Paccar Q3 Profit Falls 20.9%, Tops Analyst Expectations

DAF Trucks at the IAA Truck Show (Business Wire)

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Paccar Inc.’s profit in the third quarter fell as the truck market continues to normalize, but still beat analyst expectations.

Bellevue, Wash.-based Paccar reported net income of $972.1 million, or $1.85 per diluted share, in the most recent three-month period, a 20.9% decrease compared with $1.23 billion, $2.34, in the same period last year.

The company’s Q3 revenue totaled $8.24 billion, down 5.3% compared with $8.70 billion a year earlier, it said before the market opened Oct. 22.

Paccar’s earnings per share and revenue both topped consensus analyst expectations. Analysts expected EPS of $1.82 and revenue totaling $7.57 billion, according to Zacks Equity Research.

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Feight 

“Paccar achieved excellent revenues and net income in the third quarter of 2024,” said CEO Preston Feight. “Paccar’s truck and Parts operations achieved robust quarterly sales and profits due to industry-leading trucks and strong aftersales performance. Paccar Financial Services achieved good results due to its high-quality portfolio.”

However, after the release of the earnings, Paccar shares, which gained 19.6% between the Aug. 7 and the Oct. 21 market closes, fell nearly 6%.

Paccar’s truck deliveries in Q3 totaled 44,900 units globally, down 10.4% from 50,100 in the same period 12 months earlier.

The company sold 25,900 trucks in the U.S. and Canada in the most recent quarter, a decrease of 5.8% from 27,500 vehicles in the year-ago period. However, sales in Europe slumped 31% year on year to 10,000 trucks from 14,500 in Q3 2023.

“Strong infrastructure spending in the U.S. has been good for Kenworth and Peterbilt’s business due to our market share leadership in vocational trucks,” Paccar Senior Vice President Kevin Baney said. “The less-than-truckload segment is also performing well, while the truckload segment remains soft.”

Through the first three quarters of 2024, Paccar truck sales fell 7.6% globally to 141,400 from 153,100 in the year-ago period.

But the company’s U.S. and Canadian sales rose 3.8% to 84,100 vehicles in the first nine months from 81,000 in the 2023 period.

Paccar’s brands saw a 31.1% heavy-duty market share in the most recent quarter compared with 29.5% a year earlier. The company had a 17.2% medium-duty market share in Q3, compared with a 14.5% slice in the year-ago period.

The vocational market is expected to remain strong, Feight said during the company’s quarterly earnings call.

In addition, the truckload market seems to be stabilizing, he said. “Truckload market tension may release over the coming months. Truckload has had a tough row to hoe,” Feight said, adding that he expects 2025 to see some growth.

Much of the company’s vocational inventory is currently at upfitters, the company’s top executive said. He noted that there will be a more normal fourth-quarter medium-duty build cycle due to mirror-supplier issues being resolved.

Paccar estimates 2024 U.S. and Canadian Class 8 truck retail sales on an industrywide basis will be in a range of 250,000 to 270,000 vehicles. The company expects Class 8 retail sales in 2025 to be between 250,000 and 280,000 vehicles.

Executives said they expected used truck markets to strengthen in the coming quarters too, benefiting revenue at Paccar Financial Services.

The division posted Q3 revenue of $536.1 million compared with $464.1 million in the same period last year.

“PFS achieved good third-quarter results due to its high-quality portfolio,” Paccar Vice President Todd Hubbard said. “The used truck market has normalized in North America but remains soft in Europe, which is reflected in PFS’ quarterly results this year.”

PFS has a portfolio of 232,000 trucks and trailers. PacLease, a full-service truck leasing company with a fleet of 41,000 vehicles, is included in this segment.

Meantime, Paccar Parts reported revenue of $1.66 billion in Q3, an increase of 5% compared with $1.58 billion in the year-ago period.

Paccar plans to open a 240,000-square-foot parts distribution center in Massbach, Germany, in November. The company now has three PDCs in Europe.