Paccar Records 60% Rise in Q3 Net Income
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Paccar Inc. posted a 60% jump in third-quarter earnings as parts margins rose and truck sales increased, easily surpassing analyst expectations.
Bellevue, Wash.-based Paccar on Oct. 24 reported Q3 net income of $1.23 billion, or $2.34 per diluted share, compared with $769 million, or $1.47 per diluted share, a year earlier. The parent company of truck manufacturers Kenworth and Peterbilt posted Q3 revenues of $8.70 billion, 23% above the $7.06 billion posted in the year-ago quarter.
Paccar’s Q3 revenue from truck sales totaled $6.64 billion, compared with $5.2 billion in the year-ago period.
The company swept past consensus analyst expectations of $2.07 per diluted share and $8.02 billion in revenue, according to Zacks Equity Research.
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“Paccar achieved record net income for the third quarter of 2023,” CEO Preston Feight said in a release. “Paccar’s third-quarter results reflect excellent truck, parts and other gross margins of 19.5% and strong Paccar Parts profits.”
“Investments in innovative new DAF, Kenworth and Peterbilt trucks and enhanced manufacturing efficiency are benefiting truck owners’ operating performance and delivering strong financial results,” he added, referencing one of the company’s global brands.
Paccar Parts posted pretax profit of $412.3 million in Q3, compared with $373.6 million a year earlier, while the unit’s revenue totaled $1.58 billion, compared with $1.47 billion in the year-ago period.
Paccar reported Q3 global truck deliveries of 50,100 units, compared with 44,400 in the year-ago period.
Paccar’s truck deliveries in the United States and Canada totaled 27,500, a 12.7% increase compared with 24,400 a year earlier.
Schippers (left) and Feight
Chief Financial Officer Harrie Schippers said during the company’s earnings call Oct. 24 that deliveries in the fourth quarter would be similar to Q3’s.
“Infrastructure spending in the U.S. has been good for Kenworth and Peterbilt’s truck business,” Paccar Executive Vice President Mike Dozier said.
The company estimates that Class 8 retails sales for the U.S. and Canada in 2023 will range between 295,000 and 315,000 vehicles. That outlook aligns with the Q2 forecast the company gave of between 290,000 and 320,000 Class 8 trucks.
Rival truck manufacturer Volvo Group on Oct. 18 predicted 330,000 North American Class 8 sales in 2023 when releasing its own Q3 earnings. Volvo Group’s initial 2024 North American sales forecast was 290,000 trucks.
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Paccar expects Class 8 retail sales in 2024 of between 260,000 and 300,000 vehicles, it said.
Demand is expected to be strong in the first three months of 2024, Feight told analysts during the call, adding that the company’s order book was “filling in quickly.”
Feight said Paccar sees a really strong vocational truck market and strong medium-duty and less-than-truckload markets. He added that while the large truckload market would see some moderation, he felt good about it still, and the segment could stay at replacement level.
Dealers can currently order trucks through the first half of 2024, Paccar’s top executive said, adding later that dealer inventory was moving back to normal.
Another factor Feight was positive about was the prospects for the in-house MX engine range. He said the company was working through supply constraints that had been hampering sales of late, but he expected the share across Paccar trucks of the MX-11 and MX-13 engines to rise from 43% in Q3 moving forward.
