Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 14, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 1-12297 | ||
Entity Registrant Name | Penske Automotive Group, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 22-3086739 | ||
Entity Address, Address Line One | 2555 Telegraph Road | ||
Entity Address, City or Town | Bloomfield Hills | ||
Entity Address, State or Province | MI | ||
Entity Address, Postal Zip Code | 48302-0954 | ||
City Area Code | 248 | ||
Local Phone Number | 648-2500 | ||
Title of 12(b) Security | Voting Common Stock, par value $0.0001 per share | ||
Trading Symbol | PAG | ||
Security Exchange Name | NYSE | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 81,355,508 | ||
Entity Central Index Key | 0001019849 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 1,563,801,193 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 28.1 | $ 39.4 |
Accounts receivable, net of allowance for doubtful accounts of $5.7 and $5.4 | 960.3 | 929.1 |
Inventories | 4,260.7 | 4,040.1 |
Other current assets | 85 | 86.6 |
Total current assets | 5,334.1 | 5,095.2 |
Property and equipment, net | 2,366.4 | 2,250 |
Operating lease right-of-use assets | 2,360.5 | |
Goodwill | 1,911 | 1,752 |
Other indefinite-lived intangible assets | 552.2 | 486.2 |
Equity method investments | 1,399 | 1,305.2 |
Other long-term assets | 19.5 | 15.9 |
Total assets | 13,942.7 | 10,904.5 |
LIABILITIES AND EQUITY | ||
Floor plan notes payable | 2,412.5 | 2,362.2 |
Floor plan notes payable - non-trade | 1,594 | 1,428.6 |
Accounts payable | 638.8 | 598.2 |
Accrued expenses and other current liabilities | 701.9 | 566.6 |
Current portion of long-term debt | 103.3 | 92 |
Liabilities held for sale | 0.5 | 0.7 |
Total current liabilities | 5,451 | 5,048.3 |
Long-term debt | 2,257 | 2,124.7 |
Long-term operating lease liabilities | 2,301.2 | |
Deferred tax liabilities | 677.9 | 577.8 |
Other long-term liabilities | 444 | 519 |
Total liabilities | 11,131.1 | 8,269.8 |
Commitments and contingent liabilities (Note 11) | ||
Penske Automotive Group stockholders' equity: | ||
Preferred Stock, $0.0001 par value; 100,000 shares authorized; none issued and outstanding | ||
Common Stock | ||
Additional paid-in-capital | 320.4 | 477.8 |
Retained earnings | 2,675.8 | 2,365.8 |
Accumulated other comprehensive income (loss) | (202.8) | (234.5) |
Total Penske Automotive Group stockholders' equity | 2,793.4 | 2,609.1 |
Non-controlling interest | 18.2 | 25.6 |
Total equity | 2,811.6 | 2,634.7 |
Total liabilities and equity | 13,942.7 | 10,904.5 |
Non-voting Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock | ||
Class C Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 5.7 | $ 5.4 |
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, shares authorized | 100,000 | 100,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 240,000,000 | 240,000,000 |
Common Stock, shares issued | 81,084,751 | 84,546,970 |
Common Stock, shares outstanding | 81,084,751 | 84,546,970 |
Non-voting Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 7,125,000 | 7,125,000 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
Class C Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 20,000,000 | 20,000,000 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue: | |||
Total revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
Cost of sales: | |||
Total cost of sales | 19,723.9 | 19,370.2 | 18,164.4 |
Gross profit | 3,455.5 | 3,414.9 | 3,222.5 |
Selling, general and administrative expenses | 2,693.2 | 2,646.3 | 2,516 |
Depreciation | 109.6 | 103.7 | 95.1 |
Operating income | 652.7 | 664.9 | 611.4 |
Floor plan interest expense | (84.5) | (80.9) | (63.4) |
Other interest expense | (124.2) | (114.7) | (107.4) |
Equity in earnings of affiliates | 147.5 | 134.8 | 107.6 |
Income from continuing operations before income taxes | 591.5 | 604.1 | 548.2 |
Income taxes | (156.7) | (134.3) | 64.8 |
Income from continuing operations | 434.8 | 469.8 | 613 |
Income (loss) from discontinued operations, net of tax | 0.3 | 0.5 | (0.2) |
Net income | 435.1 | 470.3 | 612.8 |
Less: Loss attributable to non-controlling interests | (0.7) | (0.7) | (0.5) |
Net income attributable to Penske Automotive Group common stockholders | $ 435.8 | $ 471 | $ 613.3 |
Basic earnings per share attributable to Penske Automotive Group common stockholders: | |||
Continuing operations (in dollars per share) | $ 5.28 | $ 5.52 | $ 7.14 |
Discontinued operations (in dollars per share) | 0 | 0.01 | 0 |
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 5.28 | $ 5.53 | $ 7.14 |
Shares used in determining basic earnings per share (in shares) | 82,495,045 | 85,165,367 | 85,877,227 |
Diluted earnings per share attributable to Penske Automotive Group common stockholders: | |||
Continuing operations (in dollars per share) | $ 5.28 | $ 5.52 | $ 7.14 |
Discontinued operations (in dollars per share) | 0 | 0.01 | 0 |
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 5.28 | $ 5.53 | $ 7.14 |
Shares used in determining diluted earnings per share (in shares) | 82,495,045 | 85,165,367 | 85,877,227 |
Amounts attributable to Penske Automotive Group common stockholders: | |||
Income from continuing operations | $ 434.8 | $ 469.8 | $ 613 |
Less: Loss attributable to non-controlling interests | (0.7) | (0.7) | (0.5) |
Income from continuing operations, net of tax | 435.5 | 470.5 | 613.5 |
Income (loss) from discontinued operations, net of tax | 0.3 | 0.5 | (0.2) |
Net income attributable to Penske Automotive Group common stockholders | $ 435.8 | $ 471 | $ 613.3 |
Cash dividends per share (in dollars per share) | $ 1.58 | $ 1.42 | $ 1.26 |
Retail Automotive Dealership | |||
Revenue: | |||
Total revenues | $ 20,615.8 | $ 20,849.2 | $ 19,824.3 |
Cost of sales: | |||
Total cost of sales | 17,576.9 | 17,790.6 | 16,899.5 |
Retail Commercial Truck Dealership | |||
Revenue: | |||
Total revenues | 2,050.5 | 1,374.5 | 1,048 |
Cost of sales: | |||
Total cost of sales | 1,772.7 | 1,163 | 882.2 |
Commercial Vehicle Distribution and Other | |||
Revenue: | |||
Total revenues | 513.1 | 561.4 | 514.6 |
Cost of sales: | |||
Total cost of sales | $ 374.3 | $ 416.6 | $ 382.7 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 435.1 | $ 470.3 | $ 612.8 |
Other comprehensive income: | |||
Foreign currency translation adjustment | 21.9 | (75.8) | 99.2 |
Other adjustments to comprehensive income, net | 9.5 | (13.7) | 8.2 |
Other comprehensive loss, net of tax | 31.4 | (89.5) | 107.4 |
Comprehensive income | 466.5 | 380.8 | 720.2 |
Less: Comprehensive loss attributable to non-controlling interests | (1) | (2.2) | 2.7 |
Comprehensive income attributable to Penske Automotive Group common stockholders | $ 467.5 | $ 383 | $ 717.5 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Activities: | |||
Net income | $ 435.1 | $ 470.3 | $ 612.8 |
Adjustments to reconcile net income to net cash from continuing operating activities: | |||
Depreciation | 109.6 | 103.7 | 95.1 |
Earnings of equity method investments | (94.6) | (89) | (68.9) |
(Income) loss from discontinued operations, net of tax | (0.3) | (0.5) | 0.2 |
Deferred income taxes | 92 | 105.9 | (108.7) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (30.9) | 30.4 | (73.1) |
Inventories | (117.8) | (12.6) | (419.9) |
Floor plan notes payable | 83.9 | 27.4 | 276.3 |
Accounts payable and accrued expenses | 71.4 | (17.1) | 272 |
Other | (30.1) | (4.3) | 37.2 |
Net cash provided by continuing operating activities | 518.3 | 614.2 | 623 |
Investing Activities: | |||
Purchase of equipment and improvements | (245.3) | (305.6) | (247) |
Proceeds from sale of dealerships | 22.8 | 84.5 | 25.1 |
Proceeds from sale-leaseback transactions | 18.9 | 10.7 | 22.2 |
Acquisition of additional ownership interest in Penske Truck Leasing | (239.1) | ||
Acquisitions net, including repayment of sellers' floor plan notes payable of $138.5, $58.2, and $101.6, respectively | (326.9) | (309.1) | (449.7) |
Other | (2.2) | (5.7) | (40.2) |
Net cash used in continuing investing activities | (532.7) | (525.2) | (928.7) |
Financing Activities: | |||
Proceeds from borrowings under U.S. credit agreement revolving credit line | 1,808 | 1,642 | 2,040 |
Repayments under U.S. credit agreement revolving credit line | (1,793) | (1,784) | (2,108) |
Issuance of 3.75% senior subordinated notes | 300 | ||
Net borrowings of other long-term debt | 115.4 | 235.5 | 42 |
Net borrowings of floor plan notes payable - non-trade | 177.5 | 10 | 185.3 |
Payment of debt issuance costs | (0.4) | (1.9) | (4) |
Repurchases of common stock | (169.2) | (68.9) | (18.5) |
Dividends | (130.8) | (121.2) | (108.4) |
Other | (4.9) | (5.8) | (5.8) |
Net cash used in continuing financing activities | 2.6 | (94.3) | 322.6 |
Discontinued operations: | |||
Net cash provided by discontinued operating activities | 0.3 | 0.5 | 0.5 |
Net cash provided by discontinued investing activities | 2.4 | ||
Net cash provided by discontinued financing activities | (0.2) | ||
Net cash provided by discontinued operations | 0.3 | 0.5 | 2.7 |
Effect of exchange rate changes on cash and cash equivalents | 0.2 | (1.5) | 2.1 |
Net change in cash and cash equivalents | (11.3) | (6.3) | 21.7 |
Cash and cash equivalents, beginning of period | 39.4 | 45.7 | 24 |
Cash and cash equivalents, end of period | 28.1 | 39.4 | 45.7 |
Cash paid for: | |||
Interest | 204.9 | 190.2 | 163.2 |
Income taxes | 92.4 | 39.6 | (29.7) |
Seller financed/assumed debt | 0.8 | ||
Non cash activities: | |||
Deferred consideration | $ 6.8 | ||
Consideration transferred through common stock issuance | 32.4 | ||
Contingent consideration | $ 10.6 | $ 20 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Repayment of Sellers' Floor Plan Notes Payable Dealership Acquisitions | $ 138.5 | $ 58.2 | $ 101.6 |
3.75% senior subordinated notes due 2020 | |||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions | Total Stockholders' Equity Attributable to Penske Automotive Group | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total |
Balance at Dec. 31, 2016 | $ 1,750.9 | $ 497.1 | $ 1,504.5 | $ (250.7) | $ 28.6 | $ 1,779.5 | |
Balance (in shares) at Dec. 31, 2016 | 85,214,345 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 14.9 | 14.9 | 14.9 | ||||
Equity compensation (in shares) | 343,385 | ||||||
Repurchases of common stock | (18.5) | (18.5) | (18.5) | ||||
Repurchases of common stock (in shares) | (435,710) | ||||||
Issuance of common stock | 32.4 | 32.4 | 32.4 | ||||
Issuance of common stock (in shares) | 665,487 | ||||||
Dividends | (108.4) | (108.4) | (108.4) | ||||
Purchase of subsidiary shares from non-controlling interest | (0.4) | (0.4) | (0.3) | (0.7) | |||
Distributions to non-controlling interest | (1.4) | (1.4) | |||||
Foreign currency translation | 96 | 96 | 3.2 | 99.2 | |||
Other | 15 | 6.8 | 8.2 | 3.2 | 18.2 | ||
Net income | 613.3 | 613.3 | (0.5) | 612.8 | |||
Balance at Dec. 31, 2017 | 2,395.2 | 532.3 | 2,009.4 | (146.5) | 32.8 | 2,428 | |
Balance (in shares) at Dec. 31, 2017 | 85,787,507 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Adoption of ASC | ASC 606 | 6.6 | 6.6 | 6.6 | ||||
Equity compensation | 16.1 | 16.1 | 16.1 | ||||
Equity compensation (in shares) | 346,957 | ||||||
Repurchases of common stock | (68.9) | (68.9) | (68.9) | ||||
Repurchases of common stock (in shares) | (1,587,494) | ||||||
Dividends | (121.2) | (121.2) | (121.2) | ||||
Purchase of subsidiary shares from non-controlling interest | (1.5) | (1.5) | (5.4) | (6.9) | |||
Distributions to non-controlling interest | (0.9) | (0.9) | |||||
Foreign currency translation | (74.3) | (74.3) | (1.5) | (75.8) | |||
Other | (13.9) | (0.2) | (13.7) | 1.3 | (12.6) | ||
Net income | 471 | 471 | (0.7) | 470.3 | |||
Balance at Dec. 31, 2018 | 2,609.1 | 477.8 | 2,365.8 | (234.5) | 25.6 | 2,634.7 | |
Balance (in shares) at Dec. 31, 2018 | 84,546,970 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Adoption of ASC | ASC 842 | 5 | 5 | 5 | ||||
Equity compensation | 16.7 | 16.7 | 16.7 | ||||
Equity compensation (in shares) | 524,617 | ||||||
Repurchases of common stock | (174.1) | (174.1) | (174.1) | ||||
Repurchases of common stock (in shares) | (3,986,836) | ||||||
Dividends | (130.8) | (130.8) | (130.8) | ||||
Purchase of subsidiary shares from non-controlling interest | (7) | (7) | |||||
Distributions to non-controlling interest | (0.5) | (0.5) | |||||
Foreign currency translation | 22.2 | 22.2 | (0.3) | 21.9 | |||
Other | 9.5 | 9.5 | 1.1 | 10.6 | |||
Net income | 435.8 | 435.8 | (0.7) | 435.1 | |||
Balance at Dec. 31, 2019 | $ 2,793.4 | $ 320.4 | $ 2,675.8 | $ (202.8) | $ 18.2 | $ 2,811.6 | |
Balance (in shares) at Dec. 31, 2019 | 81,084,751 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF EQUITY | |||
Dividends per share (in dollars per share) | $ 1.58 | $ 1.42 | $ 1.26 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Unless the context otherwise requires, the use of the terms “PAG,” “we,” “us,” and “our” in these Notes to the Consolidated Financial Statements refers to Penske Automotive Group, Inc. and its consolidated subsidiaries. Business Overview and Concentrations We are a diversified international transportation services company that operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. In 2019, our business generated $23.2 billion in total revenue, which is comprised of approximately $20.6 billion from retail automotive dealerships, $2.1 billion from retail commercial truck dealerships and $0.5 billion from commercial vehicle distribution and other operations. Retail Automotive Dealership. We are engaged in the sale of new and used motor vehicles and related products and services, including vehicle service, collision repair, and placement of finance and lease contracts, third-party insurance products and other aftermarket products. We operate dealerships under franchise agreements with a number of automotive manufacturers and distributors. In accordance with individual franchise agreements, each dealership is subject to certain rights and restrictions typical of such industry. The ability of the manufacturers to influence the operations of the dealerships, or the loss of a significant number of franchise agreements, could have a material impact on our results of operations, financial position and cash flows. For the year ended December 31, 2019, Audi/Volkswagen/Porsche/Bentley franchises accounted for 23% of our total retail automotive dealership revenues, BMW/MINI franchises accounted for 23%, and Toyota/Lexus franchises accounted for 13%. No other manufacturers’ franchises accounted for more than 10% of our total retail automotive dealership revenues. At December 31, 2019 and 2018, we had receivables from manufacturers of $244.6 million and $211.3 million, respectively. In addition, a large portion of our contracts in transit, which are included in accounts receivable, are due from manufacturers’ captive finance companies. During 2019, we disposed of twenty-five retail automotive franchises and were awarded one retail automotive franchise. Of the franchises disposed of, ten represented franchises in the U.S., seven represented franchises in Germany, and eight represented franchises in the U.K. We maintained a 20% ownership interest in three of the franchises disposed of in the U.S. representing the Bentley, Ferrari, and Maserati brands and account for the joint venture using the equity method of accounting. We also acquired an additional 12.4% interest in the Jacobs Group, one of our German automotive dealership joint ventures, and now own a 91.8% interest in the Jacobs Group. We also operate sixteen used vehicle supercenters in the U.S. and the U.K. which retail and wholesale used vehicles under a one price, “no-haggle” methodology. Our CarSense operations in the U.S. consist of six retail locations operating in the Philadelphia and Pittsburgh, Pennsylvania market areas. Our CarShop operations in the U.K. consist of ten retail locations and a vehicle preparation center. During 2019, we opened one used vehicle supercenter in the U.S. and one used vehicle supercenter in the U.K. Retail Commercial Truck Dealership. trucks available for sale as well as service and parts departments, providing a full range of maintenance and repair services. Penske Australia. Penske Transportation Solutions. Basis of Presentation The consolidated financial statements include all majority-owned subsidiaries. Investments in affiliated companies, representing an ownership interest in the voting stock of the affiliate of between 20% and 50% or an investment in a limited partnership or a limited liability corporation for which our investment is more than minor, are stated at the cost of acquisition plus our equity in undistributed net earnings since acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements, including the comparative periods presented, have been adjusted for entities that have been treated as discontinued operations prior to adoption of ASU No. 2014-08 in accordance with generally accepted accounting principles. Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets, and certain reserves. Cash and Cash Equivalents Cash and cash equivalents include all highly-liquid investments that have an original maturity of three months or less at the date of purchase. Contracts in Transit Contracts in transit represent receivables from unaffiliated finance companies relating to the sale of customers’ installment sales and lease contracts arising in connection with the sale of a vehicle by us. Contracts in transit, included in accounts receivable, net in our consolidated balance sheets, amounted to $291.1 million and $314.2 million as of December 31, 2019 and 2018, respectively. Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Cost for new and used vehicle inventories includes acquisition, reconditioning, dealer installed accessories, and transportation expenses and is determined using the specific identification method. Inventories of dealership parts and accessories are accounted for using the “first-in, first-out” (“FIFO”) method of inventory accounting and the cost is based on factory list prices. Property and Equipment Property and equipment are recorded at cost and depreciated over estimated useful lives using the straight-line method. Useful lives for purposes of computing depreciation for assets, other than leasehold improvements, range between 3 Expenditures relating to recurring repair and maintenance are expensed as incurred. Expenditures that increase the useful life or substantially increase the serviceability of an existing asset are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, with any resulting gain or loss being reflected in income. Income Taxes Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit. Refer to the disclosures provided in Part II, Item 8, Note 16 of the Notes to our Consolidated Financial Statements for additional detail on our accounting for income taxes. Intangible Assets Our principal intangible assets relate to our franchise agreements with vehicle manufacturers and distributors, which represent the estimated value of franchises acquired in business combinations, our distribution agreements with commercial vehicle manufacturers, which represent the estimated value of distribution rights acquired in business combinations, and goodwill, which represents the excess of cost over the fair value of tangible and identified intangible assets acquired in business combinations. We believe the franchise values of our automotive dealerships and the distribution agreements of our commercial vehicle distribution operations have an indefinite useful life based on the following: ● Automotive retailing and commercial vehicle distribution are mature industries and are based on franchise and distribution agreements with the vehicle manufacturers and distributors; ● There are no known changes or events that would alter the automotive retailing franchise or commercial vehicle distribution environments; ● Certain franchise agreement terms are indefinite; ● Franchise and distribution agreements that have limited terms have historically been renewed by us without substantial cost; and ● Our history shows that manufacturers and distributors have not terminated our franchise or distribution agreements. Impairment Testing Other indefinite-lived intangible assets are assessed for impairment annually on October 1 and upon the occurrence of an indicator of impairment through a comparison of its carrying amount and estimated fair value. An indicator of impairment exists if the carrying value exceeds its estimated fair value and an impairment loss may be recognized up to that excess. The fair value is determined using a discounted cash flow approach, which includes assumptions about revenue and profitability growth, profit margins, and the cost of capital. We also evaluate in connection with the annual impairment testing whether events and circumstances continue to support our assessment that the other indefinite-lived intangible assets continue to have an indefinite life. Goodwill impairment is assessed at the reporting unit level annually on October 1 and upon the occurrence of an indicator of impairment. Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. We have determined that the dealerships in each of our operating segments within the Retail Automotive reportable segment are components that are aggregated into six reporting units for the purpose of goodwill impairment testing, as they (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and/or used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The reporting units are Eastern, Central, and Western United States, Stand-Alone Used United States, International, and Stand-Alone Used International. Our Retail Commercial Truck reportable segment has been determined to represent one operating segment and reporting unit. The goodwill included in our Other reportable segment relates primarily to our commercial vehicle distribution operating segment. There is no goodwill recorded in our Non-Automotive Investments reportable segment. For our Retail Automotive, Retail Commercial Truck, and Other reporting units, we prepared a qualitative assessment of the carrying value of goodwill using the criteria in ASC 350-20-35-3 to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying value. If it were determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, additional analysis would be unnecessary. During 2019, we concluded that for the retail automotive, retail commercial truck, and other reporting units that their fair values were more likely than not greater than their carrying values. If additional impairment testing was necessary, we would have estimated the fair value of our reporting units using an “income” valuation approach. The “income” valuation approach estimates our enterprise value using a net present value model, which discounts projected free cash flows of our business using the weighted average cost of capital as the discount rate. We would also validate the fair value for each reporting unit using the income approach by calculating a cash earnings multiple and determining whether the multiple was reasonable compared to recent market transactions completed by the Company or in the industry. As part of that assessment, we would also reconcile the estimated aggregate fair values of our reporting units to our market capitalization. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest, and other significant assumptions including revenue and profitability growth, franchise profit margins, residual values and the cost of capital. Investments We account for each of our investments under the equity method, pursuant to which we record our proportionate share of the investee’s income each period. The net book value of our investments was $1,399.0 million and $1,305.2 million as of December 31, 2019 and 2018, respectively, including $1,323.2 million and $1,237.4 million relating to PTS as of December 31, 2019 and 2018, respectively. We currently hold a 28.9% ownership interest in PTS. Investments for which there is not a liquid, actively traded market are reviewed periodically by management for indicators of impairment. If an indicator of impairment is identified, management estimates the fair value of the investment using a discounted cash flow approach, which includes assumptions relating to revenue and profitability growth, profit margins, residual values, and our cost of capital. Declines in investment values that are deemed to be other than temporary may result in an impairment charge reducing the investments’ carrying value to fair value. Foreign Currency Translation For all of our non-U.S. operations, the functional currency is the local currency. The revenue and expense accounts of our non-U.S. operations are translated into U.S. dollars using the average exchange rates that prevailed during the period. Assets and liabilities of non-U.S. operations are translated into U.S. dollars using period end exchange rates. Cumulative translation adjustments relating to foreign functional currency assets and liabilities are recorded in accumulated other comprehensive income (loss), a separate component of equity. Fair Value of Financial Instruments Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, and forward exchange contracts used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting. Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of our fixed rate debt is as follows: December 31, 2019 December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value 3.75% senior subordinated notes due 2020 $ 299.2 $ 302.6 $ 297.9 $ 291.9 5.75% senior subordinated notes due 2022 547.6 556.7 546.8 537.6 5.375% senior subordinated notes due 2024 298.0 306.7 297.6 278.7 5.50% senior subordinated notes due 2026 495.7 521.7 495.1 465.2 Mortgage facilities 423.2 430.9 289.6 290.2 Revenue Recognition Dealership Vehicle, Parts and Service Sales We record revenue for vehicle sales at a point in time when vehicles are delivered, which is when the transfer of title, risks and rewards of ownership and control are considered passed to the customer. We record revenue for vehicle service and collision work over time as work is completed, and when parts are delivered to our customers. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale. Rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales. Reimbursements of qualified advertising expenses are treated as a reduction of selling, general and administrative expenses. The amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives, and such earnings are recognized either upon the sale of the vehicle for which the award was received, or upon attainment of the particular program goals if not associated with individual vehicles. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue). Dealership Finance and Insurance Sales Subsequent to the sale of a vehicle to a customer, we sell installment sale contracts to various financial institutions on a non recourse basis (with specified exceptions) to mitigate the risk of default. We receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee. We also receive commissions for facilitating the sale of various products to customers, including guaranteed vehicle protection insurance, vehicle theft protection and extended service contracts. These commissions are recorded as revenue at a point in time when the customer enters into the contract. Payment is typically due and collected within 30 days subsequent to the execution of the contract with the customer. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $26.6 million and $26.0 million as of December 31, 2019 and December 31, 2018, respectively. Commercial Vehicle Distribution We record revenue from the distribution of vehicles, engines, and other products at a point in time when delivered, which is when the transfer of title, risks and rewards of ownership and control are considered passed to the customer. We record revenue for service or repair work over time as work is completed, and when parts are delivered to our customers. For our long-term power generation contracts, we record revenue over time as services are provided in accordance with contract milestones. See Note 2 “Revenues” for additional disclosures on revenue recognition. Defined Contribution Plans We sponsor a number of defined contribution plans covering a significant majority of our employees. Our contributions to such plans are discretionary and are based on the level of compensation and contributions by plan participants. We incurred expenses of $29.4 million, $24.8 million, and $16.8 million relating to such plans during the years ended December 31, 2019, 2018, and 2017, respectively. Advertising Advertising costs are expensed as incurred or when such advertising takes place. We incurred net advertising costs of $112.6 million, $115.3 million, and $115.8 million during the years ended December 31, 2019, 2018, and 2017, respectively. Qualified advertising expenditures reimbursed by manufacturers, which are treated as a reduction of advertising expense, were $19.2 million, $19.3 million, and $18.6 million during the years ended December 31, 2019, 2018, and 2017, respectively. Self-Insurance We retain risk relating to certain of our general liability insurance, workers’ compensation insurance, vehicle physical damage insurance, property insurance, employment practices liability insurance, directors and officers insurance, and employee medical benefits in the U.S. As a result, we are likely to be responsible for a significant portion of the claims and losses incurred under these programs. The amount of risk we retain varies by program, and for certain exposures, we have pre-determined maximum loss limits for certain individual claims and/or insurance periods. Losses, if any, above the pre-determined loss limits are paid by third-party insurance carriers. