics million. rental X%, $X.X our declined quarter operating leasing impacted increased revenue $XXX of particular second PTS items. mainly contract $XX billion. million decline by was The generated in by declined revenue share

of supply We constraints. result with a on the order have over XX,XXX as factory OEM that's units a factory

months. last so maintenance XX,XXX QX. in XX,XXX units million higher year drove of lease The this $XX obviously and in operation, have We extensions costs over far older extensions XX the

strong Our commercial to rental at XXX still or that's number a XX% basis really, XX%. utilization declined points XX.X%,

increased $XX expense in of compared with rates. billion average outstanding the the interest lower the XXXX. of a on $X.X high sale to to higher overall fleet debt high growth gain the Interest $XX interest record when A due refinancing combined overall in from performance with million of million

provide look we certainly extension to believe the will As will an forward, of and opportunity lower from is maintenance which supply lease we trucks new the stabilizing, replace PTS expense.

Penske I'll it point, over Randall Australia turn this Seymore business. discuss our to At to

exclusive principally vehicle. of leading Rolls-Royce representing Detroit and also medium-duty collection We're and the Star importer trucks Australia, refuse heavy Diesel, trucks of MTU, and In Transmission Roger. and Allison of Zealand distributor distributor parts buses MAN engines which and company, and you, Western gas Dennis Bergen Thank New and heavy-duty a and we're is a Pacific, the Eagle also power the engines. systems, diesel

off-highway markets. engine Our serving and nearly business and highway on remainder service aftersales out and locations construction offers The the network products defense, sectors mining, across for service marine, parts and XXXX, dealers through all across supports trucking, markets, a and sector rail off very including and full of the data heavy-duty strong, predominantly field remains power sold mining the generation, allocations center of branches, with the region.

Australia. haul loaders in these way Some to up we of Bergen excavators, mining we Australia Energy gas all service OEM power the for Solutions also offers mine through XX projects natural provide XXX-megawatt also equipment. years. station these engines and delivered trucks repower these contracts and commissioned the In and Penske, space, the five recently first

through Our Approximately bank from service XXXX XXXX. of for current order for our XX% million of Solution all of is deliveries and operation. in gross region profit and over Energy $XXX parts this the remainder comes

a in our of business. units key So driver increasing operation is

call turn the to Hulgrave. over like Shelley now to I'd

than I sheet. the SG&A lower Thank like gross through you, everyone. averages. walk cost several profit and to historical of key maintain achieve We last of to efficiencies and to our drive discipline to maintain the other would several highlights over years gained Randall. help our you Good operational balance reductions, automation levels us afternoon, through discuss strength and improvements financial now

XX.X% as profit basis percentage gross is QX to of second the compared profit basis below sequentially XXXX points XX the gross by improved prior quarter to X,XXX the to a XXXX. SG&A XX.X% when pandemic. of in SG&A important, in was and points Most

our our improved by As ratio points, efforts and the over gross in expenses to and points XX parts second of profit to absorption and control improved U.S. a basis the result improved service compensation basis points. service basis profit of basis quarter XXX to our and gross points our improved XXX automotive our XXX operations, year. Similarly, in absorption ratio last parts U.K. compensation

help optimization deliver will continue to we on future, particularly that through reductions, automation. the and to opportunities efficiencies cost will further simplification Looking and focus

XXXX. ended $XXX over generated the We flow. flow cash operations months in our XX, in six from at Looking million cash June

this to our million we shares dividends for and shareholders. $XX X.X in repurchased period, During million $XXX million returned

year, So dividend we per increased share. to cash $X.XX far this XX% by from the have $X.XX

to continue allocation. approach capital maintain disciplined We to a

XX% Over operations dividend the and expansion. cash acquisitions, and XX% repurchases, growth XX last to for our share to months, flow funded XX% of X% from CapEx

