Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
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 | Common Stock | |
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 | 80,461,102 | |
Entity Central Index Key | 0001019849 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 431.9 | $ 28.1 |
Accounts receivable, net of allowance for doubtful accounts of $6.4 and $5.7 | 616.3 | 960.3 |
Inventories | 4,262.7 | 4,260.7 |
Other current assets | 85.2 | 85 |
Total current assets | 5,396.1 | 5,334.1 |
Property and equipment, net | 2,297.9 | 2,366.4 |
Operating lease right-of-use assets | 2,292.1 | 2,360.5 |
Goodwill | 1,868.8 | 1,911 |
Other indefinite-lived intangible assets | 541 | 552.2 |
Equity method investments | 1,400.7 | 1,399 |
Other long-term assets | 20.2 | 19.5 |
Total assets | 13,816.8 | 13,942.7 |
LIABILITIES AND EQUITY | ||
Floor plan notes payable | 2,283.4 | 2,412.5 |
Floor plan notes payable - non-trade | 1,605.7 | 1,594 |
Accounts payable | 589.8 | 638.8 |
Accrued expenses and other current liabilities | 645.3 | 701.9 |
Current portion of long-term debt | 104.6 | 103.3 |
Liabilities held for sale | 0.5 | 0.5 |
Total current liabilities | 5,229.3 | 5,451 |
Long-term debt | 2,516.1 | 2,257 |
Long-term operating lease liabilities | 2,234.1 | 2,301.2 |
Deferred tax liabilities | 702.2 | 677.9 |
Other long-term liabilities | 427.6 | 444 |
Total liabilities | 11,109.3 | 11,131.1 |
Commitments and contingent liabilities (Note 12) | ||
Penske Automotive Group stockholders' equity: | ||
Preferred Stock, $0.0001 par value; 100,000 shares authorized; none issued and outstanding | ||
Common Stock | ||
Additional paid-in-capital | 295.9 | 320.4 |
Retained earnings | 2,693.3 | 2,675.8 |
Accumulated other comprehensive income (loss) | (299.5) | (202.8) |
Total Penske Automotive Group stockholders' equity | 2,689.7 | 2,793.4 |
Non-controlling interest | 17.8 | 18.2 |
Total equity | 2,707.5 | 2,811.6 |
Total liabilities and equity | 13,816.8 | 13,942.7 |
Non-voting Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock | ||
Class C Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock |
CONSOLIDATED CONDENSED BALANC_2
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 6.4 | $ 5.7 |
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 | 80,463,278 | 81,084,751 |
Common Stock, shares outstanding | 80,463,278 | 81,084,751 |
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 CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue: | ||
Total revenues | $ 5,009.1 | $ 5,564.4 |
Cost of sales: | ||
Total cost of sales | 4,232.4 | 4,712.9 |
Gross profit | 776.7 | 851.5 |
Selling, general and administrative expenses | 641.8 | 666.4 |
Depreciation | 28.5 | 26.4 |
Operating income | 106.4 | 158.7 |
Floor plan interest expense | (17.7) | (21.8) |
Other interest expense | (31.7) | (29.9) |
Equity in earnings of affiliates | 14.5 | 26.8 |
Income from continuing operations before income taxes | 71.5 | 133.8 |
Income taxes | (20.1) | (34.7) |
Income from continuing operations | 51.4 | 99.1 |
Income (loss) from discontinued operations, net of tax | 0.1 | 0.1 |
Net income | 51.5 | 99.2 |
Less: Loss attributable to non-controlling interests | (0.2) | (1) |
Net income attributable to Penske Automotive Group common stockholders | $ 51.7 | $ 100.2 |
Basic earnings per share attributable to Penske Automotive Group common stockholders: | ||
Continuing operations (in dollars per share) | $ 0.64 | $ 1.19 |
Discontinued operations (in dollars per share) | 0 | 0 |
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 0.64 | $ 1.19 |
Shares used in determining basic earnings per share (in shares) | 81,053,404 | 84,378,960 |
Diluted earnings per share attributable to Penske Automotive Group common stockholders: | ||
Continuing operations (in dollars per share) | $ 0.64 | $ 1.19 |
Discontinued operations (in dollars per share) | 0 | 0 |
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 0.64 | $ 1.19 |
Shares used in determining diluted earnings per share (in shares) | 81,093,404 | 84,418,960 |
Amounts attributable to Penske Automotive Group common stockholders: | ||
Income from continuing operations | $ 51.4 | $ 99.1 |
Less: Loss attributable to non-controlling interests | (0.2) | (1) |
Income from continuing operations, net of tax | 51.6 | 100.1 |
Income (loss) from discontinued operations, net of tax | 0.1 | 0.1 |
Net income attributable to Penske Automotive Group common stockholders | $ 51.7 | $ 100.2 |
Cash dividends per share (in dollars per share) | $ 0.42 | $ 0.38 |
Retail Automotive Dealership | ||
Revenue: | ||
Total revenues | $ 4,416.6 | $ 5,091.2 |
Cost of sales: | ||
Total cost of sales | 3,738.5 | 4,329.7 |
Retail Commercial Truck Dealership | ||
Revenue: | ||
Total revenues | 491.4 | 332.3 |
Cost of sales: | ||
Total cost of sales | 422.6 | 277.9 |
Commercial Vehicle Distribution and Other | ||
Revenue: | ||
Total revenues | 101.1 | 140.9 |
Cost of sales: | ||
Total cost of sales | $ 71.3 | $ 105.3 |
CONSOLIDATED CONDENSED STATEM_2
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 51.5 | $ 99.2 |
Other comprehensive income: | ||
Foreign currency translation adjustment | (92.9) | 6.7 |
Other adjustments to comprehensive income, net | (4) | 1.8 |
Other comprehensive (loss) income, net of tax | (96.9) | 8.5 |
Comprehensive income | (45.4) | 107.7 |
Less: Comprehensive loss attributable to non-controlling interests | (0.4) | (1.3) |
Comprehensive (loss) income attributable to Penske Automotive Group common stockholders | $ (45) | $ 109 |
CONSOLIDATED CONDENSED STATEM_3
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Activities: | ||
Net income | $ 51.5 | $ 99.2 |
Adjustments to reconcile net income to net cash from continuing operating activities: | ||
Depreciation | 28.5 | 26.4 |
Earnings of equity method investments | (14.5) | (26.8) |
(Income) loss from discontinued operations, net of tax | (0.1) | (0.1) |
Deferred income taxes | 28.4 | 11.8 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 343.9 | (104.9) |
Inventories | (9.3) | (90.5) |
Floor plan notes payable | (126.8) | 83.9 |
Accounts payable and accrued expenses | (84.9) | 134.5 |
Other | (4.8) | (42.1) |
Net cash provided by continuing operating activities | 211.9 | 91.4 |
Investing Activities: | ||
Purchase of equipment and improvements | (25.7) | (63.1) |
Proceeds from sale of dealerships | 10.3 | 7.2 |
Proceeds from sale-leaseback transactions | 7.3 | |
Acquisitions net, including repayment of sellers' floor plan notes payable of $138.5, $58.2, and $101.6, respectively | (1.1) | |
Other | (0.7) | (0.2) |
Net cash used in continuing investing activities | (16.1) | (49.9) |
Financing Activities: | ||
Proceeds from borrowings under U.S. credit agreement revolving credit line | 515 | 406 |
Repayments under U.S. credit agreement revolving credit line | (210) | (381) |
Net (repayments) of other long-term debt | (22.1) | (35.6) |
Net borrowings of floor plan notes payable - non-trade | 11.7 | 60.1 |
Payments for contingent consideration | (21.1) | |
Repurchases of common stock | (29.4) | (54.3) |
Dividends | (34.2) | (32.2) |
Other | (0.1) | |
Net cash provided by (used in) continuing financing activities | 209.9 | (37.1) |
Discontinued operations: | ||
Net cash provided by (used in) discontinued operating activities | 0.1 | (0.1) |
Net cash provided by discontinued investing activities | ||
Net cash provided by discontinued financing activities | ||
Net cash provided by (used in) discontinued operations | 0.1 | (0.1) |
Effect of exchange rate changes on cash and cash equivalents | (2) | (0.2) |
Net change in cash and cash equivalents | 403.8 | 4.1 |
Cash and cash equivalents, beginning of period | 28.1 | 39.4 |
Cash and cash equivalents, end of period | 431.9 | 43.5 |
Cash paid (received) for: | ||
Interest | 36.3 | 35.8 |
Income taxes | $ (3.3) | $ 8.8 |
CONSOLIDATED CONDENSED STATEM_4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Repayment of Sellers' Floor Plan Notes Payable Dealership Acquisitions | $ 0 | $ 0 |
3.75% senior subordinated notes due 2020 | ||
Interest rate (as a percent) | 3.75% |
CONSOLIDATED CONDENSED STATEM_5
CONSOLIDATED CONDENSED 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, 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 | 4.6 | 4.6 | 4.6 | ||||
Equity compensation (in shares) | 362,887 | ||||||
Repurchases of common stock | (54.3) | (54.3) | (54.3) | ||||
Repurchases of common stock (in shares) | (1,258,348) | ||||||
Dividends | (32.2) | (32.2) | (32.2) | ||||
Purchase of subsidiary shares from non-controlling interest | (4.8) | (4.8) | |||||
Distributions to non-controlling interest | (0.1) | (0.1) | |||||
Foreign currency translation | 7 | 7 | (0.3) | 6.7 | |||
Other | 1.8 | 1.8 | 0.3 | 2.1 | |||
Net income | 100.2 | 100.2 | (1) | 99.2 | |||
Balance at Mar. 31, 2019 | 2,641.2 | 428.1 | 2,438.8 | (225.7) | 19.7 | 2,660.9 | |
Balance (in shares) at Mar. 31, 2019 | 83,651,509 | ||||||
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 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 4.9 | 4.9 | 4.9 | ||||
Equity compensation (in shares) | 268,722 | ||||||
Repurchases of common stock | (29.4) | (29.4) | (29.4) | ||||
