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    PAG
    Earnings call· Mar 2026(Q1 FY26)

    PENSKE AUTOMOTIVE GROUP Q1 FY26 earnings call PAG

    Apr 29, 2026 Source

    Executive summary

    Penske Automotive Group Q1 FY26 — Solid Quarter Driven by Acquisitions and Service Growth

    Penske Automotive Group delivered a solid first quarter, buoyed by strategic acquisitions and robust performance in its service and parts segment. Despite headwinds from weather and a challenging retail automotive market, the company's diversification strategy, including a recovering commercial truck market and strong PTS results, positions it for continued growth. Management remains optimistic, focusing on portfolio optimization and capital allocation discipline.

    Highlights

    5

    • Adjusted earnings per share of $3.05, demonstrating resilience in challenging market conditions.

    • Acquisition of 2 high-performing Lexus dealerships in Orlando, expected to generate $450 million in estimated annualized revenue.

    • Increased the dividend to $1.40 per share, marking the 21st consecutive quarterly increase, yielding approximately 3.4%.

    • Record Q1 service and parts revenue, with same-store revenue increasing 4.6% and related gross profit increasing 5.7%.

    • Penske Transportation Solutions (PTS) equity income increased 24% to $41 million, driven by improved fleet utilization and lower operating expenses.

    Concerns

    4

    • Same-store retail automotive new units declined 5%, impacted by weather, difficult comparisons, and lower BEV sales.

    • Retail Commercial Truck segment unit sales declined by 953 units due to reduced order intake in late 2025 and weakness in the freight market.

    • Weather-related challenges in Q1 resulted in an estimated $6 million impact to earnings.

    • International new units in the U.K. were flat, affected by lower sales of German luxury brands and the elimination of incentive programs.

    Guidance & targets

    5
    CategoryTargetConfidence
    Commercial Truck Deliveries
    Second half of 2026
    medium materiality
    High
    Premier Truck Group New Unit Sales
    Higher new unit sales
    medium materiality
    High
    Interest Expense Sensitivity
    $15 million impact
    low materiality
    High
    PTS Fleet Reduction
    Another 3,000 or 4,000 units
    medium materiality
    Medium
    Australia Energy Solutions Revenue
    At least AUD 1 billion
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Retail Automotive (North America)
    Performance impacted by two major winter storms, difficult comparisons to March 2025 (tariff pull-ahead sales), and lower BEV sales due to tax credit elimination. Service and parts showed solid growth.
    Same-store new units declined: 5%Same-store used units increased: 1%New unit retail gross profit per unit: $4,783New unit retail gross profit per unit sequential increase: $94Used unit retail gross profit per unit: $2,076Used unit retail gross profit per unit sequential increase: $306Same-store service and parts revenue increased: 3.2%Same-store service and parts gross profit increased: 3.4%Customer pay (service) increased: 4%Warranty (service) increased: 5%Collision repair declined: 4%New units sold at MSRP: 25% (vs 29% in Q1 last year)U.S. automotive technician count increased: 3% YoYBay utilization: 84%
    		————
    Retail Automotive (International)
    Strong revenue growth driven by new and used unit increases. Service and parts saw robust customer pay growth. U.K. new unit sales were flat due to German luxury brand performance and incentive changes. Australia's Porsche dealerships gained market traction, and the Commercial Vehicle and Power Systems business secured AUD 600 million in orders for 2026.
    New units increased: 2%Used units increased: 3%Same-store service and parts revenue increased: 7%Customer pay (service) increased: 10%Warranty (service) declined: 3%U.K. automotive registrations increased: 6% to 615,000U.K. same-store new units delivered: flatU.K. same-store used units increased: 3%U.K. used unit gross profit per unit sequential increase: $500Australia EBT increased: 15% YoY
    		$3.3 billion6%——
    Premier Truck Group
    New unit sales declined in line with the North American Class 8 market, impacted by a recessionary freight environment and market uncertainty. However, an increase in new truck orders (Class 8 orders up 91% YoY) is expected to drive higher sales in H2 FY26. Service and parts continue to be a strong contributor.
    Retail new and used trucks sold: 3,583New unit gross sequential increase: $111Used unit gross sequential increase: $4,624New unit sales declined: 26%Service and parts revenue increased: 5%Service and parts gross profit as % of segment gross profit: 73%Fixed coverage: 127%
    		$695 million——$128 million gross profit
    Penske Transportation Solutions (PTS)
    Strong equity income growth despite revenue decline, driven by improved fleet utilization, lower operating and interest expenses from fleet reductions. Management expects continued fleet right-sizing and rental revenue recovery.
    Equity income increased: 24%Lease revenue increased: 2%Rental revenue declined: 17%Logistics revenue declined: 3%Units sold: 9,319Fleet size: 387,500 units (vs 435,000 at Dec 2024)Gain on sale declined: $26 million YoYRental utilization: 76% (up from 71%)
    		$2.5 billion-4%—$41 million equity income

