tapebrief
PCAR · Q4 2025

PCAR · Q1 2026 Earnings

Bullish

Paccar

Reported April 28, 2026

30-second summary

Q1 truck/parts/other gross margin came in at 13.1% (up from 12% prior quarter per Preston's prepared remarks), and Q2 is now guided to ~13.5% with deliveries stepping up to 37–38K units from 33,100. The signal that matters: management told the call "we're full in Q2" and "majority full in Q3-4," explicitly reframing the binding constraint from demand to hiring cadence and supply-base scale-up, while FY market sizing for NA, Europe, and South America was reaffirmed unchanged from the Q4 print. Parts is the one soft spot — Q1 grew just 1.2% YoY and Q2 is guided to only ~3%, at the low end of the new 3–6% FY band — but management positioned this as a lagging indicator of customer financial recovery, not structural weakness.

Headline numbers

EPS

Q1 FY2026

$1.15

Revenue

Q1 FY2026

$6.78B

-8.9% YoY

Gross margin

Q1 FY2026

13.1%

Free cash flow

Q1 FY2026

$0.82B

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$6.78B-8.9%$6.82B-0.6%
EPS$1.15—$1.06+8.5%
Gross margin13.1%—12.0%+113bps
Free cash flow$0.82B———

Guidance

PACCAR reaffirms all FY2026 market sizing and investment guidance; introduces forward Q2 guidance with modest margin expansion to ~13.5% and truck deliveries of 37–38k units, signaling sequential improvement but parts growth remains muted below full-year range.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

MetricPeriodGuideYoY
Parts Revenue Growth (Full Year)FY 20263% to 6%—
Truck DeliveriesQ2 FY202637,000 to 38,000 vehicles—
Gross Margin (Truck, Parts, Other)Q2 FY2026approximately 13.5%—
Parts Revenue GrowthQ2 FY2026approximately 3% growth—

Reaffirmed unchanged this quarter: U.S. and Canada Class 8 truck industry retail sales (230,000 to 270,000 trucks), European truck industry registrations (above 16-tonne) (280,000 to 320,000 trucks), South American above 16-tonne truck market (100,000 to 110,000 trucks), Capital Expenditures ($725 million to $775 million), Research and Development Expenses ($450 million to $500 million)

Segment KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
Truck$4.527B-13.4%
Parts$1.71B+1.2%
Financial Services$0.542B+2.7%

Other KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
United States and Canada$4.052B-12.5%
Europe$1.809B+15.3%
Other$0.916B-26.5%
New Truck Deliveries33,100 units—
PACCAR Parts Pretax Income$402.3 million—
Financial Services Pretax Income$115.5 million—
PFS Financed Portfolio221,000 trucks and trailers—
PFS Total Assets$22.3 billion—
Operating Cash Flow$971.8 million—
Capital Expenditures$135.5 million—
R&D Expense$109.1 million—

Management tone

The binding constraint has flipped from demand to supply. Management told Jerry Revich of Wells Fargo: "I'm not sure I recognize the commentary about people not having slots. That sounds more like a marketing scheme" and confirmed "we're full in Q2. We're a majority full in Q3-4." To Tammy Zakaria of J.P. Morgan, Preston added that "the rate of increase quarter over quarter is what probably informs the total market size" — the constraint is industry hiring cadence and supplier ramp, not end-customer demand. It implies management believes underlying demand exceeds the 270K NA Class 8 high end of their own reaffirmed guide.

Pricing power moved to confirmed favorability. This quarter Preston confirmed to Jerry Revich "we did have price cost advantage in the quarter sequentially. So we saw ourselves up over a percent in price cost" and to Kyle Menges "we expect to have price-cost favorability...throughout the year." The Section 232 share-gain thesis is being validated in the print — 31.8% build share simultaneously with margin stepping to 13.1%.

Tariff narrative has detoxed. Preston told Tammy that 232 "doesn't really have a lot of impact for us because of the truck specific 232 has specific offsets...So there's some moderate impact but not significant. Same on the parts side." The tariff line that dominated prior calls is now characterized as moderate and offset.

