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Paccar Inc. reported record net income and revenue for the second quarter as all segments of its business showed strength.
“I feel like things are really going well for the company,” Paccar CEO Preston Feight said during a Q2 earnings call. “The entire Paccar team has done an excellent job of working with our suppliers to manage supply-based shortages, and we have been able to gradually increase daily truck production.”
He added, “Freight tonnage remains at great levels. We’re sold out [of trucks] for the year, and the first quarter [order book] is beginning to fill in nicely. With fleet age up and truck utilization high, we anticipate continued strong demand for Paccar parts, trucks and financial services.”
Net income for the quarter ended June 30 hit $720.4 million, or $2.07 per diluted share, on revenue of $7.16 billion compared with net income of $495.5 million, $1.42, on revenue of $5.84 billion a year earlier.
The company said it delivered 47,000 trucks during the second quarter, a 9% increase compared with the first quarter. Paccar estimated third-quarter deliveries to be 44,000 to 48,000 trucks as higher daily build rates will be offset by the normal summer shutdown at its DAF brand in Europe.
“Paccar delivered solid 2Q results as revenues and margins topped our and consensus estimates,” Stephen Volkmann, an analyst with Jefferies Financial Group Inc., wrote in a note. “Margins are improving as production is shifting toward newer higher-margin trucks and parts mix increases.”
Paccar said truck, parts and other gross margins expanded to 14.4% in Q2 compared with 13.5% in the second quarter of last year. Increased vehicle production, a new lineup of trucks and strong aftermarket parts business drove the higher gross margins, Chief Financial Officer Harrie Schippers said.
“We anticipate third-quarter gross margins to be in the 14.5% to 15% range,” he said, “reflecting a continued strong performance of Paccar parts and a favorable mix of new truck models in production.”
The company noted it achieved good price realization that kept pace with its cost increases, and a little more.
Paccar Parts Q2 revenues increased by 18% to a record $1.43 billion. Pretax profits were a record $353 million, 32% higher than the same period last year. Increased truck utilization among customers and higher average fleet age contributed to the division’s record results. The division had gross margins of 30%.
The parts business includes 18 distribution centers, 2,200 dealer locations, 250 independent all-parts TRP stores, as well as technologies such as managed dealer inventory and innovative e- commerce systems, according to the company.
Paccar financial increased year-over-year pretax income by 36% to $144 million due to the quality of its portfolio and strong used truck results, the company said.
Paccar ended the quarter with manufacturing cash and marketable securities of $4.69 billion.
For the first six months, net income was $1.32 billion, $3.79, on revenue of $13.63 billion compared with a profit of $966.3 million, $2.77, on revenue of $11.69 billion a year earlier.
Paccar’s after-tax return on invested capital improved to 23% in the first half of the year, Schippers said. Capital expenditures are projected to be $425 million to $475 million in 2022, and research and development expenses are estimated to be $330 million to $350 million.
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