10-QPeriod: Q2 FY2013

PACCAR INC Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported its financial results for the second quarter and the first half of 2013. For the three months ended June 30, 2013, net income was $291.6 million, or $0.82 per diluted share, a slight decrease compared to $297.2 million, or $0.83 per diluted share, in the same period of 2012. For the six months ended June 30, 2013, net income was $527.7 million, or $1.49 per diluted share, down from $624.5 million, or $1.75 per diluted share, in the first half of 2012. This decline was primarily driven by lower truck deliveries and consequently, reduced revenue in the Truck segment, which more than offset improvements in the Parts and Financial Services segments. The company experienced a decrease in truck unit sales, particularly in the U.S. and Canada, which impacted overall revenue. However, the Parts segment showed growth in aftermarket sales globally, and the Financial Services segment demonstrated increased earning assets and improved income before taxes, benefiting from higher average earning asset balances. PACCAR is managing its financial condition through diligent cost control, strategic capital investments including a new factory in Brazil, and prudent management of its financial services portfolio.

Financial Highlights

31 data points
Beta

Revenue

$4.30B

Net Income

$291.60M

6.8% Net Margin

EPS (Diluted)

$0.55

Total Assets

$19.20B

Cash & Equivalents

$1.44B

Free Cash Flow

$637.30M

Financial Statements
Beta
Revenue$4.30B
Net Income$291.60M
EPS (Basic)$0.55
EPS (Diluted)$0.55
Shares Outstanding (Basic)531.15M
Shares Outstanding (Diluted)532.50M

Key Highlights

  • 1Net income for the second quarter of 2013 was $291.6 million, or $0.82 per diluted share, compared to $297.2 million, or $0.83 per diluted share, in Q2 2012.
  • 2For the first six months of 2013, net income was $527.7 million, or $1.49 per diluted share, down from $624.5 million, or $1.75 per diluted share, in the same period of 2012.
  • 3Truck segment revenues decreased by 6% in the second quarter and 15% in the first half of 2013 due to lower truck deliveries, particularly in the U.S. and Canada.
  • 4The Parts segment saw revenue increase by 6% in the second quarter and 2% in the first half of 2013, driven by strong aftermarket demand worldwide.
  • 5The Financial Services segment reported increased revenues (up 9% in Q2 and 10% in H1) and income before taxes (up 5% in Q2 and 9% in H1), primarily due to higher average earning assets.
  • 6Capital investments in 2013 are expected to be between $425-$475 million, with a focus on completing the Brazil factory and new product development.
  • 7R&D expenses decreased in 2013 compared to 2012 as new truck models and engines entered production, with remaining focus on comprehensive product development.

Frequently Asked Questions

The primary reason for the decrease in net income is the lower revenue and profitability in the Truck segment, driven by a decline in truck deliveries, especially in the U.S. and Canada. This decline in the core truck business was more significant than the improvements seen in the Parts and Financial Services segments.

PACCAR's Financial Services segment monitors credit quality closely and has robust processes for managing credit risk, including individual evaluation of impaired receivables and collective evaluation based on historical loss data and market conditions. They also maintain significant liquidity and access to capital markets, with credit lines and a strong investment-grade credit rating.

PACCAR expects U.S. and Canada truck industry retail sales to be between 210,000-230,000 units in 2013, a slight increase from 2012. European registrations are also projected to be in a similar range. Aftermarket parts sales in the U.S. and Canada are expected to increase modestly, while European parts sales are anticipated to be comparable to 2012 levels.

Capital investments in 2013 are expected to be $425-$475 million, largely directed towards completing the new DAF factory in Brazil and developing new products and services globally. R&D spending is projected between $250-$275 million, with a focus on comprehensive product development programs and enhancing manufacturing efficiency.