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 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.

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, 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 28,950 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.

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 28,700 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs over 44,500 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 428,000 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 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.

Current wording

During the three months ended March 31, 2025, our business generated $7.6 billion in total revenue, which is comprised of approximately $6.6 billion from retail automotive dealerships, $0.8 billion from retail commercial truck dealerships, and $211.5 million from commercial vehicle distribution and other operations. We generated $1.3 billion in gross profit, which is comprised of $1.1 billion from retail automotive dealerships, $141.0 million from retail commercial truck dealerships, and $44.2 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 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.

Current wording

Retail Automotive. We are one of the largest global automotive retailers as measured by the $26.2 billion in total retail automotive dealership revenue we generated in 2024. We are diversified geographically with 56% of our total retail automotive dealership revenues in the three months ended March 31, 2025, generated in the U.S. and Puerto Rico and 44% generated outside of the U.S. We offer over 40 vehicle brands with 74% of our retail automotive franchised dealership revenue generated from premium brands, such as Audi, BMW, Land Rover, Mercedes-Benz, and Porsche, and 20% of revenue generated from volume non-U.S. brands such as Toyota and Honda in the three months ended March 31, 2025. As of March 31, 2025, we operated 352 retail automotive franchised dealerships, of which 147 are located in the U.S. and 205 are located outside of the U.S., principally in the U.K. As of March 31, 2025, we also operated 16 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, nine dealerships in the U.K. operating under the brand name Sytner Select, and one dealership in Australia operating under the brand name Penske Select. We retailed and wholesaled, including agency units, more than 144,000 vehicles in the three months ended March 31, 2025.

Previous wording

Each of our franchised dealerships offers a wide selection of new and used vehicles for sale. In addition to selling new and used vehicles, we generate higher-margin revenue at each of our dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of our locations, collision repair services. We operate our franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Beginning in 2023, we transitioned some of our dealerships in the U.K. and Europe to an agency model under which we receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue (as opposed to previously recording all of the vehicle sale price as new revenue) with no corresponding cost of sale. We continue to provide new vehicle customer service under the agency model, and the agency model at this time has not changed our used vehicle sales operations or service and parts operations, although the long-term impact of the agency model at these dealerships, as well as other agency models proposed by our manufacturer partners, is uncertain.

Current wording

In addition to selling new and used vehicles, we generate higher-margin revenue at each of our dealerships through maintenance and repair services, the sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, and at certain of our locations, collision repair services. We operate our franchised dealerships under franchise agreements with a number of automotive manufacturers and distributors that are subject to certain rights and restrictions typical of the industry. Some of our dealerships in the U.K. and Europe operate under an agency model where we receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue with no corresponding cost of sale.

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 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.

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 10 U.S. states and the Canadian provinces of Ontario and Manitoba. As of March 31, 2025, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 4,801 new and used trucks in the three months ended March 31, 2025. This business represented 10.8% of our total revenues and 11.1% of our total gross profit in the three months ended March 31, 2025.

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 nine months ended September 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, energy solutions, 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 2.8% of our total revenues and 3.5% of our total gross profit in the three months ended March 31, 2025.

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 $145.7 million and $238.3 million in equity earnings from this investment for the nine months ended September 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 $33.2 million and $32.5 million in equity earnings from this investment for the three months ended March 31, 2025 and 2024, respectively.

Previous 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.