    Operational metrics

    39
    Adjusted Earnings Before Taxes
    $276 million
    Q1 FY26

    Excluding a $60 million gain on sale of a dealership and $13 million in other charges.

    Adjusted Net Income
    $201 million
    Q1 FY26

    Excluding a $60 million gain on sale of a dealership and $13 million in other charges.

    Adjusted Earnings Per Share
    $3.05
    Q1 FY26

    Excluding a $60 million gain on sale of a dealership and $13 million in other charges.

    Gross Profit Growth
    -1.7%YoY
    Q1 FY26

    Gross profit declined while SG&A expenses increased by 1.5%.

    EPS Impact from Tax Change
    $0.05
    Q1 FY26

    Impact to EPS due to change in tax status of Penske Motor Group, which was not subject to income tax prior to acquisition.

    PTS Profit
    $142 millionup from $120 million
    Q1 FY26

    Internal profit metric for Penske Transportation Solutions, reflecting overall pickup in profit.

    March Sales
    $17.6 million
    March FY26

    Sales figure for March, compared to $17 million in April.

    Bay Utilization
    84%
    Q1 FY26

    Current bay utilization rate.

    Bay Utilization Target
    north of 90%
    Future

    Management states achieving over 90% utilization would be challenging due to operational factors like parts availability and complex jobs.

    Service and Parts Gross Margin
    60up
    Q1 FY26

    Increase in gross margin for the service and parts segment.

    New Units Sold at MSRP
    25%vs 29% in Q1 FY25
    Q1 FY26

    Percentage of new units sold at Manufacturer's Suggested Retail Price.

    U.S. Automotive Technician Count Growth
    3%YoY
    Q1 FY26

    Increase in the number of automotive technicians in the U.S.

    Class 8 Orders Growth
    91%YoY
    Q1 FY26

    Increase in Class 8 truck orders.

    Class 8 Industry Backlog
    175,000 unitsup 33% YoY
    Q1 FY26

    Total industry backlog for Class 8 trucks.

    PTS Operating Revenue
    $2.5 billiondeclined 4%
    Q1 FY26

    Operating revenue for Penske Transportation Solutions.

    PTS Lease Revenue Growth
    2%
    Q1 FY26

    Growth in lease revenue for Penske Transportation Solutions.

    PTS Rental Revenue Growth
    -17%
    Q1 FY26

    Decline in rental revenue for Penske Transportation Solutions.

    PTS Logistics Revenue Growth
    -3%
    Q1 FY26

    Decline in logistics revenue for Penske Transportation Solutions.

    PTS Units Sold
    9,319
    Q1 FY26

    Number of units sold by Penske Transportation Solutions.

    PTS Fleet Size
    387,500 unitsvs 435,000 at Dec 2024
    Q1 FY26 end

    Total fleet size for Penske Transportation Solutions.

    PTS Gain on Sale Decline
    $26 millionYoY
    Q1 FY26

    Decline in gain on sale for Penske Transportation Solutions compared to Q1 2025.

    International Customer Pay Service Growth
    10%
    Q1 FY26

    Increase in customer pay revenue for international service and parts.

    International Warranty Service Growth
    -3%
    Q1 FY26

    Decline in warranty revenue for international service and parts.

    U.K. Automotive Registrations
    615,000increased 6%
    Q1 FY26

    Total automotive registrations in the U.K.

    SG&A Expenses Growth
    1.5%
    Q1 FY26

    Increase in Selling, General & Administrative expenses, lower than the rate of inflation.

    SG&A Impact from Weather
    $6 million
    Q1 FY26

    Estimated impact to earnings from weather-related challenges.

    EBITDA
    $397 million
    Q1 FY26

    Earnings Before Interest, Taxes, Depreciation, and Amortization.

