Penske Automotive Group Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue rose 6% to $8.5 billion, with adjusted EPS of $3.62 excluding dealership-sale gains. Retail automotive, international operations and service-and-parts growth supported results.
• Penske reported improving commercial-truck demand: North American Class 8 orders surged 170%, Premier Truck Group’s backlog reached about 10,400 units, and management expects roughly 10,000 truck deliveries in the second half of 2026.
• The board formed a special committee to review an unsolicited, non-binding proposal from Penske Corporation and Mitsui to acquire remaining shares for $210 per share in cash; the committee will retain independent legal and financial advisers.

Penske Automotive Group NYSE: PAG reported second-quarter 2026 revenue of $8.5 billion, up 6% from a year earlier, as the dealership group cited growth in retail automotive, commercial trucks and international operations. The company also disclosed that its board has formed a special committee of independent directors to evaluate an unsolicited proposal from Penske Corporation and Mitsui & Co. to acquire the shares they do not already own for $210 per share in cash.

Anthony Pordon, executive vice president of investor relations and corporate development, said the proposal is preliminary and non-binding. The special committee is authorized to hire its own legal and financial advisers. The company said it would not provide further comment or take questions on the matter during the earnings call.

For the quarter, Penske Automotive reported earnings before taxes of $354 million, net income of $260 million and earnings per share of $3.96. Results included about $30 million from gains on dealership sales. Excluding that gain, adjusted income before taxes was $323 million, adjusted net income was $238 million and adjusted earnings per share was $3.62.

Retail Automotive Results

Chairman and CEO Roger Penske said the company delivered 125,000 new and used vehicles during the quarter, along with more than 5,400 new and used commercial trucks. Same-store retail new and used vehicle units increased 5% overall.

Gross profit per new vehicle retailed was $4,782, down $1 sequentially, while used-vehicle gross profit per unit was $2,095, up $19 from the first quarter. Same-store service and parts revenue increased 2%, with related gross profit rising 3%. Service and parts gross margin expanded 60 basis points from the prior year and 80 basis points sequentially.

In the U.S., same-store new and used retail automotive units rose 3%, according to Rich Shearing, chief operating officer of North American operations. About 24% of new units sold during the quarter were sold at manufacturer’s suggested retail price, unchanged from the first quarter. U.S. same-store service and parts revenue and gross profit each increased 2.5%, supported by nearly 4% growth in customer-pay work.

Shearing said the company’s U.S. technician count was 2% higher than at the end of June 2025, while service-bay utilization was approximately 84%.

Commercial Truck Demand Improves

Premier Truck Group retailed 5,431 new and used trucks in the second quarter. Same-store new-truck units declined 8%, while used-truck units rose 65%. However, new-truck deliveries increased sequentially to 4,276 from 2,786 in the first quarter.

Premier Truck Group generated $928 million in revenue and $143 million in gross profit, with gross margin improving 20 basis points. Used-truck gross profit per unit rose by more than $2,000 sequentially and nearly $1,900 from the prior-year quarter, which management attributed to improved freight-market conditions and stronger spot rates.

Management said North American Class 8 truck orders increased 170% in the second quarter, while the industry backlog rose 105% to 186,000 units. Shearing said Premier Truck Group’s own backlog was about 10,400 units and that most orders taken in the first half are expected to convert to retail sales in the second half of 2026. He estimated the company delivered about 6,000 trucks in the first half and expects roughly 10,000 deliveries during the second half.

“The recovery in the commercial truck market is underway,” Roger Penske said, adding that improving freight conditions should benefit both the dealership business and Penske Transportation Solutions.

Penske Transportation Solutions, in which Penske Automotive records equity income, produced $57 million of equity income in the quarter, up 7% from $54 million a year earlier. Operating revenue was flat, as a 1% increase in lease revenue was offset by a 12% decline in rental revenue and a 2% decline in logistics revenue.

The unit sold 9,170 vehicles during the quarter and ended June with a fleet of just under 380,000 vehicles, compared with 414,000 a year earlier. Management said fleet reductions lowered operating and interest costs and improved utilization, but reduced gains on sales of used trucks by $13 million.

International Growth and Australia Energy Orders

International revenue increased 10% to $3.2 billion. Same-store new units rose 8%, used units increased 7%, and same-store gross profit grew 6%.

In the United Kingdom, new vehicle deliveries climbed 14%, roughly in line with the overall market’s 13% increase. Randall Seymore, chief operating officer of international operations, said the market remains challenging because of higher taxes, affordability pressures, reduced Motability programs and government electrification requirements. He also noted that Chinese brands have increased their U.K. market share, although Penske’s operations remain predominantly focused on premium and luxury brands.

In Australia, Penske’s off-highway commercial vehicle and power systems revenue increased 63%. The company secured more than $300 million in orders during the quarter, bringing its secured 2026 order book to nearly $660 million. Seymore said demand was supported by energy solutions, mining and defense, and that the company sees a path to reaching AUD 1 billion in data-center revenue by 2030.

Capital Allocation and Balance Sheet

For the first six months of 2026, Penske Automotive generated $418 million in operating cash flow and $829 million of EBITDA. It invested $134 million in capital expenditures and acquired two Lexus dealerships with estimated annualized revenue of $450 million.

The company increased its quarterly dividend to $1.44 per share, its 23rd consecutive quarterly increase, and repurchased 265,000 shares for $43 million. Since the start of 2023, it has returned approximately $1.6 billion to shareholders through dividends and buybacks.

At the end of June, non-vehicle long-term debt was $2.5 billion and leverage was 1.7 times. The company reduced long-term debt by $141 million during the quarter. Total inventory stood at $5.1 billion, including a 51-day supply of new vehicles and a 44-day supply of used vehicles. Liquidity was approximately $1.4 billion.

About Penske Automotive Group (NYSE:PAG)

Penske Automotive Group, Inc NYSE: PAG, headquartered in Bloomfield Township, Michigan, is an international transportation services company primarily focused on automotive and commercial truck dealerships. The company retails new and pre-owned vehicles across a broad spectrum of brands, while offering parts, maintenance, collision repair and reconditioning services. In addition, Penske provides financing and insurance products through its integrated finance and insurance operations, supporting both retail customers and commercial clients.

Formed in 1990 as United Auto Group and publicly traded since 1999, Penske Automotive Group has grown through organic expansion and strategic acquisitions to establish a network of dealerships and service centers across the United States and Europe.

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