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PACCAR Announces Second Quarter Revenues and Earnings
Strong International and Aftermarket Parts Business Capital Investments Generate Efficiency Gains
BELLEVUE, Wash., Jul 22, 2008 (BUSINESS WIRE) -- "PACCAR (Nasdaq:PCAR) reported very good revenues and net income
for the second quarter of 2008," said Mark C. Pigott, chairman and
chief executive officer. "PACCAR benefited from balanced global
diversification, with over 65 percent of revenues originating outside
the U.S. and continued solid performance from the company's
aftermarket parts and financial services businesses. Robust demand for
PACCAR products in Europe and international markets continues to
generate excellent earnings and provide opportunities for growth,
tempered by the continued softness in the U.S. and Canadian truck
markets."
"PACCAR's strong balance sheet and outstanding cash flow have
allowed the company to increase its capital investments in
high-quality new products and services, enhance facility efficiency
and increase aftermarket distribution capacity during all phases of
the business cycle," noted Pigott. Capital expenditures and research
and development expenses increased to a total of $205 million during
the second quarter.
PACCAR earned $313.5 million ($0.86 per diluted share) for the
second quarter of 2008, an increase of 5 percent compared to $298.3
million ($0.79 per diluted share) earned in the second quarter last
year. Second quarter net sales and financial services revenues
increased to $4.11 billion from $3.72 billion in 2007. Net sales and
financial services revenues for the first six months of 2008 were
$8.05 billion compared to $7.70 billion last year. For the first six
months of 2008, PACCAR reported net income of $605.8 million ($1.65
per diluted share), compared to $663.9 million ($1.77 per diluted
share) in 2007.
Stock Repurchase Update
PACCAR is nearing completion of its previously announced $300
million share repurchase program. During the second quarter of 2008,
PACCAR repurchased 1.89 million of its common shares for $89.8
million. PACCAR has repurchased a total of 5.62 million shares for
$262.5 million under this $300 million repurchase authorization.
Earlier this month, the PACCAR Board of Directors approved the
repurchase of an additional $300 million of its outstanding common
stock. "PACCAR's strong net profits and excellent cash flow make the
company's shares an attractive long-term investment," said Mike
Tembreull, PACCAR vice chairman. "The stock repurchase program
reflects the Board's confidence in PACCAR's successful global business
growth." PACCAR has earned a net profit for 69 consecutive years and
has paid a dividend every year since 1941. The company's stock,
including reinvested dividends, has outperformed the S&P 500 Index for
the previous three-, five- and ten-year time periods.
Financial Highlights - Second Quarter 2008
Highlights of PACCAR's financial results during the second quarter
of 2008 include:
-- Consolidated sales and revenues of $4.11 billion.
-- Net income of $313.5 million.
-- After-tax return on revenues of 7.6 percent.
-- Financial Services income of $58.7 million on assets of $11.1
billion.
-- Shareholders' equity of $5.42 billion.
Financial Highlights - First Half 2008
Financial highlights for the first six months of 2008 include:
-- Consolidated sales and revenues of $8.05 billion.
-- Net income of $605.8 million.
-- Annualized after-tax return on equity of 24.2 percent.
-- Capital expenditures of $201.0 million.
-- Research and development expenses of $173.6 million.
-- Truck and other SG&A expense ratio of 3.4 percent of sales.
Capital Investment Program Update
In May, the steel structure for PACCAR's $400 million engine
manufacturing and assembly facility in Columbus, Mississippi was
completed. "Construction of the world-class, high-technology engine
facility is on schedule and is due to be completed in late 2009," said
Jim Cardillo, PACCAR executive vice president. The facility will
complement the company's engine factory in the Netherlands and expand
the manufacture of PACCAR 12.9L and 9.2L engines for use in Kenworth,
Peterbilt and DAF vehicles.
In June, PACCAR Parts began operations at its new
260,000-square-foot parts distribution center (PDC) in Budapest,
Hungary. The PDC supports DAF's dealers and customers in Central and
Eastern Europe. PACCAR Parts also completed a 45,000-square-foot
expansion of the San Luis Potosi, Mexico, PDC. This investment will
provide increased service to Kenworth dealers in Mexico where
Kenworth's high-quality trucks have earned a 40 percent share of the
Class 8 market. "PACCAR Parts operates 13 strategically located PDCs
throughout the world providing daily delivery of aftermarket parts to
PACCAR's growing base of dealers and customers," said Rick Gorman,
PACCAR Parts general manager and PACCAR vice president. "PACCAR Parts
has more than tripled its sales since 1996, reaching $2.3 billion in
2007."
