Paccar Inc. · NASDAQ:PCAR
Paccar — Q3 2022 Earnings Presentation
54 slides from Paccar's earnings presentation, October 2022
Slide 1: October 2022
October 2022 Page 1
Slide 2: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements This presentation may contain statements that are forward looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. A summary of risks a
Slide 3: PACCAR: A Global Technology Company in Commercial Vehicles
PACCAR A Global Technology Company in Commercial Vehicles 2021 Revenues $23.5B 2021 Net Income $1.85B 2021 Avg Dividend Yield 3.2% 83 Years of Consecutive Profitability; Dividend Paid Every Year Since 1941 Truck and Other Aftermarket Parts $16.9B Revenues $4.9B Revenues Premium Quality Light, Medium
Slide 4: Our Culture
Our Culture PACCAR is a company with a great culture and a bright future. Our focus is on doing things in an ethical and disciplined manner. We make decisions utilizing conservative financial principles and common sense for the long- term benefit of our customers, employees and shareholders. Conserv
Slide 5: PACCAR business segments and brands
PACCAR’s business segments include Commercial Vehicles, Powertrain, Aftermarket Parts, Financial Services and Information Technology. PACCAR’s premium brands Kenworth, Peterbilt and DAF are the premier light, medium and heavy duty commercial trucks in their markets. Other brands include PACCAR Power
Slide 6: PACCAR's product investments deliver industry-leading performance
PACCAR’s product investments Our products reflect our core deliver industry-leading brand values of quality, performance and value to our innovation and technology customers October 2022 Page 6
Slide 7: New Kenworth T680
New Kenworth T680 Kenworth’s next generation T680 heavy truck features an enhanced aerodynamic exterior design, driver optimized technology, including a customizable 15” digital dash display, and 7% greater fuel economy October 2022 Page 7
Slide 8: New Peterbilt Model 579
New Peterbilt Model 579 Peterbilt’s new Model 579 Class 8 truck sets the standard for technology and driver comfort and delivers 7% greater fuel efficiency October 2022 Page 8
Slide 9: New Peterbilt and Kenworth Medium Duty
New Peterbilt and Kenworth Medium Duty The all new medium duty product line-up features an 8” wider cab with 3-person seating. Powered by the updated PACCAR PX engine and all-new PACCAR TX-8 automatic transmission. October 2022 Page 9
Slide 10: New DAF XD, XF, XG, XG+
New DAF XD, XF, XG, XG+ DAF is the first truck manufacturer in the industry to have taken full advantage of Europe’s new regulations governing truck design. The new trucks feature a new aerodynamic design, 10% greater fuel efficiency and larger interior space. October 2022 Page 10
Slide 11: Integrated PACCAR Powertrain
The integrated PACCAR Powertrain is the most advanced heavy-duty powertrain in the market. The PACCAR MX-13 and MX-11 engines are optimally integrated to the innovative PACCAR TX-12 automated transmission and the efficient DX-40 tandem drive axle to achieve exceptional performance and fuel economy.
Slide 12: PACCAR Truck Production
PACCAR Truck Production Over 1.5 Million Trucks Produced 2012 - 2021 PACCAR produced 162,700 trucks in 2021 Units 198.8 (000s) 189.1 200 Brasil 154.7 158.9 162.7 140.4 142.9 140.9 Australia 137.1 133.3 Mexico 150 Canada US 100 Europe 50 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 October 202
Slide 13: Excellent Financial Performance Throughout the Business Cycle
PACCAR Excellent Financial Performance Throughout the Business Cycle $ Billions Revenues $ Billions • Reputation for superior operational 28 28 excellence and premium-quality products 24 24 20 20 and services 16 16 12 12 8 8 • Long-term growth in revenues and net 4 4 income reflect increased market
Slide 14: Net Profit as % of Revenues
Net Profit as % of Revenues 12% 12% 9% 9% 6% 6% 3% 3% 0% 0% -3% -3% -6% -6% 12 13 14 15 16 17 18 19 20 21 9 Mo 22 PACCAR Volvo Daimler Truck Traton Iveco October 2022 Page 14
Slide 15: Best-in-Class Operating Efficiency: Inventory Turns
