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CTW.1122. PACCAR

Medium- and heavy-duty trucks are vital to the global economy, but they threaten the global climate: They account for 25% of all automobile-based CO2 emissions, even though they make up just 10% of the vehicles on the road. Paccar, which owns top-selling heavy truck brands including Peterbilt, Kenworth, and DAF, is doing its part to green the trucking fleet. Paccar’s first EVs hit the market in 2021, and it now sells a total of seven battery-electric models worldwide. Semis in general cost anywhere from $100,000 to over $500,000, and Paccar estimates it will deliver hundreds of electric trucks this year; the company, based in Bellevue, Wash., expects more than half of its production to be zero-emissions vehicles by 2035. Paccar’s brands have also been refuting the stereotype that electric haulers can’t tackle steep hills: Earlier this year, the DAF CF Electric truck became the first battery-electric heavy truck to tame Austria’s highest mountain pass, on the Grossglockner High Alpine Road.

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F500-2021-159-Paccar

Paccar is a light-, medium-, and heavy-duty truck manufacturer that also provides technical and financial services support for its products.

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This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-497-Paccar

The company manufactures light, medium, and heavy duty trucks under the brand names Peterbilt, Kenworth, and DAF.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-118-Paccar

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

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This year's Fortune 500 marks the 63rd running of the list.

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This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Paccar (PCAR): Company Profile, Stock Price, News, Rankings

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Paccar

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Good morning, welcome to PACCAR's first quarter 2026 earnings conference call. All lines will be in a listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has an objection, they should disconnect at this time. I would now like to introduce Mr. Ken Hastings, PACCAR's Director of Investor Relations. Mr. Hastings, please go ahead.

Good morning and welcome everyone. My name is Ken Hastings, PACCAR's Director of Investor Relations, and joining me this morning are Preston Feight, Chief Executive Officer, Kevin Baney, President, and Brice Poplawski, Senior Vice President and Chief Financial Officer. As with prior conference calls, we ask that any members of the media on the line participate in a listen only mode. Certain information presented today will be forward-looking and involve risks and uncertainties that may affect expected results. For additional information, please see our SEC filings at the investor relations page of PACCAR. I would now like to introduce Preston Feight.

Hey, thanks Ken. Good morning everyone. In the first quarter, PACCAR's outstanding employees did an excellent job providing our customers with the highest quality trucks and transportation solutions in the industry. I really appreciate their hard work, their high performance and dedication as we increase build rates in our factories all around the world. PACCAR achieved revenues of $6.8 billion and net income of $605 million in the first quarter. These results were generated by strong PACCAR Parts and Financial Services results, as well as solid growth in the truck businesses. PACCAR Parts achieved quarterly revenues of $1.7 billion and quarterly pre-tax income of $402 million. PACCAR Financial had a strong quarter, achieving pre-tax income of $116 million.

Looking at this year's U.S. and Canadian truck market, we estimate it to be in a range of 230,000-270,000 units. The market is strengthening as driver and fleet capacity becomes limited and customers begin to realize higher freight rates. This is somewhat moderated by fuel and other operating cost volatility. In the first quarter, Kenworth launched a new C580 heavy-duty vocational truck. This large multi-axle model was introduced at the CONEXPO trade show and is a unique super heavy-duty truck used in severe service applications around the world. We project the 2026 European above 16 ton market size to be in a range of 280,000-320,000. DAF's premium aerodynamic trucks provide customers with the latest technology and best operating efficiency.

As mentioned on the January earnings call, the DAF XF and XD electric vehicles won the International Truck of the Year 2026 honor. In the first quarter, DAF extended its EV leadership by introducing new flagship XG and XG+ Electric vehicles. In addition, the XF Electric earned another award, the 2026 Eco-Friendly Truck of the Year in Spain. This year's South American above 16 ton market, where DAF trucks are desired by customers for their durability and advanced technology, is expected to be in a range of 100,000-110,000 vehicles. In the first quarter, PACCAR delivered 33,100 trucks, and in the second quarter will deliver an estimated 37,000-38,000 vehicles. PACCAR's truck, parts and other gross margins increased from 12%-13.1% in the first quarter due to improved truck segment performance.

