PACCAR 10-Q 2026-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2026

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 — 526,286,229 shares as of April 24, 2026

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, 2025 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, 2025 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.

First Quarter Financial Highlights:

Worldwide net sales and revenues were $6.78 billion in 2026 compared to $7.44 billion in 2025, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.

Truck sales were $4.53 billion in 2026 compared to $5.23 billion in 2025, due to lower truck deliveries in all major markets except Europe.

Parts sales were $1.71 billion in 2026 compared to $1.69 billion in 2025.

Financial Services revenues were $542.2 million in 2026 compared to $528.0 million in 2025.

Net income was $605.3 million ($1.15 per diluted share) in 2026 compared to $505.1 million ($.96 per diluted share) in 2025. 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 45.

Capital investments were $135.5 million in 2026 compared to $171.9 million in 2025.

Research and development (R&D) expenses were $109.1 million in 2026 compared to $115.4 million in 2025.

Kenworth recently unveiled the new Kenworth C580 truck in the heavy-duty vocational segment. The C580 is designed to meet the most demanding vocational applications, such as mining and off-highway petroleum field work. DAF Trucks expanded its range of battery-electric trucks to include multiple axle tractor and rigid models for specific vocational applications such as construction. The new chassis models are available for the XD and XF Electric, which recently won the International Truck of the Year 2026, and for the larger XG and XG+ Electric, which feature the most spacious cabs in the European truck market.

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 $22.35 billion. PFS issued $400.0 million in medium-term notes during the first three months of 2026 to support new business volume and market share growth and repay maturing debt.

Truck Outlook

Truck industry heavy-duty retail sales in the U.S. and Canada in 2026 are expected to be 230,000 to 270,000 units compared to 232,800 in 2025. In Europe, the 2026 truck industry registrations for over 16-tonne vehicles are expected to be 280,000 to 320,000 units compared to 297,000 in 2025. In South America, heavy-duty truck industry registrations in 2026 are projected to be 100,000 to 110,000 units compared to 115,000 in 2025.

The Company has taken mitigating actions to reduce the impact from import tariffs on truck order intake. The Company's North American truck factories are optimally located to operate under the new Section 232 truck tariffs that began in November 2025. The Company’s tariff exposure is minimized by producing trucks locally for the United States, Canada and Mexico. The Company manufactures its trucks for U.S. customers in its Ohio, Texas, and Washington state factories. Further on February 20, 2026, the United States Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA). This decision may provide tariff relief and the potential recovery of amounts previously paid.

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The U.S. Environmental Protection Agency announcement reaffirmed the EPA27 NOx limit. It could make

changes to extended warranty requirements, useful life requirements or other modifications to new emissions systems.

The Company's results could be impacted by further changes in tariff policy, geopolitical uncertainty, emissions regulations and improving freight fundamentals.

Parts Outlook

In 2026, PACCAR Parts sales are expected to increase 3-6% compared to 2025, depending on the economic conditions.

Financial Services Outlook

In 2026, average earning assets are expected to be comparable to 2025. The used truck market has begun improving. 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 and average earning assets would likely decline.

Capital Investments and R&D Outlook

Capital investments in 2026 are expected to be $725 to $775 million and R&D is expected to be $450 to $500 million. PACCAR is increasing its investment in next generation internal combustion, hybrid and battery-electric powertrains, integrated connected vehicle services, advanced manufacturing capabilities, and the Company's autonomous vehicle platform.

In addition to the capital and R&D investments, the Company expects to continue investing in its U.S.-based battery joint venture, Amplify Cell Technologies. During the first quarter, expectations on electric vehicle demand in the commercial vehicle market continued to change. As a result, the Company and its joint venture partners agreed to finish building out the facility, and adjust the timing for installing the manufacturing capacity. As a result of these changes the production start date will be extended. See discussion in Note A.

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, 2026 and 2025 are presented below.

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

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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, geopolitical events, freight tonnage and economic conditions affecting the Company’s results of operations.

2026 Compared to 2025:

Truck

The Company’s Truck segment accounted for 67% of revenues in the first quarter of 2026 compared to 70% in the first quarter of 2025.