Our $X.X long-term Approximately matures of was quarter, $X.X XXXX, XX% XXXX. the maturing our billion XX% debt At in $X nearly trailing billion. long-term end billion. XX-month debt in subordinated the EBITDA represents is while the with notes the remaining of

rate X.X%. notes these The average is interest on

our at of to returning at the capital million was We leaving the mortgages acquisitions total X.Xx, Xx and ability and also and in for XX% have sits compared adjusted quarter, but end consistent subsidiaries. have to $XXX X.Xx flex at March. the At leverage shareholders. the lease Debt we $XXX with million to in of ratio, to June of the and is us borrowings leverage capitalization opportunity plenty to end up other

the $X.X capital U.S. for investments agreement by purchases. During up working provides capital, in capacity to for expenditures, The and credit billion other amended amended facility acquisitions, agreement we second corporate quarter, to increase the borrowing $XXX revolving million. our loans

billion, we million equity cash, availability from in December Total XX, June inventory increase $XXX was vehicle of in our had billion. billion XX. million an and agreement. $X.X in $X.X under credit Floor $X.X $XXX $XXX was over debt million representing plan At

new a of days in U.S. vehicles, including supply days the XX U.K. XX-day We and XX the in had

XX. and a Used in vehicles form XX had U.K. XX-day in the Days of was our day vehicles of was current for electric supply data a the volume point, As XX and supply. new inventory XX vehicle is U.S. days battery new premium supply days

the At some back this time, will to turn final for Roger call I remarks.

you, Shelley. Yes. Thank

is The balance secure. As Shelley strong, mentioned, say and safe certainly would XX%. sheet I capitalization of ratio and our

all We're our ability XXX% superior store. meet of balance the course, the customers. customer desires, allocation. to in sheet convenient committed from shopping our have to our maximize with online We offering capital offered future experience to This to flex of options our to ranges traditionally

our for for signing These online service, service. options remote digital customers, digital hybrid test shopping and solution, virtual video, upsell approvals and scheduling include and and drives, photo

our One are intelligence of our sales leveraging automated key service basic conversational to Set closed. interactions efficient we inquiries. even and facilities language in to both sales is using answer service appointments and service allow artificial natural initiatives for when as and

- of XXXX. received to like that Finally, for they announce team been in automotive say XXX from I'm congratulate the extraordinary to I'd glad to XX to news best dealerships efforts. notification the U.S. for have I'd named like our to our dealerships work have

commercial I strategy. the capital our certainly retail and models. business continue disciplined control allocation cost our automotive in the industries, remain diversification our from to across, closing, benefit The In confident a results demonstrate truck

the to Thanks we'll back joining it today, for operator. Thank you. us and turn

And Instructions] John question Please our go [Operator you. is Thank ahead. first Murphy. from

John. Hi,

Roger afternoon, everybody. Good and

the Just the but strength and your a parts this what take you a service view or standouts. on same-store stuff actions tougher, service? And sales even stuff time? pretty but I of of further the I question The mean micro that quarter, growth there's strength you're that is sustainability XX% on might up over - time. arguing comps good in on parts support can there slowdown, mean, But basis that you over the on in lot is a may almost follows one the parts service. and of and good first a in get

Well, hi guys.

same-store John, was XX%, up pay warranty basis, First XX% continuing and body and grow. up up are to now PDI on XX%, shops our a was customer our

really more certainly As would dropped. customer body you say it's service. know, I shop today, because is driven, business during COVID, miles But driving being of our

to through look an a the the use number operating that can cleaner the AI our is schedule of morning, important, the customers, we're up from and chance our honestly, us at day, standpoint across me can interaction think hours giving gives I a us with customer is available. to in quite o'clock call because X they it appointment, daily schedule network the the of using And XX our capability of really which sales

And for AI, us. has new really been which a we this by do certainly opportunity

driven think I car with and were today, million, up. $XXX certainly, miles park, and the

to the coming I using customer. back of of premium/luxury use car and technicians on our think videos side, from We're videos. the see directly the we actually the to continue standpoint the videoing

I think is, service So, look you high-tech, touch customers. high our for the this again, when at

U.K., a our thing, demand. reconditioning used it's up, sold our opportunity see we we was a used not cars. however, we're certainly and pent-up One Certainly, used in the the is because same, the inventory car - and negative, business down, seeing we have just more

going longer the have forward, are because an demand. of we overall, the running think opportunity pent-up I cars because as opportunity

truck question automotive seeing retail on no that side. going at this premier truck We're there's still to we're the certainly in the side, And side it truck. the see experience

certainly at premier to standpoint rate at the car of X%. day, think charge able the were and the increase again, X% U.S. labor we up X% in approximately I the So what And is and up park been to our which overall effective obviously strong. from the the end customer, we've truck is

increase as the So benefit that get from Those service. we driving increase also same customer ultimately rate, are we the things and we right? overnight, all are the get but that parts our OEMs, again, not

