Paccar Financial revenue ticks up amid trucking recovery

The financing arm of truck OEM Paccar reported an uptick in revenue in the second quarter as dealer inventories and broader industry conditions continued to stabilize.  

Paccar Financial Services is benefiting from “steady finance margins and strengthening used-truck markets,” Paccar President Kevin Baney said during today’s earnings call.  

Reflecting this, truck dealers have offloaded considerable loads of used inventory throughout this year, translating to healthier retail prices, Jim Ryan, equipment lease and finance manager at Sandhills Global, told Equipment Finance News.  

“We’re seeing some of those dealers get back into the realm of looking to buy finally,” Ryan said.  

BY THE NUMBERS: Bellevue, Wash.-based Paccar, which manufactures Peterbilt, Kenworth and DAF brand trucks, reported these Q2 results for its financial services segment:

• Revenue rose 0.4% year over year to totaled $549.7 million,
• Pre-tax income increased 0.7% YoY to $124.1 million;
• Provision for losses on receivables grew 34.9% YoY to $39.4 million; and
• Assets totaled $22.3 billion, down 5% YoY.  

Paccar’s other Q2 results included:

• Total sales and revenue ticked up 0.5% YoY to $7.6 billion;
• Parts revenue rose 1.5% YoY to a record $1.8 billion; and
• Net income increased 3.9% YoY to $752 million. 

The record in parts revenue reflects higher truck utilization rates, investments in new parts distribution centers and strong demand for inventory and service management tools among Paccar dealers, Bryan Sitko, vice president and Paccar Parts general manager, stated in today’s earnings release.  

STATE OF PLAY: The freight industry continues to recover from its yearslong slump as freight rates improve while overcapacity issues ease, Chief Executive Preston Feight said during the call.  

Increased clarity surrounding 2027 emissions regulations also provides market momentum, Feight said, citing the Environmental Protection Agency’s recent modifications to its heavy-duty Low NOx rule to reduce compliance burdens.  

“The clarification extends the timeline to introduce 35 milligram NOx engines,” he said. “Next year, customers will be able to buy the current generation of engines with an associated nonconformance fee.  

“This will be beneficial for customers as it will ensure new technology is fully validated before being purchased by customers. It is also likely to have a positive impact on the size and strength of next year’s truck market.” 

GDP growth and onshoring initiatives in the United States also support truck demand and the transportation sector’s recovery, he said. 

NOTEWORTHY: Paccar’s research and development expenses totaled $114.3 million in Q2, up 1.2% YoY.  

The company is investing in “customer-focused technology and innovation projects, including advanced flexible manufacturing that enhances efficient local-for-local production, the development of next-generation clean diesel engines, industry-leading hybrid and electric powertrains and integrated vehicle connected vehicle services,” Baney said.  

MARKET REACTION: Shares of Paccar [NASDAQ: PCAR] rose 3.6% from market open to $138.21 as of market close today. It has a market capitalization of $72.7 billion.  

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