Strong Truck
Deliveries and Aftermarket Sales Drive Results
“PACCAR (Nasdaq: PCAR) reported excellent revenues and net
income for the third quarter of 2019,” said Preston Feight, chief
executive officer. “PACCAR’s third quarter results reflect strong
global truck production and excellent global aftermarket parts
results. I am very proud of our employees who have delivered
industry-leading trucks, powertrains and transportation solutions
to our customers.”
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Kenworth T880 Truck (Photo: Business
Wire)
PACCAR achieved net income of $607.9 million ($1.75 per diluted
share) in the third quarter of this year, 11% higher than the net
income of $545.3 million ($1.55 per diluted share) earned in the
same period last year. Third quarter net sales and financial
services revenues were $6.37 billion, 11% higher than the $5.76
billion reported in the third quarter of 2018.
Net sales and financial services revenues for the first nine
months of 2019 were $19.48 billion compared to $17.22 billion last
year. PACCAR earned $1.86 billion ($5.34 per diluted share) for the
first nine months of 2019 compared to $1.62 billion ($4.59 per
diluted share) in the same period last year. PACCAR achieved an
excellent 9.5% after-tax return on revenues in the third quarter
and the first nine months of 2019.
Feight added, “PACCAR achieved a strong 14.9% Truck, Parts and
Other gross margin in the third quarter and year-to-date,
benefiting from good pricing, production efficiency and rigorous
cost controls. We anticipate that 2020 will be another good year
with a normal replacement truck market and strong demand for
PACCAR’s premium products.”
PACCAR Repurchases Common Shares
PACCAR repurchased 832,800 common shares for $53.6 million in
the third quarter. Stock repurchases of $430.5 million remain under
the current $500 million program authorized by the PACCAR Board of
Directors. “The stock repurchase program reflects PACCAR’s ongoing
excellent business performance and the Board’s confidence in
PACCAR’s future opportunities,” said Mark Pigott, PACCAR executive
chairman.
Financial Highlights – Third Quarter 2019
Highlights of PACCAR’s financial results for the third quarter
of 2019 include:
- Consolidated sales and revenues of $6.37 billion.
- Net income of $607.9 million, an after-tax return on revenues
of 9.5%.
- PACCAR Parts pre-tax income of $207.4 million.
- Financial Services pre-tax income of $66.5 million.
- Manufacturing cash and marketable securities of $4.64
billion.
- Cash generated from operations of $727.1 million.
- Record stockholders’ equity of $9.96 billion.
Financial Highlights – Nine Months 2019
Highlights of PACCAR’s financial results for the first nine
months of 2019 include:
- Record consolidated sales and revenues of $19.48 billion.
- Record net income of $1.86 billion.
- PACCAR Parts pre-tax income of $625.6 million.
- Financial Services pre-tax income of $230.8 million.
- Cash generated from operations of $1.92 billion.
- Medium-term note issuances of $2.04 billion.
Global Truck Markets
Class 8 truck industry retail sales for the U.S. and Canada are
expected to be in a range of 310,000-320,000 vehicles in 2019, the
second highest market in history. “Class 8 truck industry retail
sales in 2020 for the U.S. and Canada are estimated to be in a
range of 230,000-260,000 vehicles, a solid replacement vehicle
market. Good U.S. economic growth, 50-year-low unemployment and
strong consumer spending are generating freight tonnage growth of
4.2% this year,” said Gary Moore, PACCAR executive vice president.
“The superior operating performance of Peterbilt and Kenworth
trucks enhances our customers’ profitability.”
“Customers recognize DAF’s product quality leadership,
industry-leading fuel efficiency, low operating costs and excellent
resale value,” said Harry Wolters, DAF president. “DAF’s above
16-tonne market share was a strong 16.4% through the first three
quarters of this year.” It is estimated that European truck
industry registrations in the above 16-tonne segment will be in the
range of 310,000-320,000 units this year, one of the best markets
in history. The 2020 truck market is expected to be in the range of
260,000-290,000 trucks.
