Penske Automotive (PAG) 7 Feb 242023 Q4 Earnings call transcript

Good afternoon, and welcome to the Penske Automotive Group Fourth Quarter 2023 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately 1 hour after completion through February 14, 2024, on the company's website under the Investors tab at www.penskeautomotive.com.

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

Thank you, Brad. thank joining and today. everyone, afternoon, you us for Good

posted Penske press fourth issued As in along understanding is assist a results. designed detailing the this our Automotive presentation with and the was you know, you results release Group's to website, financial quarter morning company's on XXXX

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

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

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

the and and investor We directly on in release press prominently to have the comparable which GAAP GAAP are most measures non-GAAP presented our presentation, available the have the measures reconciled comparable website. measures

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

I'll the now over turn call Roger. to

income best afternoon, for net in and today. was year XXXX Tony, of everyone, PAG company's I history. us joining third our a thank and our you, and appreciate good everyone reflected strong year

dealerships new the commercial of performance our our brand allocation. performance premium truck driven capital market, Our car our by resilient retail is a and mix,

billion and per trucks. During XXXX, $X.X $XX.XX. and to share net billion. income and billion almost XX,XXX new $XX XXX,XXX vehicles increased earnings We commercial used generated earnings nearly we $X.X in before of revenue over our We X% taxes and delivered of

to in continue grow acquisitions our in of including and announcing U.K., Rybrook $X.X closed the business early billion revenue, XXXX. We which expected annualized January

million one shareholders the the We of from shares to since of dividend to year. beginning cash paid by X.X sheet current repurchased $X.XX approximately outstanding to balance X% end time. a We debt XX% maintained $X.XX. shares ratio and increased of dividend XXXX of the and XX% our at or our ratio capitalization a of the strong of leverage We

in Now announced was charge fourth operations to impairment that our let's $XXX a release, income Adjusted adjusted million share Difficulty] EBT just was $X.XX. [Technical was noncash as per the our quarter noted attention and related continuing turn adjusted $XXX earnings today from press excluding we earlier million million. at $XXX under

inventory remains and availability In new believe to our for demand we vehicles solid automotive continues improve. operations,

orders to the depending take sold The free brand in averaging on and We U.K. forward between U.S. region. continue activity XX% with XX% in the

Ford is order healthy at units. XX,XXX book

same increased time and slightly Although less of inventory the the compared when in last book improvement U.K. availability XX% last registrations is new vehicle the order XXXX to year, year. than

truck our gross lower to million earnings combined which in increase quarter, a the a higher $XX greater interest with impacted was record service QX profitability million. units. units, automotive increased by commercial in in over resulting in levels taxes parts before includes earnings Unfortunately, rates During inventory additional our retail equity from interest costs was our Solutions. of retail profit units and agency gross including investment X% Penske from and $XX and Transportation only increased total X%. X% business. Same-store automotive X% only revenue delivered XXX,XXX Same-store declined Same-store X,XXX profit declined X%

and produced $X XXXX, revenue $XXX increased Turning PTS vehicles. XX%. service over That contract lease time, billion. to and and In trucks, highest increased net income. business includes X% billion. increased of declined million third Full XXX,XXX PTS trailers. revenue of a fleet the tractors X% in operating XX%. PTS EBT to X%, XX, December PTS, Logistics generated just revenue operating PTS all managed over but increased $X.X QX, In revenue our rental

PTS $XX XX% Our million, by which compared share million declined or of last to year. earnings QX of was $XX

to $XX Decline bond, the expense in on lower related replace gain in million $XX increase an trucks impacted sale in We of refinancings year the debt. in period revenue used by XX,XXX trucks and decline XXX rates XXXX, when had values truck holding a fell points commercial basis depreciation utilization freight fleet. increase impacted used because compared continued interest XX%. we're as demand. at used costs PTS by older including higher earnings to of XX%. Rental in XXXX, nearly Higher to performance rates holding sold on and the higher we was -- vehicles, over the from following: be outstanding the in million A to XX%, record decline

look similar As into continues PTS to we be by XXXX, impacted QX headwinds.

