Retail Automotive Operational Highlights

New and Used retail automotive same-store unit sales increased 5.5%

	
		New +18.8%: U.S. +25.5%; U.K. +7.8%
		Used -3.6%: U.S. +14.5%; U.K. -18.2%
	
	

Retail automotive same-store revenue and gross profit increased 19.2%

Retail automotive same-store variable gross profit per unit retailed increased 25.3%

Commenting on the company's results, Chairman Roger Penske said, "We had outstanding performance across our business during the first quarter. I am particularly pleased with the continued expense discipline driving a 990-basis point improvement in selling, general and administrative expense as a percent of gross profit. Despite our dealership showrooms being closed in the U.K. for the entire first quarter due to COVID restrictions, we used our online tools to deliver 40,000 new and used vehicles in the U.K. market. Importantly, new same-store units in the U.K. increased 7.8% compared to the U.K. market which declined 12%." Penske continued, "Further, our commercial truck dealerships improved their profitability by 101% while the earnings from our investment in Penske Transportation Solutions increased 295% demonstrating the strength of the company's diversified business model."

CarShop Used Vehicle SuperCenters Penske Automotive Group operates seventeen CarShop Used Vehicle SuperCenters in the U.S. and U.K. During the first quarter, the company renamed its U.S.-based Used Vehicle SuperCenters from CarSense to CarShop to align with the existing eleven U.K.-based CarShop Used Vehicle SuperCenters, forming one global CarShop brand. For the three months ended March 31, 2021, retail unit sales decreased by 30.1% to 11,395 while revenue decreased by 20.6% to $242.6 million, principally due to a 43% decline in used unit sales in the U.K. as a result of COVID-related government-mandated showroom closures, partially offset by a 25% increase in used unit sales in the U.S. during the quarter.

Retail Commercial Truck Dealerships For the three months ended March 31, 2021, earnings before taxes increased 101% to $27.5 million compared to $13.7 million in the same period last year, return on sales was 6.3%, and fixed cost absorption was 125%. The 101% increase in earnings before taxes was principally driven by an increase in used truck unit sales coupled with improved gross margin from new and used truck sales.

On April 13, 2021, the company announced that it had completed its acquisition of Kansas City Freightliner ("KCFL") which is expected to add approximately $450 million in annualized revenue and increase our medium and heavy-duty commercial truck dealership count to 29 locations throughout the U.S. and Canada.

Penske Transportation Solutions Investment Penske Transportation Solutions ("PTS") is a leading provider of full-service truck leasing, truck rental, contract maintenance, and logistics services. The company has a 28.9% ownership interest in PTS and accounts for its ownership interest using the equity method of accounting. For the three months ended March 31, 2021, the company recorded $53.7 million in earnings compared to $13.6 million for the same period last year. The 295% increase in the first quarter was principally driven by improved operating results across PTS' full-service leasing, rental, and logistics and a reduction in operating expenses.

Corporate Development and Liquidity As mentioned above, we acquired "KCFL" in April 2021. In addition, in January, we opened our second Porsche dealership in the Washington D.C. market, which is expected to generate $50 million in annualized revenue. We also have an Audi dealership under construction in Southern California and a Honda dealership under construction in Texas. Both are expected to open by the end of the year and collectively generate approximately $100 million in annualized revenue.

Further, we expect to open two CarShop Used Vehicle SuperCenter locations in the second quarter and an additional two locations by the end of 2021. We are targeting 40 locations, 150,000 in unit sales, and $100 million of earnings before taxes in the CarShop Used Vehicle SuperCenter operations by the end of 2023.

As we look out across the next three years, we are targeting organic and acquisition growth, coupled with operating efficiencies to drive income from continuing operations before taxes to at least $1 billion by the end of 2023 which compares to $708 million last year.

As of March 31, 2021, the company had available liquidity under its various credit agreements of approximately $1.1 billion. Approximately $171 million remains available to repurchase shares under the company's existing share repurchase program.

• Penske Automotive Group, Inc.