July 2021 Page 1 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 and uncertainties is described in more detail in our periodic reports filed with the Securities and Exchange Commission (SEC).
We undertake no duty to update or revise this presentation, whether as a result of new information, future events or otherwise. For the most recent financial, risk and other information about PACCAR, please see our SEC filings and most recent earnings release available on the Investor Relations page of www.paccar.com.
July 2021 Page 2 PACCAR A Global Technology Company in Commercial Vehicles
2020 Revenues $18.7B 2020 Net Income $1.30B 2020 Avg Dividend Yield 2.5% 82 Years of Consecutive Profitability; Dividend Paid Every Year Since 1941
Truck and Other Aftermarket Parts $13.2B Revenues $3.9B Revenues Premium Quality Light, Medium and Distribute Aftermarket Parts through Global Heavy Commercial Vehicles, Diesel and Network of over 2,200 Dealerships Alternative Fuel Powertrains
Parts 21%
Truck and Other 71% Fin Svcs 8% Financial Services $1.6B Revenues Finance and leasing portfolio of 203,000 trucks and trailers, with assets of $15.80B
July 2021 Page 3 Our Culture
PACCAR is a company with a great culture and a bright 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 shareholders.
Conservative Highest Operational Long‐Term Quality Financial Integrity Excellence Perspective Management
July 2021 Page 4 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 Powertrain, PACCAR Parts, PACCAR Financial, and PACCAR Leasing.
July 2021 Page 5 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
July 2021 Page 6 New Kenworth T680
Kenworth’s next generation T680 heavy truck features an enhanced aerodynamic exterior design, excellent fuel economy, and driver optimized technology, including a customizable 15” digital dash display
July 2021 Page 7 New Peterbilt Model 579
Peterbilt’s new Model 579 Class 8 truck sets the standard for technology, fuel efficiency and driver comfort
July 2021 Page 8 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. Production will begin in third quarter.
July 2021 Page 9 New DAF XF, XG, XG+
DAF has launched its new line of trucks that meet the EU’s new masses and dimensions regulations. The new generation DAF XF, XG and XG+ represent a new range of long‐ distance trucks featuring a new aerodynamic design, class‐leading efficiency, safety and driver comfort. Production begins in October 2021.
July 2021 Page 10 The integrated PACCAR Powertrain is the most advanced heavy‐duty powertrain in the market. The PACCAR MX‐13 and MX‐11 engines are optimally integrated to the innovative PACCAR TX‐12 automated transmission and the efficient DX‐40 tandem drive axle to achieve exceptional performance and fuel economy.
The PACCAR MX‐13 engine offers 510 hp and 1,850 lb.‐ft. of torque and the PACCAR MX‐11 engine features 445 hp and 1,700 lb.‐ft. of torque. PACCAR engines undergo rigorous validation analysis including one‐million mile endurance testing and accelerated life component tests to ensure an efficient, long engine lifecycle.
In addition to the PACCAR DX‐40 tandem drive axle, Kenworth and Peterbilt offer the PACCAR FX‐20 steer axle. DAF trucks include a range of lightweight and durable PACCAR front and rear axles.