quarter sale We the and interest least used XX% due of expect first decline at costs, trucks higher higher depreciation. a earnings PTS lower to in to gain on

at Units of continue lower. to compared the XX,XXX trend on year [indiscernible] XX,XXX start to last at and

X,XXX QX. available pace XX% currently similar and of In We was than sale. for nearly XXXX which January, higher sold have units, XX,XXX January the to units we

now to Rich I'd it turn Shearing. to over like

Roger. you, Thank

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

X commercial area you representing North the of Daimler America. greater of Manitoba as annualized last have in new expanded $XXX And one estimated revenue. retailers year, We most for locations the know, Trucks earlier we into million may market truck acquiring largest Winnipeg,

sales. X% retail of backlog backlog current had in year. the the of retail last At strong compares American X-month increase a in XXX,XXX X to the same to X- at which a units. year backlog truck sales XXXX represents retail time to a XXX,XXX of North The XXX,XXX, with end December, The Class approximately a was rate

over profit, return an year-over-year. business gross more in a X% $XXX and of a than record sale. Truck $X.X and had $XXX million on Group generated and in improvement our generating XXXX, sales, EBT X% almost XX,XXX in Premier truck million used year, revenue new In billion

pleased produced business with new disruptions points to being despite solid a increased basis, sales related deliveries that same-store record, of XXX XQ Roger XXXX earlier the as down I'm unit the XX% in see referenced, Fixed to QX, to year. SG&A X chain later-than-normal driven quarter -- Class remains million, the for EBT gross absorption margin a well. $XX On duty primarily supply and basis due controlled remained across fleets private and solid be at We solid and medium to XX.X% we to X, replacement demand commercial was truck drive XX.X%. believe profit by XXX%. at will continue gross well as demand strength and that

to call the would like I turn Randall Seymore. now to over

Thanks, year Rich. our a Australia. in business record was also for XXXX

Australia As and you marine, profit. and systems XX% and the heavy- know, a and network distributor and our medium-duty full parts aftersales offer leading are a of across Australia service power represents -- in sectors locations mining, we in the power defense, In We certain and importer region. field generation, our trucking, buses products the of Zealand. all and and construction exclusive support distributor of trucks approximately of service and and gross heavy rail dealers branches, engines of business, and New parts service through

due business deliveries is XXXX, made largely and energy data significant Solutions power, standby the So the center, prime centers the and key driver units of market for data markets, and Energy its lead solutions the a mining grew operation the business. In our continue focus Australia particularly by to segments. In power strong, hybrid on into remained increasing off-highway XX%, of especially to we in revenue space, in the critical applications. in generators which

In started addition, as to large-scale solution deliver systems we energy have well. storage battery

for $XXX Solution million for over at delivery order Energy beyond. XXXX stands current Our bank and

continue one miners engines, we're repowers MTU to solution, with the we develop to mining, XX%. consumption repower hybrid Series largest fuel-efficient which by of will In a fuel with the deliver working reduce and XXXX world's

I would Hulgrave. now to call Shelley over like the turn to

approach everyone. EBITDA XXXX, maintain $X.X last cash Thank to billion. we report generated disciplined in billion we cash, XX, nearly million At availability and balance capital $X.X $X.X in agreement. billion our secure. safe $XX December In and million and had to credit I'm that in Good strong, afternoon, and a balanced equity to you, was continue our our in sheet pleased allocation vehicle and under flow $XXX year remains we Randall.

the balances for through last shareholders dividend increase. through XXXX, have capital $X.XX investing of diversified to representing acquisitions, capital while repurchases. growth million we dividends in XX% allocation end approach opportunistic We capital raised to a returning from to year. per share, Xx expenditures, Since share the shareholders and dividends $XXX returned Our to also $X.XX and