Second quarter margins are forecast to expand to around 13.5% as global production volumes increase. We anticipate continued performance improvements in the second half of the year as our customers benefit from our local for local manufacturing strategy, experience better operating conditions and purchase trucks in front of the coming 2027's emissions change. PACCAR's exceptional range of trucks, compelling parts business, industry-leading financial services and advanced technology strategy position the company well for an excellent future. Kevin will now provide an update on PACCAR Parts, financial services and other business highlights. Kevin?

Thanks, Preston. PACCAR Parts achieved first quarter revenues of $1.7 billion and profits of $402 million. Gross margins were 29.6%. We estimate parts sales to grow by about 3% in the second quarter and be in the range of 3%-6% for the full year. PACCAR Parts has 21 parts distribution centers worldwide and has plans to expand its global distribution network in TRP stores. As mentioned in our recent Analyst Day, we continue to see great opportunities for broad-based parts growth and look forward to realizing that opportunity in partnership with our outstanding dealer network. PACCAR Financial Services pre-tax income was a robust $116 million. The continued strong performance is a result of solid asset growth, improving margins and a used truck market that is beginning to strengthen.

This year, we're planning capital investments in the range of $725 million-$775 million and R&D expenses in the range of $450 million-$500 million as we continue to invest in key technology and innovation projects. These include advanced flexible manufacturing technologies, next generation powertrains, PACCAR's autonomous vehicle platform, and integrated connected vehicle services. We are excited for the growth PACCAR will experience in the coming quarters and years. We are now pleased to answer your questions.

We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Feniger of Bank of America. Your line is open. Please go ahead.

Thanks, everyone. Just on the parts guidance, maybe you guys can just unpack what did you see in the quarter? It feels like a slower start. I'd love if we could just start there of what you're seeing in the parts side, how we're looking so far through Q2, and how we should think about that in the back half with orders starting to pick up and be better than expected.

Yeah, Michael, this is Kevin. I'll start with the parts side. With fleet consolidations and the higher fuel prices that's impacted, let's say, operating cost volatility, that's resulted in the parts market remaining soft. As customers start to get healthy, we'll talk a little bit more about the truck market side. As customers start to get healthy, we'll see the parts market get healthier with that as well. Just for the full year guidance for the 3%-6%, we see that accelerating through the rest of the year.

Just on my last question, just on the gross margin, 13.5%, the pickup versus 13.1% in Q1, should we still think that gross margins sequentially walk up through the year as build rates recover? Is there a pricing expectation that that could also get better as well, given your comments that the used markets continue to strengthen? Just kind of curious how we should think about as you build through the year and what number we might be exiting the year as we're starting to see some strength in freight rates, even excluding fuel right now. Thank you.

Hey, Michael. Thanks for the question. This is Preston. It's good to talk to you. You know, I think you talked about a few things in there that we're seeing, is we do see the increasing volumes. I'm really pleased with how the factories have been able to, again, create this local for local manufacturing capability in America. We see the volumes increasing, as we said, to 37,000-38,000 in the second quarter. That's on the basis of build rates that we've already put in place. Teams have done a really good job of that, and we see some of that margin growth coming from that volume. You know, partially offset a little bit by the price of energy, steel, aluminum, other raw material pricing in there, so there is that. I'm not quite sure customers have seen the full effect of tariffs yet.

We feel really good about the cadence throughout the year as the market and our customers get healthy, and we see accelerating sequentially.

Okay, Miriam, let's go to the next question.

Your next question comes from the line of Jerry Revich of Wells Fargo. Your line is open. Please go ahead.

Hi. I'm wondering if we could just talk about the really strong profit per truck that you folks delivered in the quarter. With lower parts contribution, you folks still exceeded the guidance ranges. It looks like, you know, your profit per truck was up to about $5,300 from $2,900 last quarter. Can we just unpack that, how much of that was better cost execution versus makes and any other moving pieces as we think about the profile heading into the rest of the year?

Jerry, thanks for the comments. I appreciate them. They're nice and well stated. We did have price cost advantage in the quarter sequentially. We saw ourselves up, you know, over 1% in price cost, which is good. I think the teams are doing a really good job of focusing on the market we're in, so being price careful to see if we can make sure that we get our percentage of the market. In fact, we saw that in terms of our percentage of market build. In the first quarter, we built 31.8% of the market, which is very favorable and a good position to be in. We're balancing that growth with price cost favorability.