The Company’s new truck deliveries are summarized below:

Worldwide new truck deliveries decreased in the first quarter of 2026 compared to the same period of 2025, reflecting lower retail demand in all major markets except Europe.

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 2026, industry retail sales in the heavy-duty market in the U.S. and Canada was 44,900 units compared to 56,600 units in the same period of 2025. The Company’s heavy-duty truck retail market share was 29.4% in the first three months of 2026 compared to 29.1% in the first three months of 2025. The medium-duty market was 22,500 units in the first three months of 2026 compared to 26,000 units in the same period of 2025. The Company’s medium-duty market share was 12.8% in the first three months of 2026 compared to 14.5% in the first three months of 2025.

The over 16‑tonne truck market in Europe in the first three months of 2026 was 79,800 units compared to 72,000 units in the first three months of 2025. DAF over 16‑tonne market share was 13.1% in the first three months of 2026 compared to 14.0% in the same period of 2025. The 6 to 16‑tonne market in the first three months of 2026 was 8,800 units compared to 9,700 units in the same period of 2025. DAF market share in the 6 to 16-tonne market in the first three months of 2026 was 9.6% compared to 10.7% in the same period of 2025.

The over 16-tonne truck market in Brasil in the first three months of 2026 was 16,900 units compared to 21,500 units in the same period of 2025. DAF Brasil market share for the first three months of 2026 was 9.2% compared to 9.6% in the same period in 2025.

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

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The Company’s worldwide truck net sales and revenues in the first quarter decreased to $4.53 billion in 2026 from $5.23 billion in 2025, primarily due to lower unit truck deliveries from lower retail demand.

In the first quarter of 2026, Truck segment income before income taxes and pre-tax return on revenues decreased primarily due to lower truck unit deliveries from lower retail demand, reflecting economic conditions as well as higher tariff costs resulting from current trade policies, primarily in the U.S.

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, 2026 and 2025 are as follows:

Truck sales volume decreased revenues by $972.0 million and costs by $826.6 million, primarily reflecting lower truck deliveries.

Average truck sales prices increased sales by $104.9 million, primarily due to higher price realization in the U.S. and Canada.

Average cost per truck increased cost of sales by $162.3 million, primarily reflecting higher truck content, tariff and labor costs, partially offset by lower product support cost.

Factory overhead and other indirect costs decreased $7.2 million, primarily due to lower overhead costs from lower truck build rates.

Extended warranties, operating leases and other increased revenues by $12.9 million, primarily due to higher volume of extended warranty contracts and R&M contracts. The increase in cost of sales by $1.8 million reflects higher costs from R&M contracts partially offset by lower extended warranty costs in the U.S. and Canada.

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

Truck gross margin was 7.0% in the first quarter of 2026 compared to 9.7% in the same period of 2025 due to the factors noted above.

Truck SG&A expenses in the first quarter of 2026 increased to $61.4 million from $57.3 million in the first quarter of 2025, primarily due to higher sales and marketing expenses and higher currency translation effects, partially offset by lower salaries and related expenses and lower professional fees.

As a percentage of sales, Truck SG&A was 1.4% in the first quarter of 2026 compared to 1.1% in the first quarter of 2025.

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Parts

The Company’s Parts segment accounted for 25% of revenues in the first quarter 2026 compared to 23% in the first quarter of 2025.

The Company’s worldwide parts net sales and revenues for the first quarter increased to $1.71 billion in 2026 from $1.69 billion in 2025. The decrease in the U.S. and Canada mainly reflects a softer retail market. The increase in Europe primarily reflects an increase in the value of the euro relative to the U.S. dollar.

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, 2026 and 2025 are as follows:

Aftermarket parts sales volume decreased by $128.5 million and related cost of sales decreased by $65.7 million primarily due to lower sales volume in the U.S. and Canada and a higher mix of lower margin direct ship sales.

Average aftermarket parts sales prices increased sales by $101.5 million, primarily due to price realization in the U.S. and Canada and Europe.

Average aftermarket parts direct costs increased $55.9 million due to higher material costs, primarily in the U.S. and Canada and Europe and higher tariff costs, primarily in the U.S.

