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Management highlighted that the Section 232 truck tariff policy, effective November 1, provided advantages for PACCAR given its “local for local” manufacturing footprint across the U.S., Canada, and Mexico. Feight also said it was confirmed late in 2025 that the 35-milligram EPA 2027 NOx limit will go into effect in January of next year, which he said helps customers finalize buying plans.Feight characterized 2025 as a “dynamic year” for the North American truck market, citing soft freight conditions, tarif ...

Financial Data and Key Metrics Changes - PACCAR's fourth quarter revenues were $6.8 billion, with a net income of $557 million. For the full year 2025, revenues reached $28.4 billion and adjusted net income was $2.64 billion, marking the fourth highest profit year in company history and the 87th consecutive year of profits. The adjusted after-tax return on revenue was 9.3% [4][5][10] - PACCAR Parts and PACCAR Financial Services achieved quarterly and annual revenue records, contributing to a structurally stronger performance [4][10] Business Line Data and Key Metrics Changes - PACCAR Parts' annual revenues increased by 3% to a record $6.9 billion, with pre-tax profits of $1.67 billion. Fourth quarter revenues rose 4% to a record $1.7 billion, with pre-tax profits of $415 million [10][11] - PACCAR Financial Services achieved record annual revenues of $2.2 billion, with annual pre-tax income growing 11% to $485 million. Fourth quarter revenues were a record $569 million, with quarterly pre-tax income growing 10% to $115 million [11] Market Data and Key Metrics Changes - In the U.S. and Canadian Class 8 truck market, retail sales were 233,000 units, with PACCAR's market share at 30%. The 2026 market is forecasted to be between 230,000-270,000 vehicles [7] - The European above-16-ton truck market was 298,000 units in 2025, with expectations for 280,000-320,000 registrations in 2026. DAF trucks have a competitive advantage with innovative designs [8] Company Strategy and Development Direction - PACCAR is positioned well for upcoming regulatory changes, with a new lineup of trucks and engines that are efficient and high quality. The company is focusing on advanced technology and innovation, including next-generation clean diesel and battery-electric trucks [6][12] - The company aims to enhance profitability through improved customer service and technology, including agentic AI tools to increase vehicle uptime [10][12] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic year in the North American truck industry, with soft freight markets and uncertainties around tariffs and emissions policies. However, clarity on these issues is expected to improve customer demand [5][6] - The company anticipates 2026 to be a year of accelerated growth for customers, dealers, and PACCAR, with strong order intake and improved margins expected [9][16] Other Important Information - PACCAR declared dividends of $2.72 per share in 2025, resulting in a dividend yield of nearly 3%. The company has paid dividends for 84 consecutive years [10] - The company completed significant capital investments in 2025, totaling $728 million, with plans for similar investments in 2026 [11][12] Q&A Session Summary Question: Can you walk us through the margin improvement expected from 4Q to 1Q despite flat deliveries? - Management explained that margin improvement is expected due to the benefits from the Section 232 tariff and improved order intake, with margins projected to increase to 12.5%-13% in Q1 compared to 12% in Q4 [15][16] Question: What are you seeing in the performance of your aftermarket business in January by region? - Management forecasted a 3% growth year-over-year for Q1, with a mix shift towards required maintenance driving sales [27] Question: How do you think about market share versus unit profitability from a PACCAR standpoint? - Management expressed confidence in gaining market share and improving margins as the year progresses, especially with the clarity provided by the Section 232 tariff [32][33] Question: What is the expected price increase associated with the 2027 NOx regulations? - Management indicated a general expectation of a price increase around ±$10,000, but emphasized that this is subject to change based on further regulatory clarity [84] Question: How are you thinking about the potential for dealer stocking and the risk of an inventory overhang exiting 2026? - Management stated that while an inventory overhang has negative connotations, having inventory going into 2027 may not be problematic, and they are seeing dealers ordering stock trucks [91][92]

Paccar (NasdaqGS:PCAR) Q4 2025 Earnings call January 27, 2026 12:00 PM ET Company ParticipantsAngel Castillo - Executive DirectorBrice Poplawski - SVP and CFODavid Raso - Senior Managing Director and PartnerJamie Cook - Managing Director of Equity ResearchJeff Kauffman - Partner of Transportation and LogisticsJerry Revich - Managing DirectorKen Hastings - Director of Investor RelationsKevin Baney - PresidentPreston Feight - CEORob Wertheimer - Founding Partner and Director of ResearchStephen Volkmann - Mana ...

