Penske Automotive Group, Inc. (NYSE:PAG) Q4 2018 Earnings Conference Call Transcript
Feb 07, 2019 • 02:00 pm ET
Good afternoon, ladies and gentlemen. Welcome to the Penske Automotive Group Fourth Quarter 2018 Earnings Conference Call. Today's call is being recorded and will be available for replay approximately one hour after completion through February 14, 2019, on the company's website under the Investors tab at www.penskeautomotive.com.
I will now introduce, Anthony Pordon, the company's Executive Vice President of Investor Relations and Corporate Development. Sir, please go ahead.
Anthony R. Pordon
Thank you, John, and good afternoon, everyone, and thank you for joining us. A John indicated a press release detailing Penske Automotive Group's fourth quarter 2018 financial results was issued this morning and is posted on our website along with a presentation designed to assist you in understanding our performance and our strategy.
As always, I'm available by e-mail or phone for any follow-up questions you may have. Joining me for today's call are Roger Penske, our Chairman; J.D. Carlson, Chief Financial Officer; and Shelley Hulgrave, the Corporate Controller.
On this call, we will be discussing certain non-GAAP financial measures, such as adjusted income from continuing operations, adjusted earnings per share from continuing operations and earnings before interest, taxes, depreciation and amortization or EBITDA and adjusted EBITDA.
We have prominently presented the comparable GAAP measures and have reconciled the non-GAAP measures in this morning's press release and investor presentation, which is available on our website to the most directly comparable GAAP measures.
Also we may make some forward-looking statements about our operations, earnings potential, and outlook on the call today. Our actual results may vary because of risks and uncertainties outlined in today's press release, which may cause the actual results to differ materially from expectations. As always I direct you to our SEC filings including our Form 10-K for additional discussion and factors that could cause results to differ materially.
I'll now turn the call over to Roger.
Roger S. Penske
Good afternoon, everyone, and thank you for joining us this afternoon. I'm pleased to report another quarter of record results and the best year in PAG history. In 2018, PAG retailed 518,000 new and used units. Our revenue was almost $23 billion and we increased our earnings before taxes by 10% to $604 million. We earned $471 million in income from continuing operations and that generated $5.52 in earnings per share.
We completed acquisitions or opened new dealerships, representing approximately $800 million in estimated annualized revenue. We increased the dividend paid to shareholders each quarter by providing a sector leading 3.2% yield. We also returned $190 million or 40% of our income to shareholders through share repurchases and dividends. We increased return on average equity to 18%, up from 16% in 2017. We improved our leverage ratio to 2.7 times versus 2.9 times in 2017.
Also our credit rating was raised to BA1 by Moody's while Standard & Poor's placed our rating on a positive watch in November. Results continue to highlight the diversification strategy of our company in the standalone used, commercial truck retail, distribution and Penske Truck Leasing investment.
In 2018 we