10-QPeriod: Q2 FY2011

PACCAR INC Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 8, 2011For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported strong financial performance for the six months ended June 30, 2011, driven by a significant recovery in its core truck business. Net income surged to $433.0 million, a substantial increase from $167.9 million in the prior year period, with diluted earnings per share rising to $1.18 from $0.46. This growth was fueled by a robust rebound in truck deliveries, particularly in North America and Europe, coupled with increased aftermarket parts sales. The company's Financial Services segment also demonstrated improved profitability, with pre-tax income rising to $107.2 million from $62.1 million, supported by higher finance and lease margins and a lower provision for losses on receivables. PACCAR's financial position remains strong, with total cash and marketable debt securities increasing to $2.93 billion, providing ample liquidity and financial flexibility. The company provided an optimistic outlook, forecasting significant increases in industry truck sales for both the U.S./Canada and European markets in 2011.

Financial Highlights

31 data points
Beta

Revenue

$3.96B

Net Income

$239.70M

6.1% Net Margin

EPS (Diluted)

$0.43

Total Assets

$16.30B

Cash & Equivalents

$1.87B

Free Cash Flow

$277.40M

Financial Statements
Beta
Revenue$3.96B
Net Income$239.70M
EPS (Basic)$0.44
EPS (Diluted)$0.43
Shares Outstanding (Basic)548.85M
Shares Outstanding (Diluted)550.80M

Key Highlights

  • 1Significant year-over-year net income growth: $433.0 million for the first six months of 2011, up from $167.9 million in 2010.
  • 2Strong recovery in the Truck segment: Revenues increased by 61% to $6.69 billion for the first six months of 2011 due to a substantial increase in truck deliveries (75% volume increase) and aftermarket parts sales.
  • 3Improved Financial Services segment performance: Pre-tax income rose to $107.2 million from $62.1 million, driven by higher finance and lease margins and a lower provision for losses.
  • 4Increased truck market share: PACCAR's heavy-duty truck market share in the U.S. and Canada increased to 26.7% in H1 2011 from 23.0% in H1 2010.
  • 5Strengthened balance sheet: Total cash and marketable debt securities increased to $2.93 billion at June 30, 2011, indicating robust liquidity.
  • 6Positive market outlook: PACCAR anticipates industry retail sales for heavy-duty trucks in the U.S. and Canada to increase by 40%-60% in 2011, with European markets also showing strong growth projections.
  • 7Increased R&D investment: Research and development expenses rose to $145.6 million for the first six months of 2011, focusing on product development and manufacturing efficiency.

Frequently Asked Questions

The primary driver is the strong recovery and growth in PACCAR's Truck segment. Higher truck deliveries, particularly in North America and Europe, coupled with increased aftermarket parts sales, significantly boosted revenues and profitability. The Financial Services segment also contributed positively with improved margins and reduced credit loss provisions.

PACCAR has seen an improvement in its market share. In the U.S. and Canada heavy-duty truck market, its share increased to 26.7% in the first half of 2011, up from 23.0% in the same period of 2010. However, in Europe, its market share slightly decreased to 15.3% from 16.2%.

The outlook is positive. PACCAR expects continued growth in industry retail sales for heavy-duty trucks in the U.S. and Canada, projecting a 40%-60% increase over 2010. The European market is also anticipated to grow by 25%-35%. The company is increasing its capital investments to support product development and expansion, indicating confidence in future demand.

The Financial Services segment has shown improved performance, with pre-tax income increasing significantly. Key factors include higher finance and lease margins due to lower borrowing costs and improved asset yields, as well as a reduced provision for losses on receivables, reflecting better portfolio quality. Increased new loan and lease volume also contributed to revenue growth.