XXXX. of billion, $X.X $XXX of We the Total increase also end for from $X.X was plan million repurchased million. billion. $XXX X.X shares an debt was million representing inventory Floor

XX-day and new supply days electric battery XX was and new supply and battery vehicles had used. volume of XX the XX, vehicles In supply for electric was XX-day was was a a December vehicles in We for of for new XX. XX days of Days of U.K., days supply for the for used. our XX At supply our U.S. of used. days premium XX new and foreign vehicles

these XXXX. the with other long-term maturing in is X.X%. notes Approximately year-over-year. and interest summer, billion the our $XXX was represents notes rate $X maturing At end of average our million The debt million the on the flat subordinated billion, long-term essentially in of debt XXXX $X.X $XXX

also and million have our $XXX in mortgages subsidiaries. We other in at $XXX million international borrowings

of improved room capitalization our a leverage that Xx have allocation one Therefore, strategies. at our up time. leverage from sits to agreement flex the to we It's end total to XXXX, our XX% important deploy ability XX% the credit reiterate at our lease-adjusted we basis. to have to capital Debt and under to on

to of corporate revolving available capital, capital up at for the and billion provides December. and expenditures, purposes, for in end agreement working investments acquisitions, other credit U.S. Our was $X.X loans fully

the the profit remains XXX XXXX. was points pre-pandemic in of gross to level SG&A XX.X% basis XX% below quarter in and

on We and continue efficiencies focus efforts our cost control. to

As drive focus part further efficiency and optimization of our continue we cost ongoing to simplification, challenge digitization to costs and our and structure. lower on efforts,

pre-COVID U.S. down In compared head same-store remains when to fact, levels. our count count head XX%

last operations, in service points improved basis parts U.S. to and gross XXX QX Further, basis to variable when automotive year. absorption points and compensation our profit compared XX improved

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

Thanks, Shelley.

capital representing our opportunistically. ability flex strong, flexibility acquisition billion our we brand Shelley and dealerships, an As revenue. in XX by that our is mentioned, the in completed the demonstrated annual premium sheet January U.K. We in $X brand allocation footprint have of approximately we as to expanding balance estimated

into Our currently operations, U.K. we Rybrook integrating thrilled to these team business. add to and team the our our dealerships is are

in work Automotive and Admired Company Glassdoor that honored place Most World's a Penske XXXX. the I'm was best XXXX to Lastly, by pleased for named recently Fortune to Group as report recently was as

of commercial Our benefit continue the of truck retail our our cost model strategy. allocation industries, remain in to the control results automotive performance demonstrate our capital the business. and diversification our and confident I disciplined across and

today, us joining for questions. and we'll thanks call open Again, you. up the Thank for

can [Operator go Bank first of America. we John Instructions] Murphy to with

on pace mood just just charging are what not facilities with to sales. question you you I requirements could EVs. you or helpful. play and either was in, EVs, capital environment buying the those Shelley, Just to just buying a consumers start, to about talk as support so us numbers, sales, the of with that or kind wanted sort state the giving -- from the of the of if they're invest of appreciate these making I automakers Roger, they're I on inventory the And wondering general

get hybrids if view able be selling might EV how general in state much of to here actually here. play front? that of if on vehicles And we you Just the your by to matters are stalled trying really offset ICE you to it the

slowed. let me for Rich there's a businesses business, California, demand XX% take at of when is no But [Technical leased. our and Okay, Difficulty] has you question shot look in XX% BEV And make John, of comment. that our that have a BEVs business,

risk. in that at be hybrid, the XX% We [indiscernible] it running about the at XXX%. were was think supply, of last end we were days days to and the at forward is been much of at the U.K., order supply of point is XX look strategy they're business market In the BEV when year. U.K. the year. BEV proven the the we're committed obviously, push lease luxury the with bridging have having now, certainly [indiscernible] going The at to is X% as to of they at residual is units really XX. side, days BEV And that's and So with to market. now least, in our higher what in the OEMs right going

