PACCAR 10-Q 2025-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2025

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 — 524,959,425 shares as of April 25, 2025

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, 2024 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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Consolidated Balance Sheets

(Millions)

• The December 31, 2024 consolidated balance sheet has been derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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Condensed Consolidated Stateme****nts of Cash Flows (Unaudited)

(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 the U.S. and Canada, trucks are sold under the Kenworth and Peterbilt nameplates, in Europe, under the DAF nameplate and in Mexico, 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 included the manufacturing and marketing of industrial winches through October 31, 2024, when PACCAR sold its industrial winch business.

First Quarter Financial Highlights:

Worldwide net sales and revenues were $7.44 billion in 2025 compared to $8.74 billion in 2024, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

Truck sales were $5.23 billion in 2025 compared to $6.54 billion in 2024, due to lower truck deliveries primarily in the U.S. and Canada and Europe.

Parts sales were a record $1.69 billion in 2025 compared to $1.68 billion in 2024, reflecting higher sales in the U.S. and Canada.

Financial Services revenues were $528.0 million in 2025 compared to $509.3 million in 2024, primarily due portfolio growth and higher portfolio yields.

Net income was $505.1 million ($.96 per diluted share) in 2025 compared to $1.20 billion ($2.27 per diluted share) in 2024. In 2025, adjusted net income (non-GAAP), excluding a $264.5 million after-tax charge related to civil litigation in Europe was $769.6 million ($1.46 per diluted share). See Reconciliation of GAAP to Non-GAAP Financial Measures on page 44.

Capital investments were $171.9 million in 2025 compared to $164.3 million in 2024.

Research and development (R&D) expenses were $115.4 million in 2025 compared to $105.5 million in 2024.

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 $22.75 billion. PFS issued $694.6 million in medium-term notes during the first three months of 2025 to support new business volume and repay maturing debt.

Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2025 are expected to be 235,000 to 265,000 units compared to 268,100 in 2024. In Europe, 2025 truck industry registrations for over 16-tonne vehicles are expected to be 270,000 to 300,000 units compared to 316,100 in 2024. In South America, heavy-duty truck industry registrations in 2025 are projected to be 100,000 to 110,000 units compared to 119,000 in 2024.

The Company has been affected by the import tariffs recently imposed by the U.S. government and retaliatory actions taken by other countries. The impact from import tariffs on truck order intake and profit margins is uncertain due to the rapidly evolving tariff environment. If tariff policy uncertainty continues, economic conditions may weaken and truck industry retail sales would likely decline.

Parts Outlook

In 2025, PACCAR Parts sales are expected to increase 2-4% compared to 2024, depending on the economic conditions, including the effect of tariff uncertainty.

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Financial Services Outlook

In 2025, average earning assets are expected to be comparable to 2024. The used truck market has normalized in North America, but remains soft in Europe. If freight transportation conditions decline due to a weaker economy, including the effect of tariff uncertainty, 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 2025 are expected to be $700 to $800 million and R&D is expected to be $450 to $480 million. PACCAR is increasing its investment in next generation internal combustion, hybrid and battery-electric powertrains, integrated connected vehicle services, advanced manufacturing capabilities, and advanced driver assistance systems that will create value for our customers. In addition to the capital and R&D investments, the company plans to invest a total project amount of $600-$900 million in its battery joint venture, Amplify Cell Technologies.

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 months ended March 31, 2025 and 2024 are presented below.

• In 2025, Other includes a $350.0 million charge related to civil litigation in Europe (EC-related claims).

** See Reconciliation of GAAP to Non-GAAP Financial Measures for 2025 on page 44.

The following provides an analysis of the results of operations for the Company’s three reportable segments - Truck, Parts and Financial Services. Where possible, the Company has quantified the impact of factors identified in the following discussion and analysis. In cases where it is not possible to quantify the impact of factors, the Company lists them in estimated order of importance. Factors for which the Company is unable to specifically quantify the impact include market demand and impact from tariffs, fuel prices, freight tonnage and economic conditions affecting the Company’s results of operations.

