Paccar Inc. · NASDAQ:PCAR
Paccar — Q2 2017 Earnings Presentation
43 slides from Paccar's earnings presentation, July 2017
Slide 1: PACCAR
PACCAR ..
Slide 2: 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 and uncertainties is described in more detail in
Slide 3: PACCAR brands and businesses
PACCAR... Ee] KENWORTH [a (ierbilt) DAF PACCARFINANCIAL PACCARPARTS rl PACCAR MEXICO PACCARENGINES Fai PACKAR INFORMATION LEYLAND TRUCKS S TECHNOLOGY PACCAR WINCH DIVISION BRADEN carco Gearmatic PAICCAIR TECHNICAL CENTER 7) Kenworth DYNACGRAFT. Australia —* »acem
Slide 4: Powertrain, Aftermarket Support, Commercial Vehicles, IT, Financial Services
Powertrain Aftermarket Support Commercial Vehicles Information Technology Financial Services July 2017 Page 3
Slide 5: PACCAR Strategy
PACCAR Strategy Quality Technology Innovation Premium Products and Services Profitable Market Share Growth Geographic Expansion July 2017 Page 4
Slide 6: PACCAR Values
PACCAR Values Conservative Highest Operational Long Term Quality Financial Integrity Excellence Perspective Management July 2017 Page 5
Slide 7: Trucking Moves the Economy
Trucking Moves the Economy If you bought it, it probably was delivered by a truck 69% 15% 10% 6% Truck Rail Pipeline Water % Total U.S. Freight Tonnage Hauled by Transportation Mode July 2017 Page 6
Slide 8: Global >6T Truck Markets
Global >6T Truck Markets 2011 – 2.9 Million Russia/CIS China 2016 – 2.7 Million EU28 130 132.4 1,175 1172.559 60 960 355 305 North America 275 330 Rest of Asia India 210 213 355 South America Africa & 335 332583 295 Middle East 205 215 235 100 Australia PACCAR Truck Assembly 2011 2016 17 17 20 Units
Slide 9: Heavy Duty Commercial Vehicles
Heavy Duty Commercial Vehicles Units (000s) Units (000s) 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 99 01 03 05 07 09 11 13 15 17 Fcst US & Canada Europe South America July 2017 Page 8
Slide 10: PACCAR Heavy Duty Market Share
PACCAR Heavy Duty Market Share 40% 40% 35% 35% 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% S. America Europe Australia U.S. and Canada Mexico 2006 2016 July 2017 Page 9
Slide 11: >16T Truck Manufacturing
>16T Truck Manufacturing 2016 Production (Units 000’s) Daimler Volvo FAW Volkswagen Dongfeng PACCAR #6 Sinotruk Shaanxi Tata Motors Beijing Foton Ashok Leyland Jianghuai Iveco Hino KAMaz Navistar Isuzu Dayun Hongyan Total Production 2016 = 1.8 Million Hualing 0 50 100 150 200 250 July 2017 Page 10
Slide 12: PACCAR Truck Production
PACCAR Truck Production 1.3 Million Trucks Produced 2007-2016 154,700 160 140,400 142,900 138,000 140,900 133,900 137,100 140 125,900 Brasil 120 Australia 100 78,800 Europe 80 61,000 Mexico 60 Canada 40 US 20 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 July 2017 Page 11
Slide 13: Excellent Financial Performance Throughout the Business Cycle
PACCAR Excellent Financial Performance Throughout the Business Cycle $ Billions Revenue $ Billions $ Millions Net Income $ Millions 20 20 1.8 1.8 7% 5% (10% Adj. NI)** 1.5 1.5 15 15 1.2 1.2 10 10 0.9 0.9 0.6 0.6 5 5 0.3 0.3 0.0 0.0 0 0 96 98 00 02 04 06 08 10 12 14 16* 96 98 00 02 04 06 08 10 12 14
Slide 14: Best-in-Class Operating Efficiency: Operating Margin
Best-in-Class Operating Efficiency Commercial Vehicle Segment Operating Margin 15% 15% 12% 12% 9% 9% 6% 6% 3% 3% 0% 0% -3% -3% -6% -6% -9% -9% 07 08 09 10 11 12 13 14 15 16 PACCAR Volkswagen Daimler Volvo Iveco Navistar July 2017 Page 13
Slide 15: Best-in-Class Operating Efficiency: Inventory Turns
