美國
證券和交易委員會
華盛頓特區 20549
表格
根據1934年證券交易法第13或第15(d)條規定的季度報告 |
截至季度結束日期的財務報告
或者
根據1934年證券交易法第13或15(d)條款的過渡報告 |
過渡期從 到
委員會文件號。
(根據其章程規定的註冊人準確名稱)
（註冊或組織的）州或其他司法轄區 |
（納稅人識別號碼） |
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(主要行政辦公室地址) |
(郵政編碼) |
(
（註冊人的電話號碼，包括區號）
在法案第12(b)條的規定下注冊的證券：
每種類別的證券 |
交易標的 |
名稱爲每個註冊的交易所: |
請在以下複選框中打勾，指示註冊人：(1)在前12個月(或註冊人被要求提交這些報告的更短期間內)已經提交了1934年證券交易法第13或15(d)條規定需要提交的所有報告；以及(2)在過去的90天內一直受到了此類文件提交要求的限制。
請在以下複選框中打勾，指示註冊人是否已經電子提交了根據Regulation S-T規則405條(本章節的§232.405條)需要提交的所有互動數據文件在過去的12個月內(或註冊人被要求提交這些文件的更短期間內)。
請通過複選標記指示註冊者是否爲大型加速歸檔者、加速歸檔者、非加速歸檔者、較小的報告公司還是新興增長公司。請參閱《證券交易法》第12b‑2條中對「大型加速歸檔者」、「加速歸檔者」、「較小的報告公司」和「新興增長公司」的定義。
☒ |
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加速文件提交人 |
☐ |
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非加速文件提交人 |
☐ |
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較小的報告公司 |
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新興成長公司 |
如果公司無法符合證券交易法第13(a)條規定，使用延長過渡期來遵守任何新的或修訂的財務會計準則，請在複選框中指示。 ☐
請勾選「是」，如果報告人是外殼公司（定義見證券交易法規則12b-2）。是
請指出最近一次實際日期後，每個發行人普通股的流通情況。
普通股，面值$1 —
PACCAR Inc — 10-Q 表格
索引
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頁面 |
第一部分 |
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第 1 項。 |
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第 2 項。 |
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第 3 項。 |
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第 4 項。 |
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第二部分。 |
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第 1 項。 |
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第 1A 項。 |
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第 2 項。 |
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第 3 項。 |
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第 4 項。 |
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第 5 項。 |
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第 6 項。 |
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- 2 -
第一部分 — 金融所有信息
第 1 項。 財務報表
Com 的合併報表綜合收入（未經審計）
（百萬，每股金額除外）
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三個月已結束 |
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九個月已結束 |
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9 月 30 日 |
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9 月 30 日 |
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2024 |
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2023 |
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2024 |
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2023 |
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卡車、零件及其他： |
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淨銷售額和收入 |
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銷售成本和收入 |
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研究和開發 |
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銷售、一般和管理 |
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利息和其他（收入）支出，淨額 |
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所得稅前的卡車、零件和其他收入 |
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金融服務： |
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利息和費用 |
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經營租賃、租金和其他收入 |
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收入 |
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利息和其他借款費用 |
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折舊和其他費用 |
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銷售、一般和管理 |
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應收賬款損失準備金 |
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所得稅前的金融服務收入 |
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投資收益 |
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所得稅前總收入 |
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所得稅 |
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淨收入 |
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$ |
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每股淨收益 |
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基本 |
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$ |
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稀釋 |
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$ |
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加權平均已發行普通股數量 |
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基本 |
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稀釋 |
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綜合收益 |
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$ |
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$ |
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$ |
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$ |
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參見合併財務報表附註。
- 3 -
合併 資產負債表
（百萬）
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9 月 30 日 |
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12 月 31 日 |
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2024 |
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2023 * |
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（未經審計） |
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資產 |
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卡車、零件及其他： |
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流動資產 |
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現金和現金等價物 |
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$ |
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貿易和其他應收賬款，淨額（損失備抵金）：2024-美元 |
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有價證券 |
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庫存，淨額 |
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其他流動資產 |
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卡車、零件和其他流動資產總額 |
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經營租賃的設備，淨額 |
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財產、廠房和設備，淨額 |
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其他非流動資產，淨額 |
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卡車、零件和其他資產總計 |
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金融服務： |
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現金和現金等價物 |
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財務和其他應收賬款，淨額（損失備抵金）：2024-美元 |
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經營租賃的設備，淨額 |
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其他資產 |
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金融服務資產總額 |
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$ |
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$ |
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* 2023年12月31日的合併資產負債表來自經審計的財務報表。
參見合併財務報表附註。
- 4 -
Consolidated Balance Sheets
(Millions)
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September 30 |
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December 31 |
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2024 |
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2023 * |
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(Unaudited) |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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TRUCK, PARTS AND OTHER: |
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Current Liabilities |
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Accounts payable, accrued expenses and other |
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$ |
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Dividend payable |
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Total Truck, Parts and Other Current Liabilities |
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Residual value guarantees and deferred revenues |
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Other liabilities |
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Total Truck, Parts and Other Liabilities |
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FINANCIAL SERVICES: |
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Accounts payable, accrued expenses and other |
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Commercial paper and bank loans |
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Term notes |
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Deferred taxes and other liabilities |
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Total Financial Services Liabilities |
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STOCKHOLDERS' EQUITY: |
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Preferred stock, |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock, at cost - |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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Total Stockholders' Equity |
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$ |
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$ |
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* The December 31, 2023 consolidated balance sheet has been derived from audited financial statements.
See Notes to Consolidated Financial Statements.
- 5 -
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Millions)
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Nine Months Ended |
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September 30 |
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2024 |
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2023 |
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OPERATING ACTIVITIES: |
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Net Income |
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$ |
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$ |
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Adjustments to reconcile net income to cash provided by operations: |
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Depreciation and amortization: |
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Property, plant and equipment |
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Equipment on operating leases and other |
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Provision for losses on financial services receivables |
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Other, net |
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( |
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( |
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Pension contributions |
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( |
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Change in operating assets and liabilities: |
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Trade and other receivables |
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( |
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Wholesale receivables on new trucks |
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( |
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( |
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Inventories |
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Accounts payable and accrued expenses |
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Income taxes, warranty and other |
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Net Cash Provided by Operating Activities |
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INVESTING ACTIVITIES: |
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Originations of retail loans and finance leases |
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Collections on retail loans and finance leases |
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Net increase in wholesale receivables on used equipment |
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( |
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Purchases of marketable debt securities |
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Proceeds from sales and maturities of marketable debt securities |
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Payments for property, plant and equipment |
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Acquisitions of equipment for operating leases |
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Proceeds from asset disposals |
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Other, net |
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( |
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Net Cash Used in Investing Activities |
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FINANCING ACTIVITIES: |
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Payments of cash dividends |
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Purchases of treasury stock |
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Proceeds from stock compensation transactions |
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Net increase in commercial paper, short-term bank loans and other |
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Proceeds from term debt |
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Payments on term debt |
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Net Cash (Used in) Provided by Financing Activities |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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Net (Decrease) Increase in Cash and Cash Equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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See Notes to Consolidated Financial Statements.
- 6 -
Consolidated Statements of Stockholders’ Equity (Unaudited)
(Millions, Except Per Share Amounts)
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Three Months Ended |
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Nine Months Ended |
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September 30 |
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September 30 |
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2024 |
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2023 |
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2024 |
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2023 |
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COMMON STOCK, $1 PAR VALUE: |
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Balance at beginning of period |
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$ |
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$ |
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$ |
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$ |
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Stock compensation |
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Balance at end of period |
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ADDITIONAL PAID-IN CAPITAL: |
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Balance at beginning of period |
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Stock compensation |
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Balance at end of period |
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TREASURY STOCK, AT COST: |
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Balance at beginning of period |
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Purchases |
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( |
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( |
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( |
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Balance at end of period |
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( |
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( |
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( |
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RETAINED EARNINGS: |
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Balance at beginning of period |
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Net income |
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Cash dividends declared on common stock |
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( |
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( |
) |
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( |
) |
|
|
( |
) |
Balance at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
ACCUMULATED OTHER COMPREHENSIVE LOSS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at beginning of period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Balance at end of period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total Stockholders’ Equity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash dividends declared on common stock, per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See Notes to Consolidated Financial Statements.
- 7 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
NOTE A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and footnotes included in PACCAR Inc’s (PACCAR or the Company) Annual Report on Form 10‑K for the year ended December 31, 2023.
Equity Method Investment: The Company uses the equity method to account for the investment in an advanced battery cell manufacturing joint venture. Under the equity method, the original investments in the joint venture are recorded at cost and subsequently adjusted by the Company’s share of equity income or losses after the date of acquisition. The investment is included in Truck, Parts and Other "Other noncurrent assets, net" on the Company’s Consolidated Balance Sheets as of September 30, 2024.
Earnings per Share: Basic earnings per common share are computed by dividing earnings by the weighted average number of common shares outstanding, plus the effect of any participating securities. Diluted earnings per common share are computed assuming that all potentially dilutive securities are converted into common shares under the treasury stock method.
The dilutive and antidilutive options are shown separately in the table below:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Additional shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Antidilutive options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
New Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments in this ASU should be applied retrospectively to all prior periods presented. The implementation of this ASU will result in additional disclosures and will not have an impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require entities to disclose certain, specific categories within the rate reconciliation and enhance disclosures regarding income taxes paid and income tax expense. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments in this ASU should be applied on a prospective basis; however, retrospective application is permitted. The implementation of this ASU will result in additional disclosures and will not have an impact on the Company’s consolidated financial statements.
The Company
NOTE B – Sales and Revenues
Truck, Parts and Other
The Company enters into sales contracts with customers associated with purchases of the Company’s products and services including trucks, parts, product support, and other related services. Generally, the Company recognizes revenue for the amount of consideration it will receive for delivering a product or service to a customer. Revenue is recognized when the customer obtains control of the product or receives benefits of the service. The Company excludes sales taxes, value added taxes and other related taxes assessed by government agencies from revenue. There are no significant financing components included in product or services revenue since generally customers pay shortly after the products or services are transferred. In the Truck and Parts segment, when the Company grants extended payment terms on selected receivables and charges interest, interest income is recognized when earned.
- 8 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The following table disaggregates Truck, Parts and Other revenues by major sources:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Truck |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Revenues from extended warranties, operating leases and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Parts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Parts sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues from dealer services and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Winch sales and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck, Parts and Other sales and revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company recognizes truck and parts sales as revenues when control of the products is transferred to customers which generally occurs upon shipment, except for certain truck sales which are subject to a residual value guarantee (RVG) by the Company. The standard payment term for trucks and aftermarket parts is typically within 30 days, but the Company may grant extended payment terms on selected receivables. The Company recognizes revenue for the invoice amount adjusted for estimated sales incentives and returns. Sales incentives and returns are estimated based on historical experience and are adjusted to current period revenue when the most likely amount of consideration the Company expects to receive changes or becomes fixed. Truck and parts sales include a standard product warranty which is included in cost of sales. The Company has elected to treat delivery services as a fulfillment activity with revenues recognized when the customer obtains control of the product. Delivery revenue is included in revenues and the related costs are included in cost of sales. The Company is not disclosing truck order backlog, as a significant majority of the backlog has a duration of less than one year.
Truck sales with RVGs that allow customers the option to return their truck are accounted for as a sale when the customer does not have an economic incentive to return the truck to the Company, or as an operating lease when the customer does have an economic incentive to return the truck. The estimate of customers’ economic incentive to return the trucks is based on an analysis of historical guaranteed buyback value and estimated market value. When truck sales with RVGs are accounted for as a sale, revenue is recognized when the truck is transferred to the customer less an amount for expected returns. Expected return rates are estimated by using a historical return rate.
Aftermarket parts sales allow for returns which are estimated at the time of sale based on historical data. Parts dealer services and other revenues are recognized as services are performed.
The following table presents the balance sheet classification of the estimated value of the returned goods assets and the related return liabilities:
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
ASSETS |
|
|
LIABILITIES |
|
|
ASSETS |
|
|
LIABILITIES |
|
||||
Trucks |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
Accounts payable, accrued expenses and other |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Other noncurrent assets, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Parts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
Accounts payable, accrued expenses and other |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s total commitment to acquire trucks at a guaranteed value for contracts accounted for as a sale was $
- 9 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Revenues from extended warranties, operating leases and other include optional extended warranty and repair and maintenance (R&M) service contracts which can be purchased for periods generally ranging up to
Revenue from winch sales and other is primarily derived from the industrial winch business. Winch sales are recognized when the product is transferred to a customer, which generally occurs upon shipment. Also within this category are other revenues not attributable to a reportable segment.
Financial Services
The Company’s Financial Services segment products include loans to customers collateralized by the vehicles being financed, finance leases for retail customers and dealers, dealer wholesale financing which includes floating-rate wholesale loans to PACCAR dealers for new and used trucks, and operating leases which include rentals on Company owned equipment. Interest income from finance and other receivables is recognized using the interest method. Certain loan origination costs are deferred and amortized to interest income over the expected life of the contracts using the straight-line method which approximates the interest method.
Operating lease rental revenue is recognized on a straight-line basis over the term of the lease. Customer contracts may include additional services such as excess mileage, repair and maintenance and other services on which revenue is recognized when earned. The Company’s full-service lease arrangements bundle these additional services. Rents for full-service lease contracts are allocated between lease and non-lease components based on the relative stand-alone price of each component. Taxes, such as sales and use and value added, which are collected by the Company from a customer, are excluded from the measurement of lease income and expenses.
Recognition of interest income and rental revenue is suspended (put on non-accrual status) when the receivable becomes more than 90 days past the contractual due date or earlier if some other event causes the Company to determine that collection is not probable. Accordingly,
Finance leases are secured by the trucks and related equipment being leased and the lease terms generally range from to
Operating lease terms generally range from to
The Company determines its estimate of the residual value of leased vehicles by considering the length of the lease term, the truck model, the expected usage of the truck and anticipated market demand. If the sales price of the truck at the end of the agreement differs from the Company’s estimated residual value, a gain or loss will result. Future market conditions, changes in government regulations and other factors outside the Company’s control could impact the ultimate sales price of trucks returned under these contracts. Residual values are reviewed regularly and adjusted if market conditions warrant.
- 10 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The following table summarizes Financial Services lease revenues by lease type:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Finance lease revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating lease revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE C - Investments in Marketable Securities
Debt Securities
The Company's investments in marketable debt securities are classified as available-for-sale. These investments are stated at fair value and may include an allowance for credit losses. Changes in the allowance for credit losses are recognized in the current period earnings and any unrealized gains or losses, net of tax, are included as a component of accumulated other comprehensive income (loss) (AOCI).