Repurchases of common stock (in shares) | (890,195) | ||||||
Dividends | (34.2) | (34.2) | (34.2) | ||||
Foreign currency translation | (92.7) | (92.7) | (0.2) | (92.9) | |||
Other | (4) | (4) | (4) | ||||
Net income | 51.7 | 51.7 | (0.2) | 51.5 | |||
Balance at Mar. 31, 2020 | $ 2,689.7 | $ 295.9 | $ 2,693.3 | $ (299.5) | $ 17.8 | $ 2,707.5 | |
Balance (in shares) at Mar. 31, 2020 | 80,463,278 |
Interim Financial Statements
Interim Financial Statements | 3 Months Ended |
Mar. 31, 2020 | |
Interim Financial Statements. | |
Interim Financial Statements | 1. Interim Financial Statements Business Overview Unless the context otherwise requires, the use of the terms “PAG,” “we,” “us,” and “our” in these Notes to the Consolidated Condensed Financial Statements refers to Penske Automotive Group, Inc. and its consolidated subsidiaries. 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. COVID-19 Disclosure Overview of COVID-19 across the globe has adversely impacted each of our markets and the global economy, leading to disruptions to our business. The pandemic continues in all of our markets. Governmental authorities are taking countermeasures to slow the outbreak, including shelter-in-place orders, stay at home orders, large-scale restrictions on travel and government-funded assistance programs to individuals and businesses. For the first two months of 2020 prior to the COVID-19 pandemic, our retail automotive business same-store new vehicle revenue increased In response to shelter-in-place orders resulting from the COVID-19 pandemic, most of our automotive, and many of our commercial vehicle, showrooms were closed (though some have reopened). In permissible jurisdictions, however, we continued limited sales activity by appointment or through our e-commerce channels. Virtually all of our service, parts and collision center departments have remained open during the crisis and curb-side or home delivery offerings have supplemented our traditional service offerings. We have modified certain business practices to conform to government restrictions and best practices encouraged by government and regulatory authorities. In all of our locations, we have implemented enhanced cleaning procedures, enforced social distancing guidelines and taken other precautions to protect our employees and customers. We will continue to adjust our operations to conform to regulatory changes and consumer preferences in the evolving environment. Across the company, we implemented a hiring freeze, expense reductions including in advertising, and postponed an estimated $150 million in capital expenditures. We also furloughed over 15,000 employees in February and March in various countries. Our remaining employees are working reduced hours or have taken pay cuts, including a temporary 100% reduction in salary for the CEO and President, a 25% reduction in salary for our other executive officers, and the Board of Directors has waived cash compensation through September 30, 2020. Most of our manufacturer partners began periodic suspension of production beginning in late March with some announcing extensions into May. We believe our current inventory levels will allow us to continue to do business with the slowdown in sales driven by the pandemic. We are strategically managing inventory levels by monitoring incoming units and deferring or canceling purchases. Our manufacturer partners began providing us with additional incentive support in March. In addition, our manufacturer and lending partners are providing support to retail customers such as increased incentives, payment deferrals, as well as 0% financing on certain vehicles and term lengths. United States Commercial truck dealership sales and service operations remained open in most locations around the U.S. and Canada providing essential services to our customers. We continued to experience steady demand for new and used truck sales and service and parts during March and April. For the three months ended March 31, 2020, the North American Class 8 retail sales market declined 26% while our new same-store unit sales declined 2.2% during the same period while same-store revenue declined 1.7%. However, in total, which includes the acquisition of Warner Trucks we completed in the third quarter of 2019, total units retailed increased 52.4%, and revenue increased 47.9% to $491.4 million. Penske Transportation Solutions ownership interest in Penske Transportation Solutions ("PTS"). As an integral part of the North American supply chain, PTS has been generally classified as essential by governmental authorities. This has allowed PTS to remain operating in much of its business, providing crucial supply chain and transportation services to its customers. While its full-service leasing and contract maintenance businesses remained consistent, commercial rental utilization has slowed. PTS experienced mixed results in the logistics services business as increased volume in the grocery sector was offset by plant closings in automotive and manufacturing. In response, PTS implemented, among other items, approximately United Kingdom Australia Liquidity Risks and Uncertainties pay our quarterly dividend at prior levels; and disruptions to our technology network and other critical systems, including our dealer management systems and software or other facilities or equipment. We believe that business disruption relating to the COVID-19 pandemic will continue to negatively impact the global economy and may materially affect our businesses as outlined above, or in other manners, all of which would adversely impact our business and results of operations. Retail Automotive Dealership. 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 the three months ended March 31, 2020, we disposed of four retail automotive franchises in the U.K. and made no acquisitions. Retail Commercial Truck Dealership. Penske Australia Penske Transportation Solutions. Basis of Presentation The accompanying unaudited consolidated condensed financial statements of PAG have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC rules and regulations. The information presented as of March 31, 2020 and December 31, 2019 and for the three month periods ended March 31, 2020 and 2019 is unaudited, but includes all adjustments which our management believes to be necessary for the fair presentation of results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the year. These consolidated condensed financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2019, which are included as part of our Annual Report on Form 10-K. Estimates The preparation of financial statements in conformity with U.S. GAAP 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. 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 that 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 current market interest rates for similar types of financial instruments (Level 2). A summary of the carrying values and fair values of our senior subordinated notes and our fixed rate mortgage facilities are as follows: March 31, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value 3.75% senior subordinated notes due 2020 $ 299.5 $ 291.3 $ 299.2 $ 302.6 5.75% senior subordinated notes due 2022 547.9 514.4 547.6 556.7 5.375% senior subordinated notes due 2024 298.2 249.9 298.0 306.7 5.50% senior subordinated notes due 2026 495.9 437.1 495.7 521.7 Mortgage facilities 416.7 446.1 423.2 430.9 Assets Held for Sale and Discontinued Operations We had no entities newly classified as held for sale during the three months ended March 31, 2020 or 2019 that met the criteria to be classified as discontinued operations. The financial information for entities that were classified as discontinued operations prior to adoption of Accounting Standards Update No. 2014-08 are included in “Income from discontinued operations” in the accompanying consolidated condensed statements of income and “Liabilities held for sale” in the accompanying consolidated condensed balance sheets for all periods presented. Disposals During the three months ended March 31, 2020, we disposed of four retail automotive franchises. The results of operations for these businesses are included within continuing operations for the three months ended March 31, 2020 and 2019, as these franchises did not meet the criteria to be classified as held for sale and treated as discontinued operations. Income Taxes Tax regulations may require items to be included in our tax returns at different times than the items are reflected in our financial statements. Some of these 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 returns in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax returns that have not yet been recognized as expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not likely to allow for the use of the deduction or credit. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property. The Company is currently evaluating the impact of these provisions. Recent Accounting Pronouncements 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 adopted this ASU on the effective date of January 1, 2020. The adoption of this accounting standard update has not had a material impact on our consolidated financial position, results of operations, and cash flows. 