The South American above 16-tonne truck market is projected to
be in a range of 95,000-105,000 vehicles this year, and in a range
of 100,000-110,000 trucks in 2020. “Customer demand for DAF and
Kenworth trucks has resulted in a 79% increase in deliveries in
South America this year,” said Marco Davila, PACCAR vice president.
The Brasilian portion of the above 16-tonne truck market is
projected to be in the range of 65,000-75,000 vehicles in 2019, and
a range of 70,000-80,000 trucks in 2020.
PACCAR Parts Achieves Excellent Profits and Opens New TRP
Stores
PACCAR Parts achieved outstanding pre-tax profit of $207.4
million in the third quarter of 2019, 10% higher than the $188.5
million earned in the third quarter of 2018. Third quarter 2019
revenues were $1.00 billion, 4% higher than the $960.1 million
achieved in the third quarter last year. PACCAR Parts achieved
pre-tax profit of $625.6 million in the first nine months of 2019,
compared to $574.8 million in the first nine months of 2018. PACCAR
Parts’ nine-month revenues were $3.03 billion, compared to $2.87
billion for the same period last year. David Danforth, PACCAR vice
president and PACCAR Parts general manager, noted, “PACCAR Parts’
outstanding financial results have been driven by investments in
new parts distribution centers (PDCs), innovative programs such as
national fleet services, e-commerce and a growing population of
PACCAR MX engines. PACCAR Parts’ new 250,000 square-foot PDC in Las
Vegas, Nevada, and 160,000 square-foot PDC in Ponta Grossa, Brasil,
will open in 2020.”
DAF, Kenworth and Peterbilt dealers have opened nearly 200 TRP
retail stores, which provide high quality aftermarket products and
services to owners of all makes of light-, medium- and heavy-duty
trucks, trailers, buses and engines. TRP stores are located close
to customers in order to provide fast delivery, comprehensive parts
selection and technical expertise for all brands of trucks. Fifty
percent of the customers at TRP stores are new to PACCAR. The first
TRP store opened in 2013, and there are now retail stores in
Europe, North America, South America, Australia, Asia and Africa.
“TRP stores increase the aftermarket parts opportunity available to
PACCAR and its dealers,” commented Darrin Siver, PACCAR senior vice
president.
Capital Investment and Research and Development
PACCAR’s excellent long-term profits, strong balance sheet and
intense focus on quality have enabled the company to invest $6.6
billion in new and expanded facilities, innovative products and new
technologies during the past decade. Capital investments are
estimated to be $675-$725 million and research and development
expenses are expected to be $325-$335 million in 2019. PACCAR
estimates that it will invest $625-$675 million in capital projects
and $320-$350 million in research and development expenses in
2020.
“The company is investing in aerodynamic truck models,
integrated powertrains including diesel, electric, hybrid, and
hydrogen fuel cell technologies, as well as advanced driver
assistance systems, digital services and next-generation
manufacturing capabilities,” said Harrie Schippers, PACCAR
president and chief financial officer.
The DAF CF Electric truck was honored as the “Green Truck
Logistics Solution” for 2019 at the Transport Logistic trade fair
in Munich, Germany by the leading German trade magazines
VerkehrsRundschau and TRUCKER. The prestigious award recognizes the
deployment of advanced technologies for innovative, sustainable
logistics. The Port of Duisburg in Germany is testing DAF CF
Electric trucks in its operations.
PACCAR Earns Diversity Award
Kenworth, Peterbilt and PACCAR Parts were each honored by the
Women In Trucking Association (WIT) as a “Top Company to Work for.”
The recognition was for having a culture that fosters gender
diversity as well as providing employees with an excellent work
environment. WIT is a nonprofit organization that encourages the
employment and promotes the accomplishments of women in the
trucking industry.
Financial Services Companies Achieve Good Results
PACCAR Financial Services (PFS) offers competitive retail
financing to Peterbilt, Kenworth and DAF dealers and customers. PFS
has a portfolio of 205,000 trucks and trailers, with record total
assets of $15.61 billion. PacLease, a major full-service truck
leasing company in North America and Europe, with a fleet of 39,000
vehicles, is included in this segment.