For over a decade, PACCAR has achieved a rigorous annual goal of
improving operating efficiency in its manufacturing facilities by 5-7
percent through Six Sigma, focused capital investment and optimized
product design. This proactive lean production philosophy has enabled
the company to partially offset the increasing commodity prices
affecting components such as tires, steel rails, lubricants and cab
panels. George West, PACCAR vice president, commented, "Kenworth's
Chillicothe factory recently established a new productivity record,
which is remarkable considering the lower build rates in today's
challenging market." Kenworth is investing nearly $30 million to
install a second robotic cab paint facility, which will enhance
product quality and increase capacity and productivity.
Environmental Leadership
In April, DAF Trucks delivered the world's first heavy-duty
vehicles featuring Enhanced Environmentally-friendly Vehicle (EEV)
diesel engines with emission levels 50 percent lower than the
stringent Euro 5 emission standard scheduled for October 2009. DAF is
the first truck manufacturer in Europe to offer ultra-clean EEV
engines across its entire product range.
Kenworth CleanPower(TM) and Peterbilt Comfort Class(TM) vehicles
are setting the environmental standard for the industry. "These
factory-installed no-idle climate control systems provide heating and
cooling, plus 110-volt hotel power load solutions without the need to
operate the engine, thereby reducing emissions by 12 percent and
improving fuel economy by up to 8 percent," said Tom Plimpton, PACCAR
president.
In early September, PACCAR will begin production of innovative
medium-duty Kenworth and Peterbilt diesel-electric hybrid vehicles.
The diesel-hybrid technology reduces emissions and targets fuel
efficiency improvements of up to 30 percent for urban applications.
PACCAR will expand its presence in the growing market for
environmentally friendly, liquefied natural gas (LNG) trucks by
beginning production of Kenworth Class 8 LNG vehicles in 2009 under an
agreement with Westport Innovations Inc. "The Kenworth vehicles,
coupled with Westport's HPDI fuel system, offer an industry-leading
solution with world-class low emissions of greenhouse gases while
delivering outstanding horsepower, torque and efficiency comparable to
a diesel engine," said Bob Christensen, PACCAR vice president and
Kenworth general manager. A typical LNG truck can reduce nitrogen
oxides by 33 percent and greenhouse gas emissions by 20 percent
compared to a diesel-powered vehicle.
Growth in Asian Markets
PACCAR has sold transportation equipment in Asia for 100 years.
The development of highway systems in China and India will increase
intra-country commerce, resulting in demand for reliable, high-quality
commercial vehicles. "Following the opening of a new office in
Shanghai, China in 2007, PACCAR plans to open an information
technology, engineering and purchasing office in Pune, India in 2008,"
said Tom Plimpton, president. "The Pune office will enable PACCAR to
increase its participation in this exciting and important market."
Leyland Trucks Celebrates Ten Years as a PACCAR Company
Leyland Trucks recently celebrated ten years as a strategic member
of the PACCAR family of companies. Leyland manufactures DAF LF, CF and
XF vehicles for customers in Europe, Australia, Africa and North
America at its world-class 710,000-square-foot facility in Lancashire,
England. Highlights from the past decade include:
-- Annual production volumes have increased from 9,000 vehicles
in 1998 to an estimated 25,000 vehicles in 2008.
-- Leyland was the first commercial vehicle facility in the world
to install a robotic chassis paint operation in 2006.
-- In early 2008, the Leyland plant successfully completed the
implementation of a "zero waste to landfill" policy.
-- Leyland recently earned "Best Manufacturing Logistics and
Resource Efficiency" and "Best Financial Management" industry
honors. The awards are sponsored by the U.K.'s Institute of
Mechanical Engineers and are based on the assessment of over
600 U.K. based manufacturing companies.
"Leyland Trucks operates one of the most efficient and advanced
commercial vehicle factories in the world," said Jim Sumner, Leyland
managing director. "The success of Leyland is a result of the skill
and dedication of our employees, dealers and suppliers and has been an
important contributing factor in the impressive growth of DAF Trucks."
