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, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, 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, disposed, 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, 2025, 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, disposed, 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 28,300 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs nearly 43,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 405,000 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 28,800 people worldwide. Additionally, we own 28.9% of Penske Transportation Solutions, a business that employs nearly 41,000 people worldwide, manages one of the largest, most comprehensive and modern trucking fleets in North America with over 387,500 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, 2025, our business generated $23.0 billion in total revenue, which is comprised of approximately $19.7 billion from retail automotive dealerships, $2.7 billion from retail commercial truck dealerships, and $619.3 million from commercial vehicle distribution and other operations. We generated $3.8 billion in gross profit, which is comprised of $3.3 billion from retail automotive dealerships, $420.9 million from retail commercial truck dealerships, and $134.9 million from commercial vehicle distribution and other operations.

Current wording

During the three months ended March 31, 2026, our business generated $7.9 billion in total revenue, which is comprised of approximately $7.0 billion from retail automotive dealerships, $694.6 million from retail commercial truck dealerships, and $201.9 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, $128.2 million from retail commercial truck dealerships, and $46.2 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 $26.2 billion in total retail automotive dealership revenue we generated in 2024. We are diversified geographically with 58% of our total retail automotive dealership revenues in the nine months ended September 30, 2025, generated in the U.S. and Puerto Rico and 42% generated outside of the U.S. We offer over 40 vehicle brands with 73% 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 nine months ended September 30, 2025. As of September 30, 2025, we operated 356 retail automotive franchised dealerships, of which 147 are located in the U.S. and 209 are located outside of the U.S., principally in the U.K. As of September 30, 2025, we also operated 15 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, eight 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 418,000 vehicles in the nine months ended September 30, 2025.

Current wording

Retail Automotive. We are one of the largest global automotive retailers as measured by the $27.5 billion in total retail automotive dealership revenue we generated in 2025. We are diversified geographically with 56% of our total retail automotive dealership revenues in the three months ended March 31, 2026, generated in the U.S. and Puerto Rico and 44% 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, Lexus, Mercedes-Benz, and Porsche, and 22% of revenue generated from volume non-U.S. brands such as Toyota and Honda in the three months ended March 31, 2026. As of March 31, 2026, we operated 368 retail automotive franchised dealerships, of which 149 are located in the U.S. and 219 are located outside of the U.S., principally in the U.K. As of March 31, 2026, we also operated 15 used vehicle dealerships, with six dealerships in the U.S. operating under the brand name CarShop, eight 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 147,000 vehicles in the three months ended March 31, 2026.

Previous wording

During the nine months ended September 30, 2025, we sold two retail automotive franchises and opened one retail automotive franchise in the U.S. We also sold one used vehicle dealership and opened three retail automotive franchises in the U.K., and we acquired one retail automotive franchise in Italy. Retail automotive dealerships represented 85.6% of our total revenues and 85.4% of our total gross profit in the nine months ended September 30, 2025.

Current wording

During the three months ended March 31, 2026, we acquired two retail automotive franchises and sold one retail automotive franchise in the U.S., opened one retail automotive franchise in the U.K., and opened one retail automotive franchise in Germany. Retail automotive dealerships represented 88.6% of our total revenues and 86.6% of our total gross profit in the three months ended March 31, 2026.

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 10 U.S. states and the Canadian provinces of Ontario and Manitoba. As of September 30, 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 15,393 new and used trucks in the nine months ended September 30, 2025. This business represented 11.7% of our total revenues and 11.0% of our total gross profit in the nine months ended September 30, 2025.

Current wording

Retail Commercial Truck Dealership. We operate Premier Truck Group ("PTG"), a heavy- and medium-duty retail 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, 2026, PTG operated 45 locations selling new and/or used trucks, performing service and parts operations, or offering collision repair services. We retailed and wholesaled 3,668 new and used trucks in the three months ended March 31, 2026. This business represented 8.8% of our total revenues and 9.9% of our total gross profit in the three months ended March 31, 2026.

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, 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 2.7% of our total revenues and 3.6% of our total gross profit in the nine months ended September 30, 2025.

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 2.6% of our total revenues and 3.5% of our total gross profit in the three months ended March 31, 2026. We also own and operate three Porsche dealerships in Melbourne, Australia, which results are included within our retail automotive segment described above.

