PACCAR Inc. (NASDAQ:PCAR) Q4 2019 Earnings Conference Call - Final Transcript

Jan 28, 2020 • 12:00 pm ET


PACCAR Inc. (NASDAQ:PCAR) Q4 2019 Earnings Conference Call - Final Transcript


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Good morning and welcome to PACCAR's Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to introduce Mr. Ken Hastings, PACCAR's Director of Investor Relations. Mr. Hastings, please go ahead.

Ken Hastings

Good morning. We would like to welcome those listening by phone and those on the webcast. My name is Ken Hastings, PACCAR's Director of Investor Relations and joining me this morning are Preston Feight, Chief Executive Officer; Harrie Schippers, President and Chief Financial Officer; and Michael Barkley, Senior Vice President and Controller.

As with prior conference calls, we ask that any members of the media on the line participate in a listen-only mode. Certain information presented today will be forward-looking and involve risks and uncertainties, including general, economic and competitive conditions that may affect expected results. For additional information, please see our SEC filings in the Investor Relations page of I would now like to introduce Preston Feight.

R. Preston Feight

Good morning. Harrie Schippers and I will update you on our excellent fourth quarter and record full year 2019 results and business highlights. Thanks to PACCAR's outstanding employees around the world, 2019 was the best year in the company's 114 year history. PACCAR achieved record revenues of $25.6 billion and record net income of $2.39 billion, a 9.3% after-tax return on revenues. PACCAR strong financial performance in 2019 benefited from PACCAR Parts record pre-tax profits of $831 million and PACCAR Financial Services pre-tax profits of $299 million. PACCAR has achieved 81 consecutive years of net income and a total shareholder return in 2019 of 45%. The company has paid a dividend every year since 1941. In 2019, PACCAR declared dividends of $3.58 per share a 16% increase over 2018. Total dividends declared were a record $1.24 billion.

PACCAR's fourth quarter revenues were $6.1 billion and fourth quarter net income was $531 million. PACCAR delivered 45,700 trucks during the fourth quarter compared to 49,300 in the third quarter. There were fewer build days and lower build rates in North America compared to the third quarter. [Technical Issues] remained steady.

The U.S. economy performed well in 2019, which contributed to a strong truck market. In 2019, U.S. and Canadian Class 8 truck retail sales were 309,000 units, the second highest truck sales in history. During 2019, Kenworth and Peterbilt combined market share increased to 30% compared to 29.4% in the prior year. In 2020, the U.S. economy is expected to grow by about 2%. The new U.S. MCA and China Phase 1 trade agreements could provide upside in the economy and are good for PACCAR. We estimate that 2020 U.S. and Canada Class 8 truck market to be in a range of 230,000 to 260,000 vehicles. European above 16-tonne truck registrations were 320,000 vehicles in 2019, reflecting continued robust customer demand after several years of steady economic growth. DAF delivered a strong 16.2% market share. In 2020, the European economies are projected to continue growing and we expect another excellent truck market with above 16-tonne registrations in a range of 260,000