10-KPeriod: FY2017

PACCAR INC Annual Report, Year Ended Dec 31, 2017

Filed February 21, 2018For Securities:PCAR

Summary

PACCAR Inc's 2017 10-K report shows a strong financial performance driven by record net sales and revenues of $19.46 billion, a 14% increase from 2016. The company experienced significant growth in its Truck segment, with net sales and revenues up 16% to $14.77 billion, supported by higher truck deliveries across North America and Europe, and an increased market share in the U.S. and Canada Class 8 market. The Parts segment also achieved record sales of $3.33 billion, up 11% year-over-year, reflecting strong aftermarket demand. The Financial Services segment saw a modest revenue increase of 7% to $1.27 billion, though income before taxes declined due to factors like higher borrowing costs and losses on used lease assets. Despite a challenging 2016 impacted by an $833 million European Commission charge, PACCAR demonstrated a robust recovery in 2017, achieving net income of $1.68 billion, or $4.75 per diluted share. This includes a one-time tax benefit of $173.4 million from the U.S. Tax Cuts and Jobs Act. Excluding this benefit, adjusted net income was $1.50 billion, or $4.26 per diluted share. The company's forward-looking outlook for 2018 is positive, anticipating increased truck industry retail sales in the U.S. and Canada and higher registrations in Europe, alongside projected growth for its Parts segment.

Financial Highlights

34 data points
Beta

Revenue

$19.46B

Net Income

$1.68B

8.6% Net Margin

EPS (Diluted)

$3.17

Total Assets

$23.44B

Cash & Equivalents

$2.36B

Free Cash Flow

$2.29B

Financial Statements
Beta
Revenue$19.46B
Net Income$1.68B
EPS (Basic)$3.17
EPS (Diluted)$3.17
Shares Outstanding (Basic)527.85M
Shares Outstanding (Diluted)529.35M

Key Highlights

  • 1Record net sales and revenues of $19.46 billion in 2017, a 14% increase from $17.03 billion in 2016.
  • 2Truck segment net sales and revenues increased by 16% to $14.77 billion, driven by higher truck deliveries and increased market share in key regions.
  • 3Parts segment achieved record sales of $3.33 billion, an 11% increase, due to strong aftermarket demand.
  • 4Net income of $1.68 billion ($4.75 per diluted share) in 2017, which includes a $173.4 million tax benefit from the Tax Cuts and Jobs Act.
  • 5Company expects industry retail sales in the U.S. and Canada to be between 235,000 to 265,000 units in 2018, up from 218,400 in 2017.
  • 6PACCAR Parts sales are projected to grow 5-8% in 2018.
  • 7Significant investment in R&D and capital projects, with $433.1 million in capital investments in 2017 and planned capital investments of $425-$475 million in 2018.

Frequently Asked Questions

PACCAR demonstrated a strong rebound in 2017, with net sales and revenues increasing by 14% to $19.46 billion. This growth was primarily driven by the Truck segment, which saw a 16% revenue increase, and the Parts segment, which achieved record sales with an 11% increase. Net income significantly improved to $1.68 billion from $521.7 million in 2016, bolstered by higher sales volumes and a one-time tax benefit.

PACCAR operates in three principal segments: Truck, Parts, and Financial Services. The Truck segment, accounting for 76% of revenue, saw a 16% increase in sales due to higher deliveries and market share gains. The Parts segment, 17% of revenue, achieved record sales, up 11%. The Financial Services segment, 7% of revenue, experienced a revenue increase of 7%, but income before taxes declined due to higher borrowing costs and increased losses on used lease assets.

PACCAR anticipates a positive year in 2018. Truck industry retail sales in the U.S. and Canada are projected to increase to between 235,000 and 265,000 units, up from 218,400 in 2017. European truck registrations are also expected to grow. PACCAR Parts sales are forecasted to increase by 5-8%, and the Financial Services segment anticipates a 2-4% growth in average earning assets. The company plans to continue investing in new truck models, technology, and expanded facilities.

The Tax Cuts and Jobs Act, enacted in late 2017, resulted in a one-time net tax benefit of $173.4 million for PACCAR. This benefit arose from the re-measurement of deferred tax liabilities at the new lower statutory tax rate. Consequently, PACCAR's reported net income included this significant benefit, leading to an adjusted net income that excludes it for a clearer view of operational performance.