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Paccar Inc. reported record quarterly revenue and higher net income in the second quarter amid strong global truck demand and record production.
For the period ended June 30, Paccar posted net income of $619.7 million, or $1.78 per diluted share. That was 11% higher compared with $559.6 million, or $1.59, in the same period last year.
Second-quarter net sales and financial services revenue reached a record $6.63 billion, compared with $5.81 billion achieved in the second quarter of 2018, according to the Bellevue, Wash.-based company that makes the Kenworth and Peterbilt truck brands in North America, as well as the MX engine. It also sells the DAF brand of trucks in Europe.
“Peterbilt and Kenworth 2019 production schedules are substantially full. Customers are ordering trucks for delivery in the first half of 2020,” CEO Preston Feight said in a company release.
Kenworth, Peterbilt and DAF delivered a record 52,300 trucks in the second quarter of 2019, which was 13% more than in the same period last year.
The company said it was increasing build rates in North America, noting the Class 8 backlog in the United States and Canada was 188,000 trucks at the end of June — and Kenworth and Peterbilt’s backlog represented 36% of the industry total. Production levels in Europe are in line with the orders.
“We obviously can build trucks in Mexico for Mexico. We can make our domestic U.S. and Canadian production in local markets,” Feight said during an earnings call when asked about resurfacing trade tensions. “So I think, we just have a great manufacturing footprint that works well. And I don’t — I don’t think there’s anything about trade tensions affecting that.”
It has increased production at its MX engine plant in Mississippi by 10% to 20%, he added.
At the same time, Paccar Parts achieved record quarterly revenue of $1.03 billion in the second quarter of 2019, 6% higher than the $968 million achieved in the same period last year.
“Paccar’s new 250,000-square-foot distribution center in Las Vegas is under construction. Paccar is also building a new 160,000-square-foot distribution center in Ponta Grossa, Brazil. Both facilities will open in 2020,” Paccar Parts General Manager David Danforth said.
Paccar Financial Services has a portfolio of 205,000 trucks and trailers, with record total assets of $15.41 billion. One analyst said the quarterly results fell a little short of expectations, or were at the low end of what Paccar expected in some cases.
Its earnings per share was 3 cents shy of Wall Street estimates, wrote Credit Suisse analyst Jamie Cook in an investor note. “However a higher tax rate was a 2-cents headwind implying a 1-cent miss. Revenues exceeded the street estimate of $6.235 billion. Truck sales jumped 16.7% and parts sales improved 5.9% at the lower of Paccar’s targeted range. Deliveries were up 1.6% sequentially, modestly below its forecast of up 2-4% tied to Europe. Deliveries were up 4% in the U.S., whereas Europe fell 7%,” she wrote.
Paccar reported record first-half net income of $1.25 billion, or $3.59, 17% higher compared with $1.07 billion, or $3.04 in the first six months of 2018. Net sales and financial services revenues for the first six months of 2019 were a record $13.12 billion, or 14% higher compared with $11.46 billion achieved last year.