PACCAR Inc. (PCAR) posted an 18.1% rise in earnings to $1.11 per share in the fourth quarter of 2014 from 94 cents in the same quarter of 2013, surpassing the Zacks Consensus Estimate of $1.09. Net income surged 18% to $394.3 million from $334.2 million in the year-ago quarter.
Revenues increased 11% to a quarterly high of $5.12 billion, surpassing the Zacks Consensus Estimate of $4.96 billion.
The increase in earnings was attributable to the increase in revenues from truck and aftermarket parts’ sales, along with higher revenues from financial services.
2014 Results
PACCAR reported earnings of $3.82 per share in 2014, up from $3.30 per share in 2013. Earnings per share for 2014 also surpassed the Zacks Consensus Estimate of $3.80.
Net income increased to $1.36 billion from $1.17 billion a year ago. Revenues increased to a record high of $18.99 billion from $17.12 billion in 2013, exceeding the Zacks Consensus Estimate of $18.25 billion.
Segment Results
Revenues in the Truck, Parts and Other segment increased 12% to $4.82 billion. Pre-tax income in the segment surged 22.8% to $476.1 million from $387.7 million a year ago.
PACCAR’s DAF trucks achieved a market share of 13.8% in the above 16-ton market in Europe.
Class 8 industry retail sales in the U.S. and Canada amounted to 250,000 vehicles in 2014, which was the highest since 2006. Industry sales amounted to 227,000 units in the above 16-ton truck market in Europe and 129,000 units in the heavy-duty truck market in South America.
Industry sales in the above 16-ton truck market in Europe are expected to be in the range of 200,000–240,000 units in 2015. Meanwhile, PACCAR expects Class 8 industry retail sales of 250,000–280,000 vehicles in the U.S. and Canada this year. Further, it expects the industry demand for heavy-duty trucks in South America to range between 110,000–130,000 units in 2015.
Revenues in the Financial Services segment (comprising a portfolio of 166,000 trucks and trailers, with total assets of $11.92 billion) increased 0.8% to $302 million while pre-tax income rose 6.5% to $96.3 million in the fourth quarter of 2014.
Financial Position
PACCAR’s cash and marketable debt securities amounted to $2.64 billion as of Dec 31, 2014, compared with $2.93 billion as of Dec 31, 2013. Long-term debt was nil, compared to $150 million as of Dec 31, 2013.
The company’s cash from operations declined to $2.12 billion in 2014 from $2.38 billion in 2013. The company recorded capital investments of $223.1 million and research and development (R&D) expenses of $215.6 million in 2014 for new products and expansion of manufacturing capacity. The company has targeted capital investments of $300–$350 million and R&D expenses of $220–$260 million in 2015 for enhanced powertrain development, and expansion of operating efficiency of factories and distribution centers.
Share Repurchase Update
During 2014, PACCAR repurchased 0.73 million shares for $42.7 million under its $300 million share repurchase program.
Dividend Update
During 2014, PACCAR declared cash dividends of $1.86 per share, up 9% over 2013. This includes a special dividend of $1 per share.
PACCAR currently carries a Zacks Rank #2 (Buy). Other well-ranked automobile stocks include Tesla Motors, Inc. (TSLA), General Motors Company (GM) and Toyota Motor Corp. (TM). All these stocks carry a Zacks Rank #2.
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