PACCAR INC (PCAR) Q2 2025 Earnings Summary

Executive Summary

PACCAR delivered a solid Q2: revenue $7.51B and diluted EPS $1.37; both exceeded Wall Street consensus, while truck, parts and other gross margins compressed to 13.9% amid tariff headwinds .
Parts again set a record: PACCAR Parts revenue $1.72B and pre-tax income $416.5M; PFS pre-tax income rose to $123.2M, supported by strong credit quality and improving used truck results .
Management guided Q3 truck deliveries to 32,000–33,000 and indicated margins “around 13%,” reflecting summer shutdowns in Europe and pricing/cost impacts from tariffs; parts revenue guided up 4%–6% in Q3 .
Near-term catalysts: resolution of Section 232 tariff investigation, clarity on EPA 2027 NOx standards (potential pre-buy), and parts momentum; management is constructive on 2026 as regulatory/tariff clarity and truckload fundamentals improve .

What Went Well and What Went Wrong

What Went Well

Record aftermarket performance: PACCAR Parts revenue reached $1.72B with pre-tax income of $416.5M; management highlighted capacity, services, and connected vehicle strategy as drivers .
Financial services momentum: PFS pre-tax income was $123.2M, up year over year, with improving used truck dynamics and portfolio quality .
Strategic positioning and domestic manufacturing: “over 90% of PACCAR’s U.S.-delivered trucks are produced in our American factories,” underpinning resilience amid tariff uncertainty .

What Went Wrong

Margin pressure: Truck, parts and other gross margin fell to 13.9% in Q2; management expects ~13% in Q3 given tariff structure and seasonal shutdowns .
Top-line and EPS declined year over year: revenue $7.51B vs $8.77B and diluted EPS $1.37 vs $2.13 in Q2 2024, reflecting a softer cycle and tariff impacts .
Regional softness: Mexico and South America (notably Brazil) were softer amid tariff discussions and higher interest rates; management cited Mexico softness and Brazil rate hikes as headwinds .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$7.91	$7.44	$7.51
Net Income ($USD Millions)	$872.0	$505.1	$723.8
Diluted EPS ($USD)	$1.66	$0.96	$1.37
Truck, Parts & Other Gross Margin %	15.9%	14.8%	13.9%
Global Truck Deliveries (units)	43,900	40,100	39,300

Segment sales and profit

Segment	Q4 2024 Sales ($USD Billions)	Q1 2025 Sales ($USD Billions)	Q2 2025 Sales ($USD Billions)
Truck	$5.69	$5.23	$5.24
Parts	$1.67	$1.69	$1.72
Financial Services	$0.54	$0.53	$0.55
Intersegment & Other	$0.00	($0.00)	($0.00)

Segment	Q2 2025 Pretax Profit ($USD Millions)
Truck	$308.8
Parts	$416.5
Financial Services	$123.2
Investment Income & Other	$83.4

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Parts Revenue ($USD Billions)	$1.67	$1.69	$1.72
Parts Pretax Profit ($USD Millions)	$428.2	$426.5	$416.5
PFS Pretax Profit ($USD Millions)	$104.0	$121.1	$123.2
Cash from Operations ($USD Millions)	$1,450.0	$910.3	$833.4
CapEx ($USD Millions)	$—	$171.9	$226.8
R&D Expense ($USD Millions)	$115.3	$115.4	$112.9

Deliveries by region

Region	Q4 2024 Units	Q1 2025 Units	Q2 2025 Units
United States & Canada	22,300	22,200	23,000
Europe	12,300	10,400	10,600
Other	9,300	7,500	5,700
Total	43,900	40,100	39,300

Non-GAAP note: First half 2025 adjusted net income (ex-EC-related claims) was $1.49B ($2.83 per diluted share) vs GAAP $1.23B ($2.33), reflecting a $350M pre-tax charge recorded in Q1 tied to European civil litigation .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Truck & Parts Gross Margin %	Q3 2025	13%–14% range (shared in Q1 outlook)	~13%	Lowered
Global Truck Deliveries	Q3 2025	—	32,000–33,000	New
Parts Top-Line Growth	Q3 2025	+2%–4% (Q2 guide)	+4%–6%	Raised
U.S./Canada Class 8 Industry	FY 2025	235k–265k	230k–260k	Lowered
Europe >16t Industry	FY 2025	270k–300k	270k–300k	Maintained
South America >16t Industry	FY 2025	100k–110k	90k–100k	Lowered
CapEx	FY 2025	$700M–$800M	$750M–$800M	Raised low end
R&D	FY 2025	$450M–$480M	$450M–$480M	Maintained
Dividend	Next Pay Date	Declared $0.33 per share, payable Sep 4, 2025	$0.33 per share	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/Section 232	Q1: Margin guide incorporated full-quarter tariff impacts; pricing catching up; inventory ~3.1 months vs industry ~4 months .	Expect increased tariff impact in Q3; ~$75M quarterly effect; tariff surcharges priced into orders; backlog and supplier programs to mitigate; Q3 margin ~13% .	Headwind intensifying near term; pricing catch-up ongoing.
Regulatory (EPA 2027 NOx)	Q1: 35 mg NOx standard drives hardware/cost; potential pre-buy in 2026; prepared for both 200 mg and 35 mg scenarios .	Reinforced potential pre-buy; clarity on NOx could stimulate orders later in 2025 .	Building as potential 2026 demand tailwind.
Product performance & Parts	Q4/Q1: Record parts revenue and >30% margins; parts growth +2%–4% in 2025 .	Record parts revenue; Q3 parts growth +4%–6% guided; 30% gross margin cited .	Strengthening sequentially (more ship days in Europe, capacity).
Regional trends	Q4: NA Class 8 share 30.7%; Mexico pre-buy; medium-duty normalizing; Europe 270k–300k . Q1: Mexico soft; NA/Europe deliveries stable .	Mexico softer; Q3 Europe shutdown normal; NA inventory months favorable (2.9 vs industry 4.2) .	NA steady, Europe seasonally softer; Mexico soft.
R&D/Capex	Q4/Q1: 2025 capex $700–$800M; R&D $460–$500M; investment in ADAS, connected services, battery JV .	Capex $750–$800M; R&D $450–$480M; engine reman facility operational Q1’26 (~5k remans/yr) .	Sustained investment; targeted expansion.
Autonomy/EV	Q4/Q1: EV adoption prudent; hybrids as efficiency lever; battery JV progressing .	Aurora partnership progress; PACCAR prioritizes safety and driver-in; next-gen BEVs launched at ACT Expo (250-mile range) .	Measured progress; focus on safety and economics.
Supply chain/USMCA	Q1: Working with suppliers; USMCA content to reduce tariff risk .	Continued focus on HTS codes/USMCA certification; pricing surcharges present .	Ongoing mitigation efforts.
Used truck market	Q4/Q1: Inventories low; pricing improving .	“Improving used truck results” aided PFS .	Supportive for orders/residuals.

