Recession-fearing pundits looking for an earnings slowdown won’t find evidence in Paccar Inc.’s fourth-quarter results. The OEM set annual revenue and net income records across all its businesses.
New medium- and heavy-duty trucks at Kenworth, Peterbilt and DAF Trucks, a continuing streak of strong quarter-over-quarter performance in its parts business and strong profits in financial services combined for big numbers at the Bellevue, Washington-based manufacturer.
“Kenworth and Peterbilt achieved market share of 29.8% in 2022 compared to 29.2% in 2021,” Darrin Siver, Paccar executive vice president, said in a news release. That trailed only market leader Daimler Truck North America, which reports its Q4 and 2022 results in February.
Paccar said Class 8 truck industry retail sales in the U.S. and Canada were 283,500 units in 2022.
Is better yet to come?
Paccar projects the U.S. and Canada Class 8 truck industry retail sales to range from 270,000-310,000 trucks in 2023. It projects the same range for European retail sales.
“In the truck sector, there is pent-up demand from the prior three years of underproduction. Customers need to replace aging fleets,” CEO and President Feight told analysts on the company’s earnings call. “When we think about the year, it feels steady and strong throughout.
“We see strength globally for Paccar. Europe is doing very well for us. Brazil. Australia. North America. All are doing well, so there’s not a single market or a single segment right now,” he said.
Order intake for the second half of the year suggests another strong year, Harrie Schippers, president and CFO, said on the call.
It expects to produce 49,000 to 53,000 trucks in Q1 with gains across all geographies.
“We still see uncertainties in the supply base. That’s why we have the ranges for the first quarter and for the entire year,” Schippers said.
Paccar Europe records fall, too
In Europe, DAF posted a record 17.3% share of the above 16-tonne market share of 17.3% in 2022, compared to 15.9% in 2021.
Paccar posted Q4 revenue of $8.13 billion compared to $6.69 billion in the October-December period of 2021. The performance beat the prediction of analysts surveyed by investment site Seeking Alpha by $970 million.
The company earned $921.3 million, or $2.64 per diluted share, in Q4. That was up 78% from the $518.7 million, or $1.49, earned in the fourth quarter of 2021. EPS beat analyst estimates by 44 cents.
Paccar shareholders benefit
Paccar declared cash dividends of $4.19 per share during 2022, including a $2.80 per share extra cash dividend paid on Jan. 5, for a total shareholder return of 17.1%. Total dividends of $1.46 billion was a record. The company also declared a 50% stock dividend in December. One new share for every two owned will be issued on Feb. 7.
“Paccar has generated excellent shareholder returns and annual net income due to its industry-leading premium quality vehicles, strong growth of its aftermarket parts and financial services, and innovative use of technology,” said Mark Pigott, Paccar executive chairman.
By the numbers
2022 was Paccar’s 84th consecutive year reporting net income as it delivered 185,900 vehicles worldwide.
Paccar reported Q4 parts revenue of $1.47 billion with pretax income of $379.5 million. Full-year parts revenue was $5.76 billion with pretax income of $1.45 billion, both records.
“Our continued integration of Paccar Parts with our customers and our dealers [is] a really important and growing part of our business,” Feight said. It adds to recurring revenue strength for the future.”
- Recorded financial services pretax income of $151.3 million.
- Generated $1.25 billion in cash from operations in Q4 and $3.03 billion for the year.
- Posted after-tax return on revenues of 10.4%.
- Ended the year with more than $6 billion of cash on hand.
Editor’s Note: Updates throughout with comments from analyst call.