The Company utilizes third-party pricing services for all of its marketable debt security valuations. The Company reviews the pricing methodology used by the third‑party pricing services, including the manner employed to collect market information. On a quarterly basis, the Company also performs review and validation procedures on the pricing information received from the third‑party providers. These procedures help ensure the fair value information used by the Company is determined in accordance with applicable accounting guidance.
The Company evaluates its investment in marketable debt securities at the end of each reporting period to determine if a decline in fair value is the result of credit losses or unrealized losses. In assessing credit losses, the Company considers the collectability of principal and interest payments by monitoring changes to issuers’ credit ratings, specific credit events associated with individual issuers as well as the credit ratings of any financial guarantor. The Company considers its intent for selling the security and whether it is more likely than not the Company will be able to hold the security until the recovery of any credit losses and unrealized losses. Charges against the allowance for credit losses occur when a security with credit losses is sold or the Company no longer intends to hold that security.
Equity Securities
Marketable equity securities are traded on active exchanges and are measured at fair value. The realized and unrealized gains (losses) are recognized in investment income.
Marketable securities at September 30, 2024 and December 31, 2023 consisted of the following:
|
|
|
|
|
UNREALIZED |
|
|
UNREALIZED |
|
|
FAIR |
|
||||
At September 30, 2024 |
|
COST |
|
|
GAINS |
|
|
LOSSES |
|
|
VALUE |
|
||||
Marketable debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. tax-exempt securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. taxable municipal / non-U.S. provincial bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
- 11 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
|
|
|
|
|
UNREALIZED |
|
|
UNREALIZED |
|
|
FAIR |
|
||||
At December 31, 2023 |
|
COST |
|
|
GAINS |
|
|
LOSSES |
|
|
VALUE |
|
||||
Marketable debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. tax-exempt securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. taxable municipal / non-U.S. provincial bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Amortization, accretion, interest and dividend income and realized gains and losses are included in investment income. The cost of securities sold is based on the specific identification method. Gross realized gains were $
Net unrealized gains on marketable equity securities were $
Marketable debt securities with continuous unrealized losses and their related fair values were as follows:
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
LESS THAN |
|
|
TWELVE MONTHS |
|
|
LESS THAN |
|
|
TWELVE MONTHS |
|
||||
|
|
TWELVE MONTHS |
|
|
OR GREATER |
|
|
TWELVE MONTHS |
|
|
OR GREATER |
|
||||
Fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unrealized losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The unrealized losses on marketable debt securities above were due to higher yields on certain securities. The Company did not identify any indicators of a credit loss in its assessments. Accordingly,
Contractual maturities of marketable debt securities at September 30, 2024 were as follows:
|
|
AMORTIZED |
|
|
FAIR |
|
||
|
|
COST |
|
|
VALUE |
|
||
Within one year |
|
$ |
|
|
$ |
|
||
One to five years |
|
|
|
|
|
|
||
Six to ten years |
|
|
|
|
|
|
||
More than ten years |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
- 12 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
NOTE D - Inventories
|
|
September 30 |
|
|
December 31 |
|
||
|
|
2024 |
|
|
2023 |
|
||
Finished products |
|
$ |
|
|
$ |
|
||
Work in process and raw materials |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
NOTE E - Finance and Other Receivables
Finance and other receivables include the following:
|
|
September 30 |
|
|
December 31 |
|
||
|
|
2024 |
|
|
2023 |
|
||
Loans |
|
$ |
|
|
$ |
|
||
Finance leases |
|
|
|
|
|
|
||
Dealer wholesale financing |
|
|
|
|
|
|
||
Operating lease receivables and other |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less allowance for losses: |
|
|
|
|
|
|
||
Loans and leases |
|
|
( |
) |
|
|
( |
) |
Dealer wholesale financing |
|
|
( |
) |
|
|
( |
) |
Operating lease receivables and other |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
||
Included in Finance and other receivables, net on the Consolidated Balance Sheets is accrued interest receivable (net of allowance for credit losses) of $
Allowance for Credit Losses
The Company continuously monitors the payment performance of its finance receivables. For large retail finance customers and dealers with wholesale financing, the Company regularly reviews their financial statements and makes site visits and phone contact as appropriate. If the Company becomes aware of circumstances that could cause those customers or dealers to face financial difficulty, whether or not they are past due, the customers are placed on a watch list.
The Company modifies loans and finance leases in the normal course of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification.
When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms. The Company does not typically grant credit modifications for customers that do not meet minimum underwriting standards since the Company normally repossesses the financed equipment in these circumstances.
On average, commercial and other modifications extended contractual terms by approximately
- 13 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The Company has developed a systematic methodology for determining the allowance for credit losses for its two portfolio segments, retail and wholesale. The retail segment consists of retail loans and sales-type finance leases, net of unearned interest. The wholesale segment consists of truck inventory financing loans to dealers that are collateralized by trucks and other collateral. The wholesale segment generally has less risk than the retail segment. Wholesale receivables generally are shorter in duration than retail receivables, and the Company requires periodic reporting of the wholesale dealer’s financial condition, conducts periodic audits of the trucks being financed and in many cases, obtains guarantees or other security such as dealership assets. In determining the allowance for credit losses, retail loans and finance leases are evaluated together since they relate to a similar customer base, their contractual terms require regular payment of principal and interest, generally over to
The Company individually evaluates certain finance receivables for expected credit losses. Finance receivables that are evaluated individually consist of all wholesale accounts and certain large retail accounts with past due balances or otherwise determined to be at a higher risk of loss. In general, finance receivables that are 90 days past due are placed on non-accrual status. Finance receivables on non-accrual status which have been performing for 90 consecutive days are placed on accrual status if it is deemed probable that the Company will collect all principal and interest payments.
Individually evaluated receivables on non-accrual status are generally considered collateral dependent. Large balance retail and all wholesale receivables on non-accrual status are individually evaluated to determine the appropriate reserve for losses. Generally, the determination of reserves for large balance receivables on non-accrual status considers the fair value of the associated collateral. When the underlying collateral fair value exceeds the Company’s amortized cost basis, no reserve is recorded. Small balance receivables on non-accrual status with similar risk characteristics are evaluated as a separate pool to determine the appropriate reserve for losses using the historical loss information discussed below.
The Company evaluates finance receivables that are not individually evaluated and share similar risk characteristics on a collective basis and determines the general allowance for credit losses for both retail and wholesale receivables based on historical loss information, using past due account data, current market conditions, and expected changes in future macroeconomic conditions that affect collectability. Historical credit loss data provides relevant information of expected credit losses. The historical information used includes assumptions regarding the likelihood of collecting current and past due accounts, repossession rates, and the recovery rate on the underlying collateral based on used truck values and other pledged collateral or recourse.
The Company has developed a range of loss estimates for each of its country portfolios based on historical experience, taking into account loss frequency and severity in both strong and weak truck market conditions. A projection is made of the range of estimated credit losses inherent in the portfolio from which an amount is determined based on current market conditions and other factors impacting the creditworthiness of the Company’s borrowers and their ability to repay. Adjustments to historical loss information are made for changes in forecasted economic conditions that are specific to the industry and markets in which the Company conducts business. The Company utilizes economic forecasts from third-party sources and determines expected losses based on historical experience under similar market conditions. After determining the appropriate level of the allowance for credit losses, a provision for losses on finance receivables is charged to income as necessary to reflect management’s estimate of expected credit losses, net of recoveries, inherent in the portfolio.
In determining the fair value of the collateral, the Company uses a pricing matrix and categorizes the fair value as Level 2 in the hierarchy of fair value measurement. The pricing matrix is reviewed quarterly and updated as appropriate. The pricing matrix considers the make, model and year of the equipment as well as recent sales prices of comparable equipment sold individually, which is the lowest unit of account, through wholesale channels to the Company’s dealers (principal market). The fair value of the collateral also considers the overall condition of the equipment.
Accounts are charged off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible, which generally occurs upon repossession of the collateral. Typically the timing between the repossession and charge-off is not significant. In cases where repossession is delayed (e.g., for legal proceedings), the Company records a partial charge-off. The charge-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost basis.
- 14 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
For the following credit quality disclosures, finance receivables are classified into two portfolio segments, wholesale and retail. The retail portfolio is further segmented into dealer retail and customer retail. The dealer wholesale segment consists of truck inventory financing to PACCAR dealers. The dealer retail segment consists of loans and leases to participating dealers and franchises that use the proceeds to fund customers’ acquisition of commercial vehicles and related equipment. The customer retail segment consists of loans and leases directly to customers for the acquisition of commercial vehicles and related equipment. Customer retail receivables are further segregated between fleet and owner/operator classes. The fleet class consists of customer retail accounts operating five or more trucks. All other customer retail accounts are considered owner/operator. These two classes have similar measurement attributes, risk characteristics and common methods to monitor and assess credit risk.
The allowance for credit losses is summarized as follows:
|
|
2024 |
|
|||||||||||||||||
|
|
DEALER |
|
|
CUSTOMER |
|
|
|
|
|
|
|
||||||||
|
|
WHOLESALE |
|
|
RETAIL |
|
|
RETAIL |
|
|
OTHER* |
|
|
TOTAL |
|
|||||
Balance at January 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Provision for losses |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Charge-offs |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Currency translation and other |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
2023 |
|
|||||||||||||||||
|
|
DEALER |
|
|
CUSTOMER |
|
|
|
|
|
|
|
||||||||
|
|
WHOLESALE |
|
|
RETAIL |
|
|
RETAIL |
|
|
OTHER* |
|
|
TOTAL |
|
|||||
Balance at January 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Provision for losses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Charge-offs |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Currency translation and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at September 30 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
*
Credit Quality
The Company’s customers are principally concentrated in the transportation industry in North America, Europe, Australia and Brasil. The Company’s portfolio assets are diversified over a large number of customers and dealers with no single customer or dealer balances representing over
At the inception of each contract, the Company considers the credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit-rating agency ratings, loan-to-value ratios and other internal metrics. On an ongoing basis, the Company monitors credit quality based on past due status and collection experience as there is a meaningful correlation between the past due status of customers and the risk of loss.
The Company has three credit quality indicators: performing, watch and at-risk. Performing accounts pay in accordance with the contractual terms and are not considered high-risk. Watch accounts include accounts 31 to 90 days past due and large accounts that are performing but are considered to be high‑risk. Watch accounts are not collateral dependent. At-risk accounts are generally collateral dependent, including accounts over 90 days past due and other accounts on non-accrual status.
- 15 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The tables below summarize the amortized cost basis of the Company’s finance receivables within each credit quality indicator by year of origination and portfolio class and current period gross charge-offs of the Company’s finance receivables by year of origination and portfolio class.
|
REVOLVING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At September 30, 2024 |
LOANS |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
PRIOR |
|
|
TOTAL |
|
||||||||
Amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dealer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Wholesale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At-risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total dealer |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At-risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Owner/operator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At-risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total customer retail |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
REVOLVING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At September 30, 2024 |
LOANS |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
PRIOR |
|
|
TOTAL |
|
||||||||
Gross charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fleet |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Owner/operator |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
- 16 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
|
REVOLVING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At December 31, 2023 |
LOANS |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
PRIOR |
|
|
TOTAL |
|
||||||||
Amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dealer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Wholesale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||||
Retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total dealer |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At-risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Owner/operator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Performing |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Watch |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At-risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total customer retail |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
REVOLVING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
At December 31, 2023 |
LOANS |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
PRIOR |
|
|
TOTAL |
|
||||||||
Gross charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dealer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Wholesale: |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||||
Total dealer |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer retail: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fleet: |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Owner/operator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total customer retail |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
- 17 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The tables below summarize the Company’s finance receivables by aging category. In determining past due status, the Company considers the entire contractual account balance past due when any installment is over 30 days past due. Substantially all customer accounts that were greater than 30 days past due prior to credit modification became current upon modification for aging purposes.
|
|
DEALER |
|
|
CUSTOMER RETAIL |
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
OWNER/ |
|
|
|
|
|||||
At September 30, 2024 |
|
WHOLESALE |
|
|
RETAIL |
|
|
FLEET |
|
|
OPERATOR |
|
|
TOTAL |
|
|||||
Current and up to 30 days past due |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
31 – 60 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Greater than 60 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
DEALER |
|
|
CUSTOMER RETAIL |
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
OWNER/ |
|
|
|
|
|||||
At December 31, 2023 |
|
WHOLESALE |
|
|
RETAIL |
|
|
FLEET |
|
|
OPERATOR |
|
|
TOTAL |
|
|||||
Current and up to 30 days past due |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
31 – 60 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Greater than 60 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The amortized cost basis of finance receivables that are on non-accrual status was as follows:
|
|
DEALER |
|
CUSTOMER RETAIL |
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
OWNER/ |
|
|
|
|
||||
At September 30, 2024 |
|
WHOLESALE |
|
|
RETAIL |
|
FLEET |
|
|
OPERATOR |
|
|
TOTAL |
|
||||
Amortized cost basis with a specific reserve |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortized cost basis with no specific reserve |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
DEALER |
|
CUSTOMER RETAIL |
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
OWNER/ |
|
|
|
|
|||
At December 31, 2023 |
|
WHOLESALE |
|
RETAIL |
|
FLEET |
|
|
OPERATOR |
|
|
TOTAL |
|
|||
Amortized cost basis with a specific reserve |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Amortized cost basis with no specific reserve |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Interest income recognized on a cash basis for finance receivables that are on non-accrual status was as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Customer retail: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fleet |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Owner/operator |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
- 18 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Customers Experiencing Financial Difficulty
The Company modified $
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Customer retail: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fleet |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Owner/operator |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Annualized % of total retail porfolio |
|
|
% |
|
< |
|
% |
|
% |
|
|
% |
||||
The modifications granted customers additional time to pay. The financial effects of the term extensions added a weighted-average of
There were $
Repossessions
When the Company determines a customer is not likely to meet its contractual commitments, the Company repossesses the vehicles which serve as collateral for the loans, finance leases and equipment under operating leases. The Company records the vehicles as used truck inventory included in Financial Services Other assets on the Consolidated Balance Sheets. The balance of repossessed inventory at September 30, 2024 and December 31, 2023 was $
Proceeds from the sales of repossessed assets were $
NOTE F - Product Support Liabilities
Product support liabilities include estimated future payments related to product warranties and deferred revenues on optional extended warranties and R&M contracts.