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 $145.1 million and $145.7 million in equity earnings from this investment for the nine months ended September 30, 2025 and 2024, 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 businesses, which articulates the breadth of their services. PTS 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, supply chain management, and dry van truckload carrier services. We recorded $41.1 million and $33.2 million in equity earnings from this investment for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Electric Vehicle Regulation. Federal and state governments and regulators in our markets have placed various restrictions on new retail automotive and commercial vehicles, in many cases requiring vehicle manufacturers to achieve progressively higher penetration of EVs or lower emissions of new internal combustion engine vehicle sales. See below for further discussion. The U.S. has recently reduced its regulations and various manufacturers have begun to produce or have announced plans to produce more vehicles with internal combustion engines. The U.K. government, however, continues to propose a ban on the sale of internal combustion engines in new cars and new vans beginning in 2030, with some moderation to allow hybrid cars to be sold until 2035 and limited exceptions to the ZEV mandate for certain lower volume manufacturers. These U.K. regulations continue to effect the profitability and mix of vehicles sold by our U.K. dealerships. For an additional discussion of certain risks associated with our business related to the environmental regulations, see Item 1A. Risk Factors, "Vehicle Emissions and Other Environmental Regulations" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Electric Vehicle ("EV") and Emissions Regulation. Federal and state governments and regulators in our markets have placed various restrictions on new retail automotive and commercial vehicles, in many cases requiring vehicle manufacturers to achieve progressively higher penetration of EVs or lower emissions of new internal combustion engine vehicle sales. The U.K. government requires in 2026 that 33% of new cars sold shall be electric vehicles (with limited allowances) and that manufacturers pay significant penalties if such amount is not achieved and has confirmed a ban on the sale of internal combustion engines in new cars and new vans beginning in 2030, while allowing hybrid vehicles to be sold until 2035 with limited exceptions. These U.K. regulations increase now through 2035 and continue to affect the profitability and mix of vehicles sold by our U.K. dealerships. In the U.S. commercial vehicle market, the EPA’s 2027 heavy-duty engine emissions standards establish more stringent requirements for model year 2027 and later heavy-duty engines, and we believe the recent clarity regarding those standards has contributed to increased order activity in recent months, with related sales expected to occur primarily in the second half of 2026 as discussed further below. For an additional discussion of certain risks associated with our business related to the EV and emissions, see Item 1A. Risk Factors, "Vehicle Emissions and Other Environmental Regulations" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Retail Automotive. During the nine months ended September 30, 2025, U.S. industry new light vehicle sales increased 4.3%, to 12.3 million units, including a 5.0% increase in retail sales and a 3.1% increase in fleet sales, as compared to the same period last year. In the U.S., we believe new vehicle sales were positively impacted by continued strong consumer demand and the expiration of the electric vehicle tax credit at the end of September 2025. Although U.K. new vehicle registrations increased 4.2% to 1.6 million registrations, including a 3.8% increase in fleet sales and a 4.8% increase in retail sales, as compared to the same period last year, the sale of new premium brand vehicles across the U.K., representing a significant portion of our U.K. portfolio, decreased 5.6% over such period. We believe the decline in premium-branded vehicles is driven by macroeconomic pressures from inflation, as well as higher business taxes, labor costs, and the JLR cybersecurity incident discussed above. Our new vehicle days' supply is 51 as of September 30, 2025, compared to 49 as of December 31, 2024. Our used vehicle days' supply is 43 as of September 30, 2025, compared to 47 as of December 31, 2024. We expect lower EV sales in the U.S. due to the elimination of EV tax credits and 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, and vehicle complexity.

Current wording

Retail Automotive. During the three months ended March 31, 2026, U.S. industry new light vehicle sales decreased 6.2%, to 3.7 million units, including a 7.2% decrease in retail sales, partially offset by a 5.5% increase in fleet sales, as compared to the same period last year. In the U.S., we believe our comparative new vehicle sales overall were negatively impacted by weather-related disruptions during January and February, the benefit in the prior period from tariff-related pull-forward of retail sales, and a 61.3% decrease in our new EV sales in the U.S., driven by reduced EV and emissions regulations in the U.S. and the elimination of certain tax incentives for the purchase of vehicles, including the previous $7,500 per new vehicle tax incentive on September 30, 2025. Following the expiration of those incentives, EV sales in the U.S. have remained lower than prior-year levels. For the remainder of 2026, we expect continued lower EV sales in the U.S. as compared to 2025 and lower availability of certain products from select manufacturers as compared to 2025. We expect continued strong demand for our service and parts operations driven by the increased average age of vehicles, recall campaigns, increased miles driven, and vehicle complexity. Affordability remains a consideration for consumers, given higher average vehicle prices and the resulting impact on monthly payments.

Previous wording

Retail Commercial Truck Dealership. During the nine months ended September 30, 2025, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 11.4% from the same period last year to 309,294 units. The Class 6-7 medium-duty truck market decreased 4.6% from the same period last year to 109,971 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 14.7% from the same period last year to 199,323 units. We believe the decline in sales is due to the prolonged recessionary freight rate environment. As discussed above, certain new trucks sold by PTG, are subject to the Truck Tariffs and other tariffs which have been or may be announced. We believe that, although PTG may experience increased demand for its service and parts operations as a result of the tariffs, ongoing tariff volatility combined with general economic and freight market uncertainty may suppress new and used commercial vehicle demand. As of September 30, 2025, the Class 6-8 medium- and heavy-duty truck backlog is 136,527 units according to data published by ACT Research compared to 190,602 as of September 30, 2024, and a decrease of 3.1% since the prior quarter.

