Penske has 3.8% average coupon on fixed-rate debt; leverage is 0.8x

By Devika Patel

Knoxville, Tenn., Feb. 9 – Penske Automotive Group, Inc. reported a solid balance sheet with a 0.8x leverage ratio, a low average interest rate on its fixed-rate debt and 35% of its debt having fixed-rate.

“Thirty-five percent of our debt is fixed,” executive vice president and chief financial officer Shelley Hulgrave said on the company’s fourth quarter and year ended Dec. 31, 2022 earnings conference call on Wednesday.

“The average interest rate on our total fixed rate debt is 3.8%, which we have secured for an average remaining term of 5.7 years.

“In conclusion, our balance sheet is in great shape, and we remain confident in our ability to manage through any macro challenges that may lie ahead,” she said.

At the end of December, the company’s leverage ratio was 0.8x, but management may increase leverage as high as 4x for growth, acquisitions and shareholder returns.

“We have the ability to flex our leverage to 4x, leaving us plenty of opportunities to grow our business through acquisitions and to continue returning capital to shareholders,” Hulgrave said.

Cash and cash equivalents were $106.5 million as of Dec. 31, 2022, compared to $100.7 million as of Dec. 31, 2021.

Long-term debt was $1,546,900,000 as of Dec. 31, 2022, compared to $1,392,000,000 as of Dec. 31, 2021.

Current portion of long-term debt was $75.2 million as of Dec. 31, 2022, compared to $82 million as of Dec. 31, 2021.

Penske is a Bloomfield Hills, Mich.-based diversified transportation services company.

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