5 Revealing Quotes From PACCAR Inc.’s CEO
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Transcript of 5 Revealing Quotes From PACCAR Inc.’s CEO
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5 Revealing Quotes From PACCAR Inc.’s CEO
Image source: PACCAR
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Europe: fueling PACCAR’s growth#1
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The quote
“PACCAR’s forecast for Europe’s greater than 16-tonne market is a range of 260,000-290,000 units, reflecting strong demand and a steady economic outlook. Europe’s GDP growth expectations for this year are 2% in the UK, which is DAF’s largest market, and 1.5% on the continent.”
Ron Armstrong, CEO
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Things you need to knowEurope was PACCAR’s strongest market in Q1, with its truck deliveries climbing 34% year
over year.Europe accounted for 30% of PACCAR’s total revenues in Q1. Between January and April, PACCAR’s DAF brand achieved record market share of 16.6%
in the heavy-duty European truck market. PACCAR has upgraded its industry sales outlook for Europe.
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Engines business has taken off#2
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The quote
“[W]e are earning a strong return off the investment that we have made and will continue to make additional investments as the engine penetration grows in North America.”
Ron Armstrong
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Vertical integration: a smart move
KW/PB = Kenworth/Peterbilt. Source: PACCAR’s Q1 earnings presentation.
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Things you need to knowPACCAR’s own engines powered 46% of its trucks in Q1, up from 42% in Q4 2015.
Engine penetration target: 50% in the short-to-medium term.80%-85% in the long term. PACCAR will no longer need to source engines from Cummins.
PACCAR is ramping up production at its engines facility in Columbus, Mississippi.
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Market share on the rise#3
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The quote
“Peterbilt and Kenworth’s combined retail sales market share of the U.S. and Canadian market is 26% year to date. Our share of net orders so far this year is strong at 37% as customers appreciate the benefits of Kenworth and Peterbilt’s reliable and fuel-efficient trucks and industry leading resale values.”
Ron Armstrong
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Things you need to knowPACCAR’s share of the U.S./Canadian heavy-
duty truck market: 26% year to date versus 27.5% in 2015.
PACCAR’s net order share in the market: 37% year to date, thanks to strong demand for its trucks.
PACCAR expects to end 2016 with “slightly” higher market share despite lower sales.
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PACCAR’s hot-selling truck models
• Peterbilt 579• Peterbilt 567• Kenworth T680• Kenworth T880
Peterbilt 579 and 567, and Kenworth T680 and T880 trucks. Image source: PACCAR.
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Rapidly growing parts business#4
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The quote
“PACCAR parts’ quarterly pre-tax income was $135 million, an excellent return on revenue of 18.7%. These results were driven by good fleet utilization, a growing number of PACCAR trucks and engines in operation, and the many innovative products and services offered by PACCAR parts and our dealers.”
Ron Armstrong
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Strong growth over the years
Source: PACCAR’s Q1 earnings presentation.
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Things you need to know Parts contributed roughly
17% to PACCAR’s revenues and 25% to its adjusted income before taxes in Q1.
In April, PACCAR opened a new 160,000 square-foot parts distribution center in Renton, Washington.
Image source: PACCAR
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Cash flows growing rapidly#5
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The quote
“PACCAR’s strong balance sheet and positive cash flow have enabled the company to invest $3.3 billion in new products and facilities in the last five years.”
Ron Armstrong
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Investing in the future
Source: PACCAR’s Q1 earnings presentation.
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Ongoing projects
Source: PACCAR’s Q1 earnings presentation.
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Solid financials supporting growthSpending guidance for 2016: $325 million-$375
million in capital expenditures and $240 million-$260 million in R&D.
2015 actual spending: $308.4 million in capex and $239.8 million in R&D.
Free cash flow: $1.1 billion against net income worth $631 million during the past twelve months.
Cash and cash equivalents: $1.8 billion as of March 31, 2016.
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