PENSKE AUTOMOTIVE GROUP INC

Previous wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, and Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and those in our other periodic reports filed with the Securities and Exchange Commission, and "Forward-Looking Statements." We have acquired and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

Current wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and those in our other periodic reports filed with the Securities and Exchange Commission, and "Forward-Looking Statements." We have acquired and initiated a number of businesses during the periods presented and addressed in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Our financial statements include the results of operations of those businesses from the date acquired or when they commenced operations. Our period-to-period results of operations may vary depending on the dates of acquisitions or disposals.

Previous wording

We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. We employ over 28,850 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs over 44,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 446,000 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Current wording

We are a diversified international transportation services company and one of the world's premier automotive and commercial truck retailers. We operate dealerships in the United States, the United Kingdom, Canada, Germany, Italy, Japan, and Australia, and we are one of the largest retailers of commercial trucks in North America for Freightliner. We also distribute and retail commercial vehicles, diesel and gas engines, power systems, and related parts and services principally in Australia and New Zealand. We employ over 28,950 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs over 44,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 442,000 trucks, tractors, and trailers under lease, rental, and/or maintenance contracts, and provides innovative transportation, supply chain, and technology solutions to its customers.

Previous wording

During the six months ended June 30, 2024, our business generated $15.1 billion in total revenue, which is comprised of approximately $13.1 billion from retail automotive dealerships, $1.7 billion from retail commercial truck dealerships, and $367.0 million from commercial vehicle distribution and other operations. We generated $2.5 billion in gross profit, which is comprised of $2.1 billion from retail automotive dealerships, $289.3 million from retail commercial truck dealerships, and $87.8 million from commercial vehicle distribution and other operations.

Current wording

During the nine months ended September 30, 2024, our business generated $22.7 billion in total revenue, which is comprised of approximately $19.4 billion from retail automotive dealerships, $2.7 billion from retail commercial truck dealerships, and $553.8 million from commercial vehicle distribution and other operations. We generated $3.8 billion in gross profit, which is comprised of $3.2 billion from retail automotive dealerships, $446.4 million from retail commercial truck dealerships, and $132.4 million from commercial vehicle distribution and other operations.

Previous wording

Retail Automotive. We are one of the largest global automotive retailers as measured by the $25.2 billion in total retail automotive dealership revenue we generated in 2023. We are diversified geographically with 54% of our total retail automotive dealership revenues in the six months ended June 30, 2024, generated in the U.S. and Puerto Rico and 46% generated outside of the U.S. We offer over 40 vehicle brands with 72% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche, in the six months ended June 30, 2024. As of June 30, 2024, we operated 362 retail automotive franchised dealerships, of which 152 are located in the U.S. and 210 are located outside of the U.S. The franchised dealerships outside of the U.S. are located primarily in the U.K. As of June 30, 2024, we also operated 18 used vehicle dealerships, with six dealerships in the U.S., 11 dealerships in the U.K., and one dealership in Australia. We retailed and wholesaled, including agency units, more than 308,000 vehicles in the six months ended June 30, 2024.

Current wording

Retail Automotive. We are one of the largest global automotive retailers as measured by the $25.2 billion in total retail automotive dealership revenue we generated in 2023. We are diversified geographically with 55% of our total retail automotive dealership revenues in the nine months ended September 30, 2024, generated in the U.S. and Puerto Rico and 45% generated outside of the U.S. We offer over 40 vehicle brands with 72% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche, in the nine months ended September 30, 2024. As of September 30, 2024, we operated 360 retail automotive franchised dealerships, of which 149 are located in the U.S. and 211 are located outside of the U.S. The franchised dealerships outside of the U.S. are located primarily in the U.K. As of September 30, 2024, we also operated 16 used vehicle dealerships, with six dealerships in the U.S., nine dealerships in the U.K., and one dealership in Australia. We retailed and wholesaled, including agency units, more than 450,000 vehicles in the nine months ended September 30, 2024.

Previous wording

During the six months ended June 30, 2024, we acquired 16 retail automotive franchises and opened one retail automotive franchise in the U.K., acquired one Ford dealership and one Chrysler/Dodge/Jeep/Ram dealership in the U.S., acquired two retail automotive franchises in Italy, and acquired two retail automotive franchises and one used vehicle dealership in Australia. In the U.S., we closed one retail automotive franchise and one used vehicle dealership, and in the U.K., we closed one used vehicle dealership. Retail automotive dealerships represented 86.5% of our total revenues and 85.0% of our total gross profit in the six months ended June 30, 2024. In July 2024, we also acquired one Ford dealership in the U.S. and divested three of our U.K. CarShop locations, and we have transitioned our remaining U.K. CarShop locations to Sytner Select dealerships, having incorporated them within the broader Sytner network.

Current wording

During the nine months ended September 30, 2024, we acquired 16 retail automotive franchises and opened one retail automotive franchise in the U.K., acquired two Ford franchises and one Chrysler/Dodge/Jeep/Ram dealership in the U.S., acquired two retail automotive franchises in Italy, acquired two retail automotive franchises and one used vehicle dealership in Australia, and opened one retail automotive franchise in Germany. In the U.S., we closed one Jaguar franchise, one Chrysler/Dodge/Jeep/Ram dealership, and one used vehicle dealership, and in the U.K., we closed one used vehicle dealership and sold two used vehicle dealerships. In July 2024, we transitioned our remaining U.K. CarShop locations to Sytner Select dealerships, incorporating them within the broader Sytner network. Retail automotive dealerships represented 85.5% of our total revenues and 84.6% of our total gross profit in the nine months ended September 30, 2024. In October 2024, we signed an agreement to acquire a third Porsche dealership in Melbourne, Australia, subject to customary closing conditions. This dealership will be acquired from Porsche Retail Group Australia Pty Ltd. and will complement the two Porsche dealerships we acquired in Melbourne during the second quarter of 2024.

Previous wording

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 11 U.S. states and the Canadian provinces of Ontario and Manitoba. During the six months ended June 30, 2024, we acquired three full-service dealerships and two independent repair facilities in the U.S. As of June 30, 2024, PTG operated 48 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 9,910 new and used trucks in the six months ended June 30, 2024. This business represented 11.1% of our total revenues and 11.5% of our total gross profit in the six months ended June 30, 2024.