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. Our estimate of future losses is prepared by management using our historical loss experience and industry-based development factors. Aggregate reserves relating to retained risk were $28.6 million and $31.3 million as of December 31, 2019 and 2018, respectively. Earnings Per Share Basic earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, including outstanding unvested restricted stock awards which contain rights to non-forfeitable dividends. Diluted earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, adjusted for any dilutive effects. A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the years ended December 31, 2019, 2018, and 2017 follows: Year Ended December 31, 2019 2018 2017 Weighted average number of common shares outstanding 82,495,045 85,165,367 85,877,227 Effect of non-participatory equity compensation — — — Weighted average number of common shares outstanding, including effect of dilutive securities 82,495,045 85,165,367 85,877,227 Hedging Generally accepted accounting principles relating to derivative instruments and hedging activities require all derivatives, whether designated in hedging relationships or not, to be recorded on the balance sheet at fair value. These accounting principles also define requirements for designation and documentation of hedging relationships, as well as ongoing effectiveness assessments, which must be met in order to qualify for hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value are recorded in earnings immediately. If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and the hedged item are recorded in earnings. If the derivative is designated as a cash-flow hedge, effective changes in the fair value of the derivative are recorded in accumulated other comprehensive income (loss), a separate component of equity, and recorded in the income statement only when the hedged item affects earnings. Changes in the fair value of the derivative attributable to hedge ineffectiveness are recorded in earnings immediately. Stock-Based Compensation Generally accepted accounting principles relating to share-based payments require us to record compensation expense for all awards based on their grant-date fair value. Our share-based payments have generally been in the form of “non-vested shares,” the fair value of which are measured as if they were vested and issued on the grant date. Recent Accounting Pronouncements Accounting for Leases In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under this new guidance, a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. For public companies, this ASU is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The FASB has since issued further ASUs related to the standard providing additional practical expedients and an optional transition method allowing entities to not recast comparative periods. We adopted this ASU, including several practical expedients, on January 1, 2019 using the optional transition method. The package of practical expedients elected allows us to not reassess (1) whether any expired or existing contracts are or contain leases (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any expired or existing leases. We also elected the practical expedient to not separate lease and non-lease components for all leases and have accounted for the combined lease and non-lease components as a single lease component. Under the optional transition method, we applied ASC 840 in the comparative periods presented and provide the disclosures required by ASC 840 for all periods that continue to be presented in accordance with ASC 840, in addition to the disclosures required per ASC 842. The expense recognition for operating leases under ASC 842 is substantially consistent with ASC 840 and the adoption did not have an impact on our consolidated statements of income, comprehensive income, or cash flows. As part of the adoption of ASC 842, we performed an assessment of the impact the new lease recognition standard will have on our consolidated financial statements. We lease a significant amount of our dealership and other properties, which are classified as operating leases. We also have equipment leases that primarily relate to office and computer equipment, service and shop equipment, company vehicles, and other miscellaneous items. We do not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement under the new lease recognition standard. Upon adoption of ASC 842, we recognized our lease liabilities and right-of-use assets on our consolidated balance sheet at the present value of these future payments. We also made an accounting policy to exclude leases with an initial term of 12 months or less from the balance sheet as permitted under ASC 842. We also evaluated, documented, and implemented required changes in internal controls as part of our adoption of the new lease recognition standard. These changes include implementing updated accounting policies affected by ASC 842 and implementing a new information technology application to calculate our right-of-use assets and lease liabilities and required disclosures. See Note 3 “Leases” for additional disclosures in accordance with the new lease standard. As a result of the adoption of ASC 842 on January 1, 2019, we recorded lease liabilities and right-of-use assets on our consolidated balance sheet. The adoption also resulted in a net, after-tax cumulative effect adjustment to retained earnings of approximately $5.0 million. The details of this adjustment are summarized below. Balance at Adjustments Due Balance at December 31, 2018 to ASC 842 January 1, 2019 Assets Operating lease right-of-use assets $ — $ 2,425.6 $ 2,425.6 Liabilities and Equity Accrued expenses and other current liabilities $ 566.6 $ 70.2 $ 636.8 Long-term operating lease liabilities — 2,387.5 2,387.5 Deferred tax liabilities 577.8 0.9 578.7 Other long-term liabilities 519.0 (38.0) 481.0 Retained earnings 2,365.8 5.0 2,370.8 Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU replaces the current incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2019, with early adoption permitted. We intend to adopt this ASU on January 1, 2020. We do not expect the adoption of this accounting standard update to have a significant impact on our consolidated financial statements. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220) — Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This ASU allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the enactment of the U.S. Tax Cuts and Jobs Act (“the Act”). The update also requires entities to disclose whether or not they elected to reclassify the tax effects related to the Act as well as their accounting policy for releasing income tax effects from accumulated other comprehensive income. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. We did not adopt the optional guidance of this accounting standard update, as the potential impact on our consolidated financial statements is not material. Fair Value Measurement Disclosure In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, modifies, and adds certain disclosure requirements on fair value measurements. For public |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2019 | |
Revenues. | |
Revenues | 2. Revenues Automotive and commercial truck dealerships represent the majority of our revenues. New and used vehicle revenues typically include sales to retail customers, to fleet customers, and to leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories, as well as warranty repairs that are reimbursed directly by various OEMs. Revenues are recognized upon satisfaction of our performance obligations under contracts with our customers and are measured at the amount of consideration we expect to be entitled to in exchange for transferring goods or providing services. A discussion of revenue recognition by reportable segment is included below. Retail Automotive and Retail Commercial Truck Dealership Revenue Recognition Dealership Vehicle Sales. We record revenue for vehicle sales at a point in time when vehicles are delivered, which is when the transfer of title, risks and rewards of ownership and control are considered passed to the customer. The amount of consideration we receive for vehicle sales is stated within the executed contract with our customer and is reduced by any noncash consideration representing the fair value of trade-in vehicles, if applicable. Payment is typically due and collected within 30 days subsequent to transfer of control of the vehicle. Dealership Parts and Service Sales. a method that considers total costs incurred to date and the applicable margin in relation to total expected efforts to complete our performance obligation in order to determine the appropriate amount of revenue to recognize over time. Recognition of this revenue over time reflects the amount of consideration we expect to be entitled to for the transfer of goods and services performed to date, representative of the amount for which we have a right to payment. The amount of consideration we receive for parts and service sales, including collision repair work, is based upon labor hours expended and parts utilized to perform and complete the necessary services to our customers. Payment is typically due upon delivery or within a period of time shortly thereafter. We receive payment from our customers upon transfer of control or within a period typically less than 30 days subsequent to the completion of services for the customer. We allow for customer returns of parts sales up to 30 days after the sale; however, parts returns are not material. Dealership Finance and Insurance Sales. Subsequent to the sale of a vehicle to a customer, we sell installment sale contracts to various financial institutions on a non-recourse basis (with specified exceptions) to mitigate the risk of default. We receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee. We also receive commissions for facilitating the sale of various products to customers, including guaranteed vehicle protection insurance, vehicle theft protection and extended service contracts. These commissions are recorded as revenue at a point in time when the customer enters into the contract. Payment is typically due and collected within 30 days subsequent to the execution of the contract with the customer. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $ 26.6 million and $26.0 million as of December 31, 2019 and December 31, 2018, respectively. Commercial Vehicle Distribution and Other Revenue Recognition Penske Australia. The amount of consideration we receive for vehicle and product sales is stated within the executed contract with our customer. The amount of consideration we receive for parts and service sales is based upon labor hours expended and parts utilized to perform and complete the necessary services to our customers. Payment is typically due upon delivery, upon invoice, or within a period of time shortly thereafter. We receive payment from our customers upon transfer of control or within a period typically less than 30 days subsequent to transfer of control or invoice. We record revenue from the distribution of engines and other products at a point in time when delivered, which is when the transfer of title, risks and rewards of ownership and control are considered passed to the customer. We record revenue for service or repair work appropriate amount of revenue to recognize over time. Recognition of revenue over time reflects the amount of consideration we expect to be entitled to for the transfer of goods and services performed to date, representative of the amount for which we have a right to payment. For our long-term power generation contracts, we record revenue over time as services are provided in accordance with contract milestones, which is considered an output method that requires judgment to determine our progress towards contract completion and the corresponding amount of revenue to recognize. Any revisions to estimates related to revenues or costs to complete contracts are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. The amount of consideration we receive for engine, product, and power generation sales is stated within the executed contract with our customer. The amount of consideration we receive for service sales is based upon labor hours expended and parts utilized to perform and complete the necessary services to our customers. Payment is typically due upon delivery, upon invoice, or within a period of time shortly thereafter. We receive payment from our customers upon transfer of control or within a period typically less than 30 days subsequent to transfer of control or invoice. Service and parts revenue represented $265.1 million for the year ended December 31, 2019 and $257.6 million the year ended December 31, 2018. Other. Retail Automotive Dealership The following tables disaggregate our retail automotive reportable segment revenue by product type and geographic location for the year ended December 31, 2019, 2018, and 2017: Year Ended December 31, Retail Automotive Dealership Revenue 2019 2018 2017 New vehicle $ 9,329.5 $ 9,666.4 $ 9,678.5 Used vehicle 7,241.2 7,252.1 6,386.8 Finance and insurance, net 652.1 629.6 581.8 Service and parts 2,195.9 2,151.4 2,057.5 Fleet and wholesale 1,197.1 1,149.7 1,119.7 Total retail automotive dealership revenue $ 20,615.8 $ 20,849.2 $ 19,824.3 Year Ended December 31, Retail Automotive Dealership Revenue 2019 2018 2017 U.S. $ 11,697.6 $ 11,504.3 $ 11,610.1 U.K. 7,559.4 7,961.4 7,048.7 Germany and Italy 1,358.8 1,383.5 1,165.5 Total retail automotive dealership revenue $ 20,615.8 $ 20,849.2 $ 19,824.3 Retail Commercial Truck Dealership The following table disaggregates our retail commercial truck reportable segment revenue by product type for the year ended December 31, 2019, 2018, and 2017: Year Ended December 31, Retail Commercial Truck Dealership Revenue 2019 2018 2017 New truck $ 1,347.2 $ 866.9 $ 613.2 Used truck 117.0 112.0 89.4 Finance and insurance, net 12.4 11.9 8.9 Service and parts 503.3 364.5 325.6 Other 70.6 19.2 10.9 Total retail commercial truck dealership revenue $ 2,050.5 $ 1,374.5 $ 1,048.0 Commercial Vehicle Distribution and Other The following table disaggregates our other reportable segment revenue by business for the year ended December 31, 2019, 2018, and 2017: Year Ended December 31, Commercial Vehicle Distribution and Other 2019 2018 2017 Commercial Vehicle Distribution $ 513.1 $ 558.5 $ 511.0 Other — 2.9 3.6 Total commercial vehicle distribution and other revenue $ 513.1 $ 561.4 $ 514.6 Contract Balances The following table summarizes our accounts receivable and unearned revenues as of December 31, 2019 and December 31, 2018: December 31, December 31, 2019 2018 Accounts receivable Contracts in transit $ 291.1 $ 314.2 Vehicle receivables 249.8 266.9 Manufacturer receivables 244.6 211.3 Trade receivables 164.7 129.1 Accrued expenses Unearned revenues $ 262.9 $ 269.8 Contracts in transit represent receivables from unaffiliated finance companies relating to the sale of customers’ installment sales and lease contracts arising in connection with the sale of a vehicle by us. Vehicle receivables represent receivables for any portion of the vehicle sales price not paid by the finance company. Manufacturer receivables represent amounts due from manufacturers, including incentives, holdbacks, rebates, warranty claims, and other receivables due from the factory. Trade receivables represent receivables due from customers, including amounts due for parts and service sales, as well as receivables due from finance companies and others for the commissions earned on financing and commissions earned on insurance and extended service products provided by third parties. We evaluate collectability of receivables and estimate an allowance for doubtful accounts based on the age of the receivable and historical collection experience, which is recorded within “Accounts receivable” on our consolidated balance sheets with our receivables presented net of the allowance. Unearned revenues primarily relate to payments received from customers prior to satisfaction of our performance obligations, such as customer deposits and deferred revenues from operating leases. These amounts are presented within “Accrued expenses and other current liabilities” on our consolidated balance sheets. Of the amounts recorded as unearned revenues as of December 31, 2018, $258.3 million was recognized as revenue during the year ended December 31, 2019. Additional Revenue Recognition Related Policies We do not have any material significant payment terms associated with contracts with our customers. Payment is due and collected as previously detailed for each reportable segment. We do not offer material rights of return or service-type warranties. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue). Shipping costs incurred subsequent to transfer of control to our customers are recognized as cost of sales. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 3. Leases We lease land and facilities, including certain dealerships and office space. Our property leases are generally for an initial period between 5 and 20 years, and are typically structured to include renewal options at our election. We include renewal options that we are reasonably certain to exercise in the measurement of our lease liabilities and right-of-use assets. We also have equipment leases that primarily relate to office and computer equipment, service and shop equipment, company vehicles, and other miscellaneous items. These leases are generally for a period of less than 5 years. We do not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement. We estimate the total undiscounted rent obligations under these leases, including any extension periods that we are reasonably certain to exercise, to be $5.4 billion as of December 31, 2019. Some of our lease arrangements include rental payments that are adjusted based on an index or rate, such as the Consumer Price Index (CPI). As the rate implicit in the lease is generally not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Pursuant to the leases for some of our larger facilities, we are required to comply with specified financial ratios, including a “rent coverage” ratio and a debt to EBITDA ratio, each as defined. For these leases, non-compliance with the ratios may require us to post collateral in the form of a letter of credit. A breach of the other lease covenants gives rise to certain remedies by the landlord, the most severe of which include the termination of the applicable lease and acceleration of the total rent payments due under the lease. In connection with the sale, relocation and closure of certain of our franchises, we have entered into a number of third-party sublease agreements. The rent paid by our sub-tenants on such properties for the year ended December 31, 2019 was $24.4 million. We have in the past and may in the future enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell property to third parties and agree to lease those assets back for a certain period of time. Such sales generate proceeds that vary from period to period. Proceeds from sale-leaseback transactions were $18.9 million during the year ended December 31, 2019. We have no material leases that have not yet commenced as of December 31, 2019. The following table summarizes our net operating lease cost during the year ended December 31, 2019: Year Ended December 31, 2019 Lease Cost Operating lease cost $ 242.0 Sublease income (24.4) Total lease cost $ 217.6 (1) Includes short-term leases and variable lease costs, which are immaterial. The following tables summarize supplemental cash flow information related to our operating leases and the weighted average remaining lease term and discount rate of our leases: Year Ended December 31, 2019 Other Information Gains on sale and leaseback transactions, net $ (0.5) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 232.3 Right-of-use assets obtained in exchange for operating lease liabilities 97.7 December 31, 2019 Lease Term and Discount Rate Weighted-average remaining lease term - operating leases 25 years Weighted-average discount rate - operating leases 6.6% The following table summarizes the maturity of our lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating lease liabilities recognized on our consolidated balance sheet as of December 31, 2019: Maturity of Lease Liabilities 2020 $ 242.6 2021 236.9 2022 231.9 2023 223.4 2024 216.5 2025 and thereafter 4,272.2 Total future minimum lease payments $ 5,423.5 Less: Imputed interest (3,031.3) Present value of future minimum lease payments $ 2,392.2 Current operating lease liabilities (1) $ 91.0 Long-term operating lease liabilities 2,301.2 Total operating lease liabilities $ 2,392.2 (1) Included within “Accrued expenses and other current liabilities” on Consolidated Balance Sheet as of December 31, 2019. Minimum future rental payments required under operating leases in effect as of December 31, 2018 are as follows: 2019 $ 222.5 2020 220.5 2021 217.4 2022 216.0 2023 212.0 2024 and thereafter 4,344.4 Total future minimum lease payments $ 5,432.8 |
Equity Method Investees
Equity Method Investees | 12 Months Ended |
Dec. 31, 2019 | |
Equity Method Investees | |
Equity Method Investees | 4. Equity Method Investees As of December 31, 2019, we had investments in the following companies that are accounted for under the equity method: the Nix Group (50%) operating automotive dealerships in Germany, Ibericar Keldinich SL (50%) operating automotive dealerships in Spain, the Nicole Group (49%) operating automotive dealerships in Japan, and Penske Commercial Leasing Australia (28%) which rents heavy duty commercial vehicles in Australia. In 2019, we sold a majority interest in dealerships in Edison, New Jersey representing the Bentley, Ferrari, and Maserati brands and now maintain a 20% ownership interest in this joint venture. In September 2017, we sold an additional 5% interest in our Penske Commercial Leasing Australia joint venture to PTS and continue to account for this investment under the equity method under our current 28% ownership. In May 2017, we sold our 7% interest in National Powersport Auctions. In December 2017, we sold our 31% interest in Penske Vehicle Services to PTS. The equity earnings associated with these investments are included within continuing operations under the caption “Equity in earnings of affiliates” for the year ended December 31, 2017. We also have a 28.9% ownership interest in PTS, a leading provider of transportation and supply chain services. Our investment in PTS, which is accounted for under the equity method, amounted to $1,323.2 million and $1,237.4 million at December 31, 2019 and 2018, respectively. The net book value of our equity method investments was $1,399.0 million and $1,305.2 million as of December 31, 2019 and 2018, respectively. We recorded $147.5 million, $134.8 million, and $107.6 million during the years ended December 31, 2019, 2018, and 2017, respectively, on our statements of income under the caption “Equity in earnings of affiliates” related to earnings from our equity method investments. The combined results of operations and financial position of our equity method investees as of December 31 for each of the years presented are summarized as follows: Condensed income statement information: Year Ended December 31, 2019 2018 2017 Revenues $ 9,682.2 $ 9,013.7 $ 7,680.8 Gross profit 2,007.0 2,011.7 1,792.4 Net income 509.8 458.7 416.1 Condensed balance sheet information: December 31, 2019 2018 Current assets $ 1,481.9 $ 1,467.5 Noncurrent assets 14,767.3 13,360.8 Total assets $ 16,249.2 $ 14,828.3 Current liabilities $ 1,281.8 $ 1,880.1 Noncurrent liabilities 11,679.1 9,976.1 Equity 3,288.3 2,972.1 Total liabilities and equity $ 16,249.2 $ 14,828.3 |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations | |
Business Combinations | 5. Business Combinations During 2019, we acquired one dealership related to our Commercial Vehicle Distribution business in New Zealand and six retail commercial truck locations. The companies acquired in 2019 generated $620.2 million of revenue and $24.1 million of pre-tax income from our date of acquisition through December 31, 2019. During 2018, we acquired The Car People which we renamed CarShop, a stand-alone specialty retailer of used vehicles in the U.K. representing four locations; acquired six retail automotive franchises; and acquired one retail commercial truck location. Our financial statements include the results of operations of the acquired entities from the date of acquisition. The fair value of the assets acquired and liabilities assumed have been recorded in our consolidated financial statements, and may be subject to adjustment pending completion of final valuation. A summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed for the years ended December 31, 2019 and 2018 follows: December 31, 2019 2018 Accounts receivable $ — $ 3.6 Inventories 150.7 101.1 Other current assets 0.6 0.2 Property and equipment 2.6 55.4 Indefinite-lived intangibles 214.0 173.9 Current liabilities (16.8) (17.7) Noncurrent liabilities (13.6) (0.6) Total consideration $ 337.5 $ 315.9 Deferred consideration — (6.8) Contingent consideration (10.6) — Total cash used in acquisitions $ 326.9 $ 309.1 The following unaudited consolidated pro forma results of operations of PAG for the years ended December 31, 2019 and 2018 give effect to acquisitions consummated during 2019 and 2018 as if they had occurred on January 1, 2018: Year Ended December 31, 2019 2018 Revenues $ 23,780.6 $ 24,115.7 Income from continuing operations 443.7 489.6 Net income 444.2 490.1 Income from continuing operations per diluted common share $ 5.38 $ 5.75 Net income per diluted common share $ 5.38 $ 5.75 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Inventories | 6. Inventories Inventories consisted of the following: December 31, 2019 2018 Retail automotive dealership new vehicles $ 2,346.2 $ 2,397.0 Retail automotive dealership used vehicles 1,080.8 1,060.8 Retail automotive parts, accessories and other 141.5 140.8 Retail commercial truck dealership vehicles and parts 465.2 207.9 Commercial vehicle distribution vehicles, parts and engines 227.0 233.6 Total inventories $ 4,260.7 $ 4,040.1 We receive credits from certain vehicle manufacturers that reduce cost of sales when the vehicles are sold. Such credits amounted to $51.6 million, $54.6 million, and $55.4 million during the years ended December 31, 2019, 2018, and 2017, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consisted of the following: December 31, 2019 2018 Buildings and leasehold improvements $ 1,904.5 $ 1,770.4 Furniture, fixtures and equipment 1,140.0 1,097.9 Total $ 3,044.5 $ 2,868.3 Less: Accumulated depreciation (678.1) (618.3) Property and equipment, net $ 2,366.4 $ 2,250.0 Approximately $29.1 million and $28.6 million of capitalized interest is included in buildings and leasehold improvements as of December 31, 2019 and 2018, respectively, and is being depreciated over the useful life of the related assets. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets | |
