PACCAR INC Quarterly Report for Q3 Ended Sep 30, 2014

Summary

PACCAR Inc's third quarter and nine-month 2014 report shows robust top-line growth driven by increased truck sales in North America and Europe, alongside strong performance in the Parts and Financial Services segments. Consolidated net sales and revenues rose to $4.93 billion for the quarter and $13.88 billion for the nine months, reflecting higher unit deliveries and improved price realization, particularly for Euro 6 emission vehicles. The company also saw record revenue in its Parts segment. Profitability also saw a significant increase, with net income rising to $371.4 million ($1.04 per diluted share) for the quarter and $964.5 million ($2.71 per diluted share) for the nine months. This growth was supported by higher truck unit deliveries, reduced R&D expenses as new models entered production, and strong aftermarket demand. The Financial Services segment contributed positively with higher average earning assets and improved finance and lease margins. Looking ahead, PACCAR anticipates continued strength in the North American truck market for 2015, while the European market is expected to stabilize, with increased capital investments planned for product development and operational efficiency.

Key Highlights

• 1Consolidated net sales increased by 14.6% to $4.93 billion in Q3 2014 and by 10.8% to $13.88 billion for the first nine months of 2014, compared to the prior year periods.
• 2Net income grew significantly to $371.4 million ($1.04/share) in Q3 2014 and $964.5 million ($2.71/share) for the first nine months of 2014.
• 3Truck segment revenues increased by 16.9% in Q3 2014 and 12.0% for the first nine months, driven by higher truck deliveries in the U.S. and Canada and improved price realization for Euro 6 vehicles in Europe.
• 4Parts segment revenues reached a record $784.2 million in Q3 2014, up 10.0% year-over-year, and increased 9.0% to $2.29 billion for the nine-month period, reflecting strong aftermarket demand.
• 5Financial Services revenues grew 4.0% to $305.9 million in Q3 2014 and 3.1% to $902.2 million for the nine months, primarily due to higher average earning assets.
• 6The company's pre-tax return on revenues for the Truck, Parts, and Other segments improved to 11.2% in Q3 2014 from 10.2% in Q3 2013, and for the nine months from 9.7% to 10.4%.
• 7Operating cash flow remained strong, providing $1.60 billion for the nine months ended September 30, 2014, enabling continued investment in capital expenditures and R&D.

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