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    PAG
    Earnings call· Jun 2026(Q2 FY26)

    PENSKE AUTOMOTIVE GROUP Q2 FY26 earnings call PAG

    Jul 29, 2026 Source

    Executive summary

    Penske Automotive Group Q2 FY26 — Strong Q2 with Commercial Truck Recovery and Strategic Acquisitions

    Penske Automotive Group delivered a solid second quarter, driven by strong new and used vehicle sales and a recovering commercial truck market. The company continues to execute its diversification strategy through strategic acquisitions and disciplined capital allocation, including debt reduction and consistent dividend increases. Management remains optimistic about future growth, particularly in the commercial truck segment and international power systems.

    Highlights

    5

    • Revenue increased by 6% to $8.5 billion.

    • Adjusted EPS was $3.62, excluding a $30 million gain on sale of dealerships.

    • Quarterly dividend increased to $1.44 per share, marking the 23rd consecutive increase.

    • Retail Commercial Truck segment saw new and used truck units retail increase by 2%, with Class 8 orders up 170% YoY.

    • Penske Transportation Solutions (PTS) equity income increased 7% to $57 million, with earnings of $207 million.

    Concerns

    4

    • SG&A as a percentage of gross profit increased to 71.8% in Q2 FY26 from 69.8% in Q2 last year.

    • International operations in the U.K. face challenges from higher taxes, consumer affordability, and government mandates towards electrification.

    • PTS rental revenue declined 12%, and logistics revenue declined 2%.

    • New unit gross profit per unit retail was $4,782, down $1 sequentially.

    Guidance & targets

    9
    CategoryTargetConfidence
    Commercial Truck Retail Sales Conversion
    Majority of orders to convert into retail sales
    medium materiality
    High
    Premier Truck Group Deliveries
    10,000 units
    high materiality
    High
    Used Truck Demand
    Continuing demand
    medium materiality
    High
    SG&A to Gross Profit Ratio
    Low 70s range
    high materiality
    High
    Australia Power Systems Data Center Revenue
    AUD 1 billion
    high materiality
    High
    Toyota Lease Returns
    5,600 units
    low materiality
    High
    Lexus Lease Returns
    3,100 units
    low materiality
    High
    BMW Lease Returns
    10,700 units
    low materiality
    High
    Audi Lease Returns
    4,600 units
    low materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Retail Automotive (Company-wide)
    Strong second quarter with increased revenue and vehicle deliveries.
    New and used vehicles delivered: 125,000 unitsNew unit gross profit per retail: $4,782Used unit gross profit per retail: $2,095
    		$8.5 billion6%——
    Retail Automotive (North America - Same-Store)
    Solid growth in unit sales and service/parts, with consistent MSRP sales and improved technician count.
    New and used unit sales: up 3%New units sold at MSRP: 24%Service and parts revenue: up 2.5%Service and parts gross profit: up 2.5%Customer pay: up nearly 4%Warranty: flatCollision repair: declined 2%Technician count: up 2% YoYBay utilization: approximately 84%
    		—3%——
    Retail Automotive (International - Same-Store)
    Strong revenue and unit growth, particularly in new units, despite challenging U.K. market conditions.
    New units: increased 8%Used units: increased 7%Revenue: increased 10%Gross profit: increased 6%Service and parts gross profit: increased 5%Customer pay: up 3%Warranty: declined 7%
    		$3.2 billion10%——
    Retail Automotive (U.K.)
    Performance in line with market growth, with sequential improvement in new unit gross profit, but facing macro challenges.
    New vehicles delivered: increased 14%Overall U.K. market increase: 13%Gross profit per unit: increased $303 sequentiallySame-store used units: increased 9%Used gross profit per unit: $2,228
    		————
    Retail Commercial Truck
    Strong recovery in the commercial truck market with significant order book growth, driving used unit sales and service/parts revenue.
    New and used truck units retail: increased 2%North American Class 8 orders: increased 170% YoYIndustry backlog: grew 105% to 186,000 unitsPremier Truck Group (PTG) new units retailed: declined 8% (same-store)PTG used units: increased 65% (same-store)PTG new units retailed (sequential): improved 53% to 4,276 units from 2,786 units in Q1 FY26PTG used vehicle gross per unit: up more than $2,000 sequentially, up nearly $1,900 YoYPTG service and parts revenue: increased 5%
    		—2%——
    Premier Truck Group (PTG)
    Improved profitability and gross margin, with a substantial backlog expected to convert to sales in H2.
    Gross margin: increased 20 basis pointsBacklog: 10,400 units
    		$928 million——$143 million gross profit
    Penske Transportation Solutions (PTS)
    Strong financial performance driven by higher fleet utilization, lower operating costs, and lower interest expense, despite declines in rental and logistics revenue.
    Operating revenue: flat YoYLease revenue: increased 1%Rental revenue: declined 12%Logistics revenue: declined 2%Units sold: 9,170 unitsFleet size: just under 380,000 units (vs 414,000 in June 2025)Gain on sale declined: $13 millionFleet utilization: almost 80% (up from low 70s)Earnings: $207 million
    		—7%—$57 million equity income
    Australia Commercial Vehicle and Power Systems
    Significant growth in off-highway revenue, particularly in energy solutions, mining, and defense sectors, with a strong order pipeline.
    Revenue split: 2/3 off-highway, 1/3 on-highwayOff-highway revenue: increased 63%Order book: exceeded full year business planSecured orders in Q2: over $300 millionTotal secured orders for 2026: nearly $660 millionData center revenue target: AUD 1 billion by 2030
    		————