Intangible Assets | 8. Intangible Assets Following is a summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets during the years ended December 31, 2019 and 2018, net of accumulated impairment losses recorded prior to December 31, 2012 of $606.3 million and $37.1 million, respectively: Other Indefinite- Lived Intangible Goodwill Assets Balance — December 31, 2017 $ 1,660.5 $ 474.0 Additions 144.1 29.8 Disposals (13.8) (0.5) Impairment — (5.8) Foreign currency translation (38.8) (11.3) Balance — December 31, 2018 $ 1,752.0 $ 486.2 Additions 146.6 67.4 Disposals (3.9) (1.2) Impairment — (1.9) Foreign currency translation 16.3 1.7 Balance — December 31, 2019 $ 1,911.0 $ 552.2 Following is a summary of the changes in the carrying amount of goodwill by reportable segment during the years ended December 31, 2019 and 2018: Retail Retail Commercial Automotive Truck Other Total Balance — December 31, 2017 $ 1,412.1 $ 163.0 $ 85.4 $ 1,660.5 Additions 143.2 0.9 — 144.1 Disposals (13.8) — — (13.8) Foreign currency translation (29.6) (1.3) (7.9) (38.8) Balance — December 31, 2018 $ 1,511.9 $ 162.6 $ 77.5 $ 1,752.0 Additions 0.9 145.6 0.1 146.6 Disposals (3.9) — — (3.9) Foreign currency translation 15.9 0.8 (0.4) 16.3 Balance — December 31, 2019 $ 1,524.8 $ 309.0 $ 77.2 $ 1,911.0 There is no goodwill recorded in our Non-Automotive Investments reportable segment. We test for impairment of our intangible assets at least annually. During 2019 and 2018, we recorded $1.9 million and $5.8 million, respectively, of impairment charges relating to our intangible assets with respect to certain franchised dealerships. We did not record any impairment charges relating to our intangible assets in 2017. |
Vehicle Financing
Vehicle Financing | 12 Months Ended |
Dec. 31, 2019 | |
Vehicle Financing | |
Vehicle Financing | 9. Vehicle Financing We finance substantially all of the commercial vehicles we purchase for distribution, new vehicles for retail sale, and a portion of our used vehicle inventories for retail sale, under floor plan and other revolving arrangements with various lenders, including the captive finance companies associated with automotive manufacturers. In the U.S., the floor plan arrangements are due on demand; however, we have not historically been required to repay floor plan advances prior to the sale of the vehicles that have been financed. We typically make monthly interest payments on the amount financed. Outside of the U.S., substantially all of the floor plan arrangements are payable on demand or have an original maturity of 90 days or less, and we are generally required to repay floor plan advances at the earlier of the sale of the vehicles that have been financed or the stated maturity. The agreements typically grant a security interest in substantially all of the assets of our dealership and distribution subsidiaries and, in the U.S., Australia and New Zealand, are guaranteed or partially guaranteed by us. Interest rates under the arrangements are variable and increase or decrease based on changes in the prime rate, defined London Interbank Offered Rate (“LIBOR”), the Finance House Base Rate, the Euro Interbank Offered Rate, the Canadian Prime Rate, the Australian Bank Bill Swap Rate (“BBSW”), or the New Zealand Bank Bill Benchmark Rate. To date, we have not experienced any material limitation with respect to the amount or availability of financing from any institution providing us vehicle financing. We also receive non-refundable credits from certain of our vehicle manufacturers, which are treated as a reduction of cost of sales as vehicles are sold. The weighted average interest rate on floor plan borrowings was 2.2%, 2.1%, and 1.8% for 2019, 2018, and 2017, respectively. We classify floor plan notes payable to a party other than the manufacturer of a particular new vehicle and all floor plan notes payable relating to pre-owned vehicles as “Floor plan notes payable — non-trade” on our consolidated balance sheets and classify related cash flows as a financing activity on our consolidated statements of cash flows. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Debt | |
Long-Term Debt | 10. Long-Term Debt Long-term debt consisted of the following: December 31, 2019 2018 U.S. credit agreement — revolving credit line $ 45.0 $ 30.0 U.K. credit agreement — revolving credit line 165.8 163.3 U.K. credit agreement — overdraft line of credit — 1.8 3.75% senior subordinated notes due 2020 299.2 297.9 5.75% senior subordinated notes due 2022 547.6 546.8 5.375% senior subordinated notes due 2024 298.0 297.6 5.50% senior subordinated notes due 2026 495.7 495.1 Australia capital loan agreement 31.7 33.6 Australia working capital loan agreement — 6.1 Mortgage facilities 423.2 289.6 Other 54.1 54.9 Total long-term debt $ 2,360.3 $ 2,216.7 Less: current portion (103.3) (92.0) Net long-term debt $ 2,257.0 $ 2,124.7 Scheduled maturities of long-term debt for each of the next five years and thereafter are as follows: 2020 $ 103.3 2021 16.3 2022 997.4 2023 185.1 2024 322.4 2025 and thereafter 735.8 Total long-term debt reported $ 2,360.3 U.S. Credit Agreement Our U.S. credit agreement (the “U.S. credit agreement”) with Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation provides for up to $700.0 million in revolving loans for working capital, acquisitions, capital expenditures, investments and other general corporate purposes, which includes $250.0 million in revolving loans solely for future acquisitions. The U.S. credit agreement provides for a maximum of $150.0 million of future borrowings for foreign acquisitions and expires on September 30, 2022. In July 2019, we amended the U.S. credit agreement to provide for the issuance of up to $50 million of letters of credit within the existing $700 million facility limit. On December 18, 2019, we amended the U.S. credit agreement, effective January 1, 2020, to lower the interest rate on revolving loans to LIBOR plus 1.75%, subject to an incremental 1.25% for uncollateralized borrowings in excess of a defined borrowing base. The U.S. credit agreement is fully and unconditionally guaranteed on a joint and several basis by substantially all of our U.S. subsidiaries and contains a number of significant covenants that, among other things, restrict our ability to dispose of assets, incur additional indebtedness, repay certain other indebtedness, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. We are also required to comply with specified financial and other tests and ratios, each as defined in the U.S. credit agreement including: a ratio of current assets to current liabilities, a fixed charge coverage ratio, a ratio of debt to stockholders’ equity and a ratio of debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of the amounts owed. The U.S. credit agreement also contains typical events of default, including change of control, non-payment of obligations and cross-defaults to our other material indebtedness. Substantially all of our U.S. assets are subject to security interests granted to the lenders under the U.S. credit agreement. As of December 31, 2019, we had $45.0 million outstanding under the U.S. credit agreement. U.K. Credit Agreement Our subsidiaries in the U.K. (the “U.K. subsidiaries”) are party to a £150.0 million revolving credit agreement with the National Westminster Bank plc and BMW Financial Services (GB) Limited, and an additional demand overdraft line of credit (collectively, the “U.K. credit agreement”) to be used for working capital, acquisitions, capital expenditures, investments and general corporate purposes. The loans mature on the termination date of the facility, which is December 12, 2023. The revolving loans bear interest between defined LIBOR plus 1.10% and defined LIBOR plus 2.10%. The U.K. credit agreement also includes a £100.0 million “accordion” feature which allows the U.K. subsidiaries to request up to an additional £100.0 million of facility capacity. The lenders may agree to provide the additional capacity, and, if not, the U.K. subsidiaries may add an additional lender, if available, to the facility to provide such additional capacity. As of December 31, 2019, outstanding loans under the U.K. credit agreement amounted to £125.0 million ($165.8 million). The U.K. credit agreement is fully and unconditionally guaranteed on a joint and several basis by our U.K. subsidiaries, and contains a number of significant covenants that, among other things, restrict the ability of our U.K. subsidiaries to pay dividends, dispose of assets, incur additional indebtedness, repay other indebtedness, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, our U.K. subsidiaries are required to comply with defined ratios and tests, including: a ratio of earnings before interest, taxes, amortization, and rental payments (“EBITAR”) to interest plus rental payments, a measurement of maximum capital expenditures, and a debt to EBITDA ratio. On December 18, 2019, we amended the U.K. credit agreement to provide additional covenant flexibility for 2019 capital expenditures. A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of any amounts owed. The U.K. credit agreement also contains typical events of default, including change of control and non-payment of obligations and cross-defaults to other material indebtedness of our U.K. subsidiaries. Substantially all of our U.K. subsidiaries’ assets are subject to security interests granted to the lenders under the U.K. credit agreement. Senior Subordinated Notes We have issued the following senior subordinated notes: Description Maturity Date Interest Payment Dates Principal Amount 3.75% Notes August 15, 2020 February 15, August 15 $300 million 5.75% Notes October 1, 2022 April 1, October 1 $550 million 5.375% Notes December 1, 2024 June 1, December 1 $300 million 5.50% Notes May 15, 2026 May 15, November 15 $500 million Each of these notes are our unsecured, senior subordinated obligations and are guaranteed on an unsecured senior subordinated basis by our 100% owned U.S. subsidiaries. Each also contain customary negative covenants and events of default. If we experience certain “change of control” events specified in the indentures, holders of these notes will have the option to require us to purchase for cash all or a portion of their notes at a price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the notes at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest. We classify our 3.75% Notes due August 15, 2020 as long-term debt as we have the intent and ability to refinance the obligation on a long-term basis with the availability of our U.S. Credit Agreement. Optional redemption. Australia Loan Agreements Penske Australia is party to two facilities with Volkswagen Financial Services Australia Pty Limited representing a five-year AU $50.0 million capital loan and a one-year AU $50.0 million working capital loan. Both facilities are subject to annual extensions. These agreements each provide the lender with a secured interest in all assets of these businesses. The loans bear interest at the Australian BBSW 30-day Bill Rate plus 3.0%. Irrespective of the term of the agreements, both agreements provide the lender with the ability to call the loans on 90 days’ notice. These facilities are also guaranteed by our U.S. parent company up to AU $50.0 million. As of December 31, 2019, we had AU $45.2 million ($31.7 million) outstanding under the capital loan agreement and no outstanding borrowings under the working capital loan agreement. Mortgage Facilities We are party to several mortgages that bear interest at defined rates and require monthly principal and interest payments. These mortgage facilities also contain typical events of default, including non-payment of obligations, cross-defaults to our other material indebtedness, certain change of control events, and the loss or sale of certain franchises operated at the properties. Substantially all of the buildings and improvements on the properties financed pursuant to the mortgage facilities are subject to security interests granted to the lender. As of December 31, 2019, we owed $423.2 million of principal under our mortgage facilities. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | 11. Commitments and Contingent Liabilities We are involved in litigation which may relate to claims brought by governmental authorities, issues with customers, and employment related matters, including class action claims and purported class action claims. As of December 31, 2019, we were not party to any legal proceedings, including class action lawsuits that, individually or in the aggregate, are reasonably expected to have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition or cash flows. We lease land and facilities, including certain dealerships and office space. Pursuant to the leases for some of our larger facilities, we are required to comply with specified financial ratios, including a “rent coverage” ratio and a debt to EBITDA ratio, each as defined. For these leases, non-compliance with the ratios may require us to post collateral in the form of a letter of credit. A breach of the other lease covenants gives rise to certain remedies by the landlord, the most severe of which include the termination of the applicable lease and acceleration of the total rent payments due under the lease. Refer to the disclosures provided in Note 3 for further description of our leases. Rent expense for the years ended December 31, 2019, 2018, and 2017 amounted to $232.0 million, $232.1 million, and $225.4 million, respectively. We have sold a number of dealerships to third parties and, as a condition to certain of those sales, remain liable for the lease payments relating to the properties on which those businesses operate in the event of non-payment by the buyer. We are also party to lease agreements on properties that we no longer use in our retail operations that we have sublet to third parties. We rely on subtenants to pay the rent and maintain the property at these locations. In the event the subtenant does not perform as expected, we may not be able to recover amounts owed to us and we could be required to fulfill these obligations. We believe we have made appropriate reserves relating to these locations. The aggregate rent paid by the tenants on those properties in 2019 was approximately $24.4 million and, in aggregate, we currently guarantee or are otherwise liable for approximately $214.3 million of these lease payments, including lease payments during available renewal periods. Our floor plan credit agreement with Mercedes Benz Financial Services Australia (“MBA”) provides us revolving loans for the acquisition of commercial vehicles for distribution to our retail network. This facility includes a commitment to repurchase dealer vehicles in the event the dealer’s floor plan agreement with MBA is terminated. We have $41.9 million of letters of credit outstanding as of December 31, 2019, and have posted $19.8 million of surety bonds in the ordinary course of business. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions We sometimes pay to and/or receive fees from Penske Corporation and its affiliates for services rendered in the normal course of business, or to reimburse payments made to third parties on each other’s behalf. These transactions are reviewed periodically by our Audit Committee and reflect the provider’s cost or an amount mutually agreed upon by both parties. During 2019, 2018, and 2017, Penske Corporation and its affiliates billed us $5.4 million, $6.2 million, and $6.2 million, respectively, and we billed Penske Corporation and its affiliates $80 thousand, $183 thousand, and $159 thousand, respectively, for such services. As of December 31, 2019 and 2018, we had $46 thousand and $100 thousand of receivables from, and $0.6 million and $0.6 million of payables to, Penske Corporation and its subsidiaries, respectively. On September 7, 2017, we acquired an additional 5.5% ownership interest in PTS, a leading provider of transportation and supply chain services, from GE Capital for approximately $239.1 million in cash. At the same time, Mitsui, our second largest shareholder, acquired an additional 10.0% ownership interest in PTS at the same valuation. After the transaction, PTS is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui. GE Capital no longer owns any ownership interests in PTS. In connection with this transaction, the PTS partners agreed to amend and restate the existing partnership agreement among the partners, which among other things, provides us with specified partner distribution and governance rights and restricts our ability to transfer our interests. We and Mitsui were granted additional governance rights as part of the transaction. In addition, the partnership now has a six member advisory committee (previously seven member) and we continue to be entitled to one of the six representatives. We continue to have the right to pro rata quarterly distributions equal to 50% of PTS’ consolidated net income and we expect to continue to realize significant cash tax savings. We continue to be able to transfer our directly owned interests with the unanimous consent of the other partners, or if we provide the remaining partners with a right of first offer to acquire our interests, except that we may transfer up to 9.02% of our interest to Penske Corporation without complying with the right of first offer to the remaining partner. We and Penske Corporation have previously agreed that (1) in the event of any transfer by Penske Corporation of their partnership interests to a third party, we will be entitled to “tag-along” by transferring a pro rata amount of our partnership interests on similar terms and conditions, and (2) Penske Corporation is entitled to a right of first refusal in the event of any transfer of our partnership interests, subject to the terms of the partnership agreement. Additionally, PTS has agreed to indemnify the general partner for any actions in connection with managing PTS, except those taken in bad faith or in violation of the partnership agreement. The partnership agreement continues to allow Penske Corporation, beginning December 31, 2017, to give notice to require PTS to begin to effect an initial public offering of equity securities, subject to certain limitations, as soon as practicable after the first anniversary of the initial notice, and, beginning in 2025, we and Mitsui continue to have a similar right to require PTS to begin an initial public offering of equity securities, subject to certain limitations, as soon as reasonably practicable. The term of the partnership agreement was amended as part of the transaction to be indefinite. In 2019, 2018, and 2017, we received $71.9 million, $63.2 million, and $52.4 million, respectively, from PTS in pro rata cash dividends. In 2014, we formed a venture with PTS, Penske Commercial Leasing Australia. This venture combines PTS’ fleet operations expertise with our market knowledge of commercial vehicles to rent heavy duty commercial vehicles in Australia. This venture is accounted for as an equity method investment as discussed in Note 4. In December 2017, we sold our 31% ownership interest in Penske Vehicle Services, an automotive fleet management company, to PTS for a purchase price of $19.2 million. We previously accounted for this venture as an equity method investment. Joint Venture Relationships From time to time we enter into joint venture relationships in the ordinary course of business, pursuant to which we own and operate automotive dealerships together with other investors. We may also provide these dealerships with working capital and other debt financing at costs that are based on our incremental borrowing rate. As of December 31, 2019, our automotive joint venture relationships were as follows: Location Dealerships Ownership Interest Fairfield, Connecticut Audi, Mercedes-Benz, Sprinter, Porsche 80.00 % (A) Greenwich, Connecticut Mercedes-Benz 80.00 % (A) Edison, New Jersey Bentley, Ferrari, Maserati 20.00 % (B) (D) Northern Italy BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Mercedes-Benz, smart, Lamborghini 84.10 % (A) Aachen, Germany Audi, Maserati, SEAT, Skoda, Volkswagen 91.80 % (A) (C) Frankfurt, Germany Lexus, Toyota, Volkswagen 50.00 % (B) Barcelona, Spain BMW, MINI 50.00 % (B) Tokyo, Japan BMW, MINI, Rolls-Royce, Ferrari, ALPINA 49.00 % (B) (a) Entity is consolidated in our financial statements. (b) Entity is accounted for using the equity method of accounting. (c) In 2019, we acquired an additional 12.4% ownership interest in this joint venture and now own 91.8%. (d) In 2019, we sold a majority interest in dealerships in Edison, New Jersey representing the Bentley, Ferrari, and Maserati brands and now maintain a 20% ownership interest in this joint venture. Additionally, we are party to non-automotive joint ventures representing our investments in PTS (28.9%) and Penske Commercial Leasing Australia (28%) that are accounted for under the equity method, as more fully discussed in Note 4. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 13. Stock-Based Compensation Key employees, outside directors, consultants and advisors of PAG are eligible to receive stock-based compensation pursuant to the terms of our 2015 Equity Incentive Plan (the “2015 Plan”). This plan allows for the issuance of shares for stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other awards. The 2015 Plan is a five-year plan which allows for up to 4,000,000 awards of which 2,259,169 shares of common stock were available for grant as of December 31, 2019. Compensation expense related to our equity incentive plan was $17.8 million, $16.8 million, and $16.0 million during 2019, 2018, and 2017, respectively. Restricted Stock During 2019, 2018, and 2017, we granted 524,063, 330,048, and 320,018 shares, respectively, of restricted common stock and restricted stock units at no cost to participants under the plan. These awards provide the holder voting and dividend rights prior to vesting. The awards are subject to forfeiture and are non-transferable, which restrictions generally lapse over a four year period from the grant date at a rate of 15%, 15%, 20% and 50% per year. We have determined that the grant date quoted market price of the underlying common stock is the appropriate measure of compensation cost. This cost is amortized as expense over the restriction period. As of December 31, 2019, there was $30.3 million of unrecognized compensation cost related to the restricted stock, which is expected to be recognized over the restricted period. Presented below is a summary of the status of our restricted stock as of December 31, 2019 and 2018, and changes during the year ended December 31, 2019: Weighted Average Aggregate Shares Grant Date Fair Value Intrinsic Value December 31, 2018 912,408 $ 47.19 Granted 524,063 45.75 Vested (278,320) 46.94 Forfeited (31,446) 48.34 December 31, 2019 1,126,705 $ 46.55 $ 56.6 |
Equity
Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity | |
Equity | 14. Equity A summary of shares repurchased under our securities repurchase program, and shares acquired, is as follows: Year Ended December 31, 2019 2018 2017 Shares repurchased (1) 3,871,887 1,467,886 302,000 Aggregate purchase price $ 169.2 $ 63.1 $ 12.7 Average purchase price per share $ 43.71 $ 43.00 $ 41.95 Shares acquired (2) 114,949 119,608 133,710 Aggregate purchase price $ 4.9 $ 5.8 $ 5.8 Average purchase price per share $ 42.72 $ 48.61 $ 43.28 (1) Shares were repurchased under our securities repurchase program. As of December 31, 2019, we had $200 million in repurchase authorization under the repurchase program. (2) Shares were acquired from employees in connection with a net share settlement feature of employee equity awards. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income/(Loss) | 15. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component and the reclassifications out of accumulated other comprehensive income (loss) during the years ended December 31, 2019, 2018, and 2017 attributable to Penske Automotive Group common stockholders follows: Accumulated Foreign Other Currency Comprehensive Translation Other Income (Loss) Balance at January 1, 2017 $ (230.0) $ (20.7) $ (250.7) Other comprehensive income before reclassifications 96.0 8.2 104.2 Amounts reclassified from accumulated other comprehensive income — net of tax provision of $0.0 — — — Net current-period other comprehensive income 96.0 8.2 104.2 Balance at December 31, 2017 $ (134.0) $ (12.5) $ (146.5) Other comprehensive income before reclassifications (74.3) (13.7) (88.0) Amounts reclassified from accumulated other comprehensive income — net of tax provision $0.0 — — — Net current-period other comprehensive income (74.3) (13.7) (88.0) Balance at December 31, 2018 $ (208.3) $ (26.2) $ (234.5) Other comprehensive income before reclassifications 22.2 9.5 31.7 Amounts reclassified from accumulated other comprehensive income — net of tax provision of $0.0 — — — Net current-period other comprehensive income 22.2 9.5 31.7 Balance at December 31, 2019 $ (186.1) $ (16.7) $ (202.8) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 16. Income Taxes On December 22, 2017, the President of the United States signed into law P.L. 115-97, commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “Act”). The Act modifies several provisions of the Internal Revenue Code related to corporations, including a permanent corporate income tax rate reduction from 35% to 21% , effective January 1, 2018. The Act also significantly changes U.S. international tax laws for tax years beginning after December 31, 2017 and requires a one-time mandatory deemed repatriation of all cumulative post-1986 foreign earnings & profits (“E&P”) of a U.S. Shareholder’s foreign subsidiaries, effective during 2017. In accordance with SAB 118, we have obtained, prepared, and analyzed additional information about facts and circumstances that existed as of the enactment date and computed the U.S. tax impact of the Act. We determined that our final U.S. federal and state tax liability as a result of the transition tax on repatriation resulted in $52.2 million on a deemed repatriation of $946.0 million of foreign earnings and profits. The remeasurement of certain deferred tax assets and liabilities due to the corporate income tax rate reduction provided an income tax benefit of $301.2 million for the 2017 tax year. We have considered and analyzed the applicability of the global intangible low-taxed income (“GILTI”) provisions of the Act beginning in 2018 and its effect on our annualized effective tax rate for 2019. The effect of the GILTI inclusion on the 2019 annualized effective tax rate is not material. We have adopted the method of accounting for GILTI inclusions as a period expense and therefore have not accrued any deferred taxes in relation to this provision in the 2019 consolidated financial statements. Income from continuing operations before income taxes by geographic region was as follows: Year Ended December 31, 2019 2018 2017 U.S. $ 427.8 $ 390.3 $ 375.4 Non-U.S. 163.7 213.8 172.8 Income from continuing operations before income taxes $ 591.5 $ 604.1 $ 548.2 Income taxes relating to income from continuing operations consisted of the following: Year Ended December 31, 2019 2018 2017 Current: Federal $ 23.6 $ (15.6) $ (3.5) State and local 4.3 (2.9) 4.2 Foreign 36.8 46.9 43.2 Total current $ 64.7 $ 28.4 $ 43.9 Deferred: Federal 67.6 85.9 (150.5) State and local 24.0 20.0 47.2 Foreign 0.4 — (5.4) Total deferred $ 92.0 $ 105.9 $ (108.7) Income taxes $ 156.7 $ 134.3 $ (64.8) Income taxes relating to income from continuing operations varied from the U.S. federal statutory income tax rate due to the following: Year Ended December 31, 2019 2018 2017 Income taxes at federal statutory rate $ 124.2 $ 126.9 $ 191.9 State and local income taxes, net of federal taxes 23.6 13.8 13.7 Non-U.S. income taxed at other rates 2.8 1.9 (25.2) Revaluation of U.S. deferreds — — (301.6) Deemed mandatory repatriation — — 54.8 SAB 118 benefit — (11.6) — Other 6.1 3.3 1.6 Income taxes $ 156.7 $ 134.3 $ (64.8) The components of deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows: December 31, 2019 2018 Deferred Tax Assets Accrued liabilities $ 49.7 $ 48.7 Net operating loss and credit carryforwards 72.8 81.4 Leasing liabilities 577.8 — Other 27.6 27.9 Total deferred tax assets 727.9 158.0 Valuation allowance (45.7) (40.5) Net deferred tax assets $ 682.2 $ 117.5 Deferred Tax Liabilities Depreciation and amortization (206.9) (188.0) Partnership investments (569.0) (499.3) Leasing assets (577.8) — Other (6.4) (8.0) Total deferred tax liabilities (1,360.1) (695.3) Net deferred tax liabilities $ (677.9) $ (577.8) We are not permanently reinvested in a portion of our previously-taxed unremitted foreign earnings, which may be distributed in the future. At December 31, 2019, we have accrued the appropriate amount of U.S. state income taxes and foreign withholding taxes for the unremitted foreign earnings that are not permanently reinvested. We have not provided any U.S. taxes on a total temporary difference of $109.5 million related to the excess of financial reporting basis over tax basis in our non-U.S. subsidiaries, as it is our position that we are permanently reinvested for this basis difference. At December 31, 2019, we have $598.0 million of state net operating loss carryforwards in the U.S. that expire at various dates beginning in 2020 through 2039, U.S. federal and state credit carryforwards of $4.1 million that will not expire, a U.S. foreign tax credit carryforward of $20.1 million that will expire in beginning in 2027, U.K. capital loss carryforwards of $2.6 million that will not expire, Germany net operating loss carryforwards of $42.5 million that will not expire, Australia net operating loss carryforwards of $4.6 million that will not expire, New Zealand net operating loss carryforwards of $4.8 million that will not expire and Italy net operating loss carryforwards of $0.1 million that will not expire. The Company generated $5.3 million of state net operating loss carryforwards in the U.S. in 2019. A valuation allowance of $0.7 million has been recorded against the state net operating loss carryforwards in the U.S., a valuation allowance of $0.4 million has been recorded against the state credit carryforwards in the U.S. and a valuation allowance of $17.9 million has been recorded against the U.S. foreign tax credit carryforward as of December 31, 2019. A valuation allowance of $16.8 million has been recorded against German net operating losses and other deferred tax assets. A valuation allowance of $10.0 million has been recorded against U.K. deferred tax assets related to buildings as of December 31, 2019. Generally accepted accounting principles relating to uncertain income tax positions prescribe a minimum recognition threshold a tax position is required to meet before being recognized, and provides guidance on the derecognition, measurement, classification, and disclosure relating to income taxes. The movement in uncertain tax positions for the years ended December 31, 2019, 2018, and 2017 were as follows: Year Ended December 31, 2019 2018 2017 Uncertain tax positions — January 1 $ 0.1 $ 3.5 $ 3.4 Gross increase — tax position in prior periods — — 0.2 Gross decrease — tax position in prior periods — (3.4) (0.1) Gross increase — current period tax position — — — Settlements — — — Lapse in statute of limitations — — — Foreign exchange — — — Uncertain tax positions — December 31 $ 0.1 $ 0.1 $ 3.5 We have elected to include interest and penalties in our income tax expense. The total interest and penalties included within uncertain tax positions at December 31, 2019 was $0. We do not expect a significant change to the amount of uncertain tax positions within the next twelve months. Our U.S. federal returns remain open to examination for 2016 through 2018 and various U.S. state jurisdictions are open for periods ranging from 2015 through 2018. The portion of the total amount of uncertain tax positions as of December 31, 2019 that would, if recognized, impact the effective tax rate was $0.1 million. We have classified our tax reserves as a long-term obligation on the basis that management does not expect to make payments relating to those reserves within the next twelve months. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information | |