- 19 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Changes in product support liabilities are summarized as follows:
WARRANTY RESERVES |
2024 |
|
|
2023 |
|
||
Balance at January 1 |
$ |
|
|
$ |
|
||
Cost accruals |
|
|
|
|
|
||
Payments |
|
( |
) |
|
|
( |
) |
Change in estimates for pre-existing warranties |
|
|
|
|
|
||
Currency translation and other |
|
|
|
|
( |
) |
|
Balance at September 30 |
$ |
|
|
$ |
|
||
DEFERRED REVENUES ON EXTENDED WARRANTIES AND R&M CONTRACTS |
|
2024 |
|
|
|
2023 |
|
Balance at January 1 |
$ |
|
|
$ |
|
||
Deferred revenues |
|
|
|
|
|
||
Revenues recognized |
|
( |
) |
|
|
( |
) |
Currency translation |
|
|
|
|
( |
) |
|
Balance at September 30 |
$ |
|
|
$ |
|
The Company expects to recognize approximately $
NOTE G - Stockholders’ Equity
Comprehensive Income
The components of comprehensive income are as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive (loss) income (OCI): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized (losses) gains on derivative contracts |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Tax effect |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Unrealized gains on marketable debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tax effect |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tax effect |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation gains (losses) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Net other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
- 20 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Accumulated Other Comprehensive Income (Loss)
The components of AOCI and the changes in AOCI, net of tax, included in the Consolidated Balance Sheets and the Consolidated Statements of Stockholders’ Equity consisted of the following:
Three Months Ended September 30, 2024 |
|
DERIVATIVE |
|
|
MARKETABLE |
|
|
PENSION |
|
|
FOREIGN |
|
|
TOTAL |
|
|||||
Balance at July 1, 2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Recorded into AOCI |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reclassified out of AOCI |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Net other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
||
Three Months Ended September 30, 2023 |
|
DERIVATIVE |
|
|
MARKETABLE |
|
|
PENSION |
|
|
FOREIGN |
|
|
TOTAL |
|
|||||
Balance at July 1, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Recorded into AOCI |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||
Reclassified out of AOCI |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Net other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Balance at September 30, 2023 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Nine Months Ended September 30, 2024 |
|
DERIVATIVE |
|
|
MARKETABLE |
|
|
PENSION |
|
|
FOREIGN |
|
|
TOTAL |
|
|||||
Balance at January 1, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Recorded into AOCI |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Reclassified out of AOCI |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Net other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Balance at September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
||
Nine Months Ended September 30, 2023 |
|
DERIVATIVE |
|
|
MARKETABLE |
|
|
PENSION |
|
|
FOREIGN |
|
|
TOTAL |
|
|||||
Balance at January 1, 2023 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Recorded into AOCI |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Reclassified out of AOCI |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Net other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at September 30, 2023 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
- 21 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Reclassifications out of AOCI were as follows:
|
|
|
|
Three Months Ended |
|
|||||
|
|
LINE ITEM IN THE CONSOLIDATED STATEMENTS OF |
|
September 30 |
|
|||||
AOCI COMPONENTS |
|
COMPREHENSIVE INCOME |
|
|
2024 |
|
|
|
2023 |
|
Unrealized losses (gains) on derivative contracts: |
|
|
|
|
|
|
|
|
||
Truck, Parts and Other |
|
|
|
|
|
|
|
|
||
Foreign-exchange contracts |
|
Net sales and revenues |
|
$ |
( |
) |
|
$ |
|
|
|
|
Cost of sales and revenues |
|
|
( |
) |
|
|
( |
) |
|
|
Interest and other (income) expenses, net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
||
Commodity contracts |
|
Cost of sales and revenues |
|
|
|
|
|
|
||
Financial Services |
|
|
|
|
|
|
|
|
||
Foreign-exchange contracts |
|
Interest and other borrowing expenses |
|
|
|
|
|
( |
) |
|
Interest-rate contracts |
|
Interest and other borrowing expenses |
|
|
|
|
|
( |
) |
|
|
|
Pre-tax expense increase (reduction) |
|
|
|
|
|
( |
) |
|
|
|
Tax (benefit) expense |
|
|
( |
) |
|
|
|
|
|
|
After-tax expense increase (reduction) |
|
|
|
|
|
( |
) |
|
Unrealized gains on marketable debt securities: |
|
|
|
|
|
|
|
|
||
Marketable debt securities |
|
Investment income |
|
|
( |
) |
|
|
( |
) |
|
|
Tax expense |
|
|
|
|
|
|
||
|
|
After-tax income increase |
|
|
( |
) |
|
|
( |
) |
Pension plans: |
|
|
|
|
|
|
|
|
||
Truck, Parts and Other |
|
|
|
|
|
|
|
|
||
Actuarial loss |
|
Interest and other (income) expenses, net |
|
|
|
|
|
|
||
Prior service costs |
|
Interest and other (income) expenses, net |
|
|
|
|
|
|
||
|
|
Pre-tax expense increase |
|
|
|
|
|
|
||
|
|
Tax benefit |
|
|
( |
) |
|
|
( |
) |
|
|
After-tax expense increase |
|
|
|
|
|
|
||
Total reclassifications out of AOCI |
|
|
|
$ |
|
|
$ |
( |
) |
|
- 22 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
|
|
|
|
Nine Months Ended |
|
|||||
|
|
LINE ITEM IN THE CONSOLIDATED STATEMENTS OF |
|
September 30 |
|
|||||
AOCI COMPONENTS |
|
COMPREHENSIVE INCOME |
|
|
2024 |
|
|
|
2023 |
|
Unrealized losses (gains) on derivative contracts: |
|
|
|
|
|
|
|
|
||
Truck, Parts and Other |
|
|
|
|
|
|
|
|
||
Foreign-exchange contracts |
|
Net sales and revenues |
|
$ |
( |
) |
|
$ |
|
|
|
|
Cost of sales and revenues |
|
|
( |
) |
|
|
|
|
|
|
Interest and other (income) expenses, net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
||
Commodity contracts |
|
Cost of sales and revenues |
|
|
|
|
|
|
||
Financial Services |
|
|
|
|
|
|
|
|
||
Foreign-exchange contracts |
|
Interest and other borrowing expenses |
|
|
( |
) |
|
|
( |
) |
Interest-rate contracts |
|
Interest and other borrowing expenses |
|
|
( |
) |
|
|
|
|
|
|
Pre-tax expense (reduction) increase |
|
|
( |
) |
|
|
|
|
|
|
Tax expense (benefit) |
|
|
|
|
|
( |
) |
|
|
|
After-tax expense (reduction) increase |
|
|
( |
) |
|
|
|
|
Unrealized gains on marketable debt securities: |
|
|
|
|
|
|
|
|
||
Marketable debt securities |
|
Investment income |
|
|
( |
) |
|
|
( |
) |
|
|
Tax expense |
|
|
|
|
|
|
||
|
|
After-tax income increase |
|
|
( |
) |
|
|
( |
) |
Pension plans: |
|
|
|
|
|
|
|
|
||
Truck, Parts and Other |
|
|
|
|
|
|
|
|
||
Actuarial loss |
|
Interest and other (income) expenses, net |
|
|
|
|
|
|
||
Prior service costs |
|
Interest and other (income) expenses, net |
|
|
|
|
|
|
||
|
|
Pre-tax expense increase |
|
|
|
|
|
|
||
|
|
Tax benefit |
|
|
( |
) |
|
|
( |
) |
|
|
After-tax expense increase |
|
|
|
|
|
|
||
Total reclassifications out of AOCI |
|
|
|
$ |
( |
) |
|
$ |
|
|
Stock Compensation Plans
Stock-based compensation expense was $
During the first nine months of 2024, the Company issued
Other Capital Stock Changes
During the first nine months of 2024, the Company acquired
NOTE H - Income Taxes
The effective tax rate for the third quarter of 2024 was
- 23 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
NOTE I - Segment Information
PACCAR operates in
Truck and Parts
The Truck segment includes the design and manufacture of high-quality, light-, medium- and heavy-duty commercial trucks and the Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles, both of which are sold through the same network of independent dealers. These segments derive a large proportion of their revenues and operating profits from operations in North America and Europe. The Truck segment incurs substantial costs to design, manufacture and sell trucks to its customers. The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery. To reflect the benefit the Parts segment receives from costs incurred by the Truck segment, certain expenses are allocated from the Truck segment to the Parts segment. The expenses allocated are based on a percentage of the average annual expenses for factory overhead, engineering, research and development and SG&A expenses for the preceding five years. The allocation is based on the ratio of the average parts direct margin dollars (net sales less material and labor costs) to the total truck and parts direct margin dollars for the previous five years. The Company believes such expenses have been allocated on a reasonable basis. Truck segment assets related to the indirect expense allocation are not allocated to the Parts segment.
Financial Services
The Financial Services segment derives its earnings primarily from financing or leasing of PACCAR products and services provided to truck customers and dealers. Revenues are primarily generated from operations in North America and Europe.
In Europe, the marketing of used trucks, including those units sold by the Truck segment subject to an RVG, is performed by the Financial Services segment. When a customer returns the truck at the end of the RVG contract, the Company’s Truck segment records a reduction in an RVG liability and the Company’s Financial Services segment records a used truck asset and revenue from the subsequent sale. Certain gains and losses from the sale of these used trucks are shared with the Truck segment.
- 24 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Other
Included in Other is the Company’s industrial winch manufacturing business as well as sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and a portion of corporate expense.
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net Sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
||||
Truck |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less intersegment |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
External customers |
|
|
|
|
|
|
|
|
|
|
|
||||
Parts |
|
|
|
|
|
|
|
|
|
|
|
||||
Less intersegment |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
External customers |
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income (loss) before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
||||
Truck |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Parts |
|
|
|
|
|
|
|
|
|
|
|
||||
Other* |
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income |
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
||||
Truck |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Parts |
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
* In the first nine months of 2023, Other includes a $
- 25 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
NOTE J - Derivative Financial Instruments
As part of its risk management strategy, the Company enters into derivative contracts to hedge against the risks of interest rates, foreign currency rates and commodity prices. Certain derivative instruments designated as fair value hedges, cash flow hedges or net investment hedges are subject to hedge accounting. Derivative instruments that are not subject to hedge accounting are held as derivatives not designated as hedged instruments. The Company’s policies prohibit the use of derivatives for speculation or trading. At the inception of each hedge relationship, the Company documents its risk management objectives, procedures and accounting treatment. All of the Company’s interest-rate, commodity as well as certain foreign-exchange contracts are transacted under International Swaps and Derivatives Association (ISDA) master agreements. Each agreement permits the net settlement of amounts owed in the event of default and certain other termination events. For derivative financial instruments, the Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreements and is not required to post or receive collateral.
Exposure limits and minimum credit ratings are used to minimize the risks of counterparty default. The Company’s maximum exposure to potential default of its derivative counterparties is limited to the asset position of its derivative portfolio. The asset position of the Company’s derivative portfolio was $
The Company assesses hedges at inception and on an ongoing basis to determine the designated derivatives are highly effective in offsetting changes in fair values or cash flow of the hedged items. Hedge accounting is discontinued prospectively when the Company determines a derivative financial instrument has ceased to be a highly effective hedge. Cash flows from derivative instruments are included in Operating activities in the Condensed Consolidated Statements of Cash Flows.
Interest-Rate Contracts: The Company enters into various interest-rate contracts, including interest-rate swaps and cross currency interest-rate swaps. Interest-rate swaps involve the exchange of fixed for floating rate or floating for fixed rate interest payments based on the contractual notional amounts in a single currency. Cross currency interest-rate swaps involve the exchange of notional amounts and interest payments in different currencies. The Company is exposed to interest-rate and exchange-rate risk caused by market volatility as a result of its borrowing activities. The objective of these contracts is to mitigate the fluctuations on earnings, cash flows and fair value of borrowings. Net amounts paid or received are reflected as adjustments to interest expense.
At September 30, 2024, the notional amount of the Company’s interest-rate contracts was $
Foreign-Exchange Contracts: The Company enters into foreign-exchange contracts to hedge certain anticipated transactions and assets and liabilities denominated in foreign currencies, particularly the Canadian dollar, the euro, the British pound, the Australian dollar, the Brazilian real and the Mexican peso. The objective is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The Company enters into foreign-exchange contracts as net investment hedges to reduce the foreign currency exposure from its investments in foreign subsidiaries. At September 30, 2024, the notional amount of the outstanding foreign-exchange contracts was $
Commodity Contracts: The Company enters into commodity forward contracts to hedge the prices of certain commodities used in the production of trucks. The objective is to reduce the fluctuation in earnings and cash flows associated with adverse movement in commodity prices. At September 30, 2024, the notional amount of the outstanding commodity contracts was $
- 26 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The following table presents the balance sheet classification, fair value, gross and pro forma net amounts of derivative financial instruments:
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
ASSETS |
|
|
LIABILITIES |
|
|
ASSETS |
|
|
LIABILITIES |
|
||||
Derivatives designated under hedge accounting: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest-rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other assets |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
Deferred taxes and other liabilities |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Foreign-exchange contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck, Parts and Other: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts payable, accrued expenses and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred taxes and other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck, Parts and Other: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts payable, accrued expenses and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign-exchange contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck, Parts and Other: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
Accounts payable, accrued expenses and other |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred taxes and other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gross amounts recognized in Balance Sheets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less amounts not offset in financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck, Parts and Other: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign-exchange contracts |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Commodity contracts |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest-rate contracts |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
- 27 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The following table presents the amount of loss (gain) from derivative financial instruments recorded in the Consolidated Statements of Comprehensive Income:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
September 30, 2024 |
|
September 30, 2024 |
||||||||||||||
|
INTEREST- |
|
|
FOREIGN- |
|
|
|
INTEREST- |
|
|
FOREIGN- |
|
|
||||
|
RATE |
|
|
EXCHANGE |
|
|
|
RATE |
|
|
EXCHANGE |
|
|
||||
Truck, Parts and Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales and revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
( |
) |
|
||
Cost of sales and revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
||
Derivatives not designated as hedging instruments |
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
||
Interest and other (income) expenses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment hedges |
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
||
Derivatives not designated as hedging instruments |
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
||
|
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
( |
) |
|
||
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other borrowing expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
$ |
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
||
Fair value hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|||
Total |
$ |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
September 30, 2023 |
|
September 30, 2023 |
||||||||||||||
|
INTEREST- |
|
|
FOREIGN- |
|
|
|
INTEREST- |
|
|
FOREIGN- |
|
|
||||
|
RATE |
|
|
EXCHANGE |
|
|
|
RATE |
|
|
EXCHANGE |
|
|
||||
Truck, Parts and Other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales and revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
Cost of sales and revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|||
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|||
Interest and other (income) expenses, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment hedges |
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
||
Derivatives not designated as hedging instruments |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|||
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
||||
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other borrowing expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
|
Fair value hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
|
|
||
Total |
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
$ |
|
|
|||
The loss from commodity contracts recorded in Cost of sales and revenues was $
- 28 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Fair Value Hedges
Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged.
