Increasing used-truck profitability pushed up PACCAR Financial Services revenue in the second quarter as sales and managed assets jumped.
PACCAR Financial Services (PFS), the finance arm of PACCAR Inc., logged an 18.1% year-over-year increase in revenue to $439.8 million, largely attributed to growth in the captive’s balance sheet and used-truck profitability, according to the company’s earnings supplement.
Used medium-duty and heavy-duty truck values are coming down from “unhealthy” levels seen a year ago, but remain strong, PACCAR President and Chief Financial Officer Harrie Schippers said on the company’s earnings call Tuesday.
“Used-truck prices have come down to very normal levels,” Schippers said. “So, even at a slightly moderated used-truck pricing levels, the finance company continues to do well and is able to sell used trucks that we get back at profit levels.”
PACCAR sells used trucks through a network of 13 used-truck centers, he said.
PFS offers retail financing to Kenworth, Peterbilt and DAF dealers and customers in 26 countries on four continents.
Elevated used-truck prices and a jump in sales also boosted PFS managed assets, Schippers said. Outstandings jumped 6.1% quarter over quarter and 10.5% YoY to $19 billion, according to the earnings supplement. PacLease, a major full-service truck leasing company in North America, Europe and Australia with a fleet of 42,000 vehicles, is included in this segment.
Revenue from truck sales jumped 28.3% YoY to $6.8 billion, according to the supplement.
“The average sales prices of trucks have gone up quite a bit over the last couple of years,” Schippers said. “In the second quarter, pricing was [up] 15%. So even with a 2% growth in the total fleet for PACCAR Financial, the total assets grow with the higher prices per truck as well, of course.”
Shares of PACCAR Inc. [Nasdaq: PCAR] were trading at $84.61 at market close today, down 1.97% or $1.70 from market open. PACCAR has a market capitalization of $44.22 billion.