Penske Automotive Group, Inc.

standing by. Your conference will be underway shortly. Please continue to hold. Good afternoon and welcome to the Penske Automotive Group first quarter 2024 earnings conference call. Today's call is being recorded and will be available for replay approximately one hour after completion through May 7, 2024 on the company's website under the Investors tab at www.penskeautomotive.com. I will now introduce Tony Porton, the company's Executive Vice President of Investor Relations and corporate development. Sir, please go ahead.

Thank you, Leah. Good afternoon, everyone, and thank you for joining us today. As you know, a press release detailing Penske Automotive Group's first quarter 2024 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, Shelley Holgrave, our EVP and chief financial officer, Rich Shearing, North American Operations, Randall Seymour, International Operations, and Tony Piccioni, our vice president and corporate controller. Our discussion today may include forward-looking statements about our operations, earnings potential, outlook, acquisitions, 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 GAAP measures and have reconciled the non-GAAP measures to the most directly comparable GAAP measures in this morning's press release and investor presentation, which are available on our website. Our future results may vary from our expectations because of risks and uncertainties outlined in today's press release under forward-looking statements. I also direct you to our SEC filings, including our Form 10-K and previously filed Form 10-Qs for additional discussion and factors that could cause future events to differ materially from expectations. At this time, I'll now turn the call over to Roger Ponsky.

Thank you, Tony. Good afternoon, everyone, and thank you for joining us today. During the first quarter of 2024, PHE delivered 126,800 new and used vehicles and over 4,500 new and used commercial trucks. We increased revenue by nearly 2% to $7.4 billion. Our gross margin was 16.7%, which increased 40 basis points when compared to Q4 last year. We generated 295 million in income before taxes, 215 million in net income, and earnings per share of $3.21. During the first quarter, our U.S. and U.K. retail operation faced headwinds from portholes, product recalls, supply and production issues on premium vehicles that impacted product availability. Additionally, a strike at a plant in Mexico that builds the Audi Q5 SUV impacted availability as well. Income and earnings per share were also negatively impacted by higher interest costs for the quarter of $17.4 million, driven primarily by an increase in interest rates and higher inventory levels and lower equity earnings from the company's investment in Penske Transportation Solutions. Lower equity earnings from PTS were driven by lower commercial rental utilization, lower consumer rental revenue, that's one way, higher interest rates on average debt balances, and a lower gain from sale of used revenue earning equipment vehicles. partially offset by approved results in our full service leasing business and our distribution center logistics management business. Looking at corporate development during Q1, we added 24 automotive franchises, including 19 in our international markets and five in the U.S. Estimated annual acquired revenue is $1.1 billion. We also closed one car shop location in the U.S., In 2024 in April, we entered into an agreement to acquire two Porsche dealerships and one Ducati motorcycle dealership in Melbourne, Australia, which is expected to close in the second quarter of 2024, obviously subject to customary conditions. Let me now turn the attention to automotive operations. During the quarter, total automotive units delivered increased 4%, to 126,864 units, which includes 8,932 agency units in the UK. New units increased 6%, and used units increased 2%. We continue to take forward orders with pre-sold activity averaging between 10% and 20% in the US, depending on brand or region. And 36% of the new vehicles sold in the quarter In the US, we're at MSRP. While 87% of the BEVs sold in the quarter required significant discounting, we estimate 90% of the BEVs sold were leased. In the UK, the forward order book is healthy at 19,000 units versus 18,000 at the end of December and 22,000 at the same time last year. Same-store retail automotive revenue increased 1%. However, our service and parts increased 5%. Customer pay was up 5%. Warranty was up 6%. Our collision repair business was up 6%. It all continued to grow during the first quarter. Gross profit per new unit retail declined only $302 sequentially, while gross profit per used unit retail increased during the quarter sequentially when compared to Q4 last year. Let me now turn to Penske Transportation Solutions. At March 31st, PTS managed a fleet of over 442,000 trucks, tractors, and trailers compared to 418,000 at March 31st last year. Although the overall fleet size increased, we reduced our commercial rental fleet by 4,800 units during Q1 of 2024 due to lower utilization and a continued weak freight market. In Q1, PTS operating revenue increased 3% to 2.7 billion, full service contract revenue increased 12%, our logistics revenue increased 4%, but our rental revenue declined 13%. PGS generated net earnings of $112 million. Our share of the PGS earnings was $32.5 million, which declined by $48 million compared to Q1 last year. The decline in PGS earnings over the prior year was due to, number one, a $49 million increase in interest expense from higher rates related to bond refinancing and higher outstanding debt. a $66 million decline in the gain on sales of used trucks. We sold 11,667 used trucks in Q1 of 24 compared to 36,000 for all of 23 to expedite the disposal of older units. Our rental revenue fell 13% and utilization rate fell 310 basis points when compared to Q1 of 2023 as weak freight rates and lower one-way consumer rental demand. Higher maintenance costs of $12 million compared to Q1 last year, but importantly, the sequential increase was only $3 million as we continue to replace the older fleet and lease extensions. Our new units on order we have placed with various OEMs are down 50%. That's really from 60,000 to 30,000. with nearly 12,000 units currently for sale, compared to 8,400 at the end of March last year. As we look at Q2, we expect a sequential increase in earnings from PTS from the reduction in the rental fleet to 4,800, which improves utilization, coupled with new replacement vehicles and reducing maintenance expense. Let me turn it over to Rich Sherry now. Thank you.