Current wording

Retail Automotive. During the three months ended March 31, 2025, U.S. industry new light vehicle sales increased 4.3%, to 3.9 million units, including a 6.8% increase in retail sales, partially offset by a 3.9% decrease in fleet sales, as compared to the same period last year. U.K. new vehicle registrations increased 6.4% to 0.6 million registrations, including a 4.6% increase in fleet sales and a 9.5% increase in retail sales, as compared to the same period last year. New vehicle sales were positively impacted by continued strong consumer demand in the U.S., particularly in March 2025 in response to recently announced tariffs. Our new vehicle days' supply is 39 as of March 31, 2025, compared to 49 as of December 31, 2024. Our used vehicle days' supply is 36 as of March 31, 2025, compared to 47 as of December 31, 2024. As discussed above, the Automotive Tariffs and other tariffs are likely to increase our cost of acquiring vehicles and parts, as well as our inventory carrying costs. While it is difficult to predict the effects of these tariffs on our business, we believe increased prices could lead to lower consumer demand for new vehicles and related finance and insurance products, while potentially increasing demand for used vehicles and our service and parts operations. These tariffs may also limit the availability of certain new vehicles and parts we sell and negatively impact our gross profit with respect to affected vehicles and parts. See Part II, Item 1A. Risk Factors, "Tariffs and Trade Risk." New vehicle sales levels could also be impacted by changes to existing electrification mandates, emissions regulations and incentives regarding EVs, as discussed above, as well as vehicle affordability challenges, inflation, interest rates, or a reduction in consumer spending resulting in decreased demand. We continue to expect strong demand for our service and parts operations driven by increased vehicle sales in recent years, increased average age of vehicles, recall campaigns, increased miles driven (including in response to affordability concerns as a result of the Automotive Tariffs), and vehicle complexity.

Previous 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.

Current wording

Retail Commercial Truck Dealership. During the three months ended March 31, 2025, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 3.0% from the same period last year to 473,159 units. The Class 6-7 medium-duty truck market increased 0.5% from the same period last year to 157,260 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 4.7% from the same period last year to 315,899 units. As discussed above, the new trucks sold by PTG, while not subject to the Automotive Tariffs, are subject to the Reciprocal Tariffs and other tariffs which have been or may be announced. We believe that PTG may experience increased demand for its service and parts operations and used trucks as a result of the tariffs, depending on the general freight environment (which also could be impacted by increased cross border tariffs). As of March 31, 2025, the Class 6-8 medium- and heavy-duty truck backlog is 194,073 units according to data published by ACT Research compared to 262,572 as of March 31, 2024.

Previous 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.

Current wording

Commercial Vehicle Distribution and Other. During the three months ended March 31, 2025, the Australian heavy-duty truck market reported sales of 3,380 units, representing a decrease of 10.8% from the same period last year, while the New Zealand market reported sales of 606 units, representing a decrease of 41.1% from the same period last year. 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 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.

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 428,000 vehicles at March 31, 2025, 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. While PTS has experienced an increase in revenue from its leasing and maintenance business, it has also experienced a decline in truck rental revenue and lower gain on sale of used trucks associated with weakness in the freight market. PTS could also be negatively impacted by the tariffs discussed above, which could increase their costs of acquiring vehicles and parts as well as negatively impact the general freight environment. PTS has decreased, and expects to continue to decrease, the size of its consumer and commercial rental fleets in connection with this lower demand, aimed at improving the utilization rate of the fleet.

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 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.

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, 2024, 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 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.

Current wording

Automotive and commercial truck dealerships represent 97.2% of our revenue and 88.2% of our earnings before taxes during the three months ended March 31, 2025. Income from our PTS investment represents 9.8% of our earnings before taxes during the three months ended March 31, 2025. 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 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 $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.

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, the impact of tariffs and non-tariff trade barriers, 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 $156.7 million, or 2.1%, and increased $23.8 million, or 1.9%, respectively, during the three months ended March 31, 2025, compared to the same period in 2024.

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 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.

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 decreased revenue and gross profit by $40.3 million and $6.9 million, respectively, for the three months ended March 31, 2025, compared to the same period in 2024. Foreign currency average rate fluctuations decreased earnings per share by approximately $0.01 per share for the three months ended March 31, 2025, compared to the same period in 2024. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit increased 2.6% and increased 2.5%, respectively, for the three months ended March 31, 2025, compared to the same period in 2024.

Previous wording

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation for administration, finance, legal and general management personnel, rent, insurance, utilities, and other expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

Current wording

Our selling expenses consist of advertising and compensation for sales personnel, including commissions and related bonuses. General and administrative expenses include compensation, finance, legal and management personnel costs, rent, insurance, information technology expenses, service vehicle loaner expenses, vehicle delivery and preparation expenses, utilities, and other expenses. As the majority of our selling expenses are variable and a significant portion of our general and administrative expenses are subject to our control, we believe our expenses can be adjusted over time to reflect economic trends.

Previous wording

Equity in earnings of affiliates principally represents our share of the earnings from PTS, along with our investments in joint ventures and other non-consolidated investments.