Parts narrative framed as "lagging customer recovery." Kevin reframed parts as customer-financial-health-dependent: "as customers start to get healthy, we'll see the parts market get healthier with that as well...we see that accelerating through the rest of the year." Q1 parts pre-tax of $402.3M was down from $426.5M a year ago, and the explicit FY guide of 3–6% (with Q2 at the bottom of that band) suggests management is preparing investors for parts to remain the soft link until customer freight rates fully recover.

EV positioning shifted to product-led in Europe. Kevin highlighted DAF winning International Truck of the Year for the XF and XD Electric and an expanded EV product range (new XG and XG+ Electric) as a positioning advantage for European regulatory tailwinds — while preserving the US subsidy caveat ("without subsidies...widespread adoption is probably less likely"). The asymmetric regional framing is the first time PACCAR has put EV product strength forward as a competitive advantage rather than a regulatory hedge.

Recurring themes management leaned on this quarter:

Market strengthening as driver/fleet capacity tightens and freight rates improveVolume ramp and operating leverage driving margin expansion (13.1% to 13.5% Q2 guidance)Price-cost favorability as customers begin recovery despite raw material volatilitySupply-side capacity constraints (hiring cadence) now the binding constraint, not demandEV leadership in Europe (DAF International Truck of the Year) positioning for regulatory tailwindLocal-for-local manufacturing strategy enabling rapid capacity increases and market share gains (31.8% build share)

Risks management surfaced:

Fuel and operating cost volatility moderating market strengthRaw material pricing (energy, steel, aluminum) headwinds partially offsetting margin gainsCompetitive pricing environment as customers begin recoveryHiring cadence and supply base ability to scale up production quicklyTariff impacts on non-domestic competitors' pricing behavior and potential customer reactions

Q&A highlights

Steven Fisher · UBS

Clarification on parts acceleration expected in second half of 2024, specifically what drivers (freight rates, fuel costs, truck volume, shipments) will fuel the acceleration, and whether the expected pickup represents a pre-buy or genuine buy ahead of 2027 EPA emissions standard.

Management indicated acceleration driven by combination of increased truck orders on road, improved customer financials, both volume and mix improvements in parts (customers delaying optional purchases due to fuel/operating cost volatility). On pre-buy vs. buy: both occurring—genuine demand from customers wanting fleet age optimization plus pre-buy sensitivity to 35 milligram engine cost impact. Second half demand balanced between Q3 and Q4, suggesting more buy than pre-buy.

Q1 build percentage: 31.8%35 milligram EPA engine standard effective 2027Q3 and Q4 demand expected to be balanced (not front-loaded)

Angel Castillo · Morgan Stanley

Status of EPA formalized low NOx emissions rule and implications for industry engine launches and customer ordering decisions. Also requested Q2 guidance breakdown by region (U.S./Canada vs. Europe) and explanation for 13.5% gross profit margin guidance lacking material step change versus Q1.

EPA has formalized 35 milligram standard for 2027 with no expected modifications; parameters still being contemplated. Q2 volumes expected up around world; 13.5% margins driven by volume improvement and slight positive price-cost mix, partially offset by tariff pricing pressure and PACCAR gaining share. Regional breakdown not provided.

35 milligram NOx standard formalized for 2027Q2 expected gross profit margin: 13.5%Build rate increases across all marketsPricing pressure from tariffs not yet fully rolled through

Scott Group · Wolf Research

Breakdown of buy versus pre-buy demand between growth fleet plans and pent-up replacement; concerns about parts growth pressure if replacement activity drives fleet age normalization. Also questioned why pricing environment remains competitive despite doubled year-to-date orders.

Buy side driven by improved customer financial performance enabling capital allocation to fleet replacement and modernization for fuel economy benefits. Management de-emphasized orders as indicator, emphasized build (31.8% Q1) and retail as cleaner metrics. Pricing remains competitive despite order strength; multi-year order dynamics and build rate measurement more relevant than order counts.

Orders doubled year-to-date versus prior yearQ1 build: 31.8% market shareFleet replacement driven by financial recovery and operating cost optimization (fuel economy)Build and retail preferred metrics over orders

Steve Volkman · Jefferies

Request for average truck and parts pricing data for Q1 versus prior year and sequential comparisons.