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2025 Compared to 2024:

Truck

The Company’s Truck segment accounted for 70% of revenues in the first quarter of 2025 compared to 75% in the first quarter of 2024.

The Company’s new truck deliveries are summarized below:

Worldwide new truck deliveries decreased in the first quarter of 2025 compared to the same period of 2024, primarily due to lower deliveries in the U.S. and Canada and Europe, partially offset by an increase in Mexico.

Market share data discussed below is provided by third-party sources and is measured by either retail sales or registrations for the Company’s dealer network as a percentage of total retail sales or registrations depending on the geographic market. In the U.S. and Canada, market share is based on retail sales. In Europe, market share is based primarily on registrations.

In the first three months of 2025, industry retail sales in the heavy-duty market in the U.S. and Canada were 56,600 units compared to 62,300 units in the same period of 2024. The Company’s heavy-duty truck retail market share was 29.1% in the first three months of 2025 compared to 30.3% in the first three months of 2024. The medium-duty market was 26,000 units in the first three months of 2025 compared to 25,200 units in the same period of 2024. The Company’s medium-duty market share was 14.5% in the first three months of 2025 compared to 17.0% in the first three months of 2024.

The over 16‑tonne truck market in Europe in the first three months of 2025 was 72,000 units compared to 84,600 units in the first three months of 2024. DAF over 16‑tonne market share was 14.0% in the first three months of 2025 compared to 13.4% in the same period of 2024. The 6 to 16‑tonne market in the first three months of 2025 was 9,700 units compared to 12,100 units in the same period of 2024. DAF market share in the 6 to 16-tonne market in the first three months of 2025 was 10.7% compared to 9.2% in the same period of 2024.

The over 16-tonne truck market in Brasil in the first three months of 2025 was 21,500 units compared to 21,000 units in the same period of 2024. DAF Brasil market share for the first three months of 2025 was 9.6% compared to 10.7% in the same period in 2024.

The Company’s worldwide truck net sales and revenues are summarized below:

The Company’s worldwide truck net sales and revenues in the first quarter decreased to $5.23 billion in 2025 from $6.54 billion in 2024, primarily due to lower truck deliveries in the U.S. and Canada and Europe from lower retail demand, as well as unfavorable currency translation effects.

In the first quarter of 2025, Truck segment income before income taxes and pre-tax return on revenues decreased primarily due to lower truck unit deliveries and lower price realization in the U.S. and Canada and Europe.

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The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the three months ended March 31, 2025 and 2024 are as follows:

Truck sales volume decreased revenues by $1,123.0 million and costs by $909.0 million, primarily reflecting lower truck deliveries in the U.S. and Canada and Europe, partially offset by higher truck deliveries in Mexico.

Average truck sales prices decreased sales by $114.7 million, primarily due to lower price realization in the U.S. and Canada and Europe, reflecting an increased competitive environment in all markets except Australia.

Average cost per truck increased cost of sales by $221.8 million, primarily reflecting higher mix of trucks with higher content and product support accruals.

Factory overhead and other indirect costs decreased $44.3 million, primarily due to lower labor costs, R&M costs and factory supplies from lower truck build rates.

Extended warranties, operating leases and other increased revenues by $10.5 million, primarily due to higher dealer support services and higher volume of extended warranty contracts. The increase in cost of sales by $4.3 million reflects higher costs from extended warranty.

The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the Brazilian real, euro and Canadian dollar relative to the U.S. dollar.

Truck gross margin was 9.7% in the first quarter of 2025 compared to 15.6% in the same period of 2024 due to the factors noted above.

Truck SG&A expenses in the first quarter of 2025 decreased to $57.3 million from $61.7 million in the first quarter of 2024, primarily due to lower salaries and related expenses and professional fees, partially offset by higher sales and marketing expenses.

As a percentage of sales, Truck SG&A was 1.1% for the first quarter of 2025 compared to .9% in the first quarter of 2024.