just One real Okay. question quick. second

performance. the I function But you that be I some short its that either the I going On very in I there's do do these forward think SG&A that stand mean, and levels, - how run. the performance. the SG&A, mean, or mean, may great is about sustainability think mean really gross inflated grosses going forward? is good think dollar it value? I of this a at mean of you percent about how skeptics I

as last think been XX gross in billion, growing SG&A be $XX under the hard customer forward. I certainly John, a XX cold gross over months. we've there's levers, about obviously, two or think more for pressure maintaining the last to had just company go months. But SG&A you when going million $XX months, XX profit and doing That's over we

us business, for at trying look to that it costs the associated over it, inventory to look think, We've to when our balance me, with really that I look of sorry, you and when the volume quarter-to-quarter, amazing yield get So the better GM, me, because, at with business, roughly to similarly of units it's at we're inventory down said quarter, salesperson sales it about out for when you think ability to XX.X you our our I their XX. our people. gone from per

the and And $X I to real there. SG&A able take sales some think the better people and of there's customer better about some basis, and in sequential get opportunity a connection out costs think with million. We're costs - tools. salespeople, We on an down. went were the using actually our I

drive at, basically, we're think costs. rent some and I simplification the looking going IT that. really that But an to through key. optimization some we're have And We it's continue to

we up on with that actually plan over you really in of out the As down SG&A last at the was system. our to out $XX I think SG&A really next of rolling forward, weeks. only really, significant got days, couple money I the and sat few XX.X% basis, management look same-store team cost a the take the And overall we've We're that a from when million. go

have a going matter on grosses. because know buttons try certainly, drive some to pressure hitting we it's the of So and to all that, we'll we're

very Thank you Great. everybody. Thanks much, Roger.

John. Thanks,

ahead. go we to Gupta. Rajat go Next, Please

Hi, Rajat, hi.

Thanks taking morning. for the Hi, question. good

ask to on wanted firstly. PTS Just

quarter, in the XX%. second results First roughly down like down were XX% year-over-year quarter

impacted other to have share levels trucks. about trends half? half, we half extensions, I to areas the handicapping PTS. unwind? trajectory of maintenance Thanks. second some expect income second relative a can And in gain selling our here of follow-up? Any being the the or on terms for these way about headwinds, talked first of You by the What think sales maybe fewer Any prior year the should the second quarter to relative to of the into that you kind

think were months gain XX over I on things writing the the sale. we of one higher last the was

through already more sold six approximately we've Now, months X,XXX units.

$XX,XXX our about unit. margin down is per However,

certainly big million, of sale, $XX that was which drove decline the I in a So for Obviously, on portion. quarter. the gain think,

overall, think XX,XXX so with talked about we I from costs months. reduction will take as year, and out, extensions as leasing in last this far the of over business, the we we've see standpoint the had XX a XX,XXX earlier, we maintenance

trying have drive prep in many higher you taking units and also Now these and the have we one units There's out bring question. going shops. no point at of issue takes our because maintenance And units to that time in out, these costs. to

expected QX. taking and that's the perspective, or commercial $XX that what We I do units in flex flow fleet longer huge as Overall, these rental really it's steady will We'll about of we remember, rental surge again, think But tractors. million, will we out from So X%. state more look X,XXX talked get down But utilization. the certainly because what a than about had through. we going at here take that's - of QX a be into coming to in. we'll

side, we'll they'll our do standpoint. like team, or those the to run car a interest take and obviously, three of will auto X,XXX some now which maintenance will do somewhat it when And us happen, the of for what a And four we sales of reduce units, those newer we'll out It's killing from will selling depreciation were then that, and high months. replace and and take those X,XXX what units. units these also sell in that and give cost the mileage we'll loaded

the mileages consumer of in those and and that's the we take would they New length it route to been very Certainly, We've sell difference shorter a is when one-way guys doing sometimes rental years. we'll been and lease successful would York, look the us. lease has at rent market our on The Philadelphia. then truck two obviously, there shorter it moves, us. And for the the only four into between in which that impacted it's

obviously or which to months, So used we've the values - values, declined have higher got last interest maintenance we like car truck several the over areas use just have got we obviously the have key if terrific you has But continue it with. all we at business. market, look we our this a reputation, areas to out the that the them of the and to company deal in against peers, to

profits certainly we have the the into And think you the it, can if believe go you profits we where - as of market from standpoint at financing vehicles. investment the amount first for our our of when our an I in entire first equal really XXXX. half, the grade And half look

on business the So, is a certainly role.

