UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2025 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-14817 PACCAR Inc (Exact name of registrant as specified in its charter) Delaware 91-0351110 (State or other jurisdiction of incorporation or o ...

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Paccar (PCAR) Q1 2025 Earnings Call April 29, 2025 04:16 PM ET Speaker0 Good morning, and welcome to PACCAR's First Quarter twenty twenty five Earnings Conference Call. All lines will be in listen only mode until the question and answer session. Today's call is being recorded. And if anyone has an objection, you should disconnect at this time. I would now like to introduce Mr. Ken Hastings, PACCAR's Director, Investor Relations. Mr. Hastings, please go ahead. Speaker1 Good morning. We would like to welcome ...

Core Insights - PACCAR Inc. reported earnings of $1.46 per share for Q1 2025, missing the Zacks Consensus Estimate of $1.57 and declining from $2.27 in the same period last year [1] - Consolidated revenues were $7.44 billion, down from $8.74 billion in Q1 2024, with Truck, Parts, and Others sales at $6.91 billion [1] Revenue Breakdown - Truck segment revenues totaled $5.23 billion, lower than $6.54 billion in the prior-year quarter and missing the estimate of $5.43 billion; global truck deliveries were 40,100 units, down from 48,110 units in Q1 2024 [2] - Parts segment revenues were $1.69 billion, slightly up from $1.68 billion year-over-year and matching estimates; pre-tax income was $426.5 million, down from $455.8 million [3] - Financial Services segment revenues reached $528 million, higher than $509.3 million in the year-ago quarter but below the estimate of $553 million; pre-tax income increased to $121.1 million from $113.9 million [4] Expense and Financial Position - Selling, general and administrative expenses decreased to $143.3 million from $147.6 million year-over-year; R&D expenses rose to $115.4 million from $105.5 million [5] - As of March 31, 2025, PACCAR's cash and marketable debt securities totaled $8.1 billion, down from $9.65 billion as of December 31, 2024 [5] Future Outlook - Capital expenditures for 2025 are projected between $700 million and $800 million; R&D expenses are estimated to be in the range of $450 million to $480 million [6]

Financial Data and Key Metrics Changes - PACCAR achieved revenues of $7.4 billion and adjusted net income of $770 million in Q1 2025, with PACCAR Parts achieving record quarterly revenues of $1.7 billion and pre-tax income of $427 million [6][10] - PACCAR Financial Services reported pre-tax income of $121 million, a 6% increase from $114 million in the same quarter last year [6][12] - Gross margins for truck parts and other were 14.8% in Q1, with expectations for Q2 margins to be in the range of 13% to 14% due to economic uncertainties and tariffs [8][10] Business Line Data and Key Metrics Changes - PACCAR Parts experienced record revenues and excellent gross margins of 30.7% in Q1, with expectations for parts sales to grow by 2% to 4% in Q2 and for the full year [10][11] - The truck divisions performed well, with PACCAR delivering 40,100 trucks in Q1 and anticipating deliveries of 37,000 to 39,000 trucks in Q2 [7][10] Market Data and Key Metrics Changes - The U.S. and Canadian Class 8 market is estimated to be between 235,000 to 265,000 trucks for the year, while the European above 16-ton market is projected to be between 270,000 to 300,000 trucks [6][7] - The South American above 16-ton truck market is expected to be in the range of 100,000 to 110,000 vehicles [7] Company Strategy and Development Direction - PACCAR is investing $700 million to $800 million in capital investments and $450 million to $480 million in R&D for 2025, focusing on next-generation powertrains and advanced driver assistance systems [12][13] - The company is expanding its manufacturing capacity, including a DAF factory in Brazil and a new engine remanufacturing facility in Mississippi [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that the North American truck market is affected by uncertain economic conditions and tariffs, but anticipates increased customer demand in the second half of the year as policies stabilize [8][12] - The company expressed confidence in its ability to manage costs and pricing amidst tariff uncertainties, emphasizing the importance of maintaining strong relationships with customers [20][30] Other Important Information - The adjusted net income of $770 million excludes a $265 million after-tax provision related to EU civil litigation settlements, with progress being made in resolving these issues [10] - The company has a strong focus on enhancing operational efficiency through connected vehicle technology, which is expected to benefit parts sales [11][52] Q&A Session Summary Question: Can you elaborate on the guidance for gross margins and tariff impacts? - Management indicated that the gross margin guidance for Q2 includes current tariff impacts, but the exact effects are uncertain due to ongoing investigations into tariff policies [55][56] Question: How are you managing inventory levels? - PACCAR reported that its inventory levels for Class A trucks are around 3.1 months, which is lower than the industry average of four months, indicating a comfortable position [36][37] Question: What is the outlook for parts growth? - Management expressed confidence in parts growth despite a soft market, expecting margins to remain above 30% and sales to continue growing due to connected vehicle technology [50][51] Question: How does the company view the impact of EPA emissions changes? - Management stated that they are prepared for potential changes in emissions standards and have made investments in clean diesel technology to meet future requirements [44][46] Question: What is the visibility on orders and deliveries for the rest of the year? - Management indicated that they have a substantial backlog for Q2 and are taking orders for Q3 and Q4, with expectations for stable demand in both North America and Europe [86][87]

