PACCAR Inc. (PCAR) posted a 30.68% rise in earnings to 94 cents per share in the fourth quarter of 2013 from 72 cents in the same quarter of 2012, surpassing the Zacks Consensus Estimate of 92 cents. Net income surged 31.8% to $334.2 million from $253.5 million in the year-ago quarter.
Revenues in the quarter increased 15% to $4.6 billion, surpassing the Zacks Consensus Estimate of $4.3 billion.
The increase in earnings was attributable to the increase in truck and aftermarket parts sales along with pre-tax profits in financial services.
PACCAR reported earnings of $3.30 per share in 2013, up from $3.12 per share in 2012. Earnings per share surpassed the Zacks Consensus Estimate of $3.27.
Net income increased to $1.17 billion from $1.11 billion a year ago. Revenues increased to $17.12 billion from $17.05 billion in 2012, exceeding the Zacks Consensus Estimate of $16.03 billion.
Revenues in the Truck, Parts and Other segment increased 16.2% to $4.3 billion. Pre-tax income in the segment surged 42.9% to $387.7 million from $271.3 million a year ago.
PACCAR’s DAF trucks achieved a market share of 16.2% in the above 16-ton market in Europe.
Industry sales in the above 16-ton truck market in Europe were 240,800 units in 2013, higher than the guidance of 215,000–225,000 units. Meanwhile, Class 8 industry retail truck sales in the U.S. and Canada were 212,000 vehicles in 2013. Sales benefited from replacement demand due to the aging truck population and improving housing and automotive sectors.
PACCAR inaugurated its 300,000-square feet DAF assembly plant in Brazil in Oct 2013. Industry sales of trucks with a capacity of more than six tons in the Brazil market amounted to 149,000 units in 2013. The company expects the demand for such trucks to exceed beyond 150,000 units in 2014.
Industry sales in the above 16-ton truck market in Europe are expected to be in the range of 200,000–230,000 units in 2014. Meanwhile, the company expects Class 8 industry retail sales of 210,000–240,000 vehicles in the U.S. and Canada in 2014.
Revenues in the Financial Services segment (comprising a portfolio of 161,000 trucks and trailers, with total assets of $11.63 billion) increased 0.6% to $299.5 million while pre-tax income rose 14.9% to $90.4 million in the fourth quarter of 2013.
PACCAR’s cash and marketable debt securities amounted to $2.93 billion as of Dec 31, 2013, compared with $2.4 billion as of Dec 31, 2012. Long-term debt remained unchanged at $150 million as of Dec 31, 2013, compared with 2012-end.
The company’s cash from operations increased significantly to $2.38 billion in 2013 from $1.52 billion in 2012. The company recorded capital investments of $409.5 million and research and development (R&D) expenses of $251.4 million in 2013 for new products and expansion of manufacturing capacity. The company has targeted capital investments of $350–$400 million and R&D expenses of $225–$275 million in 2014 for new products and expansion of operating efficiency.
PACCAR, carrying a Zacks Rank #3 (Hold), is the world’s third-largest manufacturer of heavy-duty trucks (with a capacity of more than 15 metric tons) after Volvo (VOLVY) and Daimler AG (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 as well as aftermarket parts, finance and leasing services.
Currently, Tesla Motors, Inc. (TSLA) that holds a Zacks Rank #1 (Strong Buy) is performing well in the industry where PACCAR operates.