FULLTEXT DEL 2 AV 2
10-Q – 2025-10-30 – pcar-20250930.htm
101.4
Expected return on assets
( 63.2
)
( 60.8
)
( 188.6
)
( 181.9
)
Amortization of prior service costs
.3
.3
1.0
1.0
Recognized actuarial loss
.6
2.5
1.4
5.3
Net pension (income) expense
$
( 1.9
)
$
1.7
$
( 6.5
)
$
6.5
The components of net pension expense other than service cost are included in Interest and other (income) expenses, net on the Consolidated Statements of Comprehensive Income.
During the three and nine months ended September 30, 2025, the Company contributed $ 7.8 and $ 19.3 to its pension plans, respectively, and $ 2.5 and $ 34.7 for the three and nine months ended September 30, 2024 , respectively.
NOTE M – Commitments and Contingencies
On July 19, 2016, the European Commission (EC) concluded its investigation of all major European truck manufacturers and reached a settlement with DAF Trucks N.V., DAF Trucks Deutschland GmbH and PACCAR Inc (collectively “the Company”). Following the settlement, certain EC-related claims and lawsuits have been filed in various jurisdictions primarily in Europe against all major European truck manufacturers including the Company and certain subsidiaries. These claims and lawsuits include individual and collective proceedings seeking monetary damages, including class actions in the United Kingdom (U.K.), the Netherlands, and Israel. In certain jurisdictions, additional claimants may bring EC-related claims and lawsuits against the Company or its subsidiaries.
Several European courts have issued judgments; some have been favorable while others have been unfavorable and have been appealed. The Company believes it has meritorious defenses to all pending legal claims. In the first quarter 2023, the Company recorded a pre-tax charge of $ 600.0 ($ 446.4 after-tax) for the estimable total cost. The Company has settled with the majority of claimants and continues to pursue appropriate resolutions. Due to ongoing settlement costs, the Company updated its estimate and recorded an additional pre-tax charge of $ 350.0 ($ 264.5 after-tax) for the total estimable remaining costs in Interest and other (income) expenses, net in the first quarter of 2025.
PACCAR is also a defendant in various other legal proceedings and, in addition, there are various other contingent liabilities arising in the normal course of business. After consultation with legal counsel, management does not anticipate that disposition of these various other proceedings and contingent liabilities will have a material effect on the consolidated financial statements.
- 34 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
Third Quarter Financial Highlights:
• Worldwide net sales and revenues were $6.67 billion in 2025 compared to $8.24 billion in 2024, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.
• Truck sales were $4.38 billion in 2025 compared to $6.03 billion in 2024, due to lower truck deliveries, primarily in the U.S. and Canada and Mexico.
• Parts sales were $1.72 billion in 2025 compared to $1.66 billion in 2024, reflecting higher sales in the U.S. and Canada and Europe.
• Financial Services revenues were $565.3 million in 2025 compared to $536.1 million in 2024, primarily due to higher interest income driven by retail portfolio growth and higher portfolio yields.
• Net income was $590.0 million ($1.12 per diluted share) in 2025 compared to $972.1 million ($1.85 per diluted share) in 2024.
• Capital investments were $156.0 million in 2025 compared to $183.8 million in 2024.
• Research and development (R&D) expenses were $111.0 million in 2025 compared to $115.0 million in 2024.
First Nine Months Financial Highlights:
• Worldwide net sales and revenues were $21.62 billion in 2025 compared to $25.76 billion in 2024, primarily due to lower truck revenues, partially offset by higher parts and financial services revenues.
• Truck sales were $14.85 billion in 2025, compared to $19.15 billion in 2024, due to lower truck deliveries in all major markets.
• Parts sales were $5.14 billion in 2025 compared to $5.00 billion in 2024, reflecting higher sales in the U.S. and Canada.
• Financial Services revenues were $1.64 billion in 2025 compared to $1.56 billion in 2024, primarily due to higher interest income driven by retail portfolio growth and higher portfolio yields.
• Net income was $1.82 billion ($3.45 per diluted share) in 2025 compared to $3.29 billion ($6.25 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 $2.08 billion ($3.95 per diluted share). See Reconciliation of GAAP to Non-GAAP Financial Measures on page 52 .
• Capital investments were $549.0 million in 2025 compared to $567.7 million in 2024.
• Research and development (R&D) expenses were $339.3 million in 2025 compared to $337.6 million in 2024.
PACCAR is finalizing construction of a new $92 million, 46,000 square-foot chassis frame painting facility which will increase capacity with robotic paint capabilities in Chillicothe, Ohio, to be opened in early 2026. PACCAR is also finalizing construction of a new $35 million, 50,000 square-foot engine remanufacturing facility in Columbus, Mississippi, to be opened in 2026. PACCAR will open a new 180,000 square-foot Parts Distribution Center (PDC) in Calgary, Canada, in 2026, to expedite parts delivery to dealers and customers in the region. In the third quarter 2025, Kenworth launched the T880S high horsepower vocational truck for heavy-haul, logging, and other high horsepower applications, featuring a set-forward front axle configuration to optimize weight distribution and bridge law compliance.
- 35 -
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 $23.02 billion. PFS issued $2.37 billion in medium-term notes during the first nine months of 2025 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 2025 are expected to be 230,000 to 245,000 units compared to 268,100 in 2024. Estimates for the U.S. and Canada truck industry heavy-duty retail sales in 2026 are in the range of 230,000 to 270,000 units. In Europe, 2025 truck industry registrations for over 16-tonne vehicles are expected to be 275,000 to 295,000 units compared to 316,100 in 2024. The European truck registrations in the above 16-tonne truck market for 2026 are projected to be in a range of 270,000 to 300,000 units. In South America, heavy-duty truck industry registrations in 2025 are projected to be 95,000 to 105,000 units compared to 119,000 in 2024, and in a similar range for 2026.
The Company's truck and parts products have been negatively affected since March 2025 by import tariffs imposed by the U.S. government and actions taken by other countries. While the Company has taken mitigating actions to reduce the impact, the ongoing impact from import tariffs on truck order intake and profit margins remains unfavorable. The recently announced clarification of the Section 232 tariffs on medium- and heavy-duty trucks, which imposes a 25% tariff on imported trucks, is positive for the Company. The Company manufactures over 90% of its trucks for U.S. customers in its Ohio, Texas, and Washington State factories. As tariff policy, including the expected U.S. Supreme Court ruling on the International Emergency Economic Power Acts (IEEPA) tariffs, brings clarity to the market in the coming months, the impact could benefit the Company.
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 ongoing tariff uncertainty. In 2026, PACCAR Parts sales are expected to increase from 2025 levels, depending on the economic conditions.
Financial Services Outlook
In 2025, average earning assets are expected to increase 5-6% compared to 2024. The used truck market has been improving, which is reflected in PFS’ quarterly results this year. If freight transportation conditions decline due to a weaker economy, then past due accounts, truck repossessions and credit losses would likely increase from the current levels and new business volume would likely decline. In 2026, average earning assets are expected to be comparable to 2025 levels.