Best-in-Class Operating Efficiency Inventory Turns PACCAR’s inventory turns are the highest in the industry, a result of the PACCAR Production System, Lean Manufacturing and Six Sigma 24 24 20 20 16 16 12 12 8 8 4 4 0 0 12 13 14 15 16 17 18 19 20 21 PACCAR Volvo Daimler Truck Traton Iveco October 20
Slide 16: Best-in-Class Operating Efficiency: SG&A % of Sales
Best-in-Class Operating Efficiency SG&A % of Sales PACCAR’s SG&A as a percentage of sales is much lower than its peer group, reflecting strong financial discipline 16% 16% 12% 12% 8% 8% 4% 4% 0% 0% 12 13 14 15 16 17 18 19 20 21 PACCAR Volvo Daimler Truck Traton Iveco October 2022 Page 16
Slide 17: Net Income per Truck
Net Income per Truck • Net income per truck is PACCAR’s Truck Units $/Truck net income divided by total truck (000s) unit sales. 200 14,000 175 12,250 • Truck sales not only generate profit 150 10,500 from the sale, but also parts and 125 8,750 finance profit. This illustrates the strength of PACCAR
Slide 18: Best-in-Class Return on Invested Capital
Best-in-Class Return on Invested Capital PACCAR’s high profitability, strong working capital management and prudent investments resulted in best in class return on invested capital with an average of 20% over the last five years Average 2017 - 2021 24% 24% 20% 20% 16% 16% 12% 12% 8% 8% 4% 4% 0% 0% R
Slide 19: Capital Allocation Strategy
Capital Allocation Strategy • High ROI Capital Investments • Pay Regular Quarterly and Annual Dividend − Dividend paid every year since 1941 − Total dividends paid approximately 50% of net income for many years − Regular quarterly dividend 10-year annualized growth of 7% (as of 4Q21) • Share Buyback
Slide 20: Dividends Declared and Stock Repurchases
Dividends Declared and Stock Repurchases $ Millions CAGR = 12% $ Millions 1,500 1,500 1,200 1,200 900 900 600 600 300 300 0 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Dividends Stock Repurchased October 2022 Page 20
Slide 21: Excellent Dividend Yield
Excellent Dividend Yield Average Dividend Yield = 3.5% • PACCAR’s dividend yield 6% 6% reflects the total quarterly + annual dividends declared in 5% 5% the year, divided by the 4% 4% average stock price for the year 3% 3% • PACCAR’s dividend yield has 2% 2% averaged 3.5% over the last ten years 1%
Slide 22: Trucking Moves the Economy
Trucking Moves the Economy 74% of U.S. Freight is Moved by Truck Trucking is the lifeblood of the economy. In the U.S., the economy depends on trucks to deliver ten billion tons of virtually every commodity consumed - 74% of all the freight transported in 2020. 36.9 million commercial trucks, includ
Slide 23: >6t Global Truck Market
>6t Truck Market 2016 – 2.5 Million >6t Global Truck Market 2000000 China 2021 – 3.2 Million Europe Russia/CIS 1,570 1500000 355 319 62 99 1000000 962 500000 North America 0 331 356 Rest of Asia 277 277 254 India Africa & South America Middle East 277 220 125 125 98 187 Australia PACCAR Truck Assemb
Slide 24: >16t Truck Market Size
>16t Truck Market Size Units (000s) Units (000s) 2022 Market Forecast Estimate 350 350 U.S. and Canada 265,000 – 285,000 300 300 Europe 275,000 – 295,000 250 250 S. America 125,000 – 135,000 200 200 150 150 2023 Market Forecast Estimate 100 100 U.S. and Canada 260,000 – 300,000 50 50 Europe 260,000
Slide 25: October 2022 Page 25
October 2022 Page 25
Slide 26: PACCAR Strategy: Profitable Growth
PACCAR Strategy Quality Technology Innovation Brand Values Premium Products and Services Profitable Growth Profitable Market Share Growth Geographic Expansion October 2022 Page 26
Slide 27: Investing Throughout the Business Cycle
PACCAR Investing Throughout the Business Cycle Operating Cash Flow • Operating cash flow has averaged $2.7 billion for the last $ Billions $ Billions five years and has grown 6% annually over the last 20 3.0 3.0 2.5 2.5 years 2.0 2.0 • Strong operating cash flow enables PACCAR to invest in 1.5 1.5 g
Slide 28: Cumulative PACCAR MX Engines Produced
Cumulative PACCAR MX Engines Produced • The PACCAR MX-13 is the flagship of PACCAR’s engine line- # of Engines Cumulative PACCAR MX Engines Produced # of Engines up with over 580,000 engines produced in Europe and (000s) (000s) over 260,000 engines installed in North America and a growing presence i