PFS achieved good profits during the third quarter and first
nine months of 2019. PFS earned $66.5 million in the third quarter
this year compared to $78.8 million earned in the same period last
year. Third quarter 2019 revenues were $362.8 million compared to
$339.9 million in the same quarter of 2018. For the nine-month
period, PFS pre-tax income was $230.8 million in 2019 compared to
$218.7 million last year. Nine-month revenues were $1.07 billion in
2019 compared with $1.01 billion for the same period a year ago.
“PFS’ high quality portfolio delivers excellent profits to PACCAR
and benefits dealers in new and used truck transactions,” said Todd
Hubbard, PACCAR vice president. “Kenworth and Peterbilt truck
resale values command a 10-15% premium over competitors’
trucks.”
“PFS provides leading-edge technology solutions, excellent
customer service and dedicated support to the transportation
industry. Kenworth, Peterbilt and DAF dealers and customers
appreciate the ease of doing business with PFS,” said Craig
Gryniewicz, PACCAR Financial Corp. president. PACCAR’s strong
balance sheet, complemented by its A+/A1 credit ratings, enables
PFS to have excellent access to the commercial paper and
medium-term note markets. PFS profitably supports the sale of
PACCAR trucks in 25 countries on four continents.
PACCAR is a global technology leader in the design, manufacture
and customer support of high-quality light-, medium- and heavy-duty
trucks under the Kenworth, Peterbilt and DAF nameplates. PACCAR
also designs and manufactures advanced diesel engines, provides
financial services and information technology, and distributes
truck parts related to its principal business.
PACCAR will hold a conference call with securities analysts to
discuss third quarter earnings on October 22, 2019, at 9:00 a.m.
Pacific time. Interested parties may listen to the call by
selecting “Q3 Earnings Webcast” at PACCAR’s homepage. The Webcast
will be available on a recorded basis through October 29, 2019.
PACCAR shares are listed on the NASDAQ Global Select Market, symbol
PCAR. Its homepage is www.paccar.com.
This release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act. These
statements are based on management’s current expectations and are
subject to uncertainty and changes in circumstances. Actual results
may differ materially from those included in these statements due
to a variety of factors. More information about these factors is
contained in PACCAR’s filings with the Securities and Exchange
Commission.
PACCAR Inc SUMMARY STATEMENTS OF OPERATIONS
(in millions except per share amounts) Three Months Ended
Nine Months Ended September 30 September 30
2019
2018
2019
2018
Truck, Parts and Other: Net sales and revenues
$
6,004.2
$
5,416.9
$
18,408.8
$
16,205.9
Cost of sales and revenues
5,106.8
4,653.6
15,665.6
13,836.4
Research and development
82.2
72.9
243.0
225.6
Selling, general and administrative
136.8
124.2
413.5
388.3
Interest and other (income), net
(11.6
)
(7.4
)
(31.7
)
(42.5
)
Truck, Parts and Other Income BeforeIncome Taxes
690.0
573.6
2,118.4
1,798.1
Financial Services: Revenues
362.8
339.9
1,073.7
1,010.1
Interest and other
254.9
227.5
729.3
686.4
Selling, general and administrative
35.8
29.3
101.8
90.2
Provision for losses on receivables
5.6
4.3
11.8
14.8
Financial Services Income Before Income Taxes
66.5
78.8
230.8
218.7
Investment income
21.1
16.4
62.2
41.0
Total Income Before Income Taxes
777.6
668.8
2,411.4
2,057.8
Income taxes
169.7
123.5
554.8
440.8
Net Income
$
607.9
$
545.3
$
1,856.6
$
1,617.0
Net Income Per Share: Basic
$
1.75
$
1.55
$
5.35
$
4.60
Diluted
$
1.75