Capital Investments and R&D Outlook
Capital investments in 2025 are expected to be $750 to $775 million and R&D is expected to be $450 to $465 million. In 2026, capital investments are projected to be $725 to $775 million and R&D is expected to be $450 to $500 million. PACCAR is investing in next generation clean diesel and alternative powertrains, integrated connected vehicle services, expanded manufacturing capabilities, and advanced driver assistance systems that create value for customers. In addition to the capital and R&D investments, the company plans to invest a total project amount of $600 to $900 million in its battery joint venture, Amplify Cell Technologies.
See the Forward-Looking Statements section of Management’s Discussion and Analysis for factors that may affect these outlooks.
- 36 -
RESULTS OF OPERATIONS:
The Company’s results of operations for the three and nine months ended September 30, 2025 and 2024 are presented below.
Three Months Ended
Nine Months Ended
September 30
September 30
($ in millions, except per share amounts)
2025
2024
2025
2024
Net sales and revenues:
Truck
$
4,381.4
$
6,027.0
$
14,850.3
$
19,145.8
Parts
1,724.6
1,657.6
5,135.4
4,997.8
Other
.5
19.2
(2.7
)
57.5
Truck, Parts and Other
6,106.5
7,703.8
19,983.0
24,201.1
Financial Services
565.3
536.1
1,641.0
1,555.2
$
6,671.8
$
8,239.9
$
21,624.0
$
25,756.3
Income before income taxes:
Truck
$
102.5
$
630.8
$
776.2
$
2,349.7
Parts
410.0
406.7
1,253.0
1,276.3
Other*
14.1
3.6
(339.6
)
4.0
Truck, Parts and Other
526.6
1,041.1
1,689.6
3,630.0
Financial Services
126.2
106.5
370.5
331.6
Investment income
90.8
108.7
258.5
290.0
Income taxes
(153.6
)
(284.2
)
(499.7
)
(961.6
)
Net income
$
590.0
$
972.1
$
1,818.9
$
3,290.0
Diluted earnings per share
$
1.12
$
1.85
$
3.45
$
6.25
After-tax return on revenues
8.8
%
11.8
%
8.4
%
12.8
%
After-tax adjusted return on revenues (non-GAAP)**
9.6
%
* In 2025, Other includes a $350.0 million charge related to civil litigation in Europe (EC-related claims) in the first quarter 2025.
** See Reconciliation of GAAP to Non-GAAP Financial Measures for 2025 on page 52 .
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.
2025 Compared to 2024:
Truck
The Company’s Truck segment accounted for 66% of revenues in the third quarter and 68% for the first nine months of 2025, compared to 73% in the third quarter and 74% for the first nine months of 2024.
The Company’s new truck deliveries are summarized below:
Three Months Ended
Nine Months Ended
September 30
September 30
2025
2024
% CHANGE
2025
2024
% CHANGE
U.S. and Canada
17,100
25,900
(34
)
62,300
84,100
(26
)
Europe
10,100
10,000
1
31,100
33,100
(6
)
Mexico, South America, Australia and other
4,700
9,000
(48
)
17,900
24,200
(26
)
Total units
31,900
44,900
(29
)
111,300
141,400
(21
)
Worldwide new truck deliveries decreased in the third quarter compared to the same period of 2024, reflecting lower deliveries in the U.S. and Canada and Brasil, partially offset by higher deliveries in Europe. New truck deliveries also decreased for the first nine months of 2025 compared to the same period of 2024, reflecting lower retail demand in all major markets.
- 37 -
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 nine months of 2025, industry retail sales in the heavy-duty market in the U.S. and Canada were 180,300 units compared to 198,600 units in the same period of 2024. The Company’s heavy-duty truck retail market share was 30.3% in the first nine months of 2025 compared to 31.1% in the first nine months of 2024. The medium-duty market was 70,200 units in the first nine months of 2025 compared to 80,800 units in the same period of 2024. The Company’s medium-duty market share was 15.7% in the first nine months of 2025 compared to 17.2% in the first nine months of 2024.
The over 16‑tonne truck market in Europe in the first nine months of 2025 was 218,300 units compared to 239,800 units in the first nine months of 2024. DAF over 16‑tonne market share was 13.6% in the first nine months of 2025 compared to 14.0% in the same period of 2024. The 6 to 16‑tonne market in the first nine months of 2025 was 29,700 units compared to 38,900 units in the same period of 2024. DAF market share in the 6 to 16-tonne market in the first nine months of 2025 was 9.7% compared to 9.1% in the same period of 2024.
The over 16-tonne truck market in Brasil in the first nine months of 2025 was 63,900 units compared to 71,500 units in the same period of 2024. DAF Brasil market share for the first nine months of 2025 was 9.1% compared to 10.0% in the same period in 2024.
The Company’s worldwide truck net sales and revenues are summarized below:
Three Months Ended
Nine Months Ended
September 30
September 30
($ in millions)
2025
2024
% CHANGE
2025
2024
% CHANGE
Truck net sales and revenues:
U.S. and Canada
$
2,545.9
$
3,669.3
(31
)
$
9,057.1
$
12,136.2
(25
)
Europe
1,178.2
1,123.6
5
3,467.6
3,699.3
(6
)
Mexico, South America, Australia and other
657.3
1,234.1
(47
)
2,325.6
3,310.3
(30
)
$
4,381.4
$
6,027.0
(27
)
$
14,850.3
$
19,145.8
(22
)
Truck income before income taxes
$
102.5
$
630.8
(84
)
$
776.2
$
2,349.7
(67
)
Pre-tax return on revenues
2.3
%
10.5
%
5.2
%
12.3
%
The Company’s worldwide truck net sales and revenues in the third quarter decreased to $4.38 billion in 2025 from $6.03 billion in 2024. Revenues for the first nine months decreased to $14.85 billion in 2025 from $19.15 billion in 2024. The decrease in both periods was primarily due to lower truck unit deliveries in most major markets from lower retail demand, reflecting economic conditions as well as higher tariff costs resulting from current trade policies primarily in the U.S.
In the third quarter and first nine months of 2025, Truck segment income before taxes and pre-tax return on revenues decreased primarily due to lower truck unit deliveries and progressively lower price realization.
The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the three months ended September 30, 2025 and 2024 are as follows:
NET
COST OF
SALES AND
SALES AND
GROSS
($ in millions)
REVENUES
REVENUES
MARGIN
Three Months Ended September 30, 2024
$
6,027.0
$
5,246.0
$
781.0
(Decrease) increase
Truck sales volume
(1,637.2
)
(1,394.0
)
(243.2
)
Average truck sales prices
(78.3
)
(78.3
)
Average material, labor and other direct costs
243.4
(243.4
)
Factory overhead and other indirect costs
(58.1
)
58.1
Extended warranties, operating leases and other
8.2
24.1
(15.9
)
Currency translation
61.7
64.4
(2.7
)
Total decrease
(1,645.6
)
(1,120.2
)
(525.4
)
Three Months Ended September 30, 2025
$
4,381.4
$
4,125.8
$
255.6
- 38 -
• Truck sales volume decreased revenues by $1.64 billion and costs by $1.39 billion, primarily reflecting lower truck deliveries in the U.S. and Canada and Mexico, partially offset by higher deliveries in Europe.