July 2021 Page 11 PACCAR Truck Production Over 1.5 Million Trucks Produced 2011 ‐ 2020
PACCAR produced 133,300 trucks in 2020
Units 198.8 (000s) 189.1 200 Brasil 154.7 158.9 142.9 Australia 138.0 140.4 137.1 140.9 133.3 Mexico 150 Canada US 100 Europe
50
0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
July 2021 Page 12 PACCAR Excellent Financial Performance Throughout the Business Cycle
$ Billions Revenues $ Billions • Reputation for superior operational 28 28 excellence and premium‐quality products 24 24 20 20 and services 16 16 12 12 8 8 • Long‐term growth in revenues and net 4 4 income reflect increased market share in 0 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 North America and Europe, excellent aftermarket parts performance and growth in financial services $ Billions Net Income $ Billions 2.5 2.5 2.0 2.0 • Maintain profitability throughout the 1.5 1.5 cycle due to strong cost control discipline 1.0 1.0 and experienced management team 0.5 0.5 0.0 0.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
July 2021 Page 13 Best‐in‐Class Operating Efficiency Commercial Vehicle Segment Operating Margin
• PACCAR’s operating margin has 12% 12% been at the top of the industry since 2012, reflecting the 9% 9% premium value of our products 6% 6% and our leadership in operating efficiency. 3% 3%
0% 0% • This is a testament to the outstanding performance of ‐3% ‐3% PACCAR’s employees. ‐6% ‐6%
‐9% ‐9% 11 12 13 14 15 16 17 18 19 20 PACCAR Volvo Daimler Traton Iveco Navistar
July 2021 Page 14 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 11 12 13 14 15 16 17 18 19 20 PACCAR Volvo Daimler Traton CNH Navistar
July 2021 Page 15 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% 11 12 13 14 15 16 17 18 19 20 PACCAR Volvo Daimler Traton CNH Navistar
July 2021 Page 16 Net Income per Truck
• Net income per truck is PACCAR’s Truck Units $/Truck net income divided by total truck (000s) unit sales. 200 14,000 175 12,250
• Truck sales not only generate profit 150 10,500 from the sale, but also parts and 125 8,750 finance profit. This illustrates the strength of PACCAR’s business 100 7,000 model, providing the highest 75 5,250 quality trucks, aftermarket support and financing. 50 3,500 25 1,750
• PACCAR achieved $9,700 net 0 0 income per truck in 2020. 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
Trucks Net Income per Truck
July 2021 Page 17 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 11% (as of 2Q21) • Share Buybacks − $500 Million authorized; $390 Million remaining as of 6/30/2021 • Strategic M&A − Disciplined valuation and screening process − Clear path to value creation • No Unfunded Pension Obligation
July 2021 Page 18 Dividends Declared and Stock Repurchases
$ Millions CAGR = 8% $ Millions 1,500 1,500
1,200 1,200
900 900
600 600
300 300
0 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Dividends Stock Repurchased
July 2021 Page 19 Excellent Dividend Yield
Average Dividend Yield = 3.5% • PACCAR’s dividend yield, 6% 6% reflects the total quarterly + annual dividends declared in 5% 5% the year, divided by the average stock price for the year 4% 4%
• PACCAR’s dividend yield has 3% 3% averaged 3.5% over the last ten years 2% 2%
1% 1%
0% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
July 2021 Page 20 Trucking Moves the Economy 74% 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 ‐ 74% of all the freight transported in 2020. 36.9 million commercial trucks, including Rail 3.9 million heavy‐duty trucks, move that 11% freight. The percentage of tonnage by mode is stable over time. Truck 74% Pipeline 10%
Water 5%
July 2021 Page 21 >6t Truck Market
>6t Global Truck Market 2000000 2015 – 2.4 Million China 2020 –3.1 Million 1,780 Europe Russia/CIS
1500000 320 270 60 85
1000000
750
500000 North America
0 385 310
Rest of Asia
265266 210 India Africa & South America Middle East 260 170 170 90
125 130
Australia
20 21 PACCAR Truck Assembly 2015 2020 Units in Thousands >16t Truck Market Size
Units (000s) Units (000s)
350 350
300 300 2021 Market Forecast Estimate
250 250 U.S. and Canada 260,000 – 280,000 200 200 Europe 270,000 – 290,000 150 150 S. America 110,000 – 120,000 100 100
50 50
0 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