Global Truck Markets
"The European economy, especially Central Europe, continues to
experience moderate growth," shared Aad Goudriaan, DAF Trucks
president. "Industry truck sales in Europe above 15 tonnes are
expected to set a record of 350,000-360,000 units compared to 340,000
in 2007. DAF's range of premium vehicles are the quality and resale
value leaders in Europe. DAF's long-term goal is to achieve over 20
percent market share," noted Goudriaan. DAF is increasing production
by five percent in September to meet strong customer demand for its
award-winning vehicles.
"The dramatic increase in diesel prices, coupled with declining
housing starts and auto production, impacted U.S. and Canadian Class 8
truck sales in the first half," said Dan Sobic, PACCAR senior vice
president. Industry retail sales for 2008 are expected to be in the
range of 150,000-165,000 vehicles. Kenworth and Peterbilt continue to
achieve a strong share of industry orders due to their superior
quality, reliability and industry-leading resale value.
Financial Services Companies Achieve Strong Revenues
PACCAR Financial Services (PFS) has a portfolio of 169,000 trucks
and trailers, with total assets of $11.1 billion. PACCAR Leasing, a
major full-service truck leasing company in North America with a fleet
of over 32,000 vehicles, is included in this segment. Second quarter
pretax income of $58.7 million compares to the $68.9 million earned in
the second quarter of 2007. Second quarter revenues were $330.5
million compared to $286.8 million in the same quarter of 2007. For
the six-month period, pretax income was $126.0 compared to $134.5 in
2007. First-half revenues increased to $647.9 from $550.8 million for
the same period a year ago. Finance margins improved due to portfolio
growth, but profit was reduced due to an increase in the provision for
credit losses due to higher repossessions in the U.S. and Canada.
Credit losses increased in the second quarter of 2008 to $23.0 million
versus $15.3 million in the first quarter of 2008.
"PACCAR Financial Services profitably supports the sale of PACCAR
trucks in 18 countries on three continents with a comprehensive
portfolio of finance, lease and insurance products," said Ron
Armstrong, senior vice president. "Record earning assets, good finance
margins, rigorous portfolio management and innovative technologies
benefiting our customers are contributing to solid financial results.
PACCAR's excellent balance sheet, complemented by its AA- credit
rating allows the company to offer competitive retail financing to
Kenworth, Peterbilt and DAF dealers and customers." PACCAR Financial
plans to open a business office in Poland later this year to support
DAF's growing market share in that country.
PACCAR is a global technology leader in the design, manufacture
and customer support of high-quality light-, medium- and heavy-duty
trucks under the Kenworth, Peterbilt and DAF nameplates. It also
provides financial services and information technology and distributes
truck parts related to its principal business.
PACCAR will hold a conference call with securities analysts to
discuss second quarter earnings on July 22, 2008, at 9:00 a.m. Pacific
time. Interested parties may listen to the call by selecting "Live
Webcast" at PACCAR's homepage. The Webcast will be available on a
recorded basis through August 1, 2008. PACCAR shares are listed on
NASDAQ Global Select Market, symbol PCAR, and its homepage can be
found at www.paccar.com.
This release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act. These
statements are based on management's current expectations and are
subject to uncertainty and changes in circumstances. Actual results
may differ materially from those included in these statements due to a
variety of factors. More information about these factors is contained
in PACCAR's filings with the Securities and Exchange Commission.