Segment Information | 17. Segment Information Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. The Retail Automotive reportable segment includes all automotive dealerships and all departments relevant to the operation of the dealerships and our retail automotive joint ventures. The individual dealership operations included in the Retail Automotive reportable segment represent six operating segments: Eastern, Central, and Western United States, Stand-Alone Used United States, International, and Stand-Alone Used International. These operating segments have been aggregated into one reportable segment as their operations (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and/or used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals) and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The accounting policies of the segments are the same and are described in Note 1. The following table summarizes revenues, floor plan interest expense, other interest expense, depreciation, equity in earnings of affiliates, and income (loss) from continuing operations before certain non-recurring items and income taxes, which is the measure by which management allocates resources to its segments and which we refer to as adjusted segment income, for each of our reportable segments. Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2019 $ 20,615.8 $ 2,050.5 $ 513.1 $ — $ — $ 23,179.4 2018 20,849.2 1,374.5 561.4 — — 22,785.1 2017 19,824.3 1,048.0 514.6 — — 21,386.9 Floor plan interest expense 2019 $ 74.9 $ 8.0 $ 1.6 $ — $ — $ 84.5 2018 74.9 4.2 1.8 — — 80.9 2017 59.4 2.7 1.3 — — 63.4 Other interest expense 2019 $ 118.4 $ 3.2 $ 2.6 $ — $ — $ 124.2 2018 108.3 2.4 4.0 — — 114.7 2017 95.0 3.4 9.0 — — 107.4 Depreciation 2019 $ 99.1 $ 5.5 $ 5.0 $ — $ — $ 109.6 2018 94.2 4.3 5.2 — — 103.7 2017 85.7 4.1 5.3 — — 95.1 Equity in earnings of affiliates 2019 $ 5.2 $ — $ — $ 142.3 $ — $ 147.5 2018 5.2 — — 129.6 — 134.8 2017 4.6 — — 103.0 — 107.6 Adjusted segment income 2019 $ 339.9 $ 86.5 $ 22.8 $ 142.3 $ — $ 591.5 2018 389.7 62.3 22.5 129.6 — 604.1 2017 397.2 38.4 9.6 103.0 — 548.2 Total assets, equity method investments, and capital expenditures by reportable segment are as set forth in the table below: Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Total assets 2019 $ 10,960.1 $ 1,075.8 $ 579.9 $ 1,326.9 $ — $ 13,942.7 2018 8,501.4 571.5 590.5 1,241.1 — 10,904.5 Equity method investments 2019 $ 72.1 $ — $ — $ 1,326.9 $ — $ 1,399.0 2018 64.1 — — 1,241.1 — 1,305.2 Capital expenditures 2019 $ 231.9 $ 9.9 $ 3.5 $ — $ — $ 245.3 2018 292.6 9.3 3.7 — — 305.6 2017 237.8 6.4 2.8 — — 247.0 The following table presents revenue and long-lived assets (all non-current assets except goodwill, other indefinite-lived intangible assets, and operating lease right-of-use assets) by geographic area: Year Ended December 31, 2019 2018 2017 Revenue from external customers: U.S. $ 13,511.8 $ 12,607.8 $ 12,487.2 Non-U.S. 9,667.6 10,177.3 8,899.7 Total revenue from external customers $ 23,179.4 $ 22,785.1 $ 21,386.9 Long-lived assets, net: U.S. $ 2,481.1 $ 2,365.5 Non-U.S. 1,303.8 1,205.6 Total long-lived assets $ 3,784.9 $ 3,571.1 The Company’s non-U.S. operations are predominantly based in the U.K. The following tables present our revenue from external customers by product type for our Retail Automotive and Retail Commercial Truck segments: Year Ended December 31, Retail Automotive Dealership Revenue 2019 2018 2017 New vehicle $ 9,329.5 $ 9,666.4 $ 9,678.5 Used vehicle 7,241.2 7,252.1 6,386.8 Finance and insurance, net 652.1 629.6 581.8 Service and parts 2,195.9 2,151.4 2,057.5 Fleet and wholesale 1,197.1 1,149.7 1,119.7 Total retail automotive dealership revenue $ 20,615.8 $ 20,849.2 $ 19,824.3 Year Ended December 31, Retail Commercial Truck Dealership Revenue 2019 2018 2017 New truck $ 1,347.2 $ 866.9 $ 613.2 Used truck 117.0 112.0 89.4 Finance and insurance, net 12.4 11.9 9.0 Service and parts 503.3 364.5 325.6 Other 70.6 19.2 10.8 Total retail commercial truck dealership revenue $ 2,050.5 $ 1,374.5 $ 1,048.0 |
Summary of Quarterly Financial
Summary of Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Quarterly Financial Data (Unaudited) | |
Summary of Quarterly Financial Data (Unaudited) | 18. Summary of Quarterly Financial Data (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 2019 (1) Total revenues $ 5,564.4 $ 5,755.8 $ 5,967.6 $ 5,881.4 Gross profit 851.5 867.8 869.7 866.5 Income from continuing operations 99.1 118.4 116.0 101.3 Net income 99.2 118.5 116.1 101.3 Net income attributable to Penske Automotive Group common stockholders 100.2 117.8 116.2 101.6 Diluted earnings per share attributable to Penske Automotive Group common stockholders: Income from continuing operations per share $ 1.19 $ 1.42 $ 1.42 $ 1.25 Net income per share $ 1.19 $ 1.42 $ 1.42 $ 1.25 2018 (1) Total revenues $ 5,746.9 $ 5,940.3 $ 5,658.6 $ 5,439.3 Gross profit 864.4 889.8 852.6 808.1 Income from continuing operations 107.7 135.2 130.0 96.9 Net income 107.8 135.2 130.1 97.2 Net income attributable to Penske Automotive Group common stockholders 108.1 134.6 130.2 98.1 Diluted earnings per share attributable to Penske Automotive Group common stockholders: Income from continuing operations per share $ 1.26 $ 1.58 $ 1.53 $ 1.15 Net income per share $ 1.26 $ 1.58 $ 1.53 $ 1.16 (1) Per share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year per share amounts due to rounding. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Consolidating Financial Information | |
Condensed Consolidating Financial Information | 19. Condensed Consolidating Financial Information The following tables include condensed consolidating financial information as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018, and 2017 for Penske Automotive Group, Inc. (as the issuer of the 5.75% Notes, the 5.375% Notes, the 5.50% CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2019 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ 28.1 $ — $ — $ — $ 28.1 Accounts receivable, net 960.3 (497.4) 497.4 508.9 451.4 Inventories 4,260.7 — — 2,124.9 2,135.8 Other current assets 85.0 — 3.7 22.7 58.6 Total current assets 5,334.1 (497.4) 501.1 2,656.5 2,673.9 Property and equipment, net 2,366.4 — 3.7 1,101.2 1,261.5 Operating lease right-of-use assets 2,360.5 — 9.3 1,574.7 776.5 Intangible assets 2,463.2 — — 1,633.6 829.6 Equity method investments 1,399.0 — 1,328.8 — 70.2 Other long-term assets 19.5 (2,984.3) 2,996.2 1.4 6.2 Total assets $ 13,942.7 $ (3,481.7) $ 4,839.1 $ 6,967.4 $ 5,617.9 Floor plan notes payable $ 2,412.5 $ — $ — $ 1,427.1 $ 985.4 Floor plan notes payable — non-trade 1,594.0 — 233.9 522.5 837.6 Accounts payable 638.8 — 6.0 226.9 405.9 Accrued expenses and other current liabilities 701.9 (497.4) 1.6 242.0 955.7 Current portion of long-term debt 103.3 — 13.0 10.7 79.6 Liabilities held for sale 0.5 — — 0.5 — Total current liabilities 5,451.0 (497.4) 254.5 2,429.7 3,264.2 Long-term debt 2,257.0 (96.8) 1,757.9 254.5 341.4 Long-term operating lease liabilities 2,301.2 — 8.9 1,545.6 746.7 Deferred tax liabilities 677.9 — — 668.1 9.8 Other long-term liabilities 444.0 — 6.2 30.9 406.9 Total liabilities 11,131.1 (594.2) 2,027.5 4,928.8 4,769.0 Total equity 2,811.6 (2,887.5) 2,811.6 2,038.6 848.9 Total liabilities and equity $ 13,942.7 $ (3,481.7) $ 4,839.1 $ 6,967.4 $ 5,617.9 CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2018 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ 39.4 $ — $ — $ 12.9 $ 26.5 Accounts receivable, net 929.1 (481.7) 481.7 507.1 422.0 Inventories 4,040.1 — — 1,961.6 2,078.5 Other current assets 86.6 — 10.6 17.8 58.2 Total current assets 5,095.2 (481.7) 492.3 2,499.4 2,585.2 Property and equipment, net 2,250.0 — 3.9 1,077.7 1,168.4 Intangible assets 2,238.2 — — 1,422.6 815.6 Equity method investments 1,305.2 — 1,239.9 — 65.3 Other long-term assets 15.9 (2,814.3) 2,821.0 2.9 6.3 Total assets $ 10,904.5 $ (3,296.0) $ 4,557.1 $ 5,002.6 $ 4,640.8 Floor plan notes payable $ 2,362.2 $ — $ — $ 1,348.3 $ 1,013.9 Floor plan notes payable — non-trade 1,428.6 — 232.3 505.9 690.4 Accounts payable 598.2 — 4.9 196.6 396.7 Accrued expenses 566.6 (481.7) 1.4 160.2 886.7 Current portion of long-term debt 92.0 — — 6.3 85.7 Liabilities held for sale 0.7 — — 0.7 — Total current liabilities 5,048.3 (481.7) 238.6 2,218.0 3,073.4 Long-term debt 2,124.7 (88.6) 1,683.8 225.7 303.8 Deferred tax liabilities 577.8 — — 570.5 7.3 Other long-term liabilities 519.0 — — 57.6 461.4 Total liabilities 8,269.8 (570.3) 1,922.4 3,071.8 3,845.9 Total equity 2,634.7 (2,725.7) 2,634.7 1,930.8 794.9 Total liabilities and equity $ 10,904.5 $ (3,296.0) $ 4,557.1 $ 5,002.6 $ 4,640.8 CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2019 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ 23,179.4 $ — $ — $ 12,928.7 $ 10,250.7 Cost of sales 19,723.9 — — 10,909.5 8,814.4 Gross profit 3,455.5 — — 2,019.2 1,436.3 Selling, general and administrative expenses 2,693.2 — 25.9 1,471.2 1,196.1 Depreciation 109.6 — 1.4 59.9 48.3 Operating income 652.7 — (27.3) 488.1 191.9 Floor plan interest expense (84.5) — (8.0) (57.1) (19.4) Other interest expense (124.2) — (83.4) (12.6) (28.2) Equity in earnings of affiliates 147.5 — 142.3 — 5.2 Equity in earnings of subsidiaries — (568.6) 568.6 — — Income from continuing operations before income taxes 591.5 (568.6) 592.2 418.4 149.5 Income taxes (156.7) 150.5 (156.7) (116.9) (33.6) Income from continuing operations 434.8 (418.1) 435.5 301.5 115.9 Income (loss) from discontinued operations, net of tax 0.3 (0.3) 0.3 0.3 — Net income 435.1 (418.4) 435.8 301.8 115.9 Other comprehensive (loss) income, net of tax 31.4 (20.1) 31.4 — 20.1 Comprehensive income 466.5 (438.5) 467.2 301.8 136.0 Less: Comprehensive income attributable to non-controlling interests (1.0) 0.3 (0.3) — (1.0) Comprehensive income attributable to Penske Automotive Group common stockholders $ 467.5 $ (438.8) $ 467.5 $ 301.8 $ 137.0 CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2018 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ 22,785.1 $ — $ — $ 12,036.6 $ 10,748.5 Cost of sales 19,370.2 — — 10,130.4 9,239.8 Gross profit 3,414.9 — — 1,906.2 1,508.7 Selling, general and administrative expenses 2,646.3 — 24.9 1,403.7 1,217.7 Depreciation 103.7 — 1.5 56.1 46.1 Operating income 664.9 — (26.4) 446.4 244.9 Floor plan interest expense (80.9) — (7.2) (50.7) (23.0) Other interest expense (114.7) — (77.8) (8.8) (28.1) Equity in earnings of affiliates 134.8 — 129.5 — 5.3 Equity in earnings of subsidiaries — (586.8) 586.8 — — Income from continuing operations before income taxes 604.1 (586.8) 604.9 386.9 199.1 Income taxes (134.3) 130.3 (134.3) (88.6) (41.7) Income from continuing operations 469.8 (456.5) 470.6 298.3 157.4 Income (loss) from discontinued operations, net of tax 0.5 (0.5) 0.5 0.5 — Net income 470.3 (457.0) 471.1 298.8 157.4 Other comprehensive (loss) income, net of tax (89.5) 74.9 (89.5) — (74.9) Comprehensive income 380.8 (382.1) 381.6 298.8 82.5 Less: Comprehensive income attributable to non-controlling interests (2.2) 1.5 (1.5) — (2.2) Comprehensive income attributable to Penske Automotive Group common stockholders $ 383.0 $ (383.6) $ 383.1 $ 298.8 $ 84.7 CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2017 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ 21,386.9 $ — $ — $ 11,825.9 $ 9,561.0 Cost of sales 18,164.4 — — 9,945.0 8,219.4 Gross profit 3,222.5 — — 1,880.9 1,341.6 Selling, general and administrative expenses 2,516.0 — 24.5 1,393.3 1,098.2 Depreciation 95.1 — 1.6 53.1 40.4 Operating income 611.4 — (26.1) 434.5 203.0 Floor plan interest expense (63.4) — (4.9) (38.5) (20.0) Other interest expense (107.4) — (73.5) (8.9) (25.0) Equity in earnings of affiliates 107.6 — 102.8 — 4.8 Equity in earnings of subsidiaries — (550.6) 550.6 — — Income from continuing operations before income taxes 548.2 (550.6) 548.9 387.1 162.8 Income taxes 64.8 (64.8) 64.8 95.5 (30.7) Income from continuing operations 613.0 (615.4) 613.7 482.6 132.1 (Loss) income from discontinued operations, net of tax (0.2) 0.2 (0.2) (0.2) — Net income 612.8 (615.2) 613.5 482.4 132.1 Other comprehensive income (loss), net of tax 107.4 (97.5) 107.4 — 97.5 Comprehensive income 720.2 (712.7) 720.9 482.4 229.6 Less: Comprehensive income attributable to non-controlling interests 2.7 (3.2) 3.2 — 2.7 Comprehensive income attributable to Penske Automotive Group common stockholders $ 717.5 $ (709.5) $ 717.7 $ 482.4 $ 226.9 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2019 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ 518.3 $ (79.2) $ 554.2 $ 43.3 Investing activities: Purchase of equipment and improvements (245.3) (1.6) (91.3) (152.4) Proceeds from sale of dealerships 22.8 — 16.2 6.6 Proceeds from sale-leaseback transactions 18.9 — — 18.9 Acquisitions, net (326.9) — (332.7) 5.8 Other (2.2) (3.8) 3.4 (1.8) Net cash used in continuing investing activities (532.7) (5.4) (404.4) (122.9) Financing activities: Net borrowings of long-term debt 130.4 84.9 32.3 13.2 Net borrowings of floor plan notes payable — non-trade 177.5 1.6 28.7 147.2 Payment of debt issuance costs (0.4) (0.4) — — Repurchases of common stock (169.2) (169.2) — — Dividends (130.8) (130.8) — — Other (4.9) (4.9) — — Distributions from (to) parent — 303.4 (224.0) (79.4) Net cash provided (used in) by continuing financing activities 2.6 84.6 (163.0) 81.0 Net cash provided by discontinued operations 0.3 — 0.3 — Effect of exchange rate changes on cash and cash equivalents 0.2 — — 0.2 Net change in cash and cash equivalents (11.3) — (12.9) 1.6 Cash and cash equivalents, beginning of period 39.4 — 12.9 26.5 Cash and cash equivalents, end of period $ 28.1 $ — $ — $ 28.1 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2018 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by continuing operating activities $ 614.2 $ 3.4 $ 535.2 $ 75.6 Investing activities: Purchase of equipment and improvements (305.6) (1.2) (173.9) (130.5) Proceeds from sale of dealerships 84.5 — 82.0 2.5 Proceeds from sale-leaseback transactions 10.7 — — 10.7 Acquisitions, net (309.1) — (140.5) (168.6) Other (5.7) (3.8) — (1.9) Net cash used in continuing investing activities (525.2) (5.0) (232.4) (287.8) Financing activities: Net borrowings (repayments) of long-term debt 93.5 (142.0) 81.1 154.4 Net borrowings (repayments) of floor plan notes payable — non-trade 10.0 35.6 (96.0) 70.4 Payment of debt issuance costs (1.9) (1.9) — — Repurchases of common stock (68.9) (68.9) — — Dividends (121.2) (121.2) — — Other (5.8) (5.8) — — Distributions from (to) parent — 305.8 (290.3) (15.5) Net cash (used in) provided by continuing financing activities (94.3) 1.6 (305.2) 209.3 Net cash provided by discontinued operations 0.5 — 0.5 — Effect of exchange rate changes on cash and cash equivalents (1.5) — — (1.5) Net change in cash and cash equivalents (6.3) — (1.9) (4.4) Cash and cash equivalents, beginning of period 45.7 — 14.8 30.9 Cash and cash equivalents, end of period $ 39.4 $ — $ 12.9 $ 26.5 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2017 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ 623.0 $ (46.8) $ 643.3 $ 26.5 Investing activities: Purchase of equipment and improvements (247.0) (3.2) (138.0) (105.8) Proceeds from sale of dealerships 25.1 — 9.0 16.1 Proceeds from sale-leaseback transactions 22.2 — — 22.2 Acquisition of additional ownership interest in Penske Truck Leasing (239.1) (239.1) — — Acquisitions, net (449.7) — (334.5) (115.2) Other (40.2) (40.0) — (0.2) Net cash used in continuing investing activities (928.7) (282.3) (463.5) (182.9) Financing activities: Issuance of 3.75% senior subordinated notes 300.0 300.0 — — Net (repayments) borrowings of long-term debt (26.0) (68.0) 6.4 35.6 Net borrowings of floor plan notes payable — non-trade 185.3 40.6 4.8 139.9 Payment of debt issuance costs (4.0) (4.0) — — Repurchases of common stock (18.5) (18.5) — — Dividends (108.4) (108.4) — — Other (5.8) (5.8) — — Distributions from (to) parent — 193.2 (188.3) (4.9) Net cash provided by (used in) continuing financing activities 322.6 329.1 (177.1) 170.6 Net cash provided by discontinued operations 2.7 — 2.7 — Effect of exchange rate changes on cash and cash equivalents 2.1 — — 2.1 Net change in cash and cash equivalents 21.7 — 5.4 16.3 Cash and cash equivalents, beginning of period 24.0 — 9.4 14.6 Cash and cash equivalents, end of period $ 45.7 $ — $ 14.8 $ 30.9 |
Schedule II VALUATION AND QUALI
Schedule II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2019 | |
Schedule II VALUATION AND QUALIFYING ACCOUNTS | |
Schedule II VALUATION AND QUALIFYING ACCOUNTS | Schedule II PENSKE AUTOMOTIVE GROUP, INC. VALUATION AND QUALIFYING ACCOUNTS (In millions) Balance at Deductions, Balance Beginning Recoveries, at End Description of Year Additions & Other of Year Year Ended December 31, 2019 Allowance for doubtful accounts $ 5.4 $ 3.6 $ (3.3) $ 5.7 Tax valuation allowance 40.5 5.4 (0.2) 45.7 Year Ended December 31, 2018 Allowance for doubtful accounts $ 5.5 $ 2.0 $ (2.1) $ 5.4 Tax valuation allowance 36.6 4.0 (0.1) 40.5 Year Ended December 31, 2017 Allowance for doubtful accounts $ 4.5 $ 2.5 $ (1.5) $ 5.5 Tax valuation allowance 17.2 21.5 (2.1) 36.6 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Summary of Significant Accounting Policies | |
Business Overview and Concentrations | Business Overview and Concentrations We are a diversified international transportation services company that operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. In 2019, our business generated $23.2 billion in total revenue, which is comprised of approximately $20.6 billion from retail automotive dealerships, $2.1 billion from retail commercial truck dealerships and $0.5 billion from commercial vehicle distribution and other operations. Retail Automotive Dealership. We are engaged in the sale of new and used motor vehicles and related products and services, including vehicle service, collision repair, and placement of finance and lease contracts, third-party insurance products and other aftermarket products. We operate dealerships under franchise agreements with a number of automotive manufacturers and distributors. In accordance with individual franchise agreements, each dealership is subject to certain rights and restrictions typical of such industry. The ability of the manufacturers to influence the operations of the dealerships, or the loss of a significant number of franchise agreements, could have a material impact on our results of operations, financial position and cash flows. For the year ended December 31, 2019, Audi/Volkswagen/Porsche/Bentley franchises accounted for 23% of our total retail automotive dealership revenues, BMW/MINI franchises accounted for 23%, and Toyota/Lexus franchises accounted for 13%. No other manufacturers’ franchises accounted for more than 10% of our total retail automotive dealership revenues. At December 31, 2019 and 2018, we had receivables from manufacturers of $244.6 million and $211.3 million, respectively. In addition, a large portion of our contracts in transit, which are included in accounts receivable, are due from manufacturers’ captive finance companies. During 2019, we disposed of twenty-five retail automotive franchises and were awarded one retail automotive franchise. Of the franchises disposed of, ten represented franchises in the U.S., seven represented franchises in Germany, and eight represented franchises in the U.K. We maintained a 20% ownership interest in three of the franchises disposed of in the U.S. representing the Bentley, Ferrari, and Maserati brands and account for the joint venture using the equity method of accounting. We also acquired an additional 12.4% interest in the Jacobs Group, one of our German automotive dealership joint ventures, and now own a 91.8% interest in the Jacobs Group. We also operate sixteen used vehicle supercenters in the U.S. and the U.K. which retail and wholesale used vehicles under a one price, “no-haggle” methodology. Our CarSense operations in the U.S. consist of six retail locations operating in the Philadelphia and Pittsburgh, Pennsylvania market areas. Our CarShop operations in the U.K. consist of ten retail locations and a vehicle preparation center. During 2019, we opened one used vehicle supercenter in the U.S. and one used vehicle supercenter in the U.K. Retail Commercial Truck Dealership. trucks available for sale as well as service and parts departments, providing a full range of maintenance and repair services. Penske Australia. Penske Transportation Solutions. |
Basis of Presentation | Basis of Presentation The consolidated financial statements include all majority-owned subsidiaries. Investments in affiliated companies, representing an ownership interest in the voting stock of the affiliate of between 20% and 50% or an investment in a limited partnership or a limited liability corporation for which our investment is more than minor, are stated at the cost of acquisition plus our equity in undistributed net earnings since acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements, including the comparative periods presented, have been adjusted for entities that have been treated as discontinued operations prior to adoption of ASU No. 2014-08 in accordance with generally accepted accounting principles. |
Estimates | Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets, and certain reserves. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly-liquid investments that have an original maturity of three months or less at the date of purchase. |
Contracts in Transit | Contracts in Transit Contracts in transit represent receivables from unaffiliated finance companies relating to the sale of customers’ installment sales and lease contracts arising in connection with the sale of a vehicle by us. Contracts in transit, included in accounts receivable, net in our consolidated balance sheets, amounted to $291.1 million and $314.2 million as of December 31, 2019 and 2018, respectively. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost or net realizable value. Cost for new and used vehicle inventories includes acquisition, reconditioning, dealer installed accessories, and transportation expenses and is determined using the specific identification method. Inventories of dealership parts and accessories are accounted for using the “first-in, first-out” (“FIFO”) method of inventory accounting and the cost is based on factory list prices. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated over estimated useful lives using the straight-line method. Useful lives for purposes of computing depreciation for assets, other than leasehold improvements, range between 3 Expenditures relating to recurring repair and maintenance are expensed as incurred. Expenditures that increase the useful life or substantially increase the serviceability of an existing asset are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, with any resulting gain or loss being reflected in income. |
Income Taxes | Income Taxes Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit. Refer to the disclosures provided in Part II, Item 8, Note 16 of the Notes to our Consolidated Financial Statements for additional detail on our accounting for income taxes. |
Intangible Assets | Intangible Assets Our principal intangible assets relate to our franchise agreements with vehicle manufacturers and distributors, which represent the estimated value of franchises acquired in business combinations, our distribution agreements with commercial vehicle manufacturers, which represent the estimated value of distribution rights acquired in business combinations, and goodwill, which represents the excess of cost over the fair value of tangible and identified intangible assets acquired in business combinations. We believe the franchise values of our automotive dealerships and the distribution agreements of our commercial vehicle distribution operations have an indefinite useful life based on the following: ● Automotive retailing and commercial vehicle distribution are mature industries and are based on franchise and distribution agreements with the vehicle manufacturers and distributors; ● There are no known changes or events that would alter the automotive retailing franchise or commercial vehicle distribution environments; ● Certain franchise agreement terms are indefinite; ● Franchise and distribution agreements that have limited terms have historically been renewed by us without substantial cost; and ● Our history shows that manufacturers and distributors have not terminated our franchise or distribution agreements. |