US & Canada Europe South America
July 2021 Page 23 July 2021 Page 24 PACCAR Strategy
Quality Technology Innovation Brand Values
Premium Products and Services
Profitable Market Share Growth
Profitable Growth Profitable Geographic Expansion
July 2021 Page 25 PACCAR Investing Throughout the Business Cycle
Operating Cash Flow • Operating cash flow has averaged $2.8 billion for the last $ Billions $ Billions five years and has grown 9% annually over the last 20 3.0 3.0 2.5 2.5 years 2.0 2.0 • Strong operating cash flow enables PACCAR to invest in 1.5 1.5 growth throughout the business cycle 1.0 1.0 0.5 0.5 • PACCAR has invested $7.3 billion in capital projects, 0.0 0.0 innovative products and new technologies in the last 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 decade through 2020 • Key investments: Capital Investments and R&D Expenses − Next generation Kenworth and Peterbilt Class 8 trucks $ Millions $ Millions 1,200 1,200 − New Kenworth and Peterbilt Class 5‐7 trucks 1,000 1,000 − New generation DAF XF, XG and XG+ trucks 800 800 − Integrated powertrains including diesel, electric, hybrid and 600 600 hydrogen fuel cell technologies 400 400 200 200 − PACCAR MX‐13 and MX‐11 engine factory in North America 0 0 − DAF Brasil factory 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Capital R&D − PACCAR Parts distribution centers
July 2021 Page 26 Cumulative PACCAR MX Engines Produced
• The PACCAR MX‐13 is the flagship of PACCAR’s engine line‐ Cumulative PACCAR MX Engines Produced # of Engines # of Engines up with over 530,000 engines produced in Europe and (000s) (000s) over 240,000 engines installed in North America and a growing presence in South America and Australia. 900 900 • The PACCAR engine factory in Columbus, MS, celebrated 800 800 10 years of manufacturing excellence in 2020 700 700 • PACCAR expanded its engine program in 2013 with the 600 600 introduction of the PACCAR MX‐11 in Europe. The MX‐11 500 500 was launched in North America in January 2016. 400 400 300 300 200 200 100 100 0 0 11 12 13 14 15 16 17 18 19 20
DAF MX 13 KW/PB MX 13 MX 11 PACCAR MX‐13 PACCAR MX‐11 12.9 Liter 10.8 Liter
July 2021 Page 27 Zero Emission Trucks • Peterbilt, Kenworth and DAF began production of battery electric trucks in the second quarter of 2021 Peterbilt 220EV Peterbilt 579EV Peterbilt 520EV • PACCAR has received customer orders for over 450 zero emission vehicles • PACCAR customers have 60 BEV’s in operation Kenworth 270E Kenworth T680E DAF CF Electric July 2021 Page 28 PACCAR Partners with Romeo Power
• In April 2021, PACCAR announced a strategic partnership with Romeo Power for a five‐ year supply agreement for battery power systems • PACCAR will purchase Romeo Power’s battery packs and battery management software for heavy‐duty battery electric Peterbilt 579EV vehicles and Peterbilt 520EV refuse trucks in North America • Production of Peterbilt zero emissions trucks featuring Romeo Power’s battery pack is expected to launch in the second half of 2021 • PACCAR also became a minority shareholder as part of the strategic alliance
July 2021 Page 29 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 Faith Technologies and Schneider Electric to provide charging infrastructure solutions for customers who purchase Kenworth and Peterbilt electric trucks in the US and Canada.
July 2021 Page 30 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 autonomous vehicles’ enhanced safety and operational efficiency • Kenworth T680 and Peterbilt 579 trucks utilizing the Aurora Driver are expected to be delivered in the next several years Autonomous Peterbilt 579 Test Vehicle with Aurora Driver
July 2021 Page 31 Connected Services
Enhancing connected service for approximately 500,000 Kenworth, Peterbilt, and DAF trucks
July 2021 Page 32 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 trucks • PACCAR Innovation Center establishes strategic partnerships, such as the autonomous vehicle collaboration with Aurora • The Innovation Center truck lab is equipped with the tools needed to integrate emerging technologies
July 2021 Page 33 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 efficiency Digital Technology Center, Eindhoven, NL
Kenworth Embedded Engineering Center, Kirkland, WA Embedded Service Center, Pune, India