Financial Data and Key Metrics Changes - PACCAR's fourth quarter revenues were $6.8 billion, with a net income of $557 million. For the full year 2025, revenues reached $28.4 billion and adjusted net income was $2.64 billion, marking the fourth highest profit year in company history and the 87th consecutive year of profits. The adjusted after-tax return on revenue was 9.3% [3][4] - PACCAR Parts and PACCAR Financial Services achieved quarterly and annual revenue records, contributing to a structurally stronger performance [3][4] Business Line Data and Key Metrics Changes - PACCAR Parts' annual revenues increased by 3% to a record $6.9 billion, with pre-tax profits of $1.67 billion. Fourth quarter revenues rose 4% to a record $1.7 billion, with pre-tax profits of $415 million [8][9] - PACCAR Financial Services achieved record annual revenues of $2.2 billion, with annual pre-tax income growing 11% to $485 million. Fourth quarter revenues were a record $569 million, and quarterly pre-tax income grew 10% to $115 million [9] Market Data and Key Metrics Changes - In the U.S. and Canadian Class 8 truck market, retail sales were 233,000 units, with PACCAR's market share at 30%. The 2026 market is forecasted to be between 230,000-270,000 vehicles [5][6] - The European above-16-ton truck market was 298,000 units in 2025, with expectations for 280,000-320,000 registrations in 2026. DAF trucks have a competitive advantage due to their innovative design [6][7] Company Strategy and Development Direction - PACCAR is positioned well for upcoming regulatory changes, with a new lineup of efficient trucks and engines. The company aims to leverage its manufacturing strategy to adapt to local market needs [4][5] - Investments in technology and innovation include next-generation clean diesel, hybrid powertrains, and advanced driver assistance systems, which are expected to enhance customer value and operational efficiency [10] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic year in the North American truck industry, with soft freight markets and regulatory uncertainties. However, clarity on tariffs and emissions policies is expected to improve customer demand [4][5] - The company anticipates 2026 to be a year of accelerated growth for customers, dealers, and PACCAR, with strong order intake and improved margins expected [7][10] Other Important Information - PACCAR declared dividends of $2.72 per share in 2025, resulting in a dividend yield of nearly 3%. The company has paid dividends for 84 consecutive years [8] - The company completed significant capital investments and plans to continue investing in key technology and innovation projects [9][10] Q&A Session Summary Question: Can you walk us through the margin improvement expected from 4Q to 1Q despite flat deliveries? - Management explained that margin improvement is expected due to the benefits of the Section 232 tariff and strong order intake, with margins projected to increase to 12.5%-13% in Q1 compared to 12% in Q4 [12][14] Question: What is the performance of the aftermarket business in January by region? - Management forecasted a 3% growth year-over-year for Q1, with a mix shift towards required maintenance driving performance [23][24] Question: How does the company view market share versus unit profitability with the Section 232 impacts? - Management expressed confidence in gaining market share and improving margins as the competitive landscape stabilizes [29][30] Question: What is the outlook for used truck values and the impact of EPA 2027? - Management indicated that used truck values are expected to increase due to regulatory changes and anticipated price increases for new trucks [67][68] Question: How is the company handling potential supply chain bottlenecks? - Management acknowledged the importance of supplier relationships and provided forecasts to help mitigate potential bottlenecks, although they remain cautious about significant ramp-ups in production [78][80] Question: What is the expected growth for PACCAR Parts in 2026? - Management anticipates a steady growth in parts sales, with a forecast of 4%-8% growth for the year [9][93]

Core Insights - Paccar reported a revenue of $6.25 billion for the quarter ended December 2025, reflecting a year-over-year decline of 15.1% and an EPS of $1.06, down from $1.66 a year ago, with a revenue surprise of +2.81% over the Zacks Consensus Estimate of $6.08 billion [1] Financial Performance - Truck deliveries totaled 32,900, exceeding the three-analyst average estimate of 32,526, with specific breakdowns showing 5,200 deliveries in "Other," 12,700 in Europe, and 15,000 in the U.S. and Canada [4] - Financial Services revenue was reported at $568.7 million, slightly below the $570.23 million estimate, but showing a +4.5% change year-over-year [4] - Parts revenue was $1.74 billion, matching the average estimate and representing a +4.2% year-over-year change [4] - Truck revenue was reported at $4.52 billion, surpassing the average estimate of $4.35 billion, but reflecting a significant -20.7% decline year-over-year [4] Profitability Metrics - Pretax profit for Financial Services was $114.9 million, below the estimated $129.26 million [4] - Pretax profit for Parts was $415 million, exceeding the average estimate of $391.29 million [4] - Pretax profit for Truck was $94.6 million, falling short of the estimated $146.59 million [4] Stock Performance - Paccar's shares have returned +9.6% over the past month, outperforming the Zacks S&P 500 composite's +0.4% change, with a current Zacks Rank of 3 (Hold) indicating potential performance in line with the broader market [3]