Super. As we look at the backlog, how much more favorable is price cost based on what's in backlog versus what we saw in the first quarter?

We think we'll have favorability, as we look forward into the second quarter. We're looking at our volumes going up appreciably. We're really full through the second quarter, and we have good visibility into the third and the fourth quarter.

Okay. Super. Just one last one just to calibrate expectations around orders over the balance of the year. We're hearing that there's just limited number of build slots available that might hamper orders over the next couple of quarters versus underlying demand. Is that the case for your business? You know, what proportion of your slots are already spoken for for the next three quarters?

Yeah, like I said, we're full on Q2. We're majority full in Q3, Q4. Not sure I recognize the commentary about people not having slots. That sounds more like a marketing scheme.

Your next question comes from the line of Tami Zakaria of JPMorgan. Your line is open. Please go ahead.

Hey. Good morning. Thank you so much. My first question is on the simplified metal tariffs that went into effect in early April. Does that change your view on what would be the tariff impact, especially for aftermarket parts, versus the last time you spoke, or is it basically does it not change the tariff headwind that you expected?

Hey, Tami. It's good to hear from you. It doesn't really have a lot of impact for us because of the truck-specific Section 232 has specific offsets, and it applies mostly to those materials. There's some moderate impact, but not significant.

Understood. Understood. That's helpful. Just following up on what Jerry was asking, maybe I wanted to ask it in a different way. Based on third-party data, orders have been very strong year to date. You kept your U.S.-Canada outlook unchanged. Does this outlook include the year to date strength in orders? Meaning do you expect orders to moderate as we go through the year and as we get close to the NOx timeline, or is your view shaped by supply chain rather than demand?

I think our view is shaped by the fact that the first quarter really didn't have a high cadence to it. If the first quarter ran at something around or a little under 200,000, then in order for it to come to the midpoint at 250,000, there's gonna have to be already a rapid acceleration. We have a great supply base, but they also need to be able to spin up their operations. The rate of increase quarter-over-quarter is where it probably informs the total market size.

Your next question comes from the line of Rob Wertheimer of Melius. Your line is open. Please go ahead.

Thanks. Is there any visible impact of the war in the Middle East on confidence or demand or orders in Europe?

You know, what we've seen is I think those are really good words you used, confidence and demand, Rob. I would say that confidence, yeah, I think people are paying attention to and trying to discern what it might mean in the general economy, of course. I would say from a demand standpoint, we've seen less impact. We've seen continued good order intake throughout the last couple of months, so less of a show there.

Perfect. Thank you. If I could just ask, I mean, I think we chatted about this once, but the rise of electric trucks in China has been very sharp and maybe for geopolitical reasons. Could you talk about your own experience, and do you see strong demand from customers? Is there a crossover on total cost of ownership yet on some, you know, size classes, models, whatever, and, you know, how do you see that shape at present? Thank you. I'll stop there.

Yeah. Well, Kevin, why don't you share some thoughts?

Rob, you mentioned Europe, you know, the geopolitical has had an impact on the fuel prices and the cost of diesel is a bigger percent of the operating cost for customers in Europe. There's been a lot more discussion about battery electric trucks in Europe, and as we said, you know, DAF just won International Truck of the Year with the DAF XF and XD Electric. They just expanded their product range, in a really good position to address, you know, the growing customer questions and demand about battery electric trucks in Europe, and we're well-positioned against the competition. We've had a lot of competitors over time, I think we're really well-positioned with a great product line.

I would say, Kevin and I had a chance to drive that XD Truck of the Year. It's amazing. It's just a really wonderful truck to be in. It's gonna be great for our customers, and it just launched in the recent months. If you look at the U.S. market, it might inform a little bit differently. I think without subsidies, then doing widespread adoption is probably less likely. There can be markets where it makes sense. Certainly in urban environments, there could be places where EVs make sense. We just launched a couple new medium-duty models for Kenworth and Peterbilt. We have those regional delivery EVs, which is where the market makes the most sense in America.

Your next question comes from the line of David Raso of Evercore ISI. Your line is open. Please go ahead.

