Paccar Inc. · NASDAQ:PCAR
Paccar — Q1 2024 Earnings Presentation
63 slides from Paccar's earnings presentation, Apr 30, 2024
Slide 1: April 2024
April 2024 Page 1
Slide 2: Disclosure Regarding Forward-Looking Statements
Disclosure Regarding Forward-Looking Statements This presentation may contain statements that are forward looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. A summary of risks a
Slide 3: Index
Index PACCAR Overview 4 Excellent Dividend Yield 24 Distribution Centers and Dealer Map 44 Our Culture 5 Trucking Moves the Economy 25 Global Dealer Network 45 PACCAR Brands 6 >6t Global Truck Market 26 Kenworth and Peterbilt Locations 46 New Kenworth T680 8 >16t Truck Market Size 27 Financial Servi
Slide 4: PACCAR: A Global Technology Company in Commercial Vehicles
PACCAR A Global Technology Company in Commercial Vehicles 2023 Revenues $35.1B 2023 Net Income $4.6B 2023 Avg Dividend Yield 5.3% 85 Years of Consecutive Profitability; Dividend Paid Every Year Since 1941 Truck and Other Aftermarket Parts $26.9B Revenues $6.4B Revenues Premium Quality Light, Medium
Slide 5: Our Vision
Our Vision PACCAR is creating trucks and transportation solutions that drive the world’s future. Our focus is on doing things in an ethical and disciplined manner. We make decisions utilizing conservative financial principles and common sense for the long-term benefit of our customers, employees and
Slide 6: PACCAR Brands and Business Segments
PACCAR’s business segments include Commercial Vehicles, Powertrain, Aftermarket Parts, Financial Services and Information Technology. PACCAR’s premium brands Kenworth, Peterbilt and DAF are the premier light, medium and heavy duty commercial trucks in their markets. Other brands include PACCAR Power
Slide 7: PACCAR product investments
PACCAR’s product investments Our products reflect our core deliver industry-leading brand values of quality, performance and value to our innovation and technology customers April 2024 Page 7
Slide 8: New Kenworth T680
New Kenworth T680 Kenworth’s next generation T680 heavy truck features an enhanced aerodynamic exterior design, driver optimized technology, including a customizable 15” digital dash display, and 7% greater fuel economy April 2024 Page 8
Slide 9: New Peterbilt Model 579
New Peterbilt Model 579 Peterbilt’s new Model 579 Class 8 truck sets the standard for technology and driver comfort and delivers 7% greater fuel efficiency April 2024 Page 9
Slide 10: New Peterbilt Model 589
New Peterbilt Model 589 Peterbilt’s new Model 589 Class 8 truck features a new 2.1-meter-wide cab with advanced driver technology and a new digital display April 2024 Page 10
Slide 11: New Peterbilt and Kenworth Medium Duty
New Peterbilt and Kenworth Medium Duty The all new medium duty product line-up features an 8” wider cab with 3-person seating. Powered by the updated PACCAR PX engine and all-new PACCAR TX-8 automatic transmission. April 2024 Page 11
Slide 12: New DAF XB, XD, XF, XG, XG+
New DAF XB, XD, XF, XG, XG+ DAF is the first truck manufacturer in the industry to have taken full advantage of Europe’s new regulations governing truck design. The new trucks feature a new aerodynamic design, 10% greater fuel efficiency and larger interior space. April 2024 Page 12
Slide 13: New DAF Truck Models
New DAF Truck Models Electric XD and XF NGD Interior XF and XG+ XD Vocational April 2024 Page 13
Slide 14: PACCAR Powertrain
The proprietary PACCAR Powertrain is the most advanced heavy-duty powertrain in the market. The PACCAR MX engines are integrated to the PACCAR TX-12 automated transmission and the efficient DX-40 tandem drive axle to achieve exceptional performance and fuel economy. Kenworth and Peterbilt offer the
Slide 15: PACCAR Truck Production
