10-QPeriod: Q1 FY2009

PACCAR INC Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 7, 2009For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported a significant decline in net income and sales for the first quarter of 2009 compared to the same period in 2008, reflecting the severe impact of the global economic downturn on the truck and financial services industries. Net income plummeted from $292.3 million to $26.3 million, with diluted earnings per share falling from $0.79 to $0.07. This downturn was primarily driven by a substantial decrease in truck sales worldwide, with North American and European markets experiencing weakened demand due to economic conditions affecting freight tonnage and customer purchasing decisions. The Financial Services segment also saw a reduction in revenues and income before taxes, impacted by a declining portfolio and higher credit losses. While the company's liquidity remains strong with substantial cash and marketable securities, and an AA- investment grade credit rating, the results highlight the challenging operating environment PACCAR faces amidst economic uncertainty.

Financial Highlights

19 data points
Beta

Net Income

$26.30M

EPS (Diluted)

$0.05

Cash & Equivalents

$1.92B

Free Cash Flow

$74.30M

Financial Statements
Beta
Net Income$26.30M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)544.65M
Shares Outstanding (Diluted)546.00M

Key Highlights

  • 1Net income for Q1 2009 was $26.3 million, a sharp decrease from $292.3 million in Q1 2008.
  • 2Diluted EPS dropped significantly to $0.07 in Q1 2009 from $0.79 in Q1 2008.
  • 3Truck and Other segment net sales and revenues fell to $1.73 billion from $3.62 billion year-over-year.
  • 4Financial Services segment revenues decreased to $254.8 million from $317.4 million.
  • 5The company issued $750 million of fixed-rate medium-term notes in February 2009 and $178.5 million of floating-rate medium-term notes in January 2009 to manage liquidity.
  • 6Provision for losses on receivables in the Financial Services segment increased to $25.0 million from $17.4 million year-over-year.
  • 7Class 8 heavy-duty truck industry retail sales in the U.S. and Canada for 2009 are projected to be between 100,000 - 130,000 trucks.

Frequently Asked Questions

The primary driver was the substantial decline in net sales and revenues, particularly within the Truck segment, due to weak global economic conditions affecting demand for heavy-duty trucks. Lower revenues in the Financial Services segment also contributed to the decline.

The Financial Services segment experienced reduced revenues and income before taxes. This was attributed to a shrinking portfolio, higher credit losses, and lower finance margins. The provision for losses on receivables increased, and 30+ day past due accounts rose to 4.9% of the portfolio balance compared to 2.3% in the prior year, reflecting increased pressure on truck operators due to negative economic conditions.

PACCAR maintains a strong liquidity position with $2.03 billion in cash and marketable debt securities for the Truck and Other segment as of March 31, 2009. The company issued $750 million of fixed-rate medium-term notes and $178.5 million of floating-rate medium-term notes in early 2009. It also has significant unused line of credit arrangements totaling $3.28 billion. These actions demonstrate proactive debt management and liquidity preservation in a challenging economic environment.

PACCAR anticipates continued weakness in the truck market for 2009. They project industry Class 8 heavy-duty retail sales in the U.S. and Canada to be in the range of 100,000 - 130,000 trucks. In Europe, industry sales for trucks above 15 tonnes are expected to be between 180,000 - 220,000 trucks, reflecting the ongoing economic recession.