Hi. Thank you. The question relates to trying to understand your operating leverage in the truck business particularly. It looks like you can back into the gross margin for truck. Must have been around, you know, 6.9%, something like that in the first quarter. Sequentially, the truck revenues went up $11 million, but your gross profit went up $73 million. I am just making sure we understand, was there anything in the first quarter about, you know, reversal of old tariffs that you could take the benefit with IEEPA gone? I know we already had Section 232 already in, just making sure that's a clean. You know, that kind of strength in gross profit growth on only $11 million of revenue.

I mean, I appreciate U.S.-Canada as a percentage of the shipments was a lot bigger this quarter than last quarter, so maybe that's part of it. Can you walk us through that gross margin improvement in truck on really no revenue increase?

Yeah. David, you always do such a good job with your numbers, and you continue to do that, is you kind of get it right, is that we had somewhere above 7% for our truck margin. That came largely because the teams did a really good job selling these best-in-class products. The leverage we got off of the volume helped us as well. The price-cost advantages contributed to that. Brice, anything you'd add to that?

Yeah. We also had, I'll call it favorable product mix, selling more of the Kenworth and Peterbilt brand at the year-end. They're more in lower because of the holiday shutdown season. Of course, DAF at the end of the year usually has a few units that they're getting done on their fleets that they hold in inventory. A little bit of a favorable mix effect on where we're selling the trucks as well helped us.

We didn't record any increase for IEEPA, related to IEEPA. Summary of all that, David, to you, is very clean quarter. Nothing to put or take out of it.

Yeah. That then begs the question for the next quarter where your truck revenue could be up, you know, call it $600 million. You know, rough numbers. You would think then the gross margin impact would be a little more significant than going up only 40 basis points at the company level. I apologize, I think maybe earlier you mentioned parts gross margins for 2Q. I don't think you called that anything particularly negative for, but maybe I didn't hear it correctly. Again, I'm just trying to understand that impressive performance 4Q to 1Q, but then 1Q to 2Q seems a lot more muted despite this is the quarter you get a bigger revenue move.

Let's see what the quarter is. We kind of gave you the 13.5% as our midpoint guidance for our margin look. We do see the volume being a good thing. I did mention earlier in the call, right, that our build percentage has increased in the market in North America, so we're at 31.8% of a build percentage. I also see that pricing remains competitive as our customers are just beginning to experience acceleration in their end markets. There's a competitive price point out there in the market that's contributing also. Those are kind of the key factors that inform the second quarter.

Yeah. David, one other comment probably worth making. We guided 3% growth in parts. Obviously, the truck volume would be much greater than 3% going up by 7,000 trucks, 6,000-7,000 trucks. You have a negative, if you wanna call it, price mix effect that also dampens the total margin percent.

No, I appreciate that. Okay, thank you so much.

Your next question comes from the line of Chad Dillard of Bernstein. Your line is open. Please go ahead.

As you think about the pre-buy, likely to hit later this year, what are your plans for the number of shifts or build slots? Maybe you can compare it to, like, where you are today or on a year-on-year basis. I guess, like, what I'm trying to get at is, like, how quickly could you ramp that up versus where you are today if you got a little bit more visibility into, you know, the durability of demand?

You know, we have great operations teams. I think they've demonstrated that not just in the past year, but over the decades, and they continue to be able to move up quickly. I think it's more about what the supply base and order board and how quick they have visibility to it. It's about a hiring cadence across the industry that will probably inform how quick it can go up. I feel very confident in our team's ability to add the people and the capacity we need to support the market in any market size.

Got it. Can you talk about how industry pricing behavior has changed versus the start of the year? Are some of the non-domestic producers starting to price for tariffs?

Well, I think you'd have to ask them the question of how they're thinking about their pricing scheme. They're better informed on that than we are. We do see a competitive market out there right now. We do see the fact that our customers, as I said, are just starting to see improvement. Raw material pricing is high, so there is still those things that are putting into it. I think we're at the beginning of what feels like an acceleration, considering that the first quarter build was just a 200,000, just under 200,000, and last year was low. If you think about the average market being 267,000 units, there's gonna be some replacement demand and there's gonna be some strengthening financial performance, and those are both gonna be good for us in the near and midterm for the business.

Your next question comes from the line of Steve Volkmann of Jefferies. Your line is open. Please go ahead.

Steve, we are not able to hear you. I wonder if you're on mute.

