PACCAR Achieves Good First Quarter Results
Strong European Truck Market Drives Record DAF Share
“PACCAR reported good revenues and operating income for the first quarter of 2016,” said Ron Armstrong, chief executive officer. “PACCAR benefitted from a favorable truck market in North America and record DAF market share of 16.6% year-to-date in Europe. PACCAR generated increased truck and parts segment margins, and good financial services results worldwide. I am very proud of our 23,000 employees who have delivered industry leading products and services to our customers.”
First quarter 2016 net sales and financial services revenues were $4.30 billion compared to $4.83 billion for the first quarter of 2015. PACCAR earned adjusted net income (non-GAAP) of $348.0 million ($.99 per diluted share) in the first quarter of 2016, excluding a $942.6 million non-recurring charge for the European Commission investigation of all European truck manufacturers. The Company earned net income of $378.4 million ($1.06 per diluted share) in the first quarter last year. Including the non-recurring charge, which is not tax deductible, PACCAR reported a net loss of $594.6 million ($1.69 per diluted share) in the first quarter of 2016. The Company will continue to evaluate the amount of the charge pending final resolution of the proceeding.
Ron Armstrong added, “PACCAR’s strong balance sheet and positive operating cash flow, which has averaged $2.1 billion per year in the last five years, have enabled the company to invest $3.3 billion in new facilities, products and services during the same period. New Kenworth, Peterbilt and DAF vehicles, an expanded PACCAR engine range and strong aftermarket sales are contributing to the company’s long-term growth.”
PACCAR Share Repurchases
PACCAR repurchased 1.1 million of its common shares for $56.3 million during the first quarter of 2016. Under the current Board of Directors authorization for $300 million of stock repurchases, PACCAR has repurchased 3.8 million shares for $192.6 million. “PACCAR’s excellent net profits and cash flow make the company’s shares an attractive long-term investment. The stock repurchase program reflects the Board’s confidence in PACCAR’s successful global business growth,” said Bob Christensen, PACCAR president and chief financial officer.
Highlights – First Quarter 2016
Highlights of PACCAR’s financial results during the first quarter of 2016 include:
Consolidated net sales and revenues of $4.30 billion.
Adjusted net income of $348.0 million (non-GAAP), excluding a $942.6 million non-recurring charge for the European Commission investigation.
Net loss of $594.6 million.
Truck, Parts and Other gross margin of 14.9%.
Cash generated from operations of $795.8 million.
Financial Services pretax income of $80.3 million.
Research and development expenses of $59.6 million.
Manufacturing cash and marketable securities of $3.23 billion.
Stockholders’ equity of $6.34 billion.
Global Truck Markets
DAF is the above 16-tonne market share leader in the United Kingdom, the Netherlands, Hungary and Poland. “Our customers recognize DAF’s excellent product quality, low operating costs and strong resale value,” said Preston Feight, DAF president and PACCAR vice president. “European truck industry sales in the above 16-tonne truck market are estimated to increase and be in the range of 260,000-290,000 vehicles in 2016, the strongest market since 2008.”
Class 8 truck industry retail sales for the U.S. and Canada in 2016 are expected to be in a range of 220,000-250,000 vehicles, the third highest market in the last 10 years. “The truck market reflects the good economy and steady freight demand,” said Gary Moore, PACCAR executive vice president. “Our customers’ operations are benefitting from the fuel-efficient PACCAR MX engines, Kenworth and Peterbilt aerodynamic trucks and low oil prices.”
PACCAR Parts Achieves Solid Results
PACCAR’s 17 parts distribution centers (PDC) support over 2,000 DAF, Kenworth and Peterbilt dealer service locations. PACCAR Parts generated quarterly revenues of $719.5 million in the first quarter of 2016, compared to $752.7 million achieved in the first quarter of 2015. First quarter 2016 pretax income was $134.6 million, compared to $138.9 million earned in the first quarter last year. PACCAR Parts’ pretax return on revenues increased to 18.7%, compared to 18.5% in the first quarter of 2015.