|
|
|
|
|
|
September 30 |
|
|
December 31 |
|
||
|
|
|
|
|
|
2024 |
|
|
2023 |
|
||
Financial Services |
|
|
|
|
|
|
||||||
: |
|
|
|
|
|
|
|
|
|
|
||
Carrying amount of the hedged liabilities |
|
|
|
|
|
$ |
|
|
$ |
|
||
Cumulative basis adjustment included in the carrying amount |
|
|
|
|
|
|
( |
) |
|
|
|
|
The above table excludes the cumulative basis adjustments on discontinued hedge relationships of $
Cash Flow Hedges
Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in AOCI. Amounts in AOCI are reclassified into net income in the same period in which the hedged transaction affects earnings. The Company elected to exclude the forward premium component (excluded component) on some foreign-exchange cash flow hedges and amortize the excluded component over the life of the derivative instruments. The amortization of the excluded component is recognized in Interest and other (income) expenses, net in Truck, Parts and Other segment and Interest and other borrowing expenses in Financial Services segment in the Consolidated Statements of Comprehensive Income. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is
The following table presents the pre-tax effects of (loss) gain on cash flow hedges recognized in other comprehensive income (loss) (OCI):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, 2024 |
|
|
September 30, 2024 |
|
||||||||||||||||||
|
|
INTEREST- |
|
|
FOREIGN- |
|
|
|
|
|
INTEREST- |
|
|
FOREIGN- |
|
|
|
|
||||||
|
|
RATE |
|
|
EXCHANGE |
|
|
COMMODITY |
|
|
RATE |
|
|
EXCHANGE |
|
|
COMMODITY |
|
||||||
(Loss) gain recognized in OCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Truck, Parts and Other |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
|
|
$ |
( |
) |
||||
Financial Services |
|
$ |
( |
) |
|
|
( |
) |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, 2023 |
|
|
September 30, 2023 |
|
||||||||||||||||||
|
|
INTEREST- |
|
|
FOREIGN- |
|
|
|
|
|
INTEREST- |
|
|
FOREIGN- |
|
|
|
|
||||||
|
|
RATE |
|
|
EXCHANGE |
|
|
COMMODITY |
|
|
RATE |
|
|
EXCHANGE |
|
|
COMMODITY |
|
||||||
Gain (loss) recognized in OCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Truck, Parts and Other |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Financial Services |
|
$ |
|
|
|
|
|
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|||||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
- 29 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
The amount of (loss) gain reclassified out of AOCI into net income based on the probability that the original forecasted transactions would not occur was
Net Investment Hedges
Changes in the fair value of derivatives designated as net investment hedges are recorded in AOCI as an adjustment to the Cumulative Translation Adjustment (CTA). At September 30, 2024, the notional amount of the outstanding net investment hedges was $
NOTE K - Fair Value Measurements
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs to valuation techniques used to measure fair value are either observable or unobservable. These inputs have been categorized into the fair value hierarchy described below.
Level 1 – Valuations are based on quoted prices that the Company has the ability to obtain in actively traded markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market or exchange traded market, valuation of these instruments does not require a significant degree of judgment.
Level 2 – Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 – Valuations are based on model-based techniques for which some or all of the assumptions are obtained from indirect market information that is significant to the overall fair value measurement and which require a significant degree of management judgment.
The Company uses the following methods and assumptions to measure fair value for assets and liabilities subject to recurring fair value measurements.
Marketable Debt Securities: The Company’s marketable debt securities consist of municipal bonds, government obligations, investment-grade corporate obligations, commercial paper, asset-backed securities and term deposits. The fair value of U.S. government obligations is determined using the market approach and is based on quoted prices in active markets and are categorized as Level 1.
The fair value of non-U.S. government bonds, municipal bonds, corporate bonds, asset-backed securities, commercial paper and term deposits is determined using the market approach and is primarily based on matrix pricing as a practical expedient which does not rely exclusively on quoted prices for a specific security. Significant inputs used to determine fair value include interest rates, yield curves, credit rating of the security and other observable market information and are categorized as Level 2.
Marketable Equity Securities: The Company’s equity securities are traded on active exchanges and are classified as Level 1.
Derivative Financial Instruments: The Company’s derivative contracts consist of interest-rate swaps, cross currency swaps, foreign currency exchange and commodity contracts. These derivative contracts are traded over the counter, and their fair value is determined using industry standard valuation models, which are based on the income approach (i.e., discounted cash flows). The significant observable inputs into the valuation models include interest rates, yield curves, currency exchange rates, credit default swap spreads, forward rates and commodity prices and are categorized as Level 2.
- 30 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
Assets and Liabilities Subject to Recurring Fair Value Measurement
The Company’s assets and liabilities subject to recurring fair value measurements are either Level 1 or Level 2 as follows:
At September 30, 2024 |
|
LEVEL 1 |
|
|
LEVEL 2 |
|
|
TOTAL |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|||
Marketable debt securities |
|
|
|
|
|
|
|
|
|
|||
U.S. tax-exempt securities |
|
|
|
|
$ |
|
|
$ |
|
|||
U.S. taxable municipal / non-U.S. provincial bonds |
|
|
|
|
|
|
|
|
|
|||
U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|||
U.S. government securities |
|
$ |
|
|
|
|
|
|
|
|||
Non-U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|||
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|||
Other debt securities |
|
|
|
|
|
|
|
|
|
|||
Total marketable debt securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Marketable equity securities |
|
$ |
|
|
|
|
|
$ |
|
|||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Derivatives |
|
|
|
|
|
|
|
|
|
|||
Cross currency swaps |
|
|
|
|
$ |
|
|
$ |
|
|||
Interest-rate swaps |
|
|
|
|
|
|
|
|
|
|||
Foreign-exchange contracts |
|
|
|
|
|
|
|
|
|
|||
Commodity contracts |
|
|
|
|
|
|
|
|
|
|||
Total derivative assets |
|
|
|
|
$ |
|
|
$ |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|||
Derivatives |
|
|
|
|
|
|
|
|
|
|||
Cross currency swaps |
|
|
|
|
$ |
|
|
$ |
|
|||
Interest-rate swaps |
|
|
|
|
|
|
|
|
|
|||
Foreign-exchange contracts |
|
|
|
|
|
|
|
|
|
|||
Commodity contracts |
|
|
|
|
|
|
|
|
|
|||
Total derivative liabilities |
|
|
|
|
$ |
|
|
$ |
|
|||
- 31 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
At December 31, 2023 |
|
LEVEL 1 |
|
|
LEVEL 2 |
|
|
TOTAL |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|||
Marketable debt securities |
|
|
|
|
|
|
|
|
|
|||
U.S. tax-exempt securities |
|
|
|
|
$ |
|
|
$ |
|
|||
U.S. taxable municipal / non-U.S. provincial bonds |
|
|
|
|
|
|
|
|
|
|||
U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|||
U.S. government securities |
|
$ |
|
|
|
|
|
|
|
|||
Non-U.S. corporate securities |
|
|
|
|
|
|
|
|
|
|||
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|||
Other debt securities |
|
|
|
|
|
|
|
|
|
|||
Total marketable debt securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Marketable equity securities |
|
$ |
|
|
|
|
|
$ |
|
|||
Total marketable securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Derivatives |
|
|
|
|
|
|
|
|
|
|||
Cross currency swaps |
|
|
|
|
$ |
|
|
$ |
|
|||
Interest-rate swaps |
|
|
|
|
|
|
|
|
|
|||
Foreign-exchange contracts |
|
|
|
|
|
|
|
|
|
|||
Commodity contracts |
|
|
|
|
|
|
|
|
|
|||
Total derivative assets |
|
|
|
|
$ |
|
|
$ |
|
|||
Liabilities: |
|
|
|
|
|
|
|
|
|
|||
Derivatives |
|
|
|
|
|
|
|
|
|
|||
Cross currency swaps |
|
|
|
|
$ |
|
|
$ |
|
|||
Interest-rate swaps |
|
|
|
|
|
|
|
|
|
|||
Foreign-exchange contracts |
|
|
|
|
|
|
|
|
|
|||
Commodity contracts |
|
|
|
|
|
|
|
|
|
|||
Total derivative liabilities |
|
|
|
|
$ |
|
|
$ |
|
|||
Fair Value Disclosure of Other Financial Instruments
For financial instruments that are not recognized at fair value, the Company uses the following methods and assumptions to determine the fair value. These instruments are categorized as Level 2, except cash which is categorized as Level 1 and fixed rate loans which are categorized as Level 3.
Cash and Cash Equivalents: Carrying amounts approximate fair value.
Financial Services Net Receivables: For floating-rate loans, floating-rate wholesale financing and operating lease and other trade receivables, carrying values approximate fair values. For fixed rate loans, fair values are estimated using the income approach by discounting cash flows to their present value based on assumptions regarding the credit and market risks to approximate current rates for comparable loans. Finance lease receivables and related allowance for credit losses have been excluded from the accompanying table.
Debt: The carrying amounts of Financial Services commercial paper, variable rate bank loans and variable rate term notes approximate fair value. For fixed rate debt, fair values are estimated using the income approach by discounting cash flows to their present value based on current rates for comparable debt.
The Company’s estimate of fair value for fixed rate loans and debt that are not carried at fair value was as follows:
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
CARRYING |
|
|
FAIR |
|
|
CARRYING |
|
|
FAIR |
|
||||
|
|
AMOUNT |
|
|
VALUE |
|
|
AMOUNT |
|
|
VALUE |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services fixed rate loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial Services fixed rate debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
- 32 -
Notes to Consolidated Financial Statements (Unaudited) |
(Millions, Except Share Amounts) |
N
The Company has several defined benefit pension plans, which cover a majority of its employees.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest on projected benefit obligation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recognized actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net pension expense (income) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
The components of net pension expense other than service cost are included in Interest and other (income) expenses, net on the Consolidated Statements of Comprehensive Income.
During the three and nine months ended September 30, 2024, the Company contributed $
NOTE M – Commitments and Contingencies
On July 19, 2016, the European Commission (EC) concluded its investigation of all major European truck manufacturers and reached a settlement with DAF Trucks N.V., DAF Trucks Deutschland GmbH and PACCAR Inc (collectively “the Company”). Following the settlement, certain EC-related claims and lawsuits have been filed in various jurisdictions primarily in Europe against all major European truck manufacturers including the Company and certain subsidiaries. These claims and lawsuits include a number of collective proceedings, including class actions in the United Kingdom (U.K.) and Israel, alleging EC-related claims and seeking monetary damages. In certain jurisdictions, additional claimants may bring EC-related claims and lawsuits against the Company or its subsidiaries.
The legal proceedings are moving through the court systems. Several European courts have issued judgments; some have been favorable while others have been unfavorable and are being appealed. In the U.K., one class action has been certified by the lower court and the proceeding remains in its preliminary stages. The Company believes it has meritorious defenses to all of the pending legal claims. Since early 2023, the Company has been settling with selected claimants. In the first quarter 2023, the Company recorded a non-recurring pre-tax charge of $
PACCAR is also a defendant in various other legal proceedings and, in addition, there are various other contingent liabilities arising in the normal course of business. After consultation with legal counsel, management does not anticipate that disposition of these various other proceedings and contingent liabilities will have a material effect on the consolidated financial statements.
- 33 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW:
PACCAR is a global technology company whose Truck segment includes the design and manufacture of high-quality light-, medium- and heavy-duty commercial trucks. In North America, trucks are sold under the Kenworth and Peterbilt nameplates, in Europe, under the DAF nameplate and in Australia and South America, under the Kenworth and DAF nameplates. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Company’s Financial Services segment derives its earnings primarily from financing or leasing PACCAR products in North America, Europe, Australia and South America. The Company’s Other business includes the manufacturing and marketing of industrial winches.
Third Quarter Financial Highlights:
First Nine Months Financial Highlights:
PACCAR Parts opened its new 240,000 square-foot Parts Distribution Center (PDC) in Massbach, Germany. This PDC expedites parts delivery to dealers and customers in the region. PACCAR’s 20 PDCs support more than 2,000 DAF, Kenworth and Peterbilt dealer sales, parts and service locations, and over 300 TRP stores.
The PACCAR Financial Services (PFS) group of companies has operations covering four continents and 26 countries. The global breadth of PFS and its rigorous credit application process support a portfolio of loans and leases with total assets of $22.48 billion. PFS issued $3.25 billion in medium-term notes during the first nine months of 2024 to support new business volume and repay maturing debt.
- 34 -
Truck Outlook
Truck industry heavy-duty retail sales in the U.S. and Canada in 2024 are expected to be 250,000 to 270,000 units compared to 297,000 in 2023. Estimates for the U.S. and Canada truck industry heavy-duty retail sales in 2025 are in the range of 250,000 to 280,000 units. In Europe, 2024 truck industry registrations for over 16-tonne vehicles are expected to be 290,000 to 310,000 units compared to 343,300 in 2023. The European truck registrations in the above 16-tonne truck market for 2025 are projected to be in a range of 270,000 to 300,000 units. In South America, heavy-duty truck industry registrations in 2024 are projected to be 110,000 to 120,000 units compared to 105,000 in 2023, and in a similar range for 2025.
Parts Outlook
In 2024, PACCAR Parts sales are expected to increase 3-5% compared to 2023, reflecting stable demand. In 2025, PACCAR Parts sales could increase 3-5% from 2024 levels, depending on the economic conditions.
Financial Services Outlook
In 2024, average earning assets are expected to increase 8-11% compared to 2023. The used truck market has normalized in North America, but remains soft in Europe, which is reflected in PFS’ quarterly results this year. If freight transportation conditions decline due to a weaker economy, then past due accounts, truck repossessions and credit losses would likely increase from the current levels and new business volume would likely decline. In 2025, average earning assets are expected to be comparable to 2024.
Capital Investments and R&D Outlook
PACCAR’s excellent long-term profits, strong balance sheet and consistent focus on quality have enabled the Company to invest $8.4 billion in new and expanded facilities, innovative products and new technologies during the past decade. Capital investments in 2024 are expected to be $760 to $800 million and R&D is expected to be $450 to $470 million. In 2025, capital investments are projected to be $700 to $800 million and R&D is expected to be $480 to $530 million. PACCAR is investing in additional global engine manufacturing capacity, and in the construction of a new engine remanufacturing facility that will be located in Columbus, Mississippi. Truck factory investments include the expansion at Kenworth Chillicothe, Ohio, PACCAR Mexico, and the DAF electric truck assembly plant in Eindhoven, Netherlands. The Company expects to invest $600 to $900 million in its battery joint venture, Amplify Cell Technologies, over the next few years.