Yes, I was. I'm just figuring out this phone thing after a few decades of use. Sorry about that. I'll start again. You guys are good at managing supply chains, probably the best at that. We have a big ramp, I guess, in the second half this year. We're starting to hear some early signs that there might be some constraints in things like memory chips and sometimes some people are even worried about aluminum supply. I'm just curious if there's anything on your radar that you're watching that could actually constrain us in this kind of second half build that we're all expecting.

Yeah, great question, Steve. Thanks for jumping back in and taking the time with it. I think that the thing that informs right now in supply chain is really how much energy-related exposure people have to the supply of materials and what that might do to their cost is one factor. The second, as I said previously, is the hiring cadence of people and getting them trained up to speed in a sustainable manner for our suppliers to be ready for the ramp up and build.

Got it. Okay, so nothing specific yet, standing out. Maybe, can you just comment, Preston, about the mix that you're seeing relative to vocational versus over the road, I guess maybe in terms of how the second half is gonna ramp up?

You know, it's been pretty uniform. We've seen over the road companies getting their recovery now with spot rates up double-digit, maybe even up to 20%. We've seen contract rates improving, that's helping our truckload carriers. The vocational market continues to be solid as well as the LTL. We're seeing orders coming in from kind of all sides as people want to make sure that they have their fleet in the right spot for the year and next year.

Your next question comes from the line of Kyle Menges of Citigroup. Your line is open. Please go ahead.

Thank you. I just wanted to go back to some of the comments you made on gross margin and it sounds like you're expecting improvement really quarter-over-quarter as we move throughout the rest of the year. Just I understand volume's a big piece of that, but how are you thinking about pricing momentum, you know, and what are you seeing as we get to the second quarter and into the second half? How are you thinking about price cost as well for the rest of the year?

Yeah. Well, I think the year is a long way, is what we typically think about for this discussion is really the next quarter, and I would say that we expect to have a price cost favorability in the quarter. I think how that gets informed is, again, based upon what the market asks for and how raw material pricing finishes up for us. We'll see. We'll watch carefully how that raw material pricing moves through the year. Obviously, there's some volatility in the market in general, and that'll have a consequence, but we do expect to see favorability throughout the year.

Helpful. We are getting pretty close now to the new EPA mandate. Just curious how the new engine's performing out in the market and if you guys think that it'll be ready in time. Thank you.

Yeah, Kyle, thanks for that question. I think, you know, PACCAR's team does a great job of having the right engines for our customers, and we are really pleased with the engine development programs that are ongoing right now, both for us, and we're watching how it's going with Cummins. Obviously, he was a great partner for us. We look forward to seeing how the implementation rolls through for everyone. I feel great confidence in our teams and what we'll deliver.

Your next question comes from the line of Jamie Cook of Truist Securities. Your line is open. Please go ahead.

Hi. Good morning. Congratulations on a nice quarter. I guess my first question, you know, Preston, if you could talk to as we think, you know, through the second half of the year and I guess throughout the cycle, what the setup for PACCAR is in terms of incremental margins. I mean, last cycle you delivered above average incremental margins with a lot of the new product launches that came into the market. This cycle we have, you know, the Section 232 benefit, you know, market share opportunity. I'm just wondering how you'll balance the two. Should we think of the normalized incremental margins of like 15%-20% or above that?

I guess my second question, can you just talk to sort of, you know, channel inventory where PACCAR is sitting versus its peers and whether its peers have made, you know, any progress on destocking some of the, you know, inflated inventory in the channel? Thank you.

Let's start with your inventory question, Jamie. I think if you look at our inventory, we feel like it's in very good shape. It's kind of around just under three months, two point eight months, and that compares to two point two months back in December. We've been able to get at least a little bit of inventory back into the market, which feels healthy. I think the industry overall has a higher percentage of inventory, I think over four months, that's kind of the lay of the land from an inventory standpoint. PACCAR feels like we're in really good shape there. Dealers have been able to get a few trucks on the lot and get ready to go. Obviously, inventory for us is affected by our higher percent vocational share, people getting bodies put on trucks as an influencing factor there.

If you just think back to your first question was on margin and how we see that developing. We see margin being favorable, and we see that our build percentage at 31.8% in the first quarter is good for our performance and good for our customers to be able to get trucks for us. Being full in the second quarter means that we feel good about the position we're in.

Your next question comes from the line of Steven Fisher of UBS. Your line is open. Please go ahead.