PACCAR Truck Production Over 1.6 Million Trucks Produced 2014 - 2023 PACCAR produced 204,200 trucks in 2023 Units (000s) 250 198.8 204.2 Brasil 189.1 185.9 Australia 200 154.7 158.9 162.7 Mexico 142.9 140.9 Canada 133.3 150 US Europe 100 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 April 2
Slide 16: Excellent Financial Performance Throughout the Business Cycle
PACCAR Excellent Financial Performance Throughout the Business Cycle $ Billions Revenues $ Billions • Reputation for superior operational 40 35 40 35 excellence and premium-quality products 30 30 and services 25 25 20 20 15 10 15 10 • Long-term growth in revenues and net 5 5 income reflect increased
Slide 17: Net Income as % of Revenues
Net Income as % of Revenues 18% 18% 15% 15% 12% 12% 9% 9% 6% 6% 3% 3% 0% 0% -3% -3% -6% -6% 13 14 15 16 17 18 19 20 21 22 23 1Q24 PACCAR Volvo Daimler Truck Traton Iveco April 2024 Page 17
Slide 18: Best-in-Class Operating Efficiency: Inventory Turns
Best-in-Class Operating Efficiency Inventory Turns PACCAR’s inventory turns are the highest in the industry, a result of the PACCAR Production System, Lean Manufacturing and Six Sigma 24 24 20 20 16 16 12 12 8 8 4 4 0 0 14 15 16 17 18 19 20 21 22 23 PACCAR Volvo Daimler Truck Traton Iveco April 2024
Slide 19: Best-in-Class Operating Efficiency: SG&A % of Sales
Best-in-Class Operating Efficiency SG&A % of Sales PACCAR’s SG&A as a percentage of sales is much lower than its peer group, reflecting strong financial discipline 16% 16% 12% 12% 8% 8% 4% 4% 0% 0% 14 15 16 17 18 19 20 21 22 23 PACCAR Volvo Daimler Truck Traton Iveco April 2024 Page 19
Slide 20: Net Income per Truck
Net Income per Truck • Net income per truck is PACCAR’s Truck Units $/Truck net income divided by total truck (000s) unit sales. 250 25,000 225 22,500 200 20,000 • Truck sales not only generate profit from the sale, but also parts and 175 17,500 finance profit. This illustrates the 150 15,000 streng
Slide 21: Best-in-Class Return on Invested Capital
Best-in-Class Return on Invested Capital PACCAR’s high profitability, strong working capital management and prudent investments resulted in best in class return on invested capital with an average of 24% over the last five years. PACCAR had an excellent 37.8% ROIC in 2023. Average 2019 - 2023 2023 2
Slide 22: Capital Allocation Strategy
Capital Allocation Strategy • High ROI Capital Investments • Pay Regular Quarterly and Annual Dividend − Dividend paid every year since 1941 − Total dividends paid approximately 50% of net income for many years − Regular quarterly dividend 10-year annualized growth of 7% (as of 4Q23) • Strategic M&A
Slide 23: Dividends Declared and Stock Repurchases
Dividends Declared and Stock Repurchases $ Millions CAGR = 12% $ Millions 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 500 500 0 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Dividends Stock Repurchased April 2024 Page 23
Slide 24: Excellent Dividend Yield
Excellent Dividend Yield Average Dividend Yield = 3.8% • PACCAR’s dividend yield 6% 6% reflects the total quarterly + annual dividends declared in 5% 5% the year, divided by the 4% 4% average stock price for the year 3% 3% • PACCAR’s dividend yield has 2% 2% averaged 3.8% over the last ten years 1%
Slide 25: Trucking Moves the Economy
Trucking Moves the Economy 72% of U.S. Freight is Moved by Truck Trucking is the lifeblood of the economy. In the U.S., the economy depends on trucks to deliver ten billion tons of virtually every commodity consumed - 72% of all the freight transported in 2023. Rail 38.9 million commercial trucks, i
Slide 26: >6t Global Truck Market
>6t Truck Market 2018 – 3.2 Million >6t Global Truck Market 2023 – 3.1 Million Europe 2000000 Russia/CIS China 371 385 96 148 1500000 1,325 1,060 1000000 500000 North America 416 435 0 Rest of Asia 311 311 316 India Africa & South America Middle East 398 366 111 172 133 170 Australia PACCAR Truck As
