PACCAR Financial Services Reports Y/Y Decline in Q3 Income, Truck Deliveries Double



PACCAR achieved net income of $385.5 million in Q3/20 compared with $607.9 million earned in the same period last year. Third quarter revenues were $4.94 billion compared with $6.37 billion reported in Q3/19.

“PACCAR (Nasdaq: PCAR) reported strong revenues and net income for the third quarter of 2020,” Preston Feight, CEO of PACCAR. “PACCAR’s third quarter results reflect rebounding global truck production and aftermarket parts revenue. I am very proud of our outstanding employees, who delivered these results while employing the highest commitment to health and safety at all PACCAR facilities.”

PACCAR earned $892.6 million for the first nine months of 2020 compared with $1.86 billion in the same period last year. Net revenues for the first nine months of 2020 were $13.16 billion compared with $19.48 billion last year.

PACCAR’s truck deliveries doubled in the third quarter compared with the second quarter of this year, reaching 36,000 units. PACCAR Parts’ aftermarket sales and profits surpassed the results in Q3/19. PACCAR Financial Services achieved new financing business and sold a record number of used trucks. Peterbilt, Kenworth and DAF announced production availability of their battery electric trucks.

In Q3/20, PACCAR also reported manufacturing cash and marketable securities of $4.41 billion, cash generated from operations of $831.7 million and stockholders’ equity of $10.18 billion. In the first nine months of 2020, PACCAR achieved capital investments of $438.8 million and R&D expenses of $202.2 million, cash generated from operations of $2.19 billion, and medium-term note issuances of $1.89 billion.

Global Truck Markets

PACCAR is increasing its estimate of U.S. and Canada Class 8 truck industry retail sales to a range of 190,000 to 210,000 vehicles in 2020. Class 8 truck industry retail sales for 2021 are estimated to be in a range of 210,000 to 250,000 vehicles.

“U.S. economic growth is being led by manufacturing, housing starts, automotive production and consumer spending,” Darrin Siver, senior vice president of PACCAR, said. “U.S. and Canada Class 8 truck industry orders through September were 18% higher than in the same period last year.”

“Customer demand for fuel-efficient DAF XF, CF and LF trucks continued to strengthen in the third quarter as the European economies improved,” Harry Wolters, president of DAF, said. “We are raising our estimates for European truck industry registrations in the above 16-tonne segment to be in the range of 210,000-230,000 units this year. The 2021 truck market is expected to be in the range of 230,000-270,000 trucks.”

The DAF XF truck was recently honored at the Motor Transport Awards in the United Kingdom as the “Fleet Truck of the Year 2020.” The judges noted the DAF XF truck’s low operating costs, superior driver comfort and excellent after sales support.

DAF Brasil achieved a record 9.3% market share in the Brazil above 40-tonne truck segment this year.

“DAF Brasil introduced a new DAF XF truck this year, which has been well-received by customers,” Mike Dozier, senior vice president, said. “We are increasing our estimate for the 2020 South American above 16-tonne truck market to be in a range of 75,000-85,000 vehicles this year, and in a range of 95,000-105,000 trucks in 2021.”

PACCAR Parts

PACCAR Parts achieved pre-tax profit of $210.2 million in Q3/20 compared with $207.4 million earned in Q3/19. Revenues in Q3/20 were $1.02 billion compared with the $1 billion achieved in the third quarter last year. PACCAR Parts achieved pre-tax profit of $576.8 million in the first nine months of 2020 compared with $625.6 million in the first nine months of 2019. PACCAR Parts’ nine-month revenues were $2.84 billion compared with $3.03 billion for the same period last year.

“Third quarter parts sales and profits benefited from a stronger economy, increased vehicle utilization and the growth of our e-commerce platform,” David Danforth, vice president of PACCAR and general manager of PACCAR Parts, said.

Kenworth, Peterbilt and DAF Announce Electric Vehicle Production Availability

Kenworth K270E and T680E, Peterbilt models 579EV, 220EV and 520EV, and DAF CF Electric zero emissions trucks are now available for customers to order, and will be produced next year.

“PACCAR is an innovation leader in zero emissions battery electric and hydrogen fuel cell trucks,” Kyle Quinn, chief technology officer at PACCAR, said.

In addition, PACCAR is providing charging infrastructure solutions for customers who purchase battery electric Kenworth and Peterbilt trucks in the United States and Canada. Kenworth and Peterbilt customers and dealers are able to order electric chargers from PACCAR Parts. PACCAR Financial offers financing options and PacLease bundles the cost of charging systems with full service lease offerings.

Financial Services

PACCAR Financial Services (PFS) has a portfolio of 203,000 trucks and trailers, with total assets of $15.3 billion. PacLease, a truck leasing company in North America and Europe with a fleet of 38,600 vehicles, is included in this segment.

PFS earned pre-tax income of $55.5 million in the third quarter this year compared with $66.5 million in the same period last year. Q3/20 revenues were $397.6 million compared with $362.8 million in the same quarter of 2019. For the nine-month period, PFS pre-tax income was $159.3 million in 2020 compared with $230.8 million last year. Nine-month revenues were $1.14 billion in 2020 compared with $1.07 billion for the same period a year ago.

“PFS’ portfolio performed very well during the third quarter of 2020,” Todd Hubbard, vice president at PACCAR, said. “Loan and lease origination activity was strong in the third quarter. PFS sold a record number of used trucks and vehicle resale values were steady in the third quarter.”

PACCAR Financial continues to invest in worldwide used truck centers to sell used trucks at retail prices. PFS recently opened used truck centers in Lyon, France; Denton, TX: and Prague, and plans to open a used truck facility in Madrid next year. Kenworth and Peterbilt truck resale values command a 10% to 15% premium over competitors’ trucks.

“PFS provides leading-edge technology solutions, excellent customer service and dedicated support to the transportation industry. Kenworth, Peterbilt and DAF dealers and customers appreciate the ease of doing business with PFS,” Craig Gryniewicz, president of PACCAR Financial, said.

PACCAR’s balance sheet, complemented by its A+/A1 credit ratings, enables PFS to have access to the commercial paper and medium-term note markets. PFS profitably supports the sale of PACCAR trucks in 26 countries on four continents.

Capital Investment and Research and Development

PACCAR’s long-term profits and balance sheet enabled the company to invest $7.2 billion in new and expanded facilities, products and new technologies during the past decade. Capital investments are estimated to be $570 million to $600 million and research and development expenses are expected to be $270 million to $280 million in 2020. PACCAR estimates that it will invest $575 million to $625 million in capital projects and $330 million to $360 million in research and development expenses next year.

“PACCAR is investing for long-term growth in aerodynamic truck models, diesel and zero emissions powertrain technologies, advanced driver assistance systems, connected vehicle services, next-generation manufacturing and distribution capabilities,” Harrie Schippers, president and CFO of PACCAR, said.

PACCAR Earns Women in Trucking Association Award

PACCAR, Kenworth, Peterbilt, PACCAR Parts and Dynacraft were each honored by the Women in Trucking Association (WIT) as a 2020 “Top Company for Women to Work for in Transportation.” The recognition was for fostering gender diversity, flexible hours, competitive compensation and benefits, training, professional development, and career advancement opportunities.

WIT is a nonprofit organization that encourages the employment and promotes the accomplishments of women in the trucking industry.

“PACCAR is committed to hiring and promoting the most talented people in the world and we know that the best people represent the diversity present in the global community,” Freight said.

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