Warehouse and other indirect costs increased $13.1 million, primarily due to higher indirect costs including R&M and depreciation expense.

The currency translation effect on sales and cost of sales primarily reflects an increase in the value of the euro relative to the U.S. dollar.

Parts gross margin was 29.6% in the first quarter of 2026 compared to 30.7% in the first quarter of 2025 due to the factors noted above.

Parts SG&A expense in the first quarter of 2026 increased to $67.7 million from $60.9 million in the same period of 2025. The increase was primarily due to higher currency translation effects.

As a percentage of sales, Parts SG&A was 4.0% in the first quarter of 2026 compared to 3.6% in the first quarter of 2025.

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Financial Services

The Company’s Financial Services segment accounted for 8% of revenues in the first quarter of 2026 compared to 7% in the first quarter of 2025.

New loan and lease volume was $1.35 billion in the first quarter of 2026 compared to $1.51 billion in the first quarter of 2025. The decrease in new loan and lease volume was primarily due to lower retail sales of PACCAR trucks in the U.S. and Canada, Mexico and Brasil. The increase in equipment on operating lease dollar volume was primarily due to higher currency effect and market demand in Europe and Australia, partly offset by lower demand in Mexico. The effect of currency translation also increased new loan and lease volume by $70.7 million, primarily due to the euro.

In the first quarter of 2026, PFS finance market share of new PACCAR truck sales was 24.2% compared to 24.6% in the first quarter of 2025.

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In the first quarter of 2026, PFS revenues slightly increased to $542.2 million from $528.0 million in the first quarter of 2025. The increase was primarily due to a currency translation effect and higher average retail loan and finance lease portfolio, mostly offset by a lower dealer wholesale portfolio. The effects of currency translation increased PFS revenues by $34.6 million, primarily due to an increase in the value of the euro, Mexican peso and Brazilian real relative to the U.S. dollar.

PFS income before income taxes decreased to $115.5 million in the first quarter of 2026 from $121.1 million in the first quarter of 2025. The decrease was primarily due to higher provision for losses, partially offset by favorable currency effects. The effects of currency translation increased PFS income before income taxes by $7.8 million, primarily from an increase in the value of the Mexican peso 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 $354.0 million at March 31, 2026 and $389.4 million at December 31, 2025. 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 RVGs.

The Company recognized losses on used trucks, excluding repossessions, of $5.7 million in the first quarter of 2026 compared to $11.1 million in the first quarter of 2025, including $7.9 million of losses on multiple unit transactions in the first quarter of 2026 compared to $12.0 million in the first quarter of 2025. Used truck losses related repossessions, which are recognized as credit losses, were $4.7 million for the first quarter of 2026 and $3.3 million for the first quarter of 2025.

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, 2026 and 2025 are outlined below:

Average finance receivables decreased $301.7 million (excluding foreign exchange effects), decreasing interest and fees by $5.4 million, primarily due to lower dealer wholesale balances.

Average debt balances decreased $1.10 billion (excluding foreign exchange effects), decreasing interest and other borrowing costs by $13.0 million, reflecting lower funding requirements from a decrease in dealer wholesale receivables.

Slightly lower portfolio yields (7.3% in 2026 compared to 7.4% in 2025) decreased interest and fees by $10.6 million. The lower portfolio yields were primarily due to lower market rates on new portfolio assets, primarily in the U.S.

Slightly lower borrowing rates (4.8% in 2026 compared to 4.9% in 2025) decreased interest and other borrowing expenses by $3.8 million and were primarily due to lower debt market rates, primarily in Europe and Mexico.

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

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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, 2026 and 2025 are outlined below:

Used truck sales from used trucks received on trade increased revenues by $2.6 million and increased related depreciation and other expenses by $2.6 million.

Results on returned lease assets decreased depreciation and other expenses by $5.9 million.

Average operating lease assets decreased $141.1 million (excluding foreign exchange effects), which decreased revenues by $20.4 million and related depreciation and other expenses by $16.5 million.

Revenue per asset increased $12.2 million primarily due to higher average truck values financed. Cost per asset increased $7.9 million due to higher depreciation and operating expenses, mainly in Europe.