Impairment Testing | Impairment Testing Other indefinite-lived intangible assets are assessed for impairment annually on October 1 and upon the occurrence of an indicator of impairment through a comparison of its carrying amount and estimated fair value. An indicator of impairment exists if the carrying value exceeds its estimated fair value and an impairment loss may be recognized up to that excess. The fair value is determined using a discounted cash flow approach, which includes assumptions about revenue and profitability growth, profit margins, and the cost of capital. We also evaluate in connection with the annual impairment testing whether events and circumstances continue to support our assessment that the other indefinite-lived intangible assets continue to have an indefinite life. Goodwill impairment is assessed at the reporting unit level annually on October 1 and upon the occurrence of an indicator of impairment. Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. We have determined that the dealerships in each of our operating segments within the Retail Automotive reportable segment are components that are aggregated into six reporting units for the purpose of goodwill impairment testing, as they (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and/or used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The reporting units are Eastern, Central, and Western United States, Stand-Alone Used United States, International, and Stand-Alone Used International. Our Retail Commercial Truck reportable segment has been determined to represent one operating segment and reporting unit. The goodwill included in our Other reportable segment relates primarily to our commercial vehicle distribution operating segment. There is no goodwill recorded in our Non-Automotive Investments reportable segment. For our Retail Automotive, Retail Commercial Truck, and Other reporting units, we prepared a qualitative assessment of the carrying value of goodwill using the criteria in ASC 350-20-35-3 to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying value. If it were determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, additional analysis would be unnecessary. During 2019, we concluded that for the retail automotive, retail commercial truck, and other reporting units that their fair values were more likely than not greater than their carrying values. If additional impairment testing was necessary, we would have estimated the fair value of our reporting units using an “income” valuation approach. The “income” valuation approach estimates our enterprise value using a net present value model, which discounts projected free cash flows of our business using the weighted average cost of capital as the discount rate. We would also validate the fair value for each reporting unit using the income approach by calculating a cash earnings multiple and determining whether the multiple was reasonable compared to recent market transactions completed by the Company or in the industry. As part of that assessment, we would also reconcile the estimated aggregate fair values of our reporting units to our market capitalization. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest, and other significant assumptions including revenue and profitability growth, franchise profit margins, residual values and the cost of capital. |
Investments | Investments We account for each of our investments under the equity method, pursuant to which we record our proportionate share of the investee’s income each period. The net book value of our investments was $1,399.0 million and $1,305.2 million as of December 31, 2019 and 2018, respectively, including $1,323.2 million and $1,237.4 million relating to PTS as of December 31, 2019 and 2018, respectively. We currently hold a 28.9% ownership interest in PTS. Investments for which there is not a liquid, actively traded market are reviewed periodically by management for indicators of impairment. If an indicator of impairment is identified, management estimates the fair value of the investment using a discounted cash flow approach, which includes assumptions relating to revenue and profitability growth, profit margins, residual values, and our cost of capital. Declines in investment values that are deemed to be other than temporary may result in an impairment charge reducing the investments’ carrying value to fair value. |
Foreign Currency Translation | Foreign Currency Translation For all of our non-U.S. operations, the functional currency is the local currency. The revenue and expense accounts of our non-U.S. operations are translated into U.S. dollars using the average exchange rates that prevailed during the period. Assets and liabilities of non-U.S. operations are translated into U.S. dollars using period end exchange rates. Cumulative translation adjustments relating to foreign functional currency assets and liabilities are recorded in accumulated other comprehensive income (loss), a separate component of equity. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, and forward exchange contracts used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting. Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of our fixed rate debt is as follows: December 31, 2019 December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value 3.75% senior subordinated notes due 2020 $ 299.2 $ 302.6 $ 297.9 $ 291.9 5.75% senior subordinated notes due 2022 547.6 556.7 546.8 537.6 5.375% senior subordinated notes due 2024 298.0 306.7 297.6 278.7 5.50% senior subordinated notes due 2026 495.7 521.7 495.1 465.2 Mortgage facilities 423.2 430.9 289.6 290.2 |
Revenue Recognition | Revenue Recognition Dealership Vehicle, Parts and Service Sales We record revenue for vehicle sales at a point in time when vehicles are delivered, which is when the transfer of title, risks and rewards of ownership and control are considered passed to the customer. We record revenue for vehicle service and collision work over time as work is completed, and when parts are delivered to our customers. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale. Rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales. Reimbursements of qualified advertising expenses are treated as a reduction of selling, general and administrative expenses. The amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives, and such earnings are recognized either upon the sale of the vehicle for which the award was received, or upon attainment of the particular program goals if not associated with individual vehicles. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue). Dealership Finance and Insurance Sales Subsequent to the sale of a vehicle to a customer, we sell installment sale contracts to various financial institutions on a non recourse basis (with specified exceptions) to mitigate the risk of default. We receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee. We also receive commissions for facilitating the sale of various products to customers, including guaranteed vehicle protection insurance, vehicle theft protection and extended service contracts. These commissions are recorded as revenue at a point in time when the customer enters into the contract. Payment is typically due and collected within 30 days subsequent to the execution of the contract with the customer. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $26.6 million and $26.0 million as of December 31, 2019 and December 31, 2018, respectively. Commercial Vehicle Distribution We record revenue from the distribution of vehicles, engines, and other products at a point in time when delivered, which is when the transfer of title, risks and rewards of ownership and control are considered passed to the customer. We record revenue for service or repair work over time as work is completed, and when parts are delivered to our customers. For our long-term power generation contracts, we record revenue over time as services are provided in accordance with contract milestones. See Note 2 “Revenues” for additional disclosures on revenue recognition. |
Defined Contribution Plans | Defined Contribution Plans We sponsor a number of defined contribution plans covering a significant majority of our employees. Our contributions to such plans are discretionary and are based on the level of compensation and contributions by plan participants. We incurred expenses of $29.4 million, $24.8 million, and $16.8 million relating to such plans during the years ended December 31, 2019, 2018, and 2017, respectively. |
Advertising | Advertising Advertising costs are expensed as incurred or when such advertising takes place. We incurred net advertising costs of $112.6 million, $115.3 million, and $115.8 million during the years ended December 31, 2019, 2018, and 2017, respectively. Qualified advertising expenditures reimbursed by manufacturers, which are treated as a reduction of advertising expense, were $19.2 million, $19.3 million, and $18.6 million during the years ended December 31, 2019, 2018, and 2017, respectively. |
Self-Insurance | Self-Insurance We retain risk relating to certain of our general liability insurance, workers’ compensation insurance, vehicle physical damage insurance, property insurance, employment practices liability insurance, directors and officers insurance, and employee medical benefits in the U.S. As a result, we are likely to be responsible for a significant portion of the claims and losses incurred under these programs. The amount of risk we retain varies by program, and for certain exposures, we have pre-determined maximum loss limits for certain individual claims and/or insurance periods. Losses, if any, above the pre-determined loss limits are paid by third-party insurance carriers. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. Our estimate of future losses is prepared by management using our historical loss experience and industry-based development factors. Aggregate reserves relating to retained risk were $28.6 million and $31.3 million as of December 31, 2019 and 2018, respectively. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, including outstanding unvested restricted stock awards which contain rights to non-forfeitable dividends. Diluted earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, adjusted for any dilutive effects. A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the years ended December 31, 2019, 2018, and 2017 follows: Year Ended December 31, 2019 2018 2017 Weighted average number of common shares outstanding 82,495,045 85,165,367 85,877,227 Effect of non-participatory equity compensation — — — Weighted average number of common shares outstanding, including effect of dilutive securities 82,495,045 85,165,367 85,877,227 |
Hedging | Hedging Generally accepted accounting principles relating to derivative instruments and hedging activities require all derivatives, whether designated in hedging relationships or not, to be recorded on the balance sheet at fair value. These accounting principles also define requirements for designation and documentation of hedging relationships, as well as ongoing effectiveness assessments, which must be met in order to qualify for hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value are recorded in earnings immediately. If the derivative is designated as a fair-value hedge, the changes in the fair value of the derivative and the hedged item are recorded in earnings. If the derivative is designated as a cash-flow hedge, effective changes in the fair value of the derivative are recorded in accumulated other comprehensive income (loss), a separate component of equity, and recorded in the income statement only when the hedged item affects earnings. Changes in the fair value of the derivative attributable to hedge ineffectiveness are recorded in earnings immediately. |
Stock-Based Compensation | Stock-Based Compensation Generally accepted accounting principles relating to share-based payments require us to record compensation expense for all awards based on their grant-date fair value. Our share-based payments have generally been in the form of “non-vested shares,” the fair value of which are measured as if they were vested and issued on the grant date. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting for Leases In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under this new guidance, a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. For public companies, this ASU is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The FASB has since issued further ASUs related to the standard providing additional practical expedients and an optional transition method allowing entities to not recast comparative periods. We adopted this ASU, including several practical expedients, on January 1, 2019 using the optional transition method. The package of practical expedients elected allows us to not reassess (1) whether any expired or existing contracts are or contain leases (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any expired or existing leases. We also elected the practical expedient to not separate lease and non-lease components for all leases and have accounted for the combined lease and non-lease components as a single lease component. Under the optional transition method, we applied ASC 840 in the comparative periods presented and provide the disclosures required by ASC 840 for all periods that continue to be presented in accordance with ASC 840, in addition to the disclosures required per ASC 842. The expense recognition for operating leases under ASC 842 is substantially consistent with ASC 840 and the adoption did not have an impact on our consolidated statements of income, comprehensive income, or cash flows. As part of the adoption of ASC 842, we performed an assessment of the impact the new lease recognition standard will have on our consolidated financial statements. We lease a significant amount of our dealership and other properties, which are classified as operating leases. We also have equipment leases that primarily relate to office and computer equipment, service and shop equipment, company vehicles, and other miscellaneous items. We do not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement under the new lease recognition standard. Upon adoption of ASC 842, we recognized our lease liabilities and right-of-use assets on our consolidated balance sheet at the present value of these future payments. We also made an accounting policy to exclude leases with an initial term of 12 months or less from the balance sheet as permitted under ASC 842. We also evaluated, documented, and implemented required changes in internal controls as part of our adoption of the new lease recognition standard. These changes include implementing updated accounting policies affected by ASC 842 and implementing a new information technology application to calculate our right-of-use assets and lease liabilities and required disclosures. See Note 3 “Leases” for additional disclosures in accordance with the new lease standard. As a result of the adoption of ASC 842 on January 1, 2019, we recorded lease liabilities and right-of-use assets on our consolidated balance sheet. The adoption also resulted in a net, after-tax cumulative effect adjustment to retained earnings of approximately $5.0 million. The details of this adjustment are summarized below. Balance at Adjustments Due Balance at December 31, 2018 to ASC 842 January 1, 2019 Assets Operating lease right-of-use assets $ — $ 2,425.6 $ 2,425.6 Liabilities and Equity Accrued expenses and other current liabilities $ 566.6 $ 70.2 $ 636.8 Long-term operating lease liabilities — 2,387.5 2,387.5 Deferred tax liabilities 577.8 0.9 578.7 Other long-term liabilities 519.0 (38.0) 481.0 Retained earnings 2,365.8 5.0 2,370.8 Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU replaces the current incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2019, with early adoption permitted. We intend to adopt this ASU on January 1, 2020. We do not expect the adoption of this accounting standard update to have a significant impact on our consolidated financial statements. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220) — Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This ASU allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the enactment of the U.S. Tax Cuts and Jobs Act (“the Act”). The update also requires entities to disclose whether or not they elected to reclassify the tax effects related to the Act as well as their accounting policy for releasing income tax effects from accumulated other comprehensive income. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. We did not adopt the optional guidance of this accounting standard update, as the potential impact on our consolidated financial statements is not material. Fair Value Measurement Disclosure In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, modifies, and adds certain disclosure requirements on fair value measurements. For public companies, this ASU is effective for financial statements issued for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted. Entities are permitted to early adopt any eliminated or amended disclosures and delay adoption of the additional disclosure requirements until the effective date. We intend to adopt this ASU on January 1, 2020. We do not expect the adoption of this accounting standard update to have a significant impact on our consolidated financial statements. Accounting for Cloud Computing Arrangements In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” Under this new guidance, certain implementation costs incurred in a hosted cloud computing service arrangement will be capitalized in accordance with ASC 350-40. For public companies, this ASU is effective for financial statements issued for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted. The amendments from this update are to be applied retrospectively or prospectively to all implementation costs incurred after adoption. We intend to adopt this ASU on January 1, 2020. We do not expect the adoption of this accounting standard update to have a significant impact on our consolidated financial statements. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Summary of Significant Accounting Policies | |
Summary of carrying values and fair values of senior subordinated notes and fixed rate mortgage facilities | December 31, 2019 December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value 3.75% senior subordinated notes due 2020 $ 299.2 $ 302.6 $ 297.9 $ 291.9 5.75% senior subordinated notes due 2022 547.6 556.7 546.8 537.6 5.375% senior subordinated notes due 2024 298.0 306.7 297.6 278.7 5.50% senior subordinated notes due 2026 495.7 521.7 495.1 465.2 Mortgage facilities 423.2 430.9 289.6 290.2 |
Reconciliation of number of shares used in calculation of basic and diluted earning per share | Year Ended December 31, 2019 2018 2017 Weighted average number of common shares outstanding 82,495,045 85,165,367 85,877,227 Effect of non-participatory equity compensation — — — Weighted average number of common shares outstanding, including effect of dilutive securities 82,495,045 85,165,367 85,877,227 |
ASC 842 | |
Organization and Summary of Significant Accounting Policies | |
Schedule of adjustment due to adoption of ASC 842 | Balance at Adjustments Due Balance at December 31, 2018 to ASC 842 January 1, 2019 Assets Operating lease right-of-use assets $ — $ 2,425.6 $ 2,425.6 Liabilities and Equity Accrued expenses and other current liabilities $ 566.6 $ 70.2 $ 636.8 Long-term operating lease liabilities — 2,387.5 2,387.5 Deferred tax liabilities 577.8 0.9 578.7 Other long-term liabilities 519.0 (38.0) 481.0 Retained earnings 2,365.8 5.0 2,370.8 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenues | |
Schedule of accounts receivable and unearned revenues | December 31, December 31, 2019 2018 Accounts receivable Contracts in transit $ 291.1 $ 314.2 Vehicle receivables 249.8 266.9 Manufacturer receivables 244.6 211.3 Trade receivables 164.7 129.1 Accrued expenses Unearned revenues $ 262.9 $ 269.8 |
Retail Automotive Dealership | |
Revenues | |
Schedule of disaggregation of revenues | Year Ended December 31, Retail Automotive Dealership Revenue 2019 2018 2017 New vehicle $ 9,329.5 $ 9,666.4 $ 9,678.5 Used vehicle 7,241.2 7,252.1 6,386.8 Finance and insurance, net 652.1 629.6 581.8 Service and parts 2,195.9 2,151.4 2,057.5 Fleet and wholesale 1,197.1 1,149.7 1,119.7 Total retail automotive dealership revenue $ 20,615.8 $ 20,849.2 $ 19,824.3 Year Ended December 31, Retail Automotive Dealership Revenue 2019 2018 2017 U.S. $ 11,697.6 $ 11,504.3 $ 11,610.1 U.K. 7,559.4 7,961.4 7,048.7 Germany and Italy 1,358.8 1,383.5 1,165.5 Total retail automotive dealership revenue $ 20,615.8 $ 20,849.2 $ 19,824.3 |
Retail Commercial Truck Dealership | |
Revenues | |
Schedule of disaggregation of revenues | Year Ended December 31, Retail Commercial Truck Dealership Revenue 2019 2018 2017 New truck $ 1,347.2 $ 866.9 $ 613.2 Used truck 117.0 112.0 89.4 Finance and insurance, net 12.4 11.9 8.9 Service and parts 503.3 364.5 325.6 Other 70.6 19.2 10.9 Total retail commercial truck dealership revenue $ 2,050.5 $ 1,374.5 $ 1,048.0 |
Commercial Vehicle Distribution and Other | |
Revenues | |
Schedule of disaggregation of revenues | Year Ended December 31, Commercial Vehicle Distribution and Other 2019 2018 2017 Commercial Vehicle Distribution $ 513.1 $ 558.5 $ 511.0 Other — 2.9 3.6 Total commercial vehicle distribution and other revenue $ 513.1 $ 561.4 $ 514.6 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Summary of net operating lease cost | Year Ended December 31, 2019 Lease Cost Operating lease cost $ 242.0 Sublease income (24.4) Total lease cost $ 217.6 (1) Includes short-term leases and variable lease costs, which are immaterial. |
Summary of supplemental cash flow information related to operating leases and weighted average remaining lease term and discount rate of leases | Year Ended December 31, 2019 Other Information Gains on sale and leaseback transactions, net $ (0.5) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 232.3 Right-of-use assets obtained in exchange for operating lease liabilities 97.7 December 31, 2019 Lease Term and Discount Rate Weighted-average remaining lease term - operating leases 25 years Weighted-average discount rate - operating leases 6.6% |
Schedule of maturity of lease liabilities | Maturity of Lease Liabilities 2020 $ 242.6 2021 236.9 2022 231.9 2023 223.4 2024 216.5 2025 and thereafter 4,272.2 Total future minimum lease payments $ 5,423.5 Less: Imputed interest (3,031.3) Present value of future minimum lease payments $ 2,392.2 Current operating lease liabilities (1) $ 91.0 Long-term operating lease liabilities 2,301.2 Total operating lease liabilities $ 2,392.2 (1) Included within “Accrued expenses and other current liabilities” on Consolidated Balance Sheet as of December 31, 2019. Minimum future rental payments required under operating leases in effect as of December 31, 2018 are as follows: 2019 $ 222.5 2020 220.5 2021 217.4 2022 216.0 2023 212.0 2024 and thereafter 4,344.4 Total future minimum lease payments $ 5,432.8 |
Equity Method Investees (Tables
Equity Method Investees (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity Method Investees | |
Equity method investment statement of operation and financial position | Condensed income statement information: Year Ended December 31, 2019 2018 2017 Revenues $ 9,682.2 $ 9,013.7 $ 7,680.8 Gross profit 2,007.0 2,011.7 1,792.4 Net income 509.8 458.7 416.1 Condensed balance sheet information: December 31, 2019 2018 Current assets $ 1,481.9 $ 1,467.5 Noncurrent assets 14,767.3 13,360.8 Total assets $ 16,249.2 $ 14,828.3 Current liabilities $ 1,281.8 $ 1,880.1 Noncurrent liabilities 11,679.1 9,976.1 Equity 3,288.3 2,972.1 Total liabilities and equity $ 16,249.2 $ 14,828.3 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | December 31, 2019 2018 Accounts receivable $ — $ 3.6 Inventories 150.7 101.1 Other current assets 0.6 0.2 Property and equipment 2.6 55.4 Indefinite-lived intangibles 214.0 173.9 Current liabilities (16.8) (17.7) Noncurrent liabilities (13.6) (0.6) Total consideration $ 337.5 $ 315.9 Deferred consideration — (6.8) Contingent consideration (10.6) — Total cash used in acquisitions $ 326.9 $ 309.1 |
Summary of unaudited consolidated pro forma results of operations | Year Ended December 31, 2019 2018 Revenues $ 23,780.6 $ 24,115.7 Income from continuing operations 443.7 489.6 Net income 444.2 490.1 Income from continuing operations per diluted common share $ 5.38 $ 5.75 Net income per diluted common share $ 5.38 $ 5.75 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Inventories | December 31, 2019 2018 Retail automotive dealership new vehicles $ 2,346.2 $ 2,397.0 Retail automotive dealership used vehicles 1,080.8 1,060.8 Retail automotive parts, accessories and other 141.5 140.8 Retail commercial truck dealership vehicles and parts 465.2 207.9 Commercial vehicle distribution vehicles, parts and engines 227.0 233.6 Total inventories $ 4,260.7 $ 4,040.1 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Schedule of components of property and equipment | December 31, 2019 2018 Buildings and leasehold improvements $ 1,904.5 $ 1,770.4 Furniture, fixtures and equipment 1,140.0 1,097.9 Total $ 3,044.5 $ 2,868.3 Less: Accumulated depreciation (678.1) (618.3) Property and equipment, net $ 2,366.4 $ 2,250.0 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets | |
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | Other Indefinite- Lived Intangible Goodwill Assets Balance — December 31, 2017 $ 1,660.5 $ 474.0 Additions 144.1 29.8 Disposals (13.8) (0.5) Impairment — (5.8) Foreign currency translation (38.8) (11.3) Balance — December 31, 2018 $ 1,752.0 $ 486.2 Additions 146.6 67.4 Disposals (3.9) (1.2) Impairment — (1.9) Foreign currency translation 16.3 1.7 Balance — December 31, 2019 $ 1,911.0 $ 552.2 |
Summary of the changes in the carrying amount of goodwill by reportable segment | Retail Retail Commercial Automotive Truck Other Total Balance — December 31, 2017 $ 1,412.1 $ 163.0 $ 85.4 $ 1,660.5 Additions 143.2 0.9 — 144.1 Disposals (13.8) — — (13.8) Foreign currency translation (29.6) (1.3) (7.9) (38.8) Balance — December 31, 2018 $ 1,511.9 $ 162.6 $ 77.5 $ 1,752.0 Additions 0.9 145.6 0.1 146.6 Disposals (3.9) — — (3.9) Foreign currency translation 15.9 0.8 (0.4) 16.3 Balance — December 31, 2019 $ 1,524.8 $ 309.0 $ 77.2 $ 1,911.0 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Debt | |
Long Term Debt | December 31, 2019 2018 U.S. credit agreement — revolving credit line $ 45.0 $ 30.0 U.K. credit agreement — revolving credit line 165.8 163.3 U.K. credit agreement — overdraft line of credit — 1.8 3.75% senior subordinated notes due 2020 299.2 297.9 5.75% senior subordinated notes due 2022 547.6 546.8 5.375% senior subordinated notes due 2024 298.0 297.6 5.50% senior subordinated notes due 2026 495.7 495.1 Australia capital loan agreement 31.7 33.6 Australia working capital loan agreement — 6.1 Mortgage facilities 423.2 289.6 Other 54.1 54.9 Total long-term debt $ 2,360.3 $ 2,216.7 Less: current portion (103.3) (92.0) Net long-term debt $ 2,257.0 $ 2,124.7 |
Scheduled maturities of long-term debt for each of the next five years and thereafter | 2020 $ 103.3 2021 16.3 2022 997.4 2023 185.1 2024 322.4 2025 and thereafter 735.8 Total long-term debt reported $ 2,360.3 |
Schedule of senior subordinated notes issuances | Description Maturity Date Interest Payment Dates Principal Amount 3.75% Notes August 15, 2020 February 15, August 15 $300 million 5.75% Notes October 1, 2022 April 1, October 1 $550 million 5.375% Notes December 1, 2024 June 1, December 1 $300 million 5.50% Notes May 15, 2026 May 15, November 15 $500 million |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Schedule of automotive joint venture relationships | Location Dealerships Ownership Interest Fairfield, Connecticut Audi, Mercedes-Benz, Sprinter, Porsche 80.00 % (A) Greenwich, Connecticut Mercedes-Benz 80.00 % (A) Edison, New Jersey Bentley, Ferrari, Maserati 20.00 % (B) (D) Northern Italy BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Mercedes-Benz, smart, Lamborghini 84.10 % (A) Aachen, Germany Audi, Maserati, SEAT, Skoda, Volkswagen 91.80 % (A) (C) Frankfurt, Germany Lexus, Toyota, Volkswagen 50.00 % (B) Barcelona, Spain BMW, MINI 50.00 % (B) Tokyo, Japan BMW, MINI, Rolls-Royce, Ferrari, ALPINA 49.00 % (B) (a) Entity is consolidated in our financial statements. (b) Entity is accounted for using the equity method of accounting. (c) In 2019, we acquired an additional 12.4% ownership interest in this joint venture and now own 91.8%. (d) In 2019, we sold a majority interest in dealerships in Edison, New Jersey representing the Bentley, Ferrari, and Maserati brands and now maintain a 20% ownership interest in this joint venture. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Summary of the Company's restricted stock activity | Weighted Average Aggregate Shares Grant Date Fair Value Intrinsic Value December 31, 2018 912,408 $ 47.19 Granted 524,063 45.75 Vested (278,320) 46.94 Forfeited (31,446) 48.34 December 31, 2019 1,126,705 $ 46.55 $ 56.6 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity | |
Schedule of shares repurchased under our securities repurchase program and shares acquired | Year Ended December 31, 2019 2018 2017 Shares repurchased (1) 3,871,887 1,467,886 302,000 Aggregate purchase price $ 169.2 $ 63.1 $ 12.7 Average purchase price per share $ 43.71 $ 43.00 $ 41.95 Shares acquired (2) 114,949 119,608 133,710 Aggregate purchase price $ 4.9 $ 5.8 $ 5.8 Average purchase price per share $ 42.72 $ 48.61 $ 43.28 (1) Shares were repurchased under our securities repurchase program. As of December 31, 2019, we had $200 million in repurchase authorization under the repurchase program. (2) Shares were acquired from employees in connection with a net share settlement feature of employee equity awards. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss). | |
