Heavy Duty Truck Wholesale Parts

PACCAR Misses Despite Stellar Results

Analyst Report ) reported a profit of $239.7 million or 65 cents per share in the second quarter of the year that more than doubled from $99.6 million or 27 cents per share in the prior-year quarter. However, the truck maker’s profit missed the Zacks Consensus Estimate of 68 cents per share.

The improvement in profit reflected strong truck sales in North America and Europe and better aftermarket parts sales and financial services results worldwide. However, the company’s suppliers faced difficulty while catering to the robust increase in truck build rates.

Revenues in the quarter surged 61% to $3.96 billion, up from the Zacks Consensus Estimate of $3.58 billion.

Revenues in the Truck and Other segment shot up 66% to $3.70 billion. The pre-tax profit in the segment improved significantly to $286.4 million from $110.3 million a year ago.

The company’s DAF nameplate achieved a market share of 15.3% in the above 15-ton market in the first half of 2011. Meanwhile, its Class 8 retail market share in the U.S. and Canada stood at 26.7% in the same period

Revenues in PACCAR Financial Services (PFS) rose 8% to $258.0 million. Pretax profit improved to $56.9 million from $34.0 million in the second quarter of 2010 led by better finance margins and reduced credit losses. The provision for credit losses went down to $11.0 million from $17.4 million in the second quarter of 2010.

Financial Position

PACCAR’s cash and marketable debt securities was $2.85 billion as of June 30, 2011 compared with $2.43 billion as of December 31, 2010. Long-term remained unchanged at $150 million considering the same period of comparison. Consequently, the long-term debt-to-capitalization ratio remained steady at 2.5% compared with 2.7% as of December 31, 2010.

In the first half of the year, cash flow from operations decreased marginally to $792.0 million from $799.5 million in the same period of 2010, as the improvement in profits was more than offset by unfavorable changes in wholesale receivables on new trucks. Meanwhile, capital expenditures rose significantly to $117.5 million from $47.8 million in the previous year, due to new product development.

Outlook

PACCAR expects industry sales in the above 15-tonne truck market to range within 230,000-250,000 units in Europe for 2011. Whereas the company anticipates industry retail sales in the Class 8 truck markets of U.S. and Canada in the range of 180,000-200,000 vehicles.

Learning About LKQ Corp (LKQX) « Fundamental Investing Using the ...

LKQ Corp (LKQX) sells replacement parts to repair cars and trucks, and operates in the U.S. and Canada.  With more than 325 facilities in North America, LKQX is the nation’s largest provider of aftermarket and recycled parts.

LKQX was the Online Stock Study at the BI website for May 2011.  It was led by Dan Rutter, a Director of the Puget Sound BI Chapter and a professional portfolio manager and research analyst. 

The recorded session and Dan’s handouts are available to BI members.  Sadly, the Consensus SSG is, once again, not available and I had to play (and replay) the recording to retrieve the SSG details. 

- LKQX operates in three segments: wholesale aftermarket and recycled products, self service retail products, and recycled heavy-duty truck products.   

** However, these segments are not reported seperately according to the company’s 2010 Annual Report.

- LKQX is a large operation: in 2010, its wholesale aftermarket and recycled parts unit carried more than 75,000 SKUs and purchased 198,000 vechicles;  self-service retail bought 297,000 vechicles, and its heavy-duty truck unit purchased 4,000 vechicles.

** Total Sales grew 20.6% in FY 2010 and EPS grew 30.7%.

  ** Organic growth in revenues was 6.6%.

** In 2010, Sales of vehicle replacement parts and services represented 86% of Total Sales.

** Sales and EPS grew 33% & 30% over the last 5 years and 13% & 27% over the last 3.

- Since its formation in 1998, the company has made over 100 acquisitions and is the only provider of aftermarket & recycled auto parts with a national presence.

** LKQX considers its geographic locations to be a competitive advantage and strives for next-day delivery.

** Keystone Automotive Industries, a key competitor and a leading distributor of aftermarket parts, was its most significant acquisition in October 2007.

- In 2010, LKQX paid $170.4M for 20 acuisitions: wholesale products (16); recycled heavy-duty truck products (1); self-service retail (2); and tire recycling (1).

- In the first two months of 2011, LKQX made 4 acquisitions: an engine remanufacturer; auto heating and coooling parts; wholesale recycled parts; recycled heavy-duty trucks.