AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · The installed base, extensive parts distribution infrastructure and vehicle-life aftermarket demand establish a modest structural advantage. Exclusivity and comparative superiority are unproven; infrastructure size alone does not establish network effects or efficient scale.
durability · 2/4 · Vehicle-life parts demand and repeated price realization support persistence. Sales concentration in the first five years makes replenishment important, while European and North American share losses constrain confidence in long-term durability.
customer dependency · 2/4 · Continuing aftermarket demand and higher maintenance and warranty contract volume indicate ongoing customer relationships indirectly. Lower parts volumes and absent evidence of exclusive purchasing or costly fleet switching prevent a stronger assessment.
erosion resilience · 2/4 · Parts repricing continues despite weaker volumes, but parts margin compression and truck share losses demonstrate meaningful erosion pressure. Technology-transition uncertainty is a prospective risk rather than a realized failure.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Parts prices increased sales in 2023, 2024, 2025 and the first half of 2026. Truck pricing reduced 2025 revenue by $306.2 million amid competition, then contributed $191.7 million in the first half of 2026. These are mixed company-wide outcomes; some 2025 parts repricing reflected tariff costs.
retention · 2/4 · Vehicle-life parts demand and higher maintenance-contract volume provide indirect evidence of repeat engagement. Falling parts volumes and truck shares weaken that evidence. Price increases do not establish unchanged customer retention or prove that pricing caused volume declines.
margin resilience · 1/4 · Truck gross margin fell from 13.9% in 2024 to 7.5% in 2025, and first-half 2026 margin remained below its prior-year comparison. Parts margins were more resilient but declined from 31.9% in 2023 to 30.9% in 2024 and 29.9% in 2025, with further first-half compression. Pricing has not consistently protected margins against volume, mix and cost pressures.
contractual freedom · 2/4 · Dealer inventory financing rates reset monthly, whereas retail financing generally remains fixed over the contract term. Actual product repricing demonstrates some practical flexibility, but truck and parts contractual repricing rights are absent. The disclosed freedom is partial and does not establish unilateral pricing authority.
Predictability79
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 16.51
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.07
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade, currentRatioGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 48.85
- cashInterestPaid
- 692.80
- cashInterestCoverage
- 6.37
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- 0.21
- 3-year average SBC / revenue (%)
- 0.07
- cashConversionGrade
- 98.49
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 3/4 · Reported 2023–2025 operating cash generation supported investment and dividends, and 2025 net financing debt activity reduced borrowings. The battery venture's installation schedule was adjusted and first-quarter 2026 contributions paused as demand expectations changed. These support demonstrated discipline, although working-capital effects aid cash flow and the venture's remaining commitment and ultimate returns remain unresolved.
incentive alignment · 3/4 · Disclosed long-term incentives use three-year peer-relative income, return and shareholder-return measures. Actual equity grants, multi-year option vesting and hedging restrictions support alignment. Maximum cash incentives on change in control and missing actual executive ownership balances limit the conclusion; approved grants are not treated as vested awards.
execution · 2/4 · Long-running profitability, continuing cash generation, repeated aftermarket repricing and growing service contracts demonstrate operating execution indirectly. Truck share erosion, margin compression and the delayed battery capacity schedule make recent execution mixed rather than uniformly strong. The historical profit record is not attributed solely to current management.
governance · 2/4 · Actual audit-committee independence, executive sessions and an incentive-recovery policy establish oversight mechanisms. The realized European litigation charge and favorable change-in-control incentive treatment temper the assessment. These disclosures support a mixed grade without proving either ineffective oversight or exceptional governance.
Evidence
PARTS The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles to over 2,000 Kenworth, Peterbilt and DAF dealers and more than 350 TRP, PACCAR's aftermarket parts brand, stores in 99 countries around the world.
Business — Parts distribution network · Filed 18/02/2026
Aftermarket truck parts are sold and delivered to the Company’s independent dealers through the Company’s 21 strategically located parts distribution centers (PDCs) in the U.S., Canada, Europe, Australia, Mexico and Central and South America.
