PACCAR 10-Q 2024-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2024

OR

For the transition period from to

Commission File No. 001-14817

PACCAR Inc

(Exact name of registrant as specified in its charter)

(425) 468-7400

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock, $1 par value — 524,221,826 shares as of July 26, 2024

PACCAR Inc – Form 10-Q

INDEX

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PART I – FINANCI****AL INFORMATION

Consolidated Statements of Com****prehensive Income (Unaudited)

(Millions, Except Per Share Amounts)

See Notes to Consolidated Financial Statements.

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Consolidated Balance Sheets

(Millions)

• The December 31, 2023 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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Consolidated Balance Sheets

(Millions)

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OVERVIEW:

PACCAR is a global technology company whose Truck segment includes the design and manufacture of high-quality light-, medium- and heavy-duty commercial trucks. In North America, trucks are sold under the Kenworth and Peterbilt nameplates, in Europe, under the DAF nameplate and in Australia and South America, under the Kenworth and DAF nameplates. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Company’s Financial Services segment derives its earnings primarily from financing or leasing PACCAR products in North America, Europe, Australia and South America. The Company’s Other business includes the manufacturing and marketing of industrial winches.

Second Quarter Financial Highlights:

Worldwide net sales and revenues were $8.77 billion in 2024 compared to $8.88 billion in 2023, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

Truck revenues were $6.58 billion in 2024 compared to $6.83 billion in 2023, reflecting lower revenue in Europe.

Parts sales were $1.66 billion in 2024 compared to $1.60 billion in 2023, primarily due to higher sales in all markets.

Financial Services revenues were $509.8 million in 2024 compared to $439.8 million in 2023, primarily due to higher interest income driven by portfolio growth and higher portfolio yields.

Net income was $1.12 billion ($2.13 per diluted share) in 2024 compared to $1.22 billion ($2.33 per diluted share) in 2023.

Capital investments were $219.6 million in 2024 compared to $179.1 million in 2023.

Research and development (R&D) expenses were $117.1 million in 2024 compared to $101.3 million in 2023.

First Six Months Financial Highlights:

Worldwide net sales and revenues were $17.52 billion in 2024 compared to $17.35 billion in 2023, primarily due to higher parts and financial services revenues.

Truck revenues were $13.12 billion in 2024, comparable to $13.24 billion in 2023.

Parts sales were $3.34 billion in 2024 compared to $3.22 billion in 2023, primarily due to higher sales in all markets.

Financial Services revenues were $1.02 billion in 2024 compared to $863.0 million in 2023, primarily due to higher interest income driven by portfolio growth and higher portfolio yields.

Net income was $2.32 billion ($4.40 per diluted share) in 2024 compared to $1.96 billion ($3.73 per diluted share) in 2023. In 2023, adjusted net income (non-GAAP), excluding a $446.4 million after-tax non-recurring charge related to civil litigation in Europe was $2.40 billion ($4.58 per diluted share). See Reconciliation of GAAP to Non-GAAP Financial Measures on page 49.

Capital investments were $383.9 million in 2024 compared to $312.0 million in 2023.

Research and development (R&D) expenses were $222.6 million in 2024 compared to $198.5 million in 2023.

PACCAR opened a new 80,000 square-foot PACCAR Parts Distribution Center (PDC) in Bogota, Colombia in the second quarter 2024 to enhance parts delivery in South America. PACCAR is constructing a new, 240,000 square-foot PDC in Massbach, Germany to be opened in 2024. The new PDC in Germany will enhance parts delivery to dealers and customers in Europe.

In the second quarter, PACCAR, Cummins, Daimler Truck and EVE Energy completed the formation of their U.S. battery manufacturing joint venture, Amplify Cell Technologies, and began construction of its 21-gigawatt hour (GWh) battery factory in Marshall County, Mississippi. The factory is expected to start production in 2027. PACCAR anticipates investing $600-$900 million in the joint venture over the next several years. During the three months ended June 30, 2024, PACCAR contributed $51.7 million to the joint venture.

The PACCAR Financial Services (PFS) group of companies has operations covering four continents and 26 countries. The global breadth of PFS and its rigorous credit application process support a portfolio of loans and leases with total assets of $21.33 billion.

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PFS issued $1.71 billion in medium-term notes during the first six months of 2024 to support new business volume and repay maturing debt.

Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2024 are expected to be 240,000 to 280,000 units compared to 297,000 in 2023. In Europe, 2024 truck industry registrations for over 16-tonne vehicles are expected to be 260,000 to 300,000 units compared to 343,300 in 2023. In South America, heavy-duty truck industry registrations in 2024 are projected to be 105,000 to 115,000 as compared to 105,000 in 2023.

Parts Outlook

In 2024, PACCAR Parts sales are expected to increase 3-5% compared to 2023, reflecting stable demand.

Financial Services Outlook

In 2024, average earning assets are expected to increase 5-8% compared to 2023. If freight transportation conditions decline due to a weaker economy, then past due accounts, truck repossessions and credit losses would likely increase from the current levels and new business volume would likely decline.

Capital Investments and R&D Outlook

Capital investments in 2024 are expected to be $725 to $775 million and R&D is expected to be $460 to $480 million. The Company is increasing its investment in new powertrains, advanced manufacturing capabilities and capacity, and aftermarket distribution capabilities and capacity.

See the Forward-Looking Statements section of Management’s Discussion and Analysis for factors that may affect these outlooks.

RESULTS OF OPERATIONS:

The Company’s results of operations for the three and six months ended June 30, 2024 and 2023 are presented below.

• In 2023

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There were no material changes in the Company’s market risk during the three months ended June 30, 2024. For additional information, refer to Item 7A as presented in the 2023 Annual Report on Form 10‑K.

The Company’s management, with the participation of the Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

There have been no changes in the Company’s internal controls over financial reporting that occurred during the fiscal quarter covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHE****R INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note M – “Commitments and Contingencies” in the Notes to Consolidated Financial Statements (Part I, Item 1) for discussion on litigation matters, which is incorporated by reference herein.

For information regarding risk factors, refer to Part I, Item 1A as presented in the 2023 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors during the three months ended June 30, 2024.

ITEM 2. UNREGISTERED SALES OF EQUI****TY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

For Items 2(a) and (b), there was no reportable information for the three months ended June 30, 2024.

(c)

Issuer purchases of equity securities.

On December 4, 2018, PACCAR’s Board of Directors approved the repurchase of up to $500.0 million of the Company’s outstanding common stock. As of June 30, 2024, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the first half of 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s quarter ended June 30, 2024, as such terms are defined under Item 408(a) of Regulation S-K.

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Any exhibits filed herewith are listed in the accompanying index to exhibits.

INDEX TO EXHIBITS

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• filed herewith

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SIGNA****TURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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