we also installed So at can't at when in location even right there's to not chargers on available that because comments -- to truck see now California, up? follow power there we our car the from retail just We want only and on not get obviously, a supply it look But step them. couple me. Rich, to are side, the side. back of but you

we early to adopters ice. went Yes, the their convince early John, I BEV where an early first point certainly at inflection to had Those you're think their on, were that customer, find out, them and have the getting trying you're point last already we're BEV. now adopters where customers bought the as

that team management the that, country, certainly, we're adoption to much being you the the And about percentages is in what U.S. this When saturated. California. to so back going starting look the said across talking sales much, are BEV BEV think market overall balance rate. our in Earlier week lower getting Roger there, to of our

And that sales our inventory so of is That's XX% the to with QX, total of down a starting little starting in inventory. inventory rate we up slow to bit. our see climb U.S. in which the XX% units, end of under BEV X,XXX from indicative just the

That's very helpful.

with on GPUs Just second have feared goes and question that in a than pricing. better people holding along have that obviously, been many

your are to Just of and the total. context relative sort curious can expectations new in sort EVs how put And of if GPUs. maybe talk that of you there your pricing negative GPUs the weight for on about

you go to Tony, to [indiscernible] want do

Roger. Sure, the thanks question. John, for

at actually well. so So when we to looked look overall QX, at business at the from did take look a our gross the sequential how you QX of you when quite things, side

in XXX, down the MSRP. you was somewhere XXX of When down business look was selling were around was percent total, our New overall cars at up we total and F&I basis. a XX-ish used at on

now So that cash. we we're deals have that are happy of very the right and with about XX% in

QX, you So basis that gross the $XX sequential per variable a at were in unit. profit up we when to generated QX total look on $XX, we that range from

side. very on gross with we're the performance overall our pleased So profit

EVs And the any kind for are on color landing much a how they're that GPUs? Tony, of of just you weight on where on or

Yes.

So they're of the or below running $X,XXX in so somewhere neighborhood MSRP.

our So or cars year John, at Tony of last XX% MSRP. said XX%

more ICE. BEV, almost by were the if at less conversely all our at a we look on of just BEV ICE And look average, you If a sales represent $X,XXX brands across MSRP XX% you comparable below the than $X,XXX. weighted is GPU than

Discount [indiscernible]

GPU.

And XXX day also, I start say And supply. below. when you correct? we John, above at BEVs that Am XX, to EQE action days. inventory have on I and XX,XXX EQS, XXX, looking have would probably

have So X% U.K., internationally? year us there's all to no Do see and the on vehicles question even another last last you from we're month. in at those added discount on that any it starting for comment or

was BEV year-over-year. Yes. U.K., flat In the

down And points. basis XX down from points looking standpoint. was another it a basis market at fact, share XXX In January was

there's because it's at bit different through would be BEVs there little a the the because tax Meanwhile, corporate all -- of break. it, fleet it's minimis. look retail de programs So

So oranges. because parts it's X% and a government bit then at little there's And look Europe, like of Spain, apples share incentive. you other it's market to no Italy

the incentives finished the government Germany, the of year. at end So

happens by what without government. there interesting the see So going to be it's to this intervention

Capital. we Next, to Mike Freedom Ward go with

the in how the It being you spin adjustment market Starting pedal? years. Does or big just go portfolio? of accelerate at the last chance this part in at is you it it Is -- entity. separate reset the adjustment looking of this the tax wasn't the that advantage is the had wanted we've change on CarShop disruption CarShop. how with And are in reconfiguring in this PAG? How change it everybody And part look Or a U.K. structurally, to major Is few to [indiscernible] on or it? that strategy? just and a off long ago over

that in looked we business. our take so or dealerships, to if the you had question franchise you clear question. it's put are a will, lot I'll we moved impairment that We've the place Shelley. these though systems. you press F&I over very the from at to and there into CarShop U.K. incorporated same like. and in U.K. the establish CarShop became it many separate try our related we've We businesses dig our Mike, value, the had release details of mentioned initially synergies time. products franchise when that And We've an fair that

