Paccar Notches Record Q3 Net Income
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Paccar Inc. notched record third-quarter income amid record results at its parts business and strong global demand for its trucks.
Paccar reported net income of $769.4 million, or $2.21 per diluted share, which was 102% higher than the $380.5 million, $1.09, in the year-earlier period.
Third-quarter revenue was $7.06 billion compared with $5.15 billion reported in the third quarter of 2021.
One financial analyst noted revenue was 2% above expectations, suggesting some improvement in supply chain issues.
“Paccar achieved record net income for the third quarter of 2022,” CEO Preston Feight said in a release. “Paccar’s third-quarter results reflect the strong demand for premium, fuel-efficient DAF, Peterbilt and Kenworth new truck models and record Paccar parts results.”
He credited gains at its financial services unit to a “high-quality portfolio” and strong used truck prices.
Another financial analyst noted the company’s operating margin improved to 11% compared with 6.8% a year earlier. That was down, though, from the consensus forecast of 11.6%.
U.S. and Canada Class 8 truck industry retail sales are estimated to be in a range of 265,000 to 285,000 vehicles in 2022. Class 8 truck industry retail sales for 2023 are estimated to increase to a range of 260,000 to 300,000 vehicles, according to the Bellevue, Wash.-based company.
European truck industry registrations in the above 16-tonne segment are estimated to be in the range of 275,000 to 295,000 units this year. The market in 2023 is expected to be in a range of 260,000 to 300,000 trucks.
Paccar’s new DAF XD truck launched at the IAA truck show in Hannover, Germany, was named the International Truck of the Year 2023, and the DAF XF was named U.K. Fleet Truck of the Year for the fourth consecutive year at the prestigious Motor Transport Awards.
The South American above 16-tonne truck market is projected to be in a range of 125,000 to 135,000 units this year, and in a similar range in 2023. DAF’s market share in the Brazilian above 16-tonne truck segment is a record 6.9% this year, compared to 5.6% in the same period last year, the company reported.
Its parts unit had pretax profit of $373.6 million, a 32% increase compared with $282.1 million earned in the third quarter of 2021. Revenues were $1.47 billion, compared with $1.26 billion a year earlier.
“Third-quarter parts sales and profits benefited from increased vehicle utilization, high average fleet age, and industry-leading logistics operations in Paccar’s 18 strategically located parts distribution centers,” noted Laura Bloch, the segment’s general manager.
Paccar Parts opened a 260,000-square-foot PDC in Louisville, Ky. (Paccar)
Its global PDCs support more than 2,300 DAF, Kenworth and Peterbilt dealer sales, parts and service locations. In the quarter, its parts unit opened a 260,000-square-foot PDC in Louisville, Ky.
Its financial services segment earned pretax income of $146.2 million compared with $120.1 million a year earlier. Revenues slipped to $371.9 million compared with $409.1 million in the same period last year.
In the third quarter, Paccar opened a used truck facility in Madrid. Kenworth and Peterbilt truck resale values command “a 10-20% premium over competitors’ trucks,” according to Todd Hubbard, vice president of financial services.
The financial services unit has a portfolio of 211,000 trucks and trailers, with total assets of $15.92 billion, the company reported. PacLease, a full-service truck leasing company with a fleet of 39,500 vehicles, is included in this segment.
Paccar estimated capital investments to be $475 million to $500 million, and research and development expenses to be $330 million to $340 million in 2022, and estimated it will invest $525 million to $575 million in capital projects and $350 million to $400 million in research and development expenses in 2023.
“Paccar is investing in clean diesel and zero-emissions powertrain technologies, autonomous driving systems, connected vehicle services, and next-generation manufacturing and distribution capabilities,” said CFO Harrie Schippers.
Meanwhile, Paccar delivered 44,400 trucks in the quarter, Feight said, at the low end of its previous estimate of in the range of 44,000 to 48,000.
The number of trucks “red-tagged” waiting on a final part was the same in the third quarter as in the second quarter, he added, but that is expected to improve in the fourth quarter, he said.
Supply chain improvements are definitely better year-over-year — shifting predominantly to supplier issues with labor and materials and less so over enough semiconductors, he said. “We work closely with our suppliers and find ourselves in a pretty good position.”
Feight downplayed Nikola Corp.’s acquisition in October of Romeo Power — which makes hardware and battery management systems for electric vehicles — a supplier Paccar had used, according to one financial analyst.
The transaction had “no impact at all” on Paccar’s ability to produce electric vehicles, Feight said during the earnings call. “We have a really good supply base structure with the battery suppliers in the world and have long-term contracts in place that give us adequate supply.”
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