Slide 29: Zero Emission Trucks
Zero Emission Trucks • Peterbilt, Kenworth and DAF lead the industry with nine battery electric vehicle models available for Peterbilt 220EV Peterbilt 579EV DAF LF Electric customers • PACCAR’s zero emission heavy- and medium-duty vehicles provide competitive total cost of ownership Peterbilt 520EV
Slide 30: Battery Charging Solutions
Battery Charging Solutions • PACCAR Parts has introduced new electric vehicle charging stations to support the global launch of electric vehicles • Compatible with Kenworth, Peterbilt and DAF electric trucks and other brands • Charging power from 20 kW up to 350 kW • PACCAR is collaborating with Fai
Slide 31: Autonomous Trucks
Autonomous Trucks • PACCAR has invested in a strategic partnership with Aurora to develop, test and commercialize autonomous Peterbilt and Kenworth trucks • PACCAR’s autonomous vehicle platform will be integrated with the Aurora self-driving technologies • PACCAR customers will benefit from the auto
Slide 32: PACCAR and Aurora Partner on Autonomous Truck Pilots
PACCAR and Aurora Partner on Autonomous Truck Pilots • PACCAR and Aurora have three customer trials underway with FedEx, Uber Freight and Werner Enterprises – each operating in Texas October 2022 Page 32
Slide 33: Connected Services
Connected Services Kenworth, Peterbilt and DAF are launching a new state-of-the-art global connected truck platform, PACCAR Connect. The system is highly configurable and consists of proprietary hardware and software that provides reliable data security, over-the-air software updates and advanced fl
Slide 34: PACCAR Innovation Center, Sunnyvale, CA
PACCAR Innovation Center, Sunnyvale, CA • PACCAR Innovation Center in Silicon Valley enhances PACCAR’s access to emerging technologies and talent from around the world • The Innovation Center collaborates with other PACCAR engineering teams to develop next generation technologies such as autonomous
Slide 35: PACCAR Global Embedded Services
PACCAR Global Embedded Services PACCAR has three embedded service technology centers located at Kenworth in Kirkland, WA; at DAF in Eindhoven, the Netherlands; and in Pune, India The centers will accelerate embedded software development and connected vehicle solutions to benefit customers’ operating
Slide 36: PACCAR Facility Investments
PACCAR Facility Investments DAF Factory, Ponta Grossa, Brasil DAF New Body, Cab & Trim Facility, Westerlo, Belgium PACCAR Engine Factories Kenworth New Cab Paint Facility, Chillicothe, OH
Slide 37: PACCAR Parts Strategy
PACCAR Parts Strategy PACCAR Parts achieved $4.94 billion in sales and $1.1 PACCAR Parts Sales $ Millions $ Millions billion in pretax profits in 2021. Over the last 20 years, 5,000 CAGR = 8% 5,000 PACCAR Parts has achieved a sales CAGR of 8% and 4,000 4,000 profit CAGR of 11%. 3,000 3,000 2,000 2,0
Slide 38: PACCAR Parts Distribution Centers and Dealers
PACCAR Parts Distribution Centers and Dealers 18 PDCs in 10 Countries; 2,300+ Dealer Locations PACCAR Distribution Centers Kenworth and Peterbilt Dealers DAF Dealers Kenworth/DAF Dealers October 2022 Page 38
Slide 39: PACCAR Global Dealer Network
PACCAR Global Dealer Network • Independent dealer network of 2,300+ dealer locations • Premium customer experience • Strong dealer profitability and expanded opportunities from PACCAR engines and TRP stores • Competitive flooring and retail financing provided by PACCAR Financial and PACCAR Leasing O
Slide 40: Growth in Kenworth and Peterbilt Dealer Locations
Growth in Kenworth and Peterbilt Dealer Locations U.S. and Canada Locations Locations 900 PACCAR MX-13 Introduced in 2010 900 Dealer Investments of $2.3 Billion since 2010 800 800 76% Growth in Dealer Locations 700 700 Drives Long-Term PACCAR Parts Growth 600 600 500 500 400 400 02 03 04 05 06 07 08
Slide 41: PACCAR Financial Services Strategy
PACCAR Financial Services Strategy • PACCAR Financial Services supports truck sales by Total Assets 12/31/21 = $15.4 Billion providing financing and leasing services to Australia, Mexico & Brasil $2.0 Billion PACCAR customers 13% U.S. & Canada $7.1 Billion • In 2021, PACCAR Financial financed 27% of
