Paccar Earnings: First Quarter Indicates Modest Preliminary Tariff Impact

Paccar reported first-quarter results with truck deliveries down 16% year over year, continuing the slowdown that began in the second quarter of 2024. Despite this, the parts business posted modest growth and broadly held on to profitability. Earnings per share (adjusted for nonrecurring settlements over environmental litigation in the EU) of $1.46 declined 35% year over year, affected by the lower volumes as well as a mid-single-digit impact from tariffs. Management indicated the tariff impact will likely continue to be felt in the second quarter of 2025, weighing further on gross margins to the 13%-14% range. The company is working with customers and suppliers to address these issues, though it seemed confident that it could pass through price increases in the 4%-7% range as an offset. The tariff situation is highly dynamic, with management reluctant to provide more-explicit guidance.