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 were permitted to early adopt any eliminated or amended disclosures and delay adoption of the additional disclosure requirements until the effective date. We adopted this ASU on the effective date of January 1, 2020. The adoption of this accounting standard update has not had a material impact on our on our consolidated financial statements and disclosures. 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 adopted this ASU on the effective date of January 1, 2020. The adoption of this accounting standard update has not had a material impact on our consolidated financial position, results of operations, and cash flows. Facilitation of the Effects of Reference Rate Reform on Financial Reporting In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates, but do not expect a significant impact on our consolidated financial position, results of operations, and cash flows. Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities In March 2020, the Securities and Exchange Commission (“SEC”) adopted final rules that amend the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. The amended rules narrow the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamline the alternative disclosures required in lieu of those statements. The amended rules allow the registrants, among other things, to disclose summarized financial information of the issuer and guarantors on a combined basis and to present only the most recently completed fiscal year and subsequent year-to-date interim period. The rule is effective January 4, 2021, but earlier compliance is permitted. The Company early adopted the rule in the first quarter of 2020. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2020 | |
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. We record revenue for vehicle service and collision work over time as work is completed, and when parts are delivered to our customers. For service and parts revenues recorded over time, we utilize 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 as of March 31, 2020 and December 31, 2019. Commercial Vehicle Distribution and Other Revenue Recognition Penske Australia. our customers. For service and parts revenues recorded over time, we utilize 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 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 over time as work is completed, and when parts are delivered to our customers. For service and parts revenues recorded over time, we utilize 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 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 $58.4 million and $61.5 million for the three months ended March 31, 2020 and March 31, 2019, respectively, for Penske Australia. Retail Automotive Dealership The following tables disaggregate our retail automotive reportable segment revenue by product type and geographic location for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, Retail Automotive Dealership Revenue 2020 2019 New vehicle $ 1,864.5 $ 2,231.2 Used vehicle 1,619.6 1,852.0 Finance and insurance, net 144.4 160.0 Service and parts 513.3 559.8 Fleet and wholesale 274.8 288.2 Total retail automotive dealership revenue $ 4,416.6 $ 5,091.2 Three Months Ended March 31, Retail Automotive Dealership Revenue 2020 2019 U.S. $ 2,453.9 $ 2,722.8 U.K. 1,665.4 2,039.9 Germany and Italy 297.3 328.5 Total retail automotive dealership revenue $ 4,416.6 $ 5,091.2 Retail Commercial Truck Dealership The following table disaggregates our retail commercial truck reportable segment revenue by product type for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, Retail Commercial Truck Dealership Revenue 2020 2019 New truck $ 318.2 $ 207.4 Used truck 34.6 24.1 Finance and insurance, net 3.2 3.0 Service and parts 124.3 91.5 Other 11.1 6.3 Total retail commercial truck dealership revenue $ 491.4 $ 332.3 Commercial Vehicle Distribution and Other The following table disaggregates our other reportable segment revenue by business for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, Commercial Vehicle Distribution and Other 2020 2019 Commercial Vehicle Distribution $ 101.1 $ 140.9 Other — — Total commercial vehicle distribution and other revenue $ 101.1 $ 140.9 Contract Balances The following table summarizes our accounts receivable and unearned revenues as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Accounts receivable Contracts in transit $ 95.0 $ 291.1 Vehicle receivables 191.8 249.8 Manufacturer receivables 161.2 244.6 Trade receivables 161.8 164.7 Accrued expenses Unearned revenues $ 242.3 $ 262.9 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. 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, 2019, $118.5 million was recognized as revenue during the three months ended March 31, 2020. 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 | 3 Months Ended |
Mar. 31, 2020 | |
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 $5.3 billion as of March 31, 2020. 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 was $6.4 million and $5.4 million for the three months ended March 31, 2020 and 2019, respectively. 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. We had no proceeds from sale-leaseback transactions during the three months ended March 31, 2020 compared to $7.3 million during the three months ended March 31, 2019. We do not have any material leases that have not yet commenced as of March 31, 2020. The following table summarizes our net operating lease cost the three months ended March 31, 2020 and 2019: Three Months Ended Three Months Ended March 31, 2020 March 31, 2019 Lease Cost Operating lease cost $ 60.0 $ 63.5 Sublease income (6.4) (5.4) Total lease cost $ 53.6 $ 58.1 (1) Includes short-term leases and variable lease costs, which are immaterial. The following table summarizes supplemental cash flow information related to our operating leases: Three Months Ended Three Months Ended March 31, 2020 March 31, 2019 Other Information Gains on sale and leaseback transactions, net $ — $ (0.2) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 56.5 59.7 Right-of-use assets obtained in exchange for operating lease liabilities 1.1 — Supplemental balance sheet information related to the weighted average remaining lease term and discount rate of our leases is as follows: March 31, 2020 December 31, 2019 Lease Term and Discount Rate Weighted-average remaining lease term - operating leases 25 years 25 years Weighted-average discount rate - operating leases 6.4% 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 condensed balance sheet as of March 31, 2020: Maturity of Lease Liabilities March 31, 2020 2020 $ 180.4 2021 231.8 2022 226.5 2023 218.9 2024 212.7 2025 208.9 2026 and thereafter 3,992.5 Total future minimum lease payments $ 5,271.7 Less: Imputed interest (2,949.6) Present value of future minimum lease payments $ 2,322.1 Current operating lease liabilities (2) $ 88.0 Long-term operating lease liabilities 2,234.1 Total operating lease liabilities $ 2,322.1 (1) Excludes the three months ended March 31, 2020. (2) Included within “Accrued expenses and other current liabilities” on Consolidated Condensed Balance Sheet. |
Significant Equity Method Inves
Significant Equity Method Investees | 3 Months Ended |
Mar. 31, 2020 | |
Significant Equity Method Investees | |
Significant Equity Method Investees | 4. Significant Equity Method Investees We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. (“PTL”), a leading provider of transportation and supply chain services. Penske Transportation Solutions (“PTS”) is the universal brand name for PTL’s various business lines. Our investment in PTS is accounted for using the equity method of accounting. PTS equity earnings represent a significant portion of our consolidated pre-tax income. We recorded $13.6 million and $25.8 million during the three months ended March 31, 2020 and 2019, respectively, on our statements of income under the caption “Equity in earnings of affiliates” related to earnings from PTS investment. Unaudited summarized income statement information for PTS for the three months ended March 31, 2020 and 2019 is as follows: Three Months Ended March 31, 2020 2019 Revenues $ 2,194 $ 2,135 Gross profit 405 420 Income from continuing operations 47 89 Net income 47 89 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Inventories | 5. Inventories Inventories consisted of the following: March 31, December 31, 2020 2019 Retail automotive dealership new vehicles $ 2,436.6 $ 2,346.2 Retail automotive dealership used vehicles 1,052.9 1,080.8 Retail automotive parts, accessories and other 133.8 141.5 Retail commercial truck dealership vehicles and parts 437.3 465.2 Commercial vehicle distribution vehicles, parts and engines 202.1 227.0 Total inventories $ 4,262.7 $ 4,260.7 We receive credits from certain vehicle manufacturers that reduce cost of sales when the vehicles are sold. Such credits amounted to $11.5 million and $12.1 million during the three months ended March 31, 2020 and 2019, respectively. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations | |
