PACCAR(PCAR) - 2025 Q3 - Quarterly Results

Executive Summary & Overall Performance Third Quarter 2025 Financial Highlights PACCAR reported lower Q3 2025 revenues and net income year-over-year, with strong contributions from PACCAR Parts and Financial Services Third Quarter 2025 Key Financials | Metric | Q3 2025 | Q3 2024 | | :-------------------------------- | :-------------- | :-------------- | | Consolidated Net Sales and Revenues | $6.67 billion | $8.24 billion | | Consolidated Net Income | $590.0 million | $972.1 million | | Diluted EPS | $1.12 | $1.85 | | Global Truck Deliveries | 31,900 units | 44,900 units | | PACCAR Parts Revenues | $1.72 billion (Record) | $1.66 billion | | PACCAR Parts Pretax Income | $410.0 million | $406.7 million | | PACCAR Financial Services Pretax Income | $126.2 million | $106.5 million | | Capital Investments | $156.0 million | N/A | | R&D Expenses | $111.0 million | N/A | | Cash Generated from Operations | $1.53 billion | N/A | - Upcoming Section 232 truck tariffs are scheduled to begin in November, expected to bring clarity to the market[4] - Over 90% of PACCAR's U.S. sold trucks are produced in Texas, Ohio, and Washington[4] Nine Months 2025 Financial Highlights PACCAR's nine-month 2025 net income of $1.82 billion includes a European litigation charge, with adjusted net income at $2.08 billion Nine Months 2025 Key Financials | Metric | 9 Months 2025 | | :-------------------------------- | :-------------- | | Consolidated Net Sales and Revenues | $21.62 billion | | Consolidated Net Income | $1.82 billion | | Adjusted Net Income (non-GAAP) | $2.08 billion | | Diluted EPS | $3.45 | | Adjusted Diluted EPS (non-GAAP) | $3.95 | | PACCAR Parts Pretax Income | $1.25 billion | | PACCAR Financial Services Pretax Income | $370.5 million | | Capital Investments | $549.0 million | | R&D Expenses | $339.3 million | | Cash Generated from Operations | $3.27 billion | - Net income for the first nine months of 2025 includes a $264.5 million after-tax non-recurring charge related to civil litigation in Europe[3] Global Truck Market Overview North American Class 8 Truck Market North American Class 8 truck sales are estimated at 230,000-245,000 for 2025, with Kenworth and Peterbilt holding a 30.3% market share U.S. and Canada Class 8 Truck Industry Retail Sales Estimates | Year | Estimated Range (Vehicles) | | :--- | :------------------------- | | 2025 | 230,000-245,000 | | 2026 | 230,000-270,000 | - Kenworth and Peterbilt achieved a 30.3% market share in the U.S. and Canada Class 8 truck industry in 2025[5] European Truck Market European truck registrations for above 16-tonne segment are estimated at 275,000-295,000 for 2025, with DAF XF noted for 7-8% higher fuel efficiency European Truck Industry Registrations (above 16-tonne) Estimates | Year | Estimated Range (Trucks) | | :--- | :----------------------- | | 2025 | 275,000-295,000 | | 2026 | 270,000-300,000 | - The DAF XF truck was named 'Fleet Truck of the Year' and noted for 7-8% higher fuel efficiency over competitors[6] South American Truck Market The South American above 16-tonne truck market is projected to remain stable at 95,000-105,000 units for 2025-2026, with DAF and Kenworth valued for durability South American Above 16-tonne Truck Market Projections | Year | Projected Range (Units) | | :--- | :---------------------- | | 2025 | 95,000-105,000 | | 2026 | 95,000-105,000 | - South American customers value DAF and Kenworth trucks for their durability and reliability[9] Product Innovations Kenworth launched the T880S High Horsepower Vocational Truck for heavy-haul and logging, featuring a set-forward front axle and powerful powertrain - Kenworth launched the T880S High Horsepower Vocational Truck, designed for heavy-haul and logging[9] - The T880S features a set-forward front axle, longer cab length, and a powertrain with up to 605 hp and 2,050 lb.-ft. of torque[9] Business Segment Performance PACCAR Parts Division PACCAR Parts achieved strong Q3 and nine-month 2025 financial results with increased revenues and pretax profits, expanding its global distribution network PACCAR Parts Financial Performance | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :---------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenues | $1.72 billion | $1.66 billion | $5.14 billion | $5.00 billion | | Pretax Profit | $410.0 million | $406.7 million | $1.25 billion | $1.28 billion | - PACCAR Parts operates 20 global parts distribution centers (PDCs) totaling over 3.9 million square feet[12] - A new 180,000 sq. ft. PDC in Calgary, Canada, is scheduled to open next year to expedite parts delivery[12] - Utilizes technology solutions such as Managed Dealer Inventory, connected trucks, and Fleet Services[12] PACCAR Financial Services PACCAR Financial