Paccar’s Net Income Down in Second Quarter Despite Revenue Surge

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Transport Topics  /  July 25, 2017

Second-quarter net income declined for truck maker Paccar Inc., even though revenue increased for the Bellevue, Wash.-based parent of Kenworth Trucks and Peterbilt Motors.

The 2016 second quarter contained a non-recurring credit, so quarterly profits declined to $373 million, or $1.06 a share, from $481.3 million, or $1.37, in the year ago period. Over the same time, quarterly revenue improved to $4.4 billion from $4.12 billion.

As part of the company’s July 25 earnings report, Paccar released an adjusted net income figure for the 2016 second quarter of $371.7 million, or $1.06, just under the level of the quarter ended June 30.

Bloomberg News said the Wall Street consensus for the recent quarter was 99 cents a share.

“Paccar’s financial results reflect increasing North American truck production and market share, strong European truck markets and higher global aftermarket parts sales,” CEO Ron Armstrong said in the earnings report.

Paccar’s biggest market is the United States and Canada, where second-quarter revenue increased to $2.92 billion from $2.68 billion and deliveries of Kenworths and Peterbilts improved to 21,200 from 19,800 in the corresponding quarter of 2016.

European revenue decreased by less than 1%, while truck deliveries increased by 5.3%, year-over-year.

The company’s three global divisions — trucks, parts and financial services — all posted revenue gains for the quarter. The parts segment also increased operating income, whereas trucks and financial services were profitable at lower levels.

Analyst Jamie Cook told clients of Credit Suisse that it is “worth noting that [Paccar’s] sales inflected positive for the first time after seven quarters of declines.”

The adjusted upward its industrywide projections for truck production, for both the North America and Europe.

Class 8 retail sales are expected to be 200,000 to 220,000 for the United States and Canada this year, industrywide. The previous lower boundary was 190,000 and the top limit is unchanged.

In Europe, the new heavy-duty projection is 290,000 to 310,000 vehicles. The previous range was 270,000 to 300,000 trucks.

The earnings statement also said Paccar will open later this year its Silicon Valley Innovation Center.

The facility “will coordinate next-generation product development and identify emerging technologies that will benefit future vehicle performance,” the report said. Technology areas of focus will include advanced driver assistance systems, artificial intelligence and vehicle connectivity.

A year ago, Paccar had to reach a settlement with the European Union related to an investigation of several European truck makers, including Paccar’s DAF Trucks unit, on antitrust issues. Paccar paid a fine of $833 million during the first three months of 2016, but received a refund adjustment of $109.6 million during the second quarter, making the net payment worth $723.4 million.

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Paccar Reports ‘Strong’ Q2 Revenues and Profits

David Cullen, Heavy Duty Trucking  /  July 25, 2017

Truck and engine maker Paccar (Nasdaq:PCAR), parent of Kenworth and Peterbilt, announced on July 25 that for the second quarter of 2017, it achieved net sales and financial services revenues of $4.70 billion compared to $4.41 billion in the same period a year ago.

The company said it earned net income of $373.0 million ($1.06 per diluted share) in Q2 of this year compared to net income of $481.3 million ($1.37 per diluted share) in the same period of 2016.

The OEM largely credited this positive performance to increased truck deliveries and record aftermarket parts revenues in the global markets it serves.

Paccar CEO Ron Armstrong said in a staement that the company “achieved strong quarterly revenues and net income in the second quarter,” with those results reflecting “increasing North American truck production and market share, strong European truck markets, and higher global aftermarket parts sales.”

According to Paccar, other highlights of its Q2 earnings release include:

• Truck, Parts and Other gross margins of 14.6%

• Record Paccar Parts revenues of $823.1 million

• Record Paccar Parts pre-tax income of $152.4 million

• Financial Services pre-tax income of $63.0 million

• Manufacturing cash and marketable securities of $3.00 billion

• Quarterly cash generated from operations of $574.7 million

• Record stockholders’ equity of $7.50 billion

Paccar also stated that U.S. and Canada Class 8 truck industry orders increased 44% in the first six months of 2017 compared to the same period last year. Kenworth and Peterbilt achieved 31.7% share of U.S. and Canada Class 8 truck orders and 29.6% share of U.S. and Canada Class 8 truck retail sales in the first half of this year.

“Kenworth and Peterbilt’s medium- and heavy-duty truck deliveries increased in the second quarter of 2017 by 25% compared to the first quarter of this year,” said Gary Moore, Paccar executive vice president. “Class 8 truck industry retail sales for the U.S. and Canada are expected to be in a range of 200,000 to 220,000 vehicles in 2017. The truck market reflects the good economy and high levels of freight tonnage.”

Preston Feight, Paccar vice president and president of its Holland-based DAF truck operation, noted that DAF’s “above 16-ton truck orders are 10% higher in the first six months of 2017 compared to the same period last year.” He added that the company has raised its European above 16-ton market estimate to a range between 290,000 and 310,000 vehicles for this year “due to continued economic and freight growth.”