Paccar Inc. defied dour economic projections for the near-term economy, posting record second-quarter revenue and income. Strong margins, increased deliveries of recently revamped models and profit on its parts business all contributed.
Practically everything clicked in Q2 as the Bellevue, Washington-based manufacturer. It crushed analyst estimates, Earnings per share of $2.07 beat the consensus by 23 cents. Revenue of $7.16 billion was $590 million more than expected.
Paccar (NASDAQ: PCAR) is the parent company of Kenworth Trucks, Peterbilt Motors and Europe’s DAF Trucks. It delivered 46,900 units in the quarter. Kenworth and Peterbilt’s Class 8 retail sales market share is 29.4% year to date. That trails only market leader Daimler Truck North America.
“We’re sold out for the year and the first quarter [of 2023] is beginning to fill-in nicely,” Paccar CEO Preston Feight told analysts on a conference call Tuesday. “We think truck, parts and other margins are going to increase in the third quarter.”
Paccar earned net income of $720.4 million, up 45% compared with $495.5 million in the same period a year ago. Net sales and financial services revenues were $7.16 billion, compared to $5.84 billion in Q2 2021. Gross margin was 14.4% compared to 13.5% a year ago.
Parts revenues were $1.43 billion, generating pretax income of $353.3 million, 32% higher than the $266.8 million earned in the same period last year. Paccar Financial Services posted pretax income of $144.4 million, benefitting from high used truck prices.
Aging trucking fleet
The age of the trucking fleet is up 10% to 15% above normal, Feight said, because of the inability of truck manufacturers to meet demand for new trucks. Some orders for new equipment are four-year contracts, assuring a steady demand as supply disruptions for semiconductors and other parts ease.
“While we’re not complete and through the supply chain limitations, we think that that probably actually contributes to a strong truck cycle for a long period of time,” Feight said.
The number of unfinished trucks waiting for parts is dropping.
“What we have seen is an improvement from the low 3,000s into the high 2,000s,” Feight said. “We see hat sequential improvement and we hope that that sequential improvement will continue. “The number will never go to zero because there’s always trucks that are being final delivery,”
Editor’s note: Updates with comments from analyst call.