PACCAR
PCAR · NasdaqTruck and parts profit grew far faster than sales
Truck, Parts and Other pretax income rose to $858.9M from $526.6M on revenue up 19.0%, so price and lower costs, not volume alone, drove the quarter.
Q3 FY2026, the quarter to Sep 30, 2026 · 10-Q filed Oct 28, 2026
- Operating margin
- —
- Net income
- $847.5M
- Free cash flow, quarter
- $710.9M
Largest source of revenue: Truck, Parts and Other, 93.0% of the total.
Where PACCAR's money goes
- 01
Truck and parts profit grew far faster than sales
Truck, Parts and Other pretax income rose to $858.9M from $526.6M on revenue up 19.0%, so price and lower costs, not volume alone, drove the quarter.
Why it matters
Truck, Parts and Other earned $858.9M before tax against $526.6M a year earlier. Company revenue rose 19.0% to $7.94B, and new truck deliveries rose to 40,100 from 31,900. Pretax income was 13.6% of revenue against 11.1%, and net margin was 10.7% against 8.8%.1
The filing says Truck segment income rose "primarily due to higher price realization and lower tariff costs". Overheads helped: selling, general and administrative expense was $167.8M against $180.2M, 2.1% of revenue against 2.7%, and research and development was $108.9M against $111.0M while volume rose.1
AnalysisAnalysis: this is operating leverage. Factory, engineering and selling costs are largely fixed in the short run, so each extra truck delivered at a higher price adds more to profit than to revenue. The same leverage works in reverse when deliveries fall.
A gross margin of 20.5% computed on total revenue overstates the manufacturing margin, because total revenue includes Financial Services revenue whose costs sit outside cost of sales. Against Truck, Parts and Other revenue alone, cost of sales was 85.5%.1
- 03
Cash flow only matched profit as build rates rose
Operating cash flow of $847.7M matched net income of $847.5M, against $1.53B on $590.0M a year earlier, which the filing ties to cash going into inventory and receivables.
Why it matters
Operating cash flow was $847.7M against net income of $847.5M. A year earlier it was $1.53B against $590.0M. Free cash flow was $710.9M, 52% of the year-earlier $1.36B, even though net income was higher. Capital spending of $136.8M took 16.1% of operating cash flow.1
For the nine months, the filing attributes lower operating cash to cash going into wholesale receivables on new trucks, inventory and trade receivables, partly offset by higher payables and accruals, as truck build rates rose. Earlier in 2026, operating cash was $971.8M against net income of $605.3M in the first quarter, and $700.8M against $752.0M in the second.1
AnalysisAnalysis: weaker cash conversion during a production ramp is a timing effect rather than a sign of weaker earnings, provided receivables are collected and inventory turns. If build rates keep climbing, operating cash would keep trailing profit; if deliveries settle, the cash tied up would come back.
- 04
The finance arm earns 12.8% of profit on 7.0% of revenue
Financial Services earned $138.1M before tax on $558.9M of revenue, more than a year earlier even as revenue slipped 1.1%, helped by lower borrowing costs.
Why it matters
Financial Services brought in $558.9M, 7.0% of company revenue, and earned $138.1M before tax: 12.8% of total pretax income of $1.08B and 24.7% of its own revenue. A year earlier it earned $126.2M.1
Interest and other borrowing expenses fell to $181.5M from $201.0M, and were 32.5% of segment revenue. The filing cites "a higher lease margin and a lower provision for losses, partially offset by a lower finance margin", and puts the small revenue decline mainly on a smaller dealer wholesale book.1
The arm financed 27.2% of new PACCAR truck sales in the quarter, against 27.1% a year earlier, and the share of retail loan and lease accounts past due was 1.9% against 2.1%.1
AnalysisAnalysis: a captive lender lets PACCAR close truck sales and keep dealers stocked, then earns a spread on top. The cost is that credit risk and used truck values sit on its own balance sheet.
Sources
- 1.PACCAR 10-Q for the period to 2026-09-30 (the filing), Oct 28, 2026, read Nov 2, 2026
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Growth, profit and margin
Revenue went from $15.0B in FY2008 to $28.4B in FY2025, over 17 years.
