Penske Automotive Group, Inc.

Good afternoon, ladies and gentlemen. Welcome to the Penske Automotive Group fourth quarter 2020 earnings conference call. Today's call is being recorded and will be available for replay approximately one hour after completion through February 17th, 2021 on the company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Anthony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Thank you, Regina. Good afternoon, everyone, and thank you for joining us today. A press release detailing Penske Automotive Group's fourth quarter 2020 financial results was issued this morning and is posted on our website along with a presentation designed to assist you in understanding the company's results. As always, I'm available by email or phone for any follow-up questions you may have. Joining me for today's call are Roger Penske, our chairman, J.D. Carlson, chief financial officer, and Shelley Hulgrave, our corporate controller. Our discussion today may include forward-looking statements about our operations, earnings potential, outlook, future events, growth plans, liquidity, and assessment of business conditions in light of the COVID-19 pandemic. We also may discuss certain non-GAAP financial measures such as adjusted earnings before taxes, adjusted selling general and administrative expenses, adjusted income from continuing operations, adjusted earnings per share, and Earnings Before Interest Taxes Depreciation Amortization or EBITDA and Adjusted EBITDA. We have prominently presented the comparable gap measures and have reconciled the non-gap measures in this morning's press release and investor presentation, which is available on our website to the most directly comparable gap measures. Our actual results may vary because of risks and uncertainties outlined in today's press release, which may cause the actual results to differ materially from expectations. I do direct you to our SEC filings, including our Form 10-K, for additional discussion and factors that could cause results to differ materially. At this time, I will now turn the call over to Roger Penske.

