PACCAR, INC. OVERVIEW:
PACCAR is a global technology company whose Truck segment includes the design and manufacture of high-quality light-, medium- and heavy-duty commercial trucks. InNorth America , trucks are sold under the Kenworth andPeterbilt nameplates, inEurope , under the DAF nameplate and inAustralia andSouth America , under the Kenworth and DAF nameplates. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Company's Financial Services segment derives its earnings primarily from financing or leasingPACCAR products inNorth America ,Europe ,Australia andSouth America . The Company's Other business includes the manufacturing and marketing of industrial winches.
First Quarter Financial Highlights:
• Worldwide net sales and revenues were
billion in 2021, primarily due to higher truck and parts revenues.
• Truck revenues were
primarily due to higher truck price realization.
• Parts sales were a record
2021 reflecting higher demand and price realization in all markets.
• Financial Services revenues were
million in 2021, primarily due to lower used truck sales.
• Net income was
Financial Services operating results.
• Capital investments were
2021.
• Research and development (R&D) expenses were
The PACCAR Financial Services (PFS) group of companies has operations covering four continents and 26 countries. The global breadth of PFS and its rigorous credit application process support a portfolio of loans and leases with total assets of$16.00 billion . PFS issued$629.1 million in medium-term notes during the first three months of 2022 to support new business volume and repay maturing debt. Conflict inUkraine In accordance with recent international sanctions, the Company has suspended truck and parts sales inRussia andBelarus . The Company has no factories inRussia and has managed export sales toRussia through independent dealers. In 2021, 2,500 trucks were sold intoRussia andBelarus . The Company also sold parts in these markets through a third party owned warehouse. The trucks were sold on a fully paid-up basis; accordingly, the Company does not have significant receivables exposure. Inventory balances are not significant. The Company is monitoring the situation closely. At this time, the conflict has not had a significant impact on the results of operations or cash flows of the Company. Truck Outlook Truck industry heavy-duty retail sales in theU.S. andCanada in 2022 are expected to be 260,000 to 290,000 units compared to 250,000 in 2021. InEurope , 2022 truck industry registrations for over 16-tonne vehicles are expected to be 270,000 to 300,000 units compared to 278,000 in 2021. InSouth America , heavy-duty truck industry registrations in 2022 are projected to be 125,000 to 135,000 as compared to 127,000 in 2021. The Company has been affected by an industry-wide undersupply of semiconductor chips and component parts, and anticipates the shortages will continue to affect deliveries in 2022. Parts Outlook In 2022, PACCAR Parts sales are expected to increase 12-15% compared to 2021 levels reflecting strong freight demand. Financial Services Outlook Based on the truck market outlook, average earning assets in 2022 are expected to increase 3-5% compared to 2021. Current high levels of freight tonnage, freight rates and fleet utilization are contributing to customers' profitability and cash flow. - 31 - -------------------------------------------------------------------------------- Capital Investments and R&D Outlook Capital investments in 2022 are expected to be$425 to$475 million and R&D is expected to be$350 to$400 million . The Company is increasing its investment in clean diesel and electric powertrain technologies, autonomous systems, connected vehicle services, next-generation manufacturing and distribution capabilities.
See the Forward-Looking Statements section of Management's Discussion and Analysis for factors that may affect these outlooks.
RESULTS OF OPERATIONS:
The Company's results of operations for the three months ended
($ in millions, except per share amounts) Three Months Ended March 31, 2022 2021 Net sales and revenues: Truck$ 4,697.1 $ 4,233.0 Parts 1,388.9 1,160.7 Other 20.4 19.8 Truck, Parts and Other 6,106.4 5,413.5 Financial Services 366.2 432.0$ 6,472.6 $ 5,845.5 Income before income taxes: Truck$ 276.7 $ 270.0 Parts 340.2 251.6 Other 10.0 5.4 Truck, Parts and Other 626.9 527.0 Financial Services 147.0 76.4 Investment (loss) income (2.5 ) 4.9 Income taxes (170.9 ) (137.5 ) Net income$ 600.5 $ 470.8 Diluted earnings per share$ 1.72 $ 1.35 After-tax return on revenues 9.3 % 8.1 % The following provides an analysis of the results of operations for the Company's three reportable segments - Truck, Parts and Financial Services. Where possible, the Company has quantified the impact of factors identified in the following discussion and analysis. In cases where it is not possible to quantify the impact of factors, the Company lists them in estimated order of importance. Factors for which the Company is unable to specifically quantify the impact include market demand, fuel prices, freight tonnage, economic conditions and COVID-19 related factors affecting the Company's results of operations.
