Earnings Analysis for PCAR – Financial Overview
Revenue Analysis
Total and Operating Revenue: Over the past three years, PCAR’s total revenue showed a decline from 9.076 billion (2023-12-31) to 8.744 billion (2024-03-31). This recent quarter shows a slight decrease when compared to previous quarters.
Gross Profit Margins: Gross profit followed a similar trend, decreasing from 1.963 billion (2023-12-31) to 1.870 billion (2024-03-31). This suggests a reduction in profitability relative to sales. The gross profit margin as a percentage of total revenue has slightly decreased over the period.
Cost Management
Cost of Revenue: Cost of revenue has slightly decreased from 7.114 billion (2023-12-31) to 6.874 billion (2024-03-31), aligning with the overall reduction in revenue.
Operating Expense: Operating expenses were controlled relatively well, reducing from 445.8 million (2023-12-31) to 448.1 million (2024-03-31). The slight increase may need to be watched if revenues continue to decline.
Total Expenses: Total expenses have slightly decreased from 7.559 billion (2023-12-31) to 7.322 billion (2024-03-31), in line with the trend seen in revenues and cost of revenue.
Profitability Analysis
EBITDA: Earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased from 1.763 billion (2023-12-31) to 1.657 billion (2024-03-31).
Operating Income: Operating income shows a decrease from 1.517 billion (2023-12-31) to 1.422 billion (2024-03-31), indicating a squeeze on profitability from operating activities.
Pretax Income: Pretax income has decreased from 1.641 billion (2023-12-31) to 1.535 billion (2024-03-31).
Net Income: There is a significant reduction in net income from 1.417 billion (2023-12-31) to 1.195 billion (2024-03-31).
Cash Flow Indicators
Reconciled Depreciation: Reconciled depreciation slightly decreased from 245.5 million (2023-12-31) to 235 million (2024-03-31), which might slightly improve cash flows.
Interest Expense: Net non-operating interest income expenses show a positive trend, slightly increasing overall cash available.
Taxation
Tax Rate: The effective tax rate ranges from 20.1% to 22.7% across the reviewed period, latest being 22.1% (2024-03-31).
Tax Provision: Tax provision has decreased in the latest period to 339.2 million from 224 million in the previous year.
Tax Effect of Unusual Items: The tax effect of unusual items has increased, suggesting more transactions classified under unusual items.
Shareholder Metrics
Diluted and Basic EPS: Both diluted and basic EPS have decreased from 2.7 (2023-12-31) to 2.27 and 2.28 respectively in the latest quarter ending 2024-03-31.
Average Shares: The number of average diluted shares has stayed relatively stable around 525 million shares.
Net Income Available to Common Stockholders: Net income available for common stockholders aligns with the reported net income figures, indicating all net income is attributable to common shareholders.
Conclusion
In conclusion, PCAR has experienced a slight revenue decline along with a decline in major profitability metrics such as gross profit, operating income, and net income. The firm has managed costs reasonably well, but reductions in profitability metrics indicate potential challenges in maintaining profitability levels. It will be important for PCAR to focus on ways to revitalize revenue streams and enhance operational efficiencies.
Appendices
Supporting data tables and calculations have been utilized throughout the analysis and are derived from the supplied financial dataset for the years 2023 and 2024.