Current wording

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty truck dealership group offering primarily Freightliner and Western Star trucks (both Daimler brands), with locations across 11 U.S. states and the Canadian provinces of Ontario and Manitoba. During the nine months ended September 30, 2024, we acquired three full-service dealerships and two independent repair facilities in the U.S., and we closed two locations in the U.S. As of September 30, 2024, PTG operated 46 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 16,378 new and used trucks in the nine months ended September 30, 2024. This business represented 12.1% of our total revenues and 11.9% of our total gross profit in the nine months ended September 30, 2024.

Previous wording

On June 19, 2024, we became aware that CDK Global, LLC (“CDK”), a third-party provider of information systems, including dealer management software systems (“DMS”) to support retail automotive and commercial truck dealership operations, was experiencing a cybersecurity incident and its systems were rendered inoperable (the “CDK Cybersecurity Incident”). Although we do not utilize CDK's DMS in our U.S. or international automotive dealership operations, our Premier Truck Group business does utilize CDK’s dealer management system and was impacted by the CDK Cybersecurity Incident. On June 19 th, we immediately took precautionary containment steps to protect our systems and commenced an investigation of the incident. PTG implemented its business continuity response plans and continued to operate without the DMS at all locations through manual or alternate processes developed to respond to such incidents. On July 2, PTG was able to reconnect all of its locations to CDK’s DMS servers and restore core functionality of the software platform. However, key industry partners, such as Daimler Truck North America, did not immediately reconnect to the CDK systems at that time. Certain ancillary systems and integrations remain unavailable or limited, and efforts remain ongoing to restore these.

Current wording

On June 19, 2024, we became aware that CDK Global, LLC (“CDK”), a third-party provider of information systems, including dealer management software systems (“DMS”) to support retail automotive and commercial truck dealership operations, was experiencing a cybersecurity incident and its systems were rendered inoperable (the “CDK Cybersecurity Incident”). Although we do not utilize CDK's DMS in our U.S. or international automotive dealership operations, our Premier Truck Group business does utilize CDK’s dealer management system and was impacted by the CDK Cybersecurity Incident. On June 19 th, we immediately took precautionary containment steps to protect our systems and commenced an investigation of the incident. PTG implemented its business continuity response plans and continued to operate without the DMS at all locations through manual or alternate processes developed to respond to such incidents. On July 2, PTG was able to reconnect all of its locations to CDK’s DMS servers and restore core functionality of the software platform. However, key industry partners, such as Daimler Truck North America, did not immediately reconnect to the CDK systems at that time. Full connectivity and functionality of the CDK systems were completed in the third quarter. We intend to make a claim for our losses in connection with the CDK cybersecurity event from our cybersecurity carrier although any amounts ultimately recovered remains uncertain.

Previous wording

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 2.4% of our total revenues and 3.5% of our total gross profit in the six months ended June 30, 2024.

Current wording

Penske Australia. Penske Australia is the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy- and medium-duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand, and portions of the Pacific. In most of these same markets, we are also a leading distributor of diesel and gas engines and power systems, principally representing MTU (a Rolls-Royce solution), Detroit Diesel, Allison Transmission, and Bergen Engines. Penske Australia offers products across the on- and off-highway markets, including in the trucking, mining, power generation, defense, marine, rail, and construction sectors and supports full parts and aftersales service through a network of branches, field service locations, and dealers across the region. These businesses represented 2.4% of our total revenues and 3.5% of our total gross profit in the nine months ended September 30, 2024.

Previous wording

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various business lines through which it is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, freight management, and dry van truckload carrier services. We recorded $85.4 million and $154.1 million in equity earnings from this investment for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Penske Transportation Solutions. We hold a 28.9% ownership interest in Penske Truck Leasing Co., L.P. ("PTL"). PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30.0% by Mitsui & Co., Ltd. ("Mitsui"). We account for our investment in PTL under the equity method, and we therefore record our share of PTL's earnings on our statements of income under the caption "Equity in earnings of affiliates," which also includes the results of our other equity method investments. Penske Transportation Solutions ("PTS") is the universal brand name for PTL's various business lines through which it is capable of meeting customers' needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental, and contract maintenance along with logistics services, such as dedicated contract carriage, distribution center management, freight management, and dry van truckload carrier services. We recorded $145.7 million and $238.3 million in equity earnings from this investment for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Cybersecurity Incident discussed above. Our new vehicle days' supply is 52 as of June 30, 2024, compared to 39 as of December 31, 2023, as the supply of new vehicle inventory continues to increase. Our used vehicle days' supply is 40 as of June 30, 2024, compared to 48 as of December 31, 2023, and is being impacted by a lower supply of 1-4 year old used vehicles as a result of the lower number of new vehicles sold in recent years and fewer lease returns in the U.S. As a reference, our new and used days' supply was 71 and 52, respectively, as of December 31, 2019 (pre-COVID). While we continue to expect increasing new vehicle availability, production disruptions and supply shortages could result in suppressed new and used vehicle sales volumes, which would impact the availability and affordability of new and used vehicles. As the supply of new vehicles has improved, we have experienced, and may continue to experience, reduced new and used vehicle gross profit. The U.S. Environmental Protection Agency, as well as several U.S. states, have adopted emissions limits on new vehicles which are designed to incent adoption of electric or other zero-emissions vehicles. New vehicle sales levels could be impacted by affordability challenges, inflation, higher interest rates, regulatory mandates, or a reduction in consumer spending resulting in decreased demand. The unavailability of quality, low-mileage used vehicles for sale may adversely impact our used vehicle operations.