Slide 27: >16t Truck Market Size
>16t Truck Market Size Units (000s) Units (000s) 350 350 300 300 2024 Market Forecast Estimate 250 250 U.S. and Canada 250,000 – 290,000 200 200 Europe 260,000 – 300,000 150 150 S. America 105,000 – 115,000 100 100 50 50 0 0 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 US & Canada
Slide 28: April 2024 Page 28
April 2024 Page 28
Slide 29: PACCAR Strategy
PACCAR Strategy Quality Technology Innovation Brand Values Premium Products and Services Profitable Growth Profitable Market Share Growth Geographic Expansion April 2024 Page 29
Slide 30: Investing Throughout the Business Cycle
PACCAR Investing Throughout the Business Cycle • Operating cash flow has averaged $3.1 billion for the last Operating Cash Flow five years and has grown 9%/year over the last 20 years $ Billions $ Billions 4.5 4.5 − Strong operating cash flow enables PACCAR to invest in 4.0 4.0 3.5 3.5 growth throug
Slide 31: Cumulative PACCAR MX Engines Produced
Cumulative PACCAR MX Engines Produced • The PACCAR MX-13 is the flagship of PACCAR’s engine line- # of Engines Cumulative PACCAR MX Engines Produced # of Engines up with over 676,000 engines produced in Europe and (000s) (000s) over 324,000 engines installed in North America and a growing presence i
Slide 32: Zero Emission Trucks
Zero Emission Trucks • Peterbilt, Kenworth and DAF lead the industry with eight battery electric vehicle models available for customers Peterbilt 579EV Kenworth T680E DAF XF Electric • PACCAR’s zero emission heavy- and medium-duty vehicles provide competitive total cost of ownership for customers Pe
Slide 33: Battery Charging Solutions
Battery Charging Solutions • PACCAR Parts has introduced new electric vehicle charging stations to support the global launch of electric vehicles • Compatible with Kenworth, Peterbilt and DAF electric trucks and other brands • Charging power from 20 kW up to 350 kW • PACCAR is collaborating with Fai
Slide 34: Battery Cell Production Joint Venture
Battery Cell Production Joint Venture • PACCAR has partnered with Accelera by Cummins, Daimler Truck, and EVE to manufacture LFP batteries in the United States for the North American commercial vehicle market • PACCAR, Accelera, and Daimler will each own 30% of the JV and EVE will own 10% • The JV e
Slide 35: Battery Strategy
Battery Strategy • Lithium-iron-phosphate (LFP) battery technology has advantages over other chemistries: − Lower cost − Longer life − Enhanced safety − No nickel or cobalt • PACCAR to assemble customized battery packs in-house • Proprietary Battery Management System • Proprietary parts growth oppor
Slide 36: Autonomous Trucks
Autonomous Trucks • PACCAR has invested in a strategic partnership with Aurora to develop, test and commercialize autonomous Peterbilt and Kenworth trucks • PACCAR’s autonomous vehicle platform will be integrated with the Aurora self-driving technologies • PACCAR customers will benefit from the auto
Slide 37: PACCAR and Aurora Partner on Autonomous Truck Pilots
PACCAR and Aurora Partner on Autonomous Truck Pilots • PACCAR and Aurora have three customer trials underway with FedEx, Uber Freight and Werner Enterprises – each operating in Texas April 2024 Page 37
Slide 38: Connected Services
Connected Services PACCAR is launching a new state-of-the-art global connected truck platform, PACCAR Connect. New proprietary Hardware and Data Secure Vehicle Data Business Solutions platform provides: • Cybersecurity Protection & Monitoring • Over-the-Air Software Updates • Access to Industry Lead
Slide 39: PACCAR and Platform Science Connected Vehicle Partnership