benefit sourcing looking the there. So to also with of I a franchise great business There's think and consistent at stores. is the similarities CarShop there's a opportunities lot

the from So us purchasing well. a customers off directly to cars curve, huge if you buying benefit had will, that's as

spun And looked So isn't seen I have the benefit. new focus forward a succeeded we've think not from available our from as used calculation as now, standpoint, this and what's much of to always look what car really doing at that have perspective. so lot Certainly, those on there's year. future but a is the off a market this we right

cars As if you grow as CarShop have SAAR used see SAAR, available see similar affordable you we well and more car locations. the growing, for a to expect our will,

forward, as of automotive? retail a the So more then becomes partnership with look it we

been I think long Mike. for it's a time,

technically obviously, auditors the But they and look even look more when Shelley's it this. at team charge, at with along

that And think we move a it. over rental the forward, to operate as we'll leasing And location have But money, and one the brand. standpoint U.S. losing we to from U.K. reduced from something year, we we we sell wasn't go will location. obviously, it's as in one been expect. had locations didn't to a it this So and and concerned, the as that continue PTS which valued X able been is far

had, we million we that. $XXX XX% think value, a goodwill as impairment on I what, took and

to So so off business it let look, say that. that it's people of among doing me glad didn't listen spinning I'm part we

Myself growth included. unusual, path, are a particularly changes. On do there try highly things, is when the years, the have XXXX if TTS, at you of to and but sorts back one of lot couple last the of again, you XXXX, those things been of you go to look positive

that from we've if phase? And growth a some to last getting stops the we're X through more onto disruption this XXXX, again market are there company X the in of related? XXXX, even get down So anything in seen back quarters once we is

And used XX% you and right lease business us rental it to at XX,XXX units. as at were when an We support the of that of mentioned using up are logistics pieces rates all. up were I manufacturers. think XX%. down a that from think grown to at gave we've excess it Not And units. I earlier, came And of course, look utilization On slowed XX,XXX to on down, roughly down fleet we X%. leases our our units the some our market now, XX%. couldn't we business from was almost had when them Unfortunately, went written our being get we supply. And lot rental top that, those order spot

now as supply back start in. who to come those seen come So the we've

and and as out, We're about XX,XXX we X,XXX approximately they ago. sit. to sale a those Our more that's issue those than paying maintenance for had XX,XXX is have depreciation, units interest on we -- to get XX,XXX year

continue pull the stuff through quarter. So we'll that impact that first And through. say I to will have would

So say actually and similar be I had as to similar quarter, QX. in in first far we what the as we'd would value earnings

the looks there's one-way consumer people because is when and they prices both lower like the business, on move, on side, do rental mileage it volume, moving house Based our down. less is of which and

refinance. then hit had really roughly And increase company total $XXX $XXX million, us. think of that I had on the that's -- on new interest based of $XXX in debt XXXX, cost So we million and

in So us. were meaning gain from from and rental products. on really an standpoint, we sale an sales, financing, our up offense lower But in revenue core energy impacted

maintenance. add to want year-over-year the to look that more I we saw Mike, that, you change QX favorable Roger, to It in actually became us. at when So

down million [indiscernible] year. $XX fourth quarter when you it compare the the So prior in maintenance at to

means is that So process trucks taking out this the the working, is working. of fleet

future. that, hope continues into the we So that

some that we revenue. maintenance, those that With to number units the say, any we get older don't from, Mike, extension of [indiscernible] to one. extend extension, months, on on X each two, XX,XXX margin XX And up had number

