10-QPeriod: Q3 FY2018

PACCAR INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 2, 2018For Securities:PCAR

Summary

PACCAR Inc (PCAR) reported strong financial results for the nine months ended September 30, 2018, demonstrating significant year-over-year growth across its key segments. Net sales and revenues reached $17.22 billion, a substantial increase from $14.00 billion in the prior year, driven by robust performance in the Truck, Parts, and Financial Services segments. Net income for the period was $1.62 billion, or $4.59 per diluted share, a significant improvement from $1.09 billion, or $3.08 per diluted share, in the same period of 2017. This growth is attributed to higher pre-tax income from Truck and Parts operations, coupled with improved Financial Services results. A notable factor contributing to the enhanced net income is the reduced effective tax rate, largely due to the U.S. federal income tax legislation enacted in late 2017. The company also highlighted increased capital investments and R&D expenses, signaling a commitment to future growth and technological advancement, including investments in electric and hybrid vehicle technologies.

Financial Highlights

32 data points
Beta

Revenue

$5.76B

Net Income

$545.30M

9.5% Net Margin

EPS (Diluted)

$1.03

Total Assets

$25.10B

Cash & Equivalents

$2.91B

Free Cash Flow

$615.80M

Financial Statements
Beta
Revenue$5.76B
Net Income$545.30M
EPS (Basic)$1.03
EPS (Diluted)$1.03
Shares Outstanding (Basic)526.05M
Shares Outstanding (Diluted)527.25M

Key Highlights

  • 1Worldwide net sales and revenues increased by 23% to $17.22 billion for the first nine months of 2018 compared to $14.00 billion in 2017.
  • 2Net income for the nine months ended September 30, 2018, rose to $1.62 billion ($4.59 per diluted share) from $1.09 billion ($3.08 per diluted share) in the comparable period of 2017.
  • 3The Truck segment experienced a revenue increase of 26% to $13.25 billion, driven by higher truck deliveries, particularly in the U.S. and Canada.
  • 4The Parts segment also saw significant growth, with revenues up 17% to $2.87 billion, reflecting strong aftermarket demand globally.
  • 5Financial Services revenues grew 8% to $1.01 billion, supported by higher average earning assets and increased interest rates.
  • 6The company's effective tax rate decreased significantly due to the U.S. tax law changes, contributing positively to net income.
  • 7PACCAR increased its capital investments and R&D spending, indicating a strategic focus on product development and innovation, including new powertrain technologies.

Frequently Asked Questions

The primary driver of PACCAR's revenue growth for the nine months ended September 30, 2018, was a significant increase in truck deliveries across all major markets, particularly in the U.S. and Canada, coupled with higher aftermarket parts demand and growth in the Financial Services segment.

The new U.S. federal income tax legislation, which lowered the statutory income tax rate from 35% to 21%, significantly reduced PACCAR's effective tax rate in 2018 compared to 2017. This reduction in tax expense directly contributed to the substantial increase in net income reported for the period.

PACCAR anticipates the truck industry retail sales in the U.S. and Canada to remain strong in 2019, projecting a range of 280,000 to 310,000 units. In Europe, registrations for over 16-tonne vehicles are expected to be between 290,000 and 320,000 units. South America's heavy-duty truck sales are projected to increase to 95,000 to 105,000 units.

PACCAR is significantly increasing its capital investments and R&D spending. These investments are focused on developing new truck models, integrated powertrains (including diesel, electric, hybrid, and hydrogen fuel cell technologies), aerodynamic designs, advanced driver assistance systems, and enhancing manufacturing and distribution facilities.