PACCAR Profits More than Double - Analyst Blog

PACCAR Inc. (PCAR) has reported a profit of $68.3 million or 19 cents per share in the first quarter of 2010, which is more than double compared to $26.3 million or 7 cents per share in the prior-year quarter. With this, the truck maker also surpassed the Zacks Consensus Estimate of 15 cents per share. 

Revenues in the quarter went up 12% to $2.23 billion. The improved results were attributable to stronger truck sales in North America and a rise in Financial Services profits and revenues. 

Revenues in the Truck and Other segment rose 15% to $1.98 billion due to a recovery in the truck markets. Despite a 4% decline to $246.4 million, pretax income in the PACCAR Financial Services (PFS) segment increased to $28.1 million from $15.3 million in the first quarter of 2009. 

The improvement in PFS results was attributable to a 10% fall in interest and other expenses to $175.1 million and an improvement of 13% in provision for credit losses to $21.7 million. 

Financial Position 

PACCAR’s cash and cash equivalents remained almost flat at $2.05 billion as of Mar 31, 2010 compared to $2.06 billion as of Dec 31, 2009. Long-term debt increased marginally to $173.1 million from $172.3 million as of Dec 31, 2009. The long-term debt-to-capitalization ratio was as low as 3% as of the period under study. 

In the first quarter, cash flow from operations increased significantly to $285.4 million from $90.8 million in 2008, primarily driven by an improvement in profits. Capital expenditures increased to $26.1 million in the year from $16.5 million in 2008, due to the new product development. 

Outlook 

PACCAR reiterated its outlook for 2010, as provided while presenting the fourth quarter of 2009 results. The company continues to expect sales for above 15-ton vehicles to lie in the range of 150,000 - 180,000 units in 2010. The U.S. and Canadian Class 8 retail sales are projected to be in the range of 110,000 - 140,000 units during the year. 

PACCAR continues with its plan to increase its capital investments in 2010 as the economy improves. The company has estimated capital expenditures of $175 - $200 million, and research and development expenses of $225 - $250 million, which are targeted at new products and for enhancing operating efficiency.
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