Current wording

Retail Automotive. During the nine months ended September 30, 2024, U.S. industry new light vehicle sales increased 0.7%, to 11.7 million units, including a 1.3% increase in retail sales and partially offset by a 3.2% decrease in fleet sales, as compared to the same period last year. U.K. new vehicle registrations increased 4.3% to 1.5 million registrations, including a 16.3% increase in fleet sales and partially offset by a 9.4% decrease in retail sales, as compared to the same period last year. New vehicle sales are being positively impacted by continued strong consumer demand, manufacturer incentives, and government incentives on electric vehicles. Our new vehicle days' supply is 53 as of September 30, 2024, compared to 39 as of December 31, 2023, including vehicles which are unable to be sold due to open recalls. Our used vehicle days' supply is 43 as of September 30, 2024, compared to 48 as of December 31, 2023, and is being impacted by a lower supply of 1-4 year old used vehicles as a result of the lower number of new vehicles sold in recent years and fewer lease returns in the U.S. As a reference, our new and used days' supply was 71 and 52, respectively, as of December 31, 2019 (pre-COVID). As the supply of new vehicles has improved, we have experienced, and may continue to experience, reduced new and used vehicle gross profit. The regulatory authorities in our markets have adopted emissions limits on new vehicles which are designed to incent adoption of electric or other zero-emissions vehicles. New vehicle sales levels could be impacted by these regulatory mandates as well as affordability challenges, inflation, interest rates, or a reduction in consumer spending resulting in decreased demand. The unavailability of 1-4 year old quality, low-mileage used vehicles for sale may adversely impact our used vehicle operations.

Previous wording

Representatives of the U.K. government have proposed a ban on the sale of gasoline engines and gasoline hybrid engines in new cars and new vans that may take effect as early as 2030 while also providing government incentives on certain electric vehicles to entice consumers to transition from internal combustion vehicles to electric vehicles. In part due to these incentives, in the U.K. new registrations of electric vehicles, excluding hybrid, represented 16.6% of the overall market for the six months ended June 30, 2024, compared to 16.1% for the same period last year, and represented 22.1% of our U.K. new unit sales, compared with 20.0% over the same prior year period. In the U.S., sales of electric vehicles increased 7.3% to 0.6 million units as compared to the same period last year. Electric Vehicle sales represented 8.0% of the overall U.S. market for the six months ended June 30, 2024, compared to 7.2% for the same period last year. During the six months ended June 30, 2024, 4.4% of new vehicle sales in the U.S., and 2.3% of the new vehicle sales in the U.K., were sold by vehicle manufacturers directly to consumers outside of the retail automotive franchised system, principally consisting of one manufacturer.

Current wording

Representatives of the U.K. government have proposed a ban on the sale of internal combustion engines in new cars and new vans that may take effect as early as 2030 while also providing government incentives on certain electric vehicles to entice consumers to transition from internal combustion vehicles to electric vehicles. In part due to these incentives, U.K. new registrations of electric vehicles, excluding hybrid, represented 17.8% of the overall market for the nine months ended September 30, 2024, compared to 16.4% for the same period last year, and represented 22.4% of our U.K. new unit sales, compared with 21.1% over the same prior year period. In the U.S., sales of electric vehicles increased 8.7% to 0.9 million units as compared to the same period last year. Electric Vehicle sales represented 8.1% of the overall U.S. market for the nine months ended September 30, 2024, compared to 7.5% for the same period last year. During the nine months ended September 30, 2024, 4.4% of new vehicle sales in the U.S., and 2.4% of the new vehicle sales in the U.K., were sold by vehicle manufacturers directly to consumers outside of the retail automotive franchised system, principally consisting of one manufacturer. We also expect continued strong demand for our service and parts operations driven by increases in demand for warranty work in light of increasing vehicle sales in recent years, recall campaigns, miles driven, and vehicle complexity, as well as continued strong demand for customer pay work.

Previous wording

Retail Commercial Truck Dealership. During the six months ended June 30, 2024, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 8.1% from the same period last year to 223,991 units, primarily due to increased deliveries in 2023 as a result of deliveries expected in 2022 being delayed into 2023 due to supply constraints. The Class 6-7 medium-duty truck market decreased 6.8% from the same period last year to 73,033 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 8.7% from the same period last year to 150,958 units. We expect replacement demand to continue throughout 2024, although a continued weak freight market may impact unit sales and service and parts demand. As of June 30, 2024, the Class 6-8 medium- and heavy-duty truck backlog is 215,156 units according to data published by ACT Research. In April 2024, a Freightliner truck supplier experienced a fire at its facility, which impacted the timing of vehicle deliveries to us. When the supply of commercial trucks improves to historical levels, we may experience reduced new and used commercial truck gross profit per unit together with higher sales volumes.

Current wording

Retail Commercial Truck Dealership. During the nine months ended September 30, 2024, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 5.0% from the same period last year to 348,960 units, primarily due to increased deliveries in 2023 as a result of deliveries expected in 2022 being delayed into 2023 due to supply constraints as well as continued lower freight rates in the U.S. The Class 6-7 medium-duty truck market decreased 2.9% from the same period last year to 115,275 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 6.1% from the same period last year to 233,685 units. We expect replacement demand to continue throughout 2024, although a continued weak freight market may impact unit sales and service and parts demand. As of September 30, 2024, the Class 6-8 medium- and heavy-duty truck backlog is 190,602 units according to data published by ACT Research. When the supply of commercial trucks improves to historical levels, we may experience reduced new and used commercial truck gross profit per unit together with higher sales volumes. As freight rates remain low, we expect service and parts to remain impacted by miles driven or use of the vehicle in service.

Previous wording

Commercial Vehicle Distribution and Other. During the six months ended June 30, 2024, the Australian heavy-duty truck market reported sales of 8,769 units, representing an increase of 0.4% from the same period last year, while the New Zealand market reported sales of 1,929 units, representing a decrease of 2.9% from the same period last year. Additionally, our power system operations continue to grow through sales in the off-highway segments such as energy solutions which provide power systems for large data centers, mining, and military applications.

Current wording

Commercial Vehicle Distribution and Other. During the nine months ended September 30, 2024, the Australian heavy-duty truck market reported sales of 12,858 units, representing an increase of 1.6% from the same period last year, while the New Zealand market reported sales of 2,810 units, representing a decrease of 8.6% from the same period last year. Additionally, our power system operations continue to grow through sales in the off-highway segments such as energy solutions which provide power systems for large data centers, mining, and military applications.