• Average truck sales prices decreased $78.3 million, primarily due to lower price realization, reflecting an increased competitive environment in all markets, partially offset by tariff price increases in the U.S.
• Average truck costs increased $243.4 million, primarily reflecting higher tariff costs in the U.S. and higher regulatory and other truck content, partially offset by a higher mix of fleet trucks and lower product support cost.
• Factory overhead and other indirect costs decreased $58.1 million, primarily due to lower labor costs, repair and maintenance costs and factory supplies from lower truck build rates.
• Extended warranties, operating leases and other increased revenues by $8.2 million, primarily due to higher volume of extended warranty and R&M contracts. The increase in extended warranty, operating leases and other costs of $24.1 million reflects higher costs from extended warranty and R&M contracts and higher used truck costs.
• The currency translation effect on sales and cost of sales primarily reflects an increase in the value of the euro and the Brazilian real relative to the U.S. dollar, partially offset by the decline in the value of the Australian dollar and Canadian dollar relative to the U.S. dollar.
• Truck gross margin was 5.8% in the third quarter of 2025 compared to 13.0% in the same period of 2024 due to the factors noted above.
The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the nine months ended September 30, 2025 and 2024 are as follows:
NET
COST OF
SALES AND
SALES AND
GROSS
($ in millions)
REVENUES
REVENUES
MARGIN
Nine Months Ended September 30, 2024
$
19,145.8
$
16,356.6
$
2,789.2
(Decrease) increase
Truck sales volume
(4,009.0
)
(3,365.9
)
(643.1
)
Average truck sales prices
(346.8
)
(346.8
)
Average material, labor and other direct costs
681.8
(681.8
)
Factory overhead and other indirect costs
(157.7
)
157.7
Extended warranties, operating leases and other
43.6
77.5
(33.9
)
Currency translation
16.7
37.8
(21.1
)
Total decrease
(4,295.5
)
(2,726.5
)
(1,569.0
)
Nine Months Ended September 30, 2025
$
14,850.3
$
13,630.1
$
1,220.2
• Truck sales volume decreased revenues by $4.01 billion and costs by $3.37 billion, primarily reflecting lower truck deliveries in all major markets.
• Average truck sales prices decreased by $346.8 million, primarily due to lower price realization in the U.S. and Canada and Europe, reflecting an increased competitive environment, partially offset by tariff price increases in the U.S.
• Average truck costs increased by $681.8 million, primarily reflecting higher regulatory and other truck content, increased tariff costs and product support accruals.
• Factory overhead and other indirect costs decreased by $157.7 million, primarily due to lower labor costs, maintenance costs and factory supplies from lower truck build rates.
• Extended warranties, operating leases and other increased revenues by $43.6 million due to higher volume of extended warranty and R&M contracts and higher dealer support services. The increase in extended warranty, operating leases and other cost of $77.5 million reflects higher volume of extended warranty contracts, higher used truck costs, primarily in Europe, and higher volume of R&M contracts.
• 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, partially offset by the decrease in value of the Brazilian real, Canadian dollar and the Australian dollar relative to the U.S. dollar.
• Truck gross margin was 8.2% in the first nine months of 2025 compared to 14.6% in the same period of 2024 due to the factors noted above.
- 39 -
Truck SG&A expenses increased in the third quarter of 2025 to $63.3 million from $61.9 million in the same period of 2024, primarily due to higher sales and marketing expenses. For the first nine months of 2025, Truck SG&A decreased to $175.3 million from $183.3 million in the same period of 2024, primarily due to lower salaries and related expenses, lower professional fees and lower travel and entertainment expenses, partially offset by higher sales and marketing expenses. As a percentage of sales, Truck SG&A was 1.4% and 1.2% for the third quarter and first nine months of 2025, respectively, compared to 1.0% for the third quarter and first nine months of 2024.
Parts
The Company’s Parts segment accounted for 26% of revenues in the third quarter and 24% in the first nine months of 2025, compared to 20% for both the third quarter and first nine months of 2024.
Three Months Ended
Nine Months Ended
September 30
September 30
($ in millions)
2025
2024
% CHANGE
2025
2024
% CHANGE
Parts net sales and revenues:
U.S. and Canada
$
1,191.8
$
1,129.2
6
$
3,565.9
$
3,419.1
4
Europe
358.1
345.5
4
1,065.0
1,052.9
1
Mexico, South America, Australia and other
174.7
182.9
(4
)
504.5
525.8
(4
)
$
1,724.6
$
1,657.6
4
$
5,135.4
$
4,997.8
3
Parts income before income taxes
$
410.0
$
406.7
1
$
1,253.0
$
1,276.3
(2
)
Pre-tax return on revenues
23.8
%
24.5
%
24.4
%
25.5
%
The Company’s worldwide parts net sales and revenues for the third quarter increased to $1.72 billion in 2025 from $1.66 billion in 2024. For the first nine months, worldwide parts net sales and revenues increased to $5.14 billion in 2025 from $5.00 billion in 2024. The increase in both periods was primarily due to higher sales in the U.S. and Canada.
The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the three months ended September 30, 2025 and 2024 are as follows:
NET
COST OF
SALES AND
SALES AND
GROSS
($ in millions)
REVENUES
REVENUES
MARGIN
Three Months Ended September 30, 2024
$
1,657.6
$
1,159.2
$
498.4
(Decrease) increase
Aftermarket parts volume
(42.1
)
(27.3
)
(14.8
)
Average aftermarket parts sales prices
91.0
91.0
Average aftermarket parts direct costs
61.8
(61.8
)
Warehouse and other indirect costs
11.8
(11.8
)
Currency translation
18.1
11.0
7.1
Total increase
67.0
57.3
9.7
Three Months Ended September 30, 2025
$
1,724.6
$
1,216.5
$
508.1
• Aftermarket parts sales volume decreased by $42.1 million and related cost of sales decreased by $27.3 million. The decrease in parts sales and costs primarily reflects lower sales volume in most major markets, primarily in Mexico, the U.S. and Canada and Europe.
• Average aftermarket parts sales prices increased sales by $91.0 million, primarily due to price realization in all major markets as well as tariff cost increases in the U.S.
• Average aftermarket parts direct costs increased $61.8 million due to higher material costs and higher tariff costs, primarily in the U.S.
• Warehouse and other indirect costs increased $11.8 million, primarily due to higher indirect costs, including depreciation expense.
• The currency translation effect on sales and cost of sales primarily reflects an increase in the value of the euro relative to the U.S. dollar.
• Parts gross margins in the third quarter of 2025 decreased to 29.5% from 30.1% in the third quarter of 2024 due to the factors noted above.