July 2021 Page 34 PACCAR Facility Investments
DAF Factory, Ponta Grossa, Brasil DAF New Body, Cab & Trim Facility, Westerlo, Belgium
PACCAR Engine Factories Kenworth New Cab Paint Facility, Chillicothe, OH PACCAR Parts Strategy
PACCAR Parts achieved $3.91 billion in sales in 2020. PACCAR Parts Sales $ Millions $ Millions PACCAR Parts has achieved a sales CAGR of 6% over CAGR = 6% 5,000 5,000 the last 15 years. 4,000 4,000 3,000 3,000 Long‐Term Growth Drivers: 2,000 2,000 • Growing population of Kenworth, Peterbilt and 1,000 1,000 DAF trucks due to geographic expansion and 0 0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 market share growth Engine Parts Sales Parts Sales • Growing population of PACCAR engines due to North America introduction in 2010 • Best‐in‐class Distribution Network − 18 parts distribution centers and 2,200+ dealer locations. Louisville PDC will be added in 2022. • Proprietary, PACCAR Genuine and TRP branded parts enhance margins • Growing network of TRP stores Louisville, KY, PDC to Open Early 2022
July 2021 Page 36 PACCAR Parts Distribution Centers and Dealers 18 PDCs in 11 Countries; 2,200+ Dealer Locations
PACCAR Distribution Centers Kenworth and Peterbilt Dealers DAF Dealers Kenworth/DAF Dealers PACCAR Global Dealer Network
• Independent dealer network of 2,200+ 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
July 2021 Page 38 Growth in Kenworth and Peterbilt Dealer Locations U.S. and Canada
Locations Locations
900 900 PACCAR MX‐13 Introduced in 2010
800 Dealer Investments of $1.9 Billion since 2010 800
70% Growth in Dealer Locations 700 700 Drives Long‐Term PACCAR Parts Growth 600 600
500 500
400 400 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
July 2021 Page 39 PACCAR Financial Services Strategy
• PACCAR Financial Services supports truck sales by Total Assets 6/30/21 = $15.6 Billion providing financing and leasing services to Australia, Mexico & Brasil $1.7 Billion PACCAR customers 11% U.S. & Canada $7.4 Billion • In 2020, PACCAR Financial financed 28% of all Europe 48% Kenworth, Peterbilt and DAF trucks $4.0 Billion 25% PacLease • Geographical diversification, disciplined credit $2.5 Billion 16% underwriting, and rigorous portfolio management have enabled PACCAR Financial to earn excellent profits throughout the business cycle % Low 30+ Days Past Due % • Key strategies and investments: 6 6 − Predictive data analytics for credit quality 5 5 − Expanded used truck centers 4 4 3 3 − Mobile finance and credit system 2 2 − E‐contract and e‐signature 1 1 − Customer on‐line portal 0 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
July 2021 Page 40 Long‐Term Growth in PACCAR Heavy Duty Market Share
32% 32%
• Since 2000, PACCAR’s above 16 tonne market 28% 28% share has increased in North America, Europe and South America 24% 24% • Kenworth is the market leader in Australia 20% 20% • PACCAR’s investment in truck manufacturing 16% 16% in Brasil supports PACCAR’s medium‐term goal 12% 12% of 10% market share for Kenworth and DAF products in South America. 8% 8%
4% 4%
0% 0% North America Australia Europe S. America
2000 2010 2020
July 2021 Page 41 Long‐Term Growth in PACCAR Medium Duty Market Share
25% 25%
• Since 2000, PACCAR’s medium duty market 20% 20% share has increased in the U.S. and Canada and in Europe 15% 15% • In the U.S. and Canada, Kenworth and Peterbilt achieved a record share of 22.6% in 2020 10% 10% • DAF share increased to 9.5% in Europe in 2020 5% 5%
0% 0% U.S. and Canada Europe
2000 2010 2020
July 2021 Page 42 Environmental Leadership
CDP “A‐” Rating Facilities
PACCAR Achieved an “A‐” rating for its Over 90% of PACCAR Environmental Practices; Manufacturing Locations Top 15% of over 9,500 have Achieved ISO 14001 Reporting Companies Certification
Over 80% of PACCAR Science Based Targets Locations are “Zero PACCAR has established Waste to Landfill” new emission reduction targets in partnership with the Science Based 2020 Encouraging Targets Initiative Environmental Excellence “E3” Gold Award
July 2021 Page 43 Second Quarter 2021 Earnings
July 2021 Page 44 PACCAR Revenues and Profit
82 consecutive years of net profit
Dividends every year since 1941