2022 Compared to 2021:
Truck
The Company's Truck segment accounted for 73% of revenues in the first quarter of 2022 compared to 72% in the first quarter of 2021.
The Company's new truck deliveries are summarized below:
Three Months Ended March 31, 2022 2021 % CHANGE U.S. and Canada 20,700 23,000 (10 ) Europe 16,100 13,700 18
13 Total units 43,000 42,200 2
Worldwide new truck deliveries increased slightly in the first quarter of 2022
compared to the same period of 2021, primarily due to higher deliveries in
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Market share data discussed below is provided by third party sources and is
measured by either registrations or retail sales for the Company's dealer
network as a percentage of total registrations or retail sales depending on the
geographic market. In the
In the first three months of 2022, industry retail sales in the heavy-duty market in theU.S. andCanada decreased to 56,200 units from 60,400 units in the same period of 2021. The Company's heavy-duty truck retail market share was 28.8% in the first three months of 2022 compared to 28.4% in the first three months of 2021. The medium-duty market was 20,800 units in the first three months of 2022 compared to 24,000 units in the same period of 2021. The Company's medium-duty market share was 9.7% in the first three months of 2022 compared to 17.6% in the first three months of 2021. The over 16tonne truck market inEurope in the first three months of 2022 was 74,800 units compared to 74,500 units in the first three months of 2021. DAF over 16tonne market share was a 17.1% in the first three months of 2022 compared to 16.6% in the same period of 2021. The 6 to 16tonne market in the first three months of 2022 was 9,900 units compared to 10,800 units in the same period of 2021. DAF market share in the 6 to 16-tonne market in the first three months of 2022 was 9.5% compared to 10.2% in the same period of 2021.
The Company's worldwide truck net sales and revenues are summarized below:
($ in millions) Three Months Ended March 31, 2022 2021 % CHANGE Truck net sales and revenues: U.S. and Canada$ 2,590.6 $ 2,555.0
1
Europe 1,450.9 1,124.2
29
18
$ 4,697.1 $ 4,233.0
11
Truck income before income taxes$ 276.7 $ 270.0 2 Pre-tax return on revenues 5.9 % 6.4 %
The Company's worldwide truck net sales and revenues in the first quarter
increased to
Truck segment income before income taxes and pretax return on revenues reflect the tempering of truck unit deliveries due to the global semiconductor and component supply shortages. In the first quarter of 2022, Truck segment income before income taxes increased slightly from the same period in 2021 due to gains on sales of used trucks. The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the three months endedMarch 31, 2022 and 2021 are as follows: NET COST OF SALES AND SALES AND GROSS ($ in millions) REVENUES REVENUES MARGIN Three Months Ended March 31, 2021$ 4,233.0 $ 3,840.9 $ 392.1 Increase (decrease) Truck sales volume 132.4 113.6 18.8 Average truck sales prices 400.5 400.5 Average per truck material, labor and other direct costs 390.1 (390.1 ) Factory overhead and other indirect costs 46.7 (46.7 ) Extended warranties, operating leases and other 38.6 3.8 34.8 Currency translation (107.4 ) (99.0 ) (8.4 ) Total increase 464.1 455.2 8.9 Three Months Ended March 31, 2022$ 4,697.1 $ 4,296.1
• Truck sales volume reflects higher unit deliveries, primarily in
partially offset by lower unit deliveries in the
industry-wide undersupply of semiconductor chips and component products.
