Paccar (PCAR) Q3 2019 earnings summary

Executive summary

• Q3 revenue was $6.37B, up 11% YoY, and net income was $607.9M vs. $545.3M; diluted EPS was $1.75 vs. $1.55.

• Nine-month revenue reached a record $19.48B and net income was $1.86B; truck deliveries totaled 153,100 vs. 138,700.

• Q3 results benefited from higher truck deliveries and Parts demand; Financial Services revenue set a Q3 record while pretax income declined.

Financial highlights

• Q3 Truck, Parts and Other income before tax rose to $690.0M from $573.6M; Financial Services income before tax was $66.5M vs. $78.8M.

• Q3 and nine-month after-tax return on revenues were 9.5%; nine-month diluted EPS was $5.34 vs. $4.59.

• Q3 operating cash flow was $727.1M and nine-month operating cash flow was $1.92B; stockholders’ equity reached a record $9.96B.

• Manufacturing cash and marketable securities totaled $4.64B at Q3 end; manufacturing debt was zero.

Outlook and guidance

• 2020 Class 8 markets forecast at 230,000–260,000 units in the U.S. and Canada and 260,000–290,000 in Europe; South American heavy-duty sales forecast at 100,000–110,000.

• Q4 truck deliveries expected to decline 6%–8% QoQ; Truck, Parts and Other gross margin forecast at 14%–14.5%.

• Parts sales expected to grow 4%–7% in 2020, with margins comparable to 2019.

• 2020 capital investment forecast at $625M–$675M and R&D expense at $320M–$350M.

• Financial Services average earning assets expected to increase 8%–10% in 2019 and remain similar to 2019 levels in 2020.