Current wording

Retail Commercial Truck Dealership. During the three months ended March 31, 2026, North American sales of Class 6-8 medium- and heavy-duty trucks, the vehicles sold by our PTG business, decreased 17.1% from the same period last year to 85,901 units. The Class 6-7 medium-duty truck market decreased 11.1% from the same period last year to 34,192 units, and Class 8 heavy-duty trucks, the largest North American market, decreased 20.6% from the same period last year to 51,709 units. Lower order intake related to the weak freight environment during the third and fourth quarters of 2025 negatively impacted truck deliveries during the first quarter of 2026. However, order activity has begun increasing in recent months as the freight environment began to show signs of improvement, driven in part by customer orders placed ahead of anticipated 2027 emissions requirements. In addition, service and parts operations benefited from increased demand from delayed maintenance, as well as from an aging vehicle fleet. We expect related sales from increased order activity to occur primarily in the second half of 2026 and demand for service and parts operations to remain strong. As of March 31, 2026, the Class 6-8 medium- and heavy-duty truck backlog is 231,158 units according to data published by ACT Research compared to 170,568 as of December 31, 2025.

Previous wording

Commercial Vehicle Distribution and Other. During the nine months ended September 30, 2025, the Australian heavy-duty truck market reported sales of 10,563 units, representing a decrease of 17.8% from the same period last year, while the New Zealand market reported sales of 1,743 units, representing a decrease of 37.8% 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.

Current wording

Commercial Vehicle Distribution and Other. During the three months ended March 31, 2026, the Australian heavy-duty truck market reported sales of 3,007 units, representing a decrease of 11.0% from the same period last year, while the New Zealand market reported sales of 573 units, representing a decrease of 5.4% from the same period last year. For 2026, we expect similar performance to 2025 for our on-highway businesses, with higher fuel prices and broader operating cost pressures on transport operators may continue to affect demand. We expect demand for defense and energy systems products to remain strong in 2026, in particular in providing standby power energy solutions for our data systems customers.

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, 2024, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, 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, 2025, 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 97.3% of our revenue and 82.4% of our earnings before taxes during the nine months ended September 30, 2025. Income from our PTS investment represents 15.0% of our earnings before taxes during the nine months ended September 30, 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.

Current wording

Automotive and commercial truck dealerships represent 97.4% of our revenue and 85.0% of our earnings before taxes during the three months ended March 31, 2026. Income from our PTS investment represents 12.7% of our earnings before taxes during the three months ended March 31, 2026. 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

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 $92.8 million and $13.4 million, respectively, for the three months ended September 30, 2025, and increased revenue and gross profit by $189.0 million and $26.7 million, respectively, for the nine months ended September 30, 2025, compared to the same periods in 2024. Foreign currency average rate fluctuations increased earnings per share by approximately $0.02 per share for the three months ended September 30, 2025, and increased earnings per share by approximately $0.02 per share for the nine months ended September 30, 2025, compared to the same periods in 2024. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit increased 0.2% and decreased 0.6%, respectively, for the three months ended September 30, 2025, and increased 0.2% and increased 0.9%, respectively, for the nine months ended September 30, 2025, compared to the same periods in 2024.

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 $227.6 million and $34.9 million, respectively, for the three months ended March 31, 2026. Foreign currency average rate fluctuations increased earnings per share by approximately $0.05 per share for the three months ended March 31, 2026. Excluding the impact of foreign currency average rate fluctuations, aggregate revenue and gross profit decreased 4.0% and decreased 4.3%, respectively, for the three months ended March 31, 2026.

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 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, tariffs and non-tariff trade barriers, 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 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, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various regulations concerning 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; the success of our distribution of commercial vehicles, engines, and power systems; natural disasters, including those related to…

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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, tariffs and non-tariff trade barriers, 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 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, the cost of acquiring and the continued availability from truck manufacturers and suppliers of vehicles and parts for its fleet, including with respect to the effect of various regulations concerning 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; the success of our distribution of commerci…

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Previous wording

The accounting policies and estimates that we believe to be most dependent upon the use of estimates and assumptions are revenue recognition, goodwill and other indefinite-lived intangible assets, investments, income taxes, and lease recognition. Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report on Form 10-K for additional detail and discussion of these critical accounting policies and estimates. There have been no material changes in critical accounting policies and estimates as described in our most recent Annual Report.

Current wording

The accounting policy applied in the preparation of our financial statements that management believes is the most dependent upon the use of estimates and assumptions is our impairment testing of goodwill and other indefinite-lived intangible assets. Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K for additional detail and discussion of this critical accounting estimate. There have been no material changes in critical accounting estimates as described in our most recent Annual Report.