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Parts

The Company’s Parts segment accounted for 23% of revenues in the first quarter 2025 compared to 19% for the first quarter of 2024.

The Company’s worldwide parts net sales and revenues for the first quarter increased to $1.69 billion in 2025 from $1.68 billion in 2024. The increase was primarily due to higher sales in the U.S. and Canada.

The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the three months ended March 31, 2025 and 2024 are as follows:

Aftermarket parts sales volume decreased by $22.4 million and related cost of sales decreased by $9.3 million. The decrease in parts sales and costs reflects primarily lower sales volume in all markets except Australia. The decrease in cost of sales reflects lower sales volume and unfavorable product mix in the U.S. and Canada and Europe.

Average aftermarket parts sales prices increased sales by $54.2 million, primarily due to price realization in the U.S. and Canada.

Average aftermarket parts direct costs increased $50.7 million due to higher material costs, primarily in the U.S. and Canada.

Warehouse and other indirect costs increased $11.0 million, primarily due to higher indirect costs including depreciation expense.

The currency translation effect on sales and cost of sales primarily reflects a decline in the value of the euro, Brazilian real and Australian dollar relative to the U.S. dollar.

Parts gross margin in the first quarter of 2025 decreased to 30.7% from 32.5% in the first quarter of 2024 due to the factors noted above.

Parts SG&A expense in the first quarter of 2025 decreased to $60.9 million from $61.3 million in the same period of 2024. The decrease was due to currency translation effects and lower sales and marketing expenses.

As a percentage of sales, Parts SG&A was 3.6% in the first quarter of 2025 compared to 3.7% in the first quarter of 2024.

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Financial Services

The Company’s Financial Services segment accounted for 7% of revenues in the first quarter of 2025 compared to 6% in the first quarter of 2024.

New loan and lease volume was $1.51 billion in the first quarter of 2025 compared to $1.52 billion in the first quarter of 2024. The slight decrease was primarily due to lower new loan and lease volume in the U.S. and Canada and Brasil from lower retail sales of PACCAR trucks, mostly offset by higher finance market shares of new PACCAR truck sales in all markets except Brasil. The effect of currency translation decreased new loan and lease volume by $72.3 million, primarily due to a decrease in the value of the Mexican peso and Brazilian real relative to the U.S. dollar. The decrease in equipment on operating lease volume is primarily due to lower market demand in the U.S., partially offset by higher demand in Europe.

In the first quarter of 2025, PFS finance market share of new PACCAR truck sales was 24.6% compared to 21.4% in the first quarter of 2024.

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In the first quarter of 2025, PFS revenues increased to $528.0 million from $509.3 million in 2024. The increase was primarily driven by portfolio growth in all markets except Europe. The effect of currency translation decreased PFS revenues by $30.3 million in the first quarter of 2025, primarily due to a decrease in the value of the Mexican peso and Brazilian real relative to the U.S. dollar.

PFS income before income taxes increased to $121.1 million in the first quarter of 2025 from $113.9 million in the first quarter of 2024. The increase was primarily due to higher finance margins from a higher loan and finance lease portfolio. The effect of currency translation decreased PFS income before income taxes by $10.2 million, primarily due to a decrease in the value of the Mexican peso and Brazilian real relative to the U.S. dollar.

Included in Financial Services Other assets on the Company’s Consolidated Balance Sheets are used trucks held for sale, net of impairments, of $404.4 million at March 31, 2025 and $396.5 million at December 31, 2024. These trucks are primarily units returned from matured operating leases in the ordinary course of business, and also include trucks acquired from repossessions or through acquisitions of used trucks in trades related to new truck sales and trucks returned from residual value guarantees (RVGs).

The Company recognized losses on used trucks, excluding repossessions, of $11.1 million in the first quarter of 2025 compared to $10.9 million in the first quarter of 2024, including $12.0 million of losses on multiple unit transactions in the first quarter of 2025 compared to $10.6 million in the first quarter of 2024. Used truck losses related to repossessions, which are recognized as credit losses, were $3.3 million for the first quarter of 2025 and $4.2 million for the first quarter of 2024.