it. the we think units down to we How the Maybe the and change and first Got internal that That's and profit gross and declines similar very all? unit? third business, grosses are is should about expect on you're quarter, GPUs per your maintain able in Should the kind quarter? of into expect used here Thanks. healthy unit pre-pandemic quarter quarter. the anything strategy to just Or fourth unit Got roughly relative should but helpful. the versus even we between it. car were X% to comps the trade-off

during to four-year get new out lease And four look have of the to know over months. zero over zero come or XX They all vehicles, that's on period that due they to still fishing everybody trades world the tight, trying vehicles had used the because buying in that and sales were be here. less customers to leases. Let's last vehicle real is going to at say, we extending didn't returns back number a times. We

is I So, see down sales going cost probably of what the the in market.

obviously, some when the who going hand, - I done to cars here, maintain we'll that lease, we're stay our hopefully, going off the to hopefully, we've coming four-year before which can grosses, the at we timeframe, because on opportunity other zero past. in are customers But get think some we those. to in And look buying the we're

that see being railcars some plus we opportunity So, you'll an have market. into coming the

have got were that, we've to At of of the XX% where And mentioned dealer. the the when a this come cars on at buyers our cash buyers - we those our side been which cash leasing, today. look lot think a XX% point, at actually has I marketplace used premium we had it a today and in Shelley that conversation would lot not cars back on rolling still you always earlier are of because we

been. So we've that, that's up where Would you on from any have comment Shelley?

obviously they higher up to consumer year, that a remains over were They're high of some these with. it's last yes, the No, trying to very costs. begin just avert historic they're But which healthy. was where finance X%

foreign honestly. I probably from more Hyundai, see cost XX now, between see Toyota, volume running see see the say, maintaining our anywhere us think lower our us days business, having I our quite So opportunity And Honda, to we're supply. I right trades. XX sale. a And of about you perspective, and and that premium when margins pipeline for

really up get up the So as us. which for that with will to be picking supply, from merchandise more trades we're hot going OEM picks them, obviously

consider to from thing buying more vehicles are put how consumers. We've we too. sourcing vehicles into additional one concerted So is effort directly a

franchise XX%. it's look where U.S. the in in XXXX. our was at we This back so to XXXX, on when of you in and is CarShop, they're you they look it in XX% - today, So up only what at and about business X% far, go when bought X% and XXXX, were

sold the over cars really available us the that is are But So, to doing X of years, million amount the in marketplace of good cars past that three-plus source. we're the buy really a job challenging. changing with way we for fewer

trade. in the get also, way in salespeople we're compensating now or Yes cases, one our the and we other - many sure we

happened. run the it for the of And the out doesn't personally. say, customer three what's kind last go or that's two been quarters. sell So, That's and

that's hoping to So, slowdown. going we're

they're have I on been not seem way growth. traditional to We're But think auction, going of last that buy be to the market to because to those, the coming slow that's cars cars. pulled going that And going we're the to over is have, look, the be right back, we going the go to going not stay to just because we're dividends our period not time. pay they and

Got it. That's for taking very the Thanks question. fair.

Thanks, Rajat.

we'll ahead. Next, line Daniel to Instructions] go [Operator go the of Please Imbro.

Hi Daniel.

intermediate-term Hi. Good CarShop you used actually we questions. everybody. were any Thanks mentioned afternoon the trends growth or just got topic this to if you be for that was follow-up on Maybe Randall, Roger, taking around I'd different touched on, within curious hampered. better Tony, business. international used growth concept there? of how stand-alone I viability is stepping maybe concept? back, the And thinking in the stand-alone change sourcing this just to or use of kind as mean, your backdrop, then near about does to car commitment tight challenging the

touch in U.K. I'll on So the the sourcing first

shift. So similar a

all of a If getting our consumer, used meaning to OEM XX% program. the ago, were were the ago, our from not three we from XX% X%. down cars cars, via you back we years got directly conversely, years we three out proactively of buying. That's But but go trade, some of

That's up XX%. to

on of to all Roger XX% XX% said, as has our inventory. trade used XX% from gone from then focus to So our

are trade coming from consumer those that's three put together, all it bucket I ago. it versus we're So all intragroup, self-sourced, direct XX% trades of that you call focusing if year-to-date XX% years our from we how of

the the there's we're no to question the to committed brand. brand, at Now looking commitment

up XX U.K., soon units now. up have got we're us. open location opens as planning the to We for supply We've as the a in