Previous wording

Our results for the nine months ended September 30, 2025, include a gain of $52.3 million from the sale of one retail automotive franchise in the U.S. in the first quarter of 2025, resulting in an after-tax gain of $38.9 million, or $0.58 per share. This gain was partially offset by impairments and other charges in the first quarter of 2025 of $25.2 million (none of which was individually material), resulting in an after-tax expense of $20.9 million, or $0.31 per share. This resulted in a net after-tax gain of $18.0 million, or $0.27 per share.

Current wording

Our results for the three months ended March 31, 2025, include a gain of $52.3 million from the sale of one retail automotive franchise in the U.S., resulting in an after-tax gain of $38.9 million, or $0.58 per share. This gain was partially offset by impairments and other charges of $25.2 million (none of which was individually material), resulting in an after-tax expense of $20.9 million, or $0.31 per share. This resulted in a net after-tax gain of $18.0 million, or $0.27 per share.

Previous wording

Retail unit deliveries of new vehicles increased from 2024 to 2025 due to a 2,204 unit, or 3.9%, increase in same-store new retail unit deliveries, partially offset by a 1,478 unit decrease from net dealership dispositions. Same-store retail units delivered increased 8.9% in the U.S. and decreased 2.1% internationally. Overall, new retail unit deliveries increased 6.4% in the U.S. and decreased 5.2% internationally. We believe the increase in same-store retail unit sales in the U.S. is primarily due to increased EV sales in the U.S. due to the expiration of certain tax credits during the quarter and continued strong consumer demand. We believe the decrease in same-store retail unit deliveries internationally is primarily due to a comparative decrease in the sale of premium-branded vehicles across the U.K. driven by macroeconomic pressures from inflation, coupled with an increase in social program costs, and the JLR cybersecurity incident discussed above.

Current wording

Retail unit deliveries of new vehicles decreased from 2025 to 2026 due to a 3,132 unit, or 4.8%, decrease in same-store new retail unit deliveries, coupled with a 31 unit decrease from net dealership acquisitions/dispositions. Same-store retail units delivered decreased 9.5% in the U.S. and increased 1.4% internationally. Overall, new retail unit deliveries decreased 9.7% in the U.S. and increased 1.8% internationally. We believe the decrease in retail unit sales in the U.S. is due to weather-related disruptions during January and February and the benefit in the prior period from tariff-related pull-forward of retail sales, as well as lower demand for electric vehicles subsequent to the elimination of certain U.S. tax incentives as of September 30, 2025. We believe the increase in retail unit deliveries internationally is primarily due to the increase of our sales from Chinese manufacturers, coupled with increases in sales of certain premium brands, partially offset by the elimination of premium vehicles from certain government incentive programs in the U.K.

Previous wording

New vehicle sales revenue increased from 2024 to 2025 due to a $234.3 million, or 2.8%, increase in same-store revenues, coupled with a $2.1 million increase from net dealership acquisitions/dispositions. Excluding $81.0 million of favorable foreign currency fluctuations, same-store new revenue increased 1.8%. Same-store revenue (excluding agency) increased due to a $2,110 per unit increase in same-store comparative average retail selling price (including a $555 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $298.9 million, partially offset by the decrease in same-store new retail unit sales, which decreased revenue by $82.5 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 and a change in mix of products sold, coupled with the transition to the agency model for certain brands in the U.K.

Current wording

New vehicle sales revenue decreased from 2025 to 2026 due to a $184.1 million, or 5.7%, decrease in same-store revenues, partially offset by a $16.8 million increase from net dealership acquisitions/dispositions. Excluding $67.7 million of favorable foreign currency fluctuations, same-store new revenue decreased 7.9%. Same-store revenue (excluding agency) decreased due to the decrease in same-store new retail unit sales, which decreased revenue by $317.7 million, partially offset by a $2,582 per unit increase in same-store comparative average retail selling price (including a $1,334 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $126.8 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.

Previous wording

Retail gross profit from new vehicle sales decreased from 2024 to 2025 due to a $19.8 million, or 2.5%, decrease in same-store gross profit, partially offset by a $3.0 million increase from net dealership acquisitions/dispositions. Excluding $8.9 million of favorable foreign currency fluctuations, same-store gross profit decreased 3.6%. Same-store gross profit (excluding agency) decreased due to a $202 per unit decrease in same-store comparative average gross profit (despite a $47 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $28.6 million, coupled with the decrease in same-store new retail sales, which decreased retail gross profit by $7.4 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to a change in the brand mix of units sold, coupled with increased EV sales in the U.S. due to the expiration of certain tax credits during the quarter, vehicle affordability considerations.