PACCAR and Platform Science Connected Vehicle Partnership • PACCAR has made a strategic investment in Platform Science • PACCAR and Platform Science will collaborate on connected trucks • PACCAR will integrate the Platform Science Virtual Vehicle into Kenworth and Peterbilt trucks • The solution ena
Slide 40: PACCAR Innovation Center, Sunnyvale, CA
PACCAR Innovation Center, Sunnyvale, CA • PACCAR Innovation Center in Silicon Valley enhances PACCAR’s access to emerging technologies and talent from around the world • The Innovation Center collaborates with other PACCAR engineering teams to develop next generation technologies such as autonomous
Slide 41: PACCAR Global Embedded Services
PACCAR Global Embedded Services PACCAR has three embedded service technology centers located at Kenworth in Kirkland, WA; at DAF in Eindhoven, the Netherlands; and in Pune, India The centers will accelerate embedded software development and connected vehicle solutions to benefit customers’ operating
Slide 42: PACCAR Manufacturing Capacity Investments
PACCAR Manufacturing Capacity Investments Kenworth New Test Building, Chillicothe, OH PACCAR Mexico Expansion April 2024 Page 42 PACCAR Engine Factories PACCAR Australia Expansion
Slide 43: PACCAR Parts Strategy
PACCAR Parts Strategy PACCAR Parts achieved $6.41 billion in sales and PACCAR Parts Sales $ Millions $ Millions $1.70 billion in pretax profits in 2023. Over the last 20 7,000 CAGR = 9% 7,000 years, PACCAR Parts has achieved a sales CAGR of 9% 6,000 32% 32% 6,000 5,000 5,000 and profit CAGR of 14%.
Slide 44: PACCAR Parts Distribution Centers and Dealers
PACCAR Parts Distribution Centers and Dealers 19 PDCs in 10 Countries; 2,300 Dealer Locations PACCAR Distribution Centers Kenworth and Peterbilt Dealers DAF Dealers Kenworth/DAF Dealers April 2024 Page 44
Slide 45: PACCAR Global Dealer Network
PACCAR Global Dealer Network • Independent dealer network of 2,300 dealer locations • Premium customer experience • Strong dealer profitability and expanded opportunities from PACCAR engines and TRP stores • Competitive flooring and retail financing provided by PACCAR Financial and PACCAR Leasing Ap
Slide 46: Growth in Kenworth and Peterbilt Dealer Locations
Growth in Kenworth and Peterbilt Dealer Locations U.S. and Canada Locations Locations 1,000 PACCAR MX-13 Introduced in 2010 1000 900 Dealer Investments of $3.5 Billion since 2010 900 800 84% Growth in Dealer Locations 800 Drives Long-Term PACCAR Parts Growth 700 700 600 600 500 500 400 400 00 01 02
Slide 47: PACCAR Financial Services Strategy
PACCAR Financial Services Strategy • PACCAR Financial Services supports truck sales by Total Assets 12/31/23 = $21.0 Billion providing financing and leasing services to Australia, Mexico & Brasil $3.9 Billion PACCAR customers 18% U.S. & Canada $9.0 Billion • In 2023, PACCAR Financial financed 24% of
Slide 48: Long-Term Growth in PACCAR Heavy Duty Market Share
Long-Term Growth in PACCAR Heavy Duty Market Share Market Share 5-Year Average • Since 2003, PACCAR’s above 16 tonne market 32% 32% share has increased in South America, Europe, Australia and U.S. & Canada 28% 28% • Kenworth is the market leader in Australia 24% 24% 20% 20% • PACCAR’s investment in
Slide 49: DAF Brasil
DAF Brasil Opened Manufacturing Plant 2013 PFS Brasil Begins Operations 2019 Opened New Parts Distribution Center 2020 4th Brand of the Year Award from FENABRAVE 2021 DAF CF Rigid Introduced 2021 DAF Brasil Builds 20,000th Truck 2022 DAF Brasil 10th Anniversary 2023 DAF CF Parts Distribution Center
Slide 50: Infrastructure Investment and Jobs Act
Infrastructure Investment and Jobs Act • In 2021, congress approved $1.2 trillion in new infrastructure spending in the Infrastructure Investment and Jobs Act • This $1.2 trillion in spending will benefit PACCAR, as it is an industry leader in vocational trucks • Kenworth and Peterbilt combined have