So, we could be from the of prudent standpoint cost.

have an with sold up we it we in that had supply be because it for opened turning quite to honestly, and us, loss we building. closed and was into didn't fact, In the a honest Phoenix you, operation a we and

to in right, look, want we're other. the U.K. in more one need we're the doing the U.S. units in we to But take say XXX on a XXX where would the U.S. and to X,XXX it's the or monthly Am think U.K. go, action way units. We and I supply both not I afraid to get So basis. I Randall the

at a in we're now, look big the right and take business U.K. costs out. So digitization try to it's to going to

multiple And to by that having functions can giving certain done think doing technically going to delivery it past some third one And things handling. we we and the that either people that's we managers over do the fourth out person haven't in sales in by rather of and it the additional next sales or certain take process, quarter. giving than cost

me, business. to it's great So a

We've look at we And an run here CarShop U.K. in we're got business, just honestly, brand a the when that looking great also it's quite independent and you overall, And both we volume. think it way. for

the into sales How that you the Thank and And can - willingness or natural your with the really and emission this all service into parts And to side. That's do How to will you year next think turn freight then truck and changes the talk maybe it. backdrop hedge. does fleets? Got obviously, next or backlog remaining least through shifting weigh maybe a you. support helpful year risk commercial at year. color. Rich, customers' does that tough? Class X about is about is that impact their freight the over how substantial

If you industry works how could the just moving XXXX into think through through talk we backlog? as through pieces the

Daniel. Yes. Thank you,

environment. Just on to current comment

backlog about the still XXX,XXX retail months sales. mentioned, six of you at very As is units, representing

So that's year. going balance the this carry through to of us

sold allocation any so completely we've out. that were year this received And

regulations a two greenhouse XXXX mentioned, effect gas in go into As there's XXXX. and steps, emissions, the you

you of which XXXX, able are produce launched, aren't course, year against be chain a advance year. what advantage the have emissions you an new of vehicles to the That's as going to challenges buffer of take OEMs normally vehicles, For have normally effect. a be next in do to emissions year a would hangover prebuy And when supply that. would

I auto you that similarly fact side supply of a marketplace. into been the combine last with the coming to think the the vehicles for years, lower there's three

retail for the truck maintenance about talked cost carriers lot experienced of on it side same a Roger the side Certainly, thing. PTS, our on

well, maintenance costs up to eager going and be vehicles. as those their to they're replace So are

by years, So environment. over sales driven the have two the last rate been a robust

by and this to out certainly be think driven operating into to higher-cost I it's demand units going of replacement marketplace. year next standpoint the going from year, get an older

in with so, up the comments, a for QX And sales opening see that we on were the for the up sales industry XX% XX% saw you basis. retail quarter the

comment I spot its for freight certainly out. certainly, so, I right bottomed rates for us has from the year The feel now come make the down market the it next into historical and bode looking think year. And fundamentals this last well and highs, we would on

some We more start be back contract next freight think the six upward there on the forecast end correction trending for the months. to through rates of year. over the the But is side could

the natural so, and a I the recovers, And side. freight to as to think act going buffer that's commercial the sales truck cycle as retail

you much color. all Thank for so everybody. That's

All right. Yes. Thanks, Great. Dan.

David go Please we And next, Whiston. to go ahead.

Hi David.

for guess I full break if service curious difference the rental? versus up lease everyone. Hi, between - maintenance could Slide just the commercial I first me XX on on PTS. you and was

saying. on equipment the talking You're to me. you're The maintenance

that's commercial And compensation maintenance. am mean, to truckline pie full rental lease asking? I and facing why chart are versus I Your is referring you service truck

not only our maintenance and our our maintenance, when makes maintenance, rental about consumer number. we business it's leasing on our contract total all our No, That's talk commercial fee. and logistics on

and includes hires it So maintenance.

