PACCAR Announces Record Third Quarter Results
20 October 1998
PACCAR Announces Record Third Quarter Results
BELLEVUE, Wash.--Oct. 20, 1998--PACCAR Inc. today reported third quarter and first nine months records for sales and net income in 1998, according to Mark C. Pigott, chairman and chief executive officer.Consolidated net sales in the third quarter grew 13 percent to $1.9 billion compared to the $1.6 billion recorded in the year-earlier quarter. For the first nine months of 1998, sales were $5.5 billion, up 17 percent versus $4.7 billion for the comparable period in 1997.
Net income for the quarter of $96.6 million surpassed the $82.5 million earned in the same period last year by 17 percent. The first nine months income of $301.9 million is 42 percent ahead of 1997 nine month income of $211.9 million. As previously reported, third quarter financial results reflect lower production levels because of the traditional summer holiday factory closures at DAF, Leyland and Foden.
"Excellent truck demand continued during the third quarter both in North America and in Europe. Although industry orders and back logs are currently strong, there are signs that the exceptional market for trucks we have seen during the past several years may not be as robust next year," said Pigott.
Peterbilt is achieving higher production levels as increased build rates at its Denton, Texas, facility and Nashville, Tennessee, plant combine to meet customer demand. The work stoppage at the Nashville plant, which began on May 4, has not been settled.
With capacity investments made earlier in the year, Kenworth and DAF have increased their production rates in response to strong demand. DAF is investing $25 million to increase capacity 20 percent in The Netherlands and Belgium as well as utilizing the Leyland facility to supply the UK market.
"PACCAR is increasing its expenditures in new product development to maintain its industry leadership in providing the premium vehicles to the marketplace. Customer acceptance of the new Kenworth and DAF trucks has been very positive as fleets recognize the benefits of outstanding product quality, lower operating cost and the best residual value in the marketplace."
"The final stage of preparing the Kenworth Seattle facility to build Class 6/7 trucks is underway. This will increase PACCAR's North American capacity for medium-duty trucks and is another step towards the goal of building significantly more Kenworth T300s and Peterbilt 330s in the future. The shift of Class 6/7 production from Mexicali, Mexico, to Seattle will allow the Mexicali plant to increase Class 8 build rates," he said.
Pigott noted the construction of the new PACCAR factory in Ste. Therese, Canada, continues on schedule for a 1999 opening. "This $80 million investment will create a world-class facility and increase PACCAR's production capacity for Class 4-7 commercial vehicles," said Pigott.
In addition to expanding production rates and accelerating new product development, the company is increasing its investment in computer systems and enhanced infrastructure. "The implementation of Six Sigma quality initiatives throughout the company is beginning to yield results," said David J. Hovind, president. "These efforts are directly benefiting our industry-leading quality and, at the same time, lowering design, assembly, and system expenses."
Third quarter and first nine month results for PACCAR's finance and leasing companies were comparable to those recorded a year ago. PACCAR's other businesses, which include retail auto parts and industrial winches, increased sales and earnings for both the quarter and first nine months of 1998 compared with year-earlier periods.
"Demand for PACCAR winches has been particularly strong as industrial business in North America increased. In response, PACCAR Winch is expanding capacity to meet growing backlogs," said Michael A. Tembreull, vice chairman.
PACCAR, a $6.5 billion company, is a leader in the design, development and manufacture of high quality light-, medium- and heavy-duty trucks sold worldwide under the Kenworth, Peterbilt, DAF, Leyland and Foden nameplates. It also provides financial services and distributes truck parts related to its principal business. In addition, the Bellevue, Washington-based company manufactures industrial winches and sells general automotive parts and accessories through its retail outlets.
PACCAR shares are traded on the Nasdaq Exchange, symbol PCAR, and its homepage can be found at www.paccar.com.
PACCAR Inc
SUMMARY INCOME STATEMENTS
(in millions of dollars (1))
Three months Ended Nine Months Ended
Sept. 30 Sept. 30
1998 1997 1998 1997
Truck and Other Net Sales $1,857.3 $1,639.2 $5,459.0 $4,675.2
Financial Services
Revenues $ 81.4 $ 71.3 $ 231.9 $ 208.8
Income Before Taxes:
Truck and Other $ 124.6 $ 100.9 $ 391.6 $ 253.3
Financial Services 17.7 18.3 52.0 52.4
Investment Income 9.0 6.1 23.7 16.7
Other, net .6 2.7 5.9 5.1
Total Income Before
Income taxes 151.9 128.0 473.2 327.5
Income taxes 55.3 45.5 171.3 115.6
Net Income $ 96.6 $ 82.5 $ 301.9 $ 211.9
Net Income Per Share:(a)
Basic $ 1.24 $ 1.06 $ 3.87 $ 2.72
Diluted $ 1.23 $ 1.05 $ 3.84 $ 2.71
(1) Except per share amounts.
(a) Adjusted to reflect a two-for-one split effective in 1997