Thank you, Tony. Good afternoon, everyone, and thank you for joining us today. This morning, we reported record results for our business in 2020, including a very strong fourth quarter. For the quarter, earnings before taxes increased 89%. Thank you for joining us. Our success in this area can be attributed to a reduction in T&E, advertising, vehicle maintenance, administrative, personnel, and other fixed costs. We estimate that approximately $125 to $150 million in SG&A costs have been eliminated across our various businesses. During Q4, our retail automotive segment income increased This increase was driven by higher gross profit per unit retailed, expense leverage, and lower interest costs due to a reduction in inventory and lower overall debt levels. Retail automotive same-store revenue increased 1%. Same-store gross profit increased nearly 6%, including an 80 basis point increase in our overall gross margin to 15.5%. On a same-store basis, gross profit increased $870, or 25%, to $4,427. Total same-store new and used unit retail declined 8.6% as COVID impacted the U.S. and U.K. new vehicle markets, including a complete lockdown of our showrooms in the U.K. in November. Moving on to our used vehicle supercenters, this business represents A significant future growth opportunity. We expanded to 17 locations after opening Nottingham in the UK in December. This new supercenter is expected to retail approximately 6,000 units and earn between 4 and 5 million EBT annually. During the fourth quarter, our supercenter sold nearly 12,000 units down 23% as volume was impacted by COVID. Despite the decline, Variable grosses increased 19% as we improved vehicle sourcing by using our internal online auction and Buy Your Car Now purchases. Turning to the retail commercial truck dealership business, we currently operate 25 medium and heavy-duty truck dealerships in the U.S. and Canada. During the fourth quarter, we sold 4,300 new and used trucks compared to 3,700 in the same period last year, representing an increase of 16%. Our new units were up 1.4%, used units were up 106%. The increase in new units compares favorably to the North American Class 6-8 truck market, which declined 10% during the same period. Our Q4 revenue was $579 million and our return on sales was 4.4%. Use truck margins have really improved. They were up 730 basis points, and it was steadily improved since the first half of 2020. Service and parts operations represented 66% of our total gross profit and fixed cost absorption as 128%. Right now, we feel the freight market is very strong, and as a result, ACT is forecasting a 25% increase in retail sales to 290,000 units for the North American Class 8 truck market in 2021. At December 31st, the Class 8 heavy market backlog was 178,000 units, which represents a 44% increase from the same period a year ago. We expect the strong market will provide tailwinds to our commercial truck and truck leasing businesses this year. Turning to Penske Transportation Solutions, as you know, we operate a fleet of over 327,000 vehicles. In Q4, PTS generated $2.4 billion in revenue and had income of $196 million, or an 8.3% return on sales. As a result, our equity earnings increased 55% to $56.5 million, and our full-service leasing and contract sales were up 8%. Commercial and consumer rental demand continues to be strong with utilization rates in many of our classes over 88%. Today, we have almost 80,000 trucks in our rental fleet. When we look at logistics, automotive, grocery, and retail volumes are operating at higher than previously expected levels. And the gain on sale of used trucks is much stronger as the North American Class 8 Heavy Duty market continues to improve. In the fourth quarter, PTS acquired Black Horse Carriers which is expected to generate approximately 600 million in annualized revenue which represents a revenue growth overall of 7%. For the year, PTS generated 8.9 billion in total revenue and income of 569 million. As a result, our equity earnings increased 16% to 164.5 million compared to 142 in the prior year. For 2020, The PGL investment provided $137 million in cash flow through distributions and tax benefits. If we look at the balance sheet and cash flow, our balance sheet's in great shape. Our total inventory is $3.4 billion, which is down $835 million from December last year. Our new vehicle inventory is down $535 million and really remains in short supply for most of the brands, and we expect this to continue throughout the beginning of the year. The used inventory was down approximately $60 million, and our commercial truck inventory was down over $240 million. You look at our day's supply, we have a 50-day supply for new and a 48-day supply for used. In 2020, we generated $1.2 billion in cash flow from operations, and as of December 31st, debt to capitalization was 33.7% compared to 45.6%. We used the cash flow obviously to help reduce our long term debt during the year by $670 million. We generated $943 million in EBITDA during 2020 and finished the year with a leverage ratio of 1.8 and improvement from 2.9 at the end of 2019. We also refinanced $550 million of 5.75% subordinated notes due in 2022 with $500 million of new notes at 3.5% reducing interest rate by 225 basis points. We estimate the debt repayment and refinancing of our subordinated notes will reduce future interest expense by $27 million annually. We invested a net $145 million in capital expenditures including $13 million to buy and lease property and $11 million to acquire land for future expansion. as we returned $103 million to shareholders throughout dividends and share purchases during the year. We ended December with $1 billion in liquidity under our various credit agreements. Moving on to our digital initiatives, we continue to grow, expand, and enhance our digital footprint, including the introduction of new tools and technologies. We currently have 54,000 vehicles online, and our digital marketing efforts in the U.S. represented 50%. for our unit sales in the quarter. Our multi-channel marketing focuses on creating a connection with our customers through various channels. Our digital retailing tool in the US is called Preferred Purchase. It's implemented at every dealership and offers flexible buying options. The tool can accommodate a customer at any point in their buying journey and generated sales of 2,600 vehicles in the fourth quarter with a 24% closing ratio. And our online schedule tools continue to gain traction in service and parts. In Q4, we had 100,000 service points that were scheduled online and another 400,000 that were scheduled to our business development centers. In the UK, our multi-channel process, click and collect, allows a customer to complete each step of the buying process digitally. The customer can reserve a car for $99, apply for finance through a proprietary platform, receive instant credit approval, and obtained a guaranteed trade-in price. Transactions are processed digitally and the customer can choose from over 100 locations to collect their vehicle. Through these channels, we delivered 12,000 cars in November when all showrooms were closed in the UK. We now are going to introduce to our channel of used car supercenters the same capability as with the next step on online sales. So when you combine preferred purchase buy online, click and collect, online scheduling, and bill pay, we have the tools to allow our customer to perform any part of the transaction online or to shorten their visit to our stores. Looking at growth and expansion, we currently are constructing new franchise dealerships and have identified acquisition targets. We're expected to add $600 million in annualized revenue, and this would include and lead certified second Porsche dealerships serving the Washington, D.C. metro area we opened in January, a new Audi dealership in Southern California and a Honda dealership in Texas, both of which are currently under construction. We also intend to grow our super center business. With the opening of Nottingham dealership in the U.K. in December, we have started the next phase of our expansion plan. We expect to open a new location in the U.S. in May. In fact, on March 1st, are changing the name of the U.S. business from CarSense to CarShop will have one global brand to drive the business forward. In Q1, we intend to incorporate an automated buying process within the U.S. Supercenter business offering an end-to-end 100% online capability. As we look across the next three years, we plan to execute a growth plan to increase CarShop Supercenter footprints From 17 locations to 40 by the end of 2023. At that time, we expect Supercenter business will generate at least $150,000 in unit sales, revenue between $2.5 and $3 billion. That would be doubling the size of our current business. Our goal for Supercenters is to earn between 3.5 and 4% on sales while generating earnings before taxes at that time of approximately $100 million. and finally, as we look across our diversified portfolio of businesses over the next three years, our goal is to grow earnings before taxes, EBT, to over one billion through the combination of acquisitions, super center expansions and organic growth. Before closing, I'd like to mention our performance and highlight some of our achievements from the recently completed year in 2020. 2020 PHE retailed more than 400,000 new and used vehicles, while increasing our new-to-use ratio to 1.3 to 1. Earnings before taxes increased 20% to a record $708 million, increased income from continuing operations by 25% to $543 million, and earnings per share increased 28% to $6.74. We reduced our selling, general and administrating expenses as their percent of gross profit by 360 basis points. We drove cost reductions that are anticipated to yield $125 to $150 million in annual savings. We generated strong cash flow of $1.2 billion and reduced long-term debt by $670 million. We returned $103 million to shareholders through dividends and stock repurchases. Before I close here, I'd like to thank our team for their significant work and effort during these unprecedented times. As I look forward to the future, I remain confident about the opportunities I see across our diversified enterprise. Thanks again for joining us on the call today and for your continued support of PAG. At this time I'd like to turn the call back to the operator and she'll open up the line. Thank you.