Previous wording

Penske Transportation Solutions. A majority of PTS' revenue is generated by multi-year contracts for full-service leasing, contract maintenance, and logistics services. PTS also rents additional trucks to commercial customers in response to demand for freight as well as consumer customers. With a managed fleet of over 446,000 vehicles at June 30, 2024, PTS regularly sells trucks in order to maintain a low fleet age as well as in response to changes in demand for truck leasing and records a gain or loss on those sales. For 2024, PTS also expects continued demand for its full-service leasing business and lower gain on sale of used trucks as PTS continues to optimize its fleet size to help reduce operating costs while improving utilization.

Current wording

Penske Transportation Solutions. A majority of PTS' revenue is generated by multi-year contracts for full-service leasing, contract maintenance, and logistics services. PTS also rents additional trucks to commercial customers in response to demand for freight as well as consumer customers. With a managed fleet of over 442,000 vehicles at September 30, 2024, PTS regularly sells trucks in order to maintain a low fleet age as well as in response to changes in demand for truck leasing and records a gain or loss on those sales. For 2024, PTS also expects continued demand for its full-service leasing business and lower gain on sale of used trucks as PTS continues to optimize its fleet size to help reduce operating costs while improving utilization.

Previous wording

As described in "Forward-Looking Statements," there are a number of factors that could cause actual results to differ materially from our expectations, including those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, and Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and our other periodic reports filed with the Securities and Exchange Commission.

Current wording

As described in "Forward-Looking Statements," there are a number of factors that could cause actual results to differ materially from our expectations, including those discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and our other periodic reports filed with the Securities and Exchange Commission.

Previous wording

Automotive and commercial truck dealerships represent 97.6% of our revenue and 82.4% of our earnings before taxes during the six months ended June 30, 2024. Income from our PTS investment represents 13.8% of our earnings before taxes during the six months ended June 30, 2024. New and used vehicle revenues typically include sales to retail customers, agency customers, fleet customers, and leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories as well as warranty repairs that are reimbursed directly by various vehicle manufacturers.

Current wording

Automotive and commercial truck dealerships represent 97.6% of our revenue and 80.6% of our earnings before taxes during the nine months ended September 30, 2024. Income from our PTS investment represents 15.8% of our earnings before taxes during the nine months ended September 30, 2024. New and used vehicle revenues typically include sales to retail customers, agency customers, fleet customers, and leasing companies providing consumer leasing. We generate finance and insurance revenues from sales of third-party extended service contracts, sales of third-party insurance policies, commissions relating to the sale of finance and lease contracts to third parties, and the sales of certain other products. Service and parts revenues include fees paid by customers for repair, maintenance and collision services, and the sale of replacement parts and other aftermarket accessories as well as warranty repairs that are reimbursed directly by various vehicle manufacturers.

Previous wording

Our gross profit tends to vary with the mix of revenues we derive from the sale of new vehicles, used vehicles, finance and insurance products, and service and parts transactions. Our gross profit varies across product lines with vehicle sales usually resulting in lower gross profit margins and our other revenues resulting in higher gross profit margins. Factors such as inventory and vehicle availability, customer demand, consumer confidence, unemployment, general economic conditions, seasonality, weather, credit availability, fuel prices, and manufacturers' advertising and incentives also impact the mix of our revenues and therefore, influence our gross profit margin. The results of our commercial vehicle distribution and other business in Australia and New Zealand are principally driven by the number and types of products and vehicles ordered by our customers. Aggregate revenue and gross profit increased $228.2 million, or 3.1%, and decreased $8.9 million, or 0.7%, respectively, during the three months ended June 30, 2024, and increased $337.0 million, or 2.3%, and decreased $16.0 million, or 0.6%, respectively, during the six months ended June 30, 2024, compared to the same periods in 2023.

Current wording

Our gross profit tends to vary with the mix of revenues we derive from the sale of new vehicles, used vehicles, finance and insurance products, and service and parts transactions. Our gross profit varies across product lines with vehicle sales usually resulting in lower gross profit margins and our other revenues resulting in higher gross profit margins. Factors such as inventory and vehicle availability, customer demand, consumer confidence, unemployment, general economic conditions, seasonality, weather, credit availability, fuel prices, and manufacturers' advertising and incentives also impact the mix of our revenues and therefore, influence our gross profit margin. The results of our commercial vehicle distribution and other business in Australia and New Zealand are principally driven by the number and types of products and vehicles ordered by our customers. Aggregate revenue and gross profit increased $143.0 million, or 1.9%, and increased $22.8 million, or 1.9%, respectively, during the three months ended September 30, 2024, and increased $480.0 million, or 2.2%, and increased $6.8 million, or 0.2%, respectively, during the nine months ended September 30, 2024, compared to the same periods in 2023.

Previous wording

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. Dollars fluctuate. For example, if the British Pound were to weaken against the U.S. Dollar, our U.K. results of operations would translate into less U.S. Dollar reported results. Foreign currency average rate fluctuations decreased revenue and gross profit by $0.8 million and $0.7 million, respectively, for the three months ended June 30, 2024, and increased revenue and gross profit by $97.3 million and $12.5 million, respectively, for the six months ended June 30, 2024. Foreign currency average rate fluctuations had no impact on earnings per share for the three months ended June 30, 2024, and increased earnings per share by approximately $0.01 per share for the six months ended June 30, 2024. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit increased 3.1% and decreased 0.6%, respectively, for the three months ended June 30, 2024, when compared to the same period last year, and increased 1.6% and decreased 1.1%, respectively, for the six months ended June 30, 2024, when compared to the same period last year.

Current wording

As exchange rates fluctuate, our revenue and results of operations as reported in U.S. Dollars fluctuate. For example, if the British Pound were to weaken against the U.S. Dollar, our U.K. results of operations would translate into less U.S. Dollar reported results. Foreign currency average rate fluctuations increased revenue and gross profit by $69.0 million and $10.5 million, respectively, for the three months ended September 30, 2024, and increased revenue and gross profit by $166.2 million and $23.0 million, respectively, for the nine months ended September 30, 2024. Foreign currency average rate fluctuations increased earnings per share by approximately $0.03 for the three months ended September 30, 2024, and increased earnings per share by approximately $0.04 per share for the nine months ended September 30, 2024. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit increased 1.0% and increased 1.0%, respectively, for the three months ended September 30, 2024, when compared to the same period last year, and increased 1.4% and decreased 0.4%, respectively, for the nine months ended September 30, 2024, when compared to the same period last year.