“PACCAR Parts’ sales growth over the last five years has been driven by ongoing investment in distribution, technology and products, and an increase in the North American and European truck parcs,” said Harrie Schippers, PACCAR senior vice president.
PACCAR Parts opened its new 160,000 square-foot PDC in Renton, Washington this month. The PDC provides enhanced aftermarket support for dealers and customers in the Pacific Northwest and Western Canada.
Financial Services Companies Achieve Good Results
PACCAR Financial Services (PFS) has a portfolio of 175,000 trucks and trailers, with total assets of $12.3 billion. PACCAR Leasing, a major full-service truck leasing company in North America and Europe with a fleet of 38,000 vehicles, is included in this segment. PFS’ first quarter 2016 pretax income was $80.3 million compared to $89.0 million earned in the first quarter of 2015. PFS achieved first quarter 2016 revenues of $289.4 million compared to $284.7 million in 2015. “Excellent portfolio performance contributed to good PFS results during the first quarter of 2016,” said Bob Bengston, PACCAR senior vice president. “Our Kenworth, Peterbilt and DAF dealers and customers appreciate PFS’s commitment to providing technology solutions, excellent customer service and dedicated support of the transportation industry in all phases of the business cycle.”
“PACCAR’s excellent balance sheet, complemented by its A+/A1 credit ratings, enables PFS to offer competitive retail financing to Kenworth, Peterbilt and DAF dealers and customers in 22 countries on four continents,” said Todd Hubbard, PACCAR Financial Corp. president.
PACCAR is an environmental leader as reflected by the industry-leading fuel-efficiency of its Kenworth, Peterbilt and DAF trucks. The Kenworth T680 Advantage is Kenworth’s most fuel-efficient truck. Newly-designed aerodynamic features enhance the airflow around the vehicle. “Kenworth engineers continue to innovate and develop enhancements that will provide fuel economy gains for Kenworth customers,” said Mike Dozier, Kenworth general manager and PACCAR vice president.
Capital Investments Focused on Enhanced Efficiency
PACCAR’s excellent long-term profits, strong balance sheet, and intense focus on quality, technology and productivity have enabled the company to invest $6.0 billion in world-class facilities, innovative products and new technologies during the past decade. “In 2016, capital expenditures of $325-$375 million are targeted for new product development, enhanced manufacturing facilities and aftermarket support programs. Research and development expenses are estimated at $240-$260 million this year as Kenworth, Peterbilt and DAF invest in industry-leading products and services to enable our customers to enhance the performance of their businesses,” commented George West, PACCAR vice president.
Peterbilt began construction of a 102,000 square-foot expansion to its truck manufacturing facility in Denton, Texas during the first quarter of 2016. “This expansion is Peterbilt’s largest facility investment since the construction of the Denton plant in 1980 and will enhance our manufacturing efficiency and provide additional production capacity,” said Darrin Siver, Peterbilt general manager and PACCAR vice president.
Peterbilt’s truck factory in Denton, Texas, earned Frost & Sullivan’s Manufacturing Leadership Awards in 2016. The Manufacturing Leadership Awards honor companies that are shaping the future of global manufacturing. Peterbilt was honored in the ‘Operational Excellence Leadership’ category for truck assembly and quality management processes.
PACCAR is a global technology leader in the design, manufacture and customer support of high-quality light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF nameplates. PACCAR also designs and manufactures advanced diesel engines, provides financial services and information technology, and distributes truck parts related to its principal business.
PACCAR will hold a conference call with securities analysts to discuss first quarter earnings on April 26, 2016, at 8:00 a.m. Pacific time. Interested parties may listen to the call by selecting “Q1 Earnings Webcast” at PACCAR’s homepage. The Webcast will be available on a recorded basis through May 3, 2016. PACCAR shares are traded on the Nasdaq Global Select Market, symbol PCAR. Its homepage is www.paccar.com.
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in PACCAR’s filings with the Securities and Exchange Commission.
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