Business — Parts distribution centers · Filed 18/02/2026
The sale of new trucks provides the Parts segment with the basis for parts sales that may continue over the life of the truck, but are generally concentrated in the first five years after truck delivery.
Note I — Installed-base aftermarket sales lifecycle · Filed 29/07/2026
• Extended warranties, operating leases and other increased revenues by $17.5 million, primarily due to higher volume of R&M and extended warranty contracts.
MD&A — First-half 2026 maintenance and warranty contract volume · Filed 29/07/2026
Average aftermarket parts sales prices increased sales by $614.2 million primarily due to higher price realization in North America and Europe.
MD&A — 2023 parts price realization · Filed 21/02/2024
Average aftermarket parts sales prices increased sales by $161.6 million, primarily due to price realization in Europe and the U.S.
MD&A — 2024 parts price realization · Filed 19/02/2025
Average aftermarket parts sales prices increased sales by $307.3 million, primarily due to price realization in the U.S.
MD&A — 2025 parts price realization · Filed 18/02/2026
Average aftermarket parts sales prices increased sales by $170.8 million, primarily due to higher price realization in the U.S.
MD&A — First-half 2026 parts price realization · Filed 29/07/2026
Aftermarket parts sales volume decreased by $143.1 million and related cost of sales decreased by $69.6 million.
MD&A — 2025 parts volume decline · Filed 18/02/2026
Aftermarket parts sales volume decreased by $187.4 million and related cost of sales decreased by $78.4 million primarily due to lower sales volume in the U.S.
MD&A — First-half 2026 parts volume decline · Filed 29/07/2026
The Company’s heavy-duty truck retail market share was 29.6% in the first six months of 2026 compared to 30.4% in the first six months of 2025.
MD&A — North American heavy-duty market share · Filed 29/07/2026
The Company’s medium-duty market share was 12.3% in the first six months of 2026 compared to 14.0% in the first six months of 2025.
MD&A — North American medium-duty market share · Filed 29/07/2026
The pace of transition from diesel combustion to alternative powertrain commercial vehicles is highly uncertain and will be influenced by:
Risk factors — Uncertain alternative-powertrain transition · Filed 18/02/2026
Parts gross margin was 29.7% in the first six months of 2026 compared to 30.3% in the same period of 2025 due to the factors noted above.
MD&A — First-half 2026 parts gross margin · Filed 29/07/2026
• Average truck sales prices decreased sales by $306.2 million, primarily due to lower price realization in the U.S.
MD&A — 2025 truck price realization decline · Filed 18/02/2026
and Canada and Europe, reflecting an increased competitive environment, partially offset by tariff price increases in the U.S.
MD&A — Competitive pricing pressure and tariff price increases · Filed 18/02/2026
The major factors for the Truck segment changes in net sales and revenues, cost of sales and revenues and gross margin between the six months ended June 30, 2026 and 2025 are as follows: NET COST OF SALES AND SALES AND GROSS ($ in millions) REVENUES REVENUES MARGIN Six Months Ended June 30, 2025 $ 10,468.9 $ 9,504.3 $ 964.6 (Decrease) increase Truck sales volume (1,113.7 ) (913.3 ) (200.4 ) Average truck sales prices 191.7 191.7 Average material, labor and other direct costs 189.6 (189.6 ) Factory overhead and other indirect costs (14.4 ) 14.4 Extended warranties, operating leases and other 17.5 (24.6 ) 42.1 Currency translation 215.2 226.0 (10.8 ) Total decrease (689.3 ) (536.7 ) (152.6 ) Six Months Ended June 30, 2026 $ 9,779.6 $ 8,967.6 $ 812.0 • Truck sales volume decreased revenues by $1.11 billion and costs by $913.3 million, primarily reflecting lower truck deliveries.
MD&A — First-half 2026 truck revenue and cost bridge · Filed 29/07/2026
dollar. • Truck gross margin was 7.5% in 2025 compared to 13.9% in 2024 due to the factors noted above.