a that double on So impact us. had

can go to And Inc. with Daniel next, we Imbro Stephens

maybe want Roger, bit a little to topic. I expand on last the

with that lack quarter? the started units business are expand side. Carshop lease just demand there's guys business to weighing on penetration. historically we kind more franchise you It headwinds, the Can of used look talk same-store broader starting think obviously, lease just the curious, you headwinds back. coming but on having high XXXX. to on that as about this issues, that seems headwinds, those to Maybe plays like we I'm you at returns out see I there. Are supply of close how flat to through maybe

units, Well, look were our in both the and U.K. we U.S., and look, know number wholesale X. because the number number point That's at QX. point market profitable one, X we in as stabilize the we

it's that's right in somewhere I that to them being more purchase to the thing from those looking U.S., could and sell Well, the think one able CarShop. car between U.K. of We XX,XXX. the getting is price. the is XX,XXX cars impacted say, and them. really almost we It standpoint right get availability, to XX,XXX the us were a things then in were Same get of

to U.K. have returns and even [ I is guess, come and past to you anywhere come an X,XXX the is can't to in premium the or X,XXX those days, XXX side, Well, great obviously, I exact more are ], probably more we Shelley those see haven't deflation turning you in with XX what, in I number. XX were leasing cars in the give back think from important loaner down numbers and units side. the We to store on those had, almost lease at importantly, We have, can years used used tell we're what's months. big XX XX% you say because and running somewhat in not I ] I California, have X BMW used we really our the cars But think on now those Craver car going in starting they're [ being down. didn't units. vehicles premium

and didn't prime cars. would we out, ability really the become them used those So have to take

So us that's could key to to for and through go a help more we chance gives which put maybe we more system, overall, as going forward it that is certainly units, sell we the X,XXX have us than us.

Rich, any other comment you have.

No, I think the versus used And million just there. just hasn't the almost that think source car is still as It availability demand cars purchasers new years. been cumulatively SAAR for availability, X and you the I The last there. on car down, the cars best mentioned of is new availability. X.X demand trade, in the with being

to that in rates You we're a combine buying make that we've disciplined well not X, rates sure with X, has expense. been issues up sales up as mentioned. and to Roger cars low that end with then more you It service lease I the just goodwill segment been customer certainly policy keep challenge. And because think segment

than color. year result. a follow the And lighter. But of a more we as market same out there, bit on truck I just parts thought plays kind side helpful slowed it the Obviously, see [indiscernible] strong is all and would, maybe the some I Roger service That's it look you part is maybe Maybe could talk developing? guys on up maybe you little how that at side? wholesale question, XXXX XQ house. of what if the and commercial full through through takes of and Can then puts XXXX going the of if

answer Rich Dan let I'll Yes, directly.

second did year. very freight assets We half in right. very definitely see Obviously, you're the last a the of Daniel, Yes, was was Utilization of robust. slowdown high.

and were You those into us. with generally a can operators take lot market revenue repair for substantial to coming of because of rates the opportunities their big parts getting advantage make that independent service owner-operator money. and creates they had centers, truck truck profit single They

seen we've then decline sales over of wholesale retail So our and counter. general in just a sales parts our parts the traffic

at of still look the asset basis. fence we would we're have expense And we're the a utilization on were that steady still we're you've of some with monthly work service repairing because We having number maybe the from the and busy. another of decline park shops, don't that the trucks previously, down, backlog the that You ROs our truck generating carriers of but service then it. freight pull versus and got had

So well we're some the that capacity tightens seeing of in that some of as until marketplace.

at I when think, our XXX-plus Rich, you fixed what, we're coverage, running, percent. also, look

XXX. almost Yes,

turnover And We've seeing efficient. down. to a come our time. be of we're in also couldn't more we able utilizing to I during fill the tools think get mechanics COVID been lot now the has and that really requirements them We're been

benefit. customers, has certainly also So a I too, on would say the to we've put more service trucks been the road out going which

we'll our action the more core in that of traction we'll the through to some acquisitions there in start we same to get that plans think have and see business. I putting So some conditions

Rajat next Gupta go to We'll Instructions] [Operator with JPMorgan.