Current wording

Equity in earnings of affiliates principally represents our share of the earnings from PTS, along with our investments in other joint ventures and other non-consolidated investments.

Previous wording

Floor plan interest expense relates to financing incurred in connection with the acquisition of new and used vehicle inventories that are secured by those vehicles. Other interest expense consists of interest charges on all of our interest-bearing debt, other than interest relating to floor plan financing. The cost of our variable rate indebtedness is based on the prime rate, the Secured Overnight Financing Rate ("SOFR"), the Sterling Overnight Index Average ("SONIA"), the Bank of England Base Rate, the Finance House Base Rate, the Euro Interbank Offered Rate, the Canadian Prime Rate, the Tokyo Interbank Offered Rate, the Australian Bank Bill Swap Rate, and the New Zealand Bank Bill Benchmark Rate.

Current wording

Floor plan interest expense relates to financing incurred in connection with the acquisition of new and used vehicle inventories that are secured by those vehicles. Other interest expense consists of interest charges on all of our interest-bearing debt, other than interest relating to floor plan financing. The cost of our variable rate indebtedness is based on the prevailing benchmark interest rates in our various markets.

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, 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.

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 sales of new and used vehicles, service and parts, and repair and maintenance services, 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 and other freight metrics such as spot rates or miles driven, personal discretionary spending levels, interest rates, foreign currency exchange 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, any shortages of vehicle components, international conflicts, challenges in sourcing labor or labor strikes or work stoppages, or other disruptions; the control our manufacturer partners can exert over our operations and our reliance on them for various aspects of our business; risks to our reputation and those of our manufacturer partners; 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 EVs; 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 impact of tariffs targeting imported vehicles and parts, as well as changes or increases in tariffs, trade restrictions, trade disputes, or non-tariff trade barriers; 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 our 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, including with respect to the effect of various government mandates concerning the electrification of its vehicle 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, emissions standards or electrification, as well as changes in consumer sentiment relating to commercial truck sal…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Beginning in 2023, we transitioned some of our dealerships in the U.K. and Europe to an agency model under which these dealerships receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue (as opposed to previously recording all of the vehicle sale price as new revenue) with no corresponding cost of sale. We continue to provide new vehicle customer service under the agency model, and the agency model at this time has not changed our used vehicle sales operations or service and parts operations, although the long-term impact of the agency model at these dealerships as well as other agency models proposed by our manufacturer partners is uncertain. As a result of the foregoing, we have presented below units sold under this agency model as "Agency units" beginning in 2023. Moreover, our retail automotive revenue per unit retailed and related gross profit per unit retailed for new vehicles excludes agency unit sales and associated revenue.

Current wording

Some of our dealerships in the U.K. and Europe operate under an agency model where we receive a fee for facilitating the sale by the manufacturer of a new vehicle but do not hold the vehicle in inventory. Vehicles sold under this agency model are counted as new agency units sold instead of new retail units sold by us, and only the fee we receive from the manufacturer, not the price of the vehicle, is reported as new revenue with no corresponding cost of sale. We have presented below units sold under this agency model as "Agency units". Moreover, our retail automotive revenue per unit retailed and related gross profit per unit retailed for new vehicles excludes agency unit sales and associated revenue.

Previous wording

Retail unit deliveries of new vehicles increased from 2023 to 2024 due to an 8,785 unit increase from net dealership acquisitions, partially offset by a 134 unit, or 0.1%, decrease in same-store new retail unit deliveries. Same-store retail units delivered increased 1.7% in the U.S. and decreased 2.3% internationally. Overall, new retail unit deliveries increased 3.7% in the U.S. and increased 6.9% 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 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.

Current wording

Retail unit deliveries of new vehicles increased from 2024 to 2025 due to a 4,397 unit, or 7.9%, increase in same-store new retail unit deliveries, partially offset by a 708 unit decrease from net dealership acquisitions/dispositions throughout 2024. Same-store retail units delivered increased 7.6% in the U.S. and increased 8.4% internationally. Overall, new retail unit deliveries increased 8.0% in the U.S. and increased 4.6% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to increased inventory availability and continued strong consumer demand, coupled with demand from consumers in the U.S. who sought to acquire vehicles prior to the implementation of the automotive tariffs discussed above.

