10-QPeriod: Q2 FY2014

PACCAR INC Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 7, 2014For Securities:PCAR

Summary

PACCAR Inc's (PCAR) Q2 2014 report shows a solid increase in net income and revenues year-over-year, driven by improved truck sales in the U.S. and Canada, and strong performance in the Parts and Financial Services segments. Net sales rose to $4.57 billion, and net income climbed to $319.2 million ($0.90 per diluted share) from $291.6 million ($0.82 per diluted share) in the prior year's second quarter. The company saw growth in its Truck segment due to higher delivery volumes in North America and increased price realization for higher-content Euro 6 vehicles in Europe. The Parts segment benefited from robust aftermarket demand, while the Financial Services segment experienced growth in average earning assets, leading to higher revenues and income. Management highlights positive industry outlooks for truck sales in the U.S. and Canada for the remainder of 2014, although European registrations are expected to be slightly lower.

Financial Highlights

31 data points
Beta

Revenue

$4.57B

Net Income

$319.20M

7.0% Net Margin

EPS (Diluted)

$0.60

Total Assets

$20.91B

Cash & Equivalents

$1.38B

Free Cash Flow

$477.40M

Financial Statements
Beta
Revenue$4.57B
Net Income$319.20M
EPS (Basic)$0.60
EPS (Diluted)$0.60
Shares Outstanding (Basic)532.65M
Shares Outstanding (Diluted)534.45M

Key Highlights

  • 1Net income for Q2 2014 increased by 9.5% to $319.2 million, or $0.90 per diluted share, compared to $291.6 million, or $0.82 per diluted share, in Q2 2013.
  • 2Consolidated net sales and revenues increased by 6.3% to $4.57 billion in Q2 2014 from $4.30 billion in Q2 2013.
  • 3The Truck segment's net sales grew by 5.7% to $3.46 billion, driven by higher truck deliveries in the U.S. and Canada and improved price realization for Euro 6 vehicles in Europe.
  • 4The Parts segment reported a 9.6% increase in net sales to $778.0 million, attributed to higher aftermarket demand.
  • 5Financial Services segment revenues rose by 4.8% to $302.6 million, supported by higher average earning assets, with income before taxes up 12.5% to $91.7 million.
  • 6The company announced plans to construct a new 176,000 sq ft distribution center in Renton, Washington, to commence in Q4 2014.
  • 7Research and development expenses decreased to $49.9 million in Q2 2014 from $61.8 million in Q2 2013, as new truck models entered production.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in truck deliveries in the U.S. and Canada, higher price realization for Euro 6 emission vehicles in Europe, and strong aftermarket demand for parts. The Financial Services segment also contributed with higher average earning assets.

The Financial Services segment saw an increase in revenues to $302.6 million, up from $288.8 million in Q2 2013, primarily due to higher average earning assets. Income before taxes for the segment increased by 12.5% to $91.7 million, benefiting from higher finance and lease margins and a lower provision for losses on receivables.

PACCAR expects U.S. and Canada truck industry retail sales to be between 230,000-250,000 units in 2014, an increase from 212,200 units in 2013. This outlook is driven by the replacement of aging truck fleets and improvements in the construction and automotive sectors, with potential benefits from improved freight demand.

Yes, PACCAR plans to begin construction of a new 176,000-square-foot distribution center in Renton, Washington, in the fourth quarter of 2014. This facility is intended to more than double distribution capacity for dealers and customers in the northwestern U.S. and western Canada.