See the Forward-Looking Statements section of Management’s Discussion and Analysis for factors that may affect these outlooks.
- 35 -
RESULTS OF OPERATIONS:
The Company’s results of operations for the three and nine months ended September 30, 2024 and 2023 are presented below.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
($ in millions, except per share amounts) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck |
|
$ |
6,027.0 |
|
|
$ |
6,636.4 |
|
|
$ |
19,145.8 |
|
|
$ |
19,877.7 |
|
Parts |
|
|
1,657.6 |
|
|
|
1,582.2 |
|
|
|
4,997.8 |
|
|
|
4,804.1 |
|
Other |
|
|
19.2 |
|
|
|
13.7 |
|
|
|
57.5 |
|
|
|
41.9 |
|
Truck, Parts and Other |
|
|
7,703.8 |
|
|
|
8,232.3 |
|
|
|
24,201.1 |
|
|
|
24,723.7 |
|
Financial Services |
|
|
536.1 |
|
|
|
464.1 |
|
|
|
1,555.2 |
|
|
|
1,327.1 |
|
|
|
$ |
8,239.9 |
|
|
$ |
8,696.4 |
|
|
$ |
25,756.3 |
|
|
$ |
26,050.8 |
|
Income before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Truck |
|
$ |
630.8 |
|
|
$ |
960.9 |
|
|
$ |
2,349.7 |
|
|
$ |
2,803.5 |
|
Parts |
|
|
406.7 |
|
|
|
412.3 |
|
|
|
1,276.3 |
|
|
|
1,270.2 |
|
Other* |
|
|
3.6 |
|
|
|
1.6 |
|
|
|
4.0 |
|
|
|
(616.6 |
) |
Truck, Parts and Other |
|
|
1,041.1 |
|
|
|
1,374.8 |
|
|
|
3,630.0 |
|
|
|
3,457.1 |
|
Financial Services |
|
|
106.5 |
|
|
|
133.8 |
|
|
|
331.6 |
|
|
|
427.3 |
|
Investment income |
|
|
108.7 |
|
|
|
80.8 |
|
|
|
290.0 |
|
|
|
192.5 |
|
Income taxes |
|
|
(284.2 |
) |
|
|
(360.9 |
) |
|
|
(961.6 |
) |
|
|
(893.4 |
) |
Net income |
|
$ |
972.1 |
|
|
$ |
1,228.5 |
|
|
$ |
3,290.0 |
|
|
$ |
3,183.5 |
|
Diluted earnings per share |
|
$ |
1.85 |
|
|
$ |
2.34 |
|
|
$ |
6.25 |
|
|
$ |
6.07 |
|
After-tax return on revenues |
|
|
11.8 |
% |
|
|
14.1 |
% |
|
|
12.8 |
% |
|
|
12.2 |
% |
* In 2023, Other includes a $600.0 million non-recurring charge related to civil litigation in Europe (EC-related claims) in the first quarter 2023.
The following provides an analysis of the results of operations for the Company’s three reportable segments - Truck, Parts and Financial Services. Where possible, the Company has quantified the impact of factors identified in the following discussion and analysis. In cases where it is not possible to quantify the impact of factors, the Company lists them in estimated order of importance. Factors for which the Company is unable to specifically quantify the impact include market demand, fuel prices, freight tonnage and economic conditions affecting the Company’s results of operations.
2024 Compared to 2023:
Truck
The Company’s Truck segment accounted for 73% of revenues in the third quarter and 74% for first nine months of 2024, respectively, compared to 76% in both the third quarter and first nine months of 2023.
The Company’s new truck deliveries are summarized below:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
||
U.S. and Canada |
|
|
25,900 |
|
|
|
27,500 |
|
|
|
(6 |
) |
|
|
84,100 |
|
|
|
81,000 |
|
|
|
4 |
|
Europe |
|
|
10,000 |
|
|
|
14,500 |
|
|
|
(31 |
) |
|
|
33,100 |
|
|
|
48,300 |
|
|
|
(31 |
) |
Mexico, South America, Australia and other |
|
|
9,000 |
|
|
|
8,100 |
|
|
|
11 |
|
|
|
24,200 |
|
|
|
23,800 |
|
|
|
2 |
|
Total units |
|
|
44,900 |
|
|
|
50,100 |
|
|
|
(10 |
) |
|
|
141,400 |
|
|
|
153,100 |
|
|
|
(8 |
) |
Worldwide new truck deliveries decreased in the third quarter and first nine months of 2024 compared to the same periods of 2023, primarily due to lower deliveries in Europe.
Market share data discussed below is provided by third-party sources and is measured by either retail sales or registrations for the Company’s dealer network as a percentage of total retail sales or registrations depending on the geographic market. In the U.S. and Canada, market share is based on retail sales. In Europe, market share is based primarily on registrations.
- 36 -
In the first nine months of 2024, industry retail sales in the heavy-duty market in the U.S. and Canada were 198,600 units compared to 225,200 units in the same period of 2023. The Company’s heavy-duty truck retail market share was 31.1% in the first nine months of 2024 compared to 28.4% in the first nine months of 2023. The medium-duty market was 80,800 units in the first nine months of 2024 compared to 78,400 units in the same period of 2023. The Company’s medium-duty market share was 17.2% in the first nine months of 2024 compared to 13.5% in the first nine months of 2023.
The over 16‑tonne truck market in Europe in the first nine months of 2024 was 239,800 units compared to 263,100 units in the first nine months of 2023. DAF over 16‑tonne market share was 14.0% in the first nine months of 2024 compared to 15.9% in the same period of 2023. The 6 to 16‑tonne market in the first nine months of 2024 was 38,900 units compared to 35,800 units in the same period of 2023. DAF market share in the 6 to 16-tonne market in the first nine months of 2024 was 9.1% compared to 9.0% in the same period of 2023.
The over 16-tonne truck market in Brasil in the first nine months of 2024 was 71,500 units compared to 59,500 units in the same period of 2023. DAF Brasil market share for the first nine months of 2024 was 10.0% compared to 9.9% in the same period in 2023.
The Company’s worldwide truck net sales and revenues are summarized below:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
||
Truck net sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. and Canada |
|
$ |
3,669.3 |
|
|
$ |
4,006.8 |
|
|
|
(8 |
) |
|
$ |
12,136.2 |
|
|
$ |
11,715.0 |
|
|
|
4 |
|
Europe |
|
|
1,123.6 |
|
|
|
1,558.8 |
|
|
|
(28 |
) |
|
|
3,699.3 |
|
|
|
5,155.7 |
|
|
|
(28 |
) |
Mexico, South America, Australia and other |
|
|
1,234.1 |
|
|
|
1,070.8 |
|
|
|
15 |
|
|
|
3,310.3 |
|
|
|
3,007.0 |
|
|
|
10 |
|
|
|
$ |
6,027.0 |
|
|
$ |
6,636.4 |
|
|
|
(9 |
) |
|
$ |
19,145.8 |
|
|
$ |
19,877.7 |
|
|
|
(4 |
) |
Truck income before income taxes |
|
$ |
630.8 |
|
|
$ |
960.9 |
|
|
|
(34 |
) |
|
$ |
2,349.7 |
|
|
$ |
2,803.5 |
|
|
|
(16 |
) |
Pre-tax return on revenues |
|
|
10.5 |
% |
|
|
14.5 |
% |
|
|
|
|
|
12.3 |
% |
|
|
14.1 |
% |
|
|
|
||
The Company’s worldwide truck net sales and revenues in the third quarter decreased to $6.03 billion in 2024 from $6.64 billion in 2023, primarily due to lower truck unit deliveries in Europe and the U.S. and Canada. Revenues for the first nine months decreased to $19.15 billion in 2024 from $19.88 billion in 2023, primarily due to lower truck deliveries in Europe, partially offset by higher truck deliveries and average sales prices in the U.S. and Canada.
In the third quarter and first nine months of 2024, Truck segment income before taxes and pretax return on revenues decreased primarily due to lower truck unit deliveries in Europe. The decrease was partially offset by higher truck unit deliveries in Mexico, South America, Australia and other for the third quarter, and by higher truck unit deliveries in the U.S. and Canada for the first nine months of 2024, respectively.
The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the three months ended September 30, 2024 and 2023 are as follows:
|
|
NET |
|
|
COST OF |
|
|
|
|
|||
|
|
SALES AND |
|
|
SALES AND |
|
|
GROSS |
|
|||
($ in millions) |
|
REVENUES |
|
|
REVENUES |
|
|
MARGIN |
|
|||
Three Months Ended September 30, 2023 |
|
$ |
6,636.4 |
|
|
$ |
5,521.5 |
|
|
$ |
1,114.9 |
|
(Decrease) increase |
|
|
|
|
|
|
|
|
|
|||
Truck sales volume |
|
|
(578.2 |
) |
|
|
(456.1 |
) |
|
|
(122.1 |
) |
Average truck sales prices |
|
|
(29.5 |
) |
|
|
|
|
|
(29.5 |
) |
|
Average material, labor and other direct costs |
|
|
|
|
|
174.5 |
|
|
|
(174.5 |
) |
|
Factory overhead and other indirect costs |
|
|
|
|
|
(14.3 |
) |
|
|
14.3 |
|
|
Extended warranties, operating leases and other |
|
|
17.7 |
|
|
|
33.1 |
|
|
|
(15.4 |
) |
Currency translation |
|
|
(19.4 |
) |
|
|
(12.7 |
) |
|
|
(6.7 |
) |
Total decrease |
|
|
(609.4 |
) |
|
|
(275.5 |
) |
|
|
(333.9 |
) |
Three Months Ended September 30, 2024 |
|
$ |
6,027.0 |
|
|
$ |
5,246.0 |
|
|
$ |
781.0 |
|
- 37 -
The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the nine months ended September 30, 2024 and 2023 are as follows:
|
|
NET |
|
|
COST OF |
|
|
|
|
|||
|
|
SALES AND |
|
|
SALES AND |
|
|
GROSS |
|
|||
($ in millions) |
|
REVENUES |
|
|
REVENUES |
|
|
MARGIN |
|
|||
Nine Months Ended September 30, 2023 |
|
$ |
19,877.7 |
|
|
$ |
16,630.4 |
|
|
$ |
3,247.3 |
|
(Decrease) increase |
|
|
|
|
|
|
|
|
|
|||
Truck sales volume |
|
|
(950.8 |
) |
|
|
(770.7 |
) |
|
|
(180.1 |
) |
Average truck sales prices |
|
|
194.2 |
|
|
|
|
|
|
194.2 |
|
|
Average material, labor and other direct costs |
|
|
|
|
|
398.2 |
|
|
|
(398.2 |
) |
|
Factory overhead and other indirect costs |
|
|
|
|
|
35.8 |
|
|
|
(35.8 |
) |
|
Extended warranties, operating leases and other |
|
|
59.9 |
|
|
|
100.6 |
|
|
|
(40.7 |
) |
Currency translation |
|
|
(35.2 |
) |
|
|
(37.7 |
) |
|
|
2.5 |
|
Total decrease |
|
|
(731.9 |
) |
|
|
(273.8 |
) |
|
|
(458.1 |
) |
Nine Months Ended September 30, 2024 |
|
$ |
19,145.8 |
|
|
$ |
16,356.6 |
|
|
$ |
2,789.2 |
|
Truck selling, general and administrative (SG&A) expense decreased in the third quarter of 2024 to $61.9 million from $71.5 million in 2023, primarily due to lower salaries and related expenses and professional expenses. For the first nine months of 2024, Truck SG&A decreased to $183.3 million from $206.6 million in 2023, primarily due to lower professional expenses.
As a percentage of sales, Truck SG&A was 1.0% for both the third quarter and first nine months of 2024, compared to 1.1% and 1.0% in the third quarter and first nine months of 2023, respectively.
- 38 -
Parts
The Company’s Parts segment accounted for 20% of revenues in the third quarter and first nine months of 2024, compared to 19% for both the third quarter and first nine months of 2023.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
||
Parts net sales and revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. and Canada |
|
$ |
1,129.2 |
|
|
$ |
1,099.8 |
|
|
|
3 |
|
|
$ |
3,419.1 |
|
|
$ |
3,348.2 |
|
|
|
2 |
|
Europe |
|
|
345.5 |
|
|
|
325.1 |
|
|
|
6 |
|
|
|
1,052.9 |
|
|
|
1,001.5 |
|
|
|
5 |
|
Mexico, South America, Australia and other |
|
|
182.9 |
|
|
|
157.3 |
|
|
|
16 |
|
|
|
525.8 |
|
|
|
454.4 |
|
|
|
16 |
|
|
|
$ |
1,657.6 |
|
|
$ |
1,582.2 |
|
|
|
5 |
|
|
$ |
4,997.8 |
|
|
$ |
4,804.1 |
|
|
|
4 |
|
Parts income before income taxes |
|
$ |
406.7 |
|
|
$ |
412.3 |
|
|
|
(1 |
) |
|
$ |
1,276.3 |
|
|
$ |
1,270.2 |
|
|
|
|
|
Pre-tax return on revenues |
|
|
24.5 |
% |
|
|
26.1 |
% |
|
|
|
|
|
25.5 |
% |
|
|
26.4 |
% |
|
|
|
||
The Company’s worldwide parts net sales and revenues for the third quarter increased to $1.66 billion in 2024 from $1.58 billion in 2023. For the first nine months, worldwide parts net sales and revenues increased to $5.00 billion in 2024 from $4.80 billion in 2023. The increase in both periods was primarily due to higher sales in all markets.
