• Annual Revenue: $33.7 billion in 2024.
• Net Income: $4.2 billion in 2024.
• After-Tax Return on Revenues: 12.4% in 2024.
• Dividends Declared: $4.17 per share in 2024, including a year-end dividend of $3 per share.
• Fourth Quarter Revenue: $7.9 billion.
• Fourth Quarter Net Income: $872 million.
• PACCAR Parts Revenue: $1.6 billion in the fourth quarter.
• PACCAR Parts Pre-Tax Profit: $428 million in the fourth quarter.
• Class 8 Truck Market Share: 30.7% in the US and Canada.
• Medium-Duty Truck Market Share: Increased from 14.5% to 18%.
• PACCAR Parts Annual Revenue: $6.7 billion, a 4% increase.
• PACCAR Parts Pre-Tax Profit: $1.71 billion annually.
• Parts Gross Margins: 30.9% on average.
• PACCAR Financial Services Fourth Quarter Pre-Tax Income: $104 million.
• PACCAR Financial Services Annual Pre-Tax Income: $436 million.
• Capital Investments: $796 million in 2024, with a planned range of $700 million to $800 million for 2025.
• Research and Development Expenses: $453 million in 2024, with a planned range of $460 million to $500 million for 2025.
• Return on Invested Capital: 25.5% in 2024.

• Warning! GuruFocus has detected 6 Warning Signs with PCAR.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• PACCAR Inc (NASDAQ:PCAR) achieved annual revenues of $33.7 billion and net income of $4.2 billion in 2024, marking the second-highest profit in the company's history.
• The company declared $4.17 per share in dividends, representing a 53% payout of net income and a dividend yield of 4%.
• PACCAR Parts set new records for revenues and profits, with annual revenues increasing by 4% to $6.7 billion and pre-tax profit reaching $1.71 billion.
• Kenworth and Peterbilt's market share in the US and Canadian Class 8 truck market increased to 30.7%, up from 29.5% the previous year.
• PACCAR Financial Services achieved a fourth-quarter pre-tax income of $104 million, with an annual pre-tax income of $436 million, reflecting excellent credit quality and low past use.

Negative Points

• The medium-duty truck market is expected to normalize, potentially leading to a decrease in demand compared to the previous robust performance.
• The company faces challenges from unfavorable foreign exchange rates, which negatively impacted net income by approximately $20 million in the fourth quarter.
• PACCAR Inc (NASDAQ:PCAR) anticipates a slight decline in truck deliveries in the first quarter of 2025, with a forecast of around 40,000 units compared to 43,900 in the fourth quarter.
• The European truck market, particularly in Central and Eastern Europe, experienced a downturn, with markets like Poland and Lithuania being significantly impacted.
• The company is cautious about potential regulatory changes and their impact on operations, particularly concerning the EPA 2027 regulations and potential differences between California and other states.

Q & A Highlights

Q: Can you explain the delivery guidance by geography for the first quarter compared to the fourth quarter? A: In the US, we expect Class 8 to be flat or slightly up in Q1, but the medium-duty market is normalizing. There was a Euro 6 implementation in Mexico in Q4, leading to a pre-buy that won't be present in Q1. Additionally, fewer production days outside the US, particularly in South America, impact deliveries. Overall, Class 8 is expected to be flat or slightly up in the US markets. - Preston Feight, CEO

Q: Regarding the Amplify joint venture with Cummins and Daimler, is there a possibility of rethinking the investment given the current administration's shift away from BEVs? A: We are very satisfied with the progress of the Amplify joint venture. It remains a long-term strategic objective to offer a full portfolio of powertrain choices, including battery electric and hybrid vehicles. The joint venture will help us provide competitive, high-quality batteries to support our customers. - Preston Feight, CEO

Q: How do you view the vocational strength and the potential for overordering by dealers? A: Our inventory levels are healthy, with Kenworth and Peterbilt's inventory at 2.3 months compared to the industry's 3.1 months. The backlog at body builders consists of trucks that are already spoken for, indicating solid customer demand. - Preston Feight, CEO

Q: Can you provide more color on the medium-duty market in the US and Canada for 2025? A: The medium-duty market is expected to return to historically normal levels. Our new products are performing well, and we have grown our market share from 14.5% to 18% last year. We anticipate strengthening in the second half of the year. - Preston Feight, CEO

Q: What is the impact of foreign exchange rates on truck revenue per unit, and how do you expect this to affect margins? A: The strong dollar accounted for about half of the reduction in average sales price per truck. We had a negative effect on net income of about $20 million due to foreign currencies in Q4. This is factored into our guidance of 15.5% to 16% gross margin for Q1. - Harrie Schippers, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.