Management Commentary

“PACCAR achieved good revenues and net income in the second quarter… PACCAR Parts achieved record quarterly revenues of $1.72 billion and excellent quarterly pre-tax income of $417 million… PACCAR Financial had a very good quarter” — Preston Feight, CEO .
“PACCAR Parts achieved record revenues in the second quarter with excellent gross margins of 30%… PFS pre-tax income was a robust $123 million, up from $111 million a year earlier” — Kevin Baney, EVP .
“Assuming the current tariff structure and market conditions, third-quarter margins could be around 13%” — Preston Feight, CEO .
“R&D expensing and immediate expensing on fixed assets will provide cash tax benefits in the $300–$400 million range” — Brice Poplawski, CFO .
“Over 90% of PACCAR’s U.S.-delivered trucks are produced in our American factories” — Preston Feight, CEO .

Q&A Highlights

Tariff cadence and pricing: Management expects tariff impact to be higher in Q3 (~$75M quarterly), with pricing surcharges in place and ongoing catch-up through backlog; supplier/USMCA strategies aim to mitigate .
Q3 operational outlook: Deliveries guided to 32k–33k with Europe’s summer shutdown; truck, parts and other margins guided to ~13% given current tariff structure .
Parts momentum: Q3 parts revenue growth guided +4%–6%; sequential re-acceleration due to execution, capacity, and more ship days in Europe; margin outlook constructive .
Inventory positioning: Industry Class 8 inventory ~4.2 months vs Kenworth/Peterbilt ~2.9 months; roughly half of inventory at bodybuilders (vocational leadership) .
Policy tailwinds: “One Big Beautiful Bill” accelerates depreciation/R&D expensing, prompting customer engagement and $300–$400M cash tax benefit for PACCAR; management is constructive on 2026 .
Autonomy stance: Progress with Aurora and others; safety-first approach with driver-in until fully validated; broader autonomy expected to increase truck demand when realized .

Estimates Context

Consensus vs actual (Q2 2025)

Metric	Consensus	Actual
Revenue ($USD Billions)	$6.81*	$7.51
EBITDA ($USD Billions)	$0.74*	$0.96
Primary EPS ($USD)	$1.28*	$1.37

Values with asterisks (*) retrieved from S&P Global via GetEstimates. PACCAR exceeded consensus on revenue, EBITDA, and EPS, reflecting strong parts/PFS contributions and effective (though partial) tariff pricing pass-through .

Key Takeaways for Investors

Beat vs consensus on revenue and EPS; headline strength driven by record Parts and solid PFS, despite tariff headwinds compressing margins to 13.9% .
Near-term margin bottom likely in Q3 (~13%) under current tariff structure; pricing surcharges and supplier/USMCA actions should support sequential recovery thereafter .
Parts growth inflecting: Q3 guide +4%–6% with strong execution, connected fleet, and European ship-day uplift; durable profitability across cycles .
Policy catalysts: Section 232 outcome and EPA 2027 NOx clarity could unlock order momentum (potential 2026 pre-buy), with customer conversations already picking up .
Inventory and demand setup: PACCAR’s lower months of inventory vs industry and vocational leadership at bodybuilders position it well for normalization and mix resilience .
Capital allocation steady: Dividend maintained at $0.33 per share; 2025 capex raised (low end) to $750M–$800M and R&D maintained $450M–$480M, supporting ADAS/connected services and engine reman expansion .
2026 outlook constructive: Management expects improvement as tariffs/regulatory clarity emerge and truckload fundamentals strengthen; consider positioning ahead of potential pre-buy dynamics .

Sourced documents and data: Q2 press release and 8-K Exhibit 99.1 , Q2 earnings call transcript –, Q1 2025 press release and call – –, Q4 2024 press release and call – –.