• Average truck sales prices increased sales by
higher price realization worldwide.
• Average cost per truck increased cost of sales by
reflecting higher raw material, labor and freight costs.
• Factory overhead and other indirect costs increased
due to higher labor costs, utilities and depreciation.
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• Extended warranties, operating leases and other increased revenues by
million and cost of sales by
associated costs from repair and maintenance, service contracts and operating
leases. In addition, cost of sales and revenues was partially offset by gains
on sales of used trucks and lower impairments in
used truck market.
• The currency translation effect on sales and cost of sales primarily reflects
a decline in the value of the euro relative to the
• Truck gross margin was 8.5% in the first quarter of 2022 compared to 9.3% in
the same period of 2021 due to the factors noted above.
Truck SG&A expense increased in the first quarter of 2022 to$73.4 million from$61.1 million in 2021. The increase was primarily due to higher professional expenses and higher salaries and related expenses. As a percentage of sales, Truck SG&A increased to 1.6% in the first quarter compared to 1.4% in the same period of 2021. Parts
The Company's Parts segment accounted for 21% of revenues in the first quarter of 2022 compared to 20% in the first quarter of 2021.
($ in millions) Three Months Ended March 31, 2022 2021 % CHANGE Parts net sales and revenues: U.S. and Canada$ 975.7 $ 767.2
27
Europe 296.1 286.1
3
9
$ 1,388.9 $ 1,160.7
20
Parts income before income taxes$ 340.2 $ 251.6 35 Pre-tax return on revenues 24.5 % 21.7 %
The Company's worldwide parts net sales and revenues for the first quarter
increased to a record
For the first quarter of 2022, the increase in Parts segment income before income taxes and pre-tax return on revenues was primarily due to higher sales volume and higher margins, partially offset by unfavorable currency translation effects. The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the three months endedMarch 31, 2022 and 2021 are as follows: NET COST OF SALES AND SALES AND GROSS ($ in millions) REVENUES REVENUES MARGIN Three Months Ended March 31, 2021$ 1,160.7 $ 832.8 $ 327.9 Increase (decrease) Aftermarket parts volume 118.3 77.1
41.2
Average aftermarket parts sales prices 131.4
131.4
Average aftermarket parts direct costs 61.4 (61.4 ) Warehouse and other indirect costs 12.7 (12.7 ) Currency translation (21.5 ) (13.7 ) (7.8 ) Total increase 228.2 137.5 90.7
Three Months Ended
• Aftermarket parts sales volume increased by
sales increased by
• Average aftermarket parts sales prices increased sales by
primarily due to higher price realization in
• Average aftermarket parts direct costs increased
material and freight costs.
• Warehouse and other indirect costs increased
higher salaries and related expenses.
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--------------------------------------------------------------------------------• The currency translation effect on sales and cost of sales primarily reflects
a decline in the value of the euro relative to the
• Parts gross margins in the first quarter of 2022 increased to 30.1% from 28.3%
in the first quarter of 2021 due to the factors noted above.
Parts SG&A expense increased in the first quarter of 2022 to$54.9 million from$51.7 million in 2021, primarily due to higher salaries and related expenses. As a percentage of sales, Parts SG&A was 4.0% in the first quarter of 2022, compared to 4.5% in the first quarter of 2021.
Financial Services
The Company's Financial Services segment accounted for 6% of revenues in the first quarter of 2022, compared to 7% in the first quarter of 2021.
