Company Achieves 72 Consecutive Years of Net Profit
February 1, 2011, Bellevue, Washington PACCAR reported
improved fourth quarter 2010 revenues and net income compared to the same
period in 2009. We are pleased PACCAR earned its 72nd consecutive year
of net profit and achieved record shareholders equity, said Mark Pigott,
chairman and chief executive officer. PACCARs 2010 financial results
reflect the companys exceptional quality products and services, the benefits
of geographic diversification, strong aftermarket revenues, good financial
services income and environmental leadership. I am very proud of our
17,700 employees who have delivered outstanding performance to our
shareholders and customers.
PACCARs excellent balance sheet and operating cash flow of $1.55 billion in
2010 have enabled increased capital investments, enhancing manufacturing
efficiency as well as development of innovative new products, such as the
PACCAR 12.9L MX diesel engine, said Ron Armstrong, PACCAR president.
The PACCAR MX engine is being installed in approximately 25 percent of
Kenworth and Peterbilt vehicles in the U.S. and Canada. The success of
PACCARs MX engine reflects its industry-leading performance and fuel
economy.
Global truck markets are expected to improve in 2011, although the negative
impact resulting from recent commodity price increases and the cost of
installing engine emission equipment will moderate PACCARs operating
margins. PACCAR will also incur increased expenses due to global
business initiatives and the development of new models to enhance its
product ranges, noted Pigott.
Net Income, Revenues and Dividends
PACCAR earned $169.8
million ($.46 per diluted share) for the fourth quarter 2010 compared to
$46.1 million ($.13 per diluted share) in the fourth quarter 2009.
Fourth quarter net sales and financial service revenues were $3.06
billion compared to $2.24 billion reported for the comparable period in
2009. Net sales and financial service revenues for the full year 2010
were $10.29 billion versus $8.09 billion in 2009. PACCAR reported net
income in 2010 of $457.6 million ($1.25 per diluted share) compared to
$111.9 million ($.31 per diluted share) in 2009. Net income for the
fourth quarter and full year 2010 benefited from a gain on the sale of the
companys Nashville plant of $5.1 million ($3.2 million net of tax) and the
favorable effect of recent U.S. tax law changes of $5.0 million.
Cash dividends of $.69 per share, including a fourth quarter special dividend
of $.30 per share, were paid during 2010. Total dividends declared in
2010 increased by 28 percent compared to 2009. PACCAR has paid a
dividend every year since 1941.
PACCAR Delivers Excellent Shareholder Returns
PACCARs
total one-year shareholder return was 60.4 percent in 2010. In the
last 10 years, PACCARs shareholder return has averaged 23.0 percent,
compared to the S&P 500 Index return of 1.4 percent. PACCARs
shareholder return has exceeded the S&P 500 Index return for the
previous one-, three-, five-, ten-, and twenty-year time periods.
Operating Highlights 2010
- PACCAR delivered 78,800 vehicles worldwide and introduced five new truck
models, including the industry leading Kenworth T700 and Peterbilt Model
587.
- The Peterbilt Model 384 earned the Heavy-Duty Commercial Truck of the
Year award.
- Kenworth Trucks ranked highest in the J.D. Power Medium Duty Dealer
Service Customer Satisfaction Studysm*.
- The DAF CF85 earned the U.K.s Motor Transport award
for Fleet Truck of the Year for an unprecedented third consecutive year
and the tenth time in the last seventeen years.
- The DAF LF was awarded the Best 7.5 Tonne Imported Truck in Germany.
- Leyland Trucks was honored as the Overall Winner in the annual
Manufacturing Excellence Awards.
- Production of the PACCAR MX engine for Kenworth and Peterbilt vehicles
commenced at the Columbus, Mississippi factory with 10,000 orders
already received.
- PACCARs MX engine was honored as the Best Coach Engine for the fourth
consecutive time at the Bus World Asia exhibition in Shanghai, China.
- PACCAR has implemented 14,500 Six Sigma projects since 1997.
DAF CF85 U.K. Fleet Truck of the
Year in 2010
Financial Highlights Fourth Quarter 2010
- Consolidated sales and revenues of $3.06 billion.
- Net income of $169.8 million.
- Cash generated by operations of $388.6 million.
- Financial Services pretax income of $49.9 million.
- Research and development expenses of $65.4 million.
- Capital expenditures of $52.6 million.