- 40 -
The major factors for the changes in Parts segment net sales and revenues, cost of sales and revenues and gross margin between the nine months ended September 30, 2025 and 2024 are as follows:
NET
COST OF
SALES AND
SALES AND
GROSS
($ in millions)
REVENUES
REVENUES
MARGIN
Nine Months Ended September 30, 2024
$
4,997.8
$
3,450.7
$
1,547.1
(Decrease) increase
Aftermarket parts volume
(83.8
)
(43.3
)
(40.5
)
Average aftermarket parts sales prices
205.6
205.6
Average aftermarket parts direct costs
144.3
(144.3
)
Warehouse and other indirect costs
34.1
(34.1
)
Currency translation
15.8
6.9
8.9
Total increase (decrease)
137.6
142.0
(4.4
)
Nine Months Ended September 30, 2025
$
5,135.4
$
3,592.7
$
1,542.7
• Aftermarket parts sales volume decreased by $83.8 million and related cost of sales decreased by $43.3 million. The decrease in parts sales and costs reflects lower sales volume in most markets, primarily Mexico, Europe and Brasil.
• Average aftermarket parts sales prices increased sales by $205.6 million, primarily due to price realization in the U.S. and Canada as well as tariff cost increases in the U.S.
• Average aftermarket parts direct costs increased $144.3 million due to higher material costs and higher tariff costs, primarily in the U.S.
• Warehouse and other indirect costs increased $34.1 million, primarily due to higher indirect costs, including depreciation expense.
• The currency translation effect on sales reflects an increase in the value of euro relative to the U.S. dollar, partially offset by a decrease in the value of the Brazilian real, Australian dollar and Canadian dollar relative to the U.S. dollar.
• Parts gross margins in the first nine months of 2025 decreased to 30.0% from 31.0% in the first nine months of 2024 due to the factors noted above.
Parts SG&A expense increased in the third quarter of 2025 to $66.5 million from $62.5 million in the same period of 2024. For the first nine months, Parts SG&A increased to $192.0 million in 2025 from $186.4 million in the same period of 2024. The increase in both periods was primarily due to higher salaries and related expenses.
As a percentage of sales, Parts SG&A was 3.9% for the third quarter of 2025 and 3.8% for the same period of 2024, and 3.7% for the first nine months of both 2025 and 2024.
- 41 -
Financial Services
The Company’s Financial Services segment accounted for 8% of revenues in both the third quarter and for the first nine months of 2025, compared to 7% in the third quarter and 6% for the first nine months of 2024.
Three Months Ended
Nine Months Ended
September 30
September 30
($ in millions)
2025
2024
% CHANGE
2025
2024
% CHANGE
New loan and lease volume:
U.S. and Canada
$
979.9
$
1,079.0
(9
)
$
2,768.8
$
2,973.7
(7
)
Europe
283.6
336.7
(16
)
919.8
881.0
4
Mexico, Australia, Brasil and other
430.1
595.9
(28
)
1,367.7
1,592.2
(14
)
$
1,693.6
$
2,011.6
(16
)
$
5,056.3
$
5,446.9
(7
)
New loan and lease volume by product:
Loans and finance leases
$
1,543.1
$
1,811.1
(15
)
$
4,574.0
$
4,794.0
(5
)
Equipment on operating lease
150.5
200.5
(25
)
482.3
652.9
(26
)
$
1,693.6
$
2,011.6
(16
)
$
5,056.3
$
5,446.9
(7
)
New loan and lease unit volume:
Loans and finance leases
10,310
13,110
(21
)
31,610
33,510
(6
)
Equipment on operating lease
1,270
1,720
(26
)
4,400
5,310
(17
)
11,580
14,830
(22
)
36,010
38,820
(7
)
Average earning assets:
U.S. and Canada
$
12,359.1
$
11,621.0
6
$
12,210.6
$
10,974.1
11
Europe
4,076.8
4,084.0
4,009.7
4,260.3
(6
)
Mexico, Australia, Brasil and other
5,099.0
4,595.3
11
4,978.4
4,443.8
12
$
21,534.9
$
20,300.3
6
$
21,198.7
$
19,678.2
8
Average earning assets by product:
Loans and finance leases
$
15,406.3
$
13,908.0
11
$
14,924.2
$
13,568.5
10
Dealer wholesale financing
4,121.2
4,225.2
(2
)
4,276.8
3,903.4
10
Equipment on lease and other
2,007.4
2,167.1
(7
)
1,997.7
2,206.3
(9
)
$
21,534.9
$
20,300.3
6
$
21,198.7
$
19,678.2
8
Revenues:
U.S. and Canada
$
229.8
$
231.8
(1
)
$
696.2
$
661.6
5
Europe
148.0
146.0
1
408.8
430.9
(5
)
Mexico, Australia, Brasil and other
187.5
158.3
18
536.0
462.7
16
$
565.3
$
536.1
5
$
1,641.0
$
1,555.2
6
Revenues by product:
Loans and finance leases
$
293.0
$
250.1
17
$
835.5
$
723.1
16
Dealer wholesale financing
74.5
84.8
(12
)
232.6
233.2
Equipment on lease and other
197.8
201.2
(2
)
572.9
598.9
(4
)
$
565.3
$
536.1
5
$
1,641.0
$
1,555.2
6
Income before income taxes
$
126.2
$
106.5
18
$
370.5
$
331.6
12
New loan and lease volume was $1.69 billion in the third quarter of 2025 compared to $2.01 billion in the third quarter of 2024, and for the first nine months of 2025 was $5.06 billion compared to $5.45 billion in the same period in 2024. The decrease in new loan and lease volume was primarily due to lower new loan and lease volume from lower retail sales of PACCAR trucks and currency translation effects, mostly offset by higher finance market share of new PACCAR truck sales. 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 and Australia.
- 42 -
In the third quarter of 2025, PFS finance market share of new PACCAR truck sales was 27.1% compared to 26.9% in the third quarter of 2024. In the first nine months of 2025, PFS finance market share of new PACCAR truck sales was 25.9% compared to 24.2% in the first nine months of 2024. The increase in the third quarter of 2025 and in the first nine months of 2025 reflects higher share in all markets.
In the third quarter of 2025, PFS revenues increased to $565.3 million from $536.1 million in the same period of 2024. In the first nine months of 2025, PFS revenues increased to $1.64 billion from $1.56 billion in the same period of 2024. The increase in both periods was primarily driven by portfolio growth in the U.S. and Canada, Mexico and Brasil.
PFS income before income taxes increased to $126.2 million in the third quarter of 2025 from $106.5 million in the same period of 2024. In the first nine months of 2025, PFS income before income taxes increased to $370.5 million from $331.6 million in the same period of 2024. The increase in both periods was primarily due to higher finance margins from a higher loan and finance lease portfolio, and higher lease margins from operating lease portfolio, partially offset by a higher provision for losses on receivables.
Included in Financial Services, Other assets on the Company’s Consolidated Balance Sheets are used trucks held for sale, net of impairments, of $407.5 million at September 30, 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.