($ in millions) Three Months Ended March 31, 2022 2021 % CHANGE New loan and lease volume: U.S. and Canada$ 836.8 $ 734.5 14 Europe 350.2 328.9 6 Mexico, Australia and other 297.2 208.1 43$ 1,484.2 $ 1,271.5 17 New loan and lease volume by product: Loans and finance leases$ 1,243.9 $ 1,032.1 21 Equipment on operating lease 240.3 239.4$ 1,484.2 $ 1,271.5 17 New loan and lease unit volume: Loans and finance leases 9,600 9,160 5 Equipment on operating lease 2,880 2,450 18 12,480 11,610 7 Average earning assets: U.S. and Canada$ 8,511.0 $ 8,752.5 (3 ) Europe 3,826.5 3,920.3 (2 ) Mexico, Australia and other 2,326.7 2,025.3 15$ 14,664.2 $ 14,698.1 Average earning assets by product: Loans and finance leases$ 10,073.8 $ 9,786.4
3
Dealer wholesale financing 1,671.7 1,721.9 (3 )
Equipment on lease and other 2,918.7 3,189.8 (8 )
$ 14,664.2 $ 14,698.1
Revenues:
U.S. and Canada $ 168.6 $ 189.5 (11 )
Europe 129.5 182.1 (29 )
Mexico, Australia and other 68.1 60.4 13
$ 366.2 $ 432.0 (15 )
Revenue by product:
Loans and finance leases $ 118.4 $ 118.1
Dealer wholesale financing 13.9 11.8 18
Equipment on lease and other 233.9 302.1 (23 )
$ 366.2 $ 432.0 (15 )
Income before income taxes $ 147.0 $ 76.4 92
New loan and lease volume was $1,484.2 million in the first quarter of 2022
compared to $1,271.5 million in the first quarter of 2021, reflecting higher new
loan and lease volume primarily in the U.S. and Canada , Brasil and Australia .
PFS finance market share on new PACCAR truck sales was 27.7% in the first
quarter of 2022 compared to 24.9% in the first quarter of 2021.
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In the first quarter of 2022, PFS revenues were $366.2 million compared to
$432.0 million in the first quarter of 2021, reflecting lower used truck sales
in Europe and the U.S. The effects of currency translation decreased PFS
revenues by $9.4 million in the first quarter of 2022, primarily due to a weaker
euro relative to the U.S. dollar.
PFS income before income taxes increased to a record $147.0 million in the first
quarter of 2022 from $76.4 million in the first quarter of 2021, primarily due
to improved used truck results. The effect of currency translation decreased
income before income taxes by $2.7 million in the first quarter of 2022,
reflecting a decline in the value of the euro relative to the U.S. dollar.
Included in Financial Services "Other assets" on the Company's Consolidated
Balance Sheets are used trucks held for sale, net of impairments, of $72.4
million at March 31, 2022 and $92.1 million at December 31, 2021 . These trucks
are primarily units returned from matured operating leases in the ordinary
course of business, and also include trucks acquired from repossessions or
through acquisitions of used trucks in trades related to new truck sales and
trucks returned from residual value guarantees (RVGs).
The Company recognized gains on used trucks, excluding repossessions, of $35.2
million in the first quarter of 2022 compared to losses of $14.4 million in the
first quarter of 2021. There were no losses on multiple unit transactions
included in the first quarter of 2022 compared to $10.8 million in the first
quarter of 2021. Used truck losses related to repossessions, which are
recognized as credit losses, and used truck gains, which are recognized as
credit recoveries, were not significant for either the first quarter of 2022 or
2021.
The major factors for the changes in interest and fees, interest and other
borrowing expenses and finance margin for the three months ended
INTEREST
AND OTHER
INTEREST BORROWING FINANCE
($ in millions) AND FEES EXPENSES MARGIN
Three Months Ended March 31, 2021 $ 129.9 $ 42.0 $ 87.9
Increase (decrease)
Average finance receivables 5.0 5.0
Average debt balances (.1 ) .1
Yields (1.4 ) (1.4 )
Borrowing rates (2.2 ) 2.2
Currency translation and other (1.2 ) .1 (1.3 )
Total increase (decrease) 2.4 (2.2 ) 4.6
Three Months Ended
• Average finance receivables increased
exchange effects) in the first quarter of 2022 primarily due to higher average
loan balances, partially offset by lower dealer wholesale balances.
