PENSKE AUTOMOTIVE GROUP, INC. Q1 FY2026 earnings call

• Delivered over 123,000 new and used vehicles and nearly 3,600 new and used commercial trucks, generating ~$7.9B revenue; earned $324M EBT, $235M net income, EPS $3.56. • First quarter results included $60M gain on sale of dealership offset by $13M disposals and other charges; excluding items, adjusted EBT $276M, net income $201M, EPS $3.05. • Acquired two Lexus dealerships in Orlando metropolitan area in February, complementing previous acquisitions, expected to generate $2B annualized revenue. • Repurchased 170,000 shares of common stock for $26M; increased dividend to $1.40, highest yield in peer group. • In U.S. retail automotive, weather-related challenges and prior year tariff and BEV tax credit impacts affected unit sales; technician count up 3%, bay utilization 84%. • In Premier Truck Group, new unit sales down 26% in line with North American Class 8 market, but recent new truck orders up, expected higher sales in second half. • In Penske Transportation Solutions, fleet right-sizing led to higher utilization, lower operating costs contributing to increased earnings. • In international operations, UK automotive registrations up, Australia EBT up, commercial vehicle and power system business in Australia growing with strong order book

Retail Automotive: Same-store new units declined 5%, used increased 1%; gross profit per new unit retailed $4,783, up $94 sequentially; per used unit $2,076, up $306 sequentially; service and parts revenue and gross profit were Q1 record, same-store revenue up 4.6%, gross profit up 5.7%, margin up 60 basis points. Commercial Truck: Retail commercial truck Q1 unit sales declined 953 units; recent months saw increase in new truck orders, Class 8 orders up 91%, industry backlog up 33% to 175,000 units; Premier Truck retailed 3,583 new and used trucks, generated $695M revenue and $128M gross profit; service and parts revenue up 5%, gross profit 73% of segment gross profit. Penske Transportation Solutions: Operating revenue declined 4% to $2.5B; lease revenue up 2%, rental down 17%, logistics down 3%; sold 9,319 units, fleet size 387,500; equity income increased 24% to $41M. International: Revenue $3.3B, up 6%; new units up 2%, used up 3%; same-store service and parts revenue up 7%, customer pay up 10% offsetting 3% warranty decline; UK automotive registrations up 6% to $615,000; Australia EBT up 15%, commercial vehicle and power system business diversified with revenue and gross profit split approx two thirds off highway and one third on highway, off highway business growing with over 600M AUD secured orders for 2026, energy solutions, mining, and defense sectors strong

• Expect increase in new truck orders to benefit second half of 2026; commercial truck market recovery underway. • Continue to right-size PTS fleet, expecting to take out another 3,000 - 4,000 units; see potential for rental utilization to continue improving. • Plan to continue pruning dealership portfolio, looking for opportunities in key markets; focus on luxury and volume foreign brands. • Continue to invest in Australia's defense, power system, and power generation sectors

• Weather-related challenges impacted business in January and February, resulting in lost business and added expenses, estimated $6M impact to earnings. • UK automotive environment remains challenging with inflation, higher taxes, consumer affordability, and government mandate towards electrification. • Recessionary freight environment and market uncertainty associated with tariffs and emissions regulations impacted new truck orders in late 2025. • Fluctuations in interest rates could impact interest expense; effective tax rate could be affected by changes in tax status of entities. • Potential over-dealing of Chinese brands in international markets, which could lead to discounting and lower profitability

Q: Weather had a significant impact on the industry in January and February in the U.S. Can you quantify at all how much you were affected, and were you able to get any of that back?

A: Two significant storms impacted, added expense of snow removal, fixed gross loss about $4 - $5M, overall about $6M impact to earnings in Q1.

Q: Shelly, you called out cost on the SG&A side of about $15 million. It sounds like some of those will be recurring, I guess the rent and the health in the U.K., Are those one time in nature? Are they not recurring? What were you kind of alluding to with that?