Core Viewpoint - Paccar reported quarterly earnings of $1.06 per share, matching the Zacks Consensus Estimate, but down from $1.66 per share a year ago [1]. Group 1: Earnings Performance - The company posted revenues of $6.25 billion for the quarter ended December 2025, exceeding the Zacks Consensus Estimate by 2.81%, but down from $7.36 billion year-over-year [2]. - Paccar has surpassed consensus EPS estimates only once in the last four quarters [1]. - The current consensus EPS estimate for the upcoming quarter is $1.35, with expected revenues of $6.52 billion, and for the current fiscal year, the estimate is $5.79 on revenues of $27.36 billion [7]. Group 2: Stock Performance and Outlook - Paccar shares have increased approximately 11.5% since the beginning of the year, compared to a 1.5% gain in the S&P 500 [3]. - The company's earnings outlook and management's commentary during the earnings call will be crucial for determining the sustainability of the stock's price movement [3][4]. - The current Zacks Rank for Paccar is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6]. Group 3: Industry Context - The Automotive - Domestic industry, to which Paccar belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]. - Another company in the same industry, Harley-Davidson, is expected to report a quarterly loss of $0.92 per share, with revenues projected to be $527.28 million, reflecting a 22.4% increase year-over-year [9].

Financial Performance - PACCAR achieved annual revenues of $28.44 billion and net income of $2.38 billion ($4.51 per diluted share) in 2025, including a $264.5 million after-tax charge related to civil litigation[3]. - In Q4 2025, PACCAR reported revenues of $6.82 billion and net income of $556.9 million ($1.06 per diluted share), a decrease from $7.91 billion and $872.0 million in Q4 2024[2]. - Net income for the year ended December 31, 2025, was $2,375.8 million, down from $4,162.0 million in 2024, representing a decrease of 43.0%[27]. - Total income before income taxes for the year was $3,023.5 million, a decrease of 44.0% from $5,400.9 million in 2024[27]. - The company declared dividends of $1.73 per share in Q4 2025, down from $3.30 per share in Q4 2024, a reduction of 47.5%[27]. - Cash and cash equivalents at the end of the period were $6,307.9 million, down from $7,060.8 million at the end of 2024, a decrease of 10.7%[30]. Segment Performance - PACCAR Parts achieved record annual revenues of $6.87 billion, a 3% increase from $6.67 billion in 2024, with pretax income of $1.67 billion[16]. - PACCAR Financial Services reported record revenues of $2.21 billion in 2025, with pretax income of $485.4 million, an 11% increase from $435.6 million in 2024[19]. - Net sales for the Truck, Parts and Other segment decreased to $6,252.1 million in Q4 2025 from $7,363.2 million in Q4 2024, a decline of 15.1%[27]. - Total revenues for the Financial Services segment increased to $2,209.7 million in 2025 from $2,099.5 million in 2024, an increase of 5.2%[27]. Vehicle Deliveries and Market Share - PACCAR delivered 144,200 vehicles worldwide in 2025, maintaining a 30% market share in the U.S. and Canada Class 8 retail sales[9]. - New truck deliveries in the United States and Canada decreased to 15,000 units in Q4 2025 from 22,300 units in Q4 2024, a decline of 32.4%[37]. Research and Development - The company invested $1.17 billion in capital projects and research and development in 2025, with plans to invest $725-$775 million in capital projects and $450-$500 million in R&D in 2026[20]. - Research and development expenses for the year were $445.5 million, slightly down from $452.9 million in 2024, indicating a decrease of 1.0%[27]. Innovation and Infrastructure - The DAF XD and XF Electric trucks were awarded International Truck of the Year 2026, highlighting PACCAR's commitment to innovation in electric vehicle technology[14]. - PACCAR Parts opened a new 180,000 sq. ft. Parts Distribution Center in Calgary, Canada, enhancing parts delivery capabilities[16]. Financial Stability - PACCAR's strong balance sheet and A+/A1 credit ratings enabled the issuance of $3.12 billion in medium-term notes during 2025, facilitating competitive retail financing[19]. - Financial Services income before income taxes increased to $485.4 million for the year ended December 31, 2025, compared to $435.6 million in 2024, an increase of 11.0%[27]. Legal and Charges - The company recorded a pre-tax charge of $350.0 million related to civil litigation in Europe in Q1 2025[27]. - PACCAR's cash provided by operations was $4.42 billion in 2025, supporting strong financial performance and shareholder returns[10].