PACCAR Inc
SUMMARY INCOME STATEMENTS
(in millions except per share amounts)
Three Months Six Months Ended
Ended
June 30 June 30
----------------------------------------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------
Truck and Other:
Net sales and revenues $3,782.0 $3,429.4 $7,403.0 $7,149.9
Cost of sales and revenues 3,202.2 2,912.5 6,281.5 6,047.8
Research and development 90.7 58.2 173.6 95.6
Selling, general and
administrative 127.5 120.3 253.6 240.4
Interest and other (income)
expense, net (3.1) .9 (2.0) (21.5)
----------------------------------------------------------------------
Truck and Other Income Before
Income Taxes 364.7 337.5 696.3 787.6
Financial Services:
Revenues 330.5 286.8 647.9 550.8
Interest and other 217.4 180.5 421.0 346.7
Selling, general and
administrative 30.0 28.4 59.1 52.9
Provision for losses on
receivables 24.4 9.0 41.8 16.7
----------------------------------------------------------------------
Financial Services Income Before
Income Taxes 58.7 68.9 126.0 134.5
Investment income 22.6 23.7 47.3 45.7
----------------------------------------------------------------------
Total Income Before Income Taxes 446.0 430.1 869.6 967.8
Income taxes 132.5 131.8 263.8 303.9
----------------------------------------------------------------------
Net Income $ 313.5 $ 298.3 $ 605.8 $ 663.9
======================================================================
Net Income Per Share:
Basic $ .86 $ .80 $ 1.66 $ 1.78
======================================================================
Diluted $ .86 $ .79 $ 1.65 $ 1.77
======================================================================
Weighted Average Shares
Outstanding:
Basic 364.5 373.1 365.5 373.0
======================================================================
Diluted 366.5 375.3 367.4 375.2
======================================================================
Dividends declared per share $ .18 $ .17 $ .36 $ .30
======================================================================
PACCAR Inc
CONDENSED BALANCE SHEETS
(in millions)
June 30 December
31
2008 2007
----------------------------------------------------------------------
ASSETS
Truck and Other:
Cash and marketable debt securities $ 2,204.1 $ 2,515.0
Trade and other receivables, net 827.7 570.0
Inventories 892.1 628.3
Property, plant and equipment, net 1,786.6 1,642.6
Equipment on operating leases and other 1,231.9 1,162.0
Financial Services Assets 11,068.1 10,710.3
----------------------------------------------------------------------
$18,010.5 $17,228.2
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Truck and Other:
Accounts payable, deferred revenues and other $ 3,681.3 $ 3,134.1
Dividend payable 367.1
Long-term debt 23.0 23.6
Financial Services Liabilities 8,889.6 8,690.3
STOCKHOLDERS' EQUITY 5,416.6 5,013.1
----------------------------------------------------------------------
$18,010.5 $17,228.2
======================================================================
Common Shares Outstanding 363.3 367.1
----------------------------------------------------------------------
GEOGRAPHIC REVENUE DATA
Three Months Six Months Ended
Ended
June 30 June 30
----------------------------------------------------------------------
2008 2007 2008 2007
----------------------------------------------------------------------
United States $1,269.6 $1,384.1 $ 2,528.8 $ 3,194.5
Europe 1,950.4 1,483.8 3,770.6 2,875.2
Other 892.5 848.3 1,751.5 1,631.0
----------------------------------------------------------------------
$4,112.5 $3,716.2 $ 8,050.9 $ 7,700.7
======================================================================
PACCAR Inc
CONDENSED CASH FLOW STATEMENT
(in millions of dollars)
Six Months Ended June 30 2008 2007
----------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 605.8 $ 663.9
Depreciation and amortization:
Property, plant and equipment 113.6 92.8
Equipment on operating leases and other 201.8 154.4
Gain on sale of property (21.7)
Net change in wholesale receivables on new trucks (63.5) 58.4
Net change in sales-type finance leases and dealer
direct loans on new trucks 54.6 37.3
All other operating activities (158.7) (2.5)
----------------------------------------------------------------------
Net Cash Provided by Operating Activities 753.6 982.6
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (201.0) (118.7)
Acquisition of equipment for operating leases (481.5) (321.1)
Net change in financial services receivables 74.8 (308.2)
Net change in marketable securities 190.3 (244.3)
All other investing activities 81.6 90.2
----------------------------------------------------------------------
Net Cash Used in Investing Activities (335.8) (902.1)
FINANCING ACTIVITIES:
Cash dividends paid (498.6) (608.9)
Purchase of treasury stock (192.3) (49.1)
Stock compensation transactions 8.9 29.2
Net change in financial services debt 18.0 87.8
----------------------------------------------------------------------
Net Cash Used in Financing Activities (664.0) (541.0)
Effect of exchange rate changes on cash 76.1 22.2
----------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (170.1) (438.3)
Cash and cash equivalents at beginning of period 1,858.1 1,852.5
----------------------------------------------------------------------
Cash and cash equivalents at end of period $1,688.0 $1,414.2
======================================================================
SOURCE: PACCAR Inc
PACCAR Inc Robin Easton, 425-468-7676
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