European Truck Market Strong, while U.S. and Canadian Truck Sales Slow
23 October 2000
PACCAR Reports Sales and Earnings for Third Quarter
BELLEVUE, Wash. - PACCAR Inc posted net income for the third quarter ended September 30, 2000, of $93.1 million, or $1.21 per diluted share, reported Mark C. Pigott, chairman and chief executive officer. That compares with $144.7 million, or $1.83 per diluted share, for the same period a year ago. Net income in the current quarter included a $12.4 million benefit related to higher expected utilization of a net operating loss (NOL) carryforward in Europe. Earnings without the NOL benefit were $80.7 million, or $1.05 per diluted share. Consolidated net sales for the third quarter of 2000 totaled $1.6 billion, compared to $2.2 billion for the same period last year. Pigott commented that, "PACCAR's third quarter results benefited from its geographic diversity and solid performance in the aftermarket parts business."For the first nine months of 2000, PACCAR reported net income of $379.1 million, or $4.90 per diluted share, compared to $403.7 million, or $5.12 per diluted share, in 1999. Nine-month earnings for 2000 without the NOL benefit were $366.7 million, or $4.74 per diluted share. For the first nine months of 2000, sales were $5.9 billion versus $6.4 billion for the comparable period in 1999.
Global Truck Market Update
"The truck market in North America is currently very challenging," Pigott said. "Industry orders for new trucks in the United States and Canada declined to their lowest annualized level since 1996 due to unfavorable economic factors affecting the transportation sector. A 25 percent surge in diesel fuel prices over the last three quarters, combined with lower used truck values and higher interest rates, have dampened new truck orders for all manufacturers. As a result, PACCAR has reduced build rates at its U.S and Canadian facilities. However, it is encouraging that the company has increased market share, as customers select Kenworth and Peterbilt trucks due to their industry-leading resale value and superior operating performance.
"Other factors influencing the third quarter financial results were the traditional summer holiday factory closures at DAF and Leyland as well as the negative impact of a weak Euro," Pigott noted.
"The European truck market continues to be strong," stated Pigott. "DAF enhanced its product offerings to meet customer demand by launching its new CF range of trucks at the recent Frankfurt Motor Show. The vehicles received excellent industry reviews for their superb styling and driver appeal. DAF is planning to increase build rates in early December to meet increased orders for its product range."
David Hovind, PACCAR president, added, "The investments made in PACCAR's factories and material logistic systems over the last five years have improved production efficiency even at lower build rates in the U.S. and Canada. PACCAR's larger vehicle population due to increased truck sales in recent years, coupled with the introduction of new innovative aftermarket programs, generated increased parts sales worldwide. Aggressive cost management throughout PACCAR has positioned the company to respond favorably when the U.S. and Canadian truck markets improve."
Medium-Duty Share Increases
PACCAR continued to increase its share of the medium-duty truck market in 2000. Kenworth and Peterbilt recently expanded their product range for the North American market. The new Kenworth T300 and the Peterbilt 330 Class 6 models are now available with hydraulic brakes to meet the demand for trucks that do not require an operator with a Commercial Driver's License (CDL).
PACCAR Launches Internet Applications
PACCAR expanded its e-commerce initiatives during the quarter in a variety of applications. The company formed a strategic partnership with Nimble Technology to use XML software to access information stored in varied and complex databases throughout PACCAR.
PACCAR also initiated use of an internet freight-matching system. "Our venture with GoLogistics is focused on utilizing its freight-matching capabilities to reduce material shipment costs. PACCAR's goal is to implement technology into its products to maximize customer productivity and efficiency," said Tom Plimpton, PACCAR executive vice president. "PACCAR continues its drive to incorporate e-commerce technology into its daily business operating systems."
PACCAR's internet portal Truckxchange, a business-to-business (B2B) marketplace site for goods and services in the trucking industry, started operations in September with selected dealers and suppliers. The site allows PACCAR customers, dealers and suppliers to purchase supplies faster and more competitively.
Finance and Leasing Operations Continue Their Growth
During the third quarter and first nine months of 2000, PACCAR's financial services segment continued its asset and earnings growth. Financial services revenues for the quarter increased by 35 percent to $128.3 million from $95.3 million in the same quarter in 1999, while pretax income increased to $20.4 million from $19.9 million in the third quarter of last year.
For the nine-month period, revenues rose 32 percent to $354.3 million compared to $269.1 million for the same period a year ago. Pretax income increased 3 percent to $58.8 million from $57.1 million in 1999.
Mike Tembreull, vice chairman, said, "PACCAR Financial had a reasonable quarter even though there were increased vehicle repossessions and declining used truck values, leading to higher credit losses. PACCAR Financial increased its share of business as more PACCAR dealers utilized PACCAR Financial to profitably support the sale of Kenworth and Peterbilt trucks."
PACCAR's financial services segment has a portfolio of over 110,000 trucks and trailers with total assets of more than $5 billion. PACCAR Leasing is a major full-service truck leasing company in North America with a portfolio of over 13,000 vehicles.
PACCAR Winch had lower earnings for the third quarter and first nine months compared with the same periods last year due to slower growth in its domestic crane and construction equipment markets.
PACCAR, an $8 billion company, 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, DAF 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 under the Braden, Gearmatic and Carco nameplates.
PACCAR Inc
SUMMARY INCOME STATEMENTS
(in millions(a) )
Three Months Ended Nine Months Ended
September 30 September 30
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2000 1999 2000 1999
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Truck and Other:
Net sales $1,647.0 $2,174.8 $5,893.2 $6,424.6
Cost of sales 1,462.1 1,823.7 5,118.6 5,422.1
Selling, general
and administrative 92.7 152.4 304.7 443.0
Interest and other, net .2 .1 (8.9) 8.7
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Truck and Other
Income Before Taxes 92.0 198.6 478.8 550.8
Financial Services:
Revenues 128.3 95.3 354.3 269.1
Costs and Expenses 107.9 75.4 295.5 212.0
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Financial Services
Income Before Taxes 20.4 19.9 58.8 57.1
Investment Income 11.8 9.3 33.7 26.5
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Total Income
Before Income Taxes 124.2 227.8 571.3 634.4
Income Taxes 31.1 83.1 192.2 230.7
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Net Income $ 93.1 $ 144.7 $ 379.1 $ 403.7
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Net Income Per Share:
Basic $ 1.22 $ 1.85 $ 4.93 $ 5.16
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Diluted $ 1.21 $ 1.83 $ 4.90 $ 5.12
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Weighted average number
of basic shares
outstanding 76.4 78.3 76.8 78.2
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Dividends declared
per share $ .30 $ .20 $ .90 $ .60
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(a) Except per share amounts.
PACCAR Inc
SUMMARY BALANCE SHEETS
(in millions of dollars)
September 30 December 31
2000 1999
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ASSETS
Truck and Other:
Cash and marketable securities $ 917.9 $ 1,042.2
Trade and other receivables, net 546.4 570.2
Inventories 329.4 384.5
Property, plant and equipment, net 839.1 875.3
Other assets 475.6 478.3
Financial Services Assets 5,170.6 4,582.5
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$ 8,279.0 $ 7,933.0
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LIABILITIES AND STOCKHOLDERS' EQUITY
Truck and Other:
Accounts payable, taxes and other $ 1,631.1 $ 1,734.1
Dividend payable 125.3
Term debt 182.8 252.3
Financial Services Liabilities 4,207.1 3,710.7
STOCKHOLDERS' EQUITY 2,258.0 2,110.6
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$ 8,279.0 $ 7,933.0
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