Best-in-Class Operating Efficiency Inventory Turns # Inventory Turns # Inventory Turns 25 25 20 20 15 15 10 10 5 5 0 0 07 08 09 10 11 12 13 14 15 16 PACCAR Volkswagen Daimler Volvo CNH Navistar July 2017 Page 14
Slide 16: Best-in-Class Operating Efficiency: SG&A % of Sales
Best-in-Class Operating Efficiency SG&A % of Sales 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 07 08 09 10 11 12 13 14 15 16 PACCAR Volkswagen Daimler Volvo CNH Navistar July 2017 Page 15
Slide 17: Net Income per Truck
Net Income per Truck Units (000s) $/Truck 180 11,250 160 10,000 140 8,750 120 7,500 100 6,250 80 5,000 60 3,750 40 2,500 20 1,250 0 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16* Trucks Net Income per Truck Adjusted Net Income Per Truck * * 2016 Adjusted Net Inco
Slide 18: Annualized Shareholder Total Return %
Annualized Shareholder Total Return % Fifteen Years, As of June 30, 2017 Deere Volvo Caterpillar Eaton Hino Volkswagen S&P 500 Toyota Daimler Ford Navistar -4 0 4 8 12 16 July 2017 Page 17
Slide 19: PACCAR Inc balance sheet
PACCAR Inc A+/A1 Credit Ratings ($ Millions) 6/30/17 Cash & Securities $ 3,005 Manufacturing Assets 6,360 Financial Services Assets 12,688 Total Assets $ 22,053 Manufacturing Debt $ 0 Manufacturing Liabilities 4,598 Financial Services Liabilities 9,955 Shareholders' Equity 7,500 Total Liabilities &
Slide 20: PACCAR Overview – Q2 2017
PACCAR Overview – Q2 2017 Consolidated Sales & Revenues $4.7 Billion Net Income $373 Million PACCAR Financial Pre-Tax Profit $63 Million PACCAR Parts Record Pre-Tax Profit $152 Million Stockholders’ Equity $7.5 Billion A1/A+ Credit Ratings Regular Dividend Increased 25% in Last 5 Years July 2017 Pag
Slide 21: PACCAR Revenues and Profit
PACCAR Revenues and Profit 78 consecutive years of net profit Dividends every year since 1941 ($ Millions) 2nd Quarter Six Months 2017 2016 2017 2016 Revenues $4,704 $4,413 $8,942 $8,713 Net Income (Loss) 373 481 683 (113) Diluted EPS 1.06 1.37 1.94 (0.32) Adjusted Net Income (Non-GAAP) 372 720 Adju
Slide 22: PACCAR Capital Allocation
PACCAR Capital Allocation Uses of Cash Flow Capital Allocation Strategy 2012 – 2016: $8 Billion • R&D and capex investments Debt Repayment Share Repurchase Finance $0.2 drive future growth $0.5 Company $1.0 Capex $1.9 • Credit rating of A+/A1 reflects strategic nature of our financial services opera
Slide 23: New Products and Technologies
New Products and Technologies 2017 DAF CF & XF PACCAR Axles Platooning HoloLens – Augmented Reality July 2017 Page 22
Slide 24: PACCAR Investments
PACCAR Investments DAF Sales Office, Haddenham, U.K. DAF, Westerlo, Belgium PACCAR Engine Factory, Columbus, Mississippi PACCAR Parts Distribution Center, Toronto, Canada July 2017 Page 23
Slide 25: Dividends Declared and Stock Repurchases
Dividends Declared and Stock Repurchases $ Millions $ Millions 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Dividends Stock Repurchased July 2017 Page 24
Slide 26: PACCAR Engines Worldwide
PACCAR Engines Worldwide PACCAR PX-5 PACCAR PX-7 PACCAR PX-9 4.5 Liter 6.7 Liter 8.9 Liter PACCAR PR PACCAR MX-11 PACCAR MX-13 9.2 Liter 10.8 Liter 12.9 Liter July 2017 Page 25
Slide 27: Cumulative PACCAR MX Engines Produced
Cumulative PACCAR MX Engines Produced Engines (000s) Engines (000s) 550 550 500 500 450 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 DAF MX-13 KW/PB MX-13 MX-11 July 2017 Page 26
Slide 28: PACCAR Parts Revenue
PACCAR Parts Revenue $ Millions $ Millions 3,500 3,500 3,000 3,000 8% 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 July 2017 Page 27
Slide 29: Parts Distribution Centers and Dealers