Business Combinations | 6. Business Combinations During the three months ended March 31, 2020, we made no acquisitions. During the three months ended March 31, 2019, we acquired one dealership . A summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed for the three months ended March 31, 2019 follows: March 31, 2019 Accounts receivable $ — Inventories 0.5 Other current assets — Property and equipment 0.2 Indefinite-lived intangibles 0.4 Other noncurrent assets 0.1 Current liabilities (0.1) Noncurrent liabilities — Total cash used in acquisitions $ 1.1 The following unaudited consolidated pro forma results of operations of PAG for the three months ended March 31, 2019 give effect to acquisitions consummated during 2019 as if they had occurred effective at the beginning of the period: March 31, 2019 Revenues $ 5,844.7 Income from continuing operations 104.1 Net income 104.1 Income from continuing operations per diluted common share $ 1.23 Net income per diluted common share $ 1.23 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Intangible Assets | |
Intangible Assets | 7. Intangible Assets Following is a summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets during the three months ended March 31, 2020: Other Indefinite- Lived Intangible Goodwill Assets Balance, January 1, 2020 $ 1,911.0 $ 552.2 Additions — — Disposals (1.9) — Foreign currency translation (40.3) (11.2) Balance, March 31, 2020 $ 1,868.8 $ 541.0 The disposals during the three months ended March 31, 2020 were within our Retail Automotive reportable segment. During the quarter, we sold four retail automotive franchises. As of March 31, 2020, the goodwill balance within our Retail Automotive, Retail Commercial Truck, and Other reportable segments was $1,493.2 million, $307.8 million and $67.8 million, respectively. There is no goodwill recorded in our Non-Automotive Investments reportable segment. |
Vehicle Financing
Vehicle Financing | 3 Months Ended |
Mar. 31, 2020 | |
Vehicle Financing | |
Vehicle Financing | 8. 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”), The weighted average interest rate on floor plan borrowings was 1.8% for the three months ended March 31, 2020 and 2.3% for the three months ended March 31, 2019. 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. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Earnings Per Share | 9. 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 equity 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 three months ended March 31, 2020 and 2019 follows: Three Months Ended March 31, 2020 2019 Weighted average number of common shares outstanding 81,053,404 84,378,960 Effect of non-participatory equity compensation 40,000 40,000 Weighted average number of common shares outstanding, including effect of dilutive securities 81,093,404 84,418,960 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt | |
Long-Term Debt | 10. Long-Term Debt Long-term debt consisted of the following: March 31, December 31, 2020 2019 U.S. credit agreement — revolving credit line $ 350.0 $ 45.0 U.K. credit agreement — revolving credit line 117.9 165.8 U.K. credit agreement — overdraft line of credit 6.3 — 3.75% senior subordinated notes due 2020 299.5 299.2 5.75% senior subordinated notes due 2022 547.9 547.6 5.375% senior subordinated notes due 2024 298.2 298.0 5.50% senior subordinated notes due 2026 495.9 495.7 Australia capital loan agreement 27.1 31.7 Australia working capital loan agreement 12.3 — Mortgage facilities 416.7 423.2 Other 48.9 54.1 Total long-term debt 2,620.7 2,360.3 Less: current portion (104.6) (103.3) Net long-term debt $ 2,516.1 $ 2,257.0 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. The agreement also provides the issuance of up to $50 million of letters of credit within the existing $700 million facility limit. The revolving loans bear interest at LIBOR plus 1.75%, subject to an incremental 1.25% for uncollateralized borrowings in excess of a defined borrowing base. In April of 2020, the lenders consented to a deferral of interest under the U.S. Credit Agreement for the months of April, May and June, until December 2020. 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 March 31, 2020, we had $350.0 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, plus an additional £52.0 million of demand overdraft lines of credit, £40.0 million of which is only available on demand from March 20 th th th st 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. 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 from 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 March 31, 2020 , we had AU $44.2 million ( $27.1 million) outstanding under the capital loan agreement and AU $20.0 million ($ 12.3 million) outstanding 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 March 31, 2020, we owed $416.7 million of principal under our mortgage facilities. |
Derivatives and Hedging
Derivatives and Hedging | 3 Months Ended |
Mar. 31, 2020 | |
Derivatives and Hedging | |
Derivatives and Hedging | 11. Derivatives and Hedging Penske Australia sells vehicles, engines, parts and other products purchased from manufacturers in the U.S., Germany, and the U.K. In order to protect against exchange rate movements, Penske Australia enters into foreign exchange forward contracts against anticipated cash flows. The contracts are timed to mature when major shipments are scheduled to arrive in Australia and when receipt of payment from customers is expected. We classify our foreign exchange forward contracts as cash flow hedges and state them at fair value. We used Level 2 inputs to estimate the fair value of the foreign exchange forward contracts. The fair value of the contracts designated as hedging instruments was estimated to be an asset of $0.7 million and a liability of $0.1 million as of March 31, 2020 and December 31, 2019, respectively. The Company periodically uses interest rate swaps to manage interest rate risk associated with the Company’s variable rate floor plan debt. In April 2020, we entered into a new five-year interest rate swap agreement pursuant to which the LIBOR portion of $300.0 million of our U.S. floating rate floor plan debt is fixed at 0.5875% . This arrangement is in effect through April 2025. We may terminate this arrangement at any time, subject to the settlement at that time of the fair value of the swap arrangement. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | 12. 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 March 31, 2020, 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. 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. 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 March 31, 2020, and have posted $19.7 million of surety bonds in the ordinary course of business. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity | |
Equity | 13. Equity During the three months ended March 31, 2020, we repurchased 890,195 shares of our outstanding common stock for $29.4 million, or an average of $33.06 per share, under our securities repurchase program approved by our Board of Directors. As of March 31, 2020, our remaining authorization under the program was $170.6 million. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income/(Loss) | 14. 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 three months ended March 31, 2020 and 2019, respectively, attributable to Penske Automotive Group common stockholders follows: Three Months Ended March 31, 2020 Foreign Currency Translation Other Total Balance at December 31, 2019 $ (186.1) $ (16.7) $ (202.8) Other comprehensive income before reclassifications (92.7) (4.0) (96.7) Amounts reclassified from accumulated other comprehensive income — net of tax — — — Net current period other comprehensive income (92.7) (4.0) (96.7) Balance at March 31, 2020 $ (278.8) $ (20.7) $ (299.5) Three Months Ended March 31, 2019 Foreign Currency Translation Other Total Balance at December 31, 2018 $ (208.3) $ (26.2) $ (234.5) Other comprehensive income before reclassifications 7.0 1.8 8.8 Amounts reclassified from accumulated other comprehensive income — net of tax — — — Net current period other comprehensive income 7.0 1.8 8.8 Balance at March 31, 2019 $ (201.3) $ (24.4) $ (225.7) |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information | |
Segment Information | 15. 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). Revenue and segment income for the three months ended March 31, 2020 and 2019 follows: Three Months Ended March 31 Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2020 $ 4,416.6 $ 491.4 $ 101.1 $ — $ — $ 5,009.1 2019 5,091.2 332.3 140.9 — — 5,564.4 Segment income 2020 $ 41.3 $ 13.7 $ 2.9 $ 13.6 $ — $ 71.5 2019 84.9 15.9 $ 7.2 $ 25.8 $ — 133.8 |
Interim Financial Statements (P
Interim Financial Statements (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Interim Financial Statements. | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated condensed financial statements of PAG have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC rules and regulations. The information presented as of March 31, 2020 and December 31, 2019 and for the three month periods ended March 31, 2020 and 2019 is unaudited, but includes all adjustments which our management believes to be necessary for the fair presentation of results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the year. These consolidated condensed financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2019, which are included as part of our Annual Report on Form 10-K. |