The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the three months ended September 30, 2024 and 2023 are as follows:
|
|
NET |
|
|
COST OF |
|
|
|
|
|||
|
|
SALES AND |
|
|
SALES AND |
|
|
GROSS |
|
|||
($ in millions) |
|
REVENUES |
|
|
REVENUES |
|
|
MARGIN |
|
|||
Three Months Ended September 30, 2023 |
|
$ |
1,582.2 |
|
|
$ |
1,083.1 |
|
|
$ |
499.1 |
|
Increase (decrease) |
|
|
|
|
|
|
|
|
|
|||
Aftermarket parts volume |
|
|
26.7 |
|
|
|
29.5 |
|
|
|
(2.8 |
) |
Average aftermarket parts sales prices |
|
|
45.4 |
|
|
|
|
|
|
45.4 |
|
|
Average aftermarket parts direct costs |
|
|
|
|
|
40.6 |
|
|
|
(40.6 |
) |
|
Warehouse and other indirect costs |
|
|
|
|
|
4.8 |
|
|
|
(4.8 |
) |
|
Currency translation |
|
|
3.3 |
|
|
|
1.2 |
|
|
|
2.1 |
|
Total increase (decrease) |
|
|
75.4 |
|
|
|
76.1 |
|
|
|
(.7 |
) |
Three Months Ended September 30, 2024 |
|
$ |
1,657.6 |
|
|
$ |
1,159.2 |
|
|
$ |
498.4 |
|
- 39 -
The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the nine months ended September 30, 2024 and 2023 are as follows:
|
|
NET |
|
|
COST OF |
|
|
|
|
|||
|
|
SALES AND |
|
|
SALES AND |
|
|
GROSS |
|
|||
($ in millions) |
|
REVENUES |
|
|
REVENUES |
|
|
MARGIN |
|
|||
Nine Months Ended September 30, 2023 |
|
$ |
4,804.1 |
|
|
$ |
3,278.4 |
|
|
$ |
1,525.7 |
|
Increase (decrease) |
|
|
|
|
|
|
|
|
|
|||
Aftermarket parts volume |
|
|
55.8 |
|
|
|
44.9 |
|
|
|
10.9 |
|
Average aftermarket parts sales prices |
|
|
133.2 |
|
|
|
|
|
|
133.2 |
|
|
Average aftermarket parts direct costs |
|
|
|
|
|
116.7 |
|
|
|
(116.7 |
) |
|
Warehouse and other indirect costs |
|
|
|
|
|
11.1 |
|
|
|
(11.1 |
) |
|
Currency translation |
|
|
4.7 |
|
|
|
(.4 |
) |
|
|
5.1 |
|
Total increase |
|
|
193.7 |
|
|
|
172.3 |
|
|
|
21.4 |
|
Nine Months Ended September 30, 2024 |
|
$ |
4,997.8 |
|
|
$ |
3,450.7 |
|
|
$ |
1,547.1 |
|
Parts SG&A expense increased in the third quarter of 2024 to $62.5 million from $61.4 million in 2023, and for the first nine months, Parts SG&A increased to $186.4 million in 2024 from $178.6 million in 2023. The increase in both periods was primarily due to higher salaries and related expenses, partially offset by lower sales and marketing costs and professional fees.
As a percentage of sales, Parts SG&A was 3.8% and 3.7% in the third quarter and first nine months of 2024, respectively, compared to 3.9% and 3.7% in the third quarter and first nine months of 2023, respectively.
- 40 -
Financial Services
The Company’s Financial Services segment accounted for 7% of revenues in the third quarter and 6% in the first nine months of 2024, compared to 5% in both the third quarter and first nine months of 2023.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
|
|
2024 |
|
|
|
2023 |
|
|
% CHANGE |
|
||
New loan and lease volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. and Canada |
|
$ |
1,079.0 |
|
|
$ |
1,032.7 |
|
|
|
4 |
|
|
$ |
2,973.7 |
|
|
$ |
2,699.6 |
|
|
|
10 |
|
Europe |
|
|
336.7 |
|
|
|
368.6 |
|
|
|
(9 |
) |
|
|
881.0 |
|
|
|
1,136.9 |
|
|
|
(23 |
) |
Mexico, Australia, Brasil and other |
|
|
595.9 |
|
|
|
500.3 |
|
|
|
19 |
|
|
|
1,592.2 |
|
|
|
1,407.6 |
|
|
|
13 |
|
|
|
$ |
2,011.6 |
|
|
$ |
1,901.6 |
|
|
|
6 |
|
|
$ |
5,446.9 |
|
|
$ |
5,244.1 |
|
|
|
4 |
|
New loan and lease volume by product: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans and finance leases |
|
$ |
1,811.1 |
|
|
$ |
1,737.3 |
|
|
|
4 |
|
|
$ |
4,794.0 |
|
|
$ |
4,768.6 |
|
|
|
1 |
|
Equipment on operating lease |
|
|
200.5 |
|
|
|
164.3 |
|
|
|
22 |
|
|
|
652.9 |
|
|
|
475.5 |
|
|
|
37 |
|
|
|
$ |
2,011.6 |
|
|
$ |
1,901.6 |
|
|
|
6 |
|
|
$ |
5,446.9 |
|
|
$ |
5,244.1 |
|
|
|
4 |
|
New loan and lease unit volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans and finance leases |
|
|
13,110 |
|
|
|
12,120 |
|
|
|
8 |
|
|
|
33,510 |
|
|
|
34,670 |
|
|
|
(3 |
) |
Equipment on operating lease |
|
|
1,720 |
|
|
|
1,690 |
|
|
|
2 |
|
|
|
5,310 |
|
|
|
5,220 |
|
|
|
2 |
|
|
|
|
14,830 |
|
|
|
13,810 |
|
|
|
7 |
|
|
|
38,820 |
|
|
|
39,890 |
|
|
|
(3 |
) |
Average earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. and Canada |
|
$ |
11,621.0 |
|
|
$ |
9,644.9 |
|
|
|
20 |
|
|
$ |
10,974.1 |
|
|
$ |
9,268.7 |
|
|
|
18 |
|
Europe |
|
|
4,084.0 |
|
|
|
4,445.6 |
|
|
|
(8 |
) |
|
|
4,260.3 |
|
|
|
4,432.2 |
|
|
|
(4 |
) |
Mexico, Australia, Brasil and other |
|
|
4,595.3 |
|
|
|
3,803.2 |
|
|
|
21 |
|
|
|
4,443.8 |
|
|
|
3,447.8 |
|
|
|
29 |
|
|
|
$ |
20,300.3 |
|
|
$ |
17,893.7 |
|
|
|
13 |
|
|
$ |
19,678.2 |
|
|
$ |
17,148.7 |
|
|
|
15 |
|
Average earning assets by product: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans and finance leases |
|
$ |
13,908.0 |
|
|
$ |
12,250.9 |
|
|
|
14 |
|
|
$ |
13,568.5 |
|
|
$ |
11,613.5 |
|
|
|
17 |
|
Dealer wholesale financing |
|
|
4,225.2 |
|
|
|
3,148.6 |
|
|
|
34 |
|
|
|
3,903.4 |
|
|
|
2,933.6 |
|
|
|
33 |
|
Equipment on lease and other |
|
|
2,167.1 |
|
|
|
2,494.2 |
|
|
|
(13 |
) |
|
|
2,206.3 |
|
|
|
2,601.6 |
|
|
|
(15 |
) |
|
|
$ |
20,300.3 |
|
|
$ |
17,893.7 |
|
|
|
13 |
|
|
$ |
19,678.2 |
|
|
$ |
17,148.7 |
|
|
|
15 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. and Canada |
|
$ |
231.8 |
|
|
$ |
190.6 |
|
|
|
22 |
|
|
$ |
661.6 |
|
|
$ |
559.9 |
|
|
|
18 |
|
Europe |
|
|
146.0 |
|
|
|
138.2 |
|
|
|
6 |
|
|
|
430.9 |
|
|
|
413.2 |
|
|
|
4 |
|
Mexico, Australia, Brasil and other |
|
|
158.3 |
|
|
|
135.3 |
|
|
|
17 |
|
|
|
462.7 |
|
|
|
354.0 |
|
|
|
31 |
|
|
|
$ |
536.1 |
|
|
$ |
464.1 |
|
|
|
16 |
|
|
$ |
1,555.2 |
|
|
$ |
1,327.1 |
|
|
|
17 |
|
Revenues by product: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans and finance leases |
|
$ |
250.1 |
|
|
$ |
205.0 |
|
|
|
22 |
|
|
$ |
723.1 |
|
|
$ |
547.0 |
|
|
|
32 |
|
Dealer wholesale financing |
|
|
84.8 |
|
|
|
64.8 |
|
|
|
31 |
|
|
|
233.2 |
|
|
|
169.5 |
|
|
|
38 |
|
Equipment on lease and other |
|
|
201.2 |
|
|
|
194.3 |
|
|
|
4 |
|
|
|
598.9 |
|
|
|
610.6 |
|
|
|
(2 |
) |
|
|
$ |
536.1 |
|
|
$ |
464.1 |
|
|
|
16 |
|
|
$ |
1,555.2 |
|
|
$ |
1,327.1 |
|
|
|
17 |
|
Income before income taxes |
|
$ |
106.5 |
|
|
$ |
133.8 |
|
|
|
(20 |
) |
|
$ |
331.6 |
|
|
$ |
427.3 |
|
|
|
(22 |
) |
New loan and lease volume was $2.01 billion in the the third quarter of 2024 compared to $1.90 billion in the third quarter of 2023, and for the first nine months of 2024 was $5.45 billion compared to $5.24 billion in 2023. The increase in new loan and lease volume for both periods reflected higher finance market share of new PACCAR truck sales, primarily in the U.S. and Canada and Brasil. The increase in equipment on operating lease volume reflected higher market demand and a higher amount financed per truck in all major markets.
- 41 -
In the third quarter of 2024, PFS finance market share of new PACCAR truck sales was 26.9% compared to 23.7% in the third quarter of 2023. In the first nine months of 2024, PFS finance market share of new PACCAR truck sales was 24.2% compared to 23.4% in the first nine months of 2023.
In the third quarter of 2024, PFS revenues increased to $536.1 million from $464.1 million in 2023. In the first nine months of 2024, PFS revenues increased to $1.56 billion from $1.33 billion in 2023. The increase in both periods was primarily driven by portfolio growth in all markets except Europe.
PFS income before income taxes decreased to $106.5 million in the third quarter of 2024 from $133.8 million in the third quarter of 2023. In the first nine months of 2024, PFS income before income taxes decreased to $331.6 million from $427.3 million in 2023. The decrease in both periods was primarily due to lower operating lease margins, reflecting lower results on returned lease assets, partially offset by higher finance margins from a higher asset portfolio.
Included in Financial Services, Other assets on the Company’s Consolidated Balance Sheets are used trucks held for sale, net of impairments, of $401.7 million at September 30, 2024 and $309.8 million at December 31, 2023. These trucks are primarily units returned from matured operating leases in the ordinary course of business, and also include trucks acquired from repossessions or through acquisitions of used trucks in trades related to new truck sales and trucks returned from residual value guarantees (RVGs).
The Company recognized losses on used trucks, excluding repossessions, of $13.0 million in the third quarter of 2024 compared to gains of $4.3 million in the third quarter of 2023, including $9.7 million of losses on multiple unit transactions in the third quarter of 2024 compared to $3.2 million in the third quarter of 2023. Used truck losses related to repossessions, which are recognized as credit losses, were $2.0 million for the third quarter of 2024 and not significant for the third quarter of 2023.
The Company recognized losses on used trucks, excluding repossessions, of $37.5 million in the first nine months of 2024, compared to gains of $51.2 million in the first nine months of 2023, including losses on multiple unit transactions of $27.7 million in the first nine months of 2024 compared to $4.2 million in the first nine months of 2023. Used truck losses related to repossessions, which are recognized as credit losses, were $8.0 million for the first nine months of 2024 and $2.4 million first nine months of 2023.
The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the three months ended September 30, 2024 and 2023 are outlined below:
|
|
|
|
|
|
|
|
|
|
|||
($ in millions) |
|
INTEREST |
|
|
INTEREST |
|
|
FINANCE |
|
|||
Three Months Ended September 30, 2023 |
|
$ |
269.8 |
|
|
$ |
138.5 |
|
|
$ |
131.3 |
|
Increase (decrease) |
|
|
|
|
|
|
|
|
|
|||
Average finance receivables |
|
|
53.8 |
|
|
|
|
|
|
53.8 |
|
|
Average debt balances |
|
|
|
|
|
30.9 |
|
|
|
(30.9 |
) |
|
Yields |
|
|
20.0 |
|
|
|
|
|
|
20.0 |
|
|
Borrowing rates |
|
|
|
|
|
23.4 |
|
|
|
(23.4 |
) |
|
Currency translation and other |
|
|
(8.7 |
) |
|
|
(4.4 |
) |
|
|
(4.3 |
) |
Total increase |
|
|
65.1 |
|
|
|
49.9 |
|
|
|
15.2 |
|
Three Months Ended September 30, 2024 |
|
$ |
334.9 |
|
|
$ |
188.4 |
|
|
$ |
146.5 |
|
- 42 -
The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the nine months ended September 30, 2024 and 2023 are outlined below:
|
|
|
|
|
|
|
|
|
|
|||
($ in millions) |
|
INTEREST |
|
|
INTEREST |
|
|
FINANCE |
|
|||
Nine Months Ended September 30, 2023 |
|
$ |
716.5 |
|
|
$ |
347.8 |
|
|
$ |
368.7 |
|
Increase (decrease) |
|
|
|
|
|
|
|
|
|
|||
Average finance receivables |
|
|
163.8 |
|
|
|
|
|
|
163.8 |
|
|
Average debt balances |
|
|
|
|
|
83.5 |
|
|
|
(83.5 |
) |
|
Yields |
|
|
80.9 |
|
|
|
|
|
|
80.9 |
|
|
Borrowing rates |
|
|
|
|
|
93.1 |
|
|
|
(93.1 |
) |
|
Currency translation and other |
|
|
(4.9 |
) |
|
|
(3.5 |
) |
|
|
(1.4 |
) |
Total increase |
|
|
239.8 |
|
|
|
173.1 |
|
|
|
66.7 |
|
Nine Months Ended September 30, 2024 |
|
$ |
956.3 |
|
|
$ |
520.9 |
|
|
$ |
435.4 |
|
The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Operating lease and rental revenues |
|
$ |
168.4 |
|
|
$ |
184.1 |
|
|
$ |
513.4 |
|
|
$ |
574.9 |
|
Used truck sales |
|
|
25.0 |
|
|
|
3.1 |
|
|
|
63.1 |
|
|
|
15.5 |
|
Insurance, franchise and other revenues |
|
|
7.8 |
|
|
|
7.1 |
|
|
|
22.4 |
|
|
|
20.2 |
|
Operating lease, rental and other revenues |
|
$ |
201.2 |
|
|
$ |
194.3 |
|
|
$ |
598.9 |
|
|
$ |
610.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation of operating lease equipment |
|
$ |
132.5 |
|
|
$ |
122.2 |
|
|
$ |
407.8 |
|
|
$ |
363.0 |
|
Vehicle operating expenses |
|
|
16.4 |
|
|
|
20.0 |
|
|
|
51.0 |
|
|
|
44.2 |
|
Cost of used truck sales |
|
|
25.6 |
|
|
|
3.2 |
|
|
|
65.9 |
|
|
|
16.1 |
|
Insurance, franchise and other expenses |
|
|
2.1 |
|
|
|
1.5 |
|
|
|
5.8 |
|
|
|
3.7 |
|
Depreciation and other expenses |
|
$ |
176.6 |
|
|
$ |
146.9 |
|
|
$ |
530.5 |
|
|
$ |
427.0 |
|
- 43 -
The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the three months ended September 30, 2024 and 2023 are outlined below:
($ in millions) |
|
OPERATING |
|
|
DEPRECIATION |
|
|
LEASE |
|
|||
Three Months Ended September 30, 2023 |
|
$ |
194.3 |
|
|
$ |
146.9 |
|
|
$ |
47.4 |
|
Increase (decrease) |
|
|
|
|
|
|
|
|
|
|||
Used truck sales |
|
|
21.7 |
|
|
|
22.0 |
|
|
|
(.3 |
) |
Results on returned lease assets |
|
|
|
|
|
15.8 |
|
|
|
(15.8 |
) |
|
Average operating lease assets |
|
|
(31.9 |
) |
|
|
(26.8 |
) |
|
|
(5.1 |
) |
Revenue and cost per asset |
|
|
19.3 |
|
|
|
18.4 |
|
|
|
.9 |
|
Currency translation and other |
|
|
(2.2 |
) |
|
|
.3 |
|
|
|
(2.5 |
) |
Total increase (decrease) |
|
|
6.9 |
|
|
|
29.7 |
|
|
|
(22.8 |
) |
Three Months Ended September 30, 2024 |
|
$ |
201.2 |
|
|
$ |
176.6 |
|
|
$ |
24.6 |
|
The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the nine months ended September 30, 2024 and 2023 are outlined below:
|
|
|
|
|
|
|
|
|
|
|||
($ in millions) |
|
OPERATING |
|
|
DEPRECIATION |
|
|
LEASE |
|
|||
Nine Months Ended September 30, 2023 |
|
$ |
610.6 |
|
|
$ |
427.0 |
|
|
$ |
183.6 |
|
Increase (decrease) |
|
|
|
|
|
|
|
|
|
|||
Used truck sales |
|
|
47.4 |
|
|
|
49.5 |
|
|
|
(2.1 |
) |
Results on returned lease assets |
|
|
|
|
|
77.4 |
|
|
|
(77.4 |
) |
|
Average operating lease assets |
|
|
(118.9 |
) |
|
|
(107.5 |
) |
|
|
(11.4 |
) |
Revenue and cost per asset |
|
|
56.0 |
|
|
|
79.9 |
|
|
|
(23.9 |
) |
Currency translation and other |
|
|
3.8 |
|
|
|
4.2 |
|
|
|
(.4 |
) |
Total (decrease) increase |
|
|
(11.7 |
) |
|
|
103.5 |
|
|
|
(115.2 |
) |
Nine Months Ended September 30, 2024 |
|
$ |
598.9 |
|
|
$ |
530.5 |
|
|
$ |
68.4 |
|
- 44 -
Financial Services SG&A for the third quarter of 2024 increased to $42.2 million from $38.7 million in the third quarter of 2023. For the first nine months, Financial Services SG&A increased to $122.0 million in 2024 from $110.9 million in 2023. The increase in both periods was primarily due to higher salaries and related expenses and higher professional fees.