Slide 51: Emissions Regulations Summary
Emissions Regulations Summary - 15% GHG Euro 7 - 30% GHG Greenhouse Gas - Zero Emission Vehicles (ZEV) - 50% NOx - More ZEVs – 45% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Greenhouse Gas – 53% -14% GHG -6% GHG -7% GHG -6% GHG -20% GHG California: Nationwide: - 75% NOx Reduction -
Slide 52: ESG Leadership
ESG Leadership CDP “A-” Rating Newsweek America’s Greatest Workplaces 2023 PACCAR Achieved an “A-” rating for its Recognized as One of the Environmental Practices; Top 0.26% Workplaces in Leadership tier of over America by Newsweek 21,000 reporting and Plant-A Insights Group companies Science Based
Slide 53: First Quarter 2024 Earnings
First Quarter 2024 Earnings April 2024 Page 53
Slide 54: PACCAR Revenues and Profit
PACCAR Revenues and Profit 85 consecutive years of net profit Dividends every year since 1941 1st Quarter ($ in Millions) 2024 2023 Revenues $8,744 $8,473 Net Income $1,195 $734 Adjusted Net Income $1,195 $1,180 Adjusted Return on Revenues 13.7% 13.9% Adjusted Diluted EPS $2.27 $2.25 New Truck Deliv
Slide 55: 2024 Financial Results: First Quarter 2024 vs. First Quarter 2023
2024 Financial Results First Quarter 2024 vs. First Quarter 2023 Sales and Revenues Net Income (Billions of Dollars) (Millions of Dollars) • Sales and revenues of $8.74 billion $8.7 $1,180 $1,195 $8.5 • Net income of $1,195 million • After-tax return on revenues of 13.7% • PACCAR Parts revenues of $
Slide 56: Historical Annual Gross Margins
Historical Annual Gross Margins Total Manufacturing 20% 19.0% 20% • Truck margins benefited from new products and an 18% 18% improving supply base 16% 16% • Parts margins have benefited from distribution and 14% 14% technology investments and growing populations of 12% 12% PACCAR trucks and engines
Slide 57: Truck: First Quarter 2024 vs. First Quarter 2023
Truck First Quarter 2024 vs. First Quarter 2023 Sales Segment Pretax Profit (Billions of Dollars) (Millions of Dollars) $6.4 $6.5 $894 $882 • Sales totaled $6.5 billion • Pretax operating profit was $882 million • Deliveries for 1Q24 totaled 48,100 compared to 51,100 units in the same period a year
Slide 58: Aftermarket Parts: First Quarter 2024 vs. First Quarter 2023
Aftermarket Parts First Quarter 2024 vs. First Quarter 2023 Revenues Segment Pretax Profit (Billions of Dollars) (Millions of Dollars) $1.7 $456 $1.6 $439 • Revenues of $1.7 billion, an increase of 3% • Pretax profit of $456 million, an increase of 4% • Parts revenues and profit growth due to indust
Slide 59: Financial Services Balance Sheet & First Quarter 2024 Profit
Financial Services Balance Sheet & First Quarter 2024 Profit Segment $ Millions Pretax Profit (Millions of Dollars) 3/31/2024 $149 Finance & Other Receivables $17,873 Equipment on Operating Leases 2,043 $114 Other Assets 1,237 Total Financial Services Assets $21,153 Commercial Paper & Bank Loans $4,
Slide 60: PACCAR Inc: A+/A1 Credit Ratings
PACCAR Inc A+/A1 Credit Ratings ($ Millions) • Superb balance sheet 3/31/24 Mfg Cash & Securities $7,727 • $7.7 billion in manufacturing cash and securities to support growth opportunities Other Manufacturing Assets 11,494 and investments in all phases of the cycle Financial Services Assets 21,153 T
Slide 61: PACCAR Competitive Advantages
PACCAR Competitive Advantages Innovative Technology Highest Quality Products Global Aftermarket Parts Sales Profitable Financial Services Rigorous Cost Control Experienced Management Team Excellent Supplier Partnerships Strongest Dealer Network April 2024 Page 61
Slide 62: Appendix
Appendix This earnings release 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. The
Slide 63: April 2024 Page 63
April 2024 Page 63