- Revenue$28.4B
- Operating income—
- Operating margin—
- Period
- Q3 FY2026
- Revenue
- $7.9B
- Operating income
- —
- Operating margin
- —
- Net income
- $847.5M
- Free cash flow
- $710.9M
Does the profit turn into cash?
Q3 FY2026: free cash flow of $710.9M against net income of $847.5M in the quarter.
- Operating cash flow$4.4B
- Capital expenditure$743.0M
- Free cash flow$3.7B
- Net income$2.4B
Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.
Financial data and sources
How the revenue mix has shifted
Each breakdown the filing reports, as shares of revenue, for every period it restates.
Consolidated Statements of Comprehensive Income (Unaudited). The filing restates this breakdown for 1 period.
Click a member to isolate it across the years shown.
The figures
Margins, cash and growth for the period, each with what it was computed from.
Not reported, or not derivable
- operating margin: no operating income line is reported
Where revenue comes from
Every breakdown the filing reports for the period, with each item's share.
Revenue streams
| Truck, Parts and Other | $7.4B | 93.0% |
| Financial Services | $558.9M | 7.0% |
Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-10-28
ConsolidationItems
| Operating Segments | $8.1B | 101.5% |
| Intersegment | -$119.7M | -1.5% |
Source10-Q, us-gaap:Revenues, as reported in the 10-Q filed 2026-10-28
What it costs
The cost lines beneath operating income, each as a share of revenue, then the operating result.
The filing's cost lines could not be read beneath operating income.
Operating figures the company states
From the text of the filing rather than its statements, each with the sentence that states it.
View source
DAF Brasil market share for the first nine months of 2026 was 7.6% compared to 9.1% in the same period of 2025.
View source
DAF over 16-tonne market share was 13.4% in the first nine months of 2026 compared to 13.6% in the same period of 2025.
View source
Total units 40,100 31,900
View source
In the third quarter of 2026, PFS finance market share of new PACCAR truck sales increased to 27.2% from 27.1% in the same period of 2025.
View source
Accounts 30+ days past due was 1.9% at September 30, 2026, a decrease compared to 2.4% at December 31, 2025 and 2.1% at September 30, 2025.
View source
The Company's heavy-duty truck retail market share was 29.3% in the first nine months of 2026 compared to 30.3% in the first nine months of 2025.
View source
The Company's medium-duty market share was 12.5% in the first nine months of 2026 compared to 14.2% in the first nine months of 2025.
The statements, as filed
The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.
Income statement35 lines, as presented in the 10-Q
Cash flow statement1 lines, as presented in the 10-Q
Year to date, as a quarterly filing reports it.
| Line | Q3 FY2026 | A year earlier | Change | Source |
|---|---|---|---|---|
| Statement of Cash Flows | ||||
| Cash and cash equivalents at end of period | $6.15B | $6.30B | -2.4% | Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations, as reported in the 10-Q filed 2026-10-28 |
Balance sheet31 lines, as presented in the 10-Q
About this data
- Source
- PACCAR 10-Q, accession 0001193125-26-436124, filed Oct 28, 2026, read on Nov 2, 2026.
- History
- From the SEC's XBRL company facts, the value from the latest filing that stated each period.
- Reading
- Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
- Version
- methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
What holds PACCAR's model up, and what could bend it
Competitive edge
Every truck delivered seeds years of parts sales
Parts sell through the same dealers as trucks and follow each delivery for years, so the quarter's 40,100 deliveries widen the base that buys parts later.
The detail
The filing states: "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." Both segments sell "through the same network of independent dealers".1
PACCAR charges part of the Truck segment's factory overhead, engineering, research and selling costs to Parts to reflect that benefit, so the Parts result already carries a share of the cost of building the base of trucks on the road.1
AnalysisAnalysis: parts demand rests on trucks already in service rather than on this year's orders, so it tends to hold up when new truck sales fall. The filing's own outlook expects parts sales to grow in both 2026 and 2027, depending on economic conditions.
Profitable and cash-generative through the last downturn
In FY2020, as revenue fell to $18.73B from $25.60B, PACCAR still earned $1.30B, a 6.9% net margin, and produced $2.44B of free cash flow.
