Paccar (PCAR) Q3 2016 earnings summary

Executive summary

• Q3 revenue was $4,249.4M vs. $4,847.2M YoY; net income was $346.2M vs. $431.2M, and diluted EPS was $0.98 vs. $1.21.

• 9M adjusted net income was $1,065.9M, or $3.03 per diluted share, excluding the $833.0M EC charge; GAAP net income was $232.9M.

• Kenworth and Peterbilt reached a record 31% Q3 U.S. and Canada Class 8 retail share; stronger European deliveries partly offset North American weakness.

Financial highlights

• Q3 Truck, Parts and Other pretax income was $415.4M vs. $525.4M; Financial Services pretax income was $71.0M vs. $92.9M.

• 9M operating cash flow was $1,490.5M vs. $1,851.2M; cash and marketable securities totaled $2,867M at Sept. 30, 2016.

• 9M pretax income was $711.5M vs. $1,838.4M, including the $833.0M non-recurring, non-tax-deductible EC charge.

Outlook and guidance

• 2017 U.S./Canada Class 8 retail sales forecast: 200,000–230,000 units; Europe over-16-tonne market: 260,000–290,000 units.

• Q4 global truck deliveries forecast ~5% below Q3; truck parts and other gross margin expected 50–100 bps below Q3, with 2017 margins near Q4 within ±0.5%.

• 2017 Parts revenue growth expected at 2%–4%; North America sales forecast +2%–4% and Europe +1%–3%.

• 2017 capital spending forecast at $375M–$425M and R&D expenses at $270M–$300M.

• 2017 South America heavy-duty truck sales forecast at 70,000–80,000 units; Class 5–7 market expected near 80,000 units.