Current wording

Retail gross profit from new vehicle sales decreased from 2025 to 2026 due to a $35.9 million, or 12.0%, decrease in same-store gross profit, partially offset by a $3.7 million increase from net dealership acquisitions/dispositions. Excluding $6.9 million of favorable foreign currency fluctuations, same-store gross profit decreased 14.3%. Same-store gross profit (excluding agency) decreased due to the decrease in same-store new retail sales, which decreased retail gross profit by $27.5 million, coupled with a $311 per unit decrease in same-store comparative average gross profit (despite a $100 per retail unit increase attributable to favorable foreign currency fluctuations), which decreased gross profit by $15.3 million. We believe the decrease in same-store comparative average retail gross profit per unit (excluding agency) is primarily due to a highly competitive selling environment, the benefit in the prior period from tariff-related pull-forward of retail sales, and vehicle affordability considerations.

Previous wording

Finance and insurance revenue increased from 2024 to 2025 due to a $6.7 million, or 3.6%, increase in same-store revenue, partially offset by a $3.9 million decrease from net dealership dispositions. Excluding $2.3 million of favorable foreign currency fluctuations, same-store finance and insurance revenue increased 2.3%. Same-store revenue (excluding agency) increased due to an $85 per unit increase in same-store comparative average finance and insurance retail revenue (including a $22 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $8.6 million, partially offset by the decrease in combined same-store new and used retail unit sales, which decreased revenue by $2.3 million. Same-store finance and insurance revenue per unit (excluding agency) increased 0.9% in the U.S. and increased 9.9% 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, coupled with enhanced product offerings internationally and our efforts to increase product penetration across the markets we serve.

Current wording

Finance and insurance revenue decreased from 2025 to 2026 due to a $1.7 million, or 0.8%, decrease in same-store revenue, coupled with a $1.4 million decrease from net dealership acquisitions/dispositions. Excluding $5.0 million of favorable foreign currency fluctuations, same-store finance and insurance revenue decreased 3.3%. Same-store revenue (excluding agency) decreased due to the decrease in combined same-store new and used retail unit sales, which decreased revenue by $8.8 million, partially offset by a $57 per unit increase in same-store comparative average finance and insurance retail revenue (including a $44 per retail unit increase attributable to favorable foreign currency fluctuations), which increased revenue by $6.2 million. Same-store finance and insurance revenue per unit (excluding agency) decreased 0.6% in the U.S. and increased 9.7% 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 improved finance and insurance penetration internationally.

Previous wording

Service and parts gross profit increased from 2024 to 2025 due to a $96.1 million, or 7.5%, increase in same-store gross profit, coupled with an $8.0 million increase from net dealership acquisitions. Excluding $13.5 million of favorable foreign currency fluctuations, same-store gross profit increased 6.4%. The increase in same-store gross profit is due to the increase in same-store revenues, which increased gross profit by $69.3 million, coupled with a 1.2% increase in same-store gross margin from 57.9% to 59.1%, which increased gross profit by $26.8 million. The increase in same-store gross profit is due to a $41.4 million, or 5.5%, increase in customer pay gross profit, a $33.2 million, or 12.9%, increase in warranty gross profit, and a $21.5 million, or 7.9%, increase in vehicle preparation and body shop gross profit. We believe the increase in same-store gross margin is primarily due to a change in the mix of warranty and customer pay.

Current wording

Service and parts gross profit increased from 2025 to 2026 due to a $27.1 million, or 5.7%, increase in same-store gross profit, coupled with a $0.2 million increase from net dealership acquisitions/dispositions. Excluding $12.3 million of favorable foreign currency fluctuations, same-store gross profit increased 3.1%. The increase in same-store gross profit, which was partially offset by weather-related disruptions during January and February, is due to the increase in same-store revenues, which increased gross profit by $22.2 million, coupled with a 0.6% increase in same-store gross margin from 58.4% to 59.0%, which increased gross profit by $4.9 million. The increase in same-store gross profit is due to an $18.4 million, or 6.7%, increase in customer pay gross profit, a $5.0 million, or 4.9%, increase in warranty gross profit, and a $3.7 million, or 3.7%, increase in vehicle preparation and body shop gross profit. We believe the increase in same-store gross margin is primarily due to a change in the mix of warranty and customer pay, coupled with an increase in the effective labor rate.

Previous wording

Retail unit sales of new trucks decreased from 2024 to 2025 due to a 1,107 unit, or 20.5%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is due to replacement demand cycles, coupled with the prolonged recessionary freight rate environment.

Current wording

Retail unit sales of new trucks decreased from 2025 to 2026 due to a 953 unit, or 25.5%, decrease in same-store new retail unit sales. We believe the decrease in same-store unit sales is primarily due to reduced orders during the third and fourth quarters of 2025 related to the prolonged recessionary freight rate environment and the implementation of tariffs, coupled with market uncertainty prior to the recent clarity regarding the 2027 heavy-duty emissions standards.