The Company recognized losses on used trucks, excluding repossessions, of $8.0 million in the third quarter of 2025 compared to $13.0 million in the third quarter of 2024, including $7.2 million of losses on multiple unit transactions in the third quarter of 2025 compared to $9.7 million in the third quarter of 2024. Used truck losses related to repossessions, which are recognized as credit losses, were $1.9 million for the third quarter of 2025 and $2.0 million the third quarter of 2024.
The Company recognized losses on used trucks, excluding repossessions, of $26.6 million in the first nine months of 2025 and $37.5 million in the first nine months of 2024, including losses on multiple unit transactions of $28.2 million in the first nine months of 2025 compared to $27.7 million in the first nine months of 2024. Used truck losses related to repossessions, which are recognized as credit losses, were $8.5 million for the first nine months of 2025 and $8.0 million first nine months of 2024.
The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the three months ended September 30, 2025 and 2024 are outlined below:
($ in millions)
INTEREST
AND FEES
INTEREST
AND OTHER
BORROWING
EXPENSES
FINANCE
MARGIN
Three Months Ended September 30, 2024
$
334.9
$
188.4
$
146.5
Increase (decrease)
Average finance receivables
23.0
23.0
Average debt balances
6.1
(6.1
)
Yields
6.4
6.4
Borrowing rates
4.5
(4.5
)
Currency translation and other
3.2
2.0
1.2
Total increase
32.6
12.6
20.0
Three Months Ended September 30, 2025
$
367.5
$
201.0
$
166.5
• Average finance receivables increased $1.22 billion (excluding foreign exchange effects), increasing interest and fees by $23.0 million in the third quarter of 2025, primarily due to higher average loan and finance lease balances in the U.S. and Canada, Brasil and Mexico.
• Average debt balances increased $472.2 million (excluding foreign exchange effects), increasing interest and other borrowing costs by $6.1 million in the third quarter of 2025, reflecting higher funding requirements for the portfolio from growth in loans and finance leases receivables.
• Higher portfolio yields (7.5% in 2025 compared to 7.4% in 2024) increased interest and fees by $6.4 million. The higher portfolio yields were primarily due to higher market rates on new portfolio assets, primarily in the U.S. and Brasil.
- 43 -
• Higher borrowing rates (5.1% in 2025 compared to 4.9% in 2024) increased interest and other borrowing expenses by $4.5 million and were primarily due to higher debt market rates in all markets except Canada.
• The currency translation effects reflect an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro, the Mexican peso and Brazilian real.
The major factors for the changes in interest and fees, interest and other borrowing expenses and finance margin for the nine months ended September 30, 2025 and 2024 are outlined below:
($ in millions)
INTEREST
AND FEES
INTEREST
AND OTHER
BORROWING
EXPENSES
FINANCE
MARGIN
Nine Months Ended September 30, 2024
$
956.3
$
520.9
$
435.4
Increase (decrease)
Average finance receivables
111.1
111.1
Average debt balances
48.8
(48.8
)
Yields
27.0
27.0
Borrowing rates
35.4
(35.4
)
Currency translation and other
(26.3
)
(13.2
)
(13.1
)
Total increase
111.8
71.0
40.8
Nine Months Ended September 30, 2025
$
1,068.1
$
591.9
$
476.2
• Average finance receivables increased $1.97 billion (excluding foreign exchange effects), increasing interest and fees by $111.1 million in the first nine months of 2025, reflecting higher average loan, finance lease and dealer wholesale balances in the U.S. and Canada, Brasil and Mexico.
• Average debt balances increased $1.18 billion (excluding foreign exchange effects), increasing interest and other borrowing expenses by $48.8 million in the first nine months 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 7.3% in 2024) increased interest and fees by $27.0 million. The higher portfolio yields were primarily due to higher market rates on new portfolio assets, primarily in the U.S. and Brasil.
• Higher borrowing rates (5.1% in 2025 compared to 4.7% in 2024) increased interest and other borrowing expenses by $ 35.4 million, primarily due to higher debt market rates in all markets except Canada.
• 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.
The following table summarizes operating lease, rental and other revenues and depreciation and other expenses:
Three Months Ended
Nine Months Ended
September 30
September 30
($ in millions)
2025
2024
2025
2024
Operating lease and rental revenues
$
160.8
$
168.4
$
477.9
$
513.4
Used truck sales
27.1
25.0
68.0
63.1
Insurance, franchise and other revenues
9.9
7.8
27.0
22.4
Operating lease, rental and other revenues
$
197.8
$
201.2
$
572.9
$
598.9
Depreciation of operating lease equipment
$
115.5
$
132.5
$
350.2
$
407.8
Vehicle operating expenses
17.5
16.4
51.6
51.0
Cost of used truck sales
27.4
25.6
69.1
65.9
Insurance, franchise and other expenses
1.3
2.1
5.4
5.8
Depreciation and other expenses
$
161.7
$
176.6
$
476.3
$
530.5
- 44 -
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 September 30, 2025 and 2024 are outlined below:
($ in millions)
OPERATING
LEASE, RENTAL
AND OTHER
REVENUES
DEPRECIATION
AND OTHER
EXPENSES
LEASE
MARGIN
Three Months Ended September 30, 2024
$
201.2
$
176.6
$
24.6
Increase (decrease)
Used truck sales
.4
.1
.3
Results on returned lease assets
(4.5
)
4.5
Average operating lease assets
(27.3
)
(22.4
)
(4.9
)
Revenue and cost per asset
15.2
6.6
8.6
Currency translation and other
8.3
5.3
3.0
Total (decrease) increase
(3.4
)
(14.9
)
11.5
Three Months Ended September 30, 2025
$
197.8
$
161.7
$
36.1
• Used truck sales from used trucks received on trade increased revenues by $.4 million and increased related depreciation and other expenses by $.1 million, primarily reflecting improved used truck market prices.
• Results on returned lease assets decreased depreciation and other expenses by $4.5 million.
• Average operating lease assets decreased $217.9 million (excluding foreign exchange effects), which decreased revenues by $27.3 million and related depreciation and other expenses by $22.4 million.
• Revenue per asset increased $15.2 million primarily due to higher average truck values financed and higher yield. Cost per asset increased $6.6 million due to higher depreciation and operating expenses, mainly in Europe.
• The currency translation effects reflect an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro.
The major factors for the changes in operating lease, rental and other revenues, depreciation and other expenses and lease margin between the nine months ended September 30, 2025 and 2024 are outlined below:
($ in millions)
OPERATING
LEASE, RENTAL
AND OTHER
REVENUES
DEPRECIATION
AND OTHER EXPENSES
LEASE
MARGIN
Nine Months Ended September 30, 2024
$
598.9
$
530.5
$
68.4
Increase (decrease)
Used truck sales
2.7
1.0
1.7
Results on returned lease assets
(8.9
)
8.9
Average operating lease assets
(82.6
)
(68.5
)
(14.1
)
Revenue and cost per asset
54.2
21.0
33.2
Currency translation and other
(.3
)
1.2
(1.5
)
Total (decrease) increase
(26.0
)
(54.2
)
28.2
Nine Months Ended September 30, 2025
$
572.9
$
476.3
$
96.6
• Used truck sales from used truck received on trade increased revenues by $2.7 million and related depreciation and other expenses by $1.0 million, primarily reflecting improved used truck market prices.
