Paccar (PCAR) Q3 2017 earnings summary

Executive summary

• Q3 revenue was $5.060B, up from $4.249B; net income was $402.7M and diluted EPS was $1.14, versus $346.2M and $0.98.

• Truck deliveries rose to 40,200; record Parts results and strong Financial Services performance supported the quarter.

Financial highlights

• Truck, Parts and Other gross margin was 14.5%; Q3 revenue rose 20% YoY while gross margin declined 20 bps, reflecting truck mix, material costs and currency effects.

• Q3 operating cash flow was $637.3M; manufacturing cash and marketable securities totaled $3.42B at September 30, 2017.

• 9M revenue was $14.00B and net income was $1.086B, versus $12.96B and $232.9M in 2016, which included an $833.0M European Commission charge.

Outlook and guidance

• Q4 deliveries were expected 7%-9% above Q3, mainly on higher European production and the absence of the regular shutdown; Parts and Other gross margins were expected slightly lower on truck mix.

• 2018 Truck, Parts and Other gross margins were expected at 14%-15%, comparable to 2017; 2018 parts growth was forecast at 3%-5%.

• 2018 U.S./Canada Class 8 retail sales were forecast at 220,000-250,000 units; European above-16-tonne registrations were forecast at 280,000-310,000.

• 2018 capital investments were forecast at $425M-$475M and R&D at $270M-$300M; 2017 estimates were $400M-$450M and $260M-$270M, respectively.