Company Performance - Paccar reported quarterly earnings of $1.46 per share, missing the Zacks Consensus Estimate of $1.57 per share, and down from $2.27 per share a year ago, representing an earnings surprise of -7.01% [1] - The company posted revenues of $6.91 billion for the quarter, missing the Zacks Consensus Estimate by 2.28%, and down from $8.24 billion year-over-year [2] - Over the last four quarters, Paccar has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Movement and Outlook - Paccar shares have declined approximately 11.5% since the beginning of the year, compared to a -6% decline in the S&P 500 [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $1.68 for the coming quarter and $6.62 for the current fiscal year [4][7] - The current Zacks Rank for Paccar is 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Automotive - Domestic industry, to which Paccar belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Paccar's stock performance [5]

Financial Performance - PACCAR reported quarterly revenues of $7.44 billion in Q1 2025, down from $8.74 billion in Q1 2024, reflecting a decrease of approximately 14.9%[1] - Net income for Q1 2025 was $505.1 million ($0.96 per diluted share), including a $264.5 million after-tax charge related to civil litigation in Europe[1] - Adjusted net income (non-GAAP) for Q1 2025 was $769.6 million ($1.46 per diluted share), compared to $1.20 billion ($2.27 per diluted share) in Q1 2024[1][3] - Net income for Q1 2025 decreased to $505.1 million from $1,195.3 million in Q1 2024, representing a decline of approximately 57.8%[25] - Total sales and revenues for Q1 2025 were $7,441.7 million, down from $8,744.3 million in Q1 2024, a decrease of about 14.9%[27] - Truck segment revenue fell to $5,225.8 million in Q1 2025 from $6,541.0 million in Q1 2024, a decline of approximately 20.1%[27] - Adjusted net income (non-GAAP) for Q1 2025 was $769.6 million, compared to $1,534.5 million in Q1 2024, reflecting a decrease of approximately 50.2%[35] Cash Flow and Dividends - Cash and cash equivalents at the end of Q1 2025 were $5,517.7 million, down from $6,194.5 million at the end of Q1 2024, a decrease of about 10.9%[25] - Net cash provided by operating activities for Q1 2025 was $910.3 million, compared to $1,469.0 million in Q1 2024, a decline of approximately 38.0%[25] - Payments of cash dividends in Q1 2025 totaled $1,747.0 million, slightly lower than $1,816.5 million in Q1 2024, a decrease of about 3.8%[25] - The company experienced a net decrease in cash and cash equivalents of $1,543.1 million in Q1 2025, compared to a decrease of $987.2 million in Q1 2024[25] Investments and Expenditures - The company invested $171.9 million in capital projects and $115.4 million in research and development in Q1 2025[3][14] - PACCAR plans to invest between $700-$800 million in capital expenditures and $450-$480 million in R&D expenses for the full year 2025[14] Market Performance - DAF Brasil has achieved a 10% market share in the above 16-tonne truck market in Brazil, with plans for further expansion across South America[6] - The North American Class 8 truck market is projected to have retail sales between 235,000 and 265,000 trucks in 2025[4] Assets and Equity - PACCAR's total assets amounted to $42.72 billion as of March 31, 2025, with stockholders' equity at $18.02 billion[23] Deliveries - New truck deliveries decreased to 40,100 units in Q1 2025 from 48,100 units in Q1 2024, a reduction of about 16.5%[31] Charges and Litigation - The company recorded a pretax charge of $350.0 million related to civil litigation in Europe, impacting overall profitability[34]