• Lower portfolio yields (4.5% in 2022 compared to 4.6% in 2021) decreased
interest and fees by
due to lower market rates in
• Lower borrowing rates (1.5% in 2022 compared to 1.6% in 2021) were primarily
due to lower debt market rates in
• The currency translation effects reflect a decrease in the value of foreign
currencies relative to the
The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:
($ in millions) Three Months Ended March 31, 2022 2021
Operating lease and rental revenues
20.6 81.7
Insurance, franchise and other revenues 4.7 4.5
Operating lease, rental and other revenues
Depreciation of operating lease equipment
10.4 30.9
Cost of used truck sales 19.7 81.6
Insurance, franchise and other expenses .9 1.0
Depreciation and other expenses $ 143.5 $ 278.7
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The major factors for the changes in operating lease, rental and other revenues,
depreciation and other expenses and lease margin between the three months ended
March 31, 2022 and 2021 are outlined below:
OPERATING
LEASE, RENTAL DEPRECIATION
AND OTHER AND OTHER LEASE
($ in millions) REVENUES EXPENSES MARGIN
Three Months Ended March 31, 2021 $ 302.1 $ 278.7 $ 23.4
(Decrease) increase
Used truck sales (59.9 ) (60.7 ) .8
Results on returned lease assets (63.3 )
63.3
Average operating lease assets (5.8 ) (4.4 ) (1.4 ) Revenue and cost per asset 5.3 (.7 )
6.0
Currency translation and other (7.8 ) (6.1 ) (1.7 ) Total (decrease) increase (68.2 ) (135.2 )
67.0
Three Months Ended
• A lower sales volume of used trucks in
million and related depreciation and other expenses by
• Results on returned lease assets decreased depreciation and other expenses by
compared to losses in 2021 and lower impairments in
result of higher used truck market values.
• Average operating lease assets decreased
exchange effects), which decreased revenues by
depreciation and other expenses by
• Revenue per asset increased
utilization. Cost per asset decreased
equipment on operating lease and lower operating lease impairments in
• The currency translation effects reflect a decrease in the value of foreign
currencies relative to the
Financial Services SG&A expense was
The following table summarizes the provision for losses on receivables and net charge-offs:
($ in millions)
Three Months Ended March 31, 2022 2021
PROVISION FOR NET PROVISION FOR NET
LOSSES ON CHARGE- LOSSES ON CHARGE-
RECEIVABLES OFFS RECEIVABLES OFFS
U.S. and Canada $ (2.5 ) $ (.6 ) $ .4 $ .3
Europe .2 1.0 .6
Mexico, Australia and other 2.7 1.1 2.3 1.6
$ .2 $ .7 $ 3.7 $ 2.5 The provision for losses on receivables decreased to
The Company modifies loans and finance leases as a normal part of its Financial
Services operations. The Company may modify loans and finance leases for
commercial reasons or for credit reasons. Modifications for commercial reasons
are changes to contract terms for customers that are not considered to be in
financial difficulty. Insignificant delays are modifications extending terms up
to three months for customers experiencing some short-term financial stress, but
not considered to be in financial difficulty. Modifications for credit reasons
are changes to contract terms for customers considered to be in financial
difficulty. The Company's modifications typically result in granting more time
to pay the contractual amounts owed and charging a fee and interest for the term
of the modification. When considering whether to modify customer accounts for
credit reasons, the Company evaluates the creditworthiness of the customers and
modifies those accounts the Company considers likely to perform under the
modified terms. When the Company modifies a loan or finance lease for credit
reasons and grants a concession, the modification is classified as a troubled
debt restructuring (TDR).
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The post-modification balances of accounts modified during the three months
ended
2022 2021
AMORTIZED % OF TOTAL AMORTIZED % OF TOTAL
($ in millions) COST BASIS PORTFOLIO* COST BASIS PORTFOLIO*
Commercial $ 72.1 2.8 % $ 67.0 2.7 %
Insignificant delay 18.1 .7 % 23.6 1.0 %
Credit - no concession 21.1 .8 % 33.5 1.4 %
Credit - TDR .6 5.4 .2 %
$ 111.9 4.3 % $ 129.5 5.3 %
* Amortized cost basis immediately after modification as a percentage of ending
retail portfolio, on an annualized basis.