Previous wording

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on new and used vehicle sales, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG, personal discretionary spending levels, interest rates, and unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, the shortage of vehicle components, international conflicts, including the war in Ukraine, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; changes in the retail model either from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors, or from the expansion of electric vehicles; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber-attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate, integrate, and realize returns on acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes, or work stoppages by its employees, a reduction in PTS' asset utilization rates, continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, changes in values of used trucks which affects PTS' profitability on truck sales and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehicles sales, including those related to the sales process or emissions standards, as well as changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate trucks; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; the outcome of legal and administrative matters, and other factors over which management has limited control. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, an…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The future success of our business is dependent upon, among other things, macro-economic, geo-political, and industry conditions and events, including their impact on new and used vehicle sales, the availability of consumer credit, changes in consumer demand, consumer confidence levels, fuel prices, demand for trucks to move freight with respect to PTS and PTG, personal discretionary spending levels, interest rates, unemployment rates; our ability to obtain vehicles and parts from our manufacturers, especially in light of supply chain disruptions due to natural disasters, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; changes in the retail model either from direct sales by manufacturers, a transition to an agency model of sales, sales by online competitors or from the expansion of electric vehicles; disruptions to the security and availability of our information technology systems and those of our third party providers, which systems are increasingly threatened by ransomware and other cyber-attacks; the effects of a pandemic on the global economy, including our ability to react effectively to changing business conditions in light of any pandemic; the rate of inflation, including its impact on vehicle affordability; changes in interest rates and foreign currency exchange rates; our ability to consummate, integrate, and realize returns on acquisitions; with respect to PTS, changes in the financial health of its customers, labor strikes, or work stoppages by its employees, a reduction in PTS' asset utilization rates, continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, changes in values of used trucks which affects PTS' profitability on truck sales and regulatory risks and related compliance costs; our ability to realize returns on our significant capital investments in new and upgraded dealership facilities; our ability to navigate a rapidly changing automotive and truck landscape; our ability to respond to new or enhanced regulations in both our domestic and international markets relating to dealerships and vehicles sales, including those related to the sales process or emissions standards, as well as changes in consumer sentiment relating to commercial truck sales that may hinder our or PTS' ability to maintain, acquire, sell, or operate trucks; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters; recall initiatives or other disruptions that interrupt the supply of vehicles or parts to us; the outcome of legal and administrative matters, and other factors over which management has limited control. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and Part II, Item 1A…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Retail unit deliveries of new vehicles increased from 2023 to 2024 due to a 4,886 unit increase from net dealership acquisitions, coupled with a 707 unit, or 0.6%, increase in same-store new retail unit deliveries. Same-store retail units delivered increased 3.9% in the U.S. and decreased 3.3% internationally. Overall, new retail unit deliveries increased 4.8% in the U.S. and increased 5.1% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to continued consumer demand for new vehicles and increasing new vehicle availability, coupled with the pent-up demand resulting from lower vehicle availability in prior years. We believe the decrease in same-store unit sales internationally is due to limited availability of certain premium brands during the quarter, partially offset by an increase in electric and hybrid fleet vehicle sales due to government incentives.

Current wording

Retail unit deliveries of new vehicles increased from 2023 to 2024 due to a 3,971 unit increase from net dealership acquisitions, partially offset by a 913 unit, or 1.6%, decrease in same-store new retail unit deliveries. Same-store retail units delivered decreased 2.8% in the U.S. and decreased 0.1% internationally. Overall, new retail unit deliveries increased 1.4% in the U.S. and increased 10.7% internationally. We believe the decrease in same-store unit sales is due to limited availability of certain premium brands during the quarter as a result of product recalls initiated by certain manufacturers which must be completed prior to vehicle sales, partially offset by an increase in electric and hybrid fleet vehicle sales due to government incentives.

Previous wording

New vehicle sales revenue increased from 2023 to 2024 due to a $234.4 million increase from net dealership acquisitions, coupled with a $22.6 million, or 0.4%, increase in same-store revenues. Excluding $31.1 million of favorable foreign currency fluctuations, same-store new revenue decreased 0.2%. Same-store revenue (excluding agency) increased due to a $914 per unit increase in same-store comparative average retail selling price (including a $317 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $87.5 million, partially offset by the decrease in same-store new retail unit sales, which decreased revenue by $76.2 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to the increased costs of acquiring vehicles from the manufacturer.

Current wording

New vehicle sales revenue increased from 2023 to 2024 due to a $183.7 million increase from net dealership acquisitions, partially offset by a $36.2 million, or 1.3%, decrease in same-store revenues. Excluding $25.5 million of favorable foreign currency fluctuations, same-store new revenue decreased 2.3%. Same-store revenue (excluding agency) decreased due to the decrease in same-store new retail unit sales, which decreased revenue by $89.9 million, partially offset by a $1,127 per unit increase in same-store comparative average retail selling price (including a $537 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $52.1 million. We believe the increase in same-store comparative average retail selling price (excluding agency) is primarily due to changes in the mix of higher-priced units sold and the increased costs of acquiring vehicles from the manufacturer.

Previous wording

Retail gross profit from new vehicle sales decreased from 2023 to 2024 due to a $101.9 million, or 15.9%, decrease in same-store gross profit, partially offset by a $24.7 million increase from net dealership acquisitions. Excluding $2.8 million of favorable foreign currency fluctuations, same-store gross profit decreased 16.3%. Same-store gross profit (excluding agency) decreased due to a $1,055 per unit decrease in same-store comparative average gross profit (despite a $21 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $101.0 million, coupled with the decrease in same-store new retail sales, which decreased retail gross profit by $8.5 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to an improved supply of many of the new vehicles we sell and the mix of sales. We believe the resulting compression on gross margin is due to higher gross profit realized in the prior year as vehicle supply was constrained, coupled with higher consumer financing costs impacting affordability and a more competitive environment due to higher inventory levels.

