Penske Automotive Group, Inc.

good afternoon welcome to the penske automotive group first quarter 2022 earnings conference call today's call is being recorded and will be available for replay approximately one hour after the completion through may 4 2022 on the company's website under the investors tab at www.penskeautomotive.com i will now introduce anthony portin the company's Executive Vice President of Investor Relations and Corporate Development. Sure, please go ahead.

Thank you, Lori. Good afternoon, everyone, and thank you for joining us today. A press release detailing Penske Automotive Group's record first quarter 2022 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 chair and CEO, Shelly Holgrave, chief financial officer, and Tony Piccioni, vice president and 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. We may also discuss certain non-GAAP financial measures such as earnings before interest, taxes, depreciation, and amortization, or EBITDA, and our leverage ratio. 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 are 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 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 would now like to turn the call over to Roger Penske.

Roger Penske Thank you, Tony. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report all-time record quarterly results for the first quarter as earnings before taxes Net income and earnings per share more than doubled when compared to the first quarter of 2021. Our revenue increased 21% to $7 billion. Income before taxes increased 101% to $498 million. Our net income from continuing operations increased 102% to $368 million. And our earnings per share increased 111%. to $4.76. We repurchased 1.9 million shares of common stock for 184 million year-to-date, and we added approximately $665 million in annualized revenue. Over the last 12 months, we've completed acquisitions or opened new dealership points that represent approximately $1.9 billion in annualized revenue. Our strong Q1 results really came from all segments of our business. Retail automotive and commercial truck same-store revenue improved 11% and 47% respectively, coupled with record earnings from Penske Transportation Solutions. Earnings before taxes increased 93% from retail auto, 113% from North American commercial truck retail, 75% from Penske Australia, and 121% from Penske Transportation Solutions. Let's look at our retail automotive operations on a same-store basis, comparing Q1-22 with Q1-21. Unit sales continue to be impacted by supply shortages and declined 1% during the quarter. New decline 13%, however, use increased 8%. Our revenue increased 11%, and our gross profit increased 27%, including a 200 basis point increase in our gross margin. Our variable gross profit per unit increased 38% to $6,026 from $4,355. Demand remains strong across our retail automotive dealerships, with most allocations in new vehicle being pre-sold before they arrived at the dealership. Put that in perspective, at the end of March, we had 2,500 units in stock in the US and 14,900 a year ago, March in 2021. And in the UK, we had 3,200 vehicles in stock in March of 22 and had 8,350 units in stock at the end of 21. in March. Just to put it in perspective, Honda, we had 216 units in stock versus 3,700. And with Toyota, we only had 188 versus 2,500. So you can see the impact of supply. As we look out over the next 9 to 12 months, we expect the supply shortages of new vehicles to continue. I think unit grosses will remain strong, and the recovery of service and parts will continue. Looking at car shop during the first quarter, Car shop unit sales increased 71% to 19,500 units. Our revenue improved 113% to 516 million. Same-star unit increased 54%, and our revenue increased 89%. Same-star variable gross profit per unit retail was flat at 2,200. The supply shortages of new vehicles continue to impact the affordability of used vehicles. Wholesale prices continue to rise. However, retail prices are not necessarily rising at the same pace, impacting our margin. In some cases, the price of a one to three-year-old used vehicle is near or at above the price of a comparable new vehicle. As we look forward to the future, we remain optimistic about the car shop model. We will continue to grow car shop based on the ability to procure affordable vehicles which may impact our goal of retailing 150,000 by the end of 23, obviously reflecting our current market conditions. Turning to our retail commercial truck dealership business, we continue to expand our commercial truck operations, adding four new locations and $150 million in revenue during the first quarter. We now operate 41 commercial truck locations in North America, and during the first quarter, unit sales increased 78%. Revenue was up 82%, and gross profit was up 77%. On a same-store basis, revenue increased 47%, including a 26% increase in service and parts. Service and parts represented 59% of the total gross profit and covered 130% of our fixed costs in the first quarter. Earnings before taxes increased 113%, to 58 million. Approximately 75 to 80 percent of our new unit sales are Class 8 commercial trucks, and that market remains strong. In fact, our entire allocation of Class 8 product for 2022 is sold out. The Class 8 commercial truck backlog is 251,000 units as of March 31st and represents 12 months of sales. Let me now turn to Pesky Transportation Solutions. We own 28.9% of PTS, which provides us with equity income, cash distribution, and cash savings. PTS currently operates a fleet of more than 373,000 vehicles, up 38,000 units from the end of March last year. CTS produced a record quarter driven by strong performance across all product lines. Revenue increased 22% to 3.1 billion and profit increased 121% to 410. As a result, our equity earnings increased 121% to 119 million year to date. We've received 45 million in cash distributions. At this point, I'd like to turn the call over to Shelly, our Chief Financial Officer.