PACCAR’s first quarter results were met with a negative market reaction, reflecting challenges in navigating tariff-driven input cost increases and softer market conditions. Management cited that higher costs, largely tied to recently imposed tariffs, could not be fully offset by pricing during the quarter. CEO Preston Feight noted, “Our teams in Denton and Chillicothe have done a great job building trucks for us for the U.S. markets, but there are components that come into those factories from our suppliers, from other countries. And so we don’t know how they would be affected.” The company pointed to continued strength in its parts and financial services businesses but acknowledged that truck divisions faced margin pressure.
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PACCAR (PCAR) Q1 CY2025 Highlights:
- Revenue: $6.91 billion vs analyst estimates of $6.97 billion (16% year-on-year decline, 0.8% miss)
- Adjusted EPS: $1.46 vs analyst expectations of $1.58 (7.5% miss)
- Adjusted EBITDA: $863.7 million vs analyst estimates of $946.5 million (12.5% margin, 8.7% miss)
- Operating Margin: 11.1%, down from 15.9% in the same quarter last year
- Organic Revenue fell 14.6% year on year (1.5% in the same quarter last year)
- Market Capitalization: $48.17 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions PACCAR’s Q1 Earnings Call
- Charles Dillard (Bernstein): Asked for detail on how much tariff costs can be passed through to customers and the timing of margin recovery; CEO Preston Feight said the ability to offset tariffs depends on pricing actions and backlog timing, with full recovery taking time as policies evolve.
- Jamie Cook (Truist): Questioned the root causes of margin disappointment and comfort with inventory levels; Feight clarified that margin pressure mainly stemmed from tariff-related cost increases not fully priced in, while inventories were described as manageable given product mix.
- Michael Feniger (Bank of America): Inquired about the impact of upcoming EPA emissions changes on cost structure and R&D spend; Feight explained that depending on regulatory outcomes, cost impacts could vary, but PACCAR is prepared with multiple compliant engine options.
- Tami Zakaria (JPMorgan): Sought clarification on how tariffs affect parts margins and pass-through ability; CFO Harrie Schippers explained that parts pricing can be adjusted more quickly than trucks, so margin impact in this segment is limited.
- Scott Group (Wolfe Research): Asked whether margin compression in Q2 is a timing issue or reflects limited pricing power; Feight described the main issue as timing between cost increases from tariffs and the later realization of price increases.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the outcome of ongoing tariff policy investigations and potential changes in U.S. trade restrictions, (2) PACCAR’s ability to implement and sustain price increases across its truck and parts businesses, and (3) signs of stabilization or improvement in truck demand—particularly in the North American and European markets. Progress on connected vehicle initiatives and capacity expansions will also be important factors shaping the company’s longer-term outlook.
PACCAR currently trades at $93.51, up from $92.06 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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