Sign in

You're signed outSign in or to get full access.

PA

PENSKE AUTOMOTIVE GROUP, INC. (PAG)·Q1 2025 Earnings Summary

Executive Summary

  • Record Q1 revenue of $7.60B (+2% y/y); GAAP EPS $3.66 (+14% y/y) and adjusted EPS $3.39 (+6% y/y). Adjusted EBT $310M (+5% y/y). Service & parts strength and SG&A leverage supported earnings despite freight headwinds .
  • Versus Wall Street: adjusted EPS beat ($3.39 vs $3.28), EBITDA slightly beat, while revenue modestly missed ($7.60B vs $7.72B). Foreign exchange was a small headwind to revenue and EPS. Bolded items in the tables denote significance.* .
  • Operating mix: retail automotive gross margin stable (16.5%); service & parts gross margin up 60 bps y/y to 58.6%. Adjusted SG&A to gross profit improved 70 bps y/y to 70.0%, reflecting cost discipline .
  • Commercial trucks: units +4% to 4,714; revenue $823.7M; EBT $45.1M (down from $50.5M) as the freight recession persisted .
  • Catalysts: continuing tariff clarity and Freightliner pricing protection, ongoing share repurchases and dividend increases, and durable service & parts momentum could drive narrative and estimate revisions .

What Went Well and What Went Wrong

  • What Went Well

    • “Record first quarter revenue, the seventh consecutive quarter of stable gross margin, and a 70-basis point improvement of adjusted SG&A as a percentage of gross profit” (Roger Penske) .
    • Service & parts execution: same-store revenue +4%, gross profit +6%; service & parts gross margin +60 bps y/y to 58.6% .
    • Used vehicle GPU +14.6% y/y to $2,149; same-store used GPU +9.9% y/y, aided by U.K. Sytner Select realignment and inventory management .

  • What Went Wrong

    • Revenue modestly missed consensus; automotive F&I and commercial truck F&I down y/y (-3.8% and -15.1%, respectively) . Estimates context in table shows miss.*
    • Freight softness reduced truck EBT ($45.1M vs $50.5M prior year) and truck service & parts gross margin compressed (-220 bps y/y) .
    • Total retail used units -16% y/y, driven by U.K. used-only footprint reset; same-store retail units -4.5% .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Billions)$7.448 $7.720 $7.605
GAAP EPS ($)$3.21 $3.54 $3.66
Adjusted EPS ($)$3.21 $3.54 (no add-backs in Q4 2024 context) $3.39
Total Gross Margin (%)16.7% 16.3% 16.7%
SG&A to Gross Profit (%)70.7% 70.3% 72.0%
Adjusted SG&A to Gross Profit (%)70.7% n/a70.0%
Operating Income Margin (% of revenue)4.4% 4.3% 4.1%
Income Before Taxes Margin (% of revenue)4.0% 4.1% 4.4%
Results vs S&P Global Consensus (Q1 2025)ConsensusActual
Adjusted EPS ($)3.278*3.39*
Revenue ($USD Billions)7.724*7.605*
EBITDA ($USD Millions)358.44*358.80*

Values retrieved from S&P Global.*

SegmentQ1 2024 Revenue ($MM)Q1 2025 Revenue ($MM)Q1 2024 Gross Profit ($MM)Q1 2025 Gross Profit ($MM)
Retail Automotive$6,478.0 $6,569.3 $1,057.2 $1,083.8
Retail Commercial Truck$791.8 $823.7 $144.8 $141.0
Commercial Vehicle Distribution & Other$178.0 $211.5 $43.2 $44.2
Total$7,447.8 $7,604.5 $1,245.2 $1,269.0
KPIsQ1 2024Q1 2025
Retail Automotive Units – New Retail48,667 50,602
Retail Automotive Units – Used Retail69,265 58,486
New GPU (Excl. agency, $)$5,229 $5,059
Used GPU ($)$1,876 $2,149
F&I per vehicle (Excl. agency, $)$1,719 $1,782
Service & Parts Revenue ($MM)$746.1 $789.4
Service & Parts Gross Margin (%)58.0% 58.6%
New vehicle days’ supply49 days 39 days
Used vehicle days’ supply47 days 36 days
Liquidity$1.8B (12/31/24) $2.1B (3/31/25)
Leverage Ratio1.2x (12/31/24) 1.2x (3/31/25)
Premier Truck Group – Units4,540 4,714
Premier Truck Group – EBT ($MM)$50.5 $45.1