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

Financial Services SG&A for the first quarter of 2026 increased to $39.7 million from $38.3 million in the first quarter of 2025, primarily reflecting an increase in the value of the euro and Mexican peso relative to the U.S. dollar, partially offset by lower salaries and related expenses.

As an annualized percentage of average earning assets, Financial Services SG&A was .7% for both the first quarter of 2026 and 2025.

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The following table summarizes the provision for losses on receivables and net charge-offs during the three months ended March 31, 2026 and 2025:

The provision for losses on receivables was $44.1 million in the first quarter of 2026 compared to $18.3 million in the first quarter of 2025, primarily due to a higher provision in Brasil and the U.S., reflecting an increase in 30+ days past due accounts. Net charge-offs increased to $43.1 million in the first quarter of 2026 from $21.0 million in the same period of 2025. Higher net charge-offs in Brasil reflected a decline in market conditions, including elevated interest rates. The increased charge-offs in the U.S. and Canada were driven by soft freight market conditions and included one large fleet customer, which was provisioned for previously.

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, 2026 and 2025 are summarized below:

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

Modification activity increased to $407.8 million in the first three months of 2026 from $187.4 million in the same period of 2025. The decrease in modifications for Commercial reasons primarily reflects lower volumes of refinancing, primarily in the U.S. The increase related to Insignificant delay modifications reflects an increase in customers requesting payment relief for up to three months, primarily in the U.S. and Mexico. These customers were predominately not past due at the time of modification and at March 31, 2026. The increase in Credit modifications reflect higher volumes of contract modifications for customers experiencing financial difficulty in the U.S., Brasil and Mexico due to weak market conditions, including elevated interest rates in Brasil.

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

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Accounts 30+ days past due was 2.4% at March 31, 2026 compared to 2.4% at December 31, 2025 and 1.2% at March 31, 2025. The percentage of past due accounts in the U.S. and Canada was 1.8% as of March 31, 2026 and included the effect of contract modifications for one large fleet customer. The increased percentage of past due accounts in Mexico, Australia and Brasil reflects a decline in all market conditions, including elevated interest rates in Brasil. The Company continues to focus on maintaining low past due balances.

When the Company modifies a 30+ days past due account, the customer is then generally considered current under the revised contractual terms. Contract modifications, which were 30+ days past due and became current at the time of modification, were $116.1 million worldwide during the first quarter of 2026, $72.9 million during the fourth quarter of 2025 and $30.2 million during the first quarter of 2025. 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, 2026 in Mexico, Australia, Brasil and other was primarily due to accounts modified in Brasil.

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, 2026, December 31, 2025 and March 31, 2025. For certain modifications to customers experiencing financial difficulties that are at-risk at March 31, 2026 and December 31, 2025, the allowance for credit losses is based on the value of the underlying collateral or a discounted cash flow analysis

The Company’s annualized pre-tax return on average total assets for Financial Services was 2.1% for the first quarter of 2026 and 2.2% for the same period of 2025.

Other

Included in Other is sales, income and expenses not attributable to a reportable segment. Other also includes non-service cost components of pension expense and certain corporate income and expenses. Other sales represent less than 1% of consolidated net sales and revenues for the first quarter of 2026 and 2025. Other SG&A decreased to $20.5 million for the first quarter of 2026 from $25.1 million for the first quarter of 2025. The decrease was primarily due to lower salary and related costs.

For the first quarter of 2026, Other income before income taxes was $1.9 million compared to loss of $353.2 million in 2025, primarily due to the EC-related charge in the first quarter 2025 which is discussed in Note M of the consolidated financial statements.

Investment income for the first quarter decreased to $80.4 million in 2026 compared to $83.8 million in 2025. The decrease was primarily due to lower investment yields from lower market interest rates in all major markets except Brasil, partially offset by an increase in average investment balances in all major markets except Mexico.

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Income Taxes

The effective tax rate for the first quarter of 2026 was 22.0% compared to 21.5% for the first quarter of 2025. Included in 2025 was the EC-related charge of $350.0 million, which lowered the effective tax rate.

