Paccar Inc. reported record third-quarter net income and beat top- and bottom-line earnings estimates, which is becoming a common achievement.
The Bellevue, Washington-based maker of the maker of Kenworth, Peterbilt and DAF Trucks, earned net income of $1.23 billion, or $2.34 per diluted share. That compared with $769 million or $1.47 a year earlier. Q3 revenues of $8.7 billion came in 23% higher, or $790 million, than the $7.06 billion a year ago.
Analysts expected a 44% improvement in year-over-year earnings to $2.13 per share. Paccar delivered a 60% gain. The company has outpaced earnings per share and revenue estimates every quarter for the past year.
Every segment, from new and used truck sales, to parts and financial services — except for financial services pretax income — outperformed year-ago results.
Q3 highlights:
Net sales and revenues of $8.7 billion.
Record net income of $1.23 billion.
Truck, Parts and Other gross margins of 19.5%.
Global truck deliveries of 50,100 units, the midpoint of its estimate of 48,000 to 52,000.
Parts revenues of $1.58 billion with pretax income of $412.3 million.
Financial Services pretax income of $133.8 million.
Paccar estimates full-year U.S. and Canada Class 8 industry retail sales in the range of 295,000-315,000 vehicles. The company predicts a slower 2024 with retail sales in a broader range of 260,000-300,000 vehicles.
“Customers are replacing older vehicles with the new fuel-efficient Kenworth and Peterbilt trucks,” Mike Dozier, Paccar executive vice president, said in a news release. “Infrastructure spending in the U.S. has been good for Kenworth and Peterbilt’s truck business.”
The Peterbilt brand starts production of its new Model 589 long-hood truck in January. That completes a full makeover of its portfolio in the past two years.
“The Model 589 represents the essence of the Peterbilt brand in terms of styling and driver appeal,” said Jason Skoog, Paccar vice president and Peterbilt general manager.
The parts business has set record after record in quarterly sales. It posted slightly higher revenue at $1.58 billion compared to $1.47 billion in the year-ago quarter. Pretax profit of $412.3 million beat the $373.6 million income in Q3 2022. Paccar has begun construction of its 19th global parts distribution center in Massbach, Germany. The 240,000-square-foot facility opens in 2024.
Capital and R&D spending on the rise
Paccar’s strong balance sheet and top-notch credit ratings support estimated full-year capital investments of $650 million to $675 million, with another $675 million to $725 million planned in 2024, said Harrie Schippers, Paccar president and chief financial officer.
Research and development spending also is on the rise from an estimated $410 million-$420 million this year to $470 million-$520 million in 2024.
“Paccar is increasing its investment in fuel-efficient diesel and electric powertrain technologies, autonomous systems, connected vehicle services, and next-generation manufacturing and parts distribution capabilities,” Schippers said.
The company will have a 30% interest in a joint venture with Cummins Inc., Daimler Truck and China’s EVE Energy to manufacture lithium-iron phosphate batteries for commercial electric trucks in the U.S. The 21-gigawatt-hour factory is expected to cost $2 billion to $3 billion, with production starting around 2027.
This is a developing story. Update expected after earnings call at noon EDT.
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