Estimates | Estimates The preparation of financial statements in conformity with U.S. GAAP 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. |
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 that 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 current market interest rates for similar types of financial instruments (Level 2). A summary of the carrying values and fair values of our senior subordinated notes and our fixed rate mortgage facilities are as follows: March 31, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value 3.75% senior subordinated notes due 2020 $ 299.5 $ 291.3 $ 299.2 $ 302.6 5.75% senior subordinated notes due 2022 547.9 514.4 547.6 556.7 5.375% senior subordinated notes due 2024 298.2 249.9 298.0 306.7 5.50% senior subordinated notes due 2026 495.9 437.1 495.7 521.7 Mortgage facilities 416.7 446.1 423.2 430.9 |
Assets Held For Sale and Discontinued Operations | Assets Held for Sale and Discontinued Operations We had no entities newly classified as held for sale during the three months ended March 31, 2020 or 2019 that met the criteria to be classified as discontinued operations. The financial information for entities that were classified as discontinued operations prior to adoption of Accounting Standards Update No. 2014-08 are included in “Income from discontinued operations” in the accompanying consolidated condensed statements of income and “Liabilities held for sale” in the accompanying consolidated condensed balance sheets for all periods presented. |
Disposals | Disposals During the three months ended March 31, 2020, we disposed of four retail automotive franchises. The results of operations for these businesses are included within continuing operations for the three months ended March 31, 2020 and 2019, as these franchises did not meet the criteria to be classified as held for sale and treated as discontinued operations. |
Income Taxes | Income Taxes Tax regulations may require items to be included in our tax returns at different times than the items are reflected in our financial statements. Some of these 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 returns in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax returns that have not yet been recognized as expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not likely to allow for the use of the deduction or credit. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes various income and payroll tax provisions, modifications to federal net operating loss rules, business interest deduction limitations, and bonus depreciation eligibility for qualified improvement property. The Company is currently evaluating the impact of these provisions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 adopted this ASU on the effective date of January 1, 2020. The adoption of this accounting standard update has not had a material impact on our consolidated financial position, results of operations, and cash flows. 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 were permitted to early adopt any eliminated or amended disclosures and delay adoption of the additional disclosure requirements until the effective date. We adopted this ASU on the effective date of January 1, 2020. The adoption of this accounting standard update has not had a material impact on our on our consolidated financial statements and disclosures. 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 adopted this ASU on the effective date of January 1, 2020. The adoption of this accounting standard update has not had a material impact on our consolidated financial position, results of operations, and cash flows. Facilitation of the Effects of Reference Rate Reform on Financial Reporting In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Additionally, entities can elect to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain conditions are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates, but do not expect a significant impact on our consolidated financial position, results of operations, and cash flows. Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities In March 2020, the Securities and Exchange Commission (“SEC”) adopted final rules that amend the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. The amended rules narrow the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamline the alternative disclosures required in lieu of those statements. The amended rules allow the registrants, among other things, to disclose summarized financial information of the issuer and guarantors on a combined basis and to present only the most recently completed fiscal year and subsequent year-to-date interim period. The rule is effective January 4, 2021, but earlier compliance is permitted. The Company early adopted the rule in the first quarter of 2020. |
Interim Financial Statements (T
Interim Financial Statements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Interim Financial Statements. | |
Summary of carrying values and fair values of senior subordinated notes and fixed rate mortgage facilities | March 31, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value 3.75% senior subordinated notes due 2020 $ 299.5 $ 291.3 $ 299.2 $ 302.6 5.75% senior subordinated notes due 2022 547.9 514.4 547.6 556.7 5.375% senior subordinated notes due 2024 298.2 249.9 298.0 306.7 5.50% senior subordinated notes due 2026 495.9 437.1 495.7 521.7 Mortgage facilities 416.7 446.1 423.2 430.9 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenues | |
Schedule of accounts receivable and unearned revenues | March 31, December 31, 2020 2019 Accounts receivable Contracts in transit $ 95.0 $ 291.1 Vehicle receivables 191.8 249.8 Manufacturer receivables 161.2 244.6 Trade receivables 161.8 164.7 Accrued expenses Unearned revenues $ 242.3 $ 262.9 |
Retail Automotive Dealership | |
Revenues | |
Schedule of disaggregation of revenues | Three Months Ended March 31, Retail Automotive Dealership Revenue 2020 2019 New vehicle $ 1,864.5 $ 2,231.2 Used vehicle 1,619.6 1,852.0 Finance and insurance, net 144.4 160.0 Service and parts 513.3 559.8 Fleet and wholesale 274.8 288.2 Total retail automotive dealership revenue $ 4,416.6 $ 5,091.2 Three Months Ended March 31, Retail Automotive Dealership Revenue 2020 2019 U.S. $ 2,453.9 $ 2,722.8 U.K. 1,665.4 2,039.9 Germany and Italy 297.3 328.5 Total retail automotive dealership revenue $ 4,416.6 $ 5,091.2 |
Retail Commercial Truck Dealership | |
Revenues | |
Schedule of disaggregation of revenues | Three Months Ended March 31, Retail Commercial Truck Dealership Revenue 2020 2019 New truck $ 318.2 $ 207.4 Used truck 34.6 24.1 Finance and insurance, net 3.2 3.0 Service and parts 124.3 91.5 Other 11.1 6.3 Total retail commercial truck dealership revenue $ 491.4 $ 332.3 |
Commercial Vehicle Distribution and Other | |
Revenues | |
Schedule of disaggregation of revenues | Three Months Ended March 31, Commercial Vehicle Distribution and Other 2020 2019 Commercial Vehicle Distribution $ 101.1 $ 140.9 Other — — Total commercial vehicle distribution and other revenue $ 101.1 $ 140.9 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases | |
Summary of net operating lease cost | Three Months Ended Three Months Ended March 31, 2020 March 31, 2019 Lease Cost Operating lease cost $ 60.0 $ 63.5 Sublease income (6.4) (5.4) Total lease cost $ 53.6 $ 58.1 (1) Includes short-term leases and variable lease costs, which are immaterial. The following table summarizes supplemental cash flow information related to our operating leases: |
Summary of supplemental cash flow information related to operating leases and weighted average remaining lease term and discount rate of leases | Three Months Ended Three Months Ended March 31, 2020 March 31, 2019 Other Information Gains on sale and leaseback transactions, net $ — $ (0.2) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 56.5 59.7 Right-of-use assets obtained in exchange for operating lease liabilities 1.1 — March 31, 2020 December 31, 2019 Lease Term and Discount Rate Weighted-average remaining lease term - operating leases 25 years 25 years Weighted-average discount rate - operating leases 6.4% 6.6% |
Schedule of maturity of lease liabilities | Maturity of Lease Liabilities March 31, 2020 2020 $ 180.4 2021 231.8 2022 226.5 2023 218.9 2024 212.7 2025 208.9 2026 and thereafter 3,992.5 Total future minimum lease payments $ 5,271.7 Less: Imputed interest (2,949.6) Present value of future minimum lease payments $ 2,322.1 Current operating lease liabilities (2) $ 88.0 Long-term operating lease liabilities 2,234.1 Total operating lease liabilities $ 2,322.1 (1) Excludes the three months ended March 31, 2020. (2) Included within “Accrued expenses and other current liabilities” on Consolidated Condensed Balance Sheet. |
Significant Equity Method Inv_2
