Penske Automotive Group, Inc.

good afternoon welcome to the penske automotive group fourth quarter 2024 earnings conference call today's call is being recorded and will be available for replay approximately one hour after completion through february 20th 2025 on the company's website under the investors tab at www.penskeautomotive.com i will now introduce tony porden the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.

Thank you, Julianne. Good afternoon, everyone, and thank you for joining us today. A press release detailing Penske Automotive Group's fourth 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, Shelley Halgrave, EVP and chief financial officer, Rich Shearing, North American Operations, Randall Seymour, International Operations, and Tony Ficcione, who's 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 their most directly comparable GAAP measures in this morning's press release and investor presentation, both of 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 would now like to turn the call over to Roger Penske.

Thank you, Tony. Good afternoon, everyone, and thank you for joining us today. I'd like to begin by thanking each of our team members for their hard work and commitment to exceeding expectations through their efforts at PAG and delivered a strong fourth quarter and another outstanding year of profitability. During 2024, PAG delivered 491,000 new and used vehicles and over 20,500 new and used commercial trucks. We increased our revenue by 3% to $30.5 billion. We generated $1.24 billion in earnings before taxes, $919 million of net income, and earnings per share of $13.74. We continue to grow our business by completing acquisitions of $2.1 billion in expected annualized revenue, including expanding automotive operations in the U.S. and U.K., entering the retail automotive market in Australia with three Porsche dealerships and adding a strategic commercial truck location in Wisconsin. In our press release this morning, we announced the 17th consecutive increase in our quarterly dividend. The increase was $0.03 per share to $1.22 per share. Since the end of 23, We have increased our dividend by 54%. We maintain strong balance sheet and debt capitalization with ratios of 26.2 and leverage of 1.2x. Let's turn our attention to the latest quarter results. I'm very pleased with the financial performance during the quarter. Revenue increased 6% to a record $7.7 billion. New and used automotive gross profit per unit retailed remained strong, and overall gross margin was 16.3%, representing the sixth consecutive quarter of consistent gross margin. Our efforts to control costs drove a 70 basis point reduction when selling general and administrative expenses as a percentage of gross profit when compared to the fourth quarter last year, and a 90 basis points improvement sequentially when compared to the third quarter of 2024. In the fourth quarter of 2024, PAG generated 315 million in income before taxes, 236 million in net income, an income per share of $3.54. Income before taxes increased 23%, that income grew 24%, and earnings per share increased 25%. On an adjusted basis, income before taxes increased 6%, and income grew by 2%, and earnings per share increased by 3% when compared to last year. Looking at our retail auto business, we delivered 120,530 units during the quarter up nearly 3%. Our same-store units were flat. New units delivered increased 11%. Average new vehicle transaction price increased 5% to $60,288. Gross profit per new vehicle retail remained strong at $5,146 and increased sequentially by $74 from the third quarter of 2024 and remained nearly 2,000 higher in 2019. Used units declined 6%. Gross profit for vehicle retail increased $349 quarter over quarter. The unit decline is associated with the disposal of three UK car shop locations as we transition the UK-based car shop location to Sitner Select in 2024. The Sitner Select dealerships sell fewer units, which contributed to the 6% decline in used vehicles retail during the fourth quarter. Excluding Sitner Select, dealerships in both period used vehicles retail would have increased 8%. Variable gross profit per unit retail was $5,319, representing a $60 per unit increase versus Q4 23, and a sequential increase of 203 when compared to the third quarter of 24. Approximately one half of our gross profit is derived from our service and parts business. As we look to continue growing this important part of our business, we've increased our technician count by 7% during 2024, and our effective labor rate in the US has increased 6%. In the quarter, service and parts revenue increased 13%, to $771 million, including 7% on a same-store basis, with customer pay up 3%, warranty up 24%, and collision repair up 4%. Fixed absorption in the US increased 320 basis points to 87.5%. In the US, the average age of vehicle service is 6.1 years, up from 5.5 in 2019. The average miles on a vehicle service was 69,000. Let me now turn it over to Rich Shearing.