The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the three months ended March 31, 2025 and 2024 are outlined below:

Average finance receivables increased $2.59 billion (excluding foreign exchange effects), increasing interest and fees by $48.4 million in the first quarter of 2025, primarily due to higher average loan, finance lease and dealer wholesale balances in North America.

Average debt balances increased $1.95 billion (excluding foreign exchange effects), increasing interest and other borrowing costs by $24.4 million in the first quarter of 2025, reflecting higher funding requirements for the portfolio from growth in loans, finance leases and dealer wholesale receivables.

Higher portfolio yields (7.4% in 2025 compared to 7.2% in 2024) increased interest and fees by $11.2 million. The higher portfolio yields were primarily due to higher market rates on new portfolio assets, primarily in the U.S.

Higher borrowing rates (4.9% in 2025 compared to 4.6% in 2024) increased interest and other borrowing expenses by $17.0 million and were primarily due to higher debt market rates, primarily in the U.S.

The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the Mexican peso and Brazilian real.

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The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:

The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the three months ended March 31, 2025 and 2024 are outlined below:

A higher sales value of used trucks on trade increased revenues by $1.7 million and related depreciation and other expenses by $1.0 million.

Results on returned lease assets increased depreciation and other expenses by $1.4 million.

Average operating lease assets decreased $239.4 million (excluding foreign exchange effects), which decreased revenues by $28.1 million and related depreciation and other expenses by $24.3 million.

Revenue per asset increased $14.3 million primarily due to higher average truck values financed. Cost per asset increased $7.0 million due to higher depreciation and operating expenses, mainly in Europe.

The currency translation effects reflect a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the Mexican peso and the euro.

Financial Services SG&A for the first quarter of 2025 of $38.3 million decreased from $39.0 million in the first quarter of 2024, reflecting lower professional fees and sales and marketing expenses.

As an annualized percentage of average earning assets, Financial Services SG&A was .7% for the first quarter of 2025 and .8% for the same period in 2024.

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The following table summarizes the provision for losses on receivables and net charge-offs:

The provision for losses on receivables was $18.3 million in the first quarter of 2025 compared to $16.1 million in the same period of 2024, primarily driven by portfolio growth and higher charge-offs in the U.S. and Canada, and Brasil. The increased charge-offs in the first quarter of 2025 included one large fleet customer in the U.S., which was provisioned for in the fourth quarter of 2024, and one large fleet customer in Brasil. The higher charge-offs in 2025 also reflected higher average loss severity in all markets from lower used truck market values.

The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms.

The post-modification balances of accounts modified during the three months ended March 31, 2025 and 2024 are summarized below:

• Amortized cost basis immediately after modification as a percentage of ending retail portfolio, on an annualized basis.

Modification activity increased slightly to $187.4 million in the first three months of 2025 from $186.1 million in the same period of 2024. The decrease in modifications for Commercial reasons primarily reflects lower volumes of refinancing, primarily in the U.S. The increase in both Insignificant delay modifications and Credit modifications reflect higher volumes of contract modifications in Brasil, Mexico and the U.S.

The following table summarizes the Company’s 30+ days past due accounts:

Accounts 30+ days past due was 1.2% at March 31, 2025 compared to 1.3% at December 31, 2024 and 1.2% at March 31, 2024. The decreased percentage of past due accounts as of March 31, 2025 compared to December 31, 2024 is primarily due to lower past due accounts in the U.S. and Canada, partially offset by increases in past due accounts in Mexico. The decrease in past due accounts in the U.S. and Canada reflects the effect of one large fleet customer's account as well as other customers paying current. The Company continues to focus on maintaining low past due balances.