    Capital Expenditures
    $63 milliondown from $85 million in Q1 FY25
    Q1 FY26

    Investment in capital expenditures.

    Dividend Per Share
    $1.40increased
    Q1 FY26

    Cash dividend per share, marking the 21st consecutive quarterly increase.

    Total Capital Returned to Shareholders
    $1.6 billion
    Since beginning of 2023

    Cumulative amount returned to shareholders through dividends and share repurchases.

    Non-Vehicle Long-Term Debt
    $2.6 billion
    Q1 FY26 end

    Total non-vehicle long-term debt.

    Floor Plan
    $4.1 billion
    Q1 FY26 end

    Floor plan financing balance.

    Vehicle Equity
    $425 million
    Q1 FY26 end

    Equity in vehicles.

    Total Interest Expense Growth
    $2 millionincreased
    Q1 FY26

    Overall increase in total interest expense.

    Floor Plan Interest Change
    -$4 milliondecreased
    Q1 FY26

    Decrease in floor plan interest due to cash management and lower interest rates.

    Other Interest Expense Growth
    $6 millionincreased
    Q1 FY26

    Increase in other interest expense primarily from higher borrowings for acquisitions.

    Effective Tax Rate
    27.4%
    Q1 FY26

    Effective tax rate for the quarter.

    Cash Balance
    $84 million
    Q1 FY26 end

    Cash balance at the end of March.

    Liquidity
    $1.2 billion
    Q1 FY26 end

    Total available liquidity at the end of March.

    Industry KPIs

    7
    MetricValueDetails
    Sg a OPEX ratio74.3%%
    Comparable sales-5%%
    Store count growth2units
    Gross margin drivers60bps
    Net debt to adjusted EBITDA1.8xx
    Share buyback capital return$26 millionUSD
    Inventory position markdown risk$4.9 billionUSD

    Deals & partnerships

    2
    LexusAcquisition of 2 high-performing Lexus dealerships in the Orlando metropolitan area.

    These acquisitions complement 2 Lexus and 2 Toyota dealerships acquired in November 2025. Combined, these 6 dealerships are expected to generate $2 billion in estimated annualized revenue.

    VariousSale of certain dealerships as part of portfolio optimization.

    Included the sale of 2 Lexus stores (Norwich and Madison, Wisconsin) and other smaller locations in the U.K. and U.S. This strategy aims to improve returns and reduce CapEx.

    Risks & headwinds

    10
    Difficult Year-over-Year ComparisonQ1 FY26

    Q1 FY26 performance compared to prior year period

    Mitigation: Strategic portfolio optimization, diversification of business model.

    Challenging Market ConditionsQ1 FY26

    Impacted year-over-year performance

    Mitigation: Focus on high-performing brands, service and parts growth, and diversification.

    Weather-Related ChallengesQ1 FY26

    Approximately $6 million impact to Q1 earnings; $4 million to $5 million fixed gross loss

    Mitigation: Acknowledged as uncontrollable, but impact was shared by competitors in affected markets.

    Lower BEV Sales in U.S.Q1 FY26 and ongoing

    Down 61% YoY in Q1 FY26; BEV inventory at 78 days supply

    Mitigation: Stabilized post-tax credit elimination, but consumer concerns about range/charging persist; OEMs adjusting to market demand.

    Recessionary Freight Environment and Market UncertaintyH2 2025 into Q1 FY26

    Impacted new truck orders in H2 2025, leading to Q1 unit sales decline of 953 units for Retail Commercial Truck segment

    Mitigation: Anticipated recovery in H2 FY26 due to increased Class 8 orders; structural changes in freight market (e.g., tightening capacity) suggest long-term improvement.

    U.K. Automotive Environment ChallengesOngoing

    Inflation, higher taxes, consumer affordability, government mandate towards electrification

    Mitigation: Focus on customer pay in service, cautious approach to Chinese brands, portfolio pruning.

    Lower Sales of German Luxury Brands in U.K.Q1 FY26

    U.K. same-store new units delivered were flat; Audi down 30%, BMW/Mercedes down 15%, Porsche down 18%

    Mitigation: OEMs adjusting incentives, new product launches expected; company has diversified brand mix.

    Macan Transition to All-Electric VehicleCurrent year and next year

    Decline in new unit sales for Porsche in Australia

    Mitigation: Focus on pre-owned and after-sales, strong mix of higher-end vehicles.