2nd Quarter ($ in Millions) 2021 2020 Revenues $5,844 $3,062 Net Income $493 $148 Return on Revenues 8.4% 4.8% Diluted EPS ($/Share) $1.41 $0.43 New Truck Deliveries (units) 40,100 18,100
July 2021 Page 45 2021 Financial Results Second Quarter 2021 vs. Second Quarter 2020
Sales and Revenues Net Income (Billions of Dollars) (Millions of Dollars) • Sales and revenues of $5.84 billion • Net income of $492.9 million $5.84
$493 • After‐tax return on revenues of 8.4% • PACCAR Parts revenues of $1.21 billion
$3.06 • PACCAR Parts pretax income of $265.6 million • Financial Services pretax income of $106.5 million
$148 • R&D expenses of $84.4 million • Capital investments of $120.2 million • Deliveries of 40,100 trucks 2020 2021 2020 2021
July 2021 Page 46 Historical Annual Gross Margins
• Truck margins increased through 2019 due to new Total Manufacturing products and operating efficiencies 15% 15% • Truck margins in 2020 affected by lower production 14% 14% volumes and global pandemic 13% 13% • Parts margins have benefited from distribution and 12% 12% technology investments and growing populations of 11% 11% PACCAR trucks and engines in operation 13 14 15 16 17 18 19 20 1H 21
Truck Parts 14% 14% 29% 29% 12% 12% 28% 28% 10% 10% 27% 27% 8% 8% 26% 26% 6% 6% 25% 25% 13 14 15 16 17 18 19 20 1H 13 14 15 16 17 18 19 20 1H 21 21
July 2021 Page 47 Truck Second Quarter 2021 vs. Second Quarter 2020
• Sales grew 123% to $4.15 billion Sales Segment (Billions of Dollars) Pretax Profit (Millions of Dollars) • Pretax operating profit improved to $255 $4.15 million
• Second quarter 2021 deliveries of 40,100 compared to 18,100 units in the same period a
$255 year ago $1.86 • DAF launched its new generation of heavy duty XF, XG and XG + trucks in June 2021
• Production started in May 2021 of the new heavy‐duty Kenworth T680 and Peterbilt 579 2020 2021 ‐$46 trucks and medium duty truck production will
2020 2021 begin in the third quarter 2021
July 2021 Page 48 Aftermarket Parts Second Quarter 2021 vs. Second Quarter 2020 • Record second quarter revenues of $1.21 billion, Revenues Segment an increase of 47% (Millions of Dollars) Pretax Profit (Millions of Dollars) $1,211 • Record pretax profit of $265.6 million, an increase
$266 of 75%
• Second quarter parts revenues and profit growth $824 due to robust industry truck utilization, industry‐
$152 leading supply chain management and parts availability, and ongoing investments in e‐ commerce.
• Enhancements made to the e‐commerce platform include superb parts cross‐referencing and integration with customers’ parts procurement 2020 2021 2020 2021 systems. E‐commerce sales grew 56% in 2Q21 compared to a year ago.
July 2021 Page 49 Financial Services Balance Sheet & Second Quarter Profit
$ Millions Segment Pretax Profit (Millions of Dollars) 6/30/2021 $107 Finance & Other Receivables $11,899 Equipment on Operating Leases 3,064 $56 Other Assets 603 Total Financial Services Assets $15,566
Commercial Paper & Bank Loans $3,410 2020 2021 Term Notes 7,159 • Record quarterly pretax profit of $107M, up 92% Deferred Taxes & Other Liabilities 1,378 • Strong used trucks prices Total Financial Services Liabilities 11,947 • High quality portfolio of 205,000 trucks and trailers • Portfolio performed well with low provision for bad debt Equity 3,619 and 0.3% past dues year‐to‐date Total Liabilities & Equity $15,566 • Investments in 12 worldwide used truck centers. A new facility in Madrid, Spain, is under construction.
July 2021 Page 50 PACCAR Inc A+/A1 Credit Ratings
($ Millions) • Superb balance sheet 6/30/21 Mfg Cash & Securities $ 4,403 • $4.4 billion in manufacturing cash and securities to support growth opportunities Other Manufacturing Assets 9,043 and investments in all phases of the cycle Financial Services Assets 15,566 Total Assets $ 29,012 • No manufacturing debt –a capital structure that has proven beneficial throughout the business cycle Manufacturing Debt $ ‐ Manufacturing Liabilities 5,881 • A+/A1 credit rating provides excellent Financial Services Liabilities 11,947 access to the credit markets for PACCAR Shareholders' Equity 11,184 Financial Services Total Liabilities & Equity $ 29,012
July 2021 Page 51 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
July 2021 Page 52 July 2021 Page 53