10-QPeriod: Q3 FY2021

PACCAR INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 1, 2021For Securities:PCAR

Summary

PACCAR Inc's (PCAR) Q3 2021 filing shows a notable increase in net sales and revenues for the first nine months, driven by strong performance in both the Truck and Parts segments. While the third quarter saw a slight decrease in truck revenues year-over-year, this was primarily attributed to industry-wide semiconductor chip shortages impacting deliveries. However, the Parts segment achieved record sales, demonstrating robust demand across all markets. The Financial Services segment also reported record revenues and a significant increase in income before taxes, benefiting from improved used truck results and higher finance and lease margins. Despite the headwinds in truck deliveries due to supply chain issues, PACCAR demonstrated resilience with overall revenue growth for the nine-month period. The company is actively investing in new truck models, including zero-emission powertrains and advanced technologies, indicating a strategic focus on future growth and innovation. The financial position remains solid, with ample liquidity to support ongoing operations and capital allocation strategies.

Financial Highlights

31 data points
Beta

Revenue

$5.15B

18.9% Gross Margin

Net Income

$380.50M

7.4% Net Margin

EPS (Diluted)

$0.73

Total Assets

$27.91B

Free Cash Flow

$143.60M

Financial Statements
Beta
Revenue$5.15B
Cost of Revenue$4.18B
Gross Profit$970.60M
Net Income$380.50M
EPS (Basic)$0.73
EPS (Diluted)$0.73
Shares Outstanding (Basic)521.70M
Shares Outstanding (Diluted)522.45M

Key Highlights

  • 1Worldwide net sales and revenues increased by 28% for the nine months ended September 30, 2021, compared to the same period in 2020, reaching $16.84 billion.
  • 2Parts sales reached a record $3.63 billion for the nine months ended September 30, 2021, up 28% year-over-year, driven by strong demand across all markets.
  • 3Financial Services segment income before income taxes surged by 90% year-over-year to $303.0 million for the nine months ended September 30, 2021, due to improved used truck results and higher finance/lease margins.
  • 4Net income for the nine months ended September 30, 2021, was $1.34 billion, a significant increase from $892.6 million in the prior year period.
  • 5Truck segment revenues for the nine months ended September 30, 2021, increased by 30% to $11.84 billion, driven by higher truck deliveries and favorable currency translation effects.
  • 6The company is facing challenges with an industry-wide undersupply of semiconductor chips, which impacted truck deliveries by approximately 7,000 vehicles in Q3 2021 and is expected to continue affecting deliveries into 2022.
  • 7PACCAR is investing heavily in R&D and capital expenditures, with projected investments of $525-$550 million in capital expenditures and $320-$330 million in R&D for 2021.

Frequently Asked Questions

The primary driver was the significant increase in both Truck and Parts segment revenues. Truck revenues benefited from higher deliveries across all markets and favorable currency translation, while Parts achieved record sales due to strong demand.

For 2021, truck industry retail sales in the U.S. and Canada are expected to be between 230,000 to 250,000 units. For 2022, estimates are in the range of 250,000 to 290,000 units.

PACCAR has been affected by the semiconductor shortage, which reduced truck deliveries in Q3 2021 and resulted in a significant number of trucks awaiting components. The company anticipates this shortage will continue to temper deliveries in the fourth quarter of 2021 and into 2022. While not explicitly detailed, the company's ongoing investments in manufacturing capabilities and R&D suggest a strategic focus on navigating such supply chain challenges.

PACCAR maintained a solid liquidity position. Total cash and marketable securities at September 30, 2021, were $3.78 billion. Operating activities provided $1.15 billion in cash for the first nine months of 2021. The company has substantial credit line arrangements, with $3.32 billion unused at September 30, 2021, indicating strong financial flexibility.