PACCAR Parts Distribution Centers and Dealers PACCAR Distribution Centers KW, PB, DAF Dealers July 2017 Page 28
Slide 30: PACCAR Parts Investments
PACCAR Parts Investments Eindhoven, NL Lancaster, PA Renton, WA Ponta Grossa, BR July 2017 Page 29
Slide 31: Global Dealer Network
PACCAR Global Dealer Network July 2017 Page 30
Slide 32: DAF Brasil
DAF Brasil DAE FENABRAVE July 2017 Page 31
Slide 33: Road to Autonomous Commercial Vehicles
Road to Autonomous Commercial Vehicles Component Controls System Integration Network Integration Automated Vehicle 1980-2014 2015-2017 2018-2024 2025+ • Anti Lock Braking • Collision Avoidance • Vehicle to Vehicle • Vehicle to Network Infrastructure • Lane Departure • Lane Keeping Assist Network War
Slide 34: Environmental Leadership
Environmental Leadership Ranked in Top 10% of Companies Reporting to CDP (Carbon Disclosure Project) Reduce Environmental Impact Through Product Design Product Recyclability 90%+ Reduction in NOx and Particulate Emissions Alternative Fuel Vehicles (Natural Gas, Hybrid) Zero Waste to Landfill Environ
Slide 35: Financial Services – Q2 2017
PACCAR Financial Services – Q2 2017 $12.7 Billion in Assets Pre-tax Profit $63 Million 180,000 Vehicles Financed Dealer Floorplan Retail Financing Full Service Leasing July 2017 Page 34
Slide 36: Financial Services Countries on Four Continents
PACCAR Financial Services 24 Countries on Four Continents PACCAR Financial Regional Offices July 2017 Page 35
Slide 37: Financial Services Assets
PACCAR Financial Services Assets Australia & Mexico Australia & Mexico $1.4 Billion $0.9 Billion 10% 9% Europe Europe $2.2 Billion $2.9 Billion 22% 23% U.S. & PacLease U.S. & Canada $1.5 Billion Canada PacLease $6.2 Billion 16% $5.2 Billion $2.2 Billion 49% 53% 18% 2006 - $9.8 Billion 2Q17 - $12.7 B
Slide 38: Financial Europe
PACCAR Financial Europe Assets Assets € Billions € Billions 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 48,200 Vehicles 0.5 0.5 200 DAF Dealers 0.0 07 08 09 10 11 12 13 14 15 16 0.0 16 European Countries July 2017 Page 37
Slide 39: Leasing
PACCAR Leasing Trucks Trucks 000’s 000’s 40 40 35 35 30 30 25 25 20 20 15 15 10 10 07 08 09 10 11 12 13 14 15 16 July 2017 Page 38
Slide 40: Financial Services Delivers Strong Performance
PACCAR Financial Services Delivers Strong Performance Low 30+ Days Past Due Assets and Pretax Profit Assets Pre-tax Profit % % $ Billions $ Millions 8 8 16 400 7 7 14 350 6 6 12 300 5 5 10 250 4 4 8 200 3 3 6 150 2 2 4 100 1 1 2 50 0 0 0 0 90 92 94 96 98 00 02 04 06 08 10 12 14 16 07 08 09 10 11 12
Slide 41: Financial Services balance sheet
PACCAR Financial Services ($ Millions) 6/30/17 Finance & Other Receivables $9,229 Equipment on Operating Leases 2,788 Other Assets 671 Total Financial Services Assets $12,688 Commercial Paper & Bank Loans $2,889 Term Notes 5,655 Deferred Taxes & Other Liabilities 1,411 Total Financial Services Liabi
Slide 42: PACCAR Competitive Advantages
PACCAR Competitive Advantages Excellent Shareholder Return Experienced Management Team Highest Quality Products Rigorous Cost Control Balanced Global Diversification Excellent Supplier Partnerships Extensive Capital Investments Innovative Technology Global Aftermarket Parts Sales Profitable Financia
Slide 43: Appendix: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix Reconciliation of GAAP to Non-GAAP Financial Measures This presentation includes “adjusted net income (non-GAAP)” and “adjusted net income per diluted share (non-GAAP)”, which are financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”), sinc