Previous 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%.

Current wording

Retail unit sales of used vehicles decreased from 2024 to 2025 due to a 6,780 unit, or 10.6%, decrease in same-store used retail unit sales, coupled with a 3,999 unit decrease from net dealership dispositions. Our same-store units increased 2.1% in the U.S. and decreased 20.1% internationally. Overall, our used units increased 1.9% in the U.S. and decreased

Previous wording

Retail unit sales of used vehicles decreased from 2023 to 2024 due to an 8,312 unit, or 4.5%, decrease in same-store used retail unit sales, partially offset by a 1,655 unit increase from net dealership acquisitions. Our same-store units were flat in the U.S. and decreased 8.2% internationally. Overall, our used units increased 0.7% in the U.S. and decreased 6.4% 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 3.4% and same-store used units decreased 0.5%.

Current wording

27.5% internationally. Excluding the decrease of 6,789 units across the U.K. Sytner Select dealerships, same-store used retail unit sales of used vehicles increased by 9 units. Same-store unit sales were impacted by the transition of our U.K. CarShop locations to Sytner Select dealerships which sell fewer units. Excluding the U.K. Sytner Select dealerships from both periods, used vehicles retailed decreased 3.7% internationally and decreased 0.8% overall and same-store used units decreased 2.3% internationally and were flat overall.

Previous 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.

Current wording

Finance and insurance revenue decreased from 2024 to 2025 due to a $6.0 million decrease from net dealership dispositions, coupled with a $1.8 million, or 0.9%, decrease in same-store revenue. Excluding $0.4 million of unfavorable foreign currency fluctuations, same-store finance and insurance revenue decreased 0.7%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $8.7 million, partially offset by a $59 per unit increase in same-store comparative average finance and insurance retail revenue (despite a $4 per retail unit decrease attributable to unfavorable foreign currency fluctuations), which increased revenue by $6.3 million. Same-store finance and insurance revenue per unit (excluding agency) increased 0.7% in the U.S. and increased 2.3% in the U.K. We believe the increase in same-store finance and insurance revenue per unit (excluding agency) is primarily due to the increase in average selling price of both new and used vehicles, as well as changes in the availability of certain products in the U.K. compared to the prior year.

Previous wording

Service and parts revenue increased from 2023 to 2024, with an increase of 6.7% in the U.S. and an increase of 18.3% internationally. The increase in service and parts revenue is due to a $117.2 million, or 5.7%, increase in same-store revenues, coupled with a $106.3 million increase from net dealership acquisitions. Excluding $13.7 million of favorable foreign currency fluctuations, same-store revenue increased 5.1%. The increase in same-store revenue is due to a $59.3 million, or 4.0%, increase in customer pay revenue, a $52.5 million, or 12.7%, increase in warranty revenue, and a $5.4 million, or 4.0%, 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 2024 to 2025, with an increase of 6.6% in the U.S. and an increase of 4.6% internationally. The increase in service and parts revenue is due to a $30.5 million, or 4.2%, increase in same-store revenues, coupled with a $12.8 million increase from net dealership acquisitions. Excluding $3.2 million of unfavorable foreign currency fluctuations, same-store revenue increased 4.6%. The increase in same-store revenue is due to a $26.3 million, or 17.0%, increase in warranty revenue and a $4.7 million, or 0.9%, increase in customer pay revenue, partially offset by a $0.5 million, or 1.1%, decrease in vehicle preparation and body shop revenue. We believe the increase in same-store revenue is primarily due to additional warranty opportunities due to manufacturer recalls, vehicles remaining on the road longer due to affordability considerations, and increasing vehicle complexity, as well as increases in labor rates, repair orders, the price of parts.

Previous 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.

Current wording

Retail unit sales of new trucks increased from 2024 to 2025 due to a 320 unit increase from net dealership acquisitions, partially offset by a 72 unit, or 2.1%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to replacement demand cycles, coupled with a prolonged recessionary freight rate environment.

