Balloon Payments Option Fulfill Seasonal Requirements
87 Year-Old Ag Products Hauler Finds PACCAR Financial Meets its Complex Financing Needs - June 2013

Antonini Enterprises operates two trucking companies dedicated to moving agricultural products and related general commodities in the San Joaquin Valley in California.

Because its business is largely influenced by the growing season in the world’s most productive agricultural region, Antonini looks for finance providers who can offer more than a one-size-fits-all, cookie-cutter approach to financing the 220 trucks in the fleets of its two companies.

Karen Wuellner, vice president of Antonini Freight Express Inc. and Antonini Fruit Express, said Antonini’s two companies need truck finance providers who can offer competitive rates and flexible payment schedules. Balloon payments allow the company to make smaller monthly payments throughout the year and larger payments when business picks up significantly during harvest time. That allows Antonini to match their payments with their cash flow throughout the year.

“Because we’re able to arrange financing with PACCAR Financial with flexible monthly payments, we feel we can more easily replace our older equipment,” Wuellner said. “As a result, we feel we’re in a much better position to stay in compliance with California’s Air Resources Board (CARB) emission standards.”

CARB regulations approved in 2008 require eventual replacement of all heavy-duty diesel-fueled trucks with units equipped with engines that meet the EPA’s 2010 emission standards. The regulations require truck fleet operators, who filed replacement plans with the state board, to replace non-compliant trucks according to their plans’ established timetables beginning in 2013.

“The ability of PACCAR Financial to meet our needs for balloon payments is not unique. I ask all of our finance providers in their proposals to allow for balloon payments in keeping with our company’s needs,” she added. “But with PACCAR Financial, I find that I have to provide fewer explanations. They understand our business. That’s why we do much of our truck financing with PACCAR Financial.”

PACCAR Financial is the captive finance division for Kenworth. For more than 50 years, it has provided truck owners like Antonini innovative purchase and lease plans to meet their individual business needs through the Kenworth network of dealers.

Because of the seasonal nature of the company’s business, Wuellner said she can’t really provide a capital expenditure budget, something other finance providers request. Wuellner often doesn’t know what the company will be spending on trucks and other equipment until well after the harvest is in and the company’s trucks have finished moving produce grown in San Joaquin Valley, usually around November or December.

About 120 of the 220 trucks Antonini operates are assigned to Antonini Fruit Express and the rest to Antonini Freight Express. Many of the trucks both companies operate are Kenworth T800s and Kenworth T660s and are financed using PACCAR Financial loans. Antonini Fruit Express usually arranges its finance loans with smaller, even monthly payments through most of the year with large balloon payments at the end. The larger payments often come due during the peak of the harvest season, when revenue is at its highest, and at the end of the five-year loans. At which point, there’s often enough equity in the trucks, because of the low mileage and Kenworth’s high resale value, to refinance the last balloon payments for another two to three years.

Antonini Fruit Express hauls tomatoes, peaches, wheat, rice, vegetables, walnuts, pistachios and almonds from farms throughout the valley to processors from Orland in the north to Bakersfield in the south. Typically, Antonini Fruit Express trucks begin operation in March and continue running until November or December, depending on the weather. The busiest time of the year is usually between July and September.

Antonini Freight Express, a general freight carrier, operates yearlong, with a seasonal uptick in business during the summer. Initially, the company hauled cannery-related freight including steel, corrugated cardboard and empty cans. Later, Antonini Freight Express moved into flatbed, dry van and container operations. The flatbed and van division hauls steel coil, building materials, empty cans, canned goods, and corrugated fiber. The container division usually hauls bulk wine, tomato paste and edible oils.

PACCAR Financial’s unique flexible payment option gives Antonini Fruit Express another financing choice for dealing with heavy seasonal needs on a consistent basis without giving up the benefits of acquiring the use of premium trucks.

“PACCAR Financial understands the cyclical nature of our business, the industry and the trucks we choose,” Wuellner said. “They work with our local Kenworth dealer, Pape Kenworth in French Camp, Calif., who knows our business and knows how our trucks are used. Our trucks don’t put on a lot of miles and that helps us in negotiating larger balloon payments other finance providers would be uncomfortable with. I think the resale value of the Kenworth trucks we operate makes a difference. PACCAR Financial certainly understands the value is there while other finance providers have to be convinced. The others are used to financing computer equipment, which just isn’t the same as trucks.”

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