Paccar Reports Surge in Q1 Net Income
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Truck maker Paccar Inc. reported a surge in net income and improved revenue in the first quarter as its parts business achieved record revenue and pretax profits amid strong demand and booming e-commerce sales.
For the period ended March 31, net income jumped to $470.1 million, or $1.35 per diluted share. That was a 31% increase compared with $359.4 million, or $1.03, a year earlier.
Revenue increased to $5.85 billion compared with $5.16 billion a year earlier.
“Customer demand for Kenworth Truck Co., Peterbilt Motors Co. and DAF trucks is very strong. Truck deliveries increased in the first quarter of 2021 compared to the fourth quarter of 2020 despite the undersupply of semiconductors affecting the automotive industry,” Paccar CEO Preston Feight said in a release.
Quarterly new truck deliveries globally were 42,200, of which 23,000 were in the United States and Canada, financial analysts reported. That was an overall increase of 3% compared with the fourth quarter, Paccar noted.
Feight
Paccar Chief Financial Officer Harrie Schippers during the earnings call said second-quarter production would “be similar to the first quarter.”
He said freight tonnage is strong as the U.S. economy continues to grow. Kenworth and Peterbilt’s U.S. and Canada Class 8 truck orders increased nearly 300% in the first quarter of 2021 compared with the same period last year.
The company estimated U.S. and Canada Class 8 truck industry retail sales in 2021 will be in a range of 260,000-290,000 trucks — an increase from its previous guidance of 250,000-280,000.
“[New truck] inventory is relatively tight right now,” Feight said during the call. “The industry is at 1.9 months. We are at 1.7 months. I wouldn’t expect to see a lot of change in that through the year given the demand that’s out there. So I think we will enter 2022 in a similar fashion.”
Meanwhile, Paccar’s parts unit achieved record first-quarter revenue of $1.16 billion, compared with the $998.6 million a year earlier.
Parts General Manager David Danforth said a number of factors contributed to that, including robust freight demand and truck utilization, ongoing investments in distribution and innovative technology, initiatives including TRP all-makes parts and TRP stores, and a growing population of connected vehicles with Paccar MX engines.
Bellevue, Wash.-based Paccar’s 18 parts distribution centers globally support more than 2,200 DAF, Kenworth and Peterbilt dealer sales, parts and service locations.
The biggest performance in parts was from Paccar dealers’ relationships with customers, Feight said. “That’s overwhelming.”
E-commerce parts sales increased more than 30% in the first quarter compared with the same quarter last year.
“The biggest thing with e-commerce is really the world is changing, as we all know, especially this past year,” Feight said during the earnings call. “We have a great new e-commerce system in place which makes it very easy for people to order parts, find like parts in models or even other truck makers’ parts. You can do that from a handheld device. You can do it from your laptop. So the system is fantastic and that is what’s causing the growth.”
“We just see that as the foundation to what we are doing and it is continuing to grow as part of the business and we think it is a convenience and strength for the parts business in general,” he said.
Paccar’s financial services business posted first-quarter revenue of $432 million compared with $383.7 million in the same period last year, with earned pretax income of $76.4 million compared to $48.3 million a year earlier.
Even at Level 4 autonomy, self-driving trucks will have technical limitations. In this episode, we ask how technology developers are clearing those hurdles to make autonomous trucking a reality. We bring in Boris Sofman, head of engineering for the autonomous trucking program at Waymo. Hear a snippet above, and get the full program by going to RoadSigns.TTNews.com.
The segment has a portfolio of 203,000 trucks and trailers, with total assets of $15.53 billion. PacLease, a major full-service truck leasing company in North America, Europe and Australia with a fleet of 38,000 vehicles, is included in this segment.
Among Paccar’s quarterly highlights were: next-generation Kenworth T680 and Peterbilt Model 579 Class 8 trucks were unveiled in the first quarter, offering major enhancements in uptime, connectivity technology, aerodynamics, fuel-efficiency and driver comfort. DAF, its European brand, began producing CF Electric trucks this month.
Later during the earnings call, Feight added Peterbilt and Kenworth “expect to deliver their first production battery electric vehicles in the coming months.”
The company noted it is completing a successful validation phase as part of its electrification strategy, in which Kenworth, Peterbilt and DAF completed more than 500,000 miles of field testing on more than 60 vehicles.
In the quarter, Paccar began the next phase for electrification, which is producing battery electric customer trucks for applications such as port, refuse and local delivery. In these applications, trucks return to their depot each day for recharging and have an optimized range to limit battery weight and cost.
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