Significant Equity Method Investees (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
PTL | |
Equity Method Investees | |
Equity method investment summarized income statement information | Three Months Ended March 31, 2020 2019 Revenues $ 2,194 $ 2,135 Gross profit 405 420 Income from continuing operations 47 89 Net income 47 89 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Inventories | March 31, December 31, 2020 2019 Retail automotive dealership new vehicles $ 2,436.6 $ 2,346.2 Retail automotive dealership used vehicles 1,052.9 1,080.8 Retail automotive parts, accessories and other 133.8 141.5 Retail commercial truck dealership vehicles and parts 437.3 465.2 Commercial vehicle distribution vehicles, parts and engines 202.1 227.0 Total inventories $ 4,262.7 $ 4,260.7 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | March 31, 2019 Accounts receivable $ — Inventories 0.5 Other current assets — Property and equipment 0.2 Indefinite-lived intangibles 0.4 Other noncurrent assets 0.1 Current liabilities (0.1) Noncurrent liabilities — Total cash used in acquisitions $ 1.1 |
Summary of unaudited consolidated pro forma results of operations | March 31, 2019 Revenues $ 5,844.7 Income from continuing operations 104.1 Net income 104.1 Income from continuing operations per diluted common share $ 1.23 Net income per diluted common share $ 1.23 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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, January 1, 2020 $ 1,911.0 $ 552.2 Additions — — Disposals (1.9) — Foreign currency translation (40.3) (11.2) Balance, March 31, 2020 $ 1,868.8 $ 541.0 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Reconciliation of number of shares used in calculation of basic and diluted earning per share | Three Months Ended March 31, 2020 2019 Weighted average number of common shares outstanding 81,053,404 84,378,960 Effect of non-participatory equity compensation 40,000 40,000 Weighted average number of common shares outstanding, including effect of dilutive securities 81,093,404 84,418,960 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt | |
Long Term Debt | March 31, December 31, 2020 2019 U.S. credit agreement — revolving credit line $ 350.0 $ 45.0 U.K. credit agreement — revolving credit line 117.9 165.8 U.K. credit agreement — overdraft line of credit 6.3 — 3.75% senior subordinated notes due 2020 299.5 299.2 5.75% senior subordinated notes due 2022 547.9 547.6 5.375% senior subordinated notes due 2024 298.2 298.0 5.50% senior subordinated notes due 2026 495.9 495.7 Australia capital loan agreement 27.1 31.7 Australia working capital loan agreement 12.3 — Mortgage facilities 416.7 423.2 Other 48.9 54.1 Total long-term debt 2,620.7 2,360.3 Less: current portion (104.6) (103.3) Net long-term debt $ 2,516.1 $ 2,257.0 |
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 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 | Three Months Ended March 31, 2020 Foreign Currency Translation Other Total Balance at December 31, 2019 $ (186.1) $ (16.7) $ (202.8) Other comprehensive income before reclassifications (92.7) (4.0) (96.7) Amounts reclassified from accumulated other comprehensive income — net of tax — — — Net current period other comprehensive income (92.7) (4.0) (96.7) Balance at March 31, 2020 $ (278.8) $ (20.7) $ (299.5) Three Months Ended March 31, 2019 Foreign Currency Translation Other Total Balance at December 31, 2018 $ (208.3) $ (26.2) $ (234.5) Other comprehensive income before reclassifications 7.0 1.8 8.8 Amounts reclassified from accumulated other comprehensive income — net of tax — — — Net current period other comprehensive income 7.0 1.8 8.8 Balance at March 31, 2019 $ (201.3) $ (24.4) $ (225.7) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information | |
Revenues and segment income by reportable segment | Three Months Ended March 31 Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2020 $ 4,416.6 $ 491.4 $ 101.1 $ — $ — $ 5,009.1 2019 5,091.2 332.3 140.9 — — 5,564.4 Segment income 2020 $ 41.3 $ 13.7 $ 2.9 $ 13.6 $ — $ 71.5 2019 84.9 15.9 $ 7.2 $ 25.8 $ — 133.8 |
Interim Financial Statements -
Interim Financial Statements - COVID-19 Disclosure (Details) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | |||||
Mar. 31, 2020USD ($)item | Mar. 31, 2020USD ($)employee | Feb. 29, 2020 | Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | Apr. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
COVID-19 Overview | ||||||||
Revenues | $ 5,009.1 | $ 5,564.4 | ||||||
Cash | $ 431.9 | $ 431.9 | 431.9 | $ 43.5 | $ 28.1 | $ 39.4 | ||
Available funds, revolving credit facilities | 450 | 450 | 450 | $ 700 | ||||
Available funds, potentially financeable real estate | 450 | 450 | $ 450 | |||||
PTL | ||||||||
COVID-19 Overview | ||||||||
Ownership interest in PTS (as a percent) | 28.90% | |||||||
Minimum | ||||||||
COVID-19 Overview | ||||||||
Cash | $ 430 | $ 430 | $ 430 | $ 221 | ||||
3.75% senior subordinated notes due 2020 | ||||||||
COVID-19 Overview | ||||||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | 3.75% | ||||
Principal amount | $ 300 | $ 300 | $ 300 | |||||
Retail Automotive Dealership | New vehicle | ||||||||
COVID-19 Overview | ||||||||
Percentage increase in revenue | 5.30% | |||||||
Retail Automotive Dealership | Used vehicle | ||||||||
COVID-19 Overview | ||||||||
Percentage increase in revenue | 7.30% | |||||||
Retail Automotive Dealership | Finance and insurance, net | ||||||||
COVID-19 Overview | ||||||||
Percentage increase in revenue | 10.70% | |||||||
Retail Automotive Dealership | Service and parts | ||||||||
COVID-19 Overview | ||||||||
Percentage increase in revenue | 3.00% | |||||||
COVID-19 Risk | ||||||||
COVID-19 Overview | ||||||||
Estimated capital expenditures postponed | $ 150 | |||||||
Temporary reduction in the salary for the CEO and President, percentage | 100.00% | |||||||
Temporary reduction in the salary for other executive officers, percentage | 25.00% | |||||||
Incentive financing (as percent) | 0.00% | |||||||
COVID-19 Risk | PTL | ||||||||
COVID-19 Overview | ||||||||
Number of layoffs | item | 7,000 | |||||||
Percentage reduction in executive management pay | 30.00% | |||||||
COVID-19 Risk | Minimum | ||||||||
COVID-19 Overview | ||||||||
Number of employees furloughed | employee | 15,000 | |||||||
COVID-19 Risk | UK | Minimum | ||||||||
COVID-19 Overview | ||||||||
Percentage of employees furloughed | 90.00% | |||||||
COVID-19 Risk | Retail Automotive Dealership | U.S. | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in unit volume | 40.10% | |||||||
COVID-19 Risk | Retail Automotive Dealership | UK | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in unit volume | 38.00% | |||||||
COVID-19 Risk | Retail Automotive Dealership | New and Used Vehicle | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in same store business | 40.20% | |||||||
COVID-19 Risk | Retail Automotive Dealership | Used vehicle | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in same store unit sales | 49.00% | |||||||
Number of used vehicle supercenters that were closed | item | 16 | |||||||
COVID-19 Risk | Retail Automotive Dealership | Service and parts | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in business | 24.50% | |||||||
COVID-19 Risk | Retail Automotive Dealership | Service and parts | U.S. | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in revenue compared to the prior year | 21.20% | |||||||
COVID-19 Risk | Retail Automotive Dealership | Service and parts | UK | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in revenue compared to the prior year | 29.50% | |||||||
COVID-19 Risk | Retail Commercial Truck Dealership | ||||||||
COVID-19 Overview | ||||||||
Percentage increase in total units retailed | 52.40% | |||||||
Percentage increase in revenue | 47.90% | |||||||
Revenues | $ 491.4 | |||||||
COVID-19 Risk | Retail Commercial Truck Dealership | Service and parts | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in same store business | 6.60% | |||||||
COVID-19 Risk | Retail Commercial Truck Dealership | North American Class 8 Retail | ||||||||
COVID-19 Overview | ||||||||
Percentage decline in business | 26.00% | |||||||
Percentage decline in same store business | 1.70% | |||||||
Percentage decline in same store unit sales | 2.20% |
Interim Financial Statements _2
Interim Financial Statements - Business Overview (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)itemlocation | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Interim Financial Statements | |||
Total revenues | $ | $ 5,009.1 | $ 5,564.4 | |
PTL | |||
Interim Financial Statements | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 28.90% | ||
Retail Automotive Dealership | |||
Interim Financial Statements | |||
Total number of owned and operated franchises | 317 | ||
Number of owned and operated franchises in US | 145 | ||
Number of owned and operated franchises outside US | 172 | ||
Minimum number of vehicles retailed and wholesaled | 133,000 | ||
Minimum number of vehicle brands offered | 35 | ||
Number of used vehicle supercenters operated in the U.S. and U.K. | 16 | ||
Number of franchises disposed | 4 | ||
Number of acquired franchises | 0 | ||
