10-QPeriod: Q2 FY2009

PACCAR INC Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 10, 2009For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported a significant downturn in financial performance for the six months ended June 30, 2009, compared to the same period in 2008. Net sales and revenues plummeted by 52% to $3.83 billion, and net income saw a drastic reduction of 91% to $52.8 million. This decline is primarily attributed to decreased demand for the company's trucks and parts across all major markets, driven by the global recession. The Truck and Other segment experienced a pretax loss of $11.1 million for the period, a stark contrast to the $701.1 million profit in the prior year. The Financial Services segment also saw reduced revenues and profitability, with income before taxes falling to $30.9 million from $126.0 million, impacted by lower earning asset balances, reduced yields, and an increased provision for losses on receivables. Despite the challenging operating environment, PACCAR maintained a strong liquidity position with $1.87 billion in cash and cash equivalents at the end of the period. The company also implemented cost-reduction measures and reduced planned capital expenditures and R&D spending.

Financial Highlights

31 data points
Beta

Revenue

$1.85B

Net Income

$26.50M

1.4% Net Margin

EPS (Diluted)

$0.05

Total Assets

$14.92B

Cash & Equivalents

$1.87B

Free Cash Flow

$305.50M

Financial Statements
Beta
Revenue$1.85B
Net Income$26.50M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)545.10M
Shares Outstanding (Diluted)546.60M

Key Highlights

  • 1Significant decline in Net Sales and Revenues: Total net sales and revenues for the six months ended June 30, 2009, were $3.83 billion, a 52% decrease from $8.05 billion in the prior year period.
  • 2Drastic drop in Net Income: Net income for the first half of 2009 was $52.8 million, a substantial decrease from $605.8 million in the same period of 2008.
  • 3Truck segment losses: The Truck and Other segment reported a pretax loss of $11.1 million for the six months ended June 30, 2009, compared to a pretax income of $701.1 million in the prior year.
  • 4Reduced Financial Services profitability: Income before taxes for the Financial Services segment decreased by 75% to $30.9 million for the six months ended June 30, 2009.
  • 5Increased Provision for Losses on Receivables: The provision for losses on receivables in the Financial Services segment increased year-over-year, reflecting difficult economic conditions.
  • 6Strong Liquidity Maintained: Despite the downturn, PACCAR ended the period with $1.87 billion in cash and cash equivalents, demonstrating continued financial stability.
  • 7Dividend Reduction: PACCAR announced a reduction in its regular quarterly dividend from $0.18 to $0.09 per share, effective in the third quarter of 2009.

Frequently Asked Questions

The primary reason for the significant decline is the severe impact of the global recession, which led to substantially lower demand for PACCAR's trucks and related parts across all major markets. This decreased demand directly translated into lower sales volumes and consequently, reduced revenues and profitability.

The Truck segment saw a dramatic decrease in net sales and revenues, leading to a pretax loss due to lower truck unit sales and margins. The Financial Services segment experienced a decline in revenues and income due to lower average earning assets, reduced yields, and a higher provision for losses on receivables as customers faced financial difficulties. The company also saw an increase in past-due accounts, particularly in Europe and Mexico.

PACCAR has implemented several cost-reduction measures, including reductions in research and development spending and selling, general, and administrative expenses. They have also significantly reduced planned capital expenditures for 2009 to align with lower demand. Furthermore, the company reduced its regular quarterly dividend and has been focusing on credit quality within its Financial Services segment.

Yes, PACCAR maintains a strong liquidity position. As of June 30, 2009, the company had $1.87 billion in cash and cash equivalents and $165.1 million in marketable debt securities. They also have access to substantial undrawn credit facilities, indicating their ability to meet financial obligations and fund operations.