• Results on returned lease assets decreased depreciation and other expenses by $8.9 million.
• Average operating lease assets decreased $233.9 million (excluding foreign exchange effects), which decreased revenues by $82.6 million and related depreciation and other expenses by $68.5 million.
• Revenue per asset increased $54.2 million primarily due to higher average truck values financed. Cost per asset increased $21.0 million due to higher depreciation and operating expenses, mainly in Europe and Mexico.
• The currency translation effects reflect the changes in the value of foreign currencies relative to the U.S. dollar, primarily the Mexican peso and the euro.
- 45 -
Financial Services SG&A for the third quarter of 2025 decreased to $39.9 million from $42.2 million in the third quarter of 2024. For the first nine months, Financial Services SG&A decreased to $118.3 million in 2025 from $122.0 million in 2024. The decrease in both periods was primarily due to lower professional fees, travel and entertainment expenses and favorable foreign currency translation effects, primarily the Mexican peso.
As an annualized percentage of average earning assets, Financial Services SG&A was .7% for both the third quarter and first nine months of 2025 and .8% for the same periods in 2024.
The following table summarizes the provision for losses on receivables and net charge-offs:
Three Months Ended
Nine Months Ended
September 30, 2025
September 30, 2025
($ in millions)
PROVISION FOR
LOSSES ON
RECEIVABLES
NET
CHARGE-
OFFS
PROVISION FOR
LOSSES ON
RECEIVABLES
NET
CHARGE-
OFFS
U.S. and Canada
$
15.7
$
5.5
$
37.8
$
36.4
Europe
2.5
2.5
7.4
7.7
Mexico, Australia, Brasil and other
18.3
6.2
38.8
16.0
$
36.5
$
14.2
$
84.0
$
60.1
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2024
($ in millions)
PROVISION FOR
LOSSES ON
RECEIVABLES
NET
CHARGE-
OFFS
PROVISION FOR
LOSSES ON
RECEIVABLES
NET
CHARGE-
OFFS
U.S. and Canada
$
10.7
$
5.5
$
26.8
$
15.8
Europe
7.3
6.1
12.6
11.1
Mexico, Australia, Brasil and other
4.4
1.8
10.8
5.8
$
22.4
$
13.4
$
50.2
$
32.7
The provision for losses on receivables was $36.5 million in the third quarter of 2025 compared to $22.4 million in 2024, and in the first nine months, the provision for losses on receivables was $84.0 million in 2025 compared to $50.2 million in 2024. The increase in provision for losses in the third quarter and first nine months of 2025 compared to 2024 was primarily driven by an increase in 30+ days past due accounts, primarily in Brasil and the U.S., retail portfolio growth in North America and Brasil, and higher expected losses. The increase in charge-offs in the U.S. and Canada reflected a soft truckload market and included several large fleet customers, which were provisioned for previously. The higher charge-offs in both periods also reflected higher average loss severity in all markets, primarily due to normalizing used truck market values when compared to previous periods.
The Company modifies loans and finance leases as a normal part of its Financial Services operations. The Company may modify loans and finance leases for commercial reasons or for credit reasons. Modifications for commercial reasons are changes to contract terms for customers that are not considered to be in financial difficulty. Insignificant delays are modifications extending terms up to three months for customers experiencing some short-term financial stress, but not considered to be in financial difficulty. Modifications for credit reasons are changes to contract terms for customers considered to be in financial difficulty. The Company’s modifications typically result in granting more time to pay the contractual amounts owed and charging a fee and interest for the term of the modification. When considering whether to modify customer accounts for credit reasons, the Company evaluates the creditworthiness of the customers and modifies those accounts that the Company considers likely to perform under the modified terms.
- 46 -
The post-modification balances of accounts modified during the nine months ended September 30, 2025 and 2024 are summarized below:
2025
2024
($ in millions)
AMORTIZED
COST BASIS
% OF TOTAL
PORTFOLIO*
AMORTIZED
COST BASIS
% OF TOTAL
PORTFOLIO*
Commercial
$
241.0
2.1
%
$
324.3
3.0
%
Insignificant delay
235.1
2.0
%
167.5
1.6
%
Credit
250.1
2.2
%
189.0
1.7
%
$
726.2
6.3
%
$
680.8
6.3
%
* Amortized cost basis immediately after modification as a percentage of ending retail portfolio, on an annualized basis.
Modification activity was $726.2 million in the first nine months of 2025 and $680.8 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 Insignificant delay modifications primarily reflects an increase in customers requesting payment relief for up to three months, primarily in the U.S. The increase in Credit modifications for customers in financial difficulty reflects higher volumes of contract modifications in Brasil and Mexico mostly offset by lower volume of contract modifications in the U.S.
The following table summarizes the Company’s 30+ days past due accounts:
September 30
2025
December 31
2024
September 30
2024
Percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada
1.8
%
1.2
%
1.1
%
Europe
1.0
%
.8
%
.9
%
Mexico, Australia, Brasil and other
3.5
%
2.0
%
1.6
%
Worldwide
2.1
%
1.3
%
1.2
%
Accounts 30+ days past due was 2.1% at September 30, 2025 compared to 1.3% at December 31, 2024 and 1.2% at September 30, 2024. The increased percentage of past due accounts as of September 30, 2025 compared to December 31, 2024 is primarily due to higher past due accounts in the U.S., Brasil and Mexico. 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. The Company modified $63.4 million of accounts worldwide during the third quarter of 2025, $40.7 million during the fourth quarter of 2024 and $18.5 million during the third quarter of 2024 that 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:
September 30
2025
December 31
2024
September 30
2024
Pro forma percentage of retail loan and lease accounts 30+ days past due:
U.S. and Canada
2.2
%
1.4
%
1.2
%
Europe
1.0
%
.8
%
.9
%
Mexico, Australia, Brasil and other
4.2
%
2.6
%
2.0
%
Worldwide
2.5
%
1.6
%
1.3
%
The Company typically requires customers to pay current before granting modifications. The increase in pro forma percentage of retail loan and lease accounts 30+ days past due at September 30, 2025 for U.S. and Canada was primarily due to a modification granted to one large fleet customer in financial difficulty in the U.S. The increase in pro forma percentage of retail loan and lease accounts 30+ days past due at for Mexico, Australia, Brasil and other was primarily due to accounts modified in Mexico and Brasil.