Previous 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

Current wording

Service and parts revenue decreased from 2024 to 2025 due to an $8.5 million, or 3.8%, decrease in same-store revenues, partially offset by a $6.9 million increase from net dealership acquisitions. Customer pay work represented approximately 78.3% 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 $5.8 million, or 3.3%, decrease in customer pay revenue, a

Previous wording

$1.2 million, or 15.2%, decrease in body shop revenue, partially offset by a $3.1 million, or 7.8%, 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.

Current wording

$2.6 million, or 6.1%, decrease in warranty revenue, and a $0.1 million, or 0.5%, decrease in body shop revenue. We believe the decrease in same-store service and parts revenue is due to customers delaying maintenance costs due to the continued weak freight market, coupled with lower freight spot rates.

Previous 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%.

Current wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $211.5 million of revenue during the three months ended March 31, 2025, compared to $178.0 million of revenue in the prior year, an increase of 18.8%. This business also generated $44.2 million of gross profit during the three months ended March 31, 2025, compared to $43.2 million of gross profit in the prior year, an increase of 2.3%.

Previous wording

Excluding $5.2 million of unfavorable foreign currency fluctuations, revenue increased 25.7% primarily due to an increase in service and parts sales revenue and an increase in higher value power generation units sold. Excluding $1.3 million of unfavorable foreign currency fluctuations, gross profit increased 8.8% primarily due to an increase in higher value power generation units sold and higher margin service and parts sales.

Current wording

Excluding $9.5 million of unfavorable foreign currency fluctuations, revenue increased 24.1% primarily due to an increase in higher value power generation units sold, coupled with an increase in units sold. Excluding $2.1 million of unfavorable foreign currency fluctuations, gross profit increased 6.7% primarily due to an increase in units sold, coupled with higher value power generation units sold.

Previous wording

Selling, general, and administrative expenses ("SG&A") increased from 2023 to 2024 due to a $39.8 million increase from net acquisitions, partially offset by an $8.1 million, or 1.0%, decrease in same-store SG&A. Excluding $6.4 million of unfavorable foreign currency fluctuations, same-store SG&A decreased 1.7%. SG&A as a percentage of gross profit was

Current wording

Selling, general, and administrative expenses ("SG&A") increased from 2024 to 2025 due to a $30.1 million, or 3.5%, increase in same-store SG&A, coupled with a $3.7 million increase from net acquisitions. Excluding $4.9 million of favorable foreign currency fluctuations, same-store SG&A increased 4.1%. SG&A as a percentage of gross profit was

Previous 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.

Current wording

72.0%, an increase of 130 basis points compared to 70.7% in the prior year. SG&A expenses as a percentage of total revenue were 12.0% and 11.8% in the three months ended March 31, 2025 and 2024, respectively. We believe the increase in SG&A expenses is primarily due to impairments and other charges (none of which was individually material).

Previous 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.

Current wording

Depreciation increased from 2024 to 2025 due to a $1.7 million, or 4.6%, increase in same-store depreciation due to capital expenditures, coupled with a $0.4 million increase from net dealership acquisitions.

Previous wording

Floor plan interest expense increased from 2023 to 2024 due to a $40.4 million, or 43.3%, increase in same-store floor plan interest expense, coupled with a $7.6 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 decreased from 2024 to 2025 due to a $5.1 million, or 11.7%, decrease in same-store floor plan interest expense, partially offset by a $1.8 million increase from net acquisitions. The overall decrease is due to decreases in applicable rates throughout the year, partially offset by 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 increased from 2024 to 2025 due to increases in average revolver borrowing amounts outstanding under our credit agreements, partially offset by decreases in applicable rates throughout the year.

Previous wording

Income taxes decreased from 2023 to 2024 primarily due to a $52.1 million decrease in our pre-tax income compared to the prior year. Our effective tax rate was 25.4% during the three months ended September 30, 2024, compared to 25.8% during the three months ended September 30, 2023, primarily due to fluctuations in our geographic pre-tax income mix.

Current wording

Income taxes increased from 2024 to 2025 primarily due to a $42.3 million increase in our pre-tax income compared to the prior year. Our effective tax rate was 27.3% during the three months ended March 31, 2025, compared to 26.7% during the three months ended March 31, 2024, primarily due to fluctuations in our geographic pre-tax income mix and non-recurring tax adjustments.