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When the Company modifies a 30+ days past due account, the customer is then generally considered current under the revised contractual terms. The Company modified $30.2 million of accounts worldwide during the first quarter of 2025, $40.7 million during the fourth quarter of 2024 and $15.3 million during the first quarter of 2024, respectively, which were 30+ days past due and became current at the time of modification. Had these accounts not been modified and continued to not make payments, the pro forma percentage of retail loan and lease accounts 30+ days past due would have been as follows:

The Company typically requires customers to pay current before granting modifications. The higher pro forma percentage of retail loan and lease accounts 30+ days past due at March 31, 2025 in Mexico, Australia, Brasil and other was primarily due to accounts modified in Brasil and Mexico.

A contract modification that improves the past due status reduces the probability of default. The effect of modifications is included in the Company’s historical loss information used to determine the allowance for credit losses. Modifications of accounts in prior quarters that were more than 30 days past due at the time of modification are included in past dues if they were not performing under the modified terms at March 31, 2025, December 31, 2024 and March 31, 2024.

The Company’s annualized pre-tax return on average total assets for Financial Services was 2.2% for both the first quarter of 2025 and the same period of 2024.

Other

Included in Other is sales, income and expenses not attributable to a reportable segment, as well as the Company's industrial winch manufacturing business through October 31, 2024. Other also includes non-service cost components of pension expense and a portion of corporate expense. Other sales represent less than 1% of consolidated net sales and revenues for the first quarter of 2025 and 2024. Other SG&A increased to $25.1 million for the first quarter of 2025 from $24.6 million for the first quarter of 2024. The increase was primarily due to higher charitable contributions and professional fees.

For the first quarter of 2025, Other loss before income taxes was $353.2 million compared to $2.3 million in 2024, primarily due to the EC-related charge in the first quarter of 2025, which is discussed in Note M of the consolidated financial statements.

Investment income for the first quarter decreased to $83.8 million in 2025 compared to $85.5 million in 2024. The decrease was primarily due to lower investment yields from lower market interest rates, primarily in the U.S. and Europe, partially offset by an increase in average investment balance in the U.S.

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Income Taxes

The effective tax rate for the first quarter of 2025 was 21.5% compared to 22.1% for the first quarter of 2024. Included in 2025 was the EC-related charge of $350.0 million, which lowered the effective tax rate. Excluding the EC charge and related tax benefit, the effective tax rate was 22.5%.

For the first quarter of 2025, domestic income before taxes and domestic pre-tax return on revenues decreased primarily due to lower Truck operation results, partially offset by improved results from Financial Services operations. For the first quarter of 2025, foreign loss before taxes included the EC-related charge of $350.0 million, which also reduced foreign pre-tax return on revenues.

LIQUIDITY AND CAPITAL RESOURCES:

The Company’s total cash and marketable securities at March 31, 2025 decreased $1.50 billion from the balances at December 31, 2024. Total cash and marketable securities are primarily intended to provide liquidity while preserving capital.

The change in cash and cash equivalents is summarized below:

Operating activities: Cash provided by operations decreased by $558.7 million to $910.3 million in the first three months of 2025 from $1,469.0 million in 2024. The decreased operating cash flow reflects lower net income by $690.2 million, lower cash provided from net income items not affecting cash of $9.3 million, primarily deferred income taxes and the provision for losses on financial services receivables, and higher cash provided from net changes in operating assets and liabilities of $140.8 million. The net changes in operating assets and liabilities are mainly due to higher cash provided by net changes in operating assets, primarily inventory of $236.8 million and wholesale receivables on new trucks in the Financial Services segment of $212.2 million, partially offset by a lower net increase in accruals of $337.4 million, including the EC-related charge.

Investing activities: Cash used in investing activities decreased by $133.5 million to $392.6 million in the first three months of 2025 from $526.1 million in 2024. The decrease in net cash used in investing activities primarily reflects a net decrease in wholesale receivables on equipment of $99.4 million and lower net originations of retail loans and finance leases of $19.7 million.