Schedule of the changes in accumulated other comprehensive income/(loss) by component and the reclassifications out of accumulated other comprehensive income/(loss) attributable to the entity's common stockholders | Accumulated Foreign Other Currency Comprehensive Translation Other Income (Loss) Balance at January 1, 2017 $ (230.0) $ (20.7) $ (250.7) Other comprehensive income before reclassifications 96.0 8.2 104.2 Amounts reclassified from accumulated other comprehensive income — net of tax provision of $0.0 — — — Net current-period other comprehensive income 96.0 8.2 104.2 Balance at December 31, 2017 $ (134.0) $ (12.5) $ (146.5) Other comprehensive income before reclassifications (74.3) (13.7) (88.0) Amounts reclassified from accumulated other comprehensive income — net of tax provision $0.0 — — — Net current-period other comprehensive income (74.3) (13.7) (88.0) Balance at December 31, 2018 $ (208.3) $ (26.2) $ (234.5) Other comprehensive income before reclassifications 22.2 9.5 31.7 Amounts reclassified from accumulated other comprehensive income — net of tax provision of $0.0 — — — Net current-period other comprehensive income 22.2 9.5 31.7 Balance at December 31, 2019 $ (186.1) $ (16.7) $ (202.8) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of income from continuing operations before income taxes by geographic region | Year Ended December 31, 2019 2018 2017 U.S. $ 427.8 $ 390.3 $ 375.4 Non-U.S. 163.7 213.8 172.8 Income from continuing operations before income taxes $ 591.5 $ 604.1 $ 548.2 |
Schedule of income taxes relating to income from continuing operations | Year Ended December 31, 2019 2018 2017 Current: Federal $ 23.6 $ (15.6) $ (3.5) State and local 4.3 (2.9) 4.2 Foreign 36.8 46.9 43.2 Total current $ 64.7 $ 28.4 $ 43.9 Deferred: Federal 67.6 85.9 (150.5) State and local 24.0 20.0 47.2 Foreign 0.4 — (5.4) Total deferred $ 92.0 $ 105.9 $ (108.7) Income taxes $ 156.7 $ 134.3 $ (64.8) |
Schedule of reconciliation of income taxes from continuing operations at federal statutory rate | Year Ended December 31, 2019 2018 2017 Income taxes at federal statutory rate $ 124.2 $ 126.9 $ 191.9 State and local income taxes, net of federal taxes 23.6 13.8 13.7 Non-U.S. income taxed at other rates 2.8 1.9 (25.2) Revaluation of U.S. deferreds — — (301.6) Deemed mandatory repatriation — — 54.8 SAB 118 benefit — (11.6) — Other 6.1 3.3 1.6 Income taxes $ 156.7 $ 134.3 $ (64.8) |
Schedule of components of deferred tax assets and liabilities | December 31, 2019 2018 Deferred Tax Assets Accrued liabilities $ 49.7 $ 48.7 Net operating loss and credit carryforwards 72.8 81.4 Leasing liabilities 577.8 — Other 27.6 27.9 Total deferred tax assets 727.9 158.0 Valuation allowance (45.7) (40.5) Net deferred tax assets $ 682.2 $ 117.5 Deferred Tax Liabilities Depreciation and amortization (206.9) (188.0) Partnership investments (569.0) (499.3) Leasing assets (577.8) — Other (6.4) (8.0) Total deferred tax liabilities (1,360.1) (695.3) Net deferred tax liabilities $ (677.9) $ (577.8) |
Schedule of movement in uncertain tax positions | Year Ended December 31, 2019 2018 2017 Uncertain tax positions — January 1 $ 0.1 $ 3.5 $ 3.4 Gross increase — tax position in prior periods — — 0.2 Gross decrease — tax position in prior periods — (3.4) (0.1) Gross increase — current period tax position — — — Settlements — — — Lapse in statute of limitations — — — Foreign exchange — — — Uncertain tax positions — December 31 $ 0.1 $ 0.1 $ 3.5 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information | |
Revenues and segment income by reportable segment | Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2019 $ 20,615.8 $ 2,050.5 $ 513.1 $ — $ — $ 23,179.4 2018 20,849.2 1,374.5 561.4 — — 22,785.1 2017 19,824.3 1,048.0 514.6 — — 21,386.9 Floor plan interest expense 2019 $ 74.9 $ 8.0 $ 1.6 $ — $ — $ 84.5 2018 74.9 4.2 1.8 — — 80.9 2017 59.4 2.7 1.3 — — 63.4 Other interest expense 2019 $ 118.4 $ 3.2 $ 2.6 $ — $ — $ 124.2 2018 108.3 2.4 4.0 — — 114.7 2017 95.0 3.4 9.0 — — 107.4 Depreciation 2019 $ 99.1 $ 5.5 $ 5.0 $ — $ — $ 109.6 2018 94.2 4.3 5.2 — — 103.7 2017 85.7 4.1 5.3 — — 95.1 Equity in earnings of affiliates 2019 $ 5.2 $ — $ — $ 142.3 $ — $ 147.5 2018 5.2 — — 129.6 — 134.8 2017 4.6 — — 103.0 — 107.6 Adjusted segment income 2019 $ 339.9 $ 86.5 $ 22.8 $ 142.3 $ — $ 591.5 2018 389.7 62.3 22.5 129.6 — 604.1 2017 397.2 38.4 9.6 103.0 — 548.2 |
Total assets, equity method investments, and capital expenditures by reporting segment | Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Total assets 2019 $ 10,960.1 $ 1,075.8 $ 579.9 $ 1,326.9 $ — $ 13,942.7 2018 8,501.4 571.5 590.5 1,241.1 — 10,904.5 Equity method investments 2019 $ 72.1 $ — $ — $ 1,326.9 $ — $ 1,399.0 2018 64.1 — — 1,241.1 — 1,305.2 Capital expenditures 2019 $ 231.9 $ 9.9 $ 3.5 $ — $ — $ 245.3 2018 292.6 9.3 3.7 — — 305.6 2017 237.8 6.4 2.8 — — 247.0 |
Schedule of revenue and long-lived assets by geographic area | Year Ended December 31, 2019 2018 2017 Revenue from external customers: U.S. $ 13,511.8 $ 12,607.8 $ 12,487.2 Non-U.S. 9,667.6 10,177.3 8,899.7 Total revenue from external customers $ 23,179.4 $ 22,785.1 $ 21,386.9 Long-lived assets, net: U.S. $ 2,481.1 $ 2,365.5 Non-U.S. 1,303.8 1,205.6 Total long-lived assets $ 3,784.9 $ 3,571.1 |
Schedule of revenue from external customers by product type for the Retail Automotive and Retail Commercial Truck segments | Year Ended December 31, Retail Automotive Dealership Revenue 2019 2018 2017 New vehicle $ 9,329.5 $ 9,666.4 $ 9,678.5 Used vehicle 7,241.2 7,252.1 6,386.8 Finance and insurance, net 652.1 629.6 581.8 Service and parts 2,195.9 2,151.4 2,057.5 Fleet and wholesale 1,197.1 1,149.7 1,119.7 Total retail automotive dealership revenue $ 20,615.8 $ 20,849.2 $ 19,824.3 Year Ended December 31, Retail Commercial Truck Dealership Revenue 2019 2018 2017 New truck $ 1,347.2 $ 866.9 $ 613.2 Used truck 117.0 112.0 89.4 Finance and insurance, net 12.4 11.9 9.0 Service and parts 503.3 364.5 325.6 Other 70.6 19.2 10.8 Total retail commercial truck dealership revenue $ 2,050.5 $ 1,374.5 $ 1,048.0 |
Summary of Quarterly Financia_2
Summary of Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Quarterly Financial Data (Unaudited) | |
Summary of Quarterly Financial Data (Unaudited) | First Second Third Fourth Quarter Quarter Quarter Quarter 2019 (1) Total revenues $ 5,564.4 $ 5,755.8 $ 5,967.6 $ 5,881.4 Gross profit 851.5 867.8 869.7 866.5 Income from continuing operations 99.1 118.4 116.0 101.3 Net income 99.2 118.5 116.1 101.3 Net income attributable to Penske Automotive Group common stockholders 100.2 117.8 116.2 101.6 Diluted earnings per share attributable to Penske Automotive Group common stockholders: Income from continuing operations per share $ 1.19 $ 1.42 $ 1.42 $ 1.25 Net income per share $ 1.19 $ 1.42 $ 1.42 $ 1.25 2018 (1) Total revenues $ 5,746.9 $ 5,940.3 $ 5,658.6 $ 5,439.3 Gross profit 864.4 889.8 852.6 808.1 Income from continuing operations 107.7 135.2 130.0 96.9 Net income 107.8 135.2 130.1 97.2 Net income attributable to Penske Automotive Group common stockholders 108.1 134.6 130.2 98.1 Diluted earnings per share attributable to Penske Automotive Group common stockholders: Income from continuing operations per share $ 1.26 $ 1.58 $ 1.53 $ 1.15 Net income per share $ 1.26 $ 1.58 $ 1.53 $ 1.16 (1) Per share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year per share amounts due to rounding. |
Condensed Consolidating Finan_2
Condensed Consolidating Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Consolidating Financial Information | |
CONDENSED CONSOLIDATING BALANCE SHEET | CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2019 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ 28.1 $ — $ — $ — $ 28.1 Accounts receivable, net 960.3 (497.4) 497.4 508.9 451.4 Inventories 4,260.7 — — 2,124.9 2,135.8 Other current assets 85.0 — 3.7 22.7 58.6 Total current assets 5,334.1 (497.4) 501.1 2,656.5 2,673.9 Property and equipment, net 2,366.4 — 3.7 1,101.2 1,261.5 Operating lease right-of-use assets 2,360.5 — 9.3 1,574.7 776.5 Intangible assets 2,463.2 — — 1,633.6 829.6 Equity method investments 1,399.0 — 1,328.8 — 70.2 Other long-term assets 19.5 (2,984.3) 2,996.2 1.4 6.2 Total assets $ 13,942.7 $ (3,481.7) $ 4,839.1 $ 6,967.4 $ 5,617.9 Floor plan notes payable $ 2,412.5 $ — $ — $ 1,427.1 $ 985.4 Floor plan notes payable — non-trade 1,594.0 — 233.9 522.5 837.6 Accounts payable 638.8 — 6.0 226.9 405.9 Accrued expenses and other current liabilities 701.9 (497.4) 1.6 242.0 955.7 Current portion of long-term debt 103.3 — 13.0 10.7 79.6 Liabilities held for sale 0.5 — — 0.5 — Total current liabilities 5,451.0 (497.4) 254.5 2,429.7 3,264.2 Long-term debt 2,257.0 (96.8) 1,757.9 254.5 341.4 Long-term operating lease liabilities 2,301.2 — 8.9 1,545.6 746.7 Deferred tax liabilities 677.9 — — 668.1 9.8 Other long-term liabilities 444.0 — 6.2 30.9 406.9 Total liabilities 11,131.1 (594.2) 2,027.5 4,928.8 4,769.0 Total equity 2,811.6 (2,887.5) 2,811.6 2,038.6 848.9 Total liabilities and equity $ 13,942.7 $ (3,481.7) $ 4,839.1 $ 6,967.4 $ 5,617.9 CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2018 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ 39.4 $ — $ — $ 12.9 $ 26.5 Accounts receivable, net 929.1 (481.7) 481.7 507.1 422.0 Inventories 4,040.1 — — 1,961.6 2,078.5 Other current assets 86.6 — 10.6 17.8 58.2 Total current assets 5,095.2 (481.7) 492.3 2,499.4 2,585.2 Property and equipment, net 2,250.0 — 3.9 1,077.7 1,168.4 Intangible assets 2,238.2 — — 1,422.6 815.6 Equity method investments 1,305.2 — 1,239.9 — 65.3 Other long-term assets 15.9 (2,814.3) 2,821.0 2.9 6.3 Total assets $ 10,904.5 $ (3,296.0) $ 4,557.1 $ 5,002.6 $ 4,640.8 Floor plan notes payable $ 2,362.2 $ — $ — $ 1,348.3 $ 1,013.9 Floor plan notes payable — non-trade 1,428.6 — 232.3 505.9 690.4 Accounts payable 598.2 — 4.9 196.6 396.7 Accrued expenses 566.6 (481.7) 1.4 160.2 886.7 Current portion of long-term debt 92.0 — — 6.3 85.7 Liabilities held for sale 0.7 — — 0.7 — Total current liabilities 5,048.3 (481.7) 238.6 2,218.0 3,073.4 Long-term debt 2,124.7 (88.6) 1,683.8 225.7 303.8 Deferred tax liabilities 577.8 — — 570.5 7.3 Other long-term liabilities 519.0 — — 57.6 461.4 Total liabilities 8,269.8 (570.3) 1,922.4 3,071.8 3,845.9 Total equity 2,634.7 (2,725.7) 2,634.7 1,930.8 794.9 Total liabilities and equity $ 10,904.5 $ (3,296.0) $ 4,557.1 $ 5,002.6 $ 4,640.8 |
CONDENSED CONSOLIDATING STATEMENT OF INCOME | CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2019 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ 23,179.4 $ — $ — $ 12,928.7 $ 10,250.7 Cost of sales 19,723.9 — — 10,909.5 8,814.4 Gross profit 3,455.5 — — 2,019.2 1,436.3 Selling, general and administrative expenses 2,693.2 — 25.9 1,471.2 1,196.1 Depreciation 109.6 — 1.4 59.9 48.3 Operating income 652.7 — (27.3) 488.1 191.9 Floor plan interest expense (84.5) — (8.0) (57.1) (19.4) Other interest expense (124.2) — (83.4) (12.6) (28.2) Equity in earnings of affiliates 147.5 — 142.3 — 5.2 Equity in earnings of subsidiaries — (568.6) 568.6 — — Income from continuing operations before income taxes 591.5 (568.6) 592.2 418.4 149.5 Income taxes (156.7) 150.5 (156.7) (116.9) (33.6) Income from continuing operations 434.8 (418.1) 435.5 301.5 115.9 Income (loss) from discontinued operations, net of tax 0.3 (0.3) 0.3 0.3 — Net income 435.1 (418.4) 435.8 301.8 115.9 Other comprehensive (loss) income, net of tax 31.4 (20.1) 31.4 — 20.1 Comprehensive income 466.5 (438.5) 467.2 301.8 136.0 Less: Comprehensive income attributable to non-controlling interests (1.0) 0.3 (0.3) — (1.0) Comprehensive income attributable to Penske Automotive Group common stockholders $ 467.5 $ (438.8) $ 467.5 $ 301.8 $ 137.0 CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2018 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ 22,785.1 $ — $ — $ 12,036.6 $ 10,748.5 Cost of sales 19,370.2 — — 10,130.4 9,239.8 Gross profit 3,414.9 — — 1,906.2 1,508.7 Selling, general and administrative expenses 2,646.3 — 24.9 1,403.7 1,217.7 Depreciation 103.7 — 1.5 56.1 46.1 Operating income 664.9 — (26.4) 446.4 244.9 Floor plan interest expense (80.9) — (7.2) (50.7) (23.0) Other interest expense (114.7) — (77.8) (8.8) (28.1) Equity in earnings of affiliates 134.8 — 129.5 — 5.3 Equity in earnings of subsidiaries — (586.8) 586.8 — — Income from continuing operations before income taxes 604.1 (586.8) 604.9 386.9 199.1 Income taxes (134.3) 130.3 (134.3) (88.6) (41.7) Income from continuing operations 469.8 (456.5) 470.6 298.3 157.4 Income (loss) from discontinued operations, net of tax 0.5 (0.5) 0.5 0.5 — Net income 470.3 (457.0) 471.1 298.8 157.4 Other comprehensive (loss) income, net of tax (89.5) 74.9 (89.5) — (74.9) Comprehensive income 380.8 (382.1) 381.6 298.8 82.5 Less: Comprehensive income attributable to non-controlling interests (2.2) 1.5 (1.5) — (2.2) Comprehensive income attributable to Penske Automotive Group common stockholders $ 383.0 $ (383.6) $ 383.1 $ 298.8 $ 84.7 CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2017 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ 21,386.9 $ — $ — $ 11,825.9 $ 9,561.0 Cost of sales 18,164.4 — — 9,945.0 8,219.4 Gross profit 3,222.5 — — 1,880.9 1,341.6 Selling, general and administrative expenses 2,516.0 — 24.5 1,393.3 1,098.2 Depreciation 95.1 — 1.6 53.1 40.4 Operating income 611.4 — (26.1) 434.5 203.0 Floor plan interest expense (63.4) — (4.9) (38.5) (20.0) Other interest expense (107.4) — (73.5) (8.9) (25.0) Equity in earnings of affiliates 107.6 — 102.8 — 4.8 Equity in earnings of subsidiaries — (550.6) 550.6 — — Income from continuing operations before income taxes 548.2 (550.6) 548.9 387.1 162.8 Income taxes 64.8 (64.8) 64.8 95.5 (30.7) Income from continuing operations 613.0 (615.4) 613.7 482.6 132.1 (Loss) income from discontinued operations, net of tax (0.2) 0.2 (0.2) (0.2) — Net income 612.8 (615.2) 613.5 482.4 132.1 Other comprehensive income (loss), net of tax 107.4 (97.5) 107.4 — 97.5 Comprehensive income 720.2 (712.7) 720.9 482.4 229.6 Less: Comprehensive income attributable to non-controlling interests 2.7 (3.2) 3.2 — 2.7 Comprehensive income attributable to Penske Automotive Group common stockholders $ 717.5 $ (709.5) $ 717.7 $ 482.4 $ 226.9 |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS | CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2019 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ 518.3 $ (79.2) $ 554.2 $ 43.3 Investing activities: Purchase of equipment and improvements (245.3) (1.6) (91.3) (152.4) Proceeds from sale of dealerships 22.8 — 16.2 6.6 Proceeds from sale-leaseback transactions 18.9 — — 18.9 Acquisitions, net (326.9) — (332.7) 5.8 Other (2.2) (3.8) 3.4 (1.8) Net cash used in continuing investing activities (532.7) (5.4) (404.4) (122.9) Financing activities: Net borrowings of long-term debt 130.4 84.9 32.3 13.2 Net borrowings of floor plan notes payable — non-trade 177.5 1.6 28.7 147.2 Payment of debt issuance costs (0.4) (0.4) — — Repurchases of common stock (169.2) (169.2) — — Dividends (130.8) (130.8) — — Other (4.9) (4.9) — — Distributions from (to) parent — 303.4 (224.0) (79.4) Net cash provided (used in) by continuing financing activities 2.6 84.6 (163.0) 81.0 Net cash provided by discontinued operations 0.3 — 0.3 — Effect of exchange rate changes on cash and cash equivalents 0.2 — — 0.2 Net change in cash and cash equivalents (11.3) — (12.9) 1.6 Cash and cash equivalents, beginning of period 39.4 — 12.9 26.5 Cash and cash equivalents, end of period $ 28.1 $ — $ — $ 28.1 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2018 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by continuing operating activities $ 614.2 $ 3.4 $ 535.2 $ 75.6 Investing activities: Purchase of equipment and improvements (305.6) (1.2) (173.9) (130.5) Proceeds from sale of dealerships 84.5 — 82.0 2.5 Proceeds from sale-leaseback transactions 10.7 — — 10.7 Acquisitions, net (309.1) — (140.5) (168.6) Other (5.7) (3.8) — (1.9) Net cash used in continuing investing activities (525.2) (5.0) (232.4) (287.8) Financing activities: Net borrowings (repayments) of long-term debt 93.5 (142.0) 81.1 154.4 Net borrowings (repayments) of floor plan notes payable — non-trade 10.0 35.6 (96.0) 70.4 Payment of debt issuance costs (1.9) (1.9) — — Repurchases of common stock (68.9) (68.9) — — Dividends (121.2) (121.2) — — Other (5.8) (5.8) — — Distributions from (to) parent — 305.8 (290.3) (15.5) Net cash (used in) provided by continuing financing activities (94.3) 1.6 (305.2) 209.3 Net cash provided by discontinued operations 0.5 — 0.5 — Effect of exchange rate changes on cash and cash equivalents (1.5) — — (1.5) Net change in cash and cash equivalents (6.3) — (1.9) (4.4) Cash and cash equivalents, beginning of period 45.7 — 14.8 30.9 Cash and cash equivalents, end of period $ 39.4 $ — $ 12.9 $ 26.5 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2017 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ 623.0 $ (46.8) $ 643.3 $ 26.5 Investing activities: Purchase of equipment and improvements (247.0) (3.2) (138.0) (105.8) Proceeds from sale of dealerships 25.1 — 9.0 16.1 Proceeds from sale-leaseback transactions 22.2 — — 22.2 Acquisition of additional ownership interest in Penske Truck Leasing (239.1) (239.1) — — Acquisitions, net (449.7) — (334.5) (115.2) Other (40.2) (40.0) — (0.2) Net cash used in continuing investing activities (928.7) (282.3) (463.5) (182.9) Financing activities: Issuance of 3.75% senior subordinated notes 300.0 300.0 — — Net (repayments) borrowings of long-term debt (26.0) (68.0) 6.4 35.6 Net borrowings of floor plan notes payable — non-trade 185.3 40.6 4.8 139.9 Payment of debt issuance costs (4.0) (4.0) — — Repurchases of common stock (18.5) (18.5) — — Dividends (108.4) (108.4) — — Other (5.8) (5.8) — — Distributions from (to) parent — 193.2 (188.3) (4.9) Net cash provided by (used in) continuing financing activities 322.6 329.1 (177.1) 170.6 Net cash provided by discontinued operations 2.7 — 2.7 — Effect of exchange rate changes on cash and cash equivalents 2.1 — — 2.1 Net change in cash and cash equivalents 21.7 — 5.4 16.3 Cash and cash equivalents, beginning of period 24.0 — 9.4 14.6 Cash and cash equivalents, end of period $ 45.7 $ — $ 14.8 $ 30.9 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Business Overview (Details) $ in Millions | Sep. 07, 2017 | Jul. 31, 2019item | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Significant Accounting Policies | |||||
Total revenues | $ | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 | ||
Receivables from manufacturers | $ | $ 244.6 | 211.3 | |||
Number of reportable segments | 4 | ||||
PTL | |||||
Significant Accounting Policies | |||||
Ownership acquired (as a percent) | 5.50% | ||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% | ||||
German Automotive Dealership Group | |||||
Significant Accounting Policies | |||||
Ownership acquired (as a percent) | 12.40% | ||||
Ownership interest (as a percent) | 91.80% | ||||
U.S. | |||||
Significant Accounting Policies | |||||
Total revenues | $ | $ 13,511.8 | 12,607.8 | 12,487.2 | ||
Penske Corporation | PTL | |||||
Significant Accounting Policies | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | ||||
Mitsui and Co | PTL | |||||
Significant Accounting Policies | |||||
Ownership acquired (as a percent) | 10.00% | ||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 30.00% | ||||
Retail Automotive Dealership | |||||
Significant Accounting Policies | |||||
Total number of owned and operated franchises | 321 | ||||
Number of owned and operated franchises in US | 145 | ||||
Number of owned and operated franchises outside US | 176 | ||||
Number of franchises disposed | 25 | ||||
Number of franchises awarded to the reporting entity | 1 | ||||
Number of used vehicle supercenters operated in the U.S. and U.K. | 16 | ||||
Retail Automotive Dealership | UK | |||||
Significant Accounting Policies | |||||
Number of franchises disposed | 8 | ||||
Number of used vehicle supercenters opened | 1 | ||||
Retail Automotive Dealership | U.S. | |||||
Significant Accounting Policies | |||||
Number of franchises disposed | 10 | ||||
Number of used vehicle supercenters opened | 1 | ||||
Retail Automotive Dealership | U.S. | Bentley, Ferrari, Maserati | |||||
Significant Accounting Policies | |||||
Number of franchises disposed | 3 | ||||
Ownership percentage of equity method investment | 20.00% | ||||
Retail Automotive Dealership | Germany | |||||
Significant Accounting Policies | |||||
Number of franchises disposed | 7 | ||||
Retail Automotive Dealership | CarSense | |||||
Significant Accounting Policies | |||||
Number of retail locations operated | 6 | ||||
Retail Automotive Dealership | CarShop | |||||
Significant Accounting Policies | |||||
Number of retail locations operated | 10 | ||||
Retail Commercial Truck Dealership | |||||
Significant Accounting Policies | |||||
Number of locations acquired | 6 | ||||
Retail Commercial Truck Dealership | PTG | |||||
Significant Accounting Policies | |||||
Number of operating locations | 25 | ||||
Audi/Volkswagen/Porsche/Bentley | Automotive dealership revenues | |||||
Significant Accounting Policies | |||||
Percentage of total | 23.00% | ||||
BMW, MINI | Automotive dealership revenues | |||||
Significant Accounting Policies | |||||
Percentage of total | 23.00% | ||||
Toyota/Lexus | Automotive dealership revenues | |||||
Significant Accounting Policies | |||||
Percentage of total | 13.00% | ||||
Retail Automotive Dealership | |||||
Significant Accounting Policies | |||||
Total revenues | $ | $ 20,615.8 | 20,849.2 | 19,824.3 | ||
Number of reportable segments | 1 | ||||
Retail Automotive Dealership | UK | |||||
Significant Accounting Policies | |||||
Total revenues | $ | $ 7,559.4 | 7,961.4 | 7,048.7 | ||
Retail Automotive Dealership | U.S. | |||||
Significant Accounting Policies | |||||
Total revenues | $ | 11,697.6 | 11,504.3 | 11,610.1 | ||
Retail Commercial Truck Dealership | |||||
Significant Accounting Policies | |||||
Total revenues | $ | 2,050.5 | 1,374.5 | 1,048 | ||
Commercial Vehicle Distribution and Other | |||||
Significant Accounting Policies | |||||
Total revenues | $ | $ 513.1 | $ 561.4 | $ 514.6 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Prop and Equip, Contracts, Impairment, Investments (Details) $ in Millions | Dec. 22, 2017 | Sep. 07, 2017 | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Contracts in Transit | |||||
Contracts in transit, included in accounts receivable | $ 291.1 | $ 314.2 | |||
Income Taxes | |||||
Corporate tax rate (as a percent) | 35.00% | 21.00% | |||
Impairment Testing | |||||
Number of reportable segments | item | 4 | ||||
Goodwill | $ 1,911 | $ 1,752 | $ 1,660.5 | ||
Investments | |||||
Net book value of investments | 1,399 | 1,305.2 | |||
PTL | |||||
Investments | |||||
Net book value of investments | $ 1,323.2 | 1,237.4 | |||
PTL | |||||
Investments | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% | ||||
Ownership acquired (as a percent) | 5.50% | ||||
Leasehold improvements and equipment under capital lease | |||||
Property and Equipment | |||||
Useful life of property and equipment | 40 years | ||||
Minimum | Property and equipment other than leasehold improvements | |||||
Property and Equipment | |||||
Useful life of property and equipment | 3 years | ||||
Maximum | Property and equipment other than leasehold improvements | |||||
Property and Equipment | |||||
Useful life of property and equipment | 15 years | ||||
Retail Automotive Dealership | |||||
Impairment Testing | |||||
Number of reportable segments | item | 1 | ||||
Number of operating segments and reporting units for the purpose of goodwill impairment testing | item | 6 | ||||
Goodwill | $ 1,524.8 | 1,511.9 | 1,412.1 | ||
Retail Commercial Truck Dealership | |||||
Impairment Testing | |||||
Number of operating segments and reporting units for the purpose of goodwill impairment testing | item | 1 | ||||
Goodwill | $ 309 | 162.6 | $ 163 | ||
Non-Automotive Investments | |||||
Impairment Testing | |||||
Goodwill | $ 0 | $ 0 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Fair value (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | $ 2,360.3 | $ 2,216.7 | |
3.75% senior subordinated notes due 2020 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% |
Debt instrument, Carrying Value | $ 299.2 | $ 297.9 | |
3.75% senior subordinated notes due 2020 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 299.2 | 297.9 | |
Debt instrument, Fair Value | $ 302.6 | $ 291.9 | |
5.75% senior subordinated notes due 2022 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 5.75% | 5.75% | 5.75% |
Debt instrument, Carrying Value | $ 547.6 | $ 546.8 | |
5.75% senior subordinated notes due 2022 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 547.6 | 546.8 | |
Debt instrument, Fair Value | $ 556.7 | $ 537.6 | |
5.375% senior subordinated notes due 2024 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% |
Debt instrument, Carrying Value | $ 298 | $ 297.6 | |
5.375% senior subordinated notes due 2024 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 298 | 297.6 | |
Debt instrument, Fair Value | $ 306.7 | $ 278.7 | |
5.50% senior subordinated notes due 2026 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% |
Debt instrument, Carrying Value | $ 495.7 | $ 495.1 | |
5.50% senior subordinated notes due 2026 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 495.7 | 495.1 | |
Debt instrument, Fair Value | 521.7 | 465.2 | |
Mortgage facilities | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 423.2 | 289.6 | |
Mortgage facilities | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 423.2 | 289.6 | |
Debt instrument, Fair Value | $ 430.9 | $ 290.2 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Revenue, Defined Contrib. Plans, Advertising, Self-Insurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Dealership Finance and Insurance Sales | |||
Aggregate reserves relating to chargeback activity | $ 26,600 | $ 26,000 | |
Defined Contribution Plans | |||
Expense incurred relating to defined contribution plans | 29,400 | 24,800 | $ 16,800 |
Advertising | |||
Net advertising costs | 112,600 | 115,300 | 115,800 |
Reimbursement of advertising expense | 19,200 | 19,300 | $ 18,600 |
Self Insurance | |||
Aggregate reserves relating to retained risk | $ 28,600 | $ 31,300 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies - Earnings per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share | |||
Weighted average number of common shares outstanding | 82,495,045 | 85,165,367 | 85,877,227 |
Weighted average number of common shares outstanding, including effect of dilutive securities | 82,495,045 | 85,165,367 | 85,877,227 |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies - Accounting for Leases (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 02, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Assets | ||||
Operating lease right-of-use assets | $ 2,360.5 | $ 2,425.6 | ||
Liabilities and Equity | ||||
Accrued expenses and other current liabilities | 701.9 | 636.8 | $ 566.6 | |
Long-term operating lease liabilities | 2,301.2 | 2,387.5 | ||
Deferred tax liabilities | 677.9 | 578.7 | 577.8 | |
Other long-term liabilities | 444 | 481 | 519 | |
Retained earnings | $ 2,675.8 | $ 2,370.8 | $ 2,365.8 | |
ASC 842 | ||||
Liabilities and Equity | ||||
Retained earnings | $ 5 | |||
ASC 842 | Impact of Adoption | ||||
Assets | ||||
Operating lease right-of-use assets | 2,425.6 | |||
Liabilities and Equity | ||||
Accrued expenses and other current liabilities | 70.2 | |||
Long-term operating lease liabilities | 2,387.5 | |||
Deferred tax liabilities | 0.9 | |||
Other long-term liabilities | (38) | |||
Retained earnings | $ 5 |
Revenues - Other Disclosures (D
Revenues - Other Disclosures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Aggregate reserves relating to chargeback activity | $ 26,600 | $ 26,000 | |
Total revenues | 23,179,400 | 22,785,100 | $ 21,386,900 |
Commercial Vehicle Distribution and Other | |||
Revenues | |||
Total revenues | $ 513,100 | 561,400 | $ 514,600 |
Vehicle Sales | Retail Automotive and Retail Commercial Truck Dealership | |||
Revenues | |||
Payment period | 30 days | ||
Service and parts | Retail Automotive and Retail Commercial Truck Dealership | |||
Revenues | |||
Payment period | 30 days | ||
Customer return period, parts sales | 30 days | ||
Finance and insurance, net | Retail Automotive and Retail Commercial Truck Dealership | |||
Revenues | |||
Payment period | 30 days | ||
Aggregate reserves relating to chargeback activity | $ 26,600 | 26,000 | |
Penske Commercial Vehicles Australia | Commercial Vehicle Distribution and Other | |||
Revenues | |||
Payment period | 30 days | ||
Penske Commercial Vehicles Australia | Service and parts | Commercial Vehicle Distribution and Other | |||
Revenues | |||
Total revenues | $ 265,100 | $ 257,600 |
