PACCAR Inc. (PCAR) reported a whopping 93% increase in profit to $327.7 million or 91 cents per share in the fourth quarter of 2011 from $169.8 million or 46 cents per share in the same quarter of 2010. With this, the company has beaten the Zacks Consensus Estimate by 12 cents per share.
Net sales and financial service revenues in the quarter surged 58% to $4.85 billion, which is the highest quarterly revenues in the company’s history. It also exceeded the Zacks Consensus Estimate of $4.21 billion.
For full year 2011, PACCAR posted a profit of $1.04 billion or $2.86 per share, which is more than double compared with $457.6 million or $1.25 per diluted share earned in 2010. The profit exceeded the Zacks Consensus Estimate by 13 cents per share.
Net sales and financial service revenues soared 59% to $16.36 billion, which is the second highest in the company’s history and higher than the Zacks Consensus Estimate of $14.92 billion.
The robust increase in revenues and profits were attributable to higher aftermarket revenues, increased profits in Financial Services and positive impact from geographic diversification.
Segment Results
Revenues in the Truck and Other segment jumped 63% to $4.59 billion during the quarter and 64% to $15.33 billion in the year. The company’s DAF nameplate trucks achieved a record market share of 15.5% in the above 15-ton market, the highest in its 83-year history.
Industry sales in the above 15-tons in Western and Central Europe rose 33% to 244,000 units in 2011 on a year-over-year basis. The company expects industry sales in the same market to decrease to a level between 210,000 units and 240,000 units in Europe during 2012 due to the Eurozone crisis.
Meanwhile, PACCAR achieved a record Class 8 retail market share of 28.1% in the U.S. and Canada. Class 8 industry retail sales in the U.S. and Canada improved 56% to 197,000 units in 2011 from 126,000 in 2010. The company expects industry retail sales between 210,000 vehicles and 240,000 vehicles in 2012, driven by ongoing replacement of the aging truck population.
Revenues in the Financial Services segment increased 9% to $266.2 million compared with $243.8 million in the fourth quarter of 2010 while pretax income rose to $67.4 million from $49.9 million in the fourth quarter of 2010.
For the full year, Financial Services revenues increased 6% to $1.03 billion while pretax income rose to $236.4 million from $153.5 million in 2010. The increase in profits was attributable to better finance margins and improved portfolio performance.
During the quarter under study, PACCAR repurchased 1.78 million of its common shares for $67.6 million. Last month, the company’s Board of Directors approved the repurchase of an additional $300 million of its outstanding common stock.
PACCAR announced cash dividends of $1.30 per share to its shareholders for 2011, including a fourth quarter special dividend of 70 cents per share. Total dividends declared during the year increased 88% from 2010.
Financial Position
PACCAR’s cash and marketable debt securities amounted to $2.90 billion as of December 31, 2011, up from $2.43 billion as of December 31, 2010. Long-term debt remained stable at $150 million as of December 31, 2011 compared with the corresponding period of 2010.
Cash from operations rose to $1.59 billion in 2011 from $1.55 billion in 2010 due to higher profits. Capital expenditures of $535.0 million and research and development expenses of $288.2 million were made in global expansion strategies.
The company expects capital additions of $450 million-$550 million and research and development expenses of $275 million-$325 million in 2012 as Kenworth, Peterbilt and DAF invest in industry-leading products and services.
Our Call
PACCAR is the third largest manufacturer of heavy-duty trucks (with a capacity of more than 15 metric tons) in the world after Volvo (VOLVY) and Daimler (DDAIF). The company has substantial manufacturing exposure to light/medium trucks (with a capacity of 6-15 metric tons).
It also provides customer support for its products with the supply of aftermarket parts, finance and leasing services. Currently, the company retains a Zacks #2 Rank on its shares, which translates to a short-term rating (1 to 3 months) of Buy.
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