BLOOMFIELD HILLS, Mich. -

Sparked by what top management described as a reinvigorated focus on increasing used-vehicle sales, Penske Automotive Group posted significant gains in third-quarter income.

Sharing their financial report late last week, Penske executives said third-quarter income from continuing operations attributable to common shareholders came in at $31 million or 34 cents per share. During the same quarter last year, they indicated income was $27.7 million or 30 cents per share.

Penske created that income growth because its total revenue in the third quarter increased 6.5 percent to $2.8 billion. The company calculated the revenue increase was driven by a 4.7-percent jump in total retail unit sales.

Executives also highlighted total used units retailed climbed 16.5 percent, including an increase in the U.S. of 20.6 percent. However, they mentioned total new units retailed declined 2.6 percent due to the impact of the highly successful government incentive programs in the U.S., U.K. and Germany last year.

Elsewhere, Penske reported total same-store retail revenue moved higher by 3.8 percent during the quarter. The company noted that upward movement included growth of 4.2 percent and 3.1 percent in its U.S. and international operations, respectively.

Excluding changes in exchange rates, Penske computed that total same-store retail revenue increased 6.0 percent in the third quarter.

The overall performance pleased Penske Automotive Group chairman Roger Penske.

“The new-vehicle retail environment was challenging during the third quarter; however, our performance at our premium/luxury franchises and our focus on increasing used vehicle sales drove our same-store retail revenue growth,” Penske stated.

The company also shared its financial performance through the first nine months of the year.

Penske determined total revenues for the first three quarters that ended Sept. 30 increased by 12.5 percent to $7.9 billion. That revenue amount allowed the company to post an income amount from continuing operations of $80.9 million or 88 cents per share.

Also, management said that income amount also includes after-tax gains of $1.1 million, or 1 cent per share, relating to purchases of the company’s 3.5 percent senior subordinated convertible note that are due in 2026.

Executives emphasized a positive income differential as compared to the first nine months of last year. That’s when they compiled $63.9 million in income or 70 cents per share. Last year’s after-tax gains constituted $3.1 million or 4 cents per share.

Financial Update on smart USA

Along with a report on Penske’s entire balance sheet, executives offered the latest data about wholly owned smart USA.

The company indicated smart USA wholesaled 1,165 units during the third quarter. Management mentioned how smart USA introduced finance and marketing campaigns this month that are designed to sell through the balance of the 2010 model year inventory. That strategy resulted in $0.9 million, or 1 cent per share, of after-tax expense in the third quarter.

As previously announced, smart USA insisted that it expects to incur approximately $25 million of development, engineering and tooling costs relating to a new five-door vehicle based upon Nissan’s global architecture to be distributed through the smart USA dealer network. Executives believe that approximately $17 million of the costs incurred relating to this new vehicle will be expensed prior to the projected launch of the vehicle in the fourth quarter of 2011.

Penske Credit Facilities

The company reiterated that its U.S. credit facility was extended in September by one year to September 2013.

As of Sept. 30, Penske determined it had approximately $262 million and $60 million of revolving credit available under its U.S. and U.K. credit facilities, respectively.

“Together with cash flow from operations and working capital, we believe our credit facilities will provide liquidity to fund our growth objectives and repurchase or redeem outstanding securities, including the $150.6 million principal amount of convertible notes expected to be redeemed in April 2011,” explained Penske chief financial officer Bob O’Shaughnessy.

Securities Repurchase Activity

Penske also mentioned it currently has authorization to repurchase up to $150 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,” management pointed out.

Future Outlook

The Penske chairman shared an upbeat assessment about where the company is headed.

“We remain committed to growing our business. In 2010, we have acquired or been awarded new franchises that we expect will generate approximately $350 million of revenue on an annualized basis,” Penske highlighted.

“We will continue to pursue opportunities to generate incremental revenue, while maintaining the financial discipline that has allowed us to pay down more than $210 million of long-term debt since the beginning of 2009,” he concluded.