- 47 -
A contract modification that improves the past due status generally 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 September 30, 2025, December 31, 2024 and September 30, 2024. For certain modifications to customers experiencing financial difficulties that are at-risk at September 30, 2025, December 31, 2024, and September 30, 2024, 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 assets for Financial Services was 2.2% for the third quarter of 2025 and 1.9% for the third quarter of 2024 and was 2.2% for the first nine months of 2025 and 2.1% for the first nine months 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 both the third quarter and first nine months of 2025 and 2024. Other SG&A decreased to $10.5 million for the third quarter of 2025 from $19.9 million for the third quarter of 2024. Other SG&A decreased to $55.5 million for the first nine months of 2025 from $64.9 million for same period of 2024. The decrease in both periods was primarily due to lower salaries and related expenses.
For the third quarter of 2025, Other income before income taxes was $14.1 million compared to $3.6 million in 2024. For the first nine months of 2025, Other (loss) income before tax was $(339.6) million compared to $4.0 million in the same period of 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 third quarter decreased to $90.8 million in 2025 compared to $108.7 million in 2024. For the first nine months, investment income decreased to $258.5 million in 2025 from $290.0 million in 2024. The decrease in both periods is primarily due to lower investment yields from lower market interest rates in the U.S. and Europe, partially offset by an increase in average investment balance, primarily in the U.S.
Income Taxes
The effective tax rate for the third quarter of 2025 was 20.7% compared to 22.6% for the third quarter of 2024, primarily reflecting higher U.S. Federal R&D tax credits. The effective tax rate for the first nine months of 2025 was 21.6% compared to 22.6% for the first nine months of 2024. Excluding the $350.0 million EC charge and its associated tax benefit, the adjusted year-to-date effective tax rate for 2025 was 21.9%.
Three Months Ended
Nine Months Ended
September 30
September 30
($ in millions)
2025
2024
2025
2024
Domestic income before taxes
$
453.3
$
786.9
$
1,706.0
$
2,783.1
Foreign income before taxes
290.3
469.4
612.6
1,468.5
Total income before taxes
$
743.6
$
1,256.3
$
2,318.6
$
4,251.6
Domestic pre-tax return on revenues
12.4
%
16.9
%
13.9
%
18.8
%
Foreign pre-tax return on revenues
9.6
%
13.1
%
6.5
%
13.4
%
Total pre-tax return on revenues
11.1
%
15.2
%
10.7
%
16.5
%
For the third quarter and first nine months of 2025, domestic income before income taxes decreased primarily due to lower Truck operation results. For the third quarter of 2025, foreign income before income taxes decreased primarily due to lower Truck operation results in Mexico and Brasil. For the first nine months of 2025, foreign income before taxes included the EC-related charge of $350.0 million in the first quarter 2025, which also reduced foreign pre-tax return on revenues. For the third quarter and first nine months of 2025, total pre-tax return on revenues decreased, reflecting lower returns in Truck operations.
- 48 -
LIQUIDITY AND CAPITAL RESOURCES:
September 30
December 31
($ in millions)
2025
2024
Cash and cash equivalents
$
6,303.9
$
7,060.8
Marketable securities
2,946.5
2,778.8
$
9,250.4
$
9,839.6
The Company’s total cash and marketable securities at September 30, 2025 decreased by $589.2 million from the balances at December 31, 2024. Total cash and marketable securities are primarily intended to provide liquidity while preserving capital.
The change in cash and cash equivalents is summarized below:
($ in millions)
Nine Months Ended September 30,
2025
2024
Operating activities:
Net income
$
1,818.9
$
3,290.0
Net income items not affecting cash
1,064.4
725.3
Changes in operating assets and liabilities, net
388.2
(820.1
)
Net cash provided by operating activities
3,271.5
3,195.2
Net cash used in investing activities
(1,513.4
)
(2,755.3
)
Net cash used in financing activities
(2,687.8
)
(766.4
)
Effect of exchange rate changes on cash and cash equivalents
172.8
(6.0
)
Net decrease in cash and cash equivalents
(756.9
)
(332.5
)
Cash and cash equivalents at beginning of period
7,060.8
7,181.7
Cash and cash equivalents at end of period
$
6,303.9
$
6,849.2
Operating activities: Cash provided by operations increased by $76.3 million to $3,271.5 million in the first nine months of 2025 from $3,195.2 million in 2024. The increased operating cash flow reflects lower net income by $1,471.1 million more than offset by higher cash provided from net income items not affecting cash of $339.1 million, primarily deferred income taxes, and higher cash provided from net changes in operating assets and liabilities of $1,208.3 million. The net changes in operating assets and liabilities are mainly due to higher cash provided by net changes in operating assets, primarily wholesale receivables on new trucks in the Financial Services segment of $1,552.3 million, inventory of $276.0 million, partially offset by a net decrease in accounts payable and accruals of $656.9 million.
Investing activities: Cash used in investing activities decreased by $1,241.9 million to $1,513.4 million in the first nine months of 2025 from $2,755.3 million in 2024. The decrease in net cash used in investing activities reflects lower net purchases of marketable securities of $557.4 million, lower originations on retail loans and financing leases, net of collections, of $515.7 million, and lower acquisition of equipment for operating leases of $170.2 million, partially offset by a net increase in wholesale receivables on equipment of $110.3 million.
Financing activities: Cash used in financing activities was $2,687.8 million for the first nine months of 2025, $1,921.4 million higher than the $766.4 million used in 2024, reflecting higher net borrowing activity and slightly lower cash dividends. Cash used in net borrowing activities was $590.0 million in 2025, $1,913.9 million lower than the cash provided by net borrowing activities of $1,323.9 million in 2024. In the first nine months of 2025, the Company paid $2.09 billion in dividends compared to $2.13 billion in 2024.
The effect of exchange rate changes on cash increased cash and cash equivalents by $172.8 million in the first nine months of 2025, reflecting an increase in the value of foreign currencies relative to the U.S. dollar, primarily the euro, Brazilian real, the Australian dollar and the British pound. In the first nine months of 2024, a decrease in the value of foreign currencies relative to the U.S. dollar, decreased cash and cash equivalents by $6.0 million.
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Credit Lines and Other
The Company has line of credit arrangements of $5.69 billion, of which $5.26 billion were unused at September 30, 2025. 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 nine months ended September 30, 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. As of September 30, 2025, the Company has repurchased $128.4 million of shares under this plan. There were no share repurchases made under this plan during the third quarter 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 nine months of 2025 were $542.3 million compared to $562.8 million for the same period of 2024. Over the past decade, the Company’s combined investments in worldwide capital projects and R&D totaled $9.01 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 $750 to $775 million and R&D is expected to be $450 to $465 million. In 2026, capital investments are expected to be $725 to $775 million and R&D is expected to be $450 to $500 million. PACCAR is investing in next generation clean diesel and alternative powertrains, integrated connected vehicle services, expanded manufacturing capabilities, and advanced driver assistance systems that create value for customers. In addition to the capital and R&D investments, the company plans to invest a total project amount of $600 to $900 million in its battery joint venture, Amplify Cell Technologies.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The most significant impacts to the Company of the OBBBA are the immediate expensing of domestic Research and Development expenditures and the permanent reinstatement of bonus depreciation for qualifying properties. The impact to the Company is the payment deferral of a significant portion of current federal income taxes and will have an immaterial impact to the Company's Consolidated Statements of Comprehensive Income.