Slide 42: Long-Term Growth in PACCAR Heavy Duty Market Share
Long-Term Growth in PACCAR Heavy Duty Market Share 32% 32% • Since 2001, PACCAR’s above 16 tonne market 28% 28% share has increased in North America, Europe and South America 24% 24% • Kenworth is the market leader in Australia 20% 20% • PACCAR’s investment in truck manufacturing 16% 16% in Brasil s
Slide 43: Long-Term Growth in PACCAR Medium Duty Market Share
Long-Term Growth in PACCAR Medium Duty Market Share 25% 25% • Since 2001, PACCAR’s medium duty market 20% 20% share has increased in the U.S. and Canada and in Europe 15% 15% • In the U.S. and Canada, Kenworth and Peterbilt achieved a strong share of 19.8% in 2021 10% 10% • DAF share increased to 10
Slide 44: Environmental Leadership
Environmental Leadership CDP “A-” Rating Facilities PACCAR Achieved an “A” rating for its Environmental Practices; Top 1.5% of over 13,000 Reporting Companies 2021 Encouraging Kenworth – Renton Environmental Excellence Awarded WA EnviroStar “E3” Platinum Award Green Business Status Science Based Tar
Slide 45: Third Quarter 2022 Earnings
Third Quarter 2022 Earnings October 2022 Page 45
Slide 46: PACCAR Revenues and Profit
PACCAR Revenues and Profit 83 consecutive years of net profit Dividends every year since 1941 3rd Quarter Nine Months ($ in Millions) 2022 2021 2022 2021 Revenues $7,059 $5,147 $20,690 $16,836 Net Income $769 $381 $2,090 $1,347 Return on Revenues 10.9% 7.4% 10.1% 8.0% Diluted EPS $2.21 $1.09 $5.99 $
Slide 47: 2022 Financial Results: Third Quarter 2022 vs. Third Quarter 2021
2022 Financial Results Third Quarter 2022 vs. Third Quarter 2021 Sales and Revenues Net Income (Billions of Dollars) (Millions of Dollars) • Sales and revenues of $7.06 billion $7.1 $769 • Net income of $769 million $5.1 • After-tax return on revenues of 10.9% • PACCAR Parts revenues of $1.47 billio
Slide 48: Historical Annual Gross Margins
Historical Annual Gross Margins • Truck margins in 2020 & 2021 affected by lower Total Manufacturing production volumes due to global pandemic and 15% 15% supply chain shortages 14% 14% • Truck margins increased in 2022 due to new products 13% 13% • Parts margins have benefited from distribution and
Slide 49: Truck: Third Quarter 2022 vs. Third Quarter 2021
Truck Third Quarter 2022 vs. Third Quarter 2021 Sales Segment Pretax Profit (Billions of Dollars) (Millions of Dollars) • Sales totaled $5.2 billion, up 51% compared to a year ago $5.2 $431 • Pretax operating profit improved to $431 million $3.5 • Deliveries for the Third quarter 2022 totaled 44,400
Slide 50: Aftermarket Parts: Third Quarter 2022 vs. Third Quarter 2021
Aftermarket Parts Third Quarter 2022 vs. Third Quarter 2021 Revenues Segment Pretax Profit (Billions of Dollars) (Millions of Dollars) $1.5 $374 • Record revenues of $1.5 billion, an increase of 17% $1.3 $282 • Record pretax profit of $374 million, an increase of 32% • Parts revenues and profit grow
Slide 51: Financial Services Balance Sheet & Third Quarter 2022 Profit
Financial Services Balance Sheet & Third Quarter 2022 Profit Segment $ Millions Pretax Profit (Millions of Dollars) 9/30/2022 Finance & Other Receivables $12,549 $146 $120 Equipment on Operating Leases 2,546 Other Assets 830 Total Financial Services Assets $15,925 Commercial Paper & Bank Loans $3,29
Slide 52: PACCAR Inc: A+/A1 Credit Ratings
PACCAR Inc A+/A1 Credit Ratings ($ Millions) • Superb balance sheet 9/30/22 Mfg Cash & Securities $4,763 • $4.8 billion in manufacturing cash and securities to support growth opportunities Other Manufacturing Assets 9,936 and investments in all phases of the cycle Financial Services Assets 15,925 To
Slide 53: PACCAR Competitive Advantages
PACCAR Competitive Advantages Innovative Technology Highest Quality Products Global Aftermarket Parts Sales Profitable Financial Services Rigorous Cost Control Experienced Management Team Excellent Supplier Partnerships Strongest Dealer Network October 2022 Page 53
Slide 54: October 2022 Page 54
October 2022 Page 54