At this time, if you'd like to ask a question, simply press star followed by the number one on your telephone keypad. Again, that is star one. Our first question will come from the line of Rajat Gupta with JP Morgan. Please go ahead.

Hi, Rajat.

Hi. Good afternoon, Roger and Joni. Thanks for taking my question. I just had a first question, you know, on just the growth plan, you know, specifically, you know, the franchise dealer acquisitions. The 600 million in revenue, could you give us a sense of just the timeline of that, what kind of brands are you looking at, what regions you're specifically targeting, or any color you can give us on just the multiples you're looking to pay for the ones that you're acquiring. and then, you know, on the used business, sorry, go ahead, I'll follow up later.

Let me just try to answer the first question as you think about the growth between now and 2023. We're estimating about a billion in EBT and I think there are really probably three areas. One would be our commercial vehicle business and transportation solutions would be, growth would be about 25% in that area and then our Organic growth would be our U.S. and U.K. businesses on the retail side would grow at 30%, and we'd have acquisitions, including our super stores, at about 45%. So that gives you the three buckets of growth. I think when we look at the return on investment, you know, we're seeing probably on the used car super stores, we'll invest about $200 million, and we think the return on those would be about 30%. On the truck side, we probably see 20 to 25, and today, I think, If you look at it nationally here, at least in the U.S., I'm not talking about the U.K., it's probably 10% to 15% return on capital. So we're going to focus for the right businesses, giving us the right returns. There's still some cloudiness in the future here as we go through 2021, and we want to be sure that we're poised to move forward in 2022 and 2023. Certainly on the used car supercenters, we'll be investing more. as I mentioned earlier, 200 million roughly to build that network from 17 to 40. That includes both in the car shop, both the U.S. and in the U.K. And on the truck side, you know, obviously we're the largest Freightliner group today in the U.S. and we're continuing to look for opportunities to add on to our network of 25 locations here in the U.S. and Canada. So we feel good about that. And then the open points we've been awarded by the the manufacturers you know these are the great brands they fit our they fit our mix and I think that the open points probably would generate 150 million and then what we have in process is another 450 million that we'll see in 2020. Does that give you a good enough answer?

