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    PCAR
    Earnings call· Jun 2026(Q2 FY26)

    PACCAR Q2 FY26 earnings call PCAR

    Jul 28, 2026 Source

    Executive summary

    PACCAR Q2 FY26 — Strong Truck Performance and Record Parts Revenue

    PACCAR delivered a strong second quarter, driven by robust truck division performance and record results from PACCAR Parts, benefiting from increased build rates and favorable price-to-cost dynamics. Management expressed confidence in a strengthening market for the second half of 2026 and a healthy 2027, aided by the EPA's recent NOx regulation clarification which is expected to smooth the transition to new engine technologies. The company is actively investing in advanced manufacturing and next-generation powertrains to support future growth.

    Highlights

    5

    • Q2 revenues of $7.5 billion, with net income up 24% from Q1 to $752 million.

    • PACCAR Parts achieved record quarterly revenues of $1.75 billion and pretax income of $417 million, with gross margins increasing to 29.8%.

    • Truck deliveries increased from 33,000 in Q1 to 38,700 in Q2, with Q3 estimated to grow to 42,000.

    • Truck parts and other gross margins increased from 13.1% to 14.4% in Q2, forecast to be 14.5% in Q3 and further increase in Q4.

    • EPA clarification on NOx regulation smooths the 2027 market transition, allowing customers to purchase current engines with a $6,000-$7,000 nonconformance fee, avoiding higher costs of fully compliant engines.

    Concerns

    2

    • Q2 U.S. deliveries were slightly impacted by supplier constraints, leading to a few hundred trucks not being delivered as planned.

    • Third-quarter gross margins for truck parts and other are forecast to be sequentially flat at 14.5% despite higher deliveries, due to a mix shift towards lower-margin fleet trucks and the ratio mix to parts.

    Guidance & targets

    6
    CategoryTargetConfidence
    Q3 Deliveries
    around 42,000 units
    medium materiality
    High
    Truck parts and other gross margins
    14.5%
    medium materiality
    High
    Truck parts and other gross margins
    further increase
    medium materiality
    Medium
    PACCAR Parts sales growth
    3% to 5%
    medium materiality
    High
    Capital investments
    $700 million to $750 million
    medium materiality
    High
    R&D expenditures
    $450 million to $480 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Truck Division
    Strong performance driven by increased build rates and favorable market conditions. Q3 deliveries estimated to be around 42,000 units.
    Deliveries: 38,700 units (Q2 FY26)Deliveries: 33,000 units (Q1 FY26)
    		————
    PACCAR Parts
    Achieved record quarterly revenues and profits. Increasing truck utilization is leading to higher parts sales, with revenue from Fleet Services Program growing 8%.
    Gross margins: 29.8%
    		$1.75 billion——$417 million pretax income
    PACCAR Financial Services
    Robust performance due to steady finance margins and strengthening used truck markets.
    		———$124 million pretax income

    Operational metrics

    10
    Net income growth
    24%vs Q1 FY26
    Q2 FY26

    Net income increased from the first quarter.

    PACCAR Parts Fleet Services Program revenue growth
    8%QoQ
    Q2 FY26

    An indicator that customers are beginning to increase parts purchases.

    Truck parts and other gross margins
    14.4%up from 13.1%
    Q2 FY26

    Increased due to very good overall performance.

    Truck parts and other gross margins
    13.1%
    Q1 FY26

    Prior quarter gross margins.

    EPA NOx nonconformance fee
    $6,000 to $7,000
    2027

    Expected range for the nonconformance fee for current engines in 2027, as per EPA's proposed rule.

    Cost of fully compliant 35-milligram engines
    higher than $10,000
    2027

    Estimated cost for fully compliant engines, which would likely be higher than the nonconformance fee.

    Spot freight rates
    up 20%
    current

    Indicates improving operating conditions for customers.

    Contract freight rates
    up 6.5%
    current

    Indicates improving operating conditions for customers.