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Financing activities: Cash used in financing activities was $2,134.7 million for the first three months of 2025, $254.7 million higher than the $1,880.0 million used in 2024, reflecting lower net borrowing activities and lower cash dividends. Cash used in net borrowing activities was $405.9 million in 2025, $311.0 million higher than the cash used in net borrowing activities of $94.9 million in 2024. In the first three months of 2025, the Company paid $1.75 billion in dividends compared to $1.82 billion in 2024.

The effect of exchange rate changes on cash increased cash and cash equivalents by $73.9 million in the first three months of 2025, reflecting an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro, the British pound and Brazilian real. In the first three months of 2024, a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the euro, the Australian dollar and the Canadian dollar, decreased cash and cash equivalents by $50.1 million.

Credit Lines and Other

The Company has line of credit arrangements of $5.52 billion, of which $4.93 billion were unused at March 31, 2025. Included in these arrangements are $4.00 billion of committed bank facilities, of which $1.50 billion expires in June 2025, $1.25 billion expires in June 2027 and $1.25 billion expires in June 2029. The Company intends to extend or replace these credit facilities on or before expiration to maintain facilities of similar amounts and duration. These credit facilities are maintained primarily to provide backup liquidity for commercial paper borrowings and maturing medium-term notes. There were no borrowings under the committed bank facilities for the three months ended March 31, 2025.

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 without an expiration. The objective of the repurchase is to return value to PACCAR shareholders. As of March 31, 2025, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the first three months of 2025.

Truck, Parts and Other

The Company provides funding for working capital, capital expenditures, R&D, dividends, stock repurchases and other business initiatives and commitments primarily from cash provided by operations. Management expects this method of funding to continue in the future.

Investments for manufacturing property, plant and equipment in the first three months of 2025 increased to $170.7 million from $162.2 million for the same period of 2024. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $8.66 billion and have significantly increased the operating capacity and efficiency of its facilities and enhanced the quality and operating efficiency of the Company’s premium products.

In 2025, total capital investments for PACCAR are expected to be $700 to $800 million and R&D is expected to be $450 to $480 million. PACCAR is increasing its investment in next generation internal combustion, hybrid and battery-electric powertrains, integrated connected vehicle services, advanced manufacturing capabilities, and advanced driver assistance systems that will create value for our customers. In addition to the capital and R&D investments, the company plans to invest a total project amount of $600-$900 million in its battery joint venture, Amplify Cell Technologies.

Financial Services

The Company funds its financial services activities primarily from collections on existing finance receivables and borrowings in the capital markets. The primary sources of borrowings in the capital markets are commercial paper and medium-term notes issued in the public markets and, to a lesser extent, bank loans.

In November 2024, the Company’s U.S. finance subsidiary, PACCAR Financial Corp. (PFC), filed a shelf registration under the Securities Act of 1933. The total amount of medium-term notes outstanding for PFC as of March 31, 2025 was $7.45 billion. The registration expires in November 2027 and does not limit the principal amount of debt securities that may be issued during that period.

As of March 31, 2025, the Company’s European finance subsidiary, PACCAR Financial Europe, had €900.0 million available for issuance under a €2.50 billion medium-term note program listed on the Euro MTF Market of the Luxembourg Stock Exchange. This program renews annually and expires in July 2025.

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In August 2021, PACCAR Financial Mexico registered a 10.00 billion Mexican peso program with the Comision Nacional Bancaria y de Valores to issue medium-term notes and commercial paper. The registration expires in August 2026 and limits the amount of commercial paper (up to one year) to 5.00 billion Mexican pesos. At March 31, 2025, 5.04 billion Mexican pesos were available for issuance.

In August 2018, the Company’s Australian subsidiary, PACCAR Financial Pty. Ltd. (PFPL Australia), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. The total amount of medium-term notes outstanding for PFPL Australia as of March 31, 2025 was 850.0 million Australian dollars.