Current wording

Retail gross profit from new vehicle sales decreased from 2023 to 2024 due to a $41.0 million, or 13.9%, decrease in same-store gross profit, partially offset by a $19.1 million increase from net dealership acquisitions. Excluding $2.7 million of favorable foreign currency fluctuations, same-store gross profit decreased 14.8%. Same-store gross profit (excluding agency) decreased due to a $750 per unit decrease in same-store comparative average gross profit (despite a $44 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $34.6 million, coupled with the decrease in same-store new retail sales, which decreased retail gross profit by $9.2 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to an improved supply of many of the new vehicles we sell and the mix of sales. We believe the resulting compression on gross margin is due to higher gross profit realized in the prior year as vehicle supply was constrained, coupled with affordability concerns and a more competitive environment due to higher inventory levels.

Previous wording

Retail unit sales of used vehicles increased from 2023 to 2024 due to a 2,346 unit increase from net dealership acquisitions, partially offset by a 732 unit, or 0.6%, decrease in same-store used retail unit sales. Our same-store units increased 2.3% in the U.S. and decreased 2.8% internationally. Overall, our used units increased 2.5% in the U.S. and increased 0.3% internationally. Same-store unit sales are being impacted by a lower supply of 1-4 year old used vehicles due to the fewer number of new vehicles sold in recent years, lower lease returns particularly in the U.S., and high interest rates impacting the affordability of used vehicles.

Current wording

Retail unit sales of used vehicles decreased from 2023 to 2024 due to a 7,694 unit, or 12.5%, decrease in same-store used retail unit sales, coupled with a 577 unit decrease from net dealership dispositions. Our same-store units decreased 4.4% in the U.S. and decreased 19.5% internationally. Overall, our used units decreased 2.8% in the U.S. and decreased 20.1% internationally. Same-store unit sales are being impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships which sell fewer units as well as a lower supply of 1-4 year old used vehicles due to the fewer number of new vehicles sold in recent years and lower lease returns particularly in the U.S. Excluding these U.K. Sytner Select dealerships from both periods, overall used vehicles retailed increased 0.6% and same-store used units decreased 4.3%.

Previous wording

Used vehicle retail sales revenue decreased from 2023 to 2024 due to a $156.6 million, or 3.5%, decrease in same-store revenues, partially offset by a $141.2 million increase from net dealership acquisitions. Excluding $53.5 million of favorable foreign currency fluctuations, same-store used retail revenue decreased 4.6%. The decrease in same-store revenue is due to a $1,023 per unit decrease in same-store comparative average selling price (despite a $418 per unit increase attributable to favorable foreign currency fluctuations), which decreased revenue by $130.8 million, coupled with the decrease in same-store used retail unit sales, which decreased revenue by $25.8 million. We believe the decrease in same-store comparative average selling price is primarily due to the decrease in used vehicle acquisition costs when compared to the same period last year.

Current wording

Used vehicle retail sales revenue decreased from 2023 to 2024 due to a $256.5 million, or 11.5%, decrease in same-store revenues, partially offset by a $58.3 million increase from net dealership acquisitions. Excluding $25.1 million of favorable foreign currency fluctuations, same-store used retail revenue decreased 12.7%. The decrease in same-store revenue is due to the decrease in same-store used retail unit sales, which decreased revenue by $278.2 million, partially offset by a $403 per unit increase in same-store comparative average selling price (including a $467 per unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $21.7 million. We believe the decrease in same-store comparative average selling price, excluding favorable foreign currency, is primarily due to the decrease in used vehicle acquisition costs when compared to the same period last year.

Previous wording

Finance and insurance revenue decreased from 2023 to 2024 due to a $13.0 million, or 3.1%, decrease in same-store revenue, partially offset by a $6.8 million increase from net dealership acquisitions. Excluding $3.5 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 4.0%. Same-store revenue (excluding agency) decreased due to a $46 per unit decrease in same-store comparative average finance and insurance retail revenue (despite a $15 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased revenue by $10.3 million, coupled with the decrease in combined same-store new and used retail unit sales, which decreased revenue by $3.8 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 1.8% in the U.S. and decreased 5.8% in the U.K. We believe the decrease in same-store finance and insurance revenue per unit (excluding agency) is primarily due to rising interest rates impacting overall customer affordability, coupled with an increase in lease penetration and an increase in electric and hybrid fleet vehicle sales in the U.K. which limits our finance and insurance product sale opportunities.

Current wording

Finance and insurance revenue decreased from 2023 to 2024 due to an $18.7 million, or 9.1%, decrease in same-store revenue, partially offset by a $1.7 million increase from net dealership acquisitions. Excluding $1.8 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 10.0%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $17.2 million, coupled with a $26 per unit decrease in same-store comparative average finance and insurance retail revenue (despite a $16 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased revenue by $2.6 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 1.5% in the U.S. and decreased 3.5% in the U.K. We believe the decrease in same-store finance and insurance revenue per unit (excluding agency) is primarily due to high interest rates impacting overall customer affordability and an increase in lease penetration and electric and hybrid fleet vehicle sales in the U.K. which limits our finance and insurance product sale opportunities.

Previous wording

Service and parts revenue increased from 2023 to 2024, with an increase of 5.6% in the U.S. and an increase of 16.5% internationally. The increase in service and parts revenue is due to a $67.6 million, or 5.0%, increase in same-store revenues, coupled with a $63.1 million increase from net dealership acquisitions. Excluding $8.1 million of favorable foreign currency fluctuations, same-store revenue increased 4.4%. The increase in same-store revenue is due to a $38.4 million, or 3.8%, increase in customer pay revenue, a $24.9 million, or 9.0%, increase in warranty revenue, and a $4.3 million, or 4.7%, increase in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to vehicles remaining on the road longer due to affordability considerations, as well as increases in effective labor rates, the retail cost of parts due to inflation, and manufacturer recalls.