- Manufacturing cash and marketable securities of $2.43 billion at
December 31, 2010.
Financial Highlights Full Year 2010
- Consolidated sales and revenues of $10.29 billion.
- Net income of $457.6 million.
- Cash provided from operations of $1.55 billion.
- Financial Services pretax income of $153.5 million on assets of $7.9
billion.
- Capital expenditures of $168.4 million.
- Research and development expenses of $238.5 million.
- Medium-term note (MTN) issuances of $680 million.
- Record shareholders equity of $5.36 billion at December 31, 2010.
Global Truck Market Update
Industry sales above
15-tonnes in Western and Central Europe were 183,000 units in 2010, a 9
percent increase compared to 2009, said Harrie Schippers, DAF president.
In 2010, DAF achieved a market share of 15.2 percent in the above
15-tonne market, the highest share in its 82-year history. DAF is the
market share leader in the United Kingdom, Netherlands, and Belgium.
DAF is also the market share leader in the Central European above
15-tonne market, which was over 20,000 vehicles in 2010. These
achievements reflect DAFs steady progress towards its medium term goal of 20
percent market share. It is estimated that industry sales in the above
15-tonne truck market in Europe in 2011 will be in a range of
220,000-240,000 units, said Schippers.
Class 8 industry retail sales in the U.S. and Canada were 126,000 in 2010
compared to 108,000 in 2009 reflecting the slowly improving economy, which
has been negatively impacted by high unemployment and low housing starts,
said Dan Sobic, PACCAR executive vice president. Our customers
profitability is benefiting from continued increases in freight rates and
volumes. Industry retail sales in 2011 are expected to increase to a
range of 180,000-200,000 vehicles, reflecting a continued economic recovery
and the need to replace an aging truck population. This projected
sales level is still below normal replacement demand of approximately
225,000 units, added Sobic.
Global Business Opportunities
For over 40 years,
PACCARs Kenworth vehicles have earned a significant market share in many
South American countries west of the Andes. We are progressing with
the planning for the introduction of DAF vehicles in South America.
The results of rigorous testing of DAF trucks in South America have
been excellent and we are now evaluating potential sites for a DAF factory
in Brazil, said Bob Christensen, PACCAR executive vice president.
Brazil is a major truck market with industry sales above 10-tonnes of
125,000 units in 2010. The DAF and Kenworth product ranges offer low
operating costs, excellent driveability and maneuverability, and the
industry-leading PACCAR MX engine. The introduction of DAFs product
range in Brazil is an exciting development which is expected to deliver good
sales in the region beginning in 2013, added Christensen.
DAF plans to open a truck sales office in Moscow, Russia, during the first
quarter of 2011. The above 15-tonne truck market in Russia and the
rest of the CIS was over 56,000 units in 2010, said Ron Bonsen, DAF Director
of Marketing and Sales. The opening of the DAF Moscow office will
facilitate DAFs continued growth in this expanding truck market.
PACCAR Parts Achieves Strong Performance
PACCARs
aftermarket parts sales continue to increase in all of its markets.
Improving truck utilization and an aging North American truck fleet
are generating higher levels of parts and service business. PACCARs
aftermarket parts sales in North America and Australia achieved record
revenue in 2010, said Darrin Siver, PACCAR Parts general manager.
PACCAR is a leader in providing aftermarket truck parts utilizing 14
strategically located parts distribution centers supported by over 1,900
DAF, Kenworth and Peterbilt dealer locations. A new distribution
center was opened in Santiago, Chile in December 2010 to support Kenworth
and DAF customers in South America.
PACCARs new Parts Distribution
Center in Santiago, Chile
Increased Capital Investments and New Product Launches
In
2010, capital expenditures of $168.4 million and research and development
expenses of $238.5 million were invested in new PACCAR products.
PACCAR is increasing capital investments in 2011 to accelerate
comprehensive product development programs. Capital expenditures are
projected to be $400-$500 million and research and development expenses are
estimated at $250-$300 million in 2011 as Kenworth, Peterbilt and DAF invest
in industry-leading products and services to enable our customers to
continue to deliver profitable results in their businesses, said Tom
Plimpton, PACCAR vice chairman.
Significant product launches in 2010 include:
- PACCAR introduced the PACCAR MX engine for installation in Kenworth and
Peterbilt trucks. Engine production at PACCARs new
state-of-the-art manufacturing facility in Columbus, Mississippi began
in June.
