Name: PENSKE AUTOMOTIVE GROUP, INC. Q2 2025 Earnings Call
Start: 2025-07-30T18:00:00.000Z

Executive Summary

Q2 2025 delivered resilient profitability: EPS rose 5% to $3.78 and EBT margin held at 4.4%, driven by 50 bps gross margin expansion and SG&A-to-gross-profit improvement to 69.9% .
Versus S&P Global consensus, EPS beat by ~$0.22 (≈+6%), while revenue missed by ~0.8% on divestiture/closures and brand-specific wholesale pauses; management quantified ~$200M prior-year revenue not present in Q2 2025 and brand shipment delays amid tariff uncertainty .
Mix and execution tailwinds: same‑store service & parts gross profit +9% and margin +50 bps; used PVR strength in both autos and trucks; used truck GPU +56% at PTG .
Capital returns remain supportive: dividend increased 4.8% to $1.32 (19th consecutive raise) and $296M buyback capacity remained at quarter-end; liquidity ~$2.3B; leverage 1.2x .
Near-term catalysts/risks: July U.S. new units up ~10% MTD; BEV tax credit sunset could pull forward Q3 demand; tariff/regulatory outcomes and PTS gain-on-sale variability remain watch items .

What Went Well and What Went Wrong

What Went Well
- Service & parts outperformance: same-store S&P revenue +7% and gross profit +9%; S&P margin +50 bps YoY to 59.2% . “Our U.S. service and parts operations generated record levels of revenue and gross profit” .
- Cost discipline: SG&A-to-gross-profit improved 30 bps to 69.9% as advertising/compensation control held, supporting the third straight quarter of YoY earnings growth .
- Variable gross resilience: combined new/used/F&I variable GPU increased $583 YoY to $5,691; used auto GPU +28% YoY to $2,326; PTG used truck GPU +56% to $7,037, aided by tight late-model supply .
What Went Wrong
- Top-line softness: revenue -0.4% YoY to $7.66B from divestitures/closures (~$200M PY headwind) and brand wholesale pauses during tariff talks; retail auto units -12% total .
- F&I pressure: retail auto F&I revenue and gross -3.9% YoY; same-store F&I -1.5% amid mix and BEV discounting dynamics .
- PTG new truck margin compression: PTG new truck margin -80 bps YoY (5.6%); service & parts margin -100 bps; same-store truck gross -5% with lower new GPU and weaker F&I .

Financial Results

Consolidated metrics vs prior quarters

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($B)	$7.72	$7.60	$7.66
Diluted EPS ($)	$3.54	$3.66	$3.78
Gross Margin (%)	16.3%	16.7%	16.9%
EBT Margin (%)	4.1%	4.4%	4.4%
SG&A / Gross Profit (%)	70.3%	72.0% (Adj 70.0%)	69.9%

Results vs S&P Global consensus

Metric	Consensus*	Actual	Surprise
Revenue ($B)	$7.726*	$7.662	-$0.064 (≈-0.8%)
EPS ($)	$3.56*	$3.78	+$0.22 (≈+6.1%)

Values marked with * retrieved from S&P Global.

Segment performance (YoY)

Segment	Q2 2024 Revenue ($B)	Q2 2025 Revenue ($B)	YoY	Q2 2024 GP ($M)	Q2 2025 GP ($M)	YoY
Retail Automotive	$6.62	$6.52	-1.5%	$1,075.0	$1,108.8	+3.1%
Retail Commercial Truck	$0.89	$0.94	+5.7%	$144.5	$143.6	-0.6%
CV Distribution & Other	$0.19	$0.20	+6.4%	$44.6	$44.2	-0.9%

Key KPIs

KPI	Q2 2024	Q2 2025
Retail Auto Units – New	50,861	47,546
Retail Auto Units – Used	65,571	54,999
New Auto GP/Unit ($)	$5,302	$5,443
Used Auto GP/Unit ($)	$1,822	$2,326
F&I/Unit ex‑agency ($)	$1,766	$1,919
S&P Revenue ($M)	$752.8	$816.6
S&P Gross Margin (%)	58.4%	58.9%
PTG New Truck GP/Unit ($)	$8,765	$7,889
PTG Used Truck GP/Unit ($)	$4,502	$7,037
New Vehicle Days’ Supply	49 days (Dec-24)	57 days
Used Vehicle Days’ Supply	47 days (Dec-24)	44 days