Core Viewpoint - PACCAR Inc. is a leading global manufacturer of commercial trucks, with a market capitalization of $59.2 billion, and is recognized for its premium brands such as Peterbilt, Kenworth, and DAF [1] Financial Performance - Analysts anticipate PACCAR to report Q4 earnings of $1.05 per share, reflecting a 36.8% decrease from $1.66 per share in the same quarter last year [2] - For fiscal 2025, PACCAR's expected EPS is $5.01, down 36.6% from $7.90 in 2024, but is projected to grow nearly 10% year-over-year to $5.51 in fiscal 2026 [3] Stock Performance - Over the past 52 weeks, PACCAR shares have increased by 6.7%, underperforming the S&P 500 Index's 15.7% and the Industrial Select Sector SPDR Fund's 17.9% [4] Dividends - On December 9, PACCAR's Board declared a regular quarterly cash dividend of $0.33 per share and an extra cash dividend of $1.40 per share, leading to a 4.2% increase in share price following the announcement [5] Analyst Ratings - The consensus rating for PACCAR is "Moderate Buy," with 18 analysts covering the stock, including seven "Strong Buys" and 11 "Holds," and the stock is currently trading above the mean price target of $111.70 [6]

Summary of U.S. Machinery & Electricals Outlook 2026 Industry Overview - The report focuses on the machinery and electrical equipment industry, highlighting a cyclical recovery expected in 2026 after a challenging 2025, where estimates fell by 5-10% due to a downturn in core markets such as truck, agricultural, and construction equipment [1][12]. Key Points Cyclical Recovery - 2026 is anticipated to be a recovery year driven by aligned monetary and fiscal policies, which are expected to restart positive estimate revisions, with potential upside in low single digits to mid single digits [1][12]. - The recovery is not yet priced into the market, with current pricing reflecting a PMI of around 50, indicating stagnation [2][13]. Construction Equipment - Construction equipment is viewed as a tightly coiled spring, with looser monetary policy and strong fiscal impulses expected to impact the non-residential sector positively in 2026 [3][14]. - The supply/demand balance for construction equipment is tightening, with utilization rates and rental rates increasing, while inventories of used and new equipment are decreasing [3][14]. Truck and Agricultural Equipment - North American heavy-duty truck production is projected to decline by 6% year-over-year in 2026, with production expected to hit 225,000 units, which is 40,000 units below replacement levels [4][15]. - Agricultural equipment demand is expected to reach a 40-year low, declining by 10-15% year-over-year, but improving farmer profits and tighter inventories signal a potential trough [4][15]. Electrical Equipment - Demand for electrical equipment is expected to remain strong in 2026, with growth driven by data center capacity build-out, although regulatory obstacles and political factors may create friction [5][16]. - Four key factors to monitor include regulatory impacts on growth, shifts in utility capital expenditures, political implications of electricity price inflation, and the increasing importance of behind-the-meter solutions for data centers [5][16]. Investment Implications Top Stock Picks for 2026 - **United Rentals (URI)**: Top pick with a price target of $1,128, representing a 42% potential upside, driven by a cyclical recovery and business transformation [6][17]. - **Trimble (TRMB)**: Price target of $99, with a 25% potential upside, benefiting from low tech penetration in construction and expected earnings growth [6][18]. - **Hubbell (HUBB)**: Price target of $530, with a 23% potential upside, expected to benefit from organic growth and a cyclical recovery [6][19]. - **PACCAR (PCAR)**: Price target of $125, with a 12% potential upside, positioned to benefit from cyclical recovery in the truck market [6][22]. - **Eaton (ETN)**: Price target of $395, with a 25% potential upside, navigating growth challenges but set for recovery [6][23]. Valuation Insights - The report emphasizes that many stocks in the machinery and electrical sector are undervalued, trading at a discount compared to historical averages, suggesting significant upside potential as the market recovers [12][46]. Additional Insights - The report notes that the effects of tax reform could unlock $800 billion in fiscal stimulus, positively impacting non-residential construction and truck sectors [12][46]. - The cyclical recovery is expected to lead to a double-digit growth in estimates, driven by monetary policy and fiscal stimulus [12][46]. This comprehensive outlook indicates a significant potential for recovery in the machinery and electrical sectors, with specific stocks poised to benefit from the anticipated economic conditions in 2026.