    Chinese Brand Market Saturation/Over-DealeringFuture

    Concern about potential over-inventory and race to the bottom on pricing

    Mitigation: Measured 'walk before run' approach, integrating into existing facilities, careful selection of brands, monitoring market saturation.

    Lack of Captive Finance for Chinese BrandsOngoing

    Reliance on banks and buy-downs for competitive rates

    Mitigation: Acknowledged as a factor, but company is focusing on locations with existing revenue and parts/service infrastructure.

    What to watch in Q2 FY26

    5

    Commercial Truck New Unit Sales

    H2 FY26
    CurrentDeclined 953 units in Q1 FY26
    TargetHigher new unit sales in H2 FY26

    Why it matters

    Recovery of the commercial truck market is a key diversification strength and expected to benefit the company's retail truck dealerships and PTS investment.

    We expect this increase in order activity to result in higher new unit sales in the second half of this year.

    Q&A highlights

    6

    Can you quantify the impact of the Q1 weather events on your business and whether any lost sales were recovered?

    Two major winter storms impacted operations from Texas to the Northeast, causing delayed openings and closures. The direct impact on fixed gross profit was estimated at $4 million to $5 million, with an overall earnings impact of approximately $6 million. While competitors faced similar challenges, lost fixed gross business is generally unrecoverable.

    “So we had the added expense of the snow removal and then we attribute the fixed gross loss to about $4 million to $5 million. And then in total, overall, about a $6 million impact to our earnings in Q1 related to the weather.”

    asked by Michael Ward · answered by Richard Shearing

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Portfolio Optimization and Acquisitions

    Penske Automotive Group is actively optimizing its dealership portfolio, having sold several low-performing locations to fund strategic acquisitions. This strategy generated $325 million to $350 million in free cash flow from divestitures. The company acquired 2 Lexus dealerships in Orlando, Florida, in Q1 FY26, complementing 4 Toyota/Lexus dealerships acquired in November 2025. These 6 dealerships are projected to add $2 billion in estimated annualized revenue, focusing on high-growth markets and desirable brands like Toyota and Lexus, which currently have low days of supply.

    02

    Commercial Truck Market Recovery and Premier Truck Group Performance

    The commercial truck market is showing signs of recovery after a challenging period in late 2025, which saw a 953-unit decline in Q1 FY26. Class 8 truck orders increased 91% year-over-year, and the industry backlog grew 33% to 175,000 units. Management anticipates these increased orders will translate into higher new unit sales in the second half of 2026. Premier Truck Group achieved a fixed coverage of 127%, highlighting the strength of its service and parts business, which represented 73% of segment gross profit in Q1.

    03

    Penske Transportation Solutions (PTS) Strong Performance

    Penske Transportation Solutions (PTS) delivered a strong financial performance, with equity income increasing 24% to $41 million. This improvement was driven by higher fleet utilization (up to 76% from 71%), lower operating expenses, and reduced interest and depreciation costs due to fleet right-sizing. The fleet size decreased to 387,500 units from 435,000 at the end of December 2024, with plans to remove another 3,000-4,000 units this year. Lease signings are increasing, indicating sustainable long-term growth.

    04

    International Operations and Chinese Brand Strategy

    International revenue increased 6% to $3.3 billion, with new units up 2% and used up 3%. Service and parts revenue increased 7%, driven by a 10% increase in customer pay. In the U.K., automotive registrations increased 6% to 615,000. The company is cautiously exploring Chinese brands in the U.K. and Germany, integrating them into existing facilities to minimize fixed costs. Australia's Energy Solutions business is a key growth area, with AUD 600 million in secured orders for 2026 and a target of AUD 1 billion in revenue by 2030, focusing on prime power and after-sales annuities.

    05

    Service and Parts Growth and Bay Utilization

    Service and parts revenue and gross profit achieved Q1 records, with same-store revenue up 4.6% and gross profit up 5.7%. Gross margin for service and parts increased 60 basis points. U.S. automotive technician count is up 3% year-over-year, and bay utilization stands at 84%. While management believes achieving over 90% utilization is challenging due to operational complexities, the company is investing in expanding service capacity, such as adding 100 bays at Longo Toyota and 30 bays in Central Florida.

    AI-generated summary of the company’s earnings call. Not investment advice.