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Company earningsNewsOEM

Flush with new models, PACCAR posts strong first-quarter financial results

Peterbilt and Kenworth captured 42% of industry orders in North America

PACCAR Inc. (NASDAQ: PCAR) set a record for sales of truck parts in the first quarter, suggesting that an industry backlog constrained by supply chain shortages is prompting truck owners to hold on to their older equipment longer.

“Inventory is relatively tight right now,” PACCAR CEO Preston Feight said on the company earnings call Tuesday. “The industry is at 1.9 months. We’re at 1.7. I wouldn’t expect to see a lot of change in that given the demand that is out there. I think that inventory is less than normal. But it’s not an order of magnitude less. It’s just less.”

Ideal inventories are about 2.3 months, according to ACT Research.

The lack of availability of new trucks — orders have exceeded 40,000 for six consecutive months, pushing production for some models into 2022 — is leading some fleets to snap up late-model used trucks. And that is driving prices higher. PACCAR said it is getting 30% more money for pre-owned Kenworth and Peterbilt models sold through PacLease dealerships.

Semiconductor shortage — a silver lining

“The semiconductor undersupply issue has a silver lining by increasing the demand for readily available used trucks,” PacLease President Ken Roemer said in a press release.

Said Feight: “We do expect that the undersupply will continue in the second quarter, and then begin to improve as we get into the second part of the year. I don’t think tightness is going to be eliminated. But I anticipate that there’ll be improvements.”

Peterbilt and Kenworth captured 42% of new North American truck orders in the first quarter. The two brands account for 32% of the industry backlog — trucks waiting to be produced.

PACCAR delivered 42,200 trucks during the quarter, a 3% increase over Q4 production. Uncertainty surrounding the availability of semiconductors likely means current-quarter deliveries will likely be flat with Q1 deliveries.

PACCAR forecasts full-year U.S. and Canada Class 8 truck industry retail sales in a range of 260,000-290,000 trucks.

When supply chain glitches are worked out, PACCAR will begin building refreshed versions of the Peterbilt 579 and Kenworth T680 flagship Class 8 models. That will be followed by the first makeover of medium-duty trucks at the two brands in 30 years.

Separately, Peterbilt announced Tuesday an order by Yellow Corp. (NASDAQ: YELL)  for 1,222 new Model 579 Class 8 daycabs.

By the numbers

PACCAR’s first-quarter sales and financial services revenues increased 13% to $5.85 billion. Q1 net income increased 31% to $470 million. Truck and Parts gross margins increased from 12.6% to 13.4% in the quarter.

After the earnings release Tuesday, PACCAR announced a 6.3% increase in its quarterly dividend to 34 cents a share from 32 cents.

PACCAR Parts posted a 16% improvement in Q1 revenues to a record $1.16 billion compared to $998.6 million in the year-ago quarter. Parts pretax profits were a record $251.3 million compared to $214.7 million a year ago. 

E-commerce parts sales increased more than 30% in the first quarter compared to a year ago. PACCAR will add a 19th parts distribution center in Louisville, Kentucky, next year.

PACCAR Financial Services (PFS) posted $432 million in revenue, up 13% year over year. Pretax income of $76 million was 58% higher than last year. PFS has a portfolio of 203,000 trucks and trailers, including 38,000 PacLease vehicles. Total assets are $15.53 billion.

PACCAR parks unfinished trucks while waiting for microchips

Playing nice: PACCAR siblings take turns in product spotlight

Kenworth overhauls medium-duty truck lineup for the first time in 30 years

Click for more FreightWaves articles by Alan Adler.

Alan Adler

Alan Adler is a Detroit-based award-winning journalist who worked for The Associated Press, the Detroit Free Press and most recently as Detroit Bureau Chief for Trucks.com. He also spent two decades in domestic and international media relations and executive communications with General Motors.

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