Thanks. Good morning. I just wanted to clarify your answer on the parts acceleration that you expect in the second half. You mentioned about clients just starting to get healthier, but I think you also mentioned about fuel having an impact in Q1. I was hoping you could just give us a little more color on what you're expecting that's going to drive the acceleration. Do you still need to see freight rates continue to rise? Do you need to see fuel costs falling? Is it just more about getting more trucks on the road? Do you need freight shipments to be picking up? Just curious kind of what will drive that acceleration.

Yeah, you said a lot there, it's a little bit of all of that, right? As, you know, we see the increase of the truck orders, as more trucks are on the road and we see our customers' business improve, we see that on the parts side. I mentioned earlier the increased fuel and the operating cost volatility because customers still focus on required maintenance. They have delayed their optional parts purchases. We see, you know, both the volume as well as the mix improving, that leads to the acceleration through the year. We see as the truck market improves, we see the parts market follow that.

Okay. That's very helpful. Then I guess to what extent have you had any discussions with your customers about the first part of 2027 planning? Really just trying to make sure I understand how you're characterizing the expected pickup in the second half of this year, whether it's really a, kind of a pre-buy or just a buy. Yeah, I know it's maybe a little bit early to talk about 2027, but I guess a pre-buy implies a pull forward. I guess, and it seems like it could be a relevant part of the discussion right now. Just curious how you would frame that.

I like the way you frame it, Steve. I think that pre-buy versus buy, I think there's a little bit of both going on, honestly. I think that there's some buy going on because of the demand that the customers are getting healthy and want their fleet age to come back to where they want it. That's a bit of the buy side. I think on the pre-buy side, obviously, there's a cost impact to a 35 milligram engine, and I think they're sensitive to that. I think there's some of the people that are looking at putting orders in front of it. Both of those are influencing the year. Looking into 2027, I think we'll see how the year fills out and what the full year retail looks like and build looks like, and that'll probably give some information about what 2027 will look like.

Yeah, just to add is, you know, the combo of the buy versus pre-buy is the second half of the year is pretty well balanced in terms of the fill between the third and fourth quarter. If it was more weighted to a pre-buy, we'd see that demand towards the higher in the end of the year. We see a really nice balance in both third and fourth quarter.

Your next question comes from the line of Angel Castillo of Morgan Stanley. Your line is open. Please go ahead.

Hi, good morning, and thanks for taking my question. Maybe I've missed this, wanted to go back to the EPA dynamic, I guess. Has EPA actually formalized the low-NOx emissions rule that it communicated, I guess, back at the end of last year? Does that have any bearing on the ability of the industry to ultimately launch and move forward with these engines that meet the kind of latest low-NOx standard? Likewise, I guess, any implications on the customer's ability, I guess, to move forward with any, you know, orders or potential pre-buy? Just curious if that's where we're at on that, and if we don't have any formalized kind of releases there. I guess if you have any insights as to when we might be able to get that.

I think the formalized release that they've made, Angel, is that it will be a 35 milligram standard come 2027. That's the law, and there's not any kind of modification expected to that in terms of it being a 35 milligram standard for new engines in 2027. The parameters around that, I think, are things that they will have to contemplate or are contemplating based on customer and market feedback.

Got it. I wanted to go back to maybe the margin discussion. Could you, I guess, just give us the shipments number that you or deliveries guidance you provided for 2Q? Could you give that by region, specifically how much you expect U.S. and Canada versus Europe? If we could kind of revisit the 13.5% gross profit margins. I get you mentioned, I think, a little bit more uplift from trucks maybe is a little bit of a mix drag on the overall and why you don't see that kind of incremental step change in 2Q versus 1Q. I guess it wasn't entirely clear to me if there's any other drags beyond that keep it from being more of a material step change, quarter-over-quarter just given the seasonality.

Yeah. Just take the question in saying that we expect in Q2 volumes are up around the world, pretty much in every market. We've had build rate increases everywhere, that's what's driving the total increase in volume. I think we've kind of spent quite a bit of time already describing that 13.5% being volume-based improvement as well as slight price cost with still pressure on pricing in the market as tariffs maybe haven't been fully rolled through. Yet also PACCAR performing really well in terms of getting share of build up.

Paccar (PCAR) Q1 2026 Earnings Call Transcript

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