It up was in total quarter. $XX number million you So that that's the saw. the

vehicle you pretty the a for on rest you of more year, skewed if do Okay. do to robust stay deal the expect you side light market, do or And on a pipeline? have truck the M&A the

look, a Well, we would have I say pipeline.

least brand five in to standpoint, on a five be from up at think acquisition, is we're goal tracking that I area. Our

which in some be things very where it it's have promising. we're pipeline, luxury all selective, the whether going scale sure we areas or wanted volume have But also, in with think I we what's foreign mix. fit premium and internationally to the in to to We very, be fits domestically brand

as be go to going that's So we important forward.

share of acquisition why premium businesses we the look agency, I That's of had Mercedes in the made at North XX.X% We June. is the that. end at you we're XX% day, followed of the market a the us luxury. London we and And in that month U.K., even now under think

So off. starting to really pay that's

make the what's when return at we CapEx critical also key be this a and strategically be as will obviously, affordability from today, plus standpoint we So look requirement. brand acquisition, of the will a

do finally, are you you of - outside now? many your opinion, right in too do Tesla, And EVs on think market the there

getting glad and why for going little Randall of to I'm the electrification. vehicle I'm the U.K. electric the about to in EVs a But Tesla Well, business, what rest make the don't in what's going we're not bit on the running on year. I'm talk look,

color I on think he's good that. got

Yes.

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XXX total about is about of days our about represents supply hovering been inventory. which XX, XX BEVs, a that units only and used of X% XX, We've

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after buy eyes are like need then it's what's me, what there's the an the time there just that it's costs. be these costs to warranty to excuse We've we standpoint? quicker. open. associated warranty if are be the wide of to out a BEV, a if situation, to range situation, what say, And So, going turn degradation four-year a associated from got just as a then consumer, if And old things interesting you

would we're look, government and government only couple even then where to and a a less country is markets. So - subsidies, Germany a lot and I you be interestingly, hit just there's X%, that not a standpoint. than is like of go a PAG Italy, market well and we subsidy from the from as about XX% other of

different between the interesting So markets.

think also, when the tax talk it, from U.K. support, you I a look a think, a the impact bit markets, in perspective the that I little in of at from about the think governmental that international about

follow-the-money a it's Well, scenario.

BEV, and BMW $XXX provide lot but quite people a of they tax that is U.K., a be a tax. got benefit maybe Series, the in a not tax £XX relief a will zero, have company as which their So where vehicle may have you for in significant you've month if X per

where subsidies there's it's Germany, a some said, So tax standpoint, real I not. countries there similar mean benefit like other that to the I a these of have from government in BEV

artificially you the little on call where subsidies bit So are. a government could buoyed

for XXX-day look XXX. we've to I on think at EQS got the right Yes. for And sit we BEV U.S. supply overall here you when today at Mercedes, MB had

we're from our do sell of be some the know critical been XXX% from week I a what other seeing there's in talking our the part affordability -- about period past the our business questions this from So, or of heard business. a MSRP. I've standpoint is And and we peers pricing

about at XX% running We're year-to-date.

out out take at XX%. take you you BEVs, If and both we're hybrid

the the you much than business, marketplace. noise PR from is OEMs greater that and So of the the the can supply the see

So, I we quarters. we at that several forward really have think to it's the something next as go over look

So, used watching the we're pricing. car

being We're careful.

seen seen here discounts it with raised points the here We're agency things EVs. the in place. Benz already this Ford. We've going happened - U.S. in take our XXX basis the of we're on or incentives have that's in also remove to and fee our Mercedes to commission U.K., seeing One what's they've or you've with on domestically already at

think this in I here the lately paper.

So we're of I that environment. think in kind

things no captives going I on And say it for side, these at other have now, least customer. and But think to that values So, carefully. up residual can't the going we're the there's on it's because going sticker premium to I the they're to shop them. move if to these just we're watch OEM put move step to way right

than that's hard is other crash ratio heard you grows? to Do dealers. you from Yes. quick, as some it just or soon think few MSRP I've quarters that's mentioned what And real higher interesting because is that sustainable inventory for going next the

stopped, for Start out, higher want but going with pressure. will there's batting enough be to to be order. a it MSRP get I but

don't have have portfolio particular at least with today. we in domestic in We're Let's premium we time, and the a luxury, we've so at what hold a remember, think may to for pricing. be still right volume I day the X% opportunity providing we market us have this honest. supply But now, that's model got

Thank all you. Appreciate Okay. information.

Yes. Great.

back turn closing. you Mr. I'll it Penske, to for

quarter. joining everybody, support our Thanks the you for see thanks, We'll people that are for us. Well, right. line. for next the All on Thanks.

and Thank participation. Ladies for conclude that you your does gentlemen, your today. conference for

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