In May 2021, the Company’s Canadian subsidiary, PACCAR Financial Ltd. (PFL Canada), established a medium-term note program. The program does not limit the principal amount of debt securities that may be issued under the program. There were no borrowings under this program as of March 31, 2025.

The Company’s Brazilian subsidiary, Banco PACCAR S.A., established a lending program in December 2021 with the local development bank, Banco Nacional de Desenvolvimento Economico e Social (BNDES) for qualified customers to receive preferential conditions and generally market interest rates. This program is limited to 2.42 billion Brazilian reais and has 1.12 billion Brazilian reais outstanding as of March 31, 2025. The Brazilian subsidiary also established a Letra Financeira (LF) program in May 2024 and the program does not limit the principal amount of debt securities that may be issued under the program. A total of 500.0 million Brazilian reais medium-term notes were outstanding as of March 31, 2025.

The Company believes its cash balances and investments, collections on existing finance receivables, committed bank facilities and current investment-grade credit ratings of A+/A1 will continue to provide it with sufficient resources and access to capital markets at competitive interest rates and therefore contribute to the Company maintaining its liquidity and financial stability. In the event of a decrease in the Company’s credit ratings or a disruption in the financial markets, the Company may not be able to refinance its maturing debt in the financial markets. In such circumstances, the Company would be exposed to liquidity risk to the degree that the timing of debt maturities differs from the timing of receivable collections from customers. The Company believes its various sources of liquidity, including committed bank facilities, would continue to provide it with sufficient funding resources to service its maturing debt obligations.

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RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

This Form 10-Q includes “adjusted net income (non-GAAP)” and “adjusted net income per diluted share (non-GAAP)”, which are financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”), since they exclude a charge for EC-related claims. These measures differ from the most directly comparable measures calculated in accordance with GAAP and may not be comparable to similarly titled non-GAAP financial measures used by other companies.

Adjustment for the EC-related claims relates to a pre-tax charge of $350.0 million ($264.5 million after-tax) for estimable total costs recorded in Interest and other expenses (income), net in the first quarter 2025.

The Company utilizes these non-GAAP measures to allow investors and management to evaluate operating trends by excluding a significant charge that is not representative of company performance.

Reconciliations from the most directly comparable GAAP measures to adjusted net income (non-GAAP) and adjusted net income per diluted shares (non-GAAP) are as follows:

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FORWARD-LOOKING STATEMENTS:

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to future results of operations or financial position and any other statement that does not relate to any historical or current fact. Such statements are based on currently available operating, financial and other information and are subject to risks and uncertainties that may affect actual results. Risks and uncertainties include, but are not limited to: a significant decline in industry sales; competitive pressures; reduced market share; reduced availability of or higher prices for fuel; increased safety, emissions, or other regulations or tariffs resulting in higher costs and/or sales restrictions; currency or commodity price fluctuations; lower used truck prices; insufficient or under-utilization of manufacturing capacity; supplier interruptions; insufficient liquidity in the capital markets; fluctuations in interest rates; changes in the levels of the Financial Services segment new business volume due to unit fluctuations in new PACCAR truck sales or reduced market shares; changes affecting the profitability of truck owners and operators; price changes impacting truck sales prices and residual values; insufficient supplier capacity or access to raw materials and components, including semiconductors; labor disruptions; shortages of commercial truck drivers; increased warranty costs; cybersecurity risks to the Company’s information technology systems; pandemics; climate-related risks; global conflicts; litigation, including European Commission (EC) settlement-related claims; or legislative and governmental regulations. A more detailed description of these and other risks is included under the headings Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024 and in Part II, Item 1, “Legal Proceedings” and Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

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There were no material changes in the Company’s market risk during the three months ended March 31, 2025. For additional information, refer to Item 7A as presented in the 2024 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 2024 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors during the three months ended March 31, 2025.

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 March 31, 2025.

(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 March 31, 2025, the Company has repurchased $110.0 million of shares under this plan. There were no repurchases made under this plan during the first three months of 2025.

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 March 31, 2025, 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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