PACCAR Beats but Earnings Fall

Zacks

PACCAR Inc. (PCAR) reported a profit of $291.6 million or 82 cents per share in the second quarter of the year, beating the Zacks Consensus Estimate by 7 cents. However, earnings declined from $297.2 million or 83 cents per share in the second quarter of 2012.

The marginal decline in earnings can be attributable to a 3.6% fall in Truck, Parts and Other and Financial revenues in the quarter to $4.3 billion. Nevertheless, revenues were higher than the Zacks Consensus Estimate of $4.0 billion. Pre-tax income fell 3.0% to $432.9 million from $446.3 million a year ago.

Segment Results

Revenues in the Truck and Other segment dipped 4.3% to $4.0 billion. Pre-tax income in the segment decreased 4.8% to $343.4 million from $360.7 million a year ago.

The company’s DAF trucks achieved a market share of 15.8% in the above 16-ton market in Europe. DAF’s sales were benefited by the launches of the new DAF XF, CF and LF Euro 6 vehicles.

Industry sales in the above 16-ton truck market in Europe are expected to be in the range of 210,000–230,000 units this year. Meanwhile, the company expects Class 8 industry retail sales of 210,000-230,000 vehicles in 2013.

Revenues from PACCAR Financial Services (PFS) rose 8.5% to $288.8 million. Pretax profit improved 5.3% to $81.5 million from $77.4 million in the second quarter of 2012 led by growth in portfolio balances. Currently, PFS has a portfolio of 155,000 trucks and trailers, with total assets of $10.93 billion.

Financial Position
 
PACCAR’s cash and marketable debt securities was $2.52 billion as of June 30, 2013 compared with $2.40 billion as of December 31, 2012. Long-term remained unchanged at $150 million as of June 30, 2013 considering the same as of December 31, 2012.
 
In the first half of the year, cash flow from operations more than doubled to $1.15 billion from $444.0 million a year ago due to favorable changes in trade receivables, inventory and payables as well as a decrease in wholesale receivables on new trucks.

Meanwhile, capital expenditures rose 29.2% to $269.7 million from $208.7 million in the first half of 2012 due to new product developments and increase manufacturing efficiency. The company has targeted capital investments of $425-$475 million and R&D expenses of $250-$275 million in 2013 for developing new products and increase manufacturing capacity.

Our Take

PCAR, a Zacks Rank #4 (Sell), is the third largest manufacturer of heavy-duty trucks (with a capacity of more than 15 metric tons) in the world after Volvo (VOLVY) and Daimler (DDAIF), and has substantial manufacturing exposure to light/medium trucks (with a capacity of 6–15 metric tons). The company also provides customer support for its products with the supply of aftermarket parts, finance and leasing services.

Currently, Tesla Motors (TSLA) with a Zacks Rank #1 (Strong Buy) is performing well in the automotive industry.

Read the Full Research Report on PCAR

Read the Full Research Report on DDAIF

Read the Full Research Report on VOLVY

Read the Full Research Report on TSLA

Zacks Investment Research



More From Zacks.com
View Comments (0)