A: A little bit of both; rent increases year over year, health benefit plans costs not down trend; UK social programs anniversary in Q2, estimate SG&A to growth would be in 71% - 72% range without those.

Q: Usually you don't see much movement in the retail automotive revenue mix, but you see a couple of good changes year over year. And I'm just wondering if that's a trend we can look to more. Are those going to be your focus brands? Continue to focus on the luxury and the volume foreign?

A: Strategy is to prune portfolio, look at low performers, manufacturer CapEx expectations, and grow business; continue to focus on luxury and volume foreign brands, keep leverage in check.

Q: Pretty nice earnings growth in the quarter, despite the lower gain on sale. Obviously, a lot of those improvements are coming from just lower maintenance, debt, fleet costs, et cetera. I'm curious how we should think about trajectory of PTL earnings for the remainder of the year?

A: Fleet reduced, interest costs and depreciation impacted positively; rental utilization up, operating expenses lower; expect to take out another 3,000 - 4,000 units from fleet, see rental utilization continue to improve, lease signings up bodes well for future.

Q: Pretty strong numbers overall in parks and service business on the international side. But it looks like if you look at it excluding the FX benefit, you know, growth was probably slightly up. I'm curious if that's correct. And, you know, what kind of initiatives are in place to maybe accelerate that growth going forward?

A: Excluding FX, growth slightly up; in UK slightly up, Italy up 11%, Germany up 20%; focus on customer pay as warranty down, higher margin business.

Q: Just kind of curious how you're seeing things now as the year plays out, you know, because you guys, you know, are a bit unique in that you have easier compares. Just kind of curious, you know, how you're thinking about, you know, the rest of the year on the new luxury and then maybe also talk about as we lap the EVs.

A: EV sales down 61% Q1 2026 vs Q1 2025, stabilized at 4 - 5% of retail sales; luxury market has tough comps, Audi down 30%, BMW down 15%, Porsche down 18%, Mercedes down 15%; OEMs adjusted to tariff impact, back in market with new products.

Q: Just curious on the sustainability, I mean, I'm sure there's probably a portion of the truck demand that's probably driven by expectations for higher prices, you know, with some of the regulatory changes. So I'm just kind of curious if you think this is something that, you know, you think is long-term sustainable truck demand, or if this is something that you think is temporarily driven by some of those short-term factors like regulations?

A: Some short-term influence on truck orders, finality on EPA 27 guidelines drove order intake; near-term bump with tariff announcements; structural factors like DOT and FMCSA cracking down on illegal carriers tightening capacity, driving freight rates up and used truck demand; public companies report changes are structural.

Q: Could you guys just comment on what you saw in Q1 regarding Chinese models and taking share in international markets? And then, you know, is there a house view on how you think about the implications to premium luxury? And, I mean, do you think about leaning into, you know, building exposure with these models or just kind of continue to take it slow and monitor?

A: Chinese brands gaining share in Europe and Australia; in UK and Germany, started putting brands in existing facilities, first quarter positive; take walk before run approach, expand where makes sense, be cautious; implications on premium luxury, need to monitor brand over-inventory and market saturation.

Q: Switching gears a little bit to a more thematic question, the trend of energy and autos converging on a global scale is getting a lot of interest from investors. Could you speak a little bit about your Australia, New Zealand segment and any opportunity there?

A: Australia's data center backup power business has 75% market share for 1,250 kW+ power range; focused on growing prime power strategy and units in operation, example of remanufacturing cylinder heads for mining customer's power station.

Q: On service bay utilization, you talked about it being, I think, 84%. So I was just curious, what prevents that from not being 100%? Is it purely labor shortages or other variables?

A: Combination of techs and part availability; tech count up 3%; need for flexibility in work, like having parts available and handling different types of work including BEVs; can tick up a few percentage points more but growing north of 90% challenging