- Kenworth introduced the new EPA SmartWay® certified Model T700.
Kenworth also launched the medium-duty T440, offering excellent
productivity and fuel efficiency to regional delivery and vocational
customers.
- Peterbilt launched the EPA SmartWay® certified Model 587, a dynamic
successor to the highly successful Model 387. Peterbilt announced
the availability of the Model 320 Hybrid Class 8 refuse truck that
utilizes Hydraulic Launch Assist (HLA) technology and the Model 382 for
regional and shorter-haul applications.
Environmental Leadership
PACCAR is the industry leader
in the development of environmentally friendly technologies, shared Craig
Brewster, PACCAR vice president. In 2010, Leyland Trucks earned the
Green Business Award for Waste Reduction and Recycling. The award was
presented by ENDS, the specialist environmental publishers, and Management
Today, the United Kingdoms leading monthly business magazine.
Other environmental highlights for 2010 include:
- The DAF LF Hybrid began production in the fourth quarter and is
initially available in the United Kingdom, the Netherlands, Germany,
France and Belgium. The commencement of production follows two
years of extensive field tests across a range of diverse applications in
the United Kingdom and Continental Europe.
- PACCARs medium-duty hybrid-electric vehicles can achieve up to 30% fuel
efficiency improvement. Kenworth and Peterbilt delivered 325
hybrid vehicles in 2010.
- DAF is recirculating 30 percent of its thermal energy to reduce
water-heating costs in its manufacturing facilities.
- Many PACCAR truck manufacturing plants in the U.S. and Europe have
achieved Zero Waste to Landfill and all PACCAR manufacturing facilities
are ISO 14001 environmentally certified.
DAF LF Diesel Electric Hybrid
Financial Services Companies Achieve Good Results
PACCAR
Financial Services (PFS) finances a portfolio of over 133,000 trucks and
trailers, with total assets of $7.9 billion. PACCAR Leasing, a major
full-service truck leasing company in North America and Europe with a fleet
of over 31,000 vehicles, is included in this segment. During the
fourth quarter and full-year 2010, profit increased due to better finance
margins and improved portfolio performance, said Bob Bengston, PACCAR vice
president. Fourth quarter pretax income was $49.9 million compared to
the $35.6 million earned in the fourth quarter of 2009. Fourth quarter
revenues were $243.8 million compared to $254.9 million in the same quarter
of 2009. The provision for credit losses was $12.6 million in the
fourth quarter of 2010, compared to $23.7 million in the fourth quarter of
2009. For the full year, revenues were $967.8 million compared to
$1.01 billion in 2009 and pretax income was $153.5 million in 2010 compared
to $84.6 million a year ago.
PACCARs excellent balance sheet, complemented by its A+/A1 credit ratings,
enables PFS to offer competitive retail financing to Kenworth, Peterbilt and
DAF dealers and customers in 20 countries on three continents, said Tim
Henebry, PACCAR Financial president. Higher freight volumes and
increasing freight rates have improved our customers profitability leading
to lower past dues and provisions for credit losses. Used truck prices
continue to improve from prior year levels by 10-15 percent.
PACCAR Financial had excellent access to the debt markets in 2010, issuing
$680 million in three- and five-year term notes during the year.
PACCARs access to the debt markets resulted from PACCARs consistent
profitability, good cash flow and strong balance sheet, Henebry added.
PFS borrows at excellent rates which gives our customers a competitive
advantage.
PACCAR 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 and DAF nameplates. PACCAR also designs and
manufactures advanced diesel engines and provides financial services and
information technology and distributes truck parts related to its principal
business. PACCAR shares are traded on the NASDAQ Global Select Market,
symbol PCAR. Its homepage is www.paccar.com.
PACCAR will hold a conference call with securities analysts to discuss fourth
quarter earnings on February 1, 2011, at 9:00 a.m. Pacific time.
Interested parties may listen to the call by selecting Live Webcast at
PACCARs homepage. The Webcast will be available on a recorded basis
through February 8, 2011.
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. These statements are based
on managements current expectations and are subject to uncertainty and
changes in circumstances. Actual results may differ materially from
those included in these statements due to a variety of factors. More
information about these factors is contained in PACCARs filings with the
Securities and Exchange Commission.
* J.D. Power and Associates 2010 Medium-Duty Truck Customer Satisfaction
Studysm. For more information please go to www.jdpower.com.