Previous wording

We have historically expanded our operations through organic growth and the acquisition of dealerships and other businesses. We believe that cash flow from operations, dividends and distributions from PTS and our joint venture investments, and our existing capital resources, including the liquidity provided by our credit agreements and floor plan financing arrangements, will be sufficient to fund our existing operations and current commitments for at least the next twelve months. In the event that economic conditions are more severely impacted than we expect due to geo-political conditions, any pandemic or vehicle shortages resulting from supply chain difficulties, we pursue significant acquisitions or other expansion opportunities, pursue significant repurchases of our outstanding securities, or refinance or repay existing debt, we may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings, which sources of funds may not necessarily be available on terms acceptable to us, if at all. In addition, our liquidity could be negatively impacted in the event we fail to comply with the covenants under our various financing and operating agreements or in the event our floor plan financing is withdrawn. Future events, including acquisitions, divestitures, new or revised operating lease agreements, borrowings or repayments under our credit agreements and our floor plan arrangements, raising capital, and purchases or refinancing of our securities, may also impact our liquidity.

Current wording

We have historically expanded our operations through organic growth and the acquisition of dealerships and other businesses. We believe that cash flow from operations, dividends and distributions from PTS and our joint venture investments, and our existing capital resources, including the liquidity provided by our credit agreements and floor plan financing arrangements, will be sufficient to fund our existing operations and current commitments for at least the next twelve months. In the event that economic conditions are more severely impacted than we expect due to proposed tariffs, geo-political conditions, the impact of tariffs and non-tariff trade barriers, any pandemic or vehicle shortages resulting from supply chain difficulties, we pursue significant acquisitions or other expansion opportunities, pursue significant repurchases of our outstanding securities, or refinance or repay existing debt, we may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings, which sources of funds may not necessarily be available on terms acceptable to us, if at all. In addition, our liquidity could be negatively impacted in the event we fail to comply with the covenants under our various financing and operating agreements or in the event our floor plan financing is withdrawn. Future events, including acquisitions, divestitures, new or revised operating lease agreements, borrowings or repayments under our credit agreements and our floor plan arrangements, raising capital, and purchases or refinancing of our securities, may also impact our liquidity.

Previous wording

We expect that scheduled payments of our debt instruments, including the maturity of our $550 million of 3.50% senior subordinated notes due September 1, 2025, will be funded through cash flows from operations or borrowings under our credit agreements. In the case of payments upon the maturity or termination dates of our debt instruments, we currently expect to be able to refinance such instruments in the normal course of business or otherwise fund them from cash flows from operations or borrowings under our credit agreements. Refer to the disclosures provided in Part I, Item 1, Note 9 of the Notes to our Consolidated Financial Statements set forth below for a detailed description of our long-term debt obligations and scheduled interest payments.

Current wording

We expect that scheduled payments of our debt instruments will be funded through cash flows from operations or borrowings under our credit agreements. Upon the maturity of our $550 million of 3.50% senior subordinated notes due September 1, 2025, we currently expect to either repay those notes from cash flows from operations or borrowings under our U.S. credit agreement or refinance those notes in whole or in part with other similar notes, depending on the prevailing interest rates. In the case of payments upon the maturity or termination dates of our other debt instruments, we currently expect to be able to repay or refinance such instruments from cash flows from operations or borrowings under our credit agreements. Refer to the disclosures provided in Part I, Item 1, Note 9 of the Notes to our Consolidated Financial Statements set forth below for a detailed description of our long-term debt obligations and scheduled interest payments.

Previous wording

As of September 30, 2024, we had $91.9 million of cash available to fund our operations and capital commitments. In addition, we had $1.2 billion, £139.0 million ($185.9 million), CAD $29.0 million ($21.4 million), AU $33.5 million ($23.2 million), and $130.7 million available for borrowing under our U.S. credit agreement, U.K. credit agreement, Canada credit agreement, Australia credit agreement, and the revolving mortgage facility through Toyota Motor Credit Corporation in the U.S., respectively.

Current wording

As of March 31, 2025, we had $118.4 million of cash available to fund our operations and capital commitments. In addition, we had an aggregate of approximately $2.0 billion available for borrowing under our U.S. credit agreement, U.K. credit agreement, the revolving mortgage facility through Toyota Motor Credit Corporation in the U.S., and other various credit facilities.