No that's that's super helpful. On the 450 million I mean What are you seeing out there in terms of the deal environment and just the kind of multiples or the pricing for some of those assets out there?

Well, I think it's location and brand and size. There's been some real good purchases made by some of our peers. I don't know what the numbers are, but I'm assuming that you're looking at six to eight times for some of these really premium sites. And then we look on the truck side, we're probably paying half that when you look at that and you don't have the CapEx, you don't have the CI you have to deal with. So we're going to be very selective. And obviously, when you can build a store up from the ground, you're certainly in better shape. But I would say this, there's lots of activity right now.

Got it. That's super helpful. Just have one more from a modeling standpoint from an SG&A to gross profit ratio perspective. You reiterated the $125 to $150 million in cost out. Once we were through with some of these near-term gross margin tailwinds, especially on the new side, and we were back to a more normalized level, How should we be thinking about the SG&A to gross profit level more on a run rate basis going forward? Thanks.

I think we're in 73 to 74, which would still be down 300 to 400 basis points when you look at our traditional.

Got it. Okay, great. Thanks so much. I'll get back in queue. Thank you.

Your next question comes from the line of John Murphy with Bank of America. Please go ahead.

Good afternoon, Roger. Thanks for all the info. Just a first question maybe to stay on the used car business. I mean, obviously you're making a big commitment going from 17 to 40 outlets here, but the way you're talking about the numbers is a little bit linear sort of with the expansion in the physical footprint. I'm just curious, as you overlay your digital efforts and then maybe leverage some of your other assets, whether it be You know, PTS in the logistics side or whether it be, you know, your other locations, whether it be new vehicle dealers. Is there the potential to maybe, you know, really advance the ball a little bit more than just sort of on a linear basis here? Because, you know, you've got a lot of different assets that you might be able to leverage in addition to these car shop centers.

Well, let's just – I'm talking about car shop now. And, you know, because we were so rocky during 2020, it started to really – look at exactly what is the, you know, where we are from a steady state. Let's say it's 50,000, and we're looking to grow that. At this point, we're looking to grow it to 150,000, you know, during a three-year period. And with that, we're talking about 200 million roughly in capex and investment. But one thing that obviously by doing that, we're going to continue to increase our capability technically You know, through our tools that we have, you know, certainly online. But when you talk about delivery locations, we certainly have the opportunity. PTL has over 800 locations in the U.S. And there's no question that we could activate those in a model going forward that we could use those for delivery locations. And then, you know, our logistics capability, we have the ability to move vehicles, you know, anywhere across the country. So... I think, as you said, can we stretch or can we leverage those other assets we have? I would say definitely. And then, of course, the systems, and we're able to test many of these, some of these in the U.K., some of them in the U.S. The good news, we have one global brand, and with that brand, we can continue to build that across, you know, many of the markets. And I think that when we look at the scale of our footprint, where we'll be, and we'll have some will be large. We look, there's one, I think, in the material that Tony sent out this morning, There's information on one in the UK where we'll have 900 cars in stock, and they'll do 500 cars monthly, so it's less than a 60-day supply. So to me, when we pull all that together, we'll be able to drive and meet that goal we have. It's in our plan. We have the metrics. We have the CI identified. We have our marketing plans, and I think tying that together with best-in-class tools that we have in the UK that we can also... that can pivot and move those into car shop U.S., I think it'll give us a real good start in the business.

