10-QPeriod: Q3 FY2017

PACCAR INC Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 3, 2017For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported strong financial results for the nine months ended September 30, 2017. Net income surged to $1.09 billion, a significant increase from $232.9 million in the prior year, largely due to the absence of a substantial European Commission charge in 2016. Revenue also saw a healthy increase, driven by higher truck deliveries in North America and Europe, and record sales in the Parts segment. The company's outlook for both truck and parts sales remains positive for 2018, indicating continued demand. Financially, PACCAR demonstrated solid operational cash flow generation, enabling it to manage its debt and return capital to shareholders. The company maintained a strong liquidity position with substantial cash and marketable securities. The Financial Services segment reported stable performance, contributing to the overall robust financial health of the company. Management's outlook suggests continued investment in R&D and capital expenditures focused on new truck models and advanced technologies.

Financial Highlights

32 data points
Beta

Revenue

$5.06B

Net Income

$402.70M

8.0% Net Margin

EPS (Diluted)

$0.76

Total Assets

$23.10B

Cash & Equivalents

$2.31B

Free Cash Flow

$529.70M

Financial Statements
Beta
Revenue$5.06B
Net Income$402.70M
EPS (Basic)$0.76
EPS (Diluted)$0.76
Shares Outstanding (Basic)527.85M
Shares Outstanding (Diluted)529.35M

Key Highlights

  • 1Net income for the first nine months of 2017 was $1.09 billion, a substantial increase from $232.9 million in the same period of 2016, primarily due to the absence of a large non-recurring European Commission charge in 2016.
  • 2Worldwide net sales and revenues increased to $14.00 billion for the first nine months of 2017 from $12.96 billion in 2016, driven by higher truck deliveries and record parts sales.
  • 3The Truck segment saw a 7% increase in total unit deliveries for the first nine months of 2017 compared to 2016, with notable growth in the U.S. and Canada (+8%) and Europe (+6%).
  • 4PACCAR Parts achieved record sales of $2.45 billion for the first nine months of 2017, a 9% increase over 2016, reflecting strong aftermarket demand across all markets.
  • 5Net cash provided by operating activities increased to $1.82 billion for the first nine months of 2017 from $1.49 billion in 2016, indicating strong operational cash generation.
  • 6The company maintained a healthy liquidity position, with total cash and marketable debt securities increasing to $3.53 billion as of September 30, 2017, up from $3.06 billion at December 31, 2016.
  • 7PACCAR provided a positive outlook for 2018, expecting truck industry retail sales in the U.S. and Canada to be between 220,000 and 250,000 units, and European registrations between 280,000 and 310,000 units.

Frequently Asked Questions

The significant increase in net income for the first nine months of 2017 to $1.09 billion from $232.9 million in the prior year was primarily due to the absence of a substantial non-recurring European Commission charge of $833.0 million that was recorded in the first nine months of 2016. Excluding this charge, adjusted net income for 2016 would have been $1.07 billion.

The Truck segment revenue increased by 8% to $10.55 billion for the first nine months of 2017. This was driven by a 7% increase in total unit deliveries, particularly strong in the U.S. and Canada and Europe. The company anticipates continued strength in the truck market, projecting U.S. and Canada retail sales between 220,000-250,000 units and European registrations between 280,000-310,000 units for 2018.

The Financial Services segment reported stable performance. Revenues increased by 6% to $936.7 million for the first nine months of 2017, driven by higher average operating lease earning assets and used truck sales. While income before taxes decreased by 16% to $191.5 million, this was largely due to factors like lower results on returned lease assets and higher borrowing rates. The segment maintained a strong portfolio of loans and leases with total assets of $13.06 billion.

PACCAR is committed to investing in future growth. For 2017, capital investments were projected at $400-$450 million and R&D at $260-$270 million. For 2018, these are projected to increase to $425-$475 million and $270-$300 million, respectively. These investments are focused on new truck models, integrated powertrains, advanced driver assistance technologies, and expanding manufacturing and parts distribution facilities.