BLOOMFIELD HILLS, Mich. -

Fueled by used-vehicle department gains, Penske Automotive Group declared Wednesday that it achieved the highest quarterly profit in company history during the third quarter.

Penske revealed its third-quarter income from continuing operations attributable to common shareholders was $56.7 million or 62 cents per share. In the year-ago period, the company posted income of $34.8 million or 38 cents per share.

During the recent quarter, the company said it recognized a net income tax benefit of $11.0 million or 12 cents per share. Penske explained the benefit reflected a positive adjustment from the resolution of certain tax items in the U.K. of $17.0 million or 19 cents per share, partially offset by a reduction in deferred tax assets of $6.0 million or 7 cents per share.

After adjusting for these items, Penske determined adjusted income from continuing operations attributable to common shareholders was a record $45.7 million or 50 cents per share, representing an increase of 31.3 percent, compared to the third quarter last year.

Executives went on to share total revenue increased by 10.5 percent to $3.0 billion as total retail unit sales increased 6.2 percent. The increase in retail unit sales was highlighted by a 16.0-percent increase in used retail unit sales, which drove the company’s used-to-new ratio to 0.88 to 1.

During the quarter, Penske pointed out higher average transaction prices on both new and used vehicles also contributed to the revenue increase, including an 8.8-percent rise in same-store retail revenue from the company’s premium and luxury brands.

The company added the parts and service business remained strong, climbing 8.6 percent in the quarter and 4.1 percent on a same-store basis.

Penske detailed several other specific performance points from the third quarter, including:

—Total retail unit sales increased 6.2 percent to 72,204, up 5.9 percent in the U.S. and up 6.8 percent internationally.
—New unit retail sales moved 1.2 percent, while used unit retail sales soared 16.0 percent.
—Same-store retail revenue increased 6.4 percent, including 2.2 percent for new, 15.0 percent for used, 9.3 percent for F&I and 4.1 percent for service and parts. It was also up 5.1 percent in the U.S. and 8.7 percent internationally.
—Average transaction price per unit moved 8.4 percent higher for new units to $38,236 and 2.2 percent higher for used models to $26,404
—Average gross profit per new unit: $3,238, up 14.8 percent with gross margin at 8.5 percent, up 50 bps.
—Average gross profit per used unit: $1,978, up 2.8 percent with gross margin at 7.5, up 10 bps.
—Inventory days’ supply: New stood at 43 days, while used came in at 47 days.

“Our business produced another outstanding quarter of results in both the United States and internationally,” chairman Roger Penske stated.

“Although we faced a challenging new-vehicle inventory situation throughout the quarter as a result of the earthquake and tsunami that struck Japan, the company generated same-store retail revenue increases in each area of the business and leveraged our cost structure by 70 basis points, improving operating income by 17.6 percent,” Penske highlighted.

“Going forward, we believe the inventory supply of new vehicles for the affected brands is improving and should normalize in the first quarter of 2012,” he went on to say.

Turning back to foreign interests, Penske added, “Our U.K. business performed well in the third quarter. We continue to realize the benefit from the premium/luxury brand mix of our business in that market and generated a 3.3-percent increase in same-store new retail unit sales, outperforming the overall U.K. market, which declined nearly 1 percent in the third quarter. Further, same-store used retail unit sales increased 8.2 percent in the U.K. during the quarter.”

Nine-Month Metrics

Also on Wednesday, Penske mentioned how it has fared through the first nine months of the year.

For the span that ended Sept. 30, the company’s total revenue increased 12.0 percent to $8.6 billion and income from continuing operations attributable to common shareholders was $134.9 million or $1.46 per share. During the first nine months of last year, Penske generated $90.1 million or $0.98 per share.

Excluding the impact of the net tax benefit the company previously mentioned, Penske’s adjusted income from continuing operations attributable to common shareholders rose 37.5 percent to $123.9 million or $1.34 per share.

Acquisition Activity

As previously announced, Penske has acquired seven franchise rooftops so far this year, which are expected to generate approximately $525 million of annual revenue.

Additionally, the company has either sold or is in the process of disposing dealerships, which represent approximately $300 million in annualized revenue.

U.S. Credit Agreement

During the third quarter, Penske amended its credit agreement with Mercedes-Benz Financial Services USA and Toyota Motor Credit Corp., to increase the revolving loan availability by $75 million from $300 million to $375 million.

Additionally, the term of Penske’s U.S. Credit Agreement was extended by one year through Sept. 30, 2014, pursuant to its evergreen provision.

Securities Repurchase Activity

Also during the third quarter, Penske acquired 1,831,559 shares of its common stock for an aggregate purchase price of $31.9 million, or an average price of $17.39 per share.

For the time period that ended Sept. 30, the company acquired 2,449,768 shares of its common stock for an aggregate purchase price of $44.3 million or an average price of $18.07 per share.

The company currently has remaining authorization from its board of directors to repurchase up to $106.8 million of its outstanding common stock, debt or convertible debt.

“Securities may be acquired from time to time either through open market purchases, negotiated transactions or other means,” officials pointed out.

Dividend Increase

Finally on Wednesday, Penske announced its board of directors approved a 12.5-percent increase in the company’s dividend to 9 cents per share.

The dividend is payable on Dec. 1 to shareholders of record on Nov. 14. The dividend also represents the second increase this year and restores it to the level paid by the company prior to its suspension in the fourth quarter of 2008 due to the recession.

“The increase in the dividend, coupled with the 2.4 million shares we have reacquired so far this year, demonstrates the strength of our financial position, the confidence we have in the improving auto sales environment and our commitment to shareholders,,” stated Penske president Rob Kurnick.