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PACCAR Financial Services profits soar in Q4

PACCAR Financial Services, the finance arm of truck manufacturer PACCAR, posted record profits driven by elevated prices and used-truck sales.

PFS’ new business volume clocked in at $6.2 billion for the full year 2022, according to the Q4 earnings release. Growth is expected to continue in 2023, Chief Executive Preston Feight said Tuesday during PACCAR’s earnings call. “We have excellent visibility looking into the year … demand continues to be strong, in line with build, and so it’s looking like a good year,” he said. 

PFS’ quarterly pretax income in Q4 clocked in at a record $151.3 million, an increase of 12.4% year over year. Full-year 2022 pretax profit totaled a record of $588.9 million, an increase of 34.6% YoY. 

“PFS achieved excellent results due to its portfolio quality and strong used-truck performance,” PACCAR Vice President Todd Hubbard said on the call. “PFS is leveraging investments in its 13 worldwide used truck centers to sell an increased number of used trucks at higher retail prices, and opened a new used truck facility in Madrid, Spain, in 2022.” 

Bellevue, Wash.-based PACCAR is a global technology leader in the design and manufacture of Kenworth, Peterbilt and DAF trucks. The company also designs and manufactures advanced powertrains, provides financial services and information technology, and distributes truck parts. 

PACCAR’s new used-truck facility in Madrid raised its total facilities to 13 worldwide, according to the earnings release.  

“These retail used-truck centers contribute to higher price realization compared to wholesale channels,” PACCAR President and Chief Financial Officer Harrie Schippers said during the call. “In 2023, we expect used-truck prices to moderate but remain historically strong.” 

PACCAR delivered 185,900 vehicles worldwide in 2022, up compared with 162,700 deliveries in 2021, an increase largely driven by new vehicle launches and improving supply chain constraints, Feight said. 

“Since 2020, the industry has really been not able to supply all the trucks that have been needed, so there is strong demand for trucks, and in addition to that, we’ve launched more new products than any time in our history,” he said. 

PFS’ revenues rose to $394.8 million in Q4, up 1.1% YoY. PFS full-year 2022 revenues landed at $1.51 billion, a decrease of 10.7% YoY.  

The company has a portfolio of 217,000 trucks and trailers, including a fleet of 40,000 vehicles from PacLease, a full-service truck leasing company in North America and Europe. PFS’ portfolio consists of $17.2 billion in total assets, up 11.7% from yearend 2021. 

“PACCAR’s strong balance sheet, complemented by its A+/A1 credit ratings, enables PFS to offer competitive retail financing to Kenworth, Peterbilt and DAF dealers and customers in 26 countries on four continents,” said PACCAR Financial Corp. President Craig Gryniewicz. “PACCAR Financial Services has excellent access to the debt markets, issuing $3.05 billion in medium-term notes during 2022.” 

PSF issued $1.97 billion in medium-term notes in 2021, according to the company’s 2021 annual report.  

Shares of PACCAR Inc. [Nasdaq: PCAR] were trading at $110.81 at market close today, down 0.24% from market open. PACCAR has a market capitalization of $38.24 billion.