PACCAR INC Quarterly Report for Q2 Ended Jun 30, 2020

Summary

PACCAR Inc (PCAR) reported its second-quarter and first six months results for 2020, significantly impacted by the COVID-19 pandemic. The company experienced a substantial decline in net sales and revenues across all segments, with truck deliveries falling by 65% year-over-year in Q2 and 46% for the first six months. This resulted in a sharp decrease in net income, which fell to $147.7 million ($0.43 per diluted share) in Q2 2020 from $619.7 million ($1.78 per diluted share) in Q2 2019. For the first six months, net income was $507.1 million ($1.46 per diluted share) compared to $1.25 billion ($3.59 per diluted share) in the prior year. Despite the challenging environment, PACCAR demonstrated resilience. The Financial Services segment maintained relatively stable revenues, and the company saw an increase in its market share for heavy-duty trucks in the U.S. and Canada and medium-duty trucks in the U.S. The company also continued investing in long-term growth areas such as zero-emission vehicle technology and next-generation manufacturing. Management expects 2020 truck industry volumes to be significantly lower than 2019 across key markets, but the company's strong liquidity position and ongoing cost-saving measures are expected to support its financial stability.

Key Highlights

• 1Significant decline in Q2 2020 net sales and revenues, down to $3.06 billion from $6.63 billion in Q2 2019, primarily due to a 65% decrease in truck deliveries.
• 2Net income for Q2 2020 was $147.7 million ($0.43/share), a sharp decrease from $619.7 million ($1.78/share) in Q2 2019, reflecting the impact of COVID-19.
• 3For the first six months of 2020, net sales were $8.22 billion, down from $13.12 billion in the prior year, with net income falling to $507.1 million ($1.46/share) from $1.25 billion ($3.59/share).
• 4PACCAR increased its heavy-duty truck market share in the U.S. and Canada to 29.6% and medium-duty market share to 23.6% in the first six months of 2020, despite an overall market contraction.
• 5The Financial Services segment revenues remained stable year-over-year for Q2 at $360.3 million, with an increase for the first six months to $744.0 million from $710.9 million, driven by higher used truck sales in Europe.
• 6The company provided cautious outlooks for 2020, expecting significantly lower truck industry volumes in the U.S./Canada, Europe, and South America compared to 2019 due to the pandemic.
• 7PACCAR maintained a strong liquidity position, with cash and marketable debt securities totaling $4.28 billion at June 30, 2020, though cash decreased due to dividend payments and financing activities.

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