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend	Ongoing	$1.26/qtr (Q1)	$1.32/qtr (pay 9/3/25)	Raised
Share Repurchase Authorization	As of 6/30/25	$45.8M remained (4/25/25)	$295.7M remaining (post +$250M add)	Increased capacity
$550M 3.5% Notes	Sep-2025 maturity	N/A	Expect repay from CFO or revolver	Plan outlined
PTS Bonus Depreciation Cash Benefit (to PAG)	2025+	N/A	≈$150M estimated cash tax benefit in 2025; multi‑year potential	New outlook
Ferrari Modena Acquisition	Annualized	N/A	~$40M annualized revenue	Incremental

Note: Company did not issue formal revenue/EPS guidance in the release or call .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Tariffs/Macro	Q4: SG&A leverage, S&P strength; monitoring tariffs . Q1: OEMs held prices; tariff uncertainty; truck backlog 132k .	Brand wholesale pauses during tariff talks; July new units +~10% MTD as clarity improved; EU deal seen as positive; EBT margin 4.4% .	Improving clarity; demand resilient.
BEV Strategy	Q1: BEV discounts >$7.4k; inventory days improved; mix balancing by OEMs .	BEV sales ~6.5–7% of new; IRA credit sunset could pull-forward; OEM incentives rising; focus to minimize BEV inventory by late Q3 .	Managed exposure; watch Q3 pull-forward.
Service & Parts	Q4/Q1: strong S&P growth and margins; fixed absorption +310 bps US .	Record S&P; same-store S&P gross +9%, margin +50 bps; AI tools lifting utilization; fixed absorption up again .	Continuing strength and structural gains.
PTG/Trucks	Q1: replacement-led demand; backlog 132k; used GPU >$7.5k .	New truck margin -80 bps YoY; used GPU +56% to $7,037; backlog ~90.4k units; allocation constraints eased, aiding conquest .	Mixed: margin pressure, but used GPU/backlog supportive.
PTS (Equity)	Q1: op rev $2.7B; rental soft; fleet optimization .	Equity income $53.5M; gain-on-sale lower YoY; bonus depreciation could add ≈$150M cash benefit to PAG in 2025; potential additional ~$100M dividend .	Cash flow tailwind; earnings sensitivity to gains.
International/UK	Q1: Sytner Select realignment; used GPU +$589 QoQ .	UK new - impacted by incentives/mandates; Sytner Select staffing reduced ~500 via attrition; used unit declines but GPU up >$800 QoQ .	Profitability prioritized over volume.

Management Commentary

Roger Penske (Chair & CEO): “Q2 represented the third consecutive quarter of year-over-year earnings growth… company gross profit margin increased 50 basis points to 16.9%... SG&A to gross profit… 69.9%” .
Rich Shearing (North America): “U.S. service and parts operations generated record levels of revenue and gross profit… customer pay gross up 6% and warranty up 24%… July sales up ~10% month to date” .
Shelley Hulgrave (CFO): “Bonus depreciation… will provide an estimated benefit of approximately $150 million” (cash tax) tied to PTS capex; liquidity $2.3B; leverage 1.2x .
Randall Seymore (International): UK used-only realignment reduced headcount ~500 through attrition; used GPU up >$800 QoQ; S&P same-store revenue +6% .

Q&A Highlights

Divestiture/closures and agency impacts: ~$200M PY revenue removed; ~2,000 new and ~4,400 used units tied to divested/closed stores; MINI agency shifted ~1,300 units .
Tariff-driven wholesale pauses: Audi/Porsche/Land Rover paused U.S. wholesales ~45 days; Porsche EBT down 9% in Q2; wholesale flow resumed .
BEV dynamics: BEV ~6.5–7% of new; incentives ~+$7,200; focus to reduce BEV inventory before IRA credit sunset; BEV repairs 2x RO dollars vs ICE currently .
PTG/truck outlook: allocation removal offers conquest opportunities; backlog ~90.4k; used GPU strength continues; new truck margin softer; F&I softer .
Capital allocation: additional ~$150M PTS-related cash tax benefit in 2025; potential ~$100M extra PTS dividend; continued buybacks/M&A pipeline; dividend raised to $1.32 .

Estimates Context

EPS beat; revenue slight miss: EPS $3.78 vs $3.56*; Revenue $7.66B vs $7.73B*; 8 EPS estimates, 6 revenue estimates .
Drivers of the beat: stronger margins (company gross margin +50 bps), S&P leverage, and variable GPU; miss tied to revenue headwinds from divestitures and temporary wholesale pauses .
Implications: Street EPS likely nudges up on sustained margin quality and S&P strength; revenue estimates may temper modestly given unit/BEV mix and UK dynamics.