Guidance Changes

MetricPeriodPrevious Guidance/ActionCurrent Guidance/ActionChange
SG&A to Gross Profit (Adjusted)Ongoing“Low 70s” comfort signaled in prior calls Q1 adjusted SG&A/Gross at 70.0%; management remains comfortable with low-70s Maintained
Freightliner Tariff Surcharge and Price ProtectionOrders before May 31, 2025; production by end of Oct 2025n/a$3,000 heavy-duty, $1,500 medium-duty surcharge; not-to-exceed $3,500; protection through October for orders placed by May 31 (non-cancelable) New operational guidance
Dividend per ShareQ2 2025$1.22 (Q4 announcement) $1.26 (18th consecutive increase) Raised
Securities Repurchase AuthorizationMay 2025$45.8M remaining authorization as of Apr 25, 2025 Additional $250M approved; total current authorization $295.8M Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroQ3: Stop-sale and software recalls; macro freight softness; cautious on affordability . Q4: BEV inventory mix improving; premium strength .Active monitoring; OEMs holding prices during negotiations; Freightliner surcharge & price protection; uncertainty into 2H .Elevated focus; operational pricing clarity near term; 2H visibility cloudy.
SG&A disciplineQ3: SG&A/Gross ~71.2% . Q4: SG&A/Gross 70.3%; guided low-70% .Adjusted SG&A/Gross improved to 70.0%; management reiterates low-70% comfort .Improving; sustainable low-70% target.
BEV mix and discountsQ3: BEV days’ supply improved; discounts heavy; OEM adjustments . Q4: BEV discounts ~$6,900/unit; mix pivot at Mercedes/BMW .U.S. BEV day supply down to 56 days; average discount >$7,400; BMW pausing BEV wholesale in May to supplement ICE .Inventory improving; discounts remain significant.
Service & Parts (Warranty/customer pay)Q3: Warranty +20%; service & parts record; technician hiring up . Q4: Fixed absorption strong; service & parts +13% .Same-store service & parts +4% revenue, +6% gross; fixed absorption U.S. auto 87.1%; BEV repair orders ~$1,400 vs ICE ~$700 .Strong structural driver; warranty mix elevated; monetizing capacity.
UK used strategy (Sytner Select)Q3: Transition to Sytner Select; fewer units, higher quality . Q4: Used unit declines due to transition; GPU up .Efficiency gains: better inventory turn, gross per tech +7%; sustainable improvements (Randall Seymore) .Positive margin trajectory; unit pressure abating over time.
PTS (Leasing/rental/logistics)Q3: Rental headwind; higher maintenance & depreciation; earnings down y/y . Q4: Rental down 9%; stable EBT .Rental revenue down 10%; fleet reduced; PAG share of PTS earnings $33.2M (+2% y/y) .Still freight-challenged; balancing fleet and costs.
2027 emissions / prebuyQ4: Possible 2027 emissions impact; prebuy uncertain .Outcome tied to EPA waiver review; prebuy depends on regulations; cost increase >$20K/truck if rules go into effect .Watch regulatory outcome; could shift demand timing.

Management Commentary

  • Roger Penske: “Our diversified international transportation services business generated record first quarter revenue, the seventh consecutive quarter of stable gross margin, and a 70-basis point improvement of adjusted SG&A as a percentage of gross profit” .
  • On resilience drivers: “Benefits provided by our premium brand mix, geographic diversification… and the diversification of our gross profit across new and used vehicles, service and parts, and finance and insurance… provide us with opportunities to flex our business” .
  • On service & parts capacity: “Fixed absorption in the U.S. automotive business increased 310 bps to 87.1%… we’ve increased our technician head count by 5% since March of 2024” .
  • On BEV economics: “Average repair is running about $1,400… ICE… about $700. I would say all BEV work is warranty” .

Q&A Highlights

  • UK strategy and Sytner Select: Improving inventory management, lower aging, higher gross per unit; “gross profit per technician was up 7%… sustainable as we move through the rest of the year” .
  • Service & parts mix: Warranty strength (up 17%); U.S. fixed absorption 87.1%; capacity utilization ~80% with tech hiring plans .
  • Tariffs and pricing: Freightliner surcharge and price protection; majority of auto brands holding prices through May/June; lease penetration helps mitigate price elasticity in premium .
  • SG&A outlook: Management comfortable with low-70% SG&A/Gross; drivers include lower turnover, comp-to-gross discipline, and reduced advertising/T&E .
  • BEV inventory and gross: Mercedes BEV mix now <5% of inventory; BMW 25–30% BEV; BEV gross typically 65–70% of ICE; discounts >$7,400 .

Estimates Context

  • Q1 2025 outcome relative to consensus: adjusted EPS beat; revenue slight miss; EBITDA marginal beat. This mix (beat on profitability; miss on top-line) reflects service & parts strength and SG&A discipline amid U.K. used realignment and truck freight softness. Values retrieved from S&P Global.*
Metric (Q1 2025)ConsensusActualSurprise
Adjusted EPS ($)3.278*3.39*Beat
Revenue ($USD Billions)7.724*7.605*Miss
EBITDA ($USD Millions)358.44*358.80*In line/slight beat

Values retrieved from S&P Global.*

  • Potential estimate revisions: Analysts may lift margin/EPS trajectories on service & parts and SG&A leverage, while trimming revenue assumptions for U.K. used unit volumes and truck F&I given freight conditions .

Key Takeaways for Investors

  • Earnings quality: Despite a modest revenue miss, margin mix and SG&A leverage delivered an EPS beat; adjusted SG&A/Gross at 70.0% appears sustainable in low-70s .
  • Structural strengths: Service & parts gross margin expansion and higher fixed absorption underpin resilience; continued technician growth and digital tools enhance throughput .
  • BEV dynamics: Inventory and supply management improved, but discounts remain heavy—monitor OEM mix shifts (BMW pause on BEVs; more ICE), with implications for GPUs and F&I .
  • UK used transition: Sytner Select elevates margins with fewer units; execution on inventory turns and trade sourcing should support sustained profitability improvement .
  • Trucks/PTG: Freight recession remains a headwind to EBT; Freightliner pricing protection and 2027 emissions policy outcomes are key demand timing variables .
  • Capital allocation: Increased dividend to $1.26 and expanded buyback authorization to ~$296M reinforce shareholder returns—watch pace of repurchases post-Q1 .
  • Near-term trading implications: Narrative likely rewards margin durability and capital returns; tariff/policy headlines and freight indicators will drive volatility—position around service & parts strength and premium mix defense .