As an annualized percentage of average earning assets, Financial Services SG&A was .8% for both the third quarter and first nine months of 2024, and .9% for the same periods in 2023.
The following table summarizes the provision for losses on receivables and net charge-offs:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, 2024 |
|
|
September 30, 2024 |
|
||||||||||
($ in millions) |
|
PROVISION FOR |
|
|
NET |
|
|
PROVISION FOR |
|
|
NET |
|
||||
U.S. and Canada |
|
$ |
10.7 |
|
|
$ |
5.5 |
|
|
$ |
26.8 |
|
|
$ |
15.8 |
|
Europe |
|
|
7.3 |
|
|
|
6.1 |
|
|
|
12.6 |
|
|
|
11.1 |
|
Mexico, Australia, Brasil and other |
|
|
4.4 |
|
|
|
1.8 |
|
|
|
10.8 |
|
|
|
5.8 |
|
|
|
$ |
22.4 |
|
|
$ |
13.4 |
|
|
$ |
50.2 |
|
|
$ |
32.7 |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, 2023 |
|
|
September 30, 2023 |
|
||||||||||
($ in millions) |
|
PROVISION FOR |
|
|
NET |
|
|
PROVISION FOR |
|
|
NET |
|
||||
U.S. and Canada |
|
$ |
.9 |
|
|
$ |
1.1 |
|
|
$ |
2.0 |
|
|
$ |
3.0 |
|
Europe |
|
|
.5 |
|
|
|
.6 |
|
|
|
1.5 |
|
|
|
1.6 |
|
Mexico, Australia, Brasil and other |
|
|
4.8 |
|
|
|
3.7 |
|
|
|
10.6 |
|
|
|
7.0 |
|
|
|
$ |
6.2 |
|
|
$ |
5.4 |
|
|
$ |
14.1 |
|
|
$ |
11.6 |
|
The provision for losses on receivables was $22.4 million in the third quarter of 2024 compared to $6.2 million in 2023, and in the first nine months, the provision for losses on receivables was $50.2 million in 2024 compared to $14.1 million in 2023. The increase in provision for losses in the third quarter and first nine months of 2024 compared to 2023 was primarily driven by portfolio growth, an increase in the Company’s 30+ past due accounts and higher charge-offs in the U.S. and Canada and Europe. The increased charge-offs in the third quarter of 2024 included one large fleet customer in the U.S. and one large fleet customer in Europe. The increased charge-offs in the first nine months of 2024 included three large fleet customers in the U.S. and the same large fleet customer in Europe. The higher charge-offs in both periods also reflected higher average loss severity in all markets from lower used truck market values.
The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms.
- 45 -
The post-modification balances of accounts modified during the nine months ended September 30, 2024 and 2023 are summarized below:
|
|
2024 |
|
|
2023 |
|
||||||||||
($ in millions) |
|
AMORTIZED |
|
|
% OF TOTAL |
|
|
AMORTIZED |
|
|
% OF TOTAL |
|
||||
Commercial |
|
$ |
324.3 |
|
|
|
3.0 |
% |
|
$ |
134.5 |
|
|
|
1.4 |
% |
Insignificant delay |
|
|
167.5 |
|
|
|
1.6 |
% |
|
|
81.8 |
|
|
|
.9 |
% |
Credit |
|
|
189.0 |
|
|
|
1.7 |
% |
|
|
20.0 |
|
|
|
.2 |
% |
|
|
$ |
680.8 |
|
|
|
6.3 |
% |
|
$ |
236.3 |
|
|
|
2.5 |
% |
* Amortized cost basis immediately after modification as a percentage of ending retail portfolio, on an annualized basis.
Modification activity increased to $680.8 million in the first nine months of 2024 from $236.3 million in the same period of 2023. The increase in modifications for Commercial reasons primarily reflects higher volumes of refinancing, primarily in the U.S. The increase in both Insignificant delay modifications and Credit modifications reflect higher volumes of contract modifications in the U.S., Brasil and Europe.
The following table summarizes the Company’s 30+ days past due accounts:
|
|
September 30 |
|
|
December 31 |
|
|
September 30 |
|
|||
Percentage of retail loan and lease accounts 30+ days past due: |
|
|
|
|
|
|
|
|
|
|||
U.S. and Canada |
|
|
1.1 |
% |
|
|
.8 |
% |
|
|
.4 |
% |
Europe |
|
|
.9 |
% |
|
|
.5 |
% |
|
|
1.4 |
% |
Mexico, Australia, Brasil and other |
|
|
1.6 |
% |
|
|
1.9 |
% |
|
|
1.5 |
% |
Worldwide |
|
|
1.2 |
% |
|
|
1.0 |
% |
|
|
.8 |
% |
Accounts 30+ days past due was 1.2% at September 30, 2024 compared to 1.0% at December 31, 2023 and .8% at September 30, 2023. The increased percentage of past due accounts as of September 30, 2024 compared to December 31, 2023 is primarily due to two large fleet customers in the U.S. and Canada and two large fleet customers in Europe, partially offset by decreases in past due accounts in Mexico and Australia. The Company continues to focus on maintaining low past due balances.
When the Company modifies a 30+ days past due account, the customer is then generally considered current under the revised contractual terms. The Company modified $18.5 million of accounts worldwide during the third quarter of 2024, $35.0 million during the fourth quarter of 2023 and $21.5 million during the third quarter of 2023 that were 30+ days past due and became current at the time of modification. Had these accounts not been modified and continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been as follows:
|
|
September 30 |
|
|
December 31 |
|
|
September 30 |
|
|||
Pro forma percentage of retail loan and lease accounts 30+ days past due: |
|
|
|
|
|
|
|
|
|
|||
U.S. and Canada |
|
|
1.2 |
% |
|
|
.8 |
% |
|
|
.4 |
% |
Europe |
|
|
.9 |
% |
|
|
1.8 |
% |
|
|
1.4 |
% |
Mexico, Australia, Brasil and other |
|
|
2.0 |
% |
|
|
2.0 |
% |
|
|
2.1 |
% |
Worldwide |
|
|
1.3 |
% |
|
|
1.2 |
% |
|
|
.9 |
% |
Modifications of accounts in prior quarters that were more than 30 days past due at the time of modification are included in past dues if they were not performing under the modified terms at September 30, 2024, December 31, 2023 and September 30, 2023. The effect on the allowance for credit losses from such modifications was not significant at September 30, 2024, December 31, 2023 and September 30, 2023.
The Company’s annualized pre-tax return on average assets for Financial Services was 1.9% in the third quarter of 2024 compared to 2.7% in the same period of 2023. For the first nine months of 2024, annualized pre-tax return on average assets was 2.1% compared to 3.1% in 2023. The lower returns primarily reflect lower operating lease margin from lower results on returned lease assets.
- 46 -
Other
Other includes the winch business as well as sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and a portion of corporate expense. Other sales represent less than 1% of consolidated net sales and revenues for both the third quarter and first nine months of 2024 and 2023. Other SG&A increased to $19.9 million for the third quarter of 2024 from $10.7 million for the third quarter of 2023 and increased to $64.9 million for the first nine months of 2024 compared to $63.1 million for the same period of 2023. The increase in both periods was primarily due to higher salaries and related expenses.
For the third quarter of 2024, Other income before income taxes was $3.6 million compared to $1.6 million in 2023 primarily due to lower corporate expenses. For the first nine months of 2024, Other income before tax was $4.0 million compared to loss of $616.6 million in 2023, primarily due to the EC-related charge in the first quarter of 2023, which is discussed in Note M of the consolidated financial statements.
Investment income for the third quarter increased to $108.7 million in 2024 compared to $80.8 million in 2023. For the first nine months, investment income increased to $290.0 million in 2024 from $192.5 million in 2023. The increase in both periods is primarily driven higher investment balances as well as higher yields on investment due to higher market interest rates, primarily in the U.S. and Europe.
Income Taxes
The effective tax rate for the third quarter of 2024 was 22.6% compared to 22.7% for the third quarter of 2023. The effective tax rate for the first nine months of 2024 was 22.6% compared to 21.9% for the first nine months of 2023. Included in the first quarter of 2023 was the EC-related charge of $600.0 million, which lowered the effective tax rate. Excluding the EC charge and related tax benefits, the effective tax rate for the first nine months of 2023 was 22.4%.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30 |
|
|
September 30 |
|
||||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Domestic income before taxes |
|
$ |
786.9 |
|
|
$ |
1,026.5 |
|
|
$ |
2,783.1 |
|
|
$ |
2,858.0 |
|
Foreign income before taxes |
|
|
469.4 |
|
|
|
562.9 |
|
|
|
1,468.5 |
|
|
|
1,218.9 |
|
Total income before taxes |
|
$ |
1,256.3 |
|
|
$ |
1,589.4 |
|
|
$ |
4,251.6 |
|
|
$ |
4,076.9 |
|
Domestic pre-tax return on revenues |
|
|
16.9 |
% |
|
|
21.4 |
% |
|
|
18.8 |
% |
|
|
20.1 |
% |
Foreign pre-tax return on revenues |
|
|
13.1 |
% |
|
|
14.4 |
% |
|
|
13.4 |
% |
|
|
10.3 |
% |
Total pre-tax return on revenues |
|
|
15.2 |
% |
|
|
18.3 |
% |
|
|
16.5 |
% |
|
|
15.6 |
% |
For the third quarter and first nine months of 2024, domestic income before income taxes decreased primarily due to the lower Truck operation results. For the third quarter of 2024, foreign income before taxes decreased primarily due to lower Truck operation results in Europe. For the first nine months of 2024, foreign income before taxes increased as the first nine months of 2023 included the EC-related charge of $600.0 million which also reduced foreign pre-tax return on revenues in 2023. For the third quarter of 2024, total pre-tax return on revenues decreased reflecting lower returns in Truck and Parts operations. For the first nine months of 2024, total pre-tax return on revenues increased reflecting the EC-related charge in 2023.
LIQUIDITY AND CAPITAL RESOURCES:
|
September 30 |
|
|
December 31 |
|
||
($ in millions) |
|
2024 |
|
|
|
2023 |
|
Cash and cash equivalents |
$ |
6,849.2 |
|
|
$ |
7,181.7 |
|
Marketable securities |
|
2,510.7 |
|
|
|
1,822.6 |
|
|
$ |
9,359.9 |
|
|
$ |
9,004.3 |
|
The Company’s total cash and marketable securities at September 30, 2024 increased $355.6 million from the balances at December 31, 2023. Total cash and marketable securities are primarily intended to provide liquidity while preserving capital.
