PACCAR Inc Q1 FY2026 earnings call

Good morning, everyone. In the first quarter, PACCAR Inc's employees did an excellent job. PACCAR Inc achieved strong results from PACCAR Parts, Financial Services, and truck businesses. Looking at regional truck markets, U.S. and Canadian truck market estimated to be 230 thousand to 270 thousand units, European above-16-ton market 280 thousand to 320 thousand, South American above-16-ton market 100 thousand to 110 thousand. Kenworth launched new C 580 heavy-duty vocational truck. DAF introduced new electric vehicles and won awards. First quarter delivered 33 thousand 1 trucks, second quarter estimated to deliver 37 thousand to 38 thousand vehicles. PACCAR Inc plans capital investments of $725 million to $775 million and R&D expenses of $450 million to $500 million.

PACCAR Inc achieved revenues of $6.8 billion and net income of $605 million in the first quarter. PACCAR Parts had quarterly revenues of $1.7 billion and pretax income of $402 million. PACCAR Financial had pretax income of $116 million. Truck, parts, and other gross margins increased from 12% to 13.1% in the first quarter. Second quarter margins are forecast to expand to around 13.5%. PACCAR Parts is estimated to have parts sales grow by about 3% in the second quarter and 3% to 6% for the full year.

Estimates U.S. and Canadian truck market 230 thousand to 270 thousand units for 2026. European above-16-ton market 280 thousand to 320 thousand. South American above-16-ton market 100 thousand to 110 thousand. Second quarter truck delivery estimated 37 thousand to 38 thousand vehicles. Second quarter margins forecast to expand to around 13.5%. Parts sales forecast to grow about 3% in second quarter and 3% to 6% for full year.

Fuel and other operating cost volatility may moderate market. Raw material pricing volatility like energy, steel, aluminum. Geopolitical factors like war in Middle East may impact demand in Europe.

Q: Just on the parts guidance...

A: We do see increasing volumes...; Q: I am wondering if we could just talk about the really strong profit per truck...

A: We did have price/cost advantage in the quarter sequentially...; Q: Does that change your view on what would be the tariff impact...

A: It does not really have a lot of impact for us...; Q: How do you think about the prebuy likely to hit later this year...

A: We have great operations teams...; Q: We have a big ramp in the second half this year...

A: Great question. The thing informing supply chain right now...; Q: I wanted to go back to your gross margin comments...

A: The year is a long way off, so for this discussion we really focus on the next quarter...; Q: First, as we think through the second half of the year and throughout the cycle...

A: On inventory, we feel it is in very good shape...; Q: I wanted to clarify the parts acceleration you expect in the second half...

A: It is a little bit of all of that...; Q: The EPA formalized the low NOx emissions rule...

A: The formalized release is that it will be a 35 milligram standard come 2027...; Q: We have heard about customers potentially pushing back their delivery dates for trucks...

A: We have not seen that in our backlog...; Q: On the prebuy versus buy discussion from earlier...

A: On buy versus replacement, there has been a tough little run for some of our customers...; Q: I know you give average prices in the 10-Q...

A: For the first quarter compared to the first quarter last year, you will see truck price up 2%...; Q: First question is on the customer mix within the backlog...

A: It is an interesting concept, but I do not think it is significant...