Previous wording

New commercial truck retail gross profit decreased from 2024 to 2025 due to an $11.3 million, or 24.6%, decrease in same-store gross profit. The decrease in same-store gross profit is due to the decrease in same-store new retail unit sales, which decreased gross profit by $9.5 million, coupled with a $428 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $1.8 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a shift in the sales mix towards fleet sales, coupled with a prolonged recessionary freight rate environment.

Current wording

New commercial truck retail gross profit decreased from 2025 to 2026 due to a $10.3 million, or 30.7%, decrease in same-store gross profit. The decrease in same-store gross profit is due to the decrease in same-store new retail unit sales, which decreased gross profit by $8.5 million, coupled with a $646 per unit decrease in same-store comparative average gross profit, which decreased gross profit by $1.8 million. We believe the decrease in same-store comparative average gross profit per unit is primarily due to a shift in the sales mix toward larger fleets.

Previous wording

Retail unit sales of used trucks decreased from 2024 to 2025 due to a 116 unit, or 12.5%, decrease in same-store retail unit sales. We believe the decrease in same-store unit sales is primarily due to the prolonged recessionary freight rate environment.

Current wording

Retail unit sales of used trucks decreased from 2025 to 2026 due to a 178 unit, or 18.3%, decrease in same-store retail unit sales. We believe the decrease in same-store unit sales is primarily due to lower demand for used trucks due to market uncertainty and the prolonged recessionary freight rate environment.

Previous wording

Service and parts revenue decreased from 2024 to 2025 due to a $4.6 million, or 2.0%, decrease in same-store revenues, coupled with a $1.2 million decrease from net dealership dispositions. Customer pay work represented 79.4%, warranty represented 17.5%, and collision repair represented 3.1% of PTG's service and parts revenue. The decrease in same-store revenue is due to a $4.6 million, or 10.4%, decrease in warranty revenue and a $0.1 million, or 0.1%, decrease in customer pay revenue, partially offset by a $0.1 million, or 1.4%, increase in body shop revenue. We believe the decrease in same-store service and parts revenue is primarily due to customers delaying maintenance costs due to the prolonged recessionary freight rate environment.

Current wording

Service and parts revenue increased from 2025 to 2026 due to a $9.0 million, or 4.1%, increase in same-store revenues, coupled with a $1.2 million increase from net dealership acquisitions/dispositions. Customer pay work represented 78.8%, warranty represented 18.1%, and collision repair represented 3.1% of PTG's service and parts revenue. The increase in same-store revenue is due to a $9.1 million, or 5.3%, increase in customer pay revenue and a $0.4 million, or 1.0%, increase in warranty revenue, partially offset by a $0.5 million, or 7.5%, decrease in body shop revenue. We believe the increase in same-store service and parts revenue is primarily due to increased demand for repairs and maintenance services driven by aging vehicle fleet and increased demand from delayed maintenance.

Previous wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $206.6 million of revenue during the three months ended September 30, 2025, compared to $186.8 million of revenue in the prior year, an increase of 10.6%. This business also generated $46.5 million of gross profit during the three months ended September 30, 2025, compared to $44.6 million of gross profit in the prior year, an increase of 4.3%.

Current wording

Penske Australia primarily distributes and services commercial vehicles, engines, and power systems. This business generated $201.9 million of revenue during the three months ended March 31, 2026, compared to $211.5 million of revenue in the prior year period, a decrease of 4.5%. This business also generated $46.2 million of gross profit during the three months ended March 31, 2026, compared to $44.2 million of gross profit in the prior year period, an increase of 4.5%. Excluding $19.7 million of favorable foreign currency fluctuations, revenue decreased 13.9%, and excluding $4.4 million of favorable foreign currency fluctuations, gross profit decreased 5.2%. These decreases are primarily due to a decrease in units sold related to the decline in the Australian and New Zealand heavy-duty truck market, coupled with the timing of orders on power system units.

Previous wording

Selling, general, and administrative expenses ("SG&A") increased from 2024 to 2025 due to a $31.2 million, or 3.6%, increase in same-store SG&A, partially offset by an $8.9 million decrease from net dealership dispositions. Excluding $11.2 million of unfavorable foreign currency fluctuations, same-store SG&A increased 2.3%. SG&A expenses as a percentage of gross profit was 72.7%, an increase of 150 basis points compared to 71.2% in the prior year. SG&A expenses as a percentage of total revenue were 11.8% and 11.7% in the three months ended September 30, 2025 and 2024, respectively. We believe the increase in SG&A expenses as a percentage of gross profit is primarily due to increases in personnel expenses, rent and related expenses, other general overhead expenses, as well as the impact of the freight environment on PTG's earnings and the JLR cybersecurity incident discussed above.