During the first three months of 2022, total modification activity decreased compared to the first three months of 2021, reflecting lower modifications for insignificant delays, Credit - no concession and Credit -TDR, partially offset by higher commercial modifications. The increase in modifications for Commercial reasons primarily reflects higher volume of refinancing. The decrease in modifications for Insignificant delay reflects the impact of fleet customers requesting payment relief inItaly related to the COVID-19 pandemic during the first three months of 2021. The decrease in modifications for Credit - no concession is primarily due to lower volumes of refinancing and requests for payment relief inMexico andEurope . The decrease in modifications for Credit -TDR is primarily due to contract modifications related to COVID-19 for customers inItaly .
The following table summarizes the Company's 30+ days past due accounts:
March 31 December
31
2022 2021 2021
Percentage of retail loan and lease accounts
30+ days past due:
U.S. and Canada .1 %
Europe .6 % .4 % .6 %
Mexico, Australia and other 1.8 % 1.2 % 1.6 %
Worldwide .4 % .3 % .4 %
Accounts 30+ days past due was .4% at
When the Company modifies a 30+ days past due account, the customer is then generally considered current under the revised contractual terms. The Company modified$9.4 million of accounts worldwide during the first quarter of 2022,$.4 million during the fourth quarter of 2021 and$4.2 million during the first quarter of 2021 that were 30+ days past due and became current at the time of modification. Had these accounts not been modified and continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been as follows:March 31 December
31
2022 2021 2021
Pro forma percentage of retail loan and lease
accounts 30+ days past due:
U.S. and Canada .1 %
Europe .6 % .4 % .6 %
Mexico, Australia and other 2.3 % 1.2 % 1.7 %
Worldwide .5 % .3 % .4 %
Modifications of accounts in prior quarters that were more than 30 days past due
at the time of modification are included in past dues if they were not
performing under the modified terms at March 31, 2022 , December 31, 2021 and
March 31, 2021 . The effect on the allowance for credit losses from such
modifications was not significant at March 31, 2022 , December 31, 2021 and
March 31, 2021 .
The Company's annualized pre-tax return on average assets for Financial Services
increased to 3.8% in the first quarter of 2022 from 2.0% in the same period of
2021, primarily driven by improved used truck results.
Other
Other includes the winch business as well as sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and a portion of corporate expense. Other sales represent less than 1% of consolidated net sales and revenues for both the first quarter of 2022 and 2021. Other SG&A increased to$19.7 million for the first quarter of 2022 from$17.1 million for the first quarter of 2021, primarily due to higher salaries and related expenses. - 38 - --------------------------------------------------------------------------------
For the first quarter, Other income before income taxes was
Investment loss for the first quarter was
Income Taxes
The effective tax rate for the first quarter of 2022 was 22.2% compared to 22.6% for the first quarter of 2021. The lower effective tax rate in the first quarter of 2022 was primarily due to the change in mix of income generated in jurisdictions with lower tax rates in 2022 as compared to 2021. ($ in millions) Three Months Ended March 31, 2022 2021 Domestic income before taxes$ 474.0 $ 385.7 Foreign income before taxes 297.4 222.6 Total income before taxes$ 771.4 $ 608.3
Domestic pre-tax return on revenues 14.1 % 12.5 % Foreign pre-tax return on revenues 9.6 % 8.0 % Total pre-tax return on revenues 11.9 % 10.4 %
For the first quarter of 2022, both domestic and foreign income before income taxes and pre-tax return on revenues increased primarily due to the improved results from Truck, Parts and Financial Services operations.
LIQUIDITY AND CAPITAL RESOURCES:
March 31 December 31
($ in millions) 2022 2021
Cash and cash equivalents $ 3,314.9 $ 3,428.3
Marketable securities 1,515.2 1,559.4
$ 4,830.1 $ 4,987.7
The Company's total cash and marketable securities at March 31, 2022 decreased
$157.6 million from the balances at December 31, 2021 . Total cash and marketable
securities are primarily intended to provide liquidity while preserving capital.