Number of retail locations operated | location | 6 | ||
Automotive dealership revenues | Geographic | U.S. and Puerto Rico | |||
Interim Financial Statements | |||
Automotive dealership revenue (as a percent) | 56.00% | ||
Automotive dealership revenues | Geographic | Outside the U.S. | |||
Interim Financial Statements | |||
Automotive dealership revenue (as a percent) | 44.00% | ||
Automotive dealership revenues | Premium brands | |||
Interim Financial Statements | |||
Automotive dealership revenue (as a percent) | 70.00% | ||
CarShop | Retail Automotive Dealership | |||
Interim Financial Statements | |||
Number of retail locations operated | location | 10 | ||
Penske Corporation | PTL | |||
Interim Financial Statements | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | ||
Mitsui and Co | PTL | |||
Interim Financial Statements | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 30.00% | ||
PTG | Retail Commercial Truck Dealership | |||
Interim Financial Statements | |||
Number of operating locations | location | 25 | ||
Retail Automotive Dealership | |||
Interim Financial Statements | |||
Total revenues | $ | $ 4,416.6 | 5,091.2 | $ 20,600 |
Retail Automotive Dealership | UK | |||
Interim Financial Statements | |||
Total revenues | $ | 1,665.4 | 2,039.9 | |
Retail Automotive Dealership | U.S. | |||
Interim Financial Statements | |||
Total revenues | $ | 2,453.9 | 2,722.8 | |
Retail Commercial Truck Dealership | |||
Interim Financial Statements | |||
Total revenues | $ | 491.4 | 332.3 | |
Commercial Vehicle Distribution and Other | |||
Interim Financial Statements | |||
Total revenues | $ | $ 101.1 | $ 140.9 |
Interim Financial Statements _3
Interim Financial Statements - Fair Value, Assets Held For Sale, Discontinued Operations (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Fair Value of Financial Instruments | ||
Debt instrument, Carrying Value | $ 2,620.7 | $ 2,360.3 |
Assets Held for Sale and Discontinued Operations | ||
Number of entities newly classified as held for sale | item | 0 | |
3.75% senior subordinated notes due 2020 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 3.75% | 3.75% |
Debt instrument, Carrying Value | $ 299.5 | $ 299.2 |
3.75% senior subordinated notes due 2020 | Fair Value, Inputs, Level 2 | ||
Fair Value of Financial Instruments | ||
Debt instrument, Fair Value | $ 291.3 | $ 302.6 |
5.75% senior subordinated notes due 2022 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 5.75% | 5.75% |
Debt instrument, Carrying Value | $ 547.9 | $ 547.6 |
5.75% senior subordinated notes due 2022 | Fair Value, Inputs, Level 2 | ||
Fair Value of Financial Instruments | ||
Debt instrument, Fair Value | $ 514.4 | $ 556.7 |
5.375% senior subordinated notes due 2024 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 5.375% | 5.375% |
Debt instrument, Carrying Value | $ 298.2 | $ 298 |
5.375% senior subordinated notes due 2024 | Fair Value, Inputs, Level 2 | ||
Fair Value of Financial Instruments | ||
Debt instrument, Fair Value | $ 249.9 | $ 306.7 |
5.50% senior subordinated notes due 2026 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 5.50% | 5.50% |
Debt instrument, Carrying Value | $ 495.9 | $ 495.7 |
5.50% senior subordinated notes due 2026 | Fair Value, Inputs, Level 2 | ||
Fair Value of Financial Instruments | ||
Debt instrument, Fair Value | 437.1 | 521.7 |
Mortgage facilities | ||
Fair Value of Financial Instruments | ||
Debt instrument, Carrying Value | 416.7 | 423.2 |
Mortgage facilities | Fair Value, Inputs, Level 2 | ||
Fair Value of Financial Instruments | ||
Debt instrument, Fair Value | $ 446.1 | $ 430.9 |
Retail Automotive Franchise | ||
Disposals | ||
Number of franchises disposed | item | 4 |
Revenues - Other Disclosures (D
Revenues - Other Disclosures (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues | |||
Aggregate reserves relating to chargeback activity | $ 26.6 | $ 26.6 | |
Total revenues | 5,009.1 | $ 5,564.4 | |
Commercial Vehicle Distribution and Other | |||
Revenues | |||
Total revenues | $ 101.1 | 140.9 | |
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 | ||
Penske Australia | Commercial Vehicle Distribution and Other | |||
Revenues | |||
Payment period | 30 days | ||
Penske Australia | Service and parts | Commercial Vehicle Distribution and Other | |||
Revenues | |||
Total revenues | $ 58.4 | $ 61.5 |
Revenues - Retail Automotive De
Revenues - Retail Automotive Dealership (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues | |||
Total revenues | $ 5,009.1 | $ 5,564.4 | |
Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 4,416.6 | 5,091.2 | $ 20,600 |
Retail Automotive Dealership | U.S. | |||
Revenues | |||
Total revenues | 2,453.9 | 2,722.8 | |
Retail Automotive Dealership | UK | |||
Revenues | |||
Total revenues | 1,665.4 | 2,039.9 | |
Retail Automotive Dealership | Germany and Italy | |||
Revenues | |||
Total revenues | 297.3 | 328.5 | |
New vehicle | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 1,864.5 | 2,231.2 | |
Used vehicle | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 1,619.6 | 1,852 | |
Finance and insurance, net | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 144.4 | 160 | |
Service and parts | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | 513.3 | 559.8 | |
Fleet and wholesale | Retail Automotive Dealership | |||
Revenues | |||
Total revenues | $ 274.8 | $ 288.2 |
Revenues - Retail Commercial Tr
Revenues - Retail Commercial Truck Dealership (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Total revenues | $ 5,009.1 | $ 5,564.4 |
Retail Commercial Truck Dealership | ||
Revenues | ||
Total revenues | 491.4 | 332.3 |
New vehicle | Retail Commercial Truck Dealership | ||
Revenues | ||
Total revenues | 318.2 | 207.4 |
Used vehicle | Retail Commercial Truck Dealership | ||
Revenues | ||
Total revenues | 34.6 | 24.1 |
Finance and insurance, net | Retail Commercial Truck Dealership | ||
Revenues | ||
Total revenues | 3.2 | 3 |
Service and parts | Retail Commercial Truck Dealership | ||
Revenues | ||
Total revenues | 124.3 | 91.5 |
Other | Retail Commercial Truck Dealership | ||
Revenues | ||
Total revenues | $ 11.1 | $ 6.3 |
Revenues - Commercial Vehicle D
Revenues - Commercial Vehicle Distribution and Other (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Total revenues | $ 5,009.1 | $ 5,564.4 |
Commercial Vehicle Distribution and Other | ||
Revenues | ||
Total revenues | 101.1 | 140.9 |
Commercial Vehicle Distribution and Other | Commercial Vehicles Australia | ||
Revenues | ||
Total revenues | $ 101.1 | $ 140.9 |
Revenues - Contract Balances (D
Revenues - Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Contract Balances | ||
Accounts receivable, net | $ 616.3 | $ 960.3 |
Unearned revenues | 242.3 | 262.9 |
Revenue recognized from unearned revenue | 118.5 | |
Contracts in transit | ||
Contract Balances | ||
Accounts receivable, net | 95 | 291.1 |
Vehicle receivables | ||
Contract Balances | ||
Accounts receivable, net | 191.8 | 249.8 |
Manufacturer receivables | ||
Contract Balances | ||
Accounts receivable, net | 161.2 | 244.6 |
Trade receivables | ||
Contract Balances | ||
Accounts receivable, net | $ 161.8 | $ 164.7 |
Leases - Other (Details)
Leases - Other (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases | ||
Total undiscounted rent obligations | $ 5,271.7 | |
Sublease rent received | 6.4 | $ 5.4 |
Proceeds from sale-leaseback transactions | $ 0 | $ 7.3 |
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) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lease Cost | ||
Operating lease cost | $ 60 | $ 63.5 |
Sublease income | (6.4) | (5.4) |
Total lease cost | $ 53.6 | $ 58.1 |
Leases - Cash flow information,
Leases - Cash flow information, weighted average remaining term and discount rate (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Leases | |||
Gains on sale and leaseback transactions, net | $ (0.2) | ||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ 56.5 | $ 59.7 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 1.1 | ||
Weighted-average remaining lease term - operating leases | 25 years | 25 years | |
Weighted-average discount rate - operating leases | 6.40% | 6.60% |
Leases - Maturity of lease liab
Leases - Maturity of lease liabilities (Details) $ in Millions | Mar. 31, 2020USD ($) |
Maturity of Lease Liabilities | |
2020 | $ 180.4 |
2021 | 231.8 |
2022 | 226.5 |
2023 | 218.9 |
2024 | 212.7 |
2025 | 208.9 |
2026 and thereafter | 3,992.5 |
Total future minimum lease payments | 5,271.7 |
Less: Imputed interest | (2,949.6) |
Total operating lease liabilities | $ 2,322.1 |
Leases - Operating lease liabil
Leases - Operating lease liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Leases | ||
Current operating lease liabilities | $ 88 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent us-gaap:OperatingLeaseLiabilityNoncurrent | |
Long-term operating lease liabilities | $ 2,234.1 | $ 2,301.2 |
Total operating lease liabilities | $ 2,322.1 |
Significant Equity Method Inv_3
Significant Equity Method Investees (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Significant Equity Method Investees | ||
Equity in earnings of affiliates | $ 14.5 | $ 26.8 |
PTL | ||