Current wording

Selling, general, and administrative expenses ("SG&A") increased from 2025 to 2026 due to a $13.9 million, or 1.5%, increase in same-store SG&A, coupled with a $0.3 million increase from net dealership acquisitions/dispositions. Excluding $27.0 million of unfavorable foreign currency fluctuations, same-store SG&A decreased 1.4%. SG&A expenses as a percentage of gross profit was 74.3%, an increase of 230 basis points compared to 72.0% in the prior year. SG&A expenses as a percentage of total revenue were 12.3% and 12.0% in the three months ended March 31, 2026 and 2025, respectively. We believe the increase in SG&A expenses as a percentage of gross profit is primarily due to increases in personnel expenses and rent and related expenses.

Previous wording

Depreciation increased from 2024 to 2025 due to a $2.2 million, or 5.6%, increase in same-store depreciation due to capital expenditures, coupled with a $0.1 million increase from net dealership acquisitions.

Current wording

Depreciation increased from 2025 to 2026 due to a $3.9 million, or 9.6%, increase in same-store depreciation due to capital expenditures, coupled with a $0.3 million increase from net dealership acquisitions/dispositions.

Previous wording

Floor plan interest expense decreased from 2024 to 2025 due to a $7.6 million, or 15.5%, decrease in same-store floor plan interest expense, coupled with a $0.3 million decrease from net dealership dispositions. The overall decrease is due to decreases in applicable rates, coupled with decreases in average amounts outstanding under floor plan arrangements due to decreasing levels of inventory.

Current wording

Floor plan interest expense decreased from 2025 to 2026 due to a $3.5 million, or 8.4%, decrease in same-store floor plan interest expense, coupled with a $0.4 million decrease from net dealership acquisitions/dispositions. The overall decrease is due to decreases in applicable rates, coupled with decreases in average amounts outstanding under floor plan arrangements due to decreasing levels of inventory.

Previous wording

Other interest expense increased from 2024 to 2025 due to increases in average revolver borrowing amounts outstanding under our credit agreements primarily due to our repayment in full at scheduled maturity of our $550 million of 3.50% senior subordinated notes due September 1, 2025, partially offset by decreases in applicable rates.

Current wording

Other interest expense increased from 2025 to 2026 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

Equity in earnings of affiliates decreased from 2024 to 2025 due to a $1.8 million, or 3.0%, decrease in earnings from our investment in PTS, coupled with the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in certain German dealerships in the fourth quarter of 2024. We believe the decrease in our PTS equity earnings is primarily due to continued weakness in the freight market which drove a decline in rental revenue, coupled with an increase in bad debt expense and lower gain on the sale of used trucks.

Current wording

Equity in earnings of affiliates increased from 2025 to 2026 due to a $7.9 million, or 23.8%, increase in earnings from our investment in PTS, partially offset by the decrease in earnings from our joint ventures primarily due to the sale of our 50% interest in our joint venture in Spain during the second quarter of 2025. We believe the increase in our PTS equity earnings was driven by improved operating performance during the first quarter of 2026, including growth in full-service leasing revenue, improved fleet utilization, and lower operating and interest expenses, including maintenance and depreciation expense, resulting from continued fleet reductions. These benefits were partially offset by continued challenging conditions in the rental market, which pressured commercial and consumer rental demand, as well as lower gain on sale of used trucks.

Previous wording

Income taxes increased from 2024 to 2025 despite a $12.2 million decrease in our pre-tax income compared to the prior year. Our effective tax rate was 26.9% during the three months ended September 30, 2025, compared to 25.4% during the three months ended September 30, 2024, primarily due to annual refinement of U.S. and state tax provisional estimates and fluctuations in our geographic pre-tax income mix.

Current wording

Income taxes decreased from 2025 to 2026 primarily due to a $26.8 million decrease in our pre-tax income compared to the prior year. Our effective tax rate was 27.4% during the three months ended March 31, 2026, compared to 26.3% during the three months ended March 31, 2025, primarily due to our acquisition of PMG whose earnings only became subject to corporate income taxes after our November 2025 acquisition, coupled with the fluctuations in our geographic pre-tax income mix.

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 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.

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 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

Refer to the disclosures provided in Part I, Item 1, Note 10 of the Notes to our Consolidated Financial Statements for a description of our off-balance sheet arrangements which includes a repurchase commitment related to our floor plan credit agreement with Daimler Truck Financial Services Australia and Mercedes-Benz Financial Services New Zealand.

Current wording

Refer to the disclosures provided in Part I, Item 1, Note 10 of the Notes to our Consolidated Financial Statements for a description of our off-balance sheet arrangements which includes a repurchase commitment related to our floor plan credit agreement with Daimler Truck Financial Services Australia and Daimler Financial Services New Zealand.

Previous wording

As of September 30, 2025, we had $80.3 million of cash available to fund our operations and capital commitments. In addition, we had an aggregate of approximately $1.8 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.

