PACCAR Inc Q3 FY2025 earnings call

• PACCAR delivered good revenues and net income in Q3 2025, with Peterbilt, Kenworth, and DAF trucks contributing. - PACCAR Parts had record revenues of $1.72 billion and gross margins of 29.5%, with 4% growth in part sales. - PACCAR Financial Services had pre-tax income of $126 million, an 18% growth. - Estimates for US/Canada Class 8, European above 16-tonne, and South American above 16-tonne truck markets. - Production: PACCAR delivered 31,900 trucks in Q3 and anticipates 32,000 in Q4. - Truck parts and other gross margins were 12.5% in Q3, affected by tariffs, but expected to be around 12% in Q4 as tariffs peak, with Section 232 to reduce tariff costs. - PACCAR produces over 90% of US-sold trucks in Texas, Ohio, and Washington. - PACCAR Parts will open a new parts distribution center in Calgary and an engine remanufacturing center in Columbus, Mississippi. - PACCAR Financial operates 13 used truck centers and is building another in Warsaw, Poland.

PACCAR achieved revenues of $6.7 billion and net income of $590 million in the third quarter of 2025. PACCAR Parts achieved record quarterly revenues of $1.72 billion, with a 4% growth compared to the same period last year and gross margins of 29.5%. PACCAR Financial Services had pre-tax income of $126 million, an 18% growth over the previous year. The truck segments of Peterbilt, Kenworth, and DAF contributed to the good results. The US and Canadian Class 8 market is estimated to be in the range of 230,000 to 245,000 trucks in 2025 and 230,000 to 270,000 in 2026. The European above 16-tonne market is projected to be 275,000 to 295,000 in 2025 and 270,000 to 300,000 in 2026. The South American above 16-tonne truck market is estimated to be 95,000 to 105,000 in both 2025 and 2026.

• Estimates for US and Canadian Class 8 market: 230,000-245,000 in 2025 and 230,000-270,000 in 2026. - European above 16-tonne market: 275,000-295,000 in 2025 and 270,000-300,000 in 2026. - South American above 16-tonne truck market: 95,000-105,000 in both 2025 and 2026. - Q4 margins expected to be around 12% as tariffs peak in October, with Section 232 to improve competitive position and reduce tariff costs. - Anticipation of improving market conditions and continued strong performance.

• Margins affected by August steel and aluminum tariff increases and tariff costs on US-built trucks. - Uncertainty in the truckload market. - Potential changes in EPA regulations regarding NOx standards could impact supply chain and market expectations.

Q: Thoughts on how Section 232 improves competitive position and how rebates flow through financials?

A: Preston Feight stated Section 232 will be good for customers, improve PACCAR's competitive position, and take time to fully implement, with tariffs peaking in Q4 and Section 232 reducing tariff costs and bringing clarity. Rebates will be applied as parts qualify into 232.

Q: Underpinning for North American growth outlook and customer conversations?

A: Brice Poplawski mentioned benefit from tariff effects and pricing competitiveness, with 100% bonus depreciation expected to spur demand. Preston Feight noted mixed customer responses based on market conditions like vocational and LTL being positive, while truckload has challenges.

Q: Impact of Section 232 on parts and components sourcing and potential market share gain?

A: Preston Feight said they are starting conversations with suppliers, feel well-positioned with current supply base, and have invested in factories to handle share growth, with new products and manufacturing capacities to support gaining share.