    US/Canada H1 retail sales
    105,000 trucks
    H1 FY26

    First half retail sales for the heavy truck market.

    US/Canada H2 retail sales
    around 145,000
    H2 FY26

    Expected second half retail sales for the heavy truck market.

    Industry KPIs

    4
    MetricValueDetails
    Tariff cost impactnet tariff benefit
    Parts aftermarket business$1.75 billionUSD
    Order backlog order intake by segment90% full%
    Industry production market size forecasts250,000 unitsunits

    Deals & partnerships

    1
    Aurora, STACK, KodiakDevelopment of autonomous vehicle platform

    PACCAR is developing its autonomous vehicle platform with these partners, making good progress.

    Risks & headwinds

    2
    Supplier constraintsQ2 FY26

    a few hundred trucks

    Mitigation: Expected to come through in Q3.

    Inventory levelsFull year 2026

    Not quantified

    Mitigation: Management is monitoring, as it impacts the US/Canada retail outlook range.

    What to watch in Q3 FY26

    5

    Truck parts and other gross margins

    Q3 FY26, Q4 FY26
    Current14.4% (Q2 FY26)
    Target14.5% (Q3 FY26) and further increase in Q4

    Why it matters

    Indicates continued operational efficiency and pricing power, crucial for profitability.

    Third quarter margins are forecast to be a strong 14.5% and then further increase in the fourth quarter.

    Q&A highlights

    6

    What drove the stronger-than-expected Q2 gross margin?

    Higher truck volume, benefits from local-for-local production (including tariff benefits), and strong cost controls/favorable price-vs-cost contributed to the stronger Q2 gross margin.

    “Probably one of the things is volume of trucks was higher. And then most significantly, I think our local-for-local production is benefiting PACCAR. I also think that the team did a fantastic job in cost [ controls ] or price [ versus ] cost was favorable for us, even more than we thought it would be.”

    asked by Stephen Volkmann · answered by R. Feight

    1 min read5 chapters

    Detailed Narrative

    01

    Market Dynamics and Outlook

    The U.S. economy is growing, and the truck market is strengthening, with spot rates up 20% and contract rates up 6.5%. The driver pool has become more constrained, contributing to improved operating conditions for customers. This is leading to increased capital expenditure by customers who had previously extended truck lifecycles. Management noted that reshoring and local-for-local efforts in the industrial base are positive for truck demand.

    02

    EPA NOx Regulation Impact

    The EPA's recent clarification on NOx emissions regulation extends the timeline for introducing 35-milligram NOx engines. Customers will be able to purchase current-generation engines in 2027 with an associated nonconformance fee (NCP) estimated at $6,000-$7,000 per truck, which is lower than the likely cost of fully compliant 35-milligram engines (estimated at over $10,000). This approach is expected to smooth the pre-buy cycle, create a stronger 2027 market, and ensure fully validated products are introduced gradually.

    03

    Production and Supply Chain

    PACCAR was an early mover in announcing build rate increases and has maintained strong communication with its supply base to support these elevated production levels. The company's local-for-local production strategy is yielding benefits, including favorable tariff impact🌐s and improved operating effectiveness. Despite some Q2 supplier constraints impacting U.S. deliveries, these are expected to resolve in Q3.

    04

    Product Strategy and Innovation

    PACCAR plans to continue selling current product engines in 2027, aligning with customer preferences for a gradual transition to new technologies. The company is investing in advanced flexible manufacturing that enhances efficient local-for-local production, next-generation clean diesel engines, industry-leading hybrid and electric powertrains, and integrated connected vehicle services.

    05

    Autonomous Vehicle Development

    PACCAR is actively developing its autonomous vehicle platform with partners like Aurora, STACK, and Kodiak, making good progress. The company is happy with the progress but currently has no plans to remove drivers from operations.

    AI-generated summary of the company’s earnings call. Not investment advice.