Yeah. Then just a second question. I mean, right now you're seeing incredibly strong pricing, and as a result, big GPUs for you on the used and the new side. It seems like things are going to remain kind of tight here with this chip shortage on the new vehicle side, and that'll probably overflow into tightness in the used market. I'm just curious how much longer you think the industry and you specifically in your dealerships can manage what is really great performance in sort of a challenging volume environment.

Well, I think that we probably felt the end of Q1, we started to see some deterioration on new. It's been a little bit unused, I'd say, but not any great degree as we look even into January because our margins were up 1.2% on new and 1.4% unused last year. I think with this chip announcement and some of the news that have come out here in the last few days, I think it's going to be probably Q2 to Q3 before the supply chain starts to meet the demand. And with that case, we're going to have less inventory, so we'll have less cost of a floor plan. And certainly our sales people are used to getting big grosses and getting there on a variable pay plan, most of them. So I don't really see much deterioration as we look at – We're in the premium luxury side. There's probably less there than we'd see in a high volume. I think that's important. One of the benefits we got during, if you got any benefit at all, during the COVID situation is where we reduced headcount about 11%. On the sales side, we actually took out the lower performers and we're seeing that we're getting more units per salesman and the margins are higher. So I think that dynamic will continue. and I think the chip really is going to be the question mark we can drive. But I think you see that pretty much. We had a nice increase, almost $900 last year on new. So to me, I think what we have to really look at, if you look at January from the standpoint of where we are, our new unit volume was up 3%, which I think we saw good grosses. And when you think overall in the U.S. to have it up 3% during what's going on, I think that's key. And certainly when you look at overall, from an overall percentage, I think you're probably going to see some deterioration in the U.K. with the stores closed. But if we can utilize the click and collect that we have to deliver the 11,000 units in January. And when I look at the March Order Board, which is a registration month, John. We're seeing grosses are up on that order board, and we're also seeing an increase of 11% over 19, which would be the best benchmark versus talking about 20.

Yeah, seems like a pretty good environment, even though it looks a little bit choppy. Just lastly, on the debt pay down, I appreciate you're going to be in a good position to save a lot on interest. yet there's a lot of opportunity as you're kind of highlighting you know in front of you to deploy capital and capital right now particularly even on the debt side it's relatively inexpensive so I'm just curious you know if there's you know an appetite you know to reload you know and maybe leverage the additional you know above and beyond the billion dollars plus of liquidity you have right now to really go after some of these opportunities maybe more aggressively than you're talking about now.

Yeah, I would say this, that under the right circumstance, and that's how we built the business, we'd take our leverage two and a half, maybe three times if we had to. We don't have a door closed at all. But I think when you really look back, what we did in 20, our balance sheet, we divested about $450 million in revenue of non-performers, or at least they didn't meet our benchmark requirements. and I think Annette's following about $450 million the previous year. We've called out a number of underperforming businesses in the U.S. and also in the U.K. and I think that's paid off. Once we've done that and you start to look at the quality of our management team and what they're able to perform and even with January, quite honestly, the only thing I see and I think I've mentioned it before, there's probably some deterioration from the parts and service because Talking to the OEM key people, they're saying there's about a 14% less miles driven if you look at the last 90 days. So you have to factor that in. I can't tell you what that's going to do to our margin and gross profit and parts and service in Q1, but I think it's something that we all got to talk about. Okay.

That's very helpful. Thank you very much.

Thanks, John.

Your next question comes from the line of Rick Nelson with Stevens.

Thanks. Good afternoon, Roger, Tony. You provided a nice roadmap to get to those billion dollars in pre-tax income for 2023. I'm curious how you're going to fund the growth. Do you see debt ratios picking up to do that, or can you fund the bulk of it with your internally generated cash flow?