Current wording

As of March 31, 2026, we had $83.7 million of cash available to fund our operations and capital commitments. In addition, we had an aggregate of approximately $1.2 billion available for borrowing under our U.S. credit agreement, U.K.

Previous wording

From time to time, our Board of Directors has authorized securities repurchase programs pursuant to which we may, as market conditions warrant, purchase our outstanding common stock or debt on the open market, in privately negotiated transactions, via a tender offer, through a pre-arranged trading plan, pursuant to the terms of an accelerated share repurchase program, or by other means. We have historically implemented pre-arranged trading plans as part of our securities repurchase programs. These plans authorize share repurchases based on parameters outlined in the specific plan during periods when we otherwise would not trade in our securities, such as the period approaching the end of a quarter through our public announcement of earnings. We have historically funded any such repurchases using cash flow from operations, borrowings under our U.S. credit agreement, and borrowings under our U.S. floor plan arrangements. The decision to make repurchases will be based on factors such as general economic and industry conditions, the market price of the relevant security versus our view of its intrinsic value, the potential impact of such repurchases on our capital structure, and our consideration of any alternative uses of our capital, such as for acquisitions, dividends, the repayment of our existing indebtedness, and strategic investments in our current businesses, in addition to any then-existing limits imposed by our finance agreements and securities trading policy. As of September 30, 2025, $287.9 million remained outstanding and available for repurchases under our securities repurchase program. As of October 24, 2025, $262.3 million remained outstanding and available for repurchases. This authority has no expiration. Refer to the disclosures provided in Part I, Item 1, Note 11 of the Notes to our Consolidated Condensed Financial Statements for a summary of shares repurchased during the nine months ended September 30, 2025.

Current wording

From time to time, our Board of Directors has authorized securities repurchase programs pursuant to which we may, as market conditions warrant, purchase our outstanding common stock or debt on the open market, in privately negotiated transactions, via a tender offer, through a pre-arranged trading plan, pursuant to the terms of an accelerated share repurchase program, or by other means. We have historically implemented pre-arranged trading plans as part of our securities repurchase programs. These plans authorize share repurchases based on parameters outlined in the specific plan during periods when we otherwise would not trade in our securities, such as the period approaching the end of a quarter through our public announcement of earnings. We have historically funded any such repurchases using cash flow from operations, borrowings under our U.S. credit agreement, and borrowings under our U.S. floor plan arrangements. The decision to make repurchases will be based on factors such as general economic and industry conditions, the market price of the relevant security versus our view of its intrinsic value, the potential impact of such repurchases on our capital structure, and our consideration of any alternative uses of our capital, such as for acquisitions, dividends, the repayment of our existing indebtedness, and strategic investments in our current businesses, in addition to any then-existing limits imposed by our finance agreements and securities trading policy. As of March 31, 2026, $221.2 million remained outstanding and available for repurchases under our securities repurchase program. This authority has no expiration. Refer to the disclosures provided in Part I, Item 1, Note 11 of the Notes to our Consolidated Condensed Financial Statements for a summary of shares repurchased during the three months ended March 31, 2026.

Previous wording

We also announced a cash dividend of $1.38 per share, payable on December 2, 2025, to stockholders of record on November 14, 2025. While future quarterly or other cash dividends will depend upon a variety of factors considered relevant by our Board of Directors, which may include our expectations regarding vehicle availability, the impact of recently announced tariffs, the rate of inflation, earnings, cash flow, capital requirements, restrictions relating to any then-existing indebtedness, financial condition, alternative uses of capital, and other factors, we currently expect to continue to pay comparable dividends in the future.

Current wording

While future quarterly or other cash dividends will depend upon a variety of factors considered relevant by our Board of Directors, which may include our expectations regarding vehicle availability, the impact of recently announced tariffs, the rate of inflation, earnings, cash flow, capital requirements, restrictions relating to any then-existing indebtedness, financial condition, alternative uses of capital, and other factors, we currently expect to continue to pay comparable dividends in the future.

Previous wording

During the third quarter of 2025, we repaid in full at scheduled maturity our $550 million of 3.50% senior subordinated notes due September 1, 2025. As of September 30, 2025, we were in compliance with all financial covenants under our credit agreements, and we believe we will remain in compliance with such covenants for the next twelve months. Refer to the disclosures provided in Part I, Item 1, Note 9 of the Notes to our Consolidated Condensed Financial Statements for a detailed description of our long-term debt obligations.

Current wording

As of March 31, 2026, we were in compliance with all financial covenants under our credit agreements, and we believe we will remain in compliance with such covenants for the next twelve months. Refer to the disclosures provided in Part I, Item 1, Note 9 of the Notes to our Consolidated Condensed Financial Statements for a detailed description of our long-term debt obligations.