Paccar Delivers 54% Jump in Q4 Profit, Record Revenues
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Truck maker Paccar Inc. saw profits jump 54% year-over-year in the fourth quarter of 2023 on the back of record revenues and a double-digit jump in U.S. and Canadian truck deliveries.
Bellevue, Wash.-based Paccar posted a net profit of $1.42 billion, or $2.70 per diluted share in the final three months of 2023, compared with $921.3 million, $1.76, earned in the same period in 2022.
Kenworth Truck Co. and Peterbilt Motors Co. parent Paccar posted revenue of $9.08 billion in Q4 compared with $8.13 billion in the year-ago period
Of those Q4 revenues, $5.51 billion was generated in the U.S. and Canada, compared with $4.79 billion in the 2022 period.
The company beat analyst expectations by a substantial margin. Deutsche Bank analyst Nicole Deblase said in a Jan. 22 research note she expected EPS of $2.33 and that the consensus expectation was $2.22 a share. Zacks Equity Research pegged the consensus even lower at $2.13 for the quarter.
“You guys crushed it,” veteran analyst Jeffrey Kauffman at Vertical Research Partners told executives on the company’s Jan. 23 analyst call.
The company saw new truck deliveries in the U.S. and Canada rise 7.67% in Q4 to 28,100 from 26,100 in the same period a year earlier.
Paccar posted a net profit of $4.6 billion or $8.76 per diluted share for full-year 2023, even after including a $446.4 million after-tax, nonrecurring charge related to civil litigation in Europe, compared with a profit of $3.01 billion, $5.75, in 2022.
The parent company of European truck maker DAF achieved record revenues of $35.13 billion in 2023, up 21.9% compared with revenues of $28.82 billion in 2022.
Feight
On a regional basis, some $21.22 billion of the revenue was generated in the U.S. and Canada in 2023, up 22% compared with $17.4 billion in 2022.
“Paccar reported record annual revenues and net income in 2023,” CEO Preston Feight said. “Paccar’s excellent results reflect record deliveries of premium quality DAF, Peterbilt and Kenworth trucks worldwide, record Truck, Parts and Other gross margins, and strong financial services performance.”
Paccar delivered 109,100 trucks in 2023 in the U.S. and Canada, up 14.1% compared with 95,600 in 2022.
Globally, Paccar delivered a record 204,200 vehicles, up 9.8% compared with 185,900 in 2022, the OEM noted.
A Kenworth fuel cell electric truck on display at CES 2024 in Las Vegas. (Connor D. Wolf/Transport Topics)
Class 8 truck industry retail sales in the U.S. and Canada were 297,000 units in 2023, Paccar said, and are expected to be in a range of 260,000-300,000 trucks in 2024.
“Infrastructure spending and the replacement of older trucks are driving demand for Kenworth and Peterbilt trucks,” Paccar Executive Vice President Darrin Siver said.
European above 16-tonne truck (or just more than 35,000 pounds) industry registrations totaled 343,000 trucks in 2023 and are estimated to be in a 260,000-300,000 range this year, the company said.
Feight said during the analyst call that the U.S. economic outlook had set Paccar up for a good year in 2024.
The company’s order book for the first quarter of 2024 is full, while its book for second quarter is “filling very nicely,” Feight said, adding that Paccar was seeing a growing backlog for the second half of the year.
“Good operators are continuing to buy trucks,” he said, noting that such players want to manage their fleet age. It is not just a truckload carrier market, there is less-than-truckload demand too, he said.
Paccar executives told analysts they were optimistic about prospects for both the retail sales and used truck markets in 2024.
That optimism, they said, was reflected in a slowdown in used truck price depreciation. There was low single-digit depreciation in used truck prices in Q4 and there will be even greater stabilization in 2024, said Chief Financial Officer Harrie Schippers.
In fact, the latest data shows depreciation was essentially nonexistent for benchmark 3- to 7-year-old used trucks in Q4, J.D Power Senior Analyst and Product Manager Chris Visser wrote Jan. 19.
Prices at auctions were also stable in December, despite the highest volume of sleeper tractors going under the hammer since June 2020, said Visser, the architect of J.D. Power’s commercial vehicle valuation and market intelligence processes.
Also in 2024, Paccar expects its capital expenditure to be between $700 million to $750 million, Schippers told analysts, including on expansions of the company’s Columbus, Miss., and Chillicothe, Ohio, manufacturing facilities.
The company’s research and development budget in 2024 will be between $460 million and $500 million, said Schippers, with spending spread among battery-electric truck development, hydrogen FCEV truck development and new connected vehicle services, among other things.
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