Q1 vs. PY: truck pricing +2% (cost +higher, pressuring margins), parts pricing +6%. Sequential Q1: truck price roughly flat, cost down >1%; parts price up 2%, cost up 1%.

Q1 YoY truck price: +2%Q1 YoY parts price: +6%Q1 YoY truck cost: higher than +2% (margin negative)Sequential truck price: ~flat, cost -1%+

Louis Merrick · BNP Paribas

Evidence of customers pushing back delivery dates and status of 3.75% NSRP tariff credit application for 232 tariffs.

No evidence of delivery date delays observed in backlog. On tariffs: 3.75% credit well-defined for truck side of 232 tariffs; timing of application expected in 'not distant future.'

No observed delivery delays in backlog3.75% NSRP tariff credit defined for 232 truck tariffsTiming of credit application: imminent (not distant future)

Answers to last quarter's watch list

Q1 gross margin progression. Truck/Parts/Other gross margin landed at 13.1%, up from 12% prior quarter per Preston's prepared remarks. Section 232 is at full benefit and price-cost was confirmed favorable by over a percentage point sequentially. The share-vs-margin trade is resolving favorably — 31.8% build share simultaneously with margin stepping up. Status: Resolved positively
NA Class 8 order book Q2 visibility. Management said outright that Q2 is "full" and Q3–Q4 are "majority full," with Q2 deliveries guided to 37–38K (vs 33,100 Q1). The pre-buy is materializing on the timeline Q4 telegraphed, and management was specifically dismissive of competitive narratives about slot availability. Status: Resolved positively
Q1 parts performance. Q1 parts pre-tax came in at $402.3M, down from $426.5M in Q1 FY2025 (-5.7% YoY). Revenue grew just 1.2% YoY. Management framed this as customer-financial-health lagging the truck recovery rather than structural, and pointed to H2 acceleration within the new 3–6% FY band. Status: Resolved negatively
South America 2026 trajectory. "Other" geography revenue fell 26.5% YoY. The reaffirmed 100–110K FY guide (versus 115K in 2025) implies ongoing contraction, and management did not address South America on the call. Status: Resolved negatively
EPA 35mg NOx legal status. Management confirmed to Morgan Stanley that the 35mg standard is formalized for 2027 with no expected modifications. The planning baseline holds. Status: Resolved positively
Pricing discipline as Section 232 surcharges normalize. Q1 delivered build share of 31.8%, gross margin of 13.1%, and price-cost favorability of over 1pp sequentially. Management is capturing the differential as both margin and share simultaneously. Status: Resolved positively

What to watch into next quarter

Q2 gross margin vs. the ~13.5% guide. A print at or above 13.5% confirms volume leverage is real and price-cost favorability is sustaining; below 13.5% would signal the tariff pricing pressure Preston flagged to Castillo is offsetting more than expected.

Q2 truck deliveries vs. the 37–38K guide. Hitting 38K or above would validate the "full in Q2" framing as conservative; missing 37K would suggest the hiring/supply constraint is biting harder than management implied and force a re-examination of the H2 capacity ramp narrative.

Q2 parts pre-tax recovery. Q1 came in at $402.3M, down from $426.5M a year ago. Whether Q2 parts pre-tax improves on the ~3% revenue growth tests whether the dip was customer-cycle (Kevin's framing) or structural margin compression.

NA Class 8 order book Q3–Q4 fill progression beyond "majority full." Q2 print should disclose whether Q3 advanced from "majority full" toward fully booked; this is the leading indicator for whether management raises the 270K NA Class 8 high end in the Q2 update.

South America / Other geography trajectory. A 26.5% YoY decline in "Other" without management commentary is a disclosure gap. Whether Q2 brings either a regional commentary update or a stabilization in the print tests how durable the regional headwind is.

Section 232 NSRP 3.75% credit application timing. Louis Merrick surfaced this — if the credit lands in Q2 as Preston implied, it represents an unbudgeted margin tailwind beyond the guided 13.5%; slippage into H2 defers the benefit.

Sources

  1. PACCAR Q1 2026 press release (SEC filing, Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/75362/000119312526183626/pcar-ex99_1.htm
  2. PACCAR Q1 2026 earnings call prepared remarks and Q&A.

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