PACCAR 10-Q 2024-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended September 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 — 524,300,554 shares as of October 25, 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.

Third Quarter Financial Highlights:

Worldwide net sales and revenues were $8.24 billion in 2024 compared to $8.70 billion in 2023, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

Truck revenues were $6.03 billion in 2024 compared to $6.64 billion in 2023, from lower revenues in Europe and the U.S. and Canada.

Parts sales were $1.66 billion in 2024 compared to $1.58 billion in 2023, reflecting higher sales in all markets.

Financial Services revenues were $536.1 million in 2024 compared to $464.1 million in 2023, primarily due to higher interest income driven by portfolio growth and higher portfolio yields.

Net income was $972.1 million ($1.85 per diluted share) in 2024 compared to $1.23 billion ($2.34 per diluted share) in 2023.

Capital investments were $183.8 million in 2024 compared to $174.5 million in 2023.

Research and development (R&D) expenses were $115.0 million in 2024 compared to $103.5 million in 2023.

First Nine Months Financial Highlights:

Worldwide net sales and revenues were $25.76 billion in 2024 compared to $26.05 billion in 2023, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

Truck revenues were $19.15 billion in 2024, compared to $19.88 billion in 2023, from lower revenues in Europe mostly offset by all other markets.

Parts sales were $5.00 billion in 2024 compared to $4.80 billion in 2023, reflecting higher sales in all markets.

Financial Services revenues were $1.56 billion in 2024 compared to $1.33 billion in 2023, primarily due to higher interest income driven by portfolio growth and higher portfolio yields.

Net income was $3.29 billion ($6.25 per diluted share) in 2024 compared to $3.18 billion ($6.07 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 $3.63 billion ($6.92 per diluted share). See Reconciliation of GAAP to Non-GAAP Financial Measures on page 50.

Capital investments were $567.7 million in 2024 compared to $486.5 million in 2023.

Research and development (R&D) expenses were $337.6 million in 2024 compared to $302.0 million in 2023.

PACCAR Parts opened its new 240,000 square-foot Parts Distribution Center (PDC) in Massbach, Germany. This PDC expedites parts delivery to dealers and customers in the region. PACCAR’s 20 PDCs support more than 2,000 DAF, Kenworth and Peterbilt dealer sales, parts and service locations, and over 300 TRP stores.

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 $22.48 billion. PFS issued $3.25 billion in medium-term notes during the first nine months of 2024 to support new business volume and repay maturing debt.

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Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2024 are expected to be 250,000 to 270,000 units compared to 297,000 in 2023. Estimates for the U.S. and Canada truck industry heavy-duty retail sales in 2025 are in the range of 250,000 to 280,000 units. In Europe, 2024 truck industry registrations for over 16-tonne vehicles are expected to be 290,000 to 310,000 units compared to 343,300 in 2023. The European truck registrations in the above 16-tonne truck market for 2025 are projected to be in a range of 270,000 to 300,000 units. In South America, heavy-duty truck industry registrations in 2024 are projected to be 110,000 to 120,000 units compared to 105,000 in 2023, and in a similar range for 2025.

Parts Outlook

In 2024, PACCAR Parts sales are expected to increase 3-5% compared to 2023, reflecting stable demand. In 2025, PACCAR Parts sales could increase 3-5% from 2024 levels, depending on the economic conditions.

Financial Services Outlook

In 2024, average earning assets are expected to increase 8-11% compared to 2023. The used truck market has normalized in North America, but remains soft in Europe, which is reflected in PFS’ quarterly results this year. 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. In 2025, average earning assets are expected to be comparable to 2024.

Capital Investments and R&D Outlook

PACCAR’s excellent long-term profits, strong balance sheet and consistent focus on quality have enabled the Company to invest $8.4 billion in new and expanded facilities, innovative products and new technologies during the past decade. Capital investments in 2024 are expected to be $760 to $800 million and R&D is expected to be $450 to $470 million. In 2025, capital investments are projected to be $700 to $800 million and R&D is expected to be $480 to $530 million. PACCAR is investing in additional global engine manufacturing capacity, and in the construction of a new engine remanufacturing facility that will be located in Columbus, Mississippi. Truck factory investments include the expansion at Kenworth Chillicothe, Ohio, PACCAR Mexico, and the DAF electric truck assembly plant in Eindhoven, Netherlands. The Company expects to invest $600 to $900 million in its battery joint venture, Amplify Cell Technologies, over the next few years.

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

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RESULTS OF OPERATIONS:

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

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There were no material changes in the Company’s market risk during the three months ended September 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 September 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 September 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 September 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 nine months 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 September 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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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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