The change in cash and cash equivalents is summarized below:
($ in millions) Three Months Ended March 31, 2022 2021 Operating activities: Net income$ 600.5 $ 470.8 Net income items not affecting cash 45.2
208.3
Changes in operating assets and liabilities, net (186.4 ) (142.2 ) Net cash provided by operating activities 459.3
536.9
Net cash used in investing activities (406.1 ) (215.7 ) Net cash used in financing activities (156.4 ) (508.3 ) Effect of exchange rate changes on cash and cash equivalents (10.2 ) (32.5 ) Net decrease in cash and cash equivalents (113.4 ) (219.6 ) Cash and cash equivalents at beginning of period 3,428.3
3,539.6
Cash and cash equivalents at end of period$ 3,314.9
Operating activities: Cash provided by operations decreased by$77.6 million to$459.3 million in the first three months of 2022 from$536.9 million in 2021. Lower operating cash flows reflect$354.2 million in wholesale receivables in the Financial Services segment primarily due to increasing wholesale receivables the first quarter of 2022, and higher cash outflows of$78.8 million for accounts payables as payments exceeded purchases of goods and services. The lower operating cash flows were partially offset by higher cash inflows of$140.7 million from trade receivables, higher net change in derivatives of$70.1 million primarily related to exchange rate fluctuations and lower cash outflows for payment of income taxes of$50.3 million . Additionally, the lower operating cash flows were offset by RVG contracts accounted for as operating leases for$43.2 million primarily due to fewer equipment returns. - 39 - -------------------------------------------------------------------------------- Investing activities: Cash used in investing activities increased by$190.4 million to$406.1 million in the first three months of 2022 from$215.7 million in 2021. Higher net cash used in investing activities reflects higher net originations from retail loans and financing leases of$148.4 million and lower proceeds from asset disposals of$52.8 million . Financing activities: Cash used in financing activities decreased by$351.9 to$156.4 million in the first three months of 2022 from$508.3 in 2021. In the first three months of 2022, cash provided by net borrowing activities in 2022 was$468.2 million ,$650.2 million higher than the cash used by net borrowing activities of$182.0 million in 2021. The Company paid$639.4 million in dividends in 2022 compared to$353.7 million in 2021 due to a higher extra dividend paid inJanuary 2022 .
Credit Lines and Other
The Company has line of credit arrangements of$3.66 billion , of which$3.36 billion were unused atMarch 31, 2022 . Included in these arrangements are$3.00 billion of committed bank facilities, of which$1.00 billion expires inJune 2022 ,$1.00 billion expires inJune 2024 and$1.00 billion expires inJune 2026 . The Company intends to extend or replace these credit facilities on or before expiration to maintain facilities of similar amounts and duration. These credit facilities are maintained primarily to provide backup liquidity for commercial paper borrowings and maturing medium-term notes. There were no borrowings under the committed bank facilities for the three months endedMarch 31, 2022 . OnDecember 4, 2018 ,PACCAR's Board of Directors approved the repurchase of up to$500.0 million of the Company's outstanding common stock. As ofMarch 31, 2022 , the Company has repurchased$110.0 million of shares under this plan. There were no repurchases made under this plan during the first quarter of 2022.
Truck, Parts and Other
The Company provides funding for working capital, capital expenditures, R&D, dividends, stock repurchases and other business initiatives and commitments primarily from cash provided by operations. Management expects this method of funding to continue in the future. Investments for manufacturing property, plant and equipment in the first three months of 2022 were$110.5 million compared to$90.5 million for the same period of 2021. Over the past decade, the Company's combined investments in worldwide capital projects and R&D totaled$7.21 billion and have significantly increased the operating capacity and efficiency of its facilities and enhanced the quality and operating efficiency of the Company's premium products. In 2022, total capital investments forPACCAR are expected to be$425 to$475 million and R&D is expected to be$350 to$400 million . The Company is increasing its investment in clean diesel and electric powertrain technologies, autonomous systems, connected vehicle services, next-generation manufacturing and distribution capabilities.