MD&A — 2025 truck gross margin · Filed 18/02/2026
Parts gross margin was 29.9% in 2025 compared to 30.9% in 2024 due to the factors noted above.
MD&A — 2025 parts gross margin · Filed 18/02/2026
Parts gross margin was 30.9% in 2024 compared to 31.9% in 2023 due to the factors noted above.
MD&A — 2024 and 2023 parts gross margins · Filed 19/02/2025
Dealer inventory loans have variable rates with rates reset monthly based on an index pertaining to the applicable local market.
Business — Monthly resetting dealer inventory financing rates · Filed 18/02/2026
Retail loan and lease contracts normally have fixed rates over the contract term.
Business — Fixed retail financing contract rates · Filed 18/02/2026
38 CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2025 2024 2023 (millions) OPERATING ACTIVITIES: Net Income $ 2,375.8 $ 4,162.0 $ 4,600.8 Adjustments to reconcile net income to cash provided by operations: Depreciation and amortization: Property, plant and equipment 398.2 398.4 415.0 Other assets, net 429.2 518.5 508.9 Provision for losses on financial services receivables 124.5 75.6 31.3 Deferred taxes 333.1 (79.3 ) (303.7 ) Other, net 60.7 26.3 46.5 Pension contributions (24.5 ) (40.8 ) (27.3 ) Change in operating assets and liabilities: Decrease (increase) in assets other than cash and cash equivalents: Receivables: Trade and other receivables 102.0 156.9 (430.7 ) Wholesale receivables on new trucks 1,007.1 (478.7 ) (1,266.4 ) Inventories 296.4 42.5 (350.7 ) Other assets, net (102.0 ) (149.3 ) (127.2 ) (Decrease) increase in liabilities: Accounts payable and accrued expenses (432.6 ) 279.4 375.8 Residual value guarantees and deferred revenues (36.5 ) (.8 ) (36.8 ) Other liabilities, net (115.6 ) (269.8 ) 754.5 Net Cash Provided by Operating Activities 4,415.8 4,640.9 4,190.0 INVESTING ACTIVITIES: Originations of retail loans and finance leases (6,114.9 ) (6,666.7 ) (6,378.2 ) Collections on retail loans and finance leases 5,100.9 4,840.1 4,330.4 Net increase in wholesale receivables on equipment (4.9 ) (512.1 ) (29.1 ) Purchases of marketable debt securities (1,785.3 ) (2,068.7 ) (967.2 ) Proceeds from sales and maturities of marketable debt securities 1,448.0 1,103.2 803.6 Payments for property, plant and equipment (743.0 ) (838.7 ) (695.0 ) Acquisitions of equipment for operating leases (643.6 ) (906.9 ) (567.5 ) Proceeds from asset disposals 680.8 696.1 614.5 Contributions to joint venture (201.8 ) (207.6 ) Other, net (3.4 ) 74.0 17.5 Net Cash Used in Investing Activities (2,267.2 ) (4,487.3 ) (2,871.0 ) FINANCING ACTIVITIES: Payments of cash dividends (2,267.1 ) (2,288.5 ) (1,518.6 ) Purchases of treasury stock (36.1 ) (4.5 ) (3.5 ) Proceeds from stock compensation transactions 43.4 51.9 51.5 Net (decrease) increase in commercial paper, short-term bank loans and other (1,132.8 ) 699.9 1,721.0 Proceeds from term debt 3,146.1 3,891.2 3,085.0 Payments on term debt (2,835.9 ) (2,473.1 ) (2,233.2 ) Net Cash (Used in) Provided by Financing Activities (3,082.4 ) (123.1 ) 1,102.2 Effect of exchange rate changes on cash and cash equivalents 180.9 (151.4 ) 69.6 Net (Decrease) Increase in Cash and Cash Equivalents (752.9 ) (120.9 ) 2,490.8 Cash and cash equivalents at beginning of period 7,060.8 7,181.7 4,690.9 Cash and cash equivalents at end of period $ 6,307.9 $ 7,060.8 $ 7,181.7 See notes to consolidated financial statements.