Revenues - Retail Automotive De
Revenues - Retail Automotive Dealership (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Total revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
U.S. | |||
Revenues | |||
Total revenues | 13,511.8 | 12,607.8 | 12,487.2 |
Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 20,615.8 | 20,849.2 | 19,824.3 |
Retail Automotive Dealership | U.S. | |||
Revenues | |||
Total revenues | 11,697.6 | 11,504.3 | 11,610.1 |
Retail Automotive Dealership | UK | |||
Revenues | |||
Total revenues | 7,559.4 | 7,961.4 | 7,048.7 |
Retail Automotive Dealership | Germany and Italy | |||
Revenues | |||
Total revenues | 1,358.8 | 1,383.5 | 1,165.5 |
New vehicle | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 9,329.5 | 9,666.4 | 9,678.5 |
Used vehicle | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 7,241.2 | 7,252.1 | 6,386.8 |
Finance and insurance, net | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 652.1 | 629.6 | 581.8 |
Service and parts | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 2,195.9 | 2,151.4 | 2,057.5 |
Fleet and wholesale | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | $ 1,197.1 | $ 1,149.7 | $ 1,119.7 |
Revenues - Retail Commercial Tr
Revenues - Retail Commercial Truck Dealership (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Total revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
Retail Commercial Truck Dealership | |||
Revenues | |||
Total revenues | 2,050.5 | 1,374.5 | 1,048 |
New vehicle | Retail Commercial Truck Dealership | |||
Revenues | |||
Total revenues | 1,347.2 | 866.9 | 613.2 |
Used vehicle | Retail Commercial Truck Dealership | |||
Revenues | |||
Total revenues | 117 | 112 | 89.4 |
Finance and insurance, net | Retail Commercial Truck Dealership | |||
Revenues | |||
Total revenues | 12.4 | 11.9 | 8.9 |
Service and parts | Retail Commercial Truck Dealership | |||
Revenues | |||
Total revenues | 503.3 | 364.5 | 325.6 |
Other | Retail Commercial Truck Dealership | |||
Revenues | |||
Total revenues | $ 70.6 | $ 19.2 | $ 10.9 |
Revenues - Commercial Vehicle D
Revenues - Commercial Vehicle Distribution and Other (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Total revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
Commercial Vehicle Distribution and Other | |||
Revenues | |||
Total revenues | 513.1 | 561.4 | 514.6 |
Commercial Vehicle Distribution and Other | Commercial Vehicle Distribution | |||
Revenues | |||
Total revenues | $ 513.1 | 558.5 | 511 |
Commercial Vehicle Distribution and Other | Other | |||
Revenues | |||
Total revenues | $ 2.9 | $ 3.6 |
Revenues - Contract Balances (D
Revenues - Contract Balances (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Contract Balances | ||
Accounts receivable, net | $ 960.3 | $ 929.1 |
Unearned revenues | 262.9 | 269.8 |
Revenue recognized from unearned revenue | 258.3 | |
Contracts in transit | ||
Contract Balances | ||
Accounts receivable, net | 291.1 | 314.2 |
Vehicle receivables | ||
Contract Balances | ||
Accounts receivable, net | 249.8 | 266.9 |
Manufacturer receivables | ||
Contract Balances | ||
Accounts receivable, net | 244.6 | 211.3 |
Trade receivables | ||
Contract Balances | ||
Accounts receivable, net | $ 164.7 | $ 129.1 |
Leases - Other (Details)
Leases - Other (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases | |
Total undiscounted rent obligations | $ 5,423.5 |
Sublease rent received | 24.4 |
Proceeds from sale-leaseback transactions | $ 18.9 |
Property leases | Minimum | |
Leases | |
Initial lease period (in years) | 5 years |
Property leases | Maximum | |
Leases | |
Initial lease period (in years) | 20 years |
Equipment leases | Maximum | |
Leases | |
Initial lease period (in years) | 5 years |
Leases - Net operating lease co
Leases - Net operating lease cost (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease Cost | |
Operating lease cost | $ 242 |
Sublease income | (24.4) |
Total lease cost | $ 217.6 |
Leases - Cash flow information,
Leases - Cash flow information, weighted average remaining term and discount rate (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases | |
Gains on sale and leaseback transactions, net | $ (0.5) |
Cash paid for amounts included in the measurement of lease liabilities | |
Operating cash flows from operating leases | 232.3 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 97.7 |
Weighted-average remaining lease term - operating leases | 25 years |
Weighted-average discount rate - operating leases | 6.60% |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities (Details) $ in Millions | Dec. 31, 2019USD ($) |
Maturity of Lease Liabilities | |
2020 | $ 242.6 |
2021 | 236.9 |
2022 | 231.9 |
2023 | 223.4 |
2024 | 216.5 |
2025 and thereafter | 4,272.2 |
Total future minimum lease payments | 5,423.5 |
Less: Imputed interest | (3,031.3) |
Total operating lease liabilities | $ 2,392.2 |
Leases - Operating lease liabil
Leases - Operating lease liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 02, 2019 |
Leases | ||
Current operating lease liabilities | $ 91 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current | |
Long-term operating lease liabilities | $ 2,301.2 | $ 2,387.5 |
Total operating lease liabilities | $ 2,392.2 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent us-gaap:OperatingLeaseLiabilityNoncurrent |
Leases - Future Minimum Payment
Leases - Future Minimum Payments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Minimum future rental payments required under operating leases | |
2019 | $ 222.5 |
2020 | 220.5 |
2021 | 217.4 |
2022 | 216 |
2023 | 212 |
2024 and thereafter | 4,344.4 |
Total future minimum lease payments | $ 5,432.8 |
Equity Method Investees (Detail
Equity Method Investees (Details) - USD ($) $ in Millions | Sep. 07, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | May 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Equity Method Investment | |||||||
Equity Method Investments | $ 1,399 | $ 1,305.2 | |||||
Equity in earnings of affiliates | 147.5 | 134.8 | $ 107.6 | ||||
Condensed income statement information | |||||||
Revenues | 9,682.2 | 9,013.7 | 7,680.8 | ||||
Gross profit | 2,007 | 2,011.7 | 1,792.4 | ||||
Net income | 509.8 | 458.7 | $ 416.1 | ||||
Condensed balance sheet information | |||||||
Current assets | 1,481.9 | 1,467.5 | |||||
Noncurrent assets | 14,767.3 | 13,360.8 | |||||
Total assets | 16,249.2 | 14,828.3 | |||||
Current liabilities | 1,281.8 | 1,880.1 | |||||
Noncurrent liabilities | 11,679.1 | 9,976.1 | |||||
Equity | 3,288.3 | 2,972.1 | |||||
Total liabilities and equity | 16,249.2 | 14,828.3 | |||||
PTL | |||||||
Equity Method Investment | |||||||
Equity Method Investments | $ 1,323.2 | $ 1,237.4 | |||||
The Nix Group | |||||||
Equity Method Investment | |||||||
Ownership percentage of equity method investment | 50.00% | ||||||
Ibericar Keldinich SL | |||||||
Equity Method Investment | |||||||
Ownership percentage of equity method investment | 50.00% | ||||||
Nicole Group | |||||||
Equity Method Investment | |||||||
Ownership percentage of equity method investment | 49.00% | ||||||
Penske Commercial Leasing Australia | |||||||
Equity Method Investment | |||||||
Ownership percentage of equity method investment | 28.00% | ||||||
Ownership interest sold (as a percent) | 5.00% | ||||||
Dealerships in Edison, New Jersey | |||||||
Equity Method Investment | |||||||
Ownership percentage of equity method investment | 20.00% | ||||||
Penske Vehicle Services | |||||||
Equity Method Investment | |||||||
Ownership interest sold (as a percent) | 31.00% | ||||||
National Powersport Auctions | |||||||
Equity Method Investment | |||||||
Ownership interest sold (as a percent) | 7.00% | ||||||
PTL | |||||||
Equity Method Investment | |||||||
Ownership acquired (as a percent) | 5.50% | ||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% | ||||||
German Automotive Dealership Group | |||||||
Equity Method Investment | |||||||
Ownership acquired (as a percent) | 12.40% | ||||||
Ownership interest (as a percent) | 91.80% |
Business Combinations - Activit
Business Combinations - Activity (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018item | |
Business combinations | ||
Revenue from acquisition | $ | $ 620.2 | |
Pre-tax income from acquisition | $ | $ 24.1 | |
The Car People | ||
Business combinations | ||
Number of retail locations acquired | 4 | |
Retail Automotive Dealership | ||
Business combinations | ||
Number of retail locations acquired | 6 | |
Retail Commercial Truck Dealership | ||
Business combinations | ||
Number of retail locations acquired | 6 | 1 |
Commercial Vehicle Distribution | ||
Business combinations | ||
Number of dealerships acquired | 1 |
Business Combinations - Conside
Business Combinations - Consideration Paid and Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | ||
Accounts receivable | $ 3.6 | |
Inventories | $ 150.7 | 101.1 |
Other current assets | 0.6 | 0.2 |
Property and equipment | 2.6 | 55.4 |
Indefinite-lived intangibles | 214 | 173.9 |
Current liabilities | (16.8) | (17.7) |
Noncurrent liabilities | (13.6) | (0.6) |
Total consideration | 337.5 | 315.9 |
Deferred consideration | (6.8) | |
Contingent consideration | (10.6) | |
Total cash used in acquisitions | $ 326.9 | $ 309.1 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of unaudited consolidated pro forma results of operations | ||
Revenues | $ 23,780.6 | $ 24,115.7 |
Income from continuing operations | 443.7 | 489.6 |
Net income | $ 444.2 | $ 490.1 |
Income from continuing operations per diluted common share (in dollars per share) | $ 5.38 | $ 5.75 |
Net income per diluted common share (in dollars per share) | $ 5.38 | $ 5.75 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Inventories | |||
Retail automotive dealership new vehicles | $ 2,346.2 | $ 2,397 | |
Retail automotive dealership used vehicles | 1,080.8 | 1,060.8 | |
Retail automotive parts, accessories and other | 141.5 | 140.8 | |
Retail commercial truck dealership vehicles and parts | 465.2 | 207.9 | |
Commercial vehicle distribution vehicles, parts and engines | 227 | 233.6 | |
Total inventories | 4,260.7 | 4,040.1 | |
Interest credits and advertising assistance | $ 51.6 | $ 54.6 | $ 55.4 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment | ||
Total | $ 3,044.5 | $ 2,868.3 |
Less: Accumulated depreciation | (678.1) | (618.3) |
Property and equipment, net | 2,366.4 | 2,250 |
Buildings and leasehold improvements | ||
Property and equipment | ||
Total | 1,904.5 | 1,770.4 |
Capitalized interest included in buildings and leasehold improvements | 29.1 | 28.6 |
Furniture, fixtures and equipment | ||
Property and equipment | ||
Total | $ 1,140 | $ 1,097.9 |
Intangible Assets - Accumulated
Intangible Assets - Accumulated Impairment, Changes in Goodwill and Other Indefinite-Lived Intangibles (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2012 | |
Intangible Assets | ||||
Goodwill, Accumulated impairment loss | $ 606.3 | |||
Other indefinite-lived intangible assets, Accumulated impairment loss | $ 37.1 | |||
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | ||||
Goodwill, Beginning balance | $ 1,752 | $ 1,660.5 | ||
Goodwill, Additions | 146.6 | 144.1 | ||
Goodwill, Disposals | (3.9) | (13.8) | ||
Goodwill, Foreign currency translation | 16.3 | (38.8) | ||
Goodwill, Ending balance | 1,911 | 1,752 | $ 1,660.5 | |
Other indefinite-lived intangible assets, Beginning Balance | 486.2 | 474 | ||
Other indefinite-lived intangible assets, Additions | 67.4 | 29.8 | ||
Other indefinite-lived intangible assets, Disposals | (1.2) | (0.5) | ||
Other indefinite-lived intangible assets, Impairment | (1.9) | (5.8) | 0 | |
Other indefinite-lived intangible assets, Foreign currency translation | 1.7 | (11.3) | ||
Other indefinite-lived intangible assets, Ending Balance | $ 552.2 | $ 486.2 | $ 474 |
Intangible Assets - Changes in
Intangible Assets - Changes in Goodwill by Reportable Segment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of the changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Beginning balance | $ 1,752 | $ 1,660.5 |
Goodwill, Additions | 146.6 | 144.1 |
Goodwill, Disposals | (3.9) | (13.8) |
Goodwill, Foreign currency translation | 16.3 | (38.8) |
Goodwill, Ending balance | 1,911 | 1,752 |
Retail Automotive Dealership | ||
Summary of the changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Beginning balance | 1,511.9 | 1,412.1 |
Goodwill, Additions | 0.9 | 143.2 |
Goodwill, Disposals | (3.9) | (13.8) |
Goodwill, Foreign currency translation | 15.9 | (29.6) |
Goodwill, Ending balance | 1,524.8 | 1,511.9 |
Retail Commercial Truck Dealership | ||
Summary of the changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Beginning balance | 162.6 | 163 |
Goodwill, Additions | 145.6 | 0.9 |
Goodwill, Foreign currency translation | 0.8 | (1.3) |
Goodwill, Ending balance | 309 | 162.6 |
Other | ||
Summary of the changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Beginning balance | 77.5 | 85.4 |
Goodwill, Additions | 0.1 | |
Goodwill, Foreign currency translation | (0.4) | (7.9) |
Goodwill, Ending balance | 77.2 | 77.5 |
Non-Automotive Investments | ||
Summary of the changes in the carrying amount of goodwill by reportable segment | ||
Goodwill, Beginning balance | 0 | |
Goodwill, Ending balance | $ 0 | $ 0 |
Intangible Assets - Impairment
Intangible Assets - Impairment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets | |||
Impairment of intangible assets | $ 1.9 | $ 5.8 | $ 0 |
Vehicle Financing (Details)
Vehicle Financing (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Vehicle Financing | |||
Maturity period of floor plan arrangements outside the U.S. if not payable on demand | 90 days | ||
Weighted average interest rate on floor plan borrowings (as a percent) | 2.20% | 2.10% | 1.80% |
Long-Term Debt (Details)
Long-Term Debt (Details) £ in Millions, $ in Millions, $ in Millions | Jan. 01, 2020 | Dec. 31, 2019USD ($)item | Dec. 31, 2019GBP (£) | Dec. 31, 2019AUD ($) | Jul. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017 |
Long Term Debt | |||||||
Total long-term debt | $ 2,360.3 | $ 2,216.7 | |||||
Less: current portion | (103.3) | (92) | |||||
Net long-term debt | 2,257 | 2,124.7 | |||||
Scheduled maturities of long-term debt for each of the next five years and thereafter | |||||||
2020 | 103.3 | ||||||
2021 | 16.3 | ||||||
2022 | 997.4 | ||||||
2023 | 185.1 | ||||||
2024 | 322.4 | ||||||
2024 and thereafter | 735.8 | ||||||
US Credit Agreement Revolving Credit Line | |||||||
Long Term Debt | |||||||
Total long-term debt | 45 | 30 | |||||
Maximum credit available | 700 | $ 700 | |||||
Revolving loans solely for future U.S. acquisitions | 250 | ||||||
Future borrowings available for foreign acquisitions | 150 | ||||||
Maximum amount available for letters of credit | $ 50 | ||||||
Incremental interest rate for uncollateralized borrowings in excess of borrowing base (as a percent) | 1.25% | ||||||
Balance outstanding under credit agreement | 45 | ||||||
US Credit Agreement Revolving Credit Line | LIBOR | |||||||
Long Term Debt | |||||||
Line of credit basis spread on variable rate (as a percent) | 1.75% | ||||||
UK Credit Agreement Revolving Credit Line | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 165.8 | 163.3 | |||||
Maximum credit available | £ | £ 150 | ||||||
Additional facility capacity under accordion feature | £ | 100 | ||||||
UK Credit Agreement Revolving Credit Line | Minimum | LIBOR | |||||||
Long Term Debt | |||||||
Line of credit basis spread on variable rate (as a percent) | 1.10% | ||||||
UK Credit Agreement Revolving Credit Line | Maximum | LIBOR | |||||||
Long Term Debt | |||||||
Line of credit basis spread on variable rate (as a percent) | 2.10% | ||||||
UK Credit Agreement Overdraft Line of Credit | |||||||
Long Term Debt | |||||||
Total long-term debt | 1.8 | ||||||
UK Credit Agreement Revolving Credit Line and Overdraft Line Of Credit | |||||||
Long Term Debt | |||||||
Balance outstanding under credit agreement | $ 165.8 | £ 125 | |||||
Senior Subordinated Notes | |||||||
Long Term Debt | |||||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | 100.00% | 100.00% | ||||
Change of control, redemption price as a percentage of principal | 101.00% | ||||||
Sale of assets, redemption price as percentage of principal | 100.00% | ||||||
5.50% senior subordinated notes due 2026 | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 495.7 | $ 495.1 | |||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | ||
Principal amount | $ 500 | ||||||
5.50% senior subordinated notes due 2026 | Debt Redemption Prior to May 15, 2021 | |||||||
Long Term Debt | |||||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | ||||
Percentage of principal amount at which the entity may redeem the notes | 100.00% | ||||||
5.50% senior subordinated notes due 2026 | Debt Instrument Redemption Period On or After May 15, 2021 | |||||||
Long Term Debt | |||||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | ||||
5.375% senior subordinated notes due 2024 | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 298 | $ 297.6 | |||||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% | 5.375% | 5.375% | ||
Principal amount | $ 300 | ||||||
5.375% senior subordinated notes due 2024 | Debt Instrument Redemption Period On or After December 1, 2019 | |||||||
Long Term Debt | |||||||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% | ||||
5.75% senior subordinated notes due 2022 | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 547.6 | $ 546.8 | |||||
Interest rate (as a percent) | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% | ||
Principal amount | $ 550 | ||||||
3.75% senior subordinated notes due 2020 | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 299.2 | $ 297.9 | |||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | ||
Principal amount | $ 300 | ||||||
Percentage of principal amount at which the entity may redeem the notes | 100.00% | ||||||
Australia capital loan agreement | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 31.7 | $ 33.6 | |||||
Maximum credit available | $ 50 | ||||||
Debt term | 5 years | ||||||
Call period | 90 days | ||||||
Maximum amount of debt guaranteed by the Company's U.S. parent company | 50 | ||||||
Balance outstanding under credit agreement | $ 31.7 | 45.2 | |||||
Number of facilities | item | 2 | ||||||
Australia capital loan agreement | Australian BBSW 30-Day Bill Rate | |||||||
Long Term Debt | |||||||
Base rate of interest on loans | 30-day Bill Rate | ||||||
Line of credit basis spread on variable rate (as a percent) | 3.00% | ||||||
Australia working capital loan agreement | |||||||
Long Term Debt | |||||||
Total long-term debt | 6.1 | ||||||
Maximum credit available | 50 | ||||||
Debt term | 1 year | ||||||
Call period | 90 days | ||||||
Maximum amount of debt guaranteed by the Company's U.S. parent company | $ 50 | ||||||
Balance outstanding under credit agreement | $ 0 | ||||||
Australia working capital loan agreement | Australian BBSW 30-Day Bill Rate | |||||||
Long Term Debt | |||||||
Base rate of interest on loans | 30-day Bill Rate | ||||||
Line of credit basis spread on variable rate (as a percent) | 3.00% | ||||||
Mortgage facilities | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 423.2 | 289.6 | |||||
Balance outstanding under credit agreement | 423.2 | ||||||
Other debt | |||||||
Long Term Debt | |||||||
Total long-term debt | $ 54.1 | $ 54.9 |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities - Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingent Liabilities | |||
Rent expense | $ 232 | $ 232.1 | $ 225.4 |
Aggregate rent paid by the tenants | 24.4 | ||
Aggregate rent currently guaranteed by the Company | 214.3 | ||
Letters of credit outstanding | 41.9 | ||
Surety bonds posted | $ 19.8 |
Related Party Transactions - Tr
Related Party Transactions - Transactions (Details) $ in Thousands | Sep. 07, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2019USD ($)individual | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
PTL | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% | ||||
Ownership acquired (as a percent) | 5.50% | ||||
Penske Corporation | PTL | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | ||||
Mitsui and Co | PTL | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 30.00% | ||||
Ownership acquired (as a percent) | 10.00% | ||||
Penske Vehicle Services | |||||
Related party transactions | |||||
Ownership interest sold (as a percent) | 31.00% | ||||
Sale of ownership interest to PTL | Penske Vehicle Services | |||||
Related party transactions | |||||
Ownership interest sold (as a percent) | 31.00% | ||||
Purchase price | $ 19,200 | ||||
Penske Corporation and its affiliates | |||||
Related party transactions | |||||
Provider's cost reimbursed | $ 5,400 | $ 6,200 | $ 6,200 | ||
Amount of Provider's cost received | 80 | 183 | 159 | ||
Amount due from related party | 46 | 100 | |||
Amount due to related party | $ 600 | 600 | |||
PTL | |||||
Related party transactions | |||||
Number of members on the advisory committee | individual | 6 | ||||
Previous number of members on the advisory committee | individual | 7 | ||||
Number of members on the advisory committee the Company is entitled to | individual | 1 | ||||
Pro rata quarterly distribution rate (as a percent) | 50.00% | ||||
Partnership interest that my be transferred without complying with the right of first offer (as a percent) | 9.02% | ||||
Pro rata cash dividends received | $ 71,900 | $ 63,200 | $ 52,400 | ||
Cost of acquisition | $ 239,100 |
Related Party Transactions - Jo
Related Party Transactions - Joint ventures (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Bentley, Ferrari, Maserati | Edison, New Jersey | |
Related party transactions | |
Ownership percentage of equity method investment | 20.00% |
Lexus Toyota Volkswagen | Frankfurt, Germany | |
Related party transactions | |
Ownership percentage of equity method investment | 50.00% |
BMW, MINI | Barcelona Spain | |
Related party transactions | |
Ownership percentage of equity method investment | 50.00% |
BMW, MINI, Rolls-Royce, Ferrari and ALPINA | Tokyo, Japan | |
Related party transactions | |
Ownership percentage of equity method investment | 49.00% |
Penske Commercial Leasing Australia | |
Related party transactions | |
Ownership percentage of equity method investment | 28.00% |
Audi, Mercedes-Benz, Sprinter, Porsche | Fairfield, Connecticut | |
Related party transactions | |
Ownership percentage of Consolidated Entity | 80.00% |
Mercedes-Benz | Greenwich, Connecticut | |
Related party transactions | |
Ownership percentage of Consolidated Entity | 80.00% |
BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Mercedes-Benz, smart and Lamborghini | Northern Italy | |
Related party transactions | |
Ownership percentage of Consolidated Entity | 84.10% |
Audi, Maserati, SEAT, Skoda, Volkswagen | Aachen, Germany | |
Related party transactions | |
Ownership percentage of Consolidated Entity | 91.80% |
Additional ownership percentage acquired | 12.40% |
PTL | |
Related party transactions | |
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation | |||
Compensation expense related to the Plan | $ 17.8 | $ 16.8 | $ 16 |
Restricted Stock | |||
Stock-based compensation | |||
Period over which forfeiture and non-transferable restrictions lapse | 4 years | ||
Percentage over which unrecognized compensation cost is expected to be recognized year one | 15.00% | ||
Percentage over which unrecognized compensation cost is expected to be recognized year two | 15.00% | ||
Percentage over which unrecognized compensation cost is expected to be recognized year three | 20.00% | ||
Percentage over which unrecognized compensation cost is expected to be recognized year four | 50.00% | ||
Unrecognized compensation cost related to the restricted stock | $ 30.3 | ||
Shares | |||
Balance at the beginning of the period (in shares) | 912,408 | ||
Granted (in shares) | 524,063 | 330,048 | 320,018 |
Vested (in shares) | (278,320) | ||
Forfeited (in shares) | (31,446) | ||
Balance at the end of the period (in shares) | 1,126,705 | 912,408 | |
Weighted Average Grant-Date Fair value | |||
Balance at the beginning of the period (in dollars per share) | $ 47.19 | ||
Granted (in dollars per share) | 45.75 | ||
Vested (in dollars per share) | 46.94 | ||
Forfeited (in dollars per share) | 48.34 | ||
Balance at the end of the period (in dollars per share) | $ 46.55 | $ 47.19 | |
Aggregate Intrinsic Value | |||
Balance at the end of the period (in dollars) | $ 56.6 | ||
2015 Plan | |||
Stock-based compensation | |||
Plan term | 5 years | ||
Maximum number of shares authorized under the plan | 4,000,000 | ||
Number of shares of common stock available for grant under the plan | 2,259,169 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Securities Repurchase Program | |||
Repurchase of common stock | $ 174.1 | $ 68.9 | $ 18.5 |
Securities Repurchase Program | |||
Securities Repurchase Program | |||
Repurchased shares | 3,871,887 | 1,467,886 | 302,000 |
Repurchase of common stock | $ 169.2 | $ 63.1 | $ 12.7 |
Repurchased shares, average price (in dollars per share) | $ 43.71 | $ 43 | $ 41.95 |
Amount authorized to be repurchased | $ 200 | ||
Acquired Employee Equity Awards | |||
Securities Repurchase Program | |||
Repurchased shares | 114,949 | 119,608 | 133,710 |
Repurchase of common stock | $ 4.9 | $ 5.8 | $ 5.8 |
Repurchased shares, average price (in dollars per share) | $ 42.72 | $ 48.61 | $ 43.28 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | $ 2,609.1 | ||
Balance at the end of the period | 2,793.4 | $ 2,609.1 | |
Foreign Currency Translation | |||
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | (208.3) | (134) | $ (230) |
Other comprehensive income before reclassifications | 22.2 | (74.3) | 96 |
Net current period other comprehensive income | 22.2 | (74.3) | 96 |
Balance at the end of the period | (186.1) | (208.3) | (134) |
Other | |||
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | (26.2) | (12.5) | (20.7) |
Other comprehensive income before reclassifications | 9.5 | (13.7) | 8.2 |
Net current period other comprehensive income | 9.5 | (13.7) | 8.2 |
Balance at the end of the period | (16.7) | (26.2) | (12.5) |
Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | (234.5) | (146.5) | (250.7) |
Other comprehensive income before reclassifications | 31.7 | (88) | 104.2 |
Net current period other comprehensive income | 31.7 | (88) | 104.2 |
Balance at the end of the period | (202.8) | (234.5) | (146.5) |
Amounts reclassified from accumulated other comprehensive income, tax provision | $ 0 | $ 0 | $ 0 |
Income Taxes - Income tax chang
Income Taxes - Income tax changes (Details) - USD ($) $ in Millions | Dec. 22, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Income Taxes | |||
Corporate tax rate (as a percent) | 35.00% | 21.00% | |
U.S. federal and state tax liability related to transition tax on repatriation of foreign earnings and profits | $ 52.2 | ||
Amount of deemed repatriation of foreign earnings and profits | 946 | ||
Income tax benefit related to remeasurement of deferred tax assets and liabilities due to change in enacted tax rate | $ 301.2 |
Income Taxes - Income taxes rel
Income Taxes - Income taxes relating to continuing operations and deferred taxes (Details) - USD ($) $ in Millions | Dec. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Income from continuing operations before income taxes by geographic region | ||||
U.S. | $ 427.8 | $ 390.3 | $ 375.4 | |
Non-U.S. | 163.7 | 213.8 | 172.8 | |
Income from continuing operations before income taxes | 591.5 | 604.1 | 548.2 | |
Current: | ||||
Federal | 23.6 | (15.6) | (3.5) | |
State and local | 4.3 | (2.9) | 4.2 | |
Foreign | 36.8 | 46.9 | 43.2 | |
Total current | 64.7 | 28.4 | 43.9 | |
Deferred: | ||||
Federal | 67.6 | 85.9 | (150.5) | |
State and local | 24 | 20 | 47.2 | |
Foreign | 0.4 | (5.4) | ||
Total deferred | 92 | 105.9 | (108.7) | |
Income taxes | 156.7 | $ 134.3 | (64.8) | |
Reconciliation of income taxes from continuing operations at federal statutory rate | ||||
Federal statutory income tax rate (as a percent) | 35.00% | 21.00% | ||
Income taxes at federal statutory rate of 35% | 124.2 | $ 126.9 | 191.9 | |
State and local income taxes, net of federal taxes | 23.6 | 13.8 | 13.7 | |
Non-U.S. income taxed at other rates | 2.8 | 1.9 | (25.2) | |
Revaluation of U.S. deferreds | (301.6) | |||
Deemed mandatory repatriation | 54.8 | |||
SAB 118 Benefit | (11.6) | |||
Other | 6.1 | 3.3 | 1.6 | |
Income taxes | 156.7 | 134.3 | (64.8) | |
Deferred Tax Assets | ||||
Accrued liabilities | 49.7 | 48.7 | ||
Net operating loss and credit carryforwards | 72.8 | 81.4 | ||
Leasing liabilities | 577.8 | |||
Other | 27.6 | 27.9 | ||
Total deferred tax assets | 727.9 | 158 | ||
Valuation allowance | (45.7) | (40.5) | ||
