Paccar announced revenues of $5.16 billion for the first quarter 2020, compared with $6.49 billion during the same period a year ago. Paccar’s Q1 net income was $359.4 million, compared with $629.0 million in Q1 last year.
“First quarter truck deliveries were impacted by the temporary closures of Paccar truck manufacturing facilities worldwide, which began March 24, resulting from government coronavirus mandates,” says CEO Preston Feight.
“Paccar Parts achieved record results as they supported the shipment of medical supplies, food, infrastructure material and essential goods to our communities around the world. I am very proud of our employees, their support of each other and their commitment to deliver essential products and services to our customers,” Feight says.
Feight says the company has taken many positive steps in fighting the virus.
“We have temporarily closed our truck factories and have realigned all of our facilities to enhance social distancing. Every factory, office and distribution center has implemented best practices for deep cleaning, staggered shifts and employee spacing. Thousands of our employees are working from home when possible,” he says.
Harrie Schippers, president and chief financial officer, says, “Paccar delivered truck, parts and other gross margins of 12.3 percent in the first quarter. A core competency of DAF, Kenworth and Peterbilt manufacturing facilities is managing build rate fluctuations, gained from the normal cyclicality in our industry. The company is rigorously aligning operating costs to reflect changing market conditions, including selectively reducing capital investment and research and development costs. The first quarter included higher accruals for product support costs and lower used truck results. The company has achieved 81 consecutive years of profitability, managing through all business cycles.”
Mark Pigott, executive chairman, says Paccar is in a strong financial position, with excellent liquidity and investment-grade credit ratings of A+/A1. Manufacturing cash and marketable securities were $4.3 billion at March 31, 2020. The company also has access to committed bank facilities of $3.0 billion.
Paccar says highlights of the company’s financial results during the first quarter of 2020 include:
- Consolidated net sales and revenues of $5.16 billion.
- Net income of $359.4 million.
- Paccar Parts revenues of $998.6 million and pretax profits of $214.7 million.
- Paccar Financial Services revenues of $383.7 million and pretax profits of $48.3 million.
- Research and development expenses of $71.0 million.
- Capital investments of $177.1 million
- Cash flow from operations of $425.9 million.
- Manufacturing cash and marketable securities of $4.3 billion.
- Stockholders’ equity of $9.64 billion.
“The outlook for global economies and truck markets is weaker due to the coronavirus pandemic,” says Gary Moore, executive vice president. “Governments worldwide have implemented fiscal and monetary actions to assist individuals and businesses and prepare for an eventual recovery. In this uncertain time it is difficult to estimate 2020 truck industry retail sales in North America, Europe and South America.”
Kenworth and Peterbilt’s U.S. and Canada Class 8 truck retail sales market share increased to 30.4 percent in the first quarter of 2020. “Customers recognize the industry-leading quality and low total cost of ownership of Peterbilt and Kenworth trucks,” says Darrin Siver, senior vice president.
Paccar Parts’ 18 PDCs support more than 2,200 DAF, Kenworth and Peterbilt dealer sales, parts and service locations. Paccar Parts earned record quarterly pretax income of $214.7 million in the first quarter of 2020, which is 3 percent higher than the $207.6 million earned in the same period last year. Paccar Parts achieved first quarter revenues of $998.6 million, compared with the $1.0 billion reported in the same period last year, the company says.
“Paccar Parts is achieving solid results due to investments in distribution and innovative technology, initiatives such as TRP all-makes parts and TRP stores and a growing population of connected Paccar vehicles,” says David Danforth, Paccar vice president and Paccar Parts general manager.
Jim Walenczak, Paccar Parts assistant general manager, says, “Paccar Parts has invested in its e-commerce platform for many years, which is benefiting our customers and dealers in this challenging time.”
Paccar Parts is expanding its logistical footprint and plans to open a new 250,000 sq.-ft. PDC in Las Vegas, and a 160,000 sq.-ft. PDC in Ponta Grossa, Brazil, in the second quarter of 2020.
Paccar Financial Services (PFS) has a portfolio of 209,000 trucks and trailers, with total assets of $15.64 billion. PacLease, a full-service truck leasing company in North America, Europe and Australia with a fleet of 39,000 vehicles, is included in this segment. PFS earned first quarter 2020 revenues of $383.7 million and pretax income of $48.3 million, the company says.
“Paccar Financial achieved reasonable first quarter results considering the challenging market. The high quality of the portfolio is supported by conservative underwriting and matched-term funding of receivables,” says Todd Hubbard, vice president.
“The used truck market, mostly in Europe, has experienced lower industry-wide vehicle values. Paccar Financial is leveraging its investments in worldwide used truck retail center capacity to sell an increased number of used trucks at retail prices, which enhances used truck sales margins. PFS recently opened a used truck center in Denton, Texas, and plans to open retail used truck facilities in Prague, Czech Republic and Madrid, Spain this year,” Hubbard says.
Craig Gryniewicz, Paccar Financial Corp. president, says “Paccar’s strong 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 26 countries on four continents. Paccar Financial Services has excellent ongoing access to the debt markets, issuing commercial paper on a regular basis and $632 million of three- and five-year term notes during the first quarter of 2020.”
Paccar says its long-term profits, strong balance sheet and consistent focus on quality, technology and productivity have enabled the company to invest $7.0 billion in new and expanded facilities, innovative products and new technologies during the past decade.
“Paccar is rigorously reviewing capital investments and R&D projects. We have reduced 2020 capital expenditures by $100 million to a range of $525-$575 million and have lowered research and development expenses by $45 million to a range of $265-$295 million,” says Mike Dozier, senior vice president.
Peterbilt, Kenworth and DAF are field-testing battery electric, hydrogen fuel cell and hybrid powertrain trucks with customers in North America and Europe.
“Paccar is enhancing its environmental and engineering leadership with the development of innovative alternative powertrain commercial vehicles,” says Kyle Quinn, chief technology officer.
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