Services reported strong Q3 and nine-month 2025 results, driven by its high-quality portfolio and an improving used truck market PACCAR Financial Services Financial Performance | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :---------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenues | $565.3 million | $536.1 million | $1.64 billion | $1.56 billion | | Pretax Income | $126.2 million | $106.5 million | $370.5 million | $331.6 million | - PFS manages a portfolio of 229,000 trucks and trailers, with total assets of $23.02 billion[14] - PFS holds A+/A1 credit ratings, providing excellent access to commercial paper and medium-term note markets[14] - Issued $2.37 billion of medium-term notes during the first nine months of 2025[14] - PFS will open a used truck center in Warsaw, Poland, this year to increase used truck sales in Central Europe[13] Strategic Investments & Technology Initiatives Capital Expenditures and Research & Development PACCAR continues substantial capital investments and R&D, having invested $9.1 billion over the past decade, focusing on next-gen powertrains and connected services - PACCAR invested $9.1 billion in new facilities, innovative products, and new technologies over the past decade[16] Capital Investments and R&D Expenses | Metric | Q3 2025 | 2025 Projection | 2026 Projection | | :----------------------- | :-------------- | :---------------- | :---------------- | | Capital Investments | $156.0 million | $750-$775 million | $725-$775 million | | R&D Expenses | $111.0 million | $450-$465 million | $450-$500 million | - A new $35 million, 50,000 square foot engine remanufacturing facility in Columbus, Mississippi, will open next year[16] Electric Battery Cell Technology PACCAR's Amplify Cell Technologies is building a 2.6 million sq. ft. battery factory in Mississippi, targeting lithium-iron-phosphate cell production by 2028 for hybrid and electric trucks - Amplify Cell Technologies is constructing a 2.6 million sq. ft. battery factory in Byhalia, Mississippi[17] - The factory targets start of lithium-iron-phosphate battery cell production in 2028[17] - PACCAR plans to deploy these batteries in Kenworth, Peterbilt, and DAF hybrid and battery electric trucks[17] Artificial Intelligence Integration PACCAR leverages AI to reduce operational costs, enhance performance, and improve customer service, streamlining IT infrastructure and powering predictive analytics for vehicle uptime - PACCAR leverages AI to reduce operational costs and enhance performance[19] - AI has reduced the time and cost of upgrading IT infrastructure[19] - Predictive analytics technology uses AI to forecast and implement vehicle service parameters, enhancing vehicle uptime for customers[19] Consolidated Financial Statements Summary Statements of Operations Consolidated net sales, revenues, and net income declined for both Q3 and nine months 2025 year-over-year, primarily due to the Truck, Parts and Other segment, while Financial Services showed growth Summary Statements of Operations (Unaudited) - Key Metrics | Metric | Q3 2025 (Millions) | Q3 2024 (Millions) | 9 Months 2025 (Millions) | 9 Months 2024 (Millions) | | :-------------------------------- | :----------------- | :----------------- | :----------------------- | :----------------------- | | Truck, Parts and Other Net Sales and Revenues | $6,106.5 | $7,703.8 | $19,983.0 | $24,201.1 | | Truck, Parts and Other Income Before Income Taxes | $526.6 | $1,041.1 | $1,689.6 | $3,630.0 | | Financial Services Revenues | $565.3 | $536.1 | $1,641.0 | $1,555.2 | | Financial Services Income Before Income Taxes | $126.2 | $106.5 | $370.5 | $331.6 | | Total Income Before Income Taxes | $743.6 | $1,256.3 | $2,318.6 | $4,251.6 | | Net Income | $590.0 | $972.1 | $1,818.9 | $3,290.0 | | Diluted Net Income Per Share | $1.12 | $1.85 | $3.45 | $6.25 | | Dividends Declared Per Share | $0.33 | $0.30 | $0.99 | $0.87 | - Interest and other (income) expenses, net for the first nine months of 2025 includes a $350.0 million charge related to civil litigation in Europe[24] Condensed Balance Sheets PACCAR's balance sheet as of September 30, 2025, shows a slight increase in total assets, driven by Financial Services Assets and Property, plant and equipment, with stockholders' equity also increasing Condensed Balance Sheets (Unaudited) - Key Metrics | Metric | Sep 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :-------------------------------- | :---------------------- | :---------------------- | | Total Assets | $44,201.2 | $43,418.9 | | Cash and marketable securities | $9,068.6 | $9,649.9 | | Financial Services Assets | $23,020.5 | $22,411.5 | | Property, plant and equipment, net | $4,442.4 | $3,985.6 | | Total Liabilities | $24,832.6 | $25,912.0 | | Stockholders' Equity | $19,368.6 | $17,506.9 | | Common Shares Outstanding | 525.2 | 524.4 | Condensed Cash Flow Statements For the nine months ended September 30, 2025, net cash from operating activities increased, but a significant rise in net cash used in financing activities led to a larger net decrease in cash and cash equivalents Condensed Cash Flow Statements (Unaudited) - Key Metrics (Nine Months Ended Sep 30) | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------------- | :-------------- | :-------------- | | Net Cash Provided by Operating Activities | $3,271.5 | $3,195.2 | | Net Cash Used in Investing Activities | $(1,513.4) | $(2,755.3) | | Net Cash Used in Financing Activities | $(2,687.8) | $(766.4) | | Net Decrease in Cash and Cash Equivalents | $(756.9) | $(332.5) | | Cash and cash equivalents at end of period | $6,303.9 | $6,849.2 | - Net decrease in wholesale receivables on new trucks was $714.9 million in 2025, a positive change compared to a net increase of $837.4 million in 2024[28] - Net decrease in debt and other was $590.0 million in 2025, contrasting with a net increase of $1,323.9 million in 2024[28] Segment and Geographic Financial Data Segment Sales and Pretax Profit Analysis Truck segment sales and pretax profit declined significantly for Q3 and nine months 2025, while PACCAR Parts and Financial Services generally showed revenue growth and consistent pretax profit growth Sales and Revenues by Segment (Unaudited) | Segment | Q3 2025 (Millions) | Q3 2024 (Millions) | 9 Months 2025 (Millions) | 9 Months 2024 (Millions) | | :---------------- | :----------------- | :----------------- | :----------------------- | :----------------------- | | Truck | $4,381.4 | $6,027.0 | $14,850.3 | $19,145.8 | | Parts | $1,724.6 | $1,657.6 | $5,135.4 | $4,997.8 | | Financial Services | $565.3 | $536.1 | $1,641.0 | $1,555.2 | Pretax Profit by Segment (Unaudited) | Segment | Q3 2025 (Millions) | Q3 2024 (Millions) | 9 Months 2025 (Millions) | 9 Months 2024 (Millions) | | :---------------- | :----------------- | :----------------- | :----------------------- | :----------------------- | | Truck | $102.5 | $630.8 | $776.2 | $2,349.7 | | Parts | $410.0 | $406.7 | $1,253.0 | $1,276.3 | | Financial Services | $126.2 | $106.5 | $370.5 | $331.6 | - Investment Income and Other for the nine months ended September 30, 2025, includes a $350.0 million charge related to civil litigation in Europe[30] Geographic Revenue Distribution Geographic revenue for Q3 and nine months 2025 decreased in the United States, Canada, and 'Other' regions year-over-year, while Europe saw a slight Q3 increase but a nine-month decline Geographic Revenue (Unaudited) | Region | Q3 2025 (Millions) | Q3 2024 (Millions) | 9 Months 2025 (Millions) | 9 Months 2024 (Millions) | | :----------------------- | :----------------- | :----------------- | :----------------------- | :----------------------- | | United States and Canada | $3,980.4 | $5,061.6 | $13,356.2 | $16,315.1 | | Europe | $1,676.5 | $1,605.5 | $4,916.3 | $5,155.7 | | Other | $1,014.9 | $1,572.8 | $3,351.5 | $4,285.5 | | Total | $6,671.8 | $8,239.9 | $21,624.0 | $25,756.3 | New Truck Delivery Statistics New truck deliveries significantly decreased in the United States, Canada, and 'Other' regions for both Q3 and nine months 2025, with European deliveries remaining stable in Q3 but declining over nine months New Truck Deliveries (Unaudited) | Region | Q3 2025 (Units) | Q3 2024 (Units) | 9 Months 2025 (Units) | 9 Months 2024 (Units) | | :----------------------- | :-------------- | :-------------- | :-------------------- | :-------------------- | | United States and Canada | 17,100 | 25,900 | 62,300 | 84,100 | | Europe | 10,100 | 10,000 | 31,100 | 33,100 | | Other | 4,700 | 9,000 | 17,900 | 24,200 | | Total | 31,900 | 44,900 | 111,300 | 141,400 | Non-GAAP Financial Measures Reconciliation Explanation and Reconciliation of Adjusted Net Income This section reconciles GAAP net income to adjusted net income (non-GAAP) for the nine months ended September 30, 2025, by excluding a $264.5 million after-tax charge related to European civil litigation - Adjusted net income (non-GAAP) and adjusted net income per diluted share (non-GAAP) exclude a charge for EC-related claims[36] - An additional pre-tax charge of $350.0 million ($264.5 million after-tax) was recorded in the first quarter of 2025 for estimable remaining costs related to civil litigation in Europe[37] Reconciliation of GAAP to Non-GAAP Financial Measures (Nine Months Ended Sep 30, 2025) | Metric | Amount (Millions) | Per Diluted Share | | :-------------------------- | :---------------- | :---------------- | | Net income (GAAP) | $1,818.9 | $3.45 | | EC-related claims, net of taxes | $264.5 | $0.50 | | Adjusted net income (non-GAAP) | $2,083.4 | $3.95 |