For the first quarter of 2026, domestic income before taxes and domestic pre-tax return on revenues decreased primarily due to lower Truck and Parts operation results. 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, 2026 decreased $657.3 million from the balances at December 31, 2025. 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 increased by $61.5 million to $971.8 million in the first three months of 2026 from $910.3 million in 2025. The increased operating cash flow reflects higher net income by $100.2 million and higher cash provided from net changes in operating assets and liabilities of $115.9 million, partially offset by lower cash provided from net income items not affecting cash of $157.1 million, primarily deferred income taxes. The net changes in operating assets and liabilities are mainly due to higher cash provided by wholesale receivables on new trucks in the financial services segment of $169.9 million and an increase in accounts payable and accruals of $78.5 million, partially offset by higher cash used for inventories of $62.7 million and a larger increase in trade and other receivables of $48.2 million.

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Investing activities: Cash used in investing activities decreased by $317.6 million to $75.0 million in the first three months of 2026 from $392.6 million in 2025. The decrease in net cash used in investing activities primarily reflects lower net origination of retail loans and finance leases of $335.2 million and lower contributions to the joint venture of $44.7 million, partially offset by a decrease in net cash provided for in the settlement of a net investment hedge presented in Other, net in the Company's Consolidated Statements of Cash Flows.

Financing activities: Cash used in financing activities was $1,551.7 million for the first three months of 2026, $583.0 million lower than the $2,134.7 million used in 2025, reflecting lower cash dividends and lower net borrowing activities. In the first three months of 2026, the Company paid $909.4 million in dividends compared to $1.75 billion in 2025. Cash used in net borrowing activities was $679.9 million in 2026, $274.0 million higher than the $405.9 million in 2025.

The effect of exchange rate changes on cash decreased cash and cash equivalents by $8.2 million in the first three months of 2026, reflecting a decrease in the value of foreign currencies relative to the U.S. dollar, primarily the euro. In the first three months of 2025, an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro, the British pound and Brazilian real, increased cash and cash equivalents by $73.9 million.

Credit Lines and Other

The Company has line of credit arrangements of $5.62 billion, of which $5.25 billion were unused at March 31, 2026. Included in these arrangements are $4.00 billion of committed bank facilities, of which $1.50 billion expires in June 2026, $1.25 billion expires in June 2028 and $1.25 billion expires in June 2030. 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, 2026.

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, 2026, the Company has repurchased $128.4 million of shares under this plan. There were no repurchases made under this plan during the first three months of 2026.

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 2026 was $134.9 million compared to $170.7 million for the same period of 2025. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $9.22 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 2026, total capital investments are expected to be $725 to $775 million and R&D is expected to be $450 to $500 million. The Company is increasing its investment in next generation internal combustion, hybrid and battery-electric powertrains, integrated connected vehicle services, advanced manufacturing capabilities, and the Company's autonomous vehicle platform. In addition to the capital and R&D investments, the Company expects to continue investing in its U.S.-based 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. In April 2026, the Company issued $150.0 million of medium-term notes under this registration. The total amount of medium-term notes outstanding for PFC as of March 31, 2026 was $7.60 billion. The registration expires in November 2027 and does not limit the principal amount of debt securities that may be issued during that period.

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As of March 31, 2026, the Company’s European finance subsidiary, PACCAR Financial Europe, had €1.05 billion 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 May 2026. The Company intends to renew this program in the second quarter of 2026.

In August 2021, the Company's Mexican subsidiary, 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, 2026, 5.80 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, 2026 was 900.0 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, 2026.

In December 2021, the Company’s Brazilian subsidiary, Banco PACCAR S.A., established a lending program 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. The program is limited to 2.43 billion Brazilian reais and has 1.19 billion Brazilian reais outstanding as of March 31, 2026. 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. The total amount of medium-term notes outstanding as of March 31, 2026 was 500.0 million Brazilian reais.

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; use of artificial intelligence and machine learning in business processes; pandemics; climate-related risks; global conflicts; litigation, including 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, 2025 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, 2026. For additional information, refer to Item 7A as presented in the 2025 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 2025 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, 2026.

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, 2026.

(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, 2026, the Company has repurchased $128.4 million of shares under this plan. There were no repurchases made under this plan during the first three months of 2026.

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, 2026, 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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