    Operational metrics

    33
    Adjusted Income Before Taxes
    $323 million
    Q2 FY26

    Excludes a gain on sale of dealerships.

    Adjusted Net Income
    $238 million
    Q2 FY26

    Excludes a gain on sale of dealerships.

    Adjusted EPS
    $3.62
    Q2 FY26

    Excludes a gain on sale of dealerships.

    Long-Term Debt Reduction
    $141 million
    Q2 FY26

    Reduced long-term debt during the quarter.

    Dividend Per Share
    $1.44up from $1.40
    Q2 FY26

    Represents the 23rd consecutive quarterly increase.

    Annualized Dividend
    $5.76
    Forward

    Based on the current quarterly dividend.

    Dividend Yield
    2.9%
    Current

    Based on current annualized dividend.

    Dividend Payout Ratio
    40%
    LTM

    Payout ratio over the last 12 months.

    EBITDA
    $829 million
    H1 FY26

    Generated in the first six months.

    Capital Expenditures
    $134 milliondown from $147 million in H1 FY25
    H1 FY26

    Investment in capital expenditures.

    Shares Repurchased
    265,000 shares
    Q2 FY26

    Repurchased common stock.

    Capital Returned to Shareholders
    $1.6 billion
    Since 2023

    Total capital returned since the beginning of 2023.

    Non-Vehicle Long-Term Debt
    $2.5 billion
    End of June

    Despite several large acquisitions.

    Floor Plan Debt
    $4.4 billion
    End of June

    Debt related to vehicle inventory.

    Vehicle Equity
    $412 million
    End of June

    Equity in vehicles.

    Total Interest Expense
    increased $6 million
    Q2 FY26

    Overall increase in interest expense.

    Floor Plan Interest
    decreased $5 million
    Q2 FY26

    Due to cash management and lower interest rates.

    Other Interest Expense
    increased $11 million
    Q2 FY26

    Primarily from higher borrowing costs as a result of acquisitions.

    Interest Rate Sensitivity
    impact $15 million
    Annual

    Estimated impact of a 25 basis point change in interest rates.

    Effective Tax Rate
    26.2%
    Q2 FY26

    Effective tax rate for the quarter.

    EPS Impact from Tax Status Change
    $0.05
    Q2 FY25

    Impact to EPS due to the change in tax status of Penske Motor Group (PMG) acquisition.

    SG&A Expense Growth
    increased 3%
    Q2 FY26

    SG&A expenses increased during the quarter.

    SG&A to Gross Profit (Sequential Improvement)
    250 basis points lowersequentially vs Q1 FY26
    Q2 FY26

    Sequential improvement driven by PTG and fewer Q1 weather costs, partially offset by other headwinds.

    Total Inventory
    $5.1 billionup $295 million from December 2025
    End of June

    Total inventory balance.

    New Vehicle Inventory Days Supply
    51 days
    End of June

    Overall new vehicle inventory supply.

    Used Vehicle Inventory Days Supply
    44 days
    End of June

    Used vehicle inventory supply.

    Liquidity
    $1.4 billion
    End of June

    Includes cash and availability under credit agreements.

    Used Truck Price Increase
    $2,000 to $4,000
    Q2 FY26

    Increase in what PTS is getting on used trucks as they defleet.

    CPO Sales Percentage
    42%
    Q2 FY26

    High percentage of lease returns converted to CPO sales.

    Used Car Sales Price
    $25,000
    7 years ago

    Used car sales price from 7 years ago.

    Used Car Sales Price
    $41,000
    Current

    Current used car sales price, which was the new car price 7 years ago.

    Fixed Coverage
    125% to 130%
    Current

    Fixed coverage for PTG.

    Lease Penetration
    32%
    Q2 FY26

    Lease penetration for the quarter, with historical premium luxury in mid-40s.

    Industry KPIs

    8
    MetricValueDetails
    Sg a OPEX ratio71.8%%
    Comparable sales3.7%%
    Store count growth—
    Gross margin drivers—
    Net debt to adjusted EBITDA1.7xx
    Share buyback capital return$43 millionUSD
    Inventory position markdown risk$5.1 billionUSD
    Distribution supply chain cost economics—

    Deals & partnerships

    3
    Penske Corporation and Mitsui & Co.Unsolicited, preliminary and nonbinding proposal to acquire remaining common stock$210 per share

    The Board of Directors has established a special committee of disinterested and independent directors to evaluate the proposal.