Core Viewpoint - Paccar (PCAR) is expected to report a significant decline in quarterly earnings and revenues, with analysts predicting earnings of $1.57 per share, a decrease of 30.8% year-over-year, and revenues of $7.07 billion, down 14.1% from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 9.4% in the last 30 days, indicating a reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts project 'Sales and Revenues- Parts' to be $1.72 billion, reflecting a year-over-year increase of 2.8% [5]. - 'Sales and Revenues- Truck' is expected to reach $5.32 billion, indicating a decline of 18.7% from the same quarter last year [5]. - 'Sales and Revenues- Other' is forecasted at $17.87 million, a decrease of 1.3% year-over-year [5]. - 'Sales and Revenues- Financial Services' is estimated at $512.73 million, showing a slight increase of 0.7% from the prior year [6]. Delivery Estimates - Total 'Truck deliveries' are projected at 39,856, down from 48,100 in the same quarter last year [6]. - 'Truck deliveries - Other' are expected to be 7,206, slightly up from 7,000 year-over-year [6]. - 'Truck deliveries - Europe' is estimated at 10,502, down from 11,600 in the previous year [7]. - 'Truck deliveries - U.S and Canada' are forecasted at 22,148, compared to 29,500 in the same quarter last year [7]. Profit Estimates - 'Pretax Profit- Financial Services' is estimated at $105.99 million, down from $113.90 million year-over-year [8]. - 'Pretax Profit- Parts' is projected to be $420.38 million, compared to $455.80 million in the same quarter last year [8]. - 'Pretax Profit- Truck' is expected to reach $508.81 million, a significant decrease from $881.60 million in the previous year [9]. Stock Performance - Paccar shares have declined by 5.6% over the past month, compared to a 4.8% decline in the Zacks S&P 500 composite [9].

Group 1 - Paccar (PCAR) shares increased by 8.7% to $93.93, following a significant trading volume, contrasting with a 17.5% loss over the past four weeks [1][2] - The stock surge is attributed to a broader market rebound after the Trump administration announced a temporary halt on reciprocal tariffs, alleviating fears of a recession [2] - Paccar is expected to report quarterly earnings of $1.58 per share, reflecting a year-over-year decline of 30.4%, with revenues projected at $7.05 billion, down 14.3% from the previous year [3] Group 2 - The consensus EPS estimate for Paccar has been revised down by 1.5% over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] - Paccar holds a Zacks Rank of 3 (Hold), while Ford Motor Company, another player in the automotive industry, closed 9.3% higher at $9.50, despite a -10.3% return over the past month [4] - Ford Motor's EPS estimate has decreased by 12.8% over the past month to -$0.02, representing a significant year-over-year change of -104.1%, and currently holds a Zacks Rank of 5 (Strong Sell) [5]

Company Performance - Paccar's stock closed at $98.19, reflecting a -1.35% change from the previous day, which is less than the S&P 500's daily loss of 0.33% [1] - Over the past month, Paccar's shares have depreciated by 6.13%, underperforming the Auto-Tires-Trucks sector's loss of 4.57% and the S&P 500's loss of 4.03% [1] Earnings Forecast - Paccar is expected to report an EPS of $1.59, indicating a 29.96% decrease from the same quarter last year, with anticipated revenue of $7.05 billion, down 14.34% year-over-year [2] - For the full year, earnings are projected at $7.39 per share and revenue at $31.09 billion, representing changes of -6.46% and -1.51% from the prior year [3] Analyst Estimates - Recent changes to analyst estimates for Paccar reflect shifting short-term business dynamics, with positive revisions indicating a favorable outlook on the company's health and profitability [3] - The Zacks Consensus EPS estimate has fallen by 2.38% over the past month, and Paccar currently holds a Zacks Rank of 3 (Hold) [5] Valuation Metrics - Paccar is trading with a Forward P/E ratio of 13.47, which is a premium compared to the industry's average Forward P/E of 11.02 [6] - The company has a PEG ratio of 1.81, while the Automotive - Domestic industry has an average PEG ratio of 0.79 [7] Industry Context - The Automotive - Domestic industry, part of the Auto-Tires-Trucks sector, has a Zacks Industry Rank of 203, placing it in the bottom 20% of over 250 industries [8]