- 47 -
The change in cash and cash equivalents is summarized below:
($ in millions) |
|
|
|
|
|
||
Nine Months Ended September 30, |
|
2024 |
|
|
2023 |
|
|
Operating activities: |
|
|
|
|
|
||
Net income |
$ |
3,290.0 |
|
|
$ |
3,183.5 |
|
Net income items not affecting cash |
|
725.3 |
|
|
|
577.4 |
|
Changes in operating assets and liabilities, net |
|
(820.1 |
) |
|
|
(757.6 |
) |
Net cash provided by operating activities |
|
3,195.2 |
|
|
|
3,003.3 |
|
Net cash used in investing activities |
|
(2,755.3 |
) |
|
|
(1,931.1 |
) |
Net cash (used in) provided by financing activities |
|
(766.4 |
) |
|
|
159.5 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(6.0 |
) |
|
|
(16.3 |
) |
Net (decrease) increase in cash and cash equivalents |
|
(332.5 |
) |
|
|
1,215.4 |
|
Cash and cash equivalents at beginning of period |
|
7,181.7 |
|
|
|
4,690.9 |
|
Cash and cash equivalents at end of period |
$ |
6,849.2 |
|
|
$ |
5,906.3 |
|
Operating activities: Cash provided by operations increased by $191.9 million to $3,195.2 million in the first nine months of 2024 from $3,003.3 million in 2023. The increased operating cash flow reflects higher net income by $106.5 million and $147.9 million higher cash provided from net income items not affecting cash, primarily deferred income taxes and the provision for losses on financial services receivables, partially offset by higher cash usage from net changes in operating assets and liabilities of $62.5 million. The net changes in operating assets and liabilities are mainly due to decreases in accruals of $1,059.4 million, including the EC-related charge and product support liabilities, partially offset by lower increases in trade and other receivables of $481.4 million, lower cash outflow for inventories of $363.7 million, and lower increases in wholesale receivables on new trucks of $169.4 million in the Financial Services segment.
Investing activities: Cash used in investing activities increased by $824.2 million to $2,755.3 million in the first nine months of 2024 from $1,931.1 million in 2023. The increase in net cash used in investing activities reflects increased purchases of marketable securities, net of proceeds from sales and maturities, of $505.4 million, increased acquisitions of equipment for operating leases of $235.5 million and cash contributed to the battery manufacturing joint venture, Amplify Cell Technologies, of $125.8 million.
Financing activities: Cash used in financing activities was $766.4 million for the first nine months of 2024, $925.9 million higher than the $159.5 million provided in 2023. The increase reflects higher cash dividends and lower net borrowing activity. In the first nine months of 2024, the Company paid $2.13 billion in dividends compared to $1.38 billion in 2023, due to a higher year-end dividend paid in January 2024. Cash provided by borrowing activities was $1.32 billion in 2024, $172.9 million lower than the cash provided by borrowing activities of $1.50 billion in 2023.
Credit Lines and Other
The Company has line of credit arrangements of $5.30 billion, of which $4.73 billion were unused at September 30, 2024. Included in these arrangements are $4.00 billion of committed bank facilities, of which $1.50 billion expires in June 2025, $1.25 billion expires in June 2027 and $1.25 billion expires in June 2029. The Company intends to extend or replace these credit facilities on or before expiration to maintain facilities of similar amounts and duration. These credit facilities are maintained primarily to provide backup liquidity for commercial paper borrowings and maturing medium-term notes. There were no borrowings under the committed bank facilities for the nine months ended September 30, 2024.
On December 4, 2018, PACCAR’s Board of Directors approved the repurchase of up to $500.0 million of the Company’s outstanding common stock. As of September 30, 2024, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the first nine months of 2024.
Truck, Parts and Other
The Company provides funding for working capital, capital expenditures, R&D, dividends, stock repurchases and other business initiatives and commitments primarily from cash provided by operations. Management expects this method of funding to continue in the future.
- 48 -
Investments for manufacturing property, plant and equipment in the first nine months of 2024 were $562.8 million compared to $471.7 million for the same period of 2023. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $8.27 billion and have significantly increased the operating capacity and efficiency of its facilities and enhanced the quality and operating efficiency of the Company’s premium products.
In 2024, total capital investments for PACCAR are expected to be $760 to $800 million and R&D is expected to be $450 to $470 million. In 2025, capital investments are expected to be $700 to $800 million and R&D is expected to be $480 to $530 million. The Company is increasing its investment in advanced new trucks and powertrains, enhanced manufacturing capabilities and capacity, and aftermarket distribution capabilities and capacity.
Financial Services
The Company funds its financial services activities primarily from collections on existing finance receivables and borrowings in the capital markets. The primary sources of borrowings in the capital markets are commercial paper and medium-term notes issued in the public markets and, to a lesser extent, bank loans.
In November 2021, the Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), filed a shelf registration under the Securities Act of 1933. The total amount of medium-term notes outstanding for PFC as of September 30, 2024 was $7.15 billion. The registration expires in November 2024 and does not limit the principal amount of debt securities that may be issued during that period. The Company intends to file a new shelf registration in November.
As of September 30, 2024, the Company’s European finance subsidiary, PACCAR Financial Europe, had €599.7 million available for issuance under a €2.50 billion medium-term note program listed on the Euro MTF Market of the Luxembourg Stock Exchange. This program has been renewed through the filing of a new listing, which expires in July 2025.
In August 2021, PACCAR Financial Mexico registered a 10.00 billion Mexican peso program with the Comision Nacional Bancaria y de Valores to issue medium-term notes and commercial paper. The registration expires in August 2026 and limits the amount of commercial paper (up to one year) to 5.00 billion Mexican pesos. At September 30, 2024, 4.07 billion Mexican pesos were available for issuance.
In August 2018, the Company’s Australian subsidiary, PACCAR Financial Pty. Ltd. (PFPL Australia), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFPL Australia as of September 30, 2024 was 700.0 million Australian dollars.
In May 2021, the Company’s Canadian subsidiary, PACCAR Financial Ltd. (PFL Canada), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. There were no borrowings under this program as of September 30, 2024.
The Company’s Brazilian subsidiary, Banco PACCAR S.A., established a lending program in December 2021 with the local development bank, Banco Nacional de Desenvolvimento Economico e Social (BNDES) for qualified customers to receive preferential conditions and generally market interest rates. The program is limited to 2.51 billion Brazilian reais and has 1.05 billion Brazilian reais outstanding as of September 30, 2024. The Brazilian subsidiary also established a Letra Financeira (LF) program in May 2024 and the program does not limit the principal amount of debt securities that may be issued under the program. A total of 500.0 million Brazilian reais medium-term notes were outstanding as of September 30, 2024.
The Company believes its cash balances and investments, collections on existing finance receivables, committed bank facilities and current investment-grade credit ratings of A+/A1 will continue to provide it with sufficient resources and access to capital markets at competitive interest rates and therefore contribute to the Company maintaining its liquidity and financial stability. In the event of a decrease in the Company’s credit ratings or a disruption in the financial markets, the Company may not be able to refinance its maturing debt in the financial markets. In such circumstances, the Company would be exposed to liquidity risk to the degree that the timing of debt maturities differs from the timing of receivable collections from customers. The Company believes its various sources of liquidity, including committed bank facilities, would continue to provide it with sufficient funding resources to service its maturing debt obligations.
- 49 -
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:
This Form 10-Q includes “adjusted net income (non-GAAP)” and “adjusted net income per diluted share (non-GAAP)”, which are financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”), since they exclude a charge for EC-related claims. These measures differ from the most directly comparable measures calculated in accordance with GAAP and may not be comparable to similarly titled non-GAAP financial measures used by other companies.
Adjustment for the EC-related claims relates to a pre-tax charge of $600.0 million ($446.4 million after-tax) for estimable total costs recorded in Interest and other (income) expenses, net in the first quarter 2023.
Management utilizes these non-GAAP measures to evaluate the Company’s performance and believes these measures allow investors and management to evaluate operating trends by excluding a significant non-recurring charge that is not representative of underlying operating trends.
Reconciliations from the most directly comparable GAAP measures to adjusted net income (non-GAAP) and adjusted net income per diluted shares (non-GAAP) are as follows:
|
|
|
|
|
|
|
Nine Months Ended |
|
|
($ in millions, except per share amounts) |
|
September 30, 2023 |
|
|
Net income |
|
$ |
3,183.5 |
|
EC-related claims, net of taxes |
|
|
446.4 |
|
Adjusted net income (non-GAAP) |
|
$ |
3,629.9 |
|
Per diluted share |
|
|
|
|
Net income |
|
$ |
6.07 |
|
EC-related claims, net of taxes |
|
|
.85 |
|
Adjusted net income (non-GAAP) |
|
$ |
6.92 |
|
After-tax return on revenues |
|
|
12.2 |
% |
EC-related claims, net of taxes |
|
|
1.7 |
% |
After-tax adjusted return on revenues (non-GAAP) * |
|
|
13.9 |
% |
* Calculated using adjusted net income. |
|
|
|
|
- 50 -
FORWARD-LOOKING STATEMENTS:
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future results of operations or financial position and any other statement that does not relate to any historical or current fact. Such statements are based on currently available operating, financial and other information and are subject to risks and uncertainties that may affect actual results. Risks and uncertainties include, but are not limited to: a significant decline in industry sales; competitive pressures; reduced market share; reduced availability of or higher prices for fuel; increased safety, emissions, or other regulations or tariffs resulting in higher costs and/or sales restrictions; currency or commodity price fluctuations; lower used truck prices; insufficient or under-utilization of manufacturing capacity; supplier interruptions; insufficient liquidity in the capital markets; fluctuations in interest rates; changes in the levels of the Financial Services segment new business volume due to unit fluctuations in new PACCAR truck sales or reduced market shares; changes affecting the profitability of truck owners and operators; price changes impacting truck sales prices and residual values; insufficient supplier capacity or access to raw materials and components, including semiconductors; labor disruptions; shortages of commercial truck drivers; increased warranty costs; cybersecurity risks to the Company’s information technology systems; pandemics; climate-related risks; global conflicts; litigation, including European Commission (EC) settlement-related claims; or legislative and governmental regulations. A more detailed description of these and other risks is included under the headings Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2023 and in Part II, Item 1, “Legal Proceedings” and Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.
- 51 -
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in the Company’s market risk during the three months ended September 30, 2024. For additional information, refer to Item 7A as presented in the 2023 Annual Report on Form 10‑K.
ITEM 4. CONTROLS AND PROCEDURES
The Company’s management, with the participation of the Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
There have been no changes in the Company’s internal controls over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
- 52 -
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Refer to Note M – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements (Part I, Item 1) for discussion on litigation matters, which is incorporated by reference herein.
ITEM 1A. RISK FACTORS
For information regarding risk factors, refer to Part I, Item 1A as presented in the 2023 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors during the three months ended September 30, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
For Items 2(a) and (b), there was no reportable information for the three months ended September 30, 2024.
On December 4, 2018, PACCAR’s Board of Directors approved the repurchase of up to $500.0 million of the Company’s outstanding common stock. As of September 30, 2024, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the first nine months of 2024.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None of the Company’s directors or officers
- 53 -
ITEM 6. EXHIBITS
Any exhibits filed herewith are listed in the accompanying index to exhibits.
INDEX TO EXHIBITS
Exhibit Number |
|
Exhibit Description |
|
Form |
|
Date of First Filing |
|
Exhibit Number |
|
File Number |
||
(3) (i) |
|
|
|
Articles of Incorporation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amended and Restated Certificate of Incorporation of PACCAR Inc |
|
8-K |
|
May 4, 2018 |
|
3(i) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of PACCAR Inc |
|
8-K |
|
April 24, 2020 |
|
3(i) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of PACCAR Inc |
|
8-K |
|
April 29, 2022 |
|
3(i) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii) |
|
|
|
Bylaws: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K |
|
July 26, 2022 |
|
3(ii) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
|
|
Instruments defining the rights of security holders, including indentures**: |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
|
S-3 |
|
November 20, 2009 |
|
4.1 |
|
333-163273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
|
Forms of Medium-Term Note, Series P (PACCAR Financial Corp.) |
|
S-3 |
|
November 2, 2018 |
|
|
333-228141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Forms of Medium-Term Note, Series Q (PACCAR Financial Corp.) |
|
S-3 |
|
November 1, 2021 |
|
|
333-260663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) |
|
|
10-Q |
|
August 3, 2020 |
|
4(h) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) |
|
|
10-Q |
|
August 2, 2021 |
|
4(g) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) |
|
|
10-Q |
|
August 2, 2022 |
|
4(h) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) |
|
|
10-Q |
|
November 2, 2023 |
|
4(g) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** |
|
Pursuant to the Instructions to Exhibits, certain instruments defining the rights of holders of long-term debt securities of the Company and its wholly owned subsidiaries are not filed because the total amount of securities authorized under any such instrument does not exceed 10 percent of the Company’s total assets. The Company will file copies of such instruments upon request of the Commission. |
||||||||
|
|
|
|
|
||||||||
- 54 -
Exhibit Number |
|
Exhibit Description |
|
Form |
|
Date of First Filing |
|
Exhibit Number |
|
File Number |
||
|
|
(h) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
|
|
10-K |
|
February 19, 2020 |
|
4(j) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
|
|
|
Material Contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
PACCAR Inc Amended and Restated Supplemental Retirement Plan |
|
10-K |
|
February 27, 2009 |
|
10(a) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
|
|
10-Q |
|
May 10, 2012 |
|
10(b) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
Deferred Incentive Compensation Plan (Amended and Restated as of December 31, 2004) |
|
10-K |
|
February 27, 2006 |
|
10(b) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) |
|
|
10-Q |
|
May 2, 2024 |
|
10(d) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) |
|
Form of Deferred Restricted Stock Unit Grant Agreement for Non-Employee Directors |
|
10-Q |
|
July 31, 2024 |
|
10(e) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) |
|
Form of Restricted Stock Grant Agreement for Non-Employee Directors |
|
10-Q |
|
July 31, 2024 |
|
10(f) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) |
|
PACCAR Inc Senior Executive Yearly Incentive Compensation Plan |
|
10-K |
|
February 19, 2020 |
|
10(g) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h) |
|
|
10-K |
|
February 22, 2023 |
|
10(h) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
|
|
10-Q |
|
August 7, 2013 |
|
10(k) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(j) |
|
PACCAR Inc Long Term Incentive Plan, 2018 Form of Restricted Stock Award Agreement |
|
10-K |
|
February 21, 2019 |
|
10(m) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(k) |
|
PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Unit Agreement |
|
10-K |
|
February 21, 2019 |
|
10(n) |
|
001-14817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(l) |
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PACCAR Inc Savings Investment Plan, Amendment and Restatement effective September 1, 2016 |
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10-Q |
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November 4, 2016 |
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10(q) |
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001-14817 |
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(31) |
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Rule 13a-14(a)/15d-14(a) Certifications: |
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(a) |
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(b) |
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(32) |
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Section 1350 Certifications: |
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(101.INS) |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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(101.SCH) |
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Inline XBRL Taxonomy Extension Schema Document* |
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(104) |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)* |
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* |
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filed herewith |
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- 55 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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PACCAR Inc |
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(Registrant) |
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Date |
October 30, 2024 |
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By |
/s/ B. J. Poplawski |
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B. J. Poplawski |
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Vice President and Controller |
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(Authorized Officer and Chief Accounting Officer) |
- 56 -