Well, I would say right now, I mean, with the cash flow we generated last year, the net cash flow to pay down 670, you know, we've reinstituted our dividends, so that'll take some. I think our CapEx plan, you know, we've been very, I think, judicious on our CapEx plan to keep that in line. I think that, you know, we'll be able to utilize our cash flow from operations in all cases, and I think that the only big impact would be, if I looked at it right now, over the three-year period, would be 250 million for the super centers and then any other acquisitions. And we would probably in many cases where we had to build a building, the OEMs are giving us long-term money, 10 and 15-year money through their captives, which is quite attractive. So from a real estate perspective, I don't see any reason that we'd have to go into markets. But on the other hand, we've had very good rates both at the PTS side and the PAG side here in the last couple of deals that we put in the market. So I think that if you looked at acquisitions, we probably have $400 million to $500 million that we could have available for acquisitions over the three-year period easily.

Great, great. And just to follow up on acquisitions and the environment, You know, U.S., U.K., commercial trucks. Is there, you know, potential for add-on, you know, segments that you're not in today or you're looking to fill out current segments? And what, you know, where is the shopping most fertile, I guess, at the moment?

Well, I guess I said it earlier. I think we want to, what's the best return on our capital employed? and, you know, we're seeing the super centers. We don't have the CI. We don't have a lot of the restrictions, you know, market areas and certain framework agreements. So, you know, that would be, that's going to certainly be a focus and continue. And we'll grow that car shop both in the U.S. and in the U.K. On the other hand, you know, there's been consolidation going on in the heavy-duty truck business and we would expect to see us, you know, active in that area. And then, as I said earlier, We're not out of the auto business at all, and I think that we're going to be mindful and not overpay for potential CapEx. And I would say we really had the lights off on CapEx, excuse me, on acquisitions in 2020 because we really wanted to focus on building the balance sheet, being sure that we were able to remediate or dispose of non-performing assets. and then having to be able to deal with the U.K. particularly. You know, we haven't had it here in the U.S. when they say every one of your showrooms closed. And I would tell you that the job that our people have done in the U.K., Darren Edwards and his team, has been amazing. To think about delivering 12,000 vehicles in a month and you don't have your showroom open. I mean, this is a great, great effort that was given by those guys. And I think from our Our perspective in the U.S., obviously our people here have been able to deal with COVID because we had to close down locations. We had people out, and many times four or five people in the same location. So I think that the job that we've done in that area has really been amazing. So I think that when I look at where we're going, all markets really are open for us. I like contiguous. If you notice the open points we're getting, this is where we already have scale. I think you'll see that on the auto side.

That's a great color. Thanks, Roger, Tony, and good luck.

Thanks.

Your next question comes from the line of Stephanie Benjamin with Truist.

Hi, Stephanie.

Hi, good afternoon. Hi, Roger.

Hi, Tony.

Hi, Stephanie.

I wanted to switch gears to your premier truck group division. Maybe you can talk a little bit about what you believe are the key drivers of just the demand that we've seen, particularly on the used unit side, but also on new, and what your expectations for parking service for this segment as we go through 2021. Thanks.

Well, I think number one, with all the commerce going on, whether it's small boxes or big boxes, The freight market is up. Spot rates are up. We can see that the carriers are now switching where they were really trying to defleet. They're fleeting up, and that bodes well for us as a retailer of heavy-duty trucks, and I think we're seeing the benefit of that. And with the used values going up, guys sit on their trucks when the value's in the market and they're underwater. Those numbers have come up. On a heavy-duty tractor, we've seen them move up 5,000 to 6,000 units. and with that there's no question or it's a thousand dollars without that that gives them the ability to sell their trucks in the market and that's been a big big help to us when we look at doing deals going forward but I would say it's freight there's there's no question that now there's a pent-up demand for equipment and the new tech technology the emissions the fuel economy some of the telematics is all driving this and for me from our perspective the parts and service That's really the heart of the truck business because when you're running at 120 to 130 to 140 coverage of your fixed costs in many months, we cover all our costs in parts and service. And when you look at a return on sales, certainly when we look in Q4, we're at 4.5%. And when the market is going to be close to 300,000, remember we had 320, 330 I think it was in 2019. and we thought that 20 was down, which it was, but this really snapped back. I just see it's freight, it's some pent up demand, it's better used truck prices and technology.