Consolidated statements of cash flows — 2023–2025 · Filed 18/02/2026
As a result, the Company and its joint venture partners agreed to finish building out the facility, and adjust the timing for installing the manufacturing capacity.
Investment note — Battery joint venture capacity installation adjustment · Filed 29/04/2026
PACCAR did not make contributions to the joint venture in the three months ended March 31, 2026 compared to $44.7 in the same period in 2025 and the maximum required contribution is $830.0.
Investment note — Battery joint venture contributions and maximum commitment · Filed 29/04/2026
In 2025, PACCAR earned net income for the 87th consecutive year.
MD&A — Consecutive profitable years · Filed 18/02/2026
• The key metrics for long-term incentive cash awards are the three-year change in net income, return on sales, return on capital and total shareholder return, as compared with Peer Companies.
Compensation discussion — Long-term incentive performance metrics · Filed 18/03/2026
All stock options granted in 2025 vest and become exercisable on January 1, 2028 and remain exercisable until February 3, 2035, unless the participant’s employment terminates earlier for reasons other than retirement or the participant is demoted to an ineligible position.
Compensation discussion — Granted 2025 stock options and vesting terms · Filed 18/03/2026
On February 6, 2026, the Committee determined that the 2025 performance goal was achieved and approved the grant of restricted stock or RSUs consistent with the target award percentages listed on page 20.
Compensation discussion — Approved restricted stock and RSU grants · Filed 18/03/2026
The Corporate Governance Guidelines prohibit the Company’s directors and executive officers from hedging or pledging their ownership of PACCAR stock.
Board governance — Hedging and pledging prohibition · Filed 18/03/2026
Long-term cash incentives are prorated upon retirement at age 62, with 15 years of service, or death and are awarded at the maximum level upon a change in control.
Termination benefits — Maximum long-term cash incentives upon change in control · Filed 18/03/2026
The Audit Committee was comprised of up to six members in 2025, each of whom met the independence and financial literacy requirements of SEC and Nasdaq rules.
Audit Committee report — Actual 2025 committee independence · Filed 18/03/2026
The Board regularly meets in executive session without management.
Board governance — Executive sessions without management · Filed 18/03/2026
The Company maintains an incentive compensation recovery policy in accordance with Rule 10D-1 of the Exchange Act and Nasdaq Rule 5608 that requires the Company to recover excess incentive compensation that was paid to an executive officer based in whole or in part on financial results that were subject to a restatement of the Company’s financial statements.
Compensation discussion — Incentive compensation recovery policy · Filed 18/03/2026
Adjusted net income (non-GAAP), excluding a $264.5 million after-tax charge related to civil litigation in Europe, was $2.64 billion ($5.01 per diluted share).
MD&A — Realized European civil litigation charge · Filed 18/02/2026
The Company’s DAF subsidiary purchases fully assembled cabs from a competitor, Renault V.I., for its European light-, medium-duty product line pursuant to a joint product development and long-term supply contract.
Business — Named competitor and cab supply relationship · Filed 18/02/2026
In 2025, DAF had a 13.5% share of the European heavy-duty market and a 9.7% share of the light/medium-duty market.
Business — 2025 European truck market shares · Filed 18/02/2026
In 2024, DAF had a 14.4% share of the European heavy-duty market and a 9.5% share of the light/medium-duty market.
Business — 2024 European truck market shares · Filed 19/02/2025
In 2023, DAF had a 15.6% share of the European heavy-duty market and a 9.1% share of the light/medium-duty market.
Business — 2023 European truck market shares · Filed 21/02/2024
dollar. • Truck gross margin was 8.3% in the first six months of 2026 compared to 9.2% in the same period of 2025 due to the factors noted above.
MD&A — First-half 2026 truck gross margin · Filed 29/07/2026