Net deferred tax assets | 682.2 | 117.5 | ||
Deferred Tax Liabilities | ||||
Depreciation and amortization | (206.9) | (188) | ||
Partnership investments | (569) | (499.3) | ||
Leasing assets | (577.8) | |||
Other | (6.4) | (8) | ||
Total deferred tax liabilities | (1,360.1) | (695.3) | ||
Net deferred tax liabilities | (677.9) | (577.8) | ||
Income from continuing operations before income taxes of non-U.S. subsidiaries | 163.7 | $ 213.8 | $ 172.8 | |
Amount of total temporary difference related to the excess of financial reporting basis over tax basis in the non-U.S. subsidiaries on which U.S. federal income taxes are not provided | $ 109.5 |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Carryforwards | ||
Valuation allowance against deferred tax assets | $ 45.7 | $ 40.5 |
UK | ||
Carryforwards | ||
Valuation allowance against deferred tax assets | 10 | |
UK | Capital loss carryforwards | ||
Carryforwards | ||
Tax credit carryforwards | 2.6 | |
Germany | ||
Carryforwards | ||
Net operating loss carryforwards | 42.5 | |
Valuation allowance against net operating loss carryforwards | 16.8 | |
Australia | ||
Carryforwards | ||
Net operating loss carryforwards | 4.6 | |
New Zealand | ||
Carryforwards | ||
Net operating loss carryforwards | 4.8 | |
Italy | ||
Carryforwards | ||
Net operating loss carryforwards | 0.1 | |
State | U.S. | ||
Carryforwards | ||
Net operating loss carryforwards | 598 | |
Net operating loss carryforwards utilized | 5.3 | |
Valuation allowance against net operating loss carryforwards | 0.7 | |
Valuation allowance against tax credit carryforwards | 0.4 | |
Federal and state | U.S. | ||
Carryforwards | ||
Tax credit carryforwards | 4.1 | |
Foreign | U.S. | ||
Carryforwards | ||
Tax credit carryforwards | 20.1 | |
Valuation allowance against tax credit carryforwards | $ 17.9 |
Income Taxes - Uncertain tax po
Income Taxes - Uncertain tax positions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Movement in uncertain tax positions | |||
Uncertain tax positions at the beginning of the period | $ 0.1 | $ 3.5 | $ 3.4 |
Gross increase - tax position in prior periods | 0.2 | ||
Gross decrease - tax position in prior periods | (3.4) | (0.1) | |
Gross increase - current period tax position | |||
Settlements | |||
Lapse in statute of limitations | |||
Foreign exchange | |||
Uncertain tax positions at the end of the period | 0.1 | $ 0.1 | $ 3.5 |
Interest and penalties included within uncertain tax positions | 0 | ||
Impact of uncertain tax positions on effective tax rate, if recognized | $ 0.1 |
Segment Information - Reporting
Segment Information - Reporting information by segment (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting Information | |||
Number of reportable segments | item | 4 | ||
Revenues and segment income by reportable segment | |||
Total revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
Floor plan interest expense | 84.5 | 80.9 | 63.4 |
Other interest expense | 124.2 | 114.7 | 107.4 |
Depreciation | 109.6 | 103.7 | 95.1 |
Equity in earnings of affiliates | 147.5 | 134.8 | 107.6 |
Segment income | 591.5 | 604.1 | 548.2 |
Total assets, equity method investments, and capital expenditures by reporting segment | |||
Total assets | 13,942.7 | 10,904.5 | |
Equity method investments | 1,399 | 1,305.2 | |
Capital expenditures | $ 245.3 | 305.6 | 247 |
Retail Automotive Dealership | |||
Segment Reporting Information | |||
Number of reportable segments | item | 1 | ||
Number of operating segments | item | 6 | ||
Revenues and segment income by reportable segment | |||
Total revenues | $ 20,615.8 | 20,849.2 | 19,824.3 |
Retail Automotive Dealership | Operating segments | |||
Revenues and segment income by reportable segment | |||
Total revenues | 20,615.8 | 20,849.2 | 19,824.3 |
Floor plan interest expense | 74.9 | 74.9 | 59.4 |
Other interest expense | 118.4 | 108.3 | 95 |
Depreciation | 99.1 | 94.2 | 85.7 |
Equity in earnings of affiliates | 5.2 | 5.2 | 4.6 |
Segment income | 339.9 | 389.7 | 397.2 |
Total assets, equity method investments, and capital expenditures by reporting segment | |||
Total assets | 10,960.1 | 8,501.4 | |
Equity method investments | 72.1 | 64.1 | |
Capital expenditures | 231.9 | 292.6 | 237.8 |
Retail Commercial Truck Dealership | |||
Revenues and segment income by reportable segment | |||
Total revenues | 2,050.5 | 1,374.5 | 1,048 |
Retail Commercial Truck Dealership | Operating segments | |||
Revenues and segment income by reportable segment | |||
Total revenues | 2,050.5 | 1,374.5 | 1,048 |
Floor plan interest expense | 8 | 4.2 | 2.7 |
Other interest expense | 3.2 | 2.4 | 3.4 |
Depreciation | 5.5 | 4.3 | 4.1 |
Segment income | 86.5 | 62.3 | 38.4 |
Total assets, equity method investments, and capital expenditures by reporting segment | |||
Total assets | 1,075.8 | 571.5 | |
Capital expenditures | 9.9 | 9.3 | 6.4 |
Other | Operating segments | |||
Revenues and segment income by reportable segment | |||
Total revenues | 513.1 | 561.4 | 514.6 |
Floor plan interest expense | 1.6 | 1.8 | 1.3 |
Other interest expense | 2.6 | 4 | 9 |
Depreciation | 5 | 5.2 | 5.3 |
Segment income | 22.8 | 22.5 | 9.6 |
Total assets, equity method investments, and capital expenditures by reporting segment | |||
Total assets | 579.9 | 590.5 | |
Capital expenditures | 3.5 | 3.7 | 2.8 |
Non-Automotive Investments | Operating segments | |||
Revenues and segment income by reportable segment | |||
Equity in earnings of affiliates | 142.3 | 129.6 | 103 |
Segment income | 142.3 | 129.6 | $ 103 |
Total assets, equity method investments, and capital expenditures by reporting segment | |||
Total assets | 1,326.9 | 1,241.1 | |
Equity method investments | $ 1,326.9 | $ 1,241.1 |
Segment Information - Data by g
Segment Information - Data by geographic area (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from external customers and Long-lived assets, net | |||
Revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
Long-lived assets, net | 3,784.9 | 3,571.1 | |
U.S. | |||
Revenue from external customers and Long-lived assets, net | |||
Revenues | 13,511.8 | 12,607.8 | 12,487.2 |
Long-lived assets, net | 2,481.1 | 2,365.5 | |
Foreign | |||
Revenue from external customers and Long-lived assets, net | |||
Revenues | 9,667.6 | 10,177.3 | $ 8,899.7 |
Long-lived assets, net | $ 1,303.8 | $ 1,205.6 |
Segment Information - Revenue b
Segment Information - Revenue by product type (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from external customers by product type | |||
Total revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 |
Retail Automotive Dealership | |||
Revenue from external customers by product type | |||
Total revenues | 20,615.8 | 20,849.2 | 19,824.3 |
Retail Automotive Dealership | New vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 9,329.5 | 9,666.4 | 9,678.5 |
Retail Automotive Dealership | Used vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 7,241.2 | 7,252.1 | 6,386.8 |
Retail Automotive Dealership | Finance and insurance, net | |||
Revenue from external customers by product type | |||
Total revenues | 652.1 | 629.6 | 581.8 |
Retail Automotive Dealership | Service and parts | |||
Revenue from external customers by product type | |||
Total revenues | 2,195.9 | 2,151.4 | 2,057.5 |
Retail Automotive Dealership | Fleet and wholesale | |||
Revenue from external customers by product type | |||
Total revenues | 1,197.1 | 1,149.7 | 1,119.7 |
Retail Automotive Dealership | Operating segments | |||
Revenue from external customers by product type | |||
Total revenues | 20,615.8 | 20,849.2 | 19,824.3 |
Retail Automotive Dealership | Operating segments | New vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 9,329.5 | 9,666.4 | 9,678.5 |
Retail Automotive Dealership | Operating segments | Used vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 7,241.2 | 7,252.1 | 6,386.8 |
Retail Automotive Dealership | Operating segments | Finance and insurance, net | |||
Revenue from external customers by product type | |||
Total revenues | 652.1 | 629.6 | 581.8 |
Retail Automotive Dealership | Operating segments | Service and parts | |||
Revenue from external customers by product type | |||
Total revenues | 2,195.9 | 2,151.4 | 2,057.5 |
Retail Automotive Dealership | Operating segments | Fleet and wholesale | |||
Revenue from external customers by product type | |||
Total revenues | 1,197.1 | 1,149.7 | 1,119.7 |
Retail Commercial Truck Dealership | |||
Revenue from external customers by product type | |||
Total revenues | 2,050.5 | 1,374.5 | 1,048 |
Retail Commercial Truck Dealership | New vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 1,347.2 | 866.9 | 613.2 |
Retail Commercial Truck Dealership | Used vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 117 | 112 | 89.4 |
Retail Commercial Truck Dealership | Finance and insurance, net | |||
Revenue from external customers by product type | |||
Total revenues | 12.4 | 11.9 | 8.9 |
Retail Commercial Truck Dealership | Service and parts | |||
Revenue from external customers by product type | |||
Total revenues | 503.3 | 364.5 | 325.6 |
Retail Commercial Truck Dealership | Operating segments | |||
Revenue from external customers by product type | |||
Total revenues | 2,050.5 | 1,374.5 | 1,048 |
Retail Commercial Truck Dealership | Operating segments | New vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 1,347.2 | 866.9 | 613.2 |
Retail Commercial Truck Dealership | Operating segments | Used vehicle | |||
Revenue from external customers by product type | |||
Total revenues | 117 | 112 | 89.4 |
Retail Commercial Truck Dealership | Operating segments | Finance and insurance, net | |||
Revenue from external customers by product type | |||
Total revenues | 12.4 | 11.9 | 9 |
Retail Commercial Truck Dealership | Operating segments | Service and parts | |||
Revenue from external customers by product type | |||
Total revenues | 503.3 | 364.5 | 325.6 |
Retail Commercial Truck Dealership | Operating segments | Lease, rental and wholesale | |||
Revenue from external customers by product type | |||
Total revenues | $ 70.6 | $ 19.2 | $ 10.8 |
Summary of Quarterly Financia_3
Summary of Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Data | |||||||||||
Total revenues | $ 5,881.4 | $ 5,967.6 | $ 5,755.8 | $ 5,564.4 | $ 5,439.3 | $ 5,658.6 | $ 5,940.3 | $ 5,746.9 | |||
Gross profit | 866.5 | 869.7 | 867.8 | 851.5 | 808.1 | 852.6 | 889.8 | 864.4 | $ 3,455.5 | $ 3,414.9 | $ 3,222.5 |
Income from continuing operations | 101.3 | 116 | 118.4 | 99.1 | 96.9 | 130 | 135.2 | 107.7 | 434.8 | 469.8 | 613 |
Net income | 101.3 | 116.1 | 118.5 | 99.2 | 97.2 | 130.1 | 135.2 | 107.8 | 435.1 | 470.3 | 612.8 |
Net income attributable to Penske Automotive Group common stockholders | $ 101.6 | $ 116.2 | $ 117.8 | $ 100.2 | $ 98.1 | $ 130.2 | $ 134.6 | $ 108.1 | $ 435.8 | $ 471 | $ 613.3 |
Diluted earnings per share attributable to Penske Automotive Group common stockholders: | |||||||||||
Income from continuing operations per share (in dollars per share) | $ 1.25 | $ 1.42 | $ 1.42 | $ 1.19 | $ 1.15 | $ 1.53 | $ 1.58 | $ 1.26 | $ 5.28 | $ 5.52 | $ 7.14 |
Net income per share (in dollars per share) | $ 1.25 | $ 1.42 | $ 1.42 | $ 1.19 | $ 1.16 | $ 1.53 | $ 1.58 | $ 1.26 | $ 5.28 | $ 5.53 | $ 7.14 |
Condensed Consolidating Finan_3
Condensed Consolidating Financial Information - Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 02, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Condensed consolidating balance sheet | |||||
Cash and cash equivalents | $ 28.1 | $ 39.4 | $ 45.7 | $ 24 | |
Accounts receivable, net | 960.3 | 929.1 | |||
Inventories | 4,260.7 | 4,040.1 | |||
Other current assets | 85 | 86.6 | |||
Total current assets | 5,334.1 | 5,095.2 | |||
Property and equipment, net | 2,366.4 | 2,250 | |||
Operating lease right-of-use assets | 2,360.5 | $ 2,425.6 | |||
Intangible assets | 2,463.2 | 2,238.2 | |||
Equity method investments | 1,399 | 1,305.2 | |||
Other long-term assets | 19.5 | 15.9 | |||
Total assets | 13,942.7 | 10,904.5 | |||
Floor plan notes payable | 2,412.5 | 2,362.2 | |||
Floor plan notes payable - non-trade | 1,594 | 1,428.6 | |||
Accounts payable | 638.8 | 598.2 | |||
Accrued expenses and other current liabilities | 701.9 | 636.8 | 566.6 | ||
Current portion of long-term debt | 103.3 | 92 | |||
Liabilities held for sale | 0.5 | 0.7 | |||
Total current liabilities | 5,451 | 5,048.3 | |||
Long-term debt | 2,257 | 2,124.7 | |||
Long-term operating lease liabilities | 2,301.2 | 2,387.5 | |||
Deferred tax liabilities | 677.9 | 578.7 | 577.8 | ||
Other long-term liabilities | 444 | $ 481 | 519 | ||
Total liabilities | 11,131.1 | 8,269.8 | |||
Total equity | 2,811.6 | 2,634.7 | $ 2,428 | 1,779.5 | |
Total liabilities and equity | $ 13,942.7 | $ 10,904.5 | |||
5.75% senior subordinated notes due 2022 | |||||
Condensed consolidating balance sheet | |||||
Interest rate (as a percent) | 5.75% | 5.75% | 5.75% | ||
5.375% senior subordinated notes due 2024 | |||||
Condensed consolidating balance sheet | |||||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% | ||
5.50% senior subordinated notes due 2026 | |||||
Condensed consolidating balance sheet | |||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | ||
3.75% senior subordinated notes due 2020 | |||||
Condensed consolidating balance sheet | |||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | ||
Guarantor Subsidiaries | |||||
Condensed consolidating balance sheet | |||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | ||||
Eliminations | |||||
Condensed consolidating balance sheet | |||||
Accounts receivable, net | $ (497.4) | $ (481.7) | |||
Total current assets | (497.4) | (481.7) | |||
Other long-term assets | (2,984.3) | (2,814.3) | |||
Total assets | (3,481.7) | (3,296) | |||
Accrued expenses and other current liabilities | (497.4) | (481.7) | |||
Total current liabilities | (497.4) | (481.7) | |||
Long-term debt | (96.8) | (88.6) | |||
Total liabilities | (594.2) | (570.3) | |||
Total equity | (2,887.5) | (2,725.7) | |||
Total liabilities and equity | (3,481.7) | (3,296) | |||
Reportable legal entities | Penske Automotive Group | |||||
Condensed consolidating balance sheet | |||||
Accounts receivable, net | 497.4 | 481.7 | |||
Other current assets | 3.7 | 10.6 | |||
Total current assets | 501.1 | 492.3 | |||
Property and equipment, net | 3.7 | 3.9 | |||
Operating lease right-of-use assets | 9.3 | ||||
Equity method investments | 1,328.8 | 1,239.9 | |||
Other long-term assets | 2,996.2 | 2,821 | |||
Total assets | 4,839.1 | 4,557.1 | |||
Floor plan notes payable - non-trade | 233.9 | 232.3 | |||
Accounts payable | 6 | 4.9 | |||
Accrued expenses and other current liabilities | 1.6 | 1.4 | |||
Current portion of long-term debt | 13 | ||||
Total current liabilities | 254.5 | 238.6 | |||
Long-term debt | 1,757.9 | 1,683.8 | |||
Long-term operating lease liabilities | 8.9 | ||||
Other long-term liabilities | 6.2 | ||||
Total liabilities | 2,027.5 | 1,922.4 | |||
Total equity | 2,811.6 | 2,634.7 | |||
Total liabilities and equity | 4,839.1 | 4,557.1 | |||
Reportable legal entities | Guarantor Subsidiaries | |||||
Condensed consolidating balance sheet | |||||
Cash and cash equivalents | 12.9 | $ 14.8 | 9.4 | ||
Accounts receivable, net | 508.9 | 507.1 | |||
Inventories | 2,124.9 | 1,961.6 | |||
Other current assets | 22.7 | 17.8 | |||
Total current assets | 2,656.5 | 2,499.4 | |||
Property and equipment, net | 1,101.2 | 1,077.7 | |||
Operating lease right-of-use assets | 1,574.7 | ||||
Intangible assets | 1,633.6 | 1,422.6 | |||
Other long-term assets | 1.4 | 2.9 | |||
Total assets | 6,967.4 | 5,002.6 | |||
Floor plan notes payable | 1,427.1 | 1,348.3 | |||
Floor plan notes payable - non-trade | 522.5 | 505.9 | |||
Accounts payable | 226.9 | 196.6 | |||
Accrued expenses and other current liabilities | 242 | 160.2 | |||
Current portion of long-term debt | 10.7 | 6.3 | |||
Liabilities held for sale | 0.5 | 0.7 | |||
Total current liabilities | 2,429.7 | 2,218 | |||
Long-term debt | 254.5 | 225.7 | |||
Long-term operating lease liabilities | 1,545.6 | ||||
Deferred tax liabilities | 668.1 | 570.5 | |||
Other long-term liabilities | 30.9 | 57.6 | |||
Total liabilities | 4,928.8 | 3,071.8 | |||
Total equity | 2,038.6 | 1,930.8 | |||
Total liabilities and equity | 6,967.4 | 5,002.6 | |||
Reportable legal entities | Non-Guarantor Subsidiaries | |||||
Condensed consolidating balance sheet | |||||
Cash and cash equivalents | 28.1 | 26.5 | $ 30.9 | $ 14.6 | |
Accounts receivable, net | 451.4 | 422 | |||
Inventories | 2,135.8 | 2,078.5 | |||
Other current assets | 58.6 | 58.2 | |||
Total current assets | 2,673.9 | 2,585.2 | |||
Property and equipment, net | 1,261.5 | 1,168.4 | |||
Operating lease right-of-use assets | 776.5 | ||||
Intangible assets | 829.6 | 815.6 | |||
Equity method investments | 70.2 | 65.3 | |||
Other long-term assets | 6.2 | 6.3 | |||
Total assets | 5,617.9 | 4,640.8 | |||
Floor plan notes payable | 985.4 | 1,013.9 | |||
Floor plan notes payable - non-trade | 837.6 | 690.4 | |||
Accounts payable | 405.9 | 396.7 | |||
Accrued expenses and other current liabilities | 955.7 | 886.7 | |||
Current portion of long-term debt | 79.6 | 85.7 | |||
Total current liabilities | 3,264.2 | 3,073.4 | |||
Long-term debt | 341.4 | 303.8 | |||
Long-term operating lease liabilities | 746.7 | ||||
Deferred tax liabilities | 9.8 | 7.3 | |||
Other long-term liabilities | 406.9 | 461.4 | |||
Total liabilities | 4,769 | 3,845.9 | |||
Total equity | 848.9 | 794.9 | |||
Total liabilities and equity | $ 5,617.9 | $ 4,640.8 |
Condensed Consolidating Finan_4
Condensed Consolidating Financial Information - Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed consolidating statement of income | |||||||||||
Revenues | $ 23,179.4 | $ 22,785.1 | $ 21,386.9 | ||||||||
Cost of sales | 19,723.9 | 19,370.2 | 18,164.4 | ||||||||
Gross profit | $ 866.5 | $ 869.7 | $ 867.8 | $ 851.5 | $ 808.1 | $ 852.6 | $ 889.8 | $ 864.4 | 3,455.5 | 3,414.9 | 3,222.5 |
Selling, general and administrative expenses | 2,693.2 | 2,646.3 | 2,516 | ||||||||
Depreciation | 109.6 | 103.7 | 95.1 | ||||||||
Operating income | 652.7 | 664.9 | 611.4 | ||||||||
Floor plan interest expense | (84.5) | (80.9) | (63.4) | ||||||||
Other interest expense | (124.2) | (114.7) | (107.4) | ||||||||
Equity in earnings of affiliates | 147.5 | 134.8 | 107.6 | ||||||||
Income from continuing operations before income taxes | 591.5 | 604.1 | 548.2 | ||||||||
Income taxes | (156.7) | (134.3) | 64.8 | ||||||||
Income from continuing operations | 101.3 | 116 | 118.4 | 99.1 | 96.9 | 130 | 135.2 | 107.7 | 434.8 | 469.8 | 613 |
Income (loss) from discontinued operations, net of tax | 0.3 | 0.5 | (0.2) | ||||||||
Net income | $ 101.3 | $ 116.1 | $ 118.5 | $ 99.2 | $ 97.2 | $ 130.1 | $ 135.2 | $ 107.8 | 435.1 | 470.3 | 612.8 |
Other comprehensive income (loss), net of tax | 31.4 | (89.5) | 107.4 | ||||||||
Comprehensive income | 466.5 | 380.8 | 720.2 | ||||||||
Less: Comprehensive loss attributable to non-controlling interests | (1) | (2.2) | 2.7 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | 467.5 | 383 | 717.5 | ||||||||
Eliminations | |||||||||||
Condensed consolidating statement of income | |||||||||||
Equity in earnings of subsidiaries | (568.6) | (586.8) | (550.6) | ||||||||
Income from continuing operations before income taxes | (568.6) | (586.8) | (550.6) | ||||||||
Income taxes | 150.5 | 130.3 | (64.8) | ||||||||
Income from continuing operations | (418.1) | (456.5) | (615.4) | ||||||||
Income (loss) from discontinued operations, net of tax | (0.3) | (0.5) | 0.2 | ||||||||
Net income | (418.4) | (457) | (615.2) | ||||||||
Other comprehensive income (loss), net of tax | (20.1) | 74.9 | (97.5) | ||||||||
Comprehensive income | (438.5) | (382.1) | (712.7) | ||||||||
Less: Comprehensive loss attributable to non-controlling interests | 0.3 | 1.5 | (3.2) | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | (438.8) | (383.6) | (709.5) | ||||||||
Penske Automotive Group | Reportable legal entities | |||||||||||
Condensed consolidating statement of income | |||||||||||
Selling, general and administrative expenses | 25.9 | 24.9 | 24.5 | ||||||||
Depreciation | 1.4 | 1.5 | 1.6 | ||||||||
Operating income | (27.3) | (26.4) | (26.1) | ||||||||
Floor plan interest expense | (8) | (7.2) | (4.9) | ||||||||
Other interest expense | (83.4) | (77.8) | (73.5) | ||||||||
Equity in earnings of affiliates | 142.3 | 129.5 | 102.8 | ||||||||
Equity in earnings of subsidiaries | 568.6 | 586.8 | 550.6 | ||||||||
Income from continuing operations before income taxes | 592.2 | 604.9 | 548.9 | ||||||||
Income taxes | (156.7) | (134.3) | 64.8 | ||||||||
Income from continuing operations | 435.5 | 470.6 | 613.7 | ||||||||
Income (loss) from discontinued operations, net of tax | 0.3 | 0.5 | (0.2) | ||||||||
Net income | 435.8 | 471.1 | 613.5 | ||||||||
Other comprehensive income (loss), net of tax | 31.4 | (89.5) | 107.4 | ||||||||
Comprehensive income | 467.2 | 381.6 | 720.9 | ||||||||
Less: Comprehensive loss attributable to non-controlling interests | (0.3) | (1.5) | 3.2 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | 467.5 | 383.1 | 717.7 | ||||||||
Guarantor Subsidiaries | Reportable legal entities | |||||||||||
Condensed consolidating statement of income | |||||||||||
Revenues | 12,928.7 | 12,036.6 | 11,825.9 | ||||||||
Cost of sales | 10,909.5 | 10,130.4 | 9,945 | ||||||||
Gross profit | 2,019.2 | 1,906.2 | 1,880.9 | ||||||||
Selling, general and administrative expenses | 1,471.2 | 1,403.7 | 1,393.3 | ||||||||
Depreciation | 59.9 | 56.1 | 53.1 | ||||||||
Operating income | 488.1 | 446.4 | 434.5 | ||||||||
Floor plan interest expense | (57.1) | (50.7) | (38.5) | ||||||||
Other interest expense | (12.6) | (8.8) | (8.9) | ||||||||
Income from continuing operations before income taxes | 418.4 | 386.9 | 387.1 | ||||||||
Income taxes | (116.9) | (88.6) | 95.5 | ||||||||
Income from continuing operations | 301.5 | 298.3 | 482.6 | ||||||||
Income (loss) from discontinued operations, net of tax | 0.3 | 0.5 | (0.2) | ||||||||
Net income | 301.8 | 298.8 | 482.4 | ||||||||
Comprehensive income | 301.8 | 298.8 | 482.4 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | 301.8 | 298.8 | 482.4 | ||||||||
Non-Guarantor Subsidiaries | Reportable legal entities | |||||||||||
Condensed consolidating statement of income | |||||||||||
Revenues | 10,250.7 | 10,748.5 | 9,561 | ||||||||
Cost of sales | 8,814.4 | 9,239.8 | 8,219.4 | ||||||||
Gross profit | 1,436.3 | 1,508.7 | 1,341.6 | ||||||||
Selling, general and administrative expenses | 1,196.1 | 1,217.7 | 1,098.2 | ||||||||
Depreciation | 48.3 | 46.1 | 40.4 | ||||||||
Operating income | 191.9 | 244.9 | 203 | ||||||||
Floor plan interest expense | (19.4) | (23) | (20) | ||||||||
Other interest expense | (28.2) | (28.1) | (25) | ||||||||
Equity in earnings of affiliates | 5.2 | 5.3 | 4.8 | ||||||||
Income from continuing operations before income taxes | 149.5 | 199.1 | 162.8 | ||||||||
Income taxes | (33.6) | (41.7) | (30.7) | ||||||||
Income from continuing operations | 115.9 | 157.4 | 132.1 | ||||||||
Net income | 115.9 | 157.4 | 132.1 | ||||||||
Other comprehensive income (loss), net of tax | 20.1 | (74.9) | 97.5 | ||||||||
Comprehensive income | 136 | 82.5 | 229.6 | ||||||||
Less: Comprehensive loss attributable to non-controlling interests | (1) | (2.2) | 2.7 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | $ 137 | $ 84.7 | $ 226.9 |
Condensed Consolidating Finan_5
Condensed Consolidating Financial Information - Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | $ 518.3 | $ 614.2 | $ 623 |
Investing activities: | |||
Purchase of equipment and improvements | (245.3) | (305.6) | (247) |
Proceeds from sale of dealerships | 22.8 | 84.5 | 25.1 |
Proceeds from sale-leaseback transactions | 18.9 | 10.7 | 22.2 |
Acquisition of additional ownership interest in Penske Truck Leasing | (239.1) | ||
Acquisitions, net | (326.9) | (309.1) | (449.7) |
Other | (2.2) | (5.7) | (40.2) |
Net cash used in continuing investing activities | (532.7) | (525.2) | (928.7) |
Financing activities: | |||
Issuance of 3.75% senior subordinated notes | 300 | ||
Net borrowings (repayments) of long-term debt | 130.4 | 93.5 | (26) |
Net (repayments) borrowings of floor plan notes payable - non-trade | 177.5 | 10 | 185.3 |
Payment of debt issuance costs | (0.4) | (1.9) | (4) |
Repurchases of common stock | (169.2) | (68.9) | (18.5) |
Dividends | (130.8) | (121.2) | (108.4) |
Other | (4.9) | (5.8) | (5.8) |
Net cash used in continuing financing activities | 2.6 | (94.3) | 322.6 |
Net cash provided by discontinued operations | 0.3 | 0.5 | 2.7 |
Effect of exchange rate changes on cash and cash equivalents | 0.2 | (1.5) | 2.1 |
Net change in cash and cash equivalents | (11.3) | (6.3) | 21.7 |
Cash and cash equivalents, beginning of period | 39.4 | 45.7 | 24 |
Cash and cash equivalents, end of period | $ 28.1 | $ 39.4 | $ 45.7 |
5.50% senior subordinated notes due 2026 | |||
Condensed consolidating statement of cash flows | |||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% |
3.75% senior subordinated notes due 2020 | |||
Condensed consolidating statement of cash flows | |||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% |
Penske Automotive Group | Reportable legal entities | |||
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | $ (79.2) | $ 3.4 | $ (46.8) |
Investing activities: | |||
Purchase of equipment and improvements | (1.6) | (1.2) | (3.2) |
Acquisition of additional ownership interest in Penske Truck Leasing | (239.1) | ||
Other | (3.8) | (3.8) | (40) |
Net cash used in continuing investing activities | (5.4) | (5) | (282.3) |
Financing activities: | |||
Issuance of 3.75% senior subordinated notes | 300 | ||
Net borrowings (repayments) of long-term debt | 84.9 | (142) | (68) |
Net (repayments) borrowings of floor plan notes payable - non-trade | 1.6 | 35.6 | 40.6 |
Payment of debt issuance costs | (0.4) | (1.9) | (4) |
Repurchases of common stock | (169.2) | (68.9) | (18.5) |
Dividends | (130.8) | (121.2) | (108.4) |
Other | (4.9) | (5.8) | (5.8) |
Distributions from (to) parent | 303.4 | 305.8 | 193.2 |
Net cash used in continuing financing activities | 84.6 | 1.6 | 329.1 |
Guarantor Subsidiaries | Reportable legal entities | |||
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | 554.2 | 535.2 | 643.3 |
Investing activities: | |||
Purchase of equipment and improvements | (91.3) | (173.9) | (138) |
Proceeds from sale of dealerships | 16.2 | 82 | 9 |
Acquisitions, net | (332.7) | (140.5) | (334.5) |
Other | 3.4 | ||
Net cash used in continuing investing activities | (404.4) | (232.4) | (463.5) |
Financing activities: | |||
Net borrowings (repayments) of long-term debt | 32.3 | 81.1 | 6.4 |
Net (repayments) borrowings of floor plan notes payable - non-trade | 28.7 | (96) | 4.8 |
Distributions from (to) parent | (224) | (290.3) | (188.3) |
Net cash used in continuing financing activities | (163) | (305.2) | (177.1) |
Net cash provided by discontinued operations | 0.3 | 0.5 | 2.7 |
Net change in cash and cash equivalents | (12.9) | (1.9) | 5.4 |
Cash and cash equivalents, beginning of period | 12.9 | 14.8 | 9.4 |
Cash and cash equivalents, end of period | 12.9 | 14.8 | |
Non-Guarantor Subsidiaries | Reportable legal entities | |||
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | 43.3 | 75.6 | 26.5 |
Investing activities: | |||
Purchase of equipment and improvements | (152.4) | (130.5) | (105.8) |
Proceeds from sale of dealerships | 6.6 | 2.5 | 16.1 |
Proceeds from sale-leaseback transactions | 18.9 | 10.7 | 22.2 |
Acquisitions, net | 5.8 | (168.6) | (115.2) |
Other | (1.8) | (1.9) | (0.2) |
Net cash used in continuing investing activities | (122.9) | (287.8) | (182.9) |
Financing activities: | |||
Net borrowings (repayments) of long-term debt | 13.2 | 154.4 | 35.6 |
Net (repayments) borrowings of floor plan notes payable - non-trade | 147.2 | 70.4 | 139.9 |
Distributions from (to) parent | (79.4) | (15.5) | (4.9) |
Net cash used in continuing financing activities | 81 | 209.3 | 170.6 |
Effect of exchange rate changes on cash and cash equivalents | 0.2 | (1.5) | 2.1 |
Net change in cash and cash equivalents | 1.6 | (4.4) | 16.3 |
Cash and cash equivalents, beginning of period | 26.5 | 30.9 | 14.6 |
Cash and cash equivalents, end of period | $ 28.1 | $ 26.5 | $ 30.9 |
Schedule II VALUATION AND QUA_2
Schedule II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for doubtful accounts | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Year | $ 5.4 | $ 5.5 | $ 4.5 |
Additions | 3.6 | 2 | 2.5 |
Deductions, Recoveries & Other | (3.3) | (2.1) | (1.5) |
Balance at Ending of Year | 5.7 | 5.4 | 5.5 |
Tax valuation allowance | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Year | 40.5 | 36.6 | 17.2 |
Additions | 5.4 | 4 | 21.5 |
Deductions, Recoveries & Other | (0.2) | (0.1) | (2.1) |
Balance at Ending of Year | $ 45.7 | $ 40.5 | $ 36.6 |