Tim Denoyer — Auto & Truck Manufacturing
Below is our Auto & Truck Manufacturing library of research listed in reverse chronological order. Please use the search box to look for research on a specific company or topic, or use the Calendar, Archives, or Sector links at left to browse for research from a specific time period or sector. If you are a Wolfe Trahan client and can not access any of the links in our library, please contact ITSupport@WolfeTrahan.com to request our PDF decryption plug-in.Under the Hood: Modest Pickup in August Truck Orders
Yesterday, ACT Research reported preliminary net orders of Class 8 trucks of 12,600 for August, up 8% sequentially from July, compared to an historical average sequential increase of 2%. August orders have historically been about 9% below an average month. Adjusting for this seasonality, August Class 8 orders suggest an annual production rate of about 165K-170K.
Under the Hood: August U.S. Auto Sales Unexciting But Inventory Unexpectedly Builds
The 11.5M U.S. light vehicle sales Seasonally Adjusted Annual Rate (SAAR) in August was unchanged from July and up slightly from the 2Q:10 SAAR of 11.3M. Unadjusted sales of 997K dropped -5% sequentially and -21% y/y from the cash for clunkers comparison.
Audio Brief: 3Q:10 Truck Equipment Survey
This audio brief and accompanying slides summarize the key takeaways from our recent proprietary 3Q:10 trucker survey. Our questions centered on truck demand fundamentals, fleet utilization and capacity, future equipment purchasing decisions, and the new 2010 engine technologies.
3Q:10 Truck Equipment Survey: Capex Plans Stronger But Demand Fundamentals Suggest Slow Cycle
In recent weeks we surveyed 52 US truck fleets about equipment issues. The results include tighter truck capacity and higher capex plans since 1Q:10. However, we still see an underutilized fleet by mileage and respondents are keeping trade cycles elevated by increasing equipment remanufacturing, suggesting a slower grind up.
BWA: Lowering Rating to Peer Perform from Outperform on Price Appreciation
BWA has gained 30% since late-May versus a 5% increase for our Auto & Truck Manufacturing Index ex-BWA and 2% for the S&P 500. We are lowering our rating on BWA to Peer Perform from Outperform as it closed within $1 of our recently raised $48 year-end target price, and at current levels we see the stock as fairly valued. We have not changed our modestly above Cons. EPS forecasts.
AONE: Disappointing 2Q But Little Change to the Outlook
AONE reported a 2Q EPS loss of -$0.33 vs our -$0.26 and Cons of -$0.27. Rev was also weaker than expected, 11% below our est and down 8% from 1Q:10 vs guidance in the ‘general range’ of 1Q:10. Rev mix was also below expectations as product rev declined 21% from 1Q and R&D Service rev grew 50% from 1Q. Mgmt lowered C10 revenue guidance to the low end of its prior $120M-$150M range.
JCI: Cranking the AC?
In this note, we look at several factors that suggest demand for JCI’s BE segment products and services are improving, albeit gradually in most cases. Relative to the consumer outlook, where we see risk of auto sales falling short of expectations on F11, we see a lower-risk outlook for commercial buildings as projects with typical lead times of 2-3 quarters, including stimulus projects, have begun to materialize in order trends.
Under the Hood: U.S. Auto Sales Show Gradual Improvement in July
The 11.5M light vehicle sales Seasonally Adjusted Annual Rate (SAAR) in July was 4% above June’s selling rate and that of 1H. This is below initial SAAR estimates of about 12M after OEMs released results on Tuesday as the BEA released its widely-used seasonal factors yesterday.
Under the Hood: July Class 8 Truck Orders Weaken
Yesterday, ACT Research reported preliminary net orders of Class 8 trucks of 11,800 for July, down 26% sequentially from June, compared to an historical average sequential decline of about 4%. July orders have been about 8% below an average month since 96, excluding 02 and 06 which were distorted by emissions pre-buys. The trailing 3- and 6-month avg order levels imply annual rates of 164K and 150K, and July orders suggest an annual rate of 142K.
BWA: Reiterating Outperform with Secular Growth Apparent in 2Q
BWA reported ongoing 2Q EPS of $0.78 versus our $0.69 and Cons. $0.67, excluding $0.10 of non-recurring charges. Rev grew 55% y/y, above our 48% estimate and above y/y global vehicle production growth of about 30% on new vehicle programs and about 3-4pp from acquisitions. Improved EBIT mgns drove most of the upside.