guidance sequential in a color F&I. to any that quick could $XXX around if GPU, rule million of last new you trended few as cadence, helpful. on in on what things declines months us like including be F&I. $XXX Or of XXXX, January? recent may quarters Is the Just would had then question GPUs through one Based I have over good on roughly or have seen And on give new the and million follow-up how quarterly progress you have one a you and thumb?

about the When was to XX. a $XX. look across down mentioned, same-store basis down it when Tony. that Rajat, year-over-year $XXX we car. from So down decline to take And sequentially, I one. handle previously 'XX, at That's I'll new a is it at the I as this gross you think, $XX.XX from on looked a was QX QX $XXX 'XX portfolio.

growth So I well. to think very manage we're the able

Some will period of BEV the level be it the to sales. might how change mix and of upon next dependent from one the

made MSRP of $X,XXX over BEV the comment side the that on we were things. Rich down versus think I

new the growth far how in So I has happy months. with think vehicle past the XX we're performed so very

Lamborghini. seeing make comment, one Rajat, Porsche, internationally that we're Ferrari and I'd

range, be are year to Some people them seeing for look, I'll them of in year. saying, to trade another $XXX,XXX able my those the cars a now next for and big get We're the car. come drive some back car keep and $XXX,XXX, are people could into

So margin. I That note canceled I that's it's dramatic, the decline. it's have we at resell those think impact in having we some orders to but lower quarter. used something say of where a fourth should vehicle because wouldn't on the But happened

fourth quarter, the yes. In

helpful. on performance F&I, We about can drove these And XXXX? here what coming That's leasing in kind levels the how then what the back. it. the fourth there? sustaining that of should we're think that F&I see we despite a Got gross -- is strength into hearing data quarter, strong very And

this Rajat, is Well, Tony.

you basis, at That the up was same-store and on to unit then did a about a up $XX fourth sequentially, If look we from from a quarter it $XX.XX $XXXX was XXXX unit. XXXX.

and when a captive bit. maintenance strong we're programs again We've that I is XX% tire XX%. the total. wheel, it's to are increased rates. product when point the us. then selling, you that of little then about about U.S. at look stuff that at of the some Therefore, really sales of think some And our reserves penetration products, important for has you overall our the at prepaid different different out leasing penetration are look And like stayed you up look protection and

So overall, a is F&I on strong I job of side the team think things. doing really our

too, products sell is are to we lease those customer helpful. can the that And which premium

Got it.

play Obviously, So feel levels at role are levels the of basis. into sustaining like like these kind on sustainable think a do level, like might okay these there, you X? penetration you about a pricing same-store

will U.S. and that lease that the look well, have, we particularly Some second as help actually and see vehicles that I upon customers look F&I think at But side in year if could we extended level the happen have at might affordable. interest any more of you reduction so rate you making business the half the of the may of depend rates, the to service to in potential it absolute contracts. respect any then concerns with also affordability have that

revenue But of XX% from it's only reserves. is coming the our actual

Correct.

on And correct. get flat we would leasing

to go with Whiston David we'll Next, Morningstar.

of kind front. the questions like allocation capital Two

vehicle you First that, in it year top trucks? geographic your or on of first be And terms areas would say what this would your preference choice? on M&A, of light be can would what be CarShop on M&A

Well, at different I look let's the businesses. guess,

are looking There's We actively in locations. Europe. with the XX side. premier in truck opportunity We no Rybrook question had

a opportunities have have look primarily here we U.S. already of say would number where we And I in the scale. We

we plugged set consolidate can that and bought with the management the Rybrook, business So [indiscernible] offices, and Rybrook. looked right them of at we in. We with at business looked have conjunction losses Pendragon stores had we we back when our in team to our just a with at we'd deal