Financial Services
The Company funds its financial services activities primarily from collections on existing finance receivables and borrowings in the capital markets. The primary sources of borrowings in the capital markets are commercial paper and medium-term notes issued in the public markets and, to a lesser extent, bank loans. InNovember 2021 , the Company'sU.S. finance subsidiary,PACCAR Financial Corp. (PFC), filed a shelf registration under the Securities Act of 1933. The total amount of medium-term notes outstanding for PFC as ofMarch 31, 2022 was$5.50 billion . InApril 2022 , PFC issued$400.0 million of medium-term notes under this registration. The registration expires inNovember 2024 and does not limit the principal amount of debt securities that may be issued during that period. As ofMarch 31, 2022 , the Company's European finance subsidiary,PACCAR Financial Europe, had €1.60 billion available for issuance under a €2.50 billion medium-term note program listed on the Euro MTF Market of theLuxembourg Stock Exchange . This program expires inJuly 2022 and is renewed annually through the filing of a new listing. InAugust 2021 , PACCAR Financial Mexico registered a10.00 billion Mexican peso program with the Comision Nacional Bancaria y de Valores to issue medium-term notes and commercial paper. The registration expires inAugust 2026 and limits the amount of Commercial paper (up to one year) to5.00 billion Mexican pesos . AtMarch 31, 2022 ,9.32 billion Mexican pesos were available for issuance. InAugust 2018 , the Company's Australian subsidiary,PACCAR Financial Pty. Ltd. (PFPL), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFPL as ofMarch 31, 2022 was700.0 million Australian dollars . - 40 - -------------------------------------------------------------------------------- InMay 2021 , the Company's Canadian subsidiary,PACCAR Financial Ltd. (PFLCanada ), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFL Canada as ofMarch 31, 2022 was150.0 million Canadian dollars . The Company believes its cash balances and investments, collections on existing finance receivables, committed bank facilities and current investment-grade credit ratings of A+/A1 will continue to provide it with sufficient resources and access to capital markets at competitive interest rates and therefore contribute to the Company maintaining its liquidity and financial stability. In the event of a decrease in the Company's credit ratings or a disruption in the financial markets, the Company may not be able to refinance its maturing debt in the financial markets. In such circumstances, the Company would be exposed to liquidity risk to the degree that the timing of debt maturities differs from the timing of receivable collections from customers. The Company believes its various sources of liquidity, including committed bank facilities, would continue to provide it with sufficient funding resources to service its maturing debt obligations. FORWARD-LOOKING STATEMENTS: This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future results of operations or financial position and any other statement that does not relate to any historical or current fact. Such statements are based on currently available operating, financial and other information and are subject to risks and uncertainties that may affect actual results. Risks and uncertainties include, but are not limited to: a significant decline in industry sales; competitive pressures; reduced market share; reduced availability of or higher prices for fuel; increased safety, emissions or other regulations or tariffs resulting in higher costs and/or sales restrictions; currency or commodity price fluctuations; lower used truck prices; insufficient or under-utilization of manufacturing capacity; supplier interruptions; insufficient liquidity in the capital markets; fluctuations in interest rates; changes in the levels of the Financial Services segment new business volume due to unit fluctuations in newPACCAR truck sales or reduced market shares; changes affecting the profitability of truck owners and operators; price changes impacting truck sales prices and residual values; insufficient supplier capacity or access to raw materials and components, including semiconductors; labor disruptions; shortages of commercial truck drivers; increased warranty costs; pandemics; global conflicts; litigation, including EC settlement-related claims; or legislative and governmental regulations. A more detailed description of these and other risks is included under the headings Part I, Item 1A, "Risk Factors" in the Company's Annual Report on Form 10K for the year endedDecember 31, 2021 and in Part II, Item 1, "Legal Proceedings" and Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q. - 41 -
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