That's really helpful. And just as a follow up, I know you've talked broadly about M&A on the retail auto side as well as discussing your expansion to build out your used vehicle stores. What's your appetite of continuing to build out your presence on the commercial truck dealership side?

I would say it's one of our three pillars, you know, going forward in order to go forward. We have the team, and I think the appetite is strong.

Got it. Well, that's it for me.

Thank you so much.

Thank you, Stephanie. Yep.

And once again, for any questions, please press star 1. We do have a follow-up from the line of Rajat Gupta with JP Morgan.

Great. Hey, sorry. Thanks for getting me back in the queue. I just, you know, was curious, like, you know, you provided some color on 2021 earlier. Anything we could get on PTL specifically, given how strong the exit rate has been, you know, is it just more of a temporary benefit that we should expect in the near term, or are we at this, you know, You did like $169 million in equity income last year. So is that kind of like a good base to work off of as the economy recovers?

When you looked at the business, and our business did $569 million I think is the number for the year, I think the return on sales was 6%, almost 9% in a quarter. And all guns are loaded, and we are absolutely from a rental There is absolutely no question that the market is strong, driven by used truck prices. I think the fact that we have the flexibility, we're signing many, many long-term leases, interest rates are down. Obviously, our borrowing costs are in great shape. And I think our overall footprint is key. We're seeing our one-way business, this is rented here, leave it there, is way up because people are fleeing some of these major cities, which I think is really key. And when we look at that, we're getting margin now that we've never seen before. So I think with the contract sales, the rental business, I think we head out to some of the people like FedEx and UPSDHL. We had almost 20,000 units on rental out to them during the holidays, and some of those haven't come back. because there's so much traffic going on in the lighter freight area. I think the remarketing, which is gain on sale, is much better than we would have expected, and we have a big turn of fleet as we go into 21 and 22. So I would assume, and thinking that we were under some real lockdowns earlier there in March and April, and you just take that out and look at the run rate the last six months and figure 200 million What they did in the fourth quarter, you look at that and fast forward that, we really have a real strong market going forward. And I think our team got almost over 30,000 people in the locations we have. Our CapEx has been strong and continues to be. And we're executing, and I think the brand is strong. And we've got great customers. And when we look at liquidity, obviously we did a bond offering recently. I think $700 million, right around 2% for five years, which is really good for us from an acquisition capital perspective. The Black Horse, which is a logistics operation that was out in Chicago, well regarded in the industry, and that was a negotiated bid. That's $600 million of revenue for 2021. That'll move our revenue up to 7% alone. So we'll continue to invest properly there. Right now, one of our problems is going to be that we've probably reduced our fleet down on the rental side, maybe a little too low, and we're going to have to try to get slots in order to get trucks in order to fill those as we go forward in the second and third quarter. So, you know, overall, I would say that business has never been better, and we're, you know, setting all-time records in many of these areas, you know, every month.

Great. Thanks for that, Collar, and good luck.

Thanks for the support.

And there are no further questions at this time. I'll turn the call back over to Mr. Penske for any further remarks.

Well, thanks, everybody, for joining us. Great year in 2020. Other than what we're dealing with on COVID, et cetera, hope everybody's safe and healthy. And, you know, we feel good about our business. We've got a great team here in the U.S. that have really done a super job internationally. There's no question, you know, when you think about Spain and Germany and Italy and Australia, every one of these areas has created another opportunity and also issues we had to deal with. So I want to thank the team. Hopefully some are on the line here, but we'll see you next quarter. Thanks.

Ladies and gentlemen, that will conclude today's call. Thank you all for joining, and you may now disconnect.