    Multiple sellersAcquisition of 2 Lexus dealerships in California, Florida, and Texas

    These acquisitions demonstrate the company's ability to identify and incorporate significant acquisitions into its portfolio.

    UnknownAdded a Ferrari location in Modena

    Fits with the structured store group in Aachen, Germany.

    Risks & headwinds

    5
    Turbulent U.K. automotive marketOngoing

    ZEV mandate at 25% vs 33% target, increasing to 38% next year; Chinese brands doubled market share from 7.5% to over 15%

    Mitigation: Structured team, focus on premium brands, after-sales, strategic growth with Chinese brands in existing facilities.

    Declining rental and logistics revenue in PTSQ2 FY26

    Rental revenue declined 12%, logistics revenue declined 2%

    Mitigation: Rightsizing fleet, improving utilization, focusing on lease business growth.

    Challenge in sourcing used trucksH2 FY26

    Used truck demand is high, but sourcing is difficult.

    Mitigation: Leveraging lease and loan maturities, converting CPO sales.

    Consumers in negative equity position for used car purchasesOngoing

    Used car sales price is $41,000 today, which was new car price 7 years ago; higher rates make payment walk challenging.

    Mitigation: Captive finance companies helping to retain customers, focus on CPO sales.

    Potential disruption from Japan earthquake on Toyota/Lexus productionShort-term

    Plant shut down through this Friday (call date + 2 days)

    Mitigation: Expected to be non-material, precautionary measures for inspection.

    What to watch in Q3 FY26

    5

    Commercial Truck Retail Sales Conversion

    H2 FY26
    CurrentMajority of H1 orders expected to convert in H2 2026.
    TargetConversion of strong Class 8 order book into retail sales.

    Why it matters

    Indicates the realization of strong order book growth into actual sales, impacting the commercial truck segment's revenue and profitability.

    We expect to see the benefit from the strong order book in the second half of 2026.

    Q&A highlights

    5

    How does the strong Class 8 order book convert into sales, and what is the typical cadence?

    The backlog of 186,000 units represents 8.5 months of production. For Daimler Truck North America, it's typically 45-60 days from order to delivery. The majority of orders taken in H1 are expected to convert to retail sales in H2 2026, with some spillover into early 2027. PTG expects 10,000 deliveries in H2, up from 6,000 in H1.

    “So if you look at Premier Truck Group's backlog, it's about 10,400 units. Some of those will probably spill into the first part of next year, but the majority of those will deliver in the second half of this year.”

    asked by John Babcock · answered by Richard Shearing

    2 min read6 chapters

    Detailed Narrative

    01

    Unsolicited Acquisition Proposal

    The company received a preliminary, non-binding proposal from Penske Corporation and Mitsui & Co. to acquire the remaining common stock for $210 per share. A special committee of disinterested and independent directors has been established to evaluate the proposal, and the company will not be taking questions on this matter.

    02

    Portfolio Optimization & Acquisitions

    Penske Automotive Group continues to optimize its portfolio, evidenced by a $30 million gain on sale of dealerships in Q2. The company also completed acquisitions of two Lexus dealerships, representing $450 million in estimated annualized revenue, demonstrating its ability to integrate significant acquisitions.

    03

    Commercial Truck Market Recovery

    The commercial truck market is showing signs of recovery, with North American Class 8 orders increasing 170% YoY in Q2 and the industry backlog growing 105% to 186,000 units. This strong order book is expected to benefit retail sales in the second half of 2026, with PTG anticipating 10,000 deliveries in H2 compared to 6,000 in H1.

    04

    Australia Power Systems Growth

    The Australian Commercial Vehicle and Power Systems business, particularly the off-highway segment, continues to grow. The energy solutions business, focused on backup power for data centers, holds over 75% market share in the 1,250 kV and higher segment. The company secured over $300 million in orders in Q2, bringing the order book to nearly $660 million for 2026, with a target of AUD 1 billion in data center revenue by 2030.

    05

    U.K. Market Challenges & Strategy

    The U.K. automotive environment remains challenging due to higher taxes, consumer affordability concerns, reduced motability programs, and government mandates towards electrification. Chinese brands have doubled their market share, primarily in lower-cost vehicles. Penske's strategy involves leveraging existing facilities for Chinese brands and focusing on premium luxury segments and after-sales service.

    06

    Penske Transportation Solutions (PTS) Fleet Management

    PTS is actively rightsizing its fleet, reducing its size from 414,000 units in June 2025 to just under 380,000 units. This defleeting, which included selling 18,500 units in H1, has improved fleet utilization to almost 80% and reduced total debt by nearly $2 billion. The business is expected to grow through its lease and logistics segments.

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