PACCAR reported stronger than expected third quarter earnings before the market Tuesday despite chip issues and supply constraints. The PACCAR parts segment delivered record revenues and pretax profits; a 32% increase compared to the third quarter of 2021. Profit margins for both trucks and the parts business were up substantially year over year. Investors have concerns however with the global economic and supply-chain issues constraining orders and production. PCCAR is also set for a large research-and-development spend that might impact fourth-quarter earnings given the headwinds.
PACCAR Q3 22 Earnings
Q3 2022 earnings release at 6:15 a.m. ET; conference call at 8:30 a.m ET
Highlights
- Net income of $769.4 million ($2.21 per diluted share), 102% higher than the $380.5 million ($1.09 per diluted share) same period last year.
- Adj EPS $2.21 (est $1.98)
- Revenues $7.06 billion, compared to $5.15 billion reported in the third quarter of 2021.
- Revenue $7.06 (est $6.65B)
- Truck, Parts and Other gross margins of 14.9%.
- Global truck deliveries of 44,400 units.
- PACCAR Parts revenues of $1.47 billion.
- PACCAR Parts pretax income of $373.6 million.
- PACCAR Financial Services pretax income of $146.2 million.
- Manufacturing cash and marketable securities of $4.76 billion.
- Cash generated from operations of $680.7 million.
- Stockholders’ equity of $12.89 billion.
“PACCAR achieved record net income for the third quarter of 2022,” said Preston Feight, chief executive officer. “PACCAR’s third quarter results reflect the strong demand for premium, fuel-efficient DAF, Peterbilt and Kenworth new truck models and record PACCAR Parts results. PACCAR Parts reported record quarterly sales and profits due to industry-leading technology and logistics performance that enhanced customer uptime. PACCAR Financial Services delivered excellent results due to its high quality portfolio and strong used truck prices. I am very proud of our employees for delivering the highest quality trucks and transportation solutions to our customers.”
Stock Market Reaction
- PCAR trades 91.72 -0.3 (0.33%) today after earnings,
- PCAR +4.49 (+5.15%) the past year
Analyst Reaction
Citi analyst Timothy Thein said it looks like a solid quarter.
“Upside across the board,” in a Tuesday note. He also pointed out that increased research-and-development spending might impact fourth-quarter earnings. That is something for investors to take note of, but R&D spending isn’t a long-term drag on the company’s results.
Thein rates Paccar stock at Hold with a price target of $90. He believes 2023 will be a cyclical peak for Paccar, and doesn’t want to pay more than 11 times his estimated 2023 numbers.
Dividend Increase
Approved an increase of 9% in the regular quarterly cash dividend from thirty-four cents ($.34) per share to thirty-seven cents ($.37) per share. The dividend will be payable on December 6, 2022, to stockholders of record at the close of business on November 15, 2022.
Outlook
“Strong industry truck utilization and increased freight tonnage is good for truck demand,” said Mike Dozier, PACCAR senior vice president.
Customers are replacing older vehicles with the new fuel-efficient Kenworth and Peterbilt trucks. U.S. and Canada Class 8 truck industry retail sales are estimated to be in a range of 265,000-285,000 vehicles in 2022. Class 8 truck industry retail sales for 2023 are estimated to increase to a range of 260,000-300,000 vehicles.
European truck industry registrations in the above 16-tonne segment are estimated to be in the range of 275,000-295,000 units this year. The market in 2023 is expected to be in a range of 260,000-300,000 trucks. Harald Seidel, DAF president, said, “The new DAF XD, XF, XG and XG+ trucks deliver industry-leading fuel efficiency, safety and driver comfort to our customers.
The South American above 16-tonne truck market is projected to be in a range of 125,000-135,000 units this year, and in a similar range in 2023. DAF’s market share in the Brasilian above 16-tonne truck segment is a record 6.9% this year, compared to 5.6% in the same period last year.
About PACCAR
PACCAR is headquartered in Bellevue, Washington, USA. and is a global technology leader in the design, manufacture and customer support of premium light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF nameplates. PACCAR also designs and manufactures advanced diesel engines, provides financial services, information technology, and distributes truck parts related to its principal business.
- Kenworth Truck Company builds premium commercial vehicles for sale in the U.S., Canada, Mexico and Australia and for export throughout the world.
- Peterbilt Motors also designs, manufactures and distributes premium commercial vehicles in the US and Canada.
- DAF Trucks manufactures trucks in the Netherlands, Belgium, Brasil and the United Kingdom for sale throughout Western and Eastern Europe, and export to Asia, Africa, North and South America.
PACCAR Parts operates a network of parts distribution centers offering aftermarket support to Kenworth, Peterbilt and DAF dealers and customers around the world.
PACCAR Financial Services provides finance, lease and insurance services to dealers and customers in 24 countries including a portfolio of more than 180,000 trucks and trailers and total assets in excess of $13 billion.
Source: PACCAR
From The Traders Community Research Desk