Penske Automotive Group, Inc.

Good afternoon. Welcome to the Penske Automotive Group second quarter 2025 earnings conference call. Today's call is being recorded and will be available for replay approximately one hour after completion through August 6th, 2025 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, Julianne. Good afternoon, everyone, and thank you for joining us today. A press release detailing Penske Automotive Group's second quarter 2025 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, Chair and CEO, Shelly Holgrave, EVP and Chief Financial Officer, Rich Shearing, North American Operations, Randall Seymour, International Operations, and Tony Piccioni, our Vice President, 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 as defined under SEC rules, such as earnings before interest, taxes, depreciation, and amortization, or EBITDA, adjusted net income, adjusted earnings per share, adjusted selling, general, and administration expenses and our leverage ratio. We have prominently presented the comparable gap measures and have reconciled the non-gap measures to the most directly comparable gap measures in this morning's press release and investor presentation. both of which are available again 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 results to differ materially from expectations. I will now turn the call over to Roger Penske.

Thank you, Tony. Good afternoon, everyone. I'm really pleased with the performance of our diversified international transportation service business in the second quarter. Our revenue was $7.7 billion, which was consistent with Q2 last year. Our Q2 revenue was impacted by strategic divestitures of dealership closures made since quarter two in 2024, representing approximately $200 million in revenue. EBT increased 4%, our net income increased 4%, and earnings per share increased 5% when compared to the second quarter of 2024. Q2 represented our third consecutive quarter of year-over-year earnings growth, and we generated $337 million of income before taxes, $250 million in net income, and $3.78 per share. Our EBT margin increased 20 basis points to 4.4% when compared to Q2 last year. The second quarter performance was highlighted by a 9% increase in same-store retail automotive service and parts gross profit and a 50 basis point increase in service and parts gross margin. Also an increase in fixed cost absorption of 330 basis points in the U.S. and 30 basis points in the U.K. Our gross profit increased to $1.3 billion, which compares to $868 million in Q2 in 2019. The company gross profit margin increased 50 basis points to 16.9%, representing the eighth consecutive quarter of strong and stable gross margin. New and used vehicle grosses increased $141 in the quarter for new, and $384 sequentially. Used grosses increased $504 per unit for the quarter, and $177 sequentially. New and used vehicle gross and F&I combined, or what we call variable gross profit, increased $583 per unit, or 11%. to $5,691. Our focus on controlling costs such as advertising compensation as a percentage of gross profit help drive selling general administrative expenses as a percentage of gross profit or SG&A to 69.9%, a 30 basis point improvement. As we look at the current environment, we are encouraged by the recent trade agreements. In fact, the recent agreement with the EU is expected to provide benefits to two of our largest partners that should benefit from the agreement by exporting U.S. production. We've seen some OEMs increase prices modestly, while others have extended during the current pricing. The situation remains fluid. We remain close in close contact with our OEM partners. I think our diversification is a key differentiator as approximately 61% of our revenue is generated in North America, 29% in the UK, and 10% from other international markets. PAG's premium brand mix are present in the U.S., and international automotive markets, our North American retail, commercial truck dealerships, and earnings from Penske Transportation Solutions, coupled with our highly variable cost structure, provide us with opportunities to flex our business to meet the changing automotive and commercial truck landscape. Let me now turn it over to Rich Shearing, who handles our North American operations. Rich?