10-QPeriod: Q3 FY2010

PACCAR INC Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 8, 2010For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported a significant recovery in its financial performance for the nine months ended September 30, 2010, compared to the same period in 2009. Net income surged to $287.8 million from $65.8 million, with diluted earnings per share increasing to $0.79 from $0.18. This improvement was driven by a substantial rebound in the Truck and Other segment, which saw net sales increase by approximately 28% to $6.51 billion, reflecting higher truck deliveries and improved pricing, partly due to the introduction of EPA 2010 emission vehicles. The Financial Services segment also showed resilience, with income before taxes more than doubling to $103.6 million, primarily due to a lower provision for losses on receivables and improved finance and lease margins. The company's balance sheet showed a strong liquidity position, with cash and marketable debt securities totaling $2.41 billion at the end of September 2010. While total assets decreased slightly from the prior year-end, the company maintained a healthy equity position. PACCAR's outlook for the heavy-duty truck industry anticipates modest growth in 2011, driven by an aging truck fleet and economic recovery, which should positively impact both truck sales and financial services volumes.

Financial Highlights

31 data points
Beta

Revenue

$2.54B

Net Income

$119.90M

4.7% Net Margin

EPS (Diluted)

$0.22

Total Assets

$13.98B

Cash & Equivalents

$2.06B

Free Cash Flow

$295.30M

Financial Statements
Beta
Revenue$2.54B
Net Income$119.90M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)547.35M
Shares Outstanding (Diluted)549.15M

Key Highlights

  • 1Net income for the first nine months of 2010 was $287.8 million, a substantial increase from $65.8 million in the prior year.
  • 2Diluted earnings per share rose to $0.79 for the nine months ended September 30, 2010, up from $0.18 in the comparable period of 2009.
  • 3Truck and Other segment net sales increased by 28% year-over-year for the nine months, driven by higher truck deliveries and average selling prices.
  • 4Financial Services segment income before taxes more than doubled to $103.6 million for the nine months, aided by improved credit quality and lower loss provisions.
  • 5Total cash and marketable debt securities stood at $2.41 billion as of September 30, 2010, indicating a strong liquidity position.
  • 6The company anticipates modest growth in the heavy-duty truck market for 2011, driven by fleet age and economic conditions.

Frequently Asked Questions

The primary driver is the significant recovery in the Truck and Other segment, which experienced a substantial increase in net sales and a return to profitability. This was fueled by higher truck deliveries, improved average selling prices (partly due to EPA 2010 emission vehicles), and increased demand for aftermarket parts, indicating a rebound in the commercial trucking market. The Financial Services segment also contributed positively with improved profitability.

PACCAR's liquidity position remains strong. Total cash and marketable debt securities increased to $2.41 billion as of September 30, 2010, from $2.13 billion at the end of 2009. The company generated significant cash flow from operations, which more than covered its investing and financing activities, reflecting a healthy balance sheet and operational cash generation.

PACCAR anticipates modest growth in the heavy-duty truck industry for 2011. This outlook is supported by factors such as an aging truck fleet, general economic growth, and the market's adjustment to higher-priced vehicles resulting from new emissions standards. This projected market improvement is expected to benefit both PACCAR's truck sales and its financial services business.

The report mentions ongoing investigations by the UK Office of Fair Trading into potential price-fixing among commercial vehicle manufacturers, including PACCAR subsidiaries. Additionally, a National Labor Relations Board administrative law judge issued a decision regarding a past work stoppage at a Peterbilt plant, which PACCAR intends to appeal. The company states that resolution of these matters is not expected to have a material adverse effect on its results. Risk factors remain largely consistent with the prior year's 10-K filing.