The detail
Revenue fell to $18.73B in FY2020 from $25.60B in FY2019. Net income was $1.30B, 6.9% of revenue, and operating cash flow was $2.99B, well above net income. Free cash flow was positive in every year from FY2018 to FY2025, the lowest being $1.63B in FY2021.1
Investment income on the company's cash and securities added $84.0M this quarter, 7.8% of pretax income.1
AnalysisAnalysis: cash moves against the truck cycle. When builds slow, inventory and receivables shrink and release cash, which lets the company keep funding research, capital spending and dividends through weak years. This quarter shows the mirror image, with the ramp absorbing cash.
What to watch
Part of the margin gain was tariff relief
The filing credits lower tariff costs and recovered payments after the IEEPA ruling for part of the truck gain, and recovered amounts are not a recurring benefit.
The detail
In February 2026 the Supreme Court invalidated tariffs imposed under IEEPA, a decision the filing says "resulted in tariff relief and recovery of certain amounts previously paid." Truck income rose "primarily due to higher price realization and lower tariff costs". The filing adds that local production for the United States, Canada and Mexico minimizes tariff exposure.1
The outlook warns that results "could be impacted by further changes in tariff policy, geopolitical uncertainty, emissions regulations and improving freight fundamentals".1
AnalysisAnalysis: the filing does not split the quarter's gain between pricing and tariff relief. Recovered payments are a one-time benefit, so the part of the 13.6% pretax return that rests on them is unlikely to repeat, while pricing that holds would.
Fewer past dues, but more loans modified for hardship
Past dues fell to 1.9% from 2.1%, yet the filing shows more contracts modified for customers in financial difficulty, and higher charge-offs in Brasil.
The detail
Retail loan and lease accounts past due were 1.9% against 2.1% a year earlier. The filing also reports more credit modifications for customers in financial difficulty in the U.S., Australia and Mexico "due to softer market conditions, including the higher cost of fuel", and shows past dues in Mexico, Australia, Brasil and other markets would have been higher without modifications.1
The filing states: "If freight transportation conditions decline due to a weaker economy, then past due accounts, truck repossessions and credit losses would likely increase from the current levels". It ties higher net charge-offs in Brasil to "higher interest rates and slowing freight activities".1
AnalysisAnalysis: a modified account generally counts as current, so the past-due rate alone understates strain. The finance arm's 12.8% share of pretax income depends on the freight recovery reaching the fleets and owner-operators now on modified terms.
A pending emissions rule could reshape order timing
The EPA's proposal keeps the coming NOx limits with revised warranty and useful-life terms, and a final decision is expected in the fourth quarter of 2026.
The detail
The EPA's July 2026 proposed rule reaffirms the coming NOx emissions limits, with revisions to extended warranty periods, useful-life requirements and other provisions, intended to ensure technology readiness and mitigate compliance costs. The filing expects a final decision in the fourth quarter of 2026.1
AnalysisAnalysis: truck buyers can bring purchases forward ahead of a costlier standard and pause after it. The rule's final cost and timing could shape deliveries well beyond the quarter it takes effect, and with them the volume behind the current margin.
The company says it continues to invest in "next generation clean diesel, hybrid and battery-electric powertrains" and in its U.S.-based battery joint venture, Amplify Cell Technologies.1
Sources
- 1.PACCAR 10-Q for the period to 2026-09-30 (the filing), Oct 28, 2026, read Nov 2, 2026
PACCAR, further in
Member research, then your own questions on ChatGPT.
What could change the outlook
What PACCAR's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.
- What PACCAR's margin rests on once tariff relief fades
How much of the quarter's margin is pricing that can hold, what the share losses cost, and which reported figures would show the difference first.
- When the cash tied up in the production ramp comes back
How build rates, inventory and dealer financing move cash against profit through the truck cycle, and what to watch in the quarters after a ramp.
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Have a question about PACCAR?
Explore its profit drivers, competitive edge, risks, or your own investment and business questions with CXProWealth on ChatGPT.
- How much of PACCAR's higher truck margin this quarter came from pricing, and how much from tariff relief that may not repeat?
- Why did PACCAR's operating cash flow only match net income this quarter, and what would bring the cash tied up in the ramp back?
- How would a freight slowdown affect PACCAR Financial Services' past dues and its share of PACCAR's pretax profit?
Business Lens describes PACCAR from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.