Significant Equity Method Investees | ||
Equity in earnings of affiliates | 13.6 | 25.8 |
Condensed income statement information | ||
Revenues | 2,194 | 2,135 |
Gross profit | 405 | 420 |
Income from continuing operations | 47 | 89 |
Net income | $ 47 | $ 89 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Inventories | |||
Retail automotive dealership new vehicles | $ 2,436.6 | $ 2,346.2 | |
Retail automotive dealership used vehicles | 1,052.9 | 1,080.8 | |
Retail automotive parts, accessories and other | 133.8 | 141.5 | |
Retail commercial truck dealership vehicles and parts | 437.3 | 465.2 | |
Commercial vehicle distribution vehicles, parts and engines | 202.1 | 227 | |
Total inventories | 4,262.7 | $ 4,260.7 | |
Interest credits and advertising assistance | $ 11.5 | $ 12.1 |
Business Combinations - Activit
Business Combinations - Activity (Details) - item | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commercial Vehicle Distribution | ||
Business combinations | ||
Number of dealerships acquired | 0 | 1 |
Business Combinations - Conside
Business Combinations - Consideration Paid and Assets Acquired and Liabilities Assumed (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | |
Inventories | $ 0.5 |
Property and equipment | 0.2 |
Indefinite-lived intangibles | 0.4 |
Other noncurrent assets | 0.1 |
Current liabilities | (0.1) |
Total cash used in acquisitions | $ 1.1 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($)$ / shares | |
Summary of unaudited consolidated pro forma results of operations | |
Revenues | $ 5,844.7 |
Income from continuing operations | 104.1 |
Net income | $ 104.1 |
Income from continuing operations per diluted common share (in dollars per share) | $ / shares | $ 1.23 |
Net income per diluted common share (in dollars per share) | $ / shares | $ 1.23 |
Intangible Assets - Summary of
Intangible Assets - Summary of Changes (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | |
Goodwill, Beginning balance | $ 1,911 |
Goodwill, Disposals | (1.9) |
Goodwill, Foreign currency translation | (40.3) |
Goodwill, Ending balance | 1,868.8 |
Other indefinite-lived intangible assets, Beginning Balance | 552.2 |
Other indefinite-lived intangible assets, Foreign currency translation | (11.2) |
Other indefinite-lived intangible assets, Ending Balance | $ 541 |
Intangible Assets - Activity (D
Intangible Assets - Activity (Details) | 3 Months Ended |
Mar. 31, 2020item | |
Retail Automotive Dealership | |
Intangible assets | |
Number of franchises sold | 4 |
Intangible Assets - Information
Intangible Assets - Information by Segment (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Intangible assets | ||
Goodwill | $ 1,868.8 | $ 1,911 |
Retail Automotive Dealership | ||
Intangible assets | ||
Goodwill | 1,493.2 | |
Retail Commercial Truck Dealership | ||
Intangible assets | ||
Goodwill | 307.8 | |
Other | ||
Intangible assets | ||
Goodwill | 67.8 | |
Non-Automotive Investments | ||
Intangible assets | ||
Goodwill | $ 0 |
Vehicle Financing (Details)
Vehicle Financing (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
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) | 1.80% | 2.30% |
Earnings Per Share - (Details)
Earnings Per Share - (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reconciliation of number of shares used in calculation of basic and diluted earnings per share | ||
Weighted average number of common shares outstanding | 81,053,404 | 84,378,960 |
Effect of non-participatory equity compensation (in shares) | 40,000 | 40,000 |
Weighted average number of common shares outstanding, including effect of dilutive securities | 81,093,404 | 84,418,960 |
Long-Term Debt (Details)
Long-Term Debt (Details) £ in Millions, $ in Millions, $ in Millions | 3 Months Ended | |||
Mar. 31, 2020USD ($)item | Mar. 31, 2020GBP (£) | Mar. 31, 2020AUD ($) | Dec. 31, 2019USD ($) | |
Long Term Debt | ||||
Total long-term debt | $ 2,620.7 | $ 2,360.3 | ||
Less: current portion | (104.6) | (103.3) | ||
Net long-term debt | 2,516.1 | 2,257 | ||
US Credit Agreement Revolving Credit Line | ||||
Long Term Debt | ||||
Total long-term debt | 350 | 45 | ||
Maximum credit available | 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 | $ 350 | |||
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 | $ 117.9 | 165.8 | ||
Maximum credit available | £ | £ 150 | |||
Additional facility capacity under accordion feature | £ | 100 | |||
Balance outstanding under credit agreement | $ 124.2 | 100.1 | ||
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 | $ 6.3 | |||
Maximum credit available | £ | 52 | |||
Amount of demand overdraft lines of credit available during specified time periods each year | £ | £ 40 | |||
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 | $ 495.9 | $ 495.7 | ||
Interest rate (as a percent) | 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 | $ 298.2 | $ 298 | ||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% | 5.375% |
Principal amount | $ 300 | |||
5.75% senior subordinated notes due 2022 | ||||
Long Term Debt | ||||
Total long-term debt | $ 547.9 | $ 547.6 | ||
Interest rate (as a percent) | 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 | $ 299.5 | $ 299.2 | ||
Interest rate (as a percent) | 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 | $ 27.1 | $ 31.7 | ||
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 | $ 27.1 | 44.2 | ||
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 | $ 12.3 | |||
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 | $ 12.3 | $ 20 | ||
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 | $ 416.7 | 423.2 | ||
Balance outstanding under credit agreement | 416.7 | |||
Other debt | ||||
Long Term Debt | ||||
Total long-term debt | $ 48.9 | $ 54.1 |
Derivatives and Hedging (Detail
Derivatives and Hedging (Details) - USD ($) $ in Millions | Apr. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Forward foreign exchange contracts | Fair Value, Inputs, Level 2 | |||
Derivative | |||
Estimated asset of contracts designated as hedging instruments, fair value | $ 0.7 | $ 0.1 | |
Interest Rate Swap Agreements | Floating Rate Floor Plan Debt | |||
Derivative | |||
Derivative, term | 5 years | ||
Portion of floating rate floor plan debt fixed by swap agreements | $ 300 | ||
Interest rate swap, fixed (as a percent) | 0.5875% |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities (Details) $ in Millions | Mar. 31, 2020USD ($) |
Loss Contingencies | |
Letters of credit outstanding | $ 41.9 |
Surety bonds posted | $ 19.7 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Securities Repurchase Program | ||
Repurchase of common stock | $ 29.4 | $ 54.3 |
Securities Repurchase Program | ||
Securities Repurchase Program | ||
Repurchased shares | 890,195 | |
Repurchase of common stock | $ 29.4 | |
Repurchased shares, average price (in dollars per share) | $ 33.06 | |
Remaining amount authorized to be repurchased | $ 170.6 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Changes in accumulated other comprehensive income (loss) by component | ||
Balance at the beginning of the period | $ 2,793.4 | |
Balance at the end of the period | 2,689.7 | |
Foreign Currency Translation | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Balance at the beginning of the period | (186.1) | $ (208.3) |
Other comprehensive income before reclassifications | (92.7) | 7 |
Net current period other comprehensive income | (92.7) | 7 |
Balance at the end of the period | (278.8) | (201.3) |
Other | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Balance at the beginning of the period | (16.7) | (26.2) |
Other comprehensive income before reclassifications | (4) | 1.8 |
Net current period other comprehensive income | (4) | 1.8 |
Balance at the end of the period | (20.7) | (24.4) |
Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Balance at the beginning of the period | (202.8) | (234.5) |
Other comprehensive income before reclassifications | (96.7) | 8.8 |
Net current period other comprehensive income | (96.7) | 8.8 |
Balance at the end of the period | $ (299.5) | $ (225.7) |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information | |||
Number of reportable segments | item | 4 | ||
Revenues and segment income by reportable segment | |||
Revenues | $ 5,009.1 | $ 5,564.4 | |
Segment income | $ 71.5 | 133.8 | |
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 | |||
Revenues | $ 4,416.6 | 5,091.2 | $ 20,600 |
Retail Automotive Dealership | Operating segments | |||
Revenues and segment income by reportable segment | |||
Revenues | 4,416.6 | 5,091.2 | |
Segment income | 41.3 | 84.9 | |
Retail Commercial Truck Dealership | |||
Revenues and segment income by reportable segment | |||
Revenues | 491.4 | 332.3 | |
Retail Commercial Truck Dealership | Operating segments | |||
Revenues and segment income by reportable segment | |||
Revenues | 491.4 | 332.3 | |
Segment income | 13.7 | 15.9 | |
Other | Operating segments | |||
Revenues and segment income by reportable segment | |||
Revenues | 101.1 | 140.9 | |
Segment income | 2.9 | 7.2 | |
Non-Automotive Investments | Operating segments | |||
Revenues and segment income by reportable segment | |||
Segment income | $ 13.6 | $ 25.8 |