Paccar (PCAR) Q1 2018 earnings summary

Executive summary

• Record Q1 sales and revenues of $5.654B vs. $4.238B; net income was $512.1M vs. $310.3M, or $1.45 diluted EPS vs. $0.88.

• Record deliveries of 44,500 trucks, up from 35,000, and record Parts results reflected strong demand and production leverage.

Financial highlights

• Truck, Parts and Other revenue was $5.322B; Financial Services revenue was $332.2M. Income before taxes was $669.4M, and after-tax return on revenue was 9.1%.

• Truck, Parts and Other gross margin was 14.8%; favorable currency translation and a lower effective tax rate also supported results.

• Currency added $240M to revenue and $19M to pretax income YoY, primarily from euro appreciation against the dollar.

Outlook and guidance

• 2018 U.S. and Canada Class 8 retail forecast was raised to 265,000–285,000 vehicles; Europe above-16-ton registrations were forecast at 300,000–320,000.

• 2018 Parts sales expected to grow 10%–12%; South America heavy-duty sales forecast at 70,000–80,000 and Brazil above-16-ton sales at 40,000–45,000.

• 2018 capital investments targeted at $425M–$475M and R&D at $300M–$320M, including electrified powertrains, driver assistance, connectivity and facilities.

• Q2 truck deliveries expected 7%–9% above Q1; truck gross margins projected around 12%, with truck parts and other margins at the mid-14% level.