Current wording

Service and parts revenue increased from 2023 to 2024, with an increase of 8.9% in the U.S. and an increase of 21.9% internationally. The increase in service and parts revenue is due to a $49.4 million, or 7.2%, increase in same-store revenues, coupled with a $43.4 million increase from net dealership acquisitions. Excluding $5.6 million of favorable foreign currency fluctuations, same-store revenue increased 6.4%. The increase in same-store revenue is due to a $27.7 million, or 20.0%, increase in warranty revenue, a $20.7 million, or 4.2%, increase in customer pay revenue, and a $1.0 million, or 2.2%, increase in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to an increase in warranty work from manufacturer recalls, coupled with vehicles remaining on the road longer due to affordability considerations, as well as increases in effective labor rates, the retail cost of parts due to inflation, and higher repair costs.

Previous wording

Service and parts gross profit increased from 2023 to 2024 due to a $17.5 million, or 4.3%, increase in same-store gross profit, coupled with a $15.6 million increase from net dealership acquisitions. Excluding $0.2 million of favorable foreign currency fluctuations, same-store gross profit increased 4.3%. The increase in same-store gross profit is due to the increase in same-store revenues, which increased gross profit by $20.2 million, partially offset by a 0.4% decrease in same- store gross margin, which decreased gross profit by $2.7 million. The increase in same-store gross profit is due to an $8.6 million, or 11.7%, increase in warranty gross profit, a $5.2 million, or 2.2%, increase in customer pay gross profit, and a $3.7 million, or 4.2%, increase in vehicle preparation and body shop gross profit. We believe the decrease in same-store gross margin is primarily due to a shift in sales mix in the U.K. from customer pay to warranty, which typically has lower gross margin.

Current wording

Service and parts gross profit increased from 2023 to 2024 due to a $25.2 million, or 6.3%, increase in same-store gross profit, coupled with a $20.2 million increase from net dealership acquisitions. Excluding $3.3 million of favorable foreign currency fluctuations, same-store gross profit increased 5.4%. The increase in same-store gross profit is due to the increase in same-store revenues, which increased gross profit by $28.8 million, partially offset by a 0.5% decrease in same-store gross margin, which decreased gross profit by $3.6 million. The increase in same-store gross profit is due to a $13.7 million, or 18.2%, increase in warranty gross profit, a $9.8 million, or 4.2%, increase in customer pay gross profit, and a $1.7 million, or 1.9%, increase in vehicle preparation and body shop gross profit. We believe the decrease in same-store gross margin is primarily due to a shift in sales mix in the U.K. from customer pay to warranty, which typically has a lower gross margin.

Previous wording

As discussed above under “Overview - Retail Commercial Truck Dealership,” the CDK Cybersecurity Incident impacted PTG’s operations beginning June 19, 2024 through the quarter end, primarily impacting service and parts sales, but also impacting to a lesser extent sales of used trucks.

Current wording

As discussed above under “Overview - Retail Commercial Truck Dealership,” the CDK Cybersecurity Incident impacted PTG’s operations beginning June 19, 2024 and into the third quarter, primarily impacting service and parts sales, but also impacting to a lesser extent sales of used trucks.

Previous wording

Retail unit sales of new trucks decreased from 2023 to 2024 due to a 1,390 unit, or 15.4%, decrease in same-store new retail unit sales, partially offset by a 308 unit increase from net dealership acquisitions. We believe the decrease in same-store unit sales is primarily due to the unusually high number of deliveries in the prior year period resulting from production timing and delivery delays throughout 2022 caused by manufacturer supply chain challenges, partially offset by replacement demand for medium- and heavy-duty trucks.

Current wording

Retail unit sales of new trucks increased from 2023 to 2024 due to a 490 unit, or 10.5%, increase in same-store new retail unit sales, coupled with a 242 unit increase from net dealership acquisitions. We believe the increase in same-store unit sales is primarily due to replacement demand for medium- and heavy-duty trucks.

Previous wording

New commercial truck retail sales revenue decreased from 2023 to 2024 due to a $152.6 million, or 12.6%, decrease in same-store revenues, partially offset by a $45.6 million increase from net dealership acquisitions. The decrease in same-store revenue is due to the decrease in same-store new retail unit sales, which decreased revenue by $186.7 million, partially offset by a $4,463 per unit increase in same-store comparative average selling price, which increased revenue by $34.1 million. We believe the increase in same-store comparative average selling price is primarily due to higher prices driven by replacement demand and the mix of units sold.

Current wording

New commercial truck retail sales revenue increased from 2023 to 2024 due to a $72.7 million, or 11.3%, increase in same-store revenues, coupled with a $38.2 million increase from net dealership acquisitions. The increase in same-store revenue is due to the increase in same-store new retail unit sales, which increased revenue by $68.0 million, coupled with a $999 per unit increase in same-store comparative average selling price, which increased revenue by $4.7 million. We believe the increase in same-store comparative average selling price is primarily due to higher prices driven by replacement demand and the mix of higher-priced units sold.

Previous wording

New commercial truck retail gross profit increased from 2023 to 2024 due to a $1.7 million increase from net dealership acquisitions, coupled with a $0.1 million, or 0.3%, increase in same-store gross profit. The increase in same-store gross profit is due to a $473 per unit increase in same-store comparative average gross profit, which increased gross profit by $2.0 million, partially offset by the decrease in same-store new retail unit sales, which decreased gross profit by $1.9 million. We believe the increase in same-store comparative average gross profit per unit is primarily due to a change in sales mix when compared to the same period last year.

Current wording

New commercial truck retail gross profit increased from 2023 to 2024 due to a $3.7 million increase from net dealership acquisitions, coupled with a $2.0 million, or 5.0%, increase in same-store gross profit. The increase in same-store gross profit is due to the increase in same-store new retail unit sales, which increased gross profit by $4.0 million, partially offset by a $431 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $2.0 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a change in sales mix when compared to the same period last year.

Previous wording

Retail unit sales of used trucks increased from 2023 to 2024 due to a 38 unit, or 5.4%, increase in same-store retail unit sales, coupled with a 23 unit increase from net dealership acquisitions. We believe the increase in same-store unit sales is primarily due to the increase in availability and affordability of used trucks when compared with the prior year period, coupled with limited availability of certain new trucks resulting in higher demand of certain used trucks.

