PACCAR Inc (PCAR) filed Quarterly Report for the period ended 2009-09-30.
PACCAR Inc. is a global technology leader in the design manufacture and customer support of high-quality light- medium- and heavy-duty trucks under the Kenworth Peterbilt DAF and Foden nameplates. It also provides financial services and distributes truck parts related to its principal business. In addition the Bellevue Washington-based company manufactures industrial winches under the Braden Gearmatic and Carco nameplates. (Company Press Release) Paccar Inc has a market cap of $13.62 billion; its shares were traded at around $37.5 with a P/E ratio of 98.7 and P/S ratio of 1. The dividend yield of Paccar Inc stocks is 1%. Paccar Inc had an annual average earning growth of 15% over the past 10 years.
Highlight of Business Operations:
PACCAR recorded lower sales and net income in the third quarter and first nine months of 2009 compared to year-earlier levels. Third quarter 2009 net income was $13.0 million ($.04 per diluted share) compared to $299.0 million ($.82 per diluted share) in the third quarter of 2008. First nine months total net sales and revenues were $5.83 billion, 52% lower compared to the first nine months of 2008. First nine months net income was $65.8 million ($.18 per diluted share) compared to $904.8 million ($2.47 per diluted share) in the year-earlier period.
Third quarter results included a one-time net benefit of $14.1 million ($8.9 million, net of tax) from a $18.3 million curtailment gain related to discontinued postretirement healthcare plans for plant employees and $4.2 million of plant closure costs in connection with the permanent closure of the Peterbilt facility in Madison, Tennessee . Year-to-date 2009 results include $66.0 million of curtailment gains related to postretirement health care plans ($41.5 million, net of tax).
Truck and Other Cost of sales and revenues were $1.65 billion in the third quarter of 2009 compared to $3.11 billion in the third quarter of 2008. Cost of sales and revenues were $4.70 billion in the first nine months of 2009, down 50% compared to $9.40 billion in the first nine months of 2008. Cost of sales and revenues declined in both periods primarily due to the decline in world wide truck deliveries. This volume decline was slightly offset by higher costs primarily due to lower fixed cost coverage caused by lower factory production volumes. Also included in cost of sales are severance costs of $7.1 million for the third quarter of 2009 compared to severance costs of $3.2 million in the third quarter of 2008 and $21.6 million in the first nine months of 2009 compared to $4.4 million in the first nine months of 2008.
Research and development (R&D) expenditures decreased to $43.4 million in the third quarter of 2009 from $88.1 million in the third quarter of 2008. R&D was $148.5 million for the first nine months of 2009 compared to $261.7 million in the first nine months of 2008 primarily due to lower spending on engine development programs. R&D spending in the fourth quarter of 2009 is expected to be in the range of $40.0 to $50.0 million.
Selling, general and administrative (SG&A) expense for Truck and Other of $87.4 million in the third quarter and $255.0 year to date declined by $31.9 million and $117.9 million, respectively. The lower spending is a result of focused efforts to reduce costs in response to the global economic recession and consists primarily of lower staffing costs, sales and marketing spending and travel costs. Foreign currency translation effects reduced SG&A by $2.7 million and $15.8 million for the quarter and nine month periods, respectively. Severance costs included in SG&A were $0.4 million in the third quarter of 2009 and $6.0 million in the first nine months of 2009 compared to $0.2 million in the third quarter of 2008 and $0.3 million in the first nine months of 2008. As a percentage of sales, SG&A increased in the third quarter to 5.0% in 2009 from 3.2% in 2008 and increased to 5.0% in the first nine months of 2009 from 3.4% in 2008 due to lower sales volumes.
Financial Services segment revenues for the third quarter of 2009 decreased to $241.7 million from $322.8 million in the third quarter of 2008. Revenues were $740.0 million in the first nine months of 2009, compared to $970.7 million in the first nine months of 2008. The decreased revenues in both the third quarter and the first nine months of 2009 resulted from lower earning asset balances in all markets and lower yields in North America and Europe. Third quarter Financial Services income before income taxes was $18.1 million compared to $45.5 million in 2008. First nine months income before income taxes was $49.0 million compared to $171.5 million. The decrease in both periods was primarily due to less revenues resulting from lower average earning asset balances and yields. In addition there were higher impairments and losses on sales of operating lease vehicles. These were partially offset by lower interest expense on smaller average debt balances, as well as lower operating expenses and provision for losses. The third quarter 2009 provision for losses on receivables declined $7.6 million to $26.6 million from $34.2 million in the prior year reflecting lower charge-offs and a decrease in the allowance for losses due to a decrease in past due accounts and a lower asset base. Year-to-date, the 2009 provision for losses on receivables was $80.7 million compared to the $76.0 million in 2008.
PCAR is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Arnold Schneider of Schneider Capital Management, Kenneth Fisher of Fisher Asset Management, LLC, Chris Davis of Davis Selected Advisers.
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