SG&A big fire move So to down to key frame. would prices that have I proper now, more coming the we least realistic And additional seeing amount to they're make to we capital plenty be moves. want a right available, be think again, a of look of a But got billion where or going factor. small And we've time the we're $X.X strategic. obviously, with of

preference But on really strong truck versus then you light matter? that have a don't doesn't vehicle,

portfolio. look I entire of of -- worth billion a we -- that have think new one at be some goal it's $X minimum would to for a don't an we annualized truck not across would XXXX I to grow mean, the speed at or we basis, on that business a we're want generate time. I at the them see else.

how you the about year level? this spending on about buybacks, XXXX relative guys feeling talk Okay. you to And can buybacks are

look, buybacks. we at will as look I think look we point, at that certainly look to we and continue at those But The we we to to Board this at acquisitions, buybacks. that at would at make with we CapEx, I And look us. recommendations we've continue. dividends, look done Well, has before, approve think buybacks our

is sequential And may GPU worst last pleased versus a QX for that this words, In is QX. you that thing better how -- used performance of that of vehicles. green shoot specifically just over? on Is guys kind on of that press release one you it called the were lack be like out the

used David? on you talking Are vehicles, .

Yes.

you, will. that in the tell about was to what headwinds, you seeing U.K. we're might Randy, comment want if the will you Randall because big of one So

So.

year, month. significantly from went from quarter, fourth down X% valuations the up were X% all to down And as X% last it going and 'XX. So anywhere X%, 'XX, a X% over In they starting April then December. obviously, the November, was October,

come look, can But in the was it. stabilized, as turn and you caught sell challenge in at year well. new we've that number, a Otherwise, seeing it you're absolutely February it's lower So January, the with that inventory as without you a doubt, into to a had we're quickly.

definitely in last we rightsizing thing. When per but GBP unit, are made the per XX,XXX for we the unit from January cars, wholesale, down we gross per year. trading days be will pounds up of about first was I'll other inventory, make wholesaled XXX actually the unit in our point. one handful Our XXX February, QX same which

down wasn't much. it So

way If you about market it going the that think the down did. in

fire December we a in month. acquired late better that's reason and part we're deflated sale. as as markets was now the strategically went and hopefully But the of market a cars November bunch seeing wasn't grosses stabilize that, some, and up this out certainly there -- the goes So of conversely and to used

we So I advantageous with team. there think bit our a were

buy then thing, It car they the we where were used David, cases, paying for Well, look, for. I in think money almost, that some key could a new near cars. is was

finance interest of deal. some on a got going going go hopefully, now, as as to on side. the comes the used forward, we down we'll the the financed that we're up profit be help lease to cost very will And the premium these cars that see of advance forward. all it's lot feel of increase chance pushing now we we've to amount margins about to Remember, go the left finance to our cars, an from available sale loaner things able But from as small gross the returns. rate So good company. think us rates I especially I a are us turn car business, going give get And us start a was to we us margin used a

cars buying about in the fourth talked Mercedes, You last in quarter. from year advantageous I think XXX

things on. execute we will these start can So help that to us

over And a $XX,XXX our average That's car. transaction price used year high. was last

year before? was What it the

flat was roughly. a It on basis year-over-year

go So $XX,XXX. back, it really think, when I to you pandemic, it XXXX prior was to the

CarShop. down. We the [indiscernible] sale of coming can numbers price see

that's So, sure sweet in back I spot. and to I'm is, down it get the help exactly not coming know but it's us going what

That's right.

with OEM call will a we that be it right, what it's the dealership, So we're competing not I because different market and down have.

XX,XXX Sorry, stores? CarShop a retail or was that the

price CarShop, look total if That's average consolidated fourth under the -- number transaction $XX,XXX was quarter. in the at that's just everybody you

in questions the to queue, to for I'd turn over further Penske back closing no call With remarks. Mr. like

good we thanks. We headwind, big here. balance that good we but some feel go us we about of on vehicle. a focus to about the and deal quarter. electric going That's Brad, had battery the talked year. forward obviously, I Obviously, as with how

thanks So to again. next quarter. We'll you talk

participation. for call for your the conclude Thanks today. does That

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