Current wording

Retail unit sales of used trucks increased from 2023 to 2024 due to a 34 unit, or 3.9%, increase in same-store retail unit sales, coupled with a 9 unit increase from net dealership acquisitions. We believe the increase in same-store unit sales is primarily due to the increase in availability and affordability of used trucks when compared with the prior year period, coupled with limited availability of certain new trucks resulting in higher demand of certain used trucks.

Previous wording

Used commercial truck retail gross profit decreased from 2023 to 2024 primarily due to a $0.2 million, or 5.0%, decrease in same-store gross profit. The decrease in same-store gross profit is due to a $593 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $0.4 million, partially offset by the increase in same-store used retail unit sales, which increased gross profit by $0.2 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to the decreased value of used trucks over the prior year, as a result of prolonged lower freight spot rates when compared to the prior year period.

Current wording

Used commercial truck retail gross profit remained flat from 2023 to 2024. Same-store gross profit remained flat due to a $132 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $0.1 million, offset by the increase in same-store used retail unit sales, which increased gross profit by $0.1 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to the decreased value of used trucks over the prior year, as a result of prolonged lower freight spot rates when compared to the prior year period.

Previous wording

Service and parts revenue decreased from 2023 to 2024 due to a $21.7 million, or 9.5%, decrease in same-store revenues, partially offset by an $8.8 million increase from net dealership acquisitions. Customer pay work represented approximately 78.5% of PTG's service and parts revenue, largely due to the significant amount of retail sales of parts and accessories. The decrease in same-store revenue is due to a $21.2 million, or 11.5%, decrease in customer pay revenue and a $1.0 million, or 12.7%, decrease in body shop revenue, partially offset by a $0.5 million, or 1.4%, increase in warranty revenue. We believe the decrease in same-store service and parts revenue is due to customers delaying maintenance costs due to prolonged lower freight spot rates, coupled with slower retail parts sales in June resulting from the CDK Cybersecurity Incident discussed above.

Current wording

Service and parts revenue decreased from 2023 to 2024 due to an $11.0 million, or 4.7%, decrease in same-store revenues, partially offset by an $8.7 million increase from net dealership acquisitions. Customer pay work represented approximately 77.7% of PTG's service and parts revenue, largely due to the significant amount of retail sales of parts and accessories. The decrease in same-store revenue is due to a $12.9 million, or 6.8%, decrease in customer pay revenue and a

Previous wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $189.0 million of revenue during the three months ended June 30, 2024, compared to $143.3 million of revenue in the prior year, an increase of 31.9%. This business also generated $44.6 million of gross profit during the three months ended June 30, 2024, compared to $40.3 million of gross profit in the prior year, an increase of 10.7%.

Current wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $186.8 million of revenue during the three months ended September 30, 2024, compared to $157.7 million of revenue in the prior year, an increase of 18.5%. This business also generated $44.6 million of gross profit during the three months ended September 30, 2024, compared to $39.7 million of gross profit in the prior year, an increase of 12.3%.

Previous wording

Excluding $2.6 million of unfavorable foreign currency fluctuations, revenue increased 33.8% primarily due to an increase in service and parts sales revenue, coupled with an increase in overall unit sales. Excluding $0.6 million of unfavorable foreign currency fluctuations, gross profit increased 12.6% primarily due to the increase in overall unit sales and mix of products sold as compared to the same period last year, coupled with an increase in higher margin remanufacturing activity and higher margin service and parts sales.

Current wording

Excluding $3.7 million of favorable foreign currency fluctuations, revenue increased 16.0% primarily due to an increase in service and parts sales revenue and an increase in higher value power generation units sold. Excluding $0.9 million of favorable foreign currency fluctuations, gross profit increased 9.7% primarily due to an increase in higher value power generation units sold and higher margin service and parts sales.

Previous wording

Selling, general, and administrative expenses ("SG&A") increased from 2023 to 2024 due to a $32.0 million increase from net acquisitions, partially offset by a $2.6 million, or 0.3%, decrease in same-store SG&A. Excluding $0.1 million of favorable foreign currency fluctuations, same-store SG&A decreased 0.3%. SG&A as a percentage of gross profit was 70.2%, an increase of 280 basis points compared to 67.4% in the prior year. SG&A expenses as a percentage of total revenue were 11.5% and 11.5% in the three months ended June 30, 2024 and 2023, respectively. We believe the increase in SG&A as a percentage of gross profit is primarily due to personnel expenses, rent expenses, customer service vehicle loaner expenses, and information technology expenses, relative to gross profit.

Current wording

71.2%, an increase of 130 basis points compared to 69.9% in the prior year. SG&A expenses as a percentage of total revenue were 11.7% and 11.5% in the three months ended September 30, 2024 and 2023, respectively. We believe the increase in SG&A as a percentage of gross profit is primarily due to increases in personnel expenses, rent expenses, customer service vehicle loaner expenses, and information technology expenses, relative to gross profit, in part due to inflation.

Previous wording

Depreciation increased from 2023 to 2024 due to a $6.3 million, or 9.3%, increase in same-store depreciation due to capital expenditures, coupled with a $2.1 million increase from net dealership acquisitions.

Current wording

Depreciation increased from 2023 to 2024 due to a $3.6 million, or 10.4%, increase in same-store depreciation due to capital expenditures, coupled with a $1.6 million increase from net dealership acquisitions.

Previous wording

Floor plan interest expense increased from 2023 to 2024 due to a $28.9 million, or 49.4%, increase in same-store floor plan interest expense, coupled with a $3.8 million increase from net acquisitions. The overall increase is due to increases in average amounts outstanding under floor plan arrangements due to increasing levels of inventory, coupled with increases in applicable rates.

Current wording

Floor plan interest expense increased from 2023 to 2024 due to an $11.5 million, or 32.6%, increase in same-store floor plan interest expense, coupled with a $3.8 million increase from net acquisitions. The overall increase is due to increases in average amounts outstanding under floor plan arrangements due to increasing levels of inventory.

Previous wording

Other interest expense decreased from 2023 to 2024 due to decreases in average revolver borrowing amounts outstanding under our credit agreements, partially offset by increases in applicable rates.

Current wording

Other interest expense decreased from 2023 to 2024 due to decreases in average revolver borrowing amounts outstanding under our credit agreements.