$
1.55
$
5.34
$
4.59
Weighted Average Shares Outstanding: Basic
346.6
350.7
346.9
351.6
Diluted
347.2
351.5
347.6
352.5
Dividends declared per share
$
.32
$
.28
$
.96
$
.81
PACCAR Inc CONDENSED BALANCE SHEETS (in
millions)
September 30
December 31
2019
2018
ASSETS Truck, Parts and Other: Cash and marketable
debt securities
$
4,643.0
$
4,299.6
Trade and other receivables, net
1,729.0
1,314.4
Inventories, net
1,292.6
1,184.7
Property, plant and equipment, net
2,690.8
2,480.9
Equipment on operating leases and other, net
1,797.8
1,803.2
Financial Services Assets
15,614.5
14,399.6
$
27,767.7
$
25,482.4
LIABILITIES AND STOCKHOLDERS' EQUITY Truck, Parts
and Other: Accounts payable, deferred revenues and other
$
5,557.8
$
5,710.9
Financial Services Liabilities
12,247.2
11,178.6
STOCKHOLDERS' EQUITY
9,962.7
8,592.9
$
27,767.7
$
25,482.4
Common Shares Outstanding
345.7
346.6
PACCAR Inc CONDENSED CASH FLOW STATEMENTS (in
millions) Nine Months Ended September 30
2019
2018
OPERATING ACTIVITIES: Net income
$
1,856.6
$
1,617.0
Depreciation and amortization: Property, plant and equipment
243.1
255.6
Equipment on operating leases and other
549.3
538.8
Net change in trade receivables, inventory and payables
(170.3
)
(252.8
)
Net increase in wholesale receivables on new trucks
(472.8
)
(375.0
)
All other operating activities, net
(89.3
)
143.6
Net Cash Provided by Operating Activities
1,916.6
1,927.2
INVESTING ACTIVITIES: Payments for property, plant
and equipment
(387.2
)
(334.5
)
Acquisitions of equipment for operating leases
(1,038.4
)
(1,078.4
)
Net increase in financial services receivables
(519.0
)
(695.6
)
Net (increase) decrease in marketable debt securities
(90.6
)
343.2
Proceeds from asset disposals and other
478.7
488.8
Net Cash Used in Investing Activities
(1,556.5
)
(1,276.5
)
FINANCING ACTIVITIES: Payments of cash dividends
(1,027.8
)
(706.6
)
Purchases of treasury stock
(110.2
)
(153.2
)
Proceeds from stock compensation transactions
33.8
13.2
Net increase in debt and other
1,015.5
782.9
Net Cash Used in Financing Activities
(88.7
)
(63.7
)
Effect of exchange rate changes on cash
(37.8
)
(37.7
)
Net Increase in Cash and Cash Equivalents
233.6
549.3
Cash and cash equivalents at beginning of period
3,435.9
2,364.7
Cash and cash equivalents at end of period
$
3,669.5
$
2,914.0
PACCAR Inc SEGMENT AND OTHER
INFORMATION (in millions) Three Months Ended Nine Months
Ended September 30 September 30
2019
2018
2019
2018
Sales and Revenues: Truck
$
4,977.4
$
4,429.4
$
15,296.6
$
13,250.2
Parts
1,000.9
960.1
3,031.0
2,868.0
Financial Services
362.8
339.9
1,073.7
1,010.1
Other
25.9
27.4
81.2
87.7
$
6,367.0
$
5,756.8
$
19,482.5
$
17,216.0
Pretax Profit: Truck
$
481.5
$
391.0
$
1,509.2
$
1,220.2
Parts
207.4
188.5
625.6
574.8
Financial Services
66.5
78.8
230.8
218.7
Investment Income and Other
22.2
10.5
45.8
44.1
$
777.6
$
668.8
$
2,411.4
$
2,057.8
GEOGRAPHIC REVENUE (in millions) Three Months
Ended Nine Months Ended September 30 September 30
2019
2018
2019
2018
United States and Canada
$
4,405.9
$
3,844.3
$
12,819.0
$
10,945.1
Europe
1,305.2
1,259.5
4,550.5
4,346.1
Other
655.9
653.0
2,113.0
1,924.8
$
6,367.0
$
5,756.8
$
19,482.5
$
17,216.0
NEW TRUCK DELIVERIES Three Months Ended Nine
Months Ended September 30 September 30
2019
2018
2019
2018
United States and Canada
31,700
28,400
90,600
78,500
Europe
12,700
14,300
45,300
45,800
Other
4,900
5,100
17,200
14,400
49,300
47,800
153,100
138,700
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191022005385/en/
Ken Hastings (425) 468-7530 ken.hastings@paccar.com
PACCAR (NASDAQ:PCAR)
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