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 September 30, 2025 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.
As of September 30, 2025, the Company’s European finance subsidiary, PACCAR Financial Europe, had €550.0 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 May 2026.
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 September 30, 2025, 5.80 billion Mexican pesos were available for issuance.
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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 September 30, 2025 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 September 30, 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. The program is limited to 2.61 billion Brazilian reais and has 1.00 billion Brazilian reais outstanding as of September 30, 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 September 30, 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 ($264.5 million after-tax) for estimable total costs recorded in Interest and other (income) expenses, net in the first quarter 2025.
The Company utilizes these non-GAAP measures to allow investors and management to evaluate operating trends by excluding a significant charge that is not representative of company performance.
Reconciliations from the most directly comparable GAAP measures to adjusted net income (non-GAAP) and adjusted net income per diluted shares (non-GAAP) are as follows:
Nine Months Ended
($ in millions, except per share amounts)
September 30, 2025
Net income
$
1,818.9
EC-related claims, net of taxes
264.5
Adjusted net income (non-GAAP)
$
2,083.4
Per diluted share
Net income
$
3.45
EC-related claims, net of taxes
.50
Adjusted net income (non-GAAP)
$
3.95
After-tax return on revenues
8.4
%
EC-related claims, net of taxes
1.2
%
After-tax adjusted return on revenues (non-GAAP) *
9.6
%
Tax rate
Effective tax rate
21.6
%
EC-related claims
.3
%
Adjusted effective tax rate (non-GAAP) **
21.9
%
* Calculated using adjusted net income.
** Calculated using adjusted pre-tax net income.
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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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ITEM 3. QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK
There were no material changes in the Company’s market risk during the three months ended September 30, 2025. For additional information, refer to Item 7A as presented in the 2024 Annual Report on Form 10‑K.
ITEM 4. CONTROLS AND PROCEDURES
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.
ITEM 1A. RI SK FACTORS
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 September 30, 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 September 30, 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 September 30, 2025, the Company has repurchased $128.4 million of shares under this plan. There were no repurchases made under this plan during the third quarter of 2025.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None of the Company’s directors or officers adopted , modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s quarter ended September 30, 2025, as such terms are defined under Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS
Any exhibits filed herewith are listed in the accompanying index to exhibits.
INDEX TO EXHIBITS
Exhibit Number
Exhibit Description
Form
Date of First Filing
Exhibit
Number
File Number
(3) (i)
Articles of Incorporation:
Amended and Restated Certificate of Incorporation of PACCAR Inc
8-K
May 4, 2018
3(i)
001-14817
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of PACCAR Inc
8-K
April 24, 2020
3(i)
001-14817
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of PACCAR Inc
8-K
April 29, 2022
3(i)
001-14817
(ii)
Bylaws:
Seventh Amended and Restated Bylaws of PACCAR Inc
8-K
July 26, 2022
3(ii)
001-14817
(4)
Instruments defining the rights of security holders, including indentures**:
(a)
Indenture for Senior Debt Securities dated as of November 20, 2009 between PACCAR Financial Corp. and U.S. Bank Trust Company, National Association (as a successor to The Bank of New York Mellon Trust Company, N.A. )
S-3
November 20, 2009
4.1
333-163273
(b)
Forms of Medium-Term Note, Series P (PACCAR Financial Corp.)
S-3
November 2, 2018
4.2 and 4.3
333-228141
(c)
Forms of Medium-Term Note, Series Q (PACCAR Financial Corp.)
S-3
November 1, 2021
4.3 and 4.4
333-260663
(d)
Forms of Medium-Term Note, Series R (PACCAR Financial Corp.)
S-3
November 7, 2024
4.4 and 4.5
333-283056
(e)
Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated May 29, 2020
10-Q
August 3, 2020
4(h)
001-14817
(f)
Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 15, 2021
10-Q
August 2, 2021
4(g)
001-14817
(g)
Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 13, 2022
10-Q
August 2, 2022
4(h)
001-14817
(h)
Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated September 20, 2023
10-Q
November 2, 2023
4(g)
001-14817
**
Pursuant to the Instructions to Exhibits, certain instruments defining the rights of holders of long-term debt securities of the Company and its wholly owned subsidiaries are not filed because the total amount of securities authorized under any such instrument does not exceed 10 percent of the Company’s total assets. The Company will file copies of such instruments upon request of the Commission.
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Exhibit Number
Exhibit Description
Form
Date of First Filing
Exhibit
Number
File Number
(i)
Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated July 17, 2024
10-Q
October 30, 2024
4(h)
001-14817
(j)
Terms and Conditions of the Notes applicable to the €2,500,000,000 Medium Term Note Programme of PACCAR Financial Europe B.V. set forth in the Information Memorandum dated May 8, 2025
10-Q
July 31, 2025
4(j)
001-14817
(k)
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
10-K
February 19, 2020
4(j)
001-14817
(10)
Material Contracts:
(a)
PACCAR Inc Amended and Restated Supplemental Retirement Plan
10-K
February 27, 2009
10(a)
001-14817
(b)
Amended and Restated Deferred Compensation Plan
10-Q
May 10, 2012
10(b)
001-14817
(c)
Third Amended and Restated PACCAR Inc Restricted Stock and Deferred Compensation Plan for Non-Employee Directors
10-Q
May 2, 2024
10(d)
001-14817
(d)
Form of Deferred Restricted Stock Unit Grant Agreement for Non-Employee Directors
10-Q
July 31, 2024
10(e)
001-14817
(e)
Form of Restricted Stock Grant Agreement for Non-Employee Directors
10-Q
July 31, 2024
10(f)
001-14817
(f)
PACCAR Inc Senior Executive Yearly Incentive Compensation Plan
10-K
February 19, 2020
10(g)
001-14817
(g)
PACCAR Inc Long Term Incentive Plan
10-K
February 22, 2023
10(h)
001-14817
(h)
PACCAR Inc Long Term Incentive Plan, Form of Stock Option Agreement
10-K
February 19, 2025
10(h)
001-14817
(i)
PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Award Agreement
10-K
February 21, 2019
10(m)
001-14817
(j)
PACCAR Inc Long Term Incentive Plan, Form of Restricted Stock Unit Agreement
10-K
February 21, 2019
10(n)
001-14817
(k)
PACCAR Inc Savings Investment Plan, Amendment and Restatement effective September 1, 2016
10-Q
November 4, 2016
10(q)
001-14817
(31)
Rule 13a-14(a)/15d-14(a) Certifications:
(a)
Certification of Principal Executive Officer*
(b)
Certification of Principal Financial Officer*
(32)
Section 1350 Certifications:
Certification pursuant to rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350)*
(101.INS)
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(101.SCH)
Inline XBRL Taxonomy Extension Schema Document*
(104)
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*
*
filed herewith
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SIGNA TURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PACCAR Inc
(Registrant)
Date
October 30, 2025
By
/s/ B. J. Poplawski
B. J. Poplawski
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
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