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PACCAR Achieves Record Quarterly Revenues and Excellent Profits

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Strong Global Truck Deliveries and Parts Sales
Drive Results

"PACCAR (NASDAQ:PCAR) achieved record quarterly revenues and excellent
net income in the second quarter of 2018," said Ron Armstrong, chief
executive officer. "PACCAR's financial results reflect strong global
truck demand, increasing PACCAR truck production and market share, and
robust global aftermarket parts sales. I am very proud of our 27,000
employees who have delivered outstanding products and services to our
customers." Armstrong added, "The positive economic and freight growth
in North America and Europe are good indicators that 2019 will be
another strong truck market."

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180724005210/en/

DAF CF Electric Truck (Photo: Business Wire)

DAF CF Electric Truck (Photo: Business Wire)

PACCAR earned net income of $559.6 million ($1.59 per diluted share) in
the second quarter, 50% higher than the $373.0 million ($1.06 per
diluted share) earned in the same period last year. Second quarter net
sales and financial services revenues were a record $5.81 billion, 23%
higher than the $4.70 billion achieved in the second quarter of 2017.
"PACCAR's 9.6 percent after-tax return on revenues is an excellent
achievement," shared Harrie Schippers, PACCAR president and chief
financial officer. "The dramatic increase in net income reinforces
PACCAR's financial leadership and strongly positions the company as it
invests in new vehicle platforms, technology initiatives such as
connected truck, autonomous and alternative fuel systems and developing
customer service programs."

PACCAR reported record first half net income of $1.07 billion ($3.04 per
diluted share) in 2018 compared to net income of $683.3 million ($1.94
per diluted share) in the first six months of last year. Net sales and
financial services revenues for the first six months of 2018 were $11.46
billion versus $8.94 billion last year.

New $300 Million Stock Repurchase Authorization and Increased
Quarterly Dividend

PACCAR repurchased 1.21 million of its common shares for $77.2 million
during the second quarter, completing its previously authorized $300
million share repurchase program. The PACCAR Board of Directors approved
an additional $300 million repurchase of outstanding common stock
earlier this month.

"The new $300 million share repurchase authorization reflects PACCAR's
ongoing excellent business performance," said Mark Pigott, PACCAR
executive chairman. In addition, the Board of Directors increased the
regular quarterly cash dividend by 12%, to twenty-eight cents ($.28) per
share, in May 2018. "PACCAR has a proven track record of delivering
quarterly and special dividends in the range of 45-55% of net income to
its shareholders," Pigott added.

Financial Highlights – Second Quarter 2018

Highlights of PACCAR's financial results for the second quarter of 2018
include:

  • Record consolidated net sales and revenues of $5.81 billion.
  • Net income of $559.6 million, an after-tax return on revenue of 9.6
    percent.
  • Truck, Parts and Other gross margins of 15.0%.
  • Record PACCAR Parts revenues of $968.0 million.
  • Record PACCAR Parts pre-tax income of $194.5 million.
  • Financial Services pre-tax income of $72.4 million.
  • Manufacturing cash and marketable securities of $3.44 billion.
  • Cash generated from operations of $673.2 million.
  • Bank credit facilities of $3.0 billion renewed.
  • Record stockholders' equity of $8.78 billion.

Financial Highlights – First Half 2018

Highlights of PACCAR's financial results for the first six months of
2018 include:

  • Consolidated net sales and revenues of $11.46 billion.
  • Net income of $1.07 billion, an after-tax return on revenue of 9.4
    percent.
  • Financial Services pre-tax income of $139.9 million.
  • Cash generated from operations of $1.20 billion.
  • Medium-term note issuances of $1.30 billion.

Robust Global Truck Markets

"DAF achieved a record 16.5% market share in the European above 16-tonne
segment in the first half of 2018," said Preston Feight, PACCAR vice
president and DAF president. "Customers benefit from the reliability and
fuel efficiency leadership of the DAF XF, CF and LF trucks. DAF above
16-tonne truck orders increased 26% in the first half of 2018 compared
to the same period last year." European truck industry registrations in
the above 16-tonne market are estimated to be in a range of
300,000-320,000 vehicles in 2018, which would be the third highest in
history.

Class 8 truck industry retail sales for the U.S. and Canada have
increased by 32% year-to-date and are expected to be in a range of
265,000-285,000 vehicles in 2018. "U.S. and Canada Class 8 truck
industry orders surged by 111% in the first six months of 2018 compared
to the same period last year," said Gary Moore, PACCAR executive vice
president. "The growing economy and record levels of freight tonnage
have resulted in excellent demand for Kenworth and Peterbilt vehicles."

PACCAR Trucks Achieve Record Quarterly Deliveries

Kenworth, Peterbilt and DAF delivered a record 46,400 trucks in the
second quarter of 2018, 18% higher than the same period last year.
"Truck deliveries increased in North America, Europe, Australia and
Brasil in the second quarter, reflecting strong customer demand for the
industry-leading Kenworth, Peterbilt and DAF trucks," said Darrin Siver,
PACCAR senior vice president.

DAF, Kenworth and Peterbilt Invest in Alternative Powertrain Vehicles

DAF, Kenworth and Peterbilt are leaders in the development of battery
electric, hydrogen fuel cell and hybrid vehicles. PACCAR is actively
field-testing these powertrains in North America and Europe.

DAF has developed the DAF CF Electric truck for up to 40-tonne
distribution applications within urban areas. The fully electric vehicle
includes a 285 horsepower electric motor powered by a 170 kWh
lithium-ion battery pack. "DAF has an outstanding record of developing
innovative transport solutions to meet the evolving needs of customers,"
noted Ron Borsboom, DAF chief engineer. "The DAF CF Electric truck is
designed for high-volume distribution applications in which customers
desire zero-emissions and ultra-low noise."

The Kenworth T680 Zero Emission Cargo Transport (ZECT) and the Kenworth
Hybrid Electric Cargo Transport (HECT) trucks will be in field trials
this year at the Ports of Los Angeles and Long Beach. The ZECT uses a
hydrogen fuel cell that combines hydrogen gas and air to produce
electricity. The HECT incorporates a parallel hybrid propulsion system
that uses a compressed natural gas engine and lithium-ion batteries.

The Peterbilt Model 520 is a leader in the low-cab-forward truck segment
with 32% market share year-to-date through May 2018. Peterbilt has
designed a battery electric Model 520 equipped with a 400 horsepower
electric drive system, 350 kWh of energy storage and regenerative
braking. The truck's 80-mile range and quiet operation is an excellent
solution for residential neighborhood refuse operations.

PACCAR Parts Achieves Record Quarterly Revenues and Pre-Tax Profit

PACCAR Parts achieved record quarterly revenues of $968.0 million in the
second quarter of 2018, 18% higher than the $823.1 million achieved in
the same period last year. Second quarter 2018 pre-tax profit was a
record $194.5 million, 29% higher than the $151.2 million achieved in
the second quarter of 2017. PACCAR Parts first half 2018 revenues were
$1.91 billion, compared to $1.61 billion for the same period last year.
PACCAR Parts achieved pre-tax profit of $386.3 million in the first six
months of 2018, compared to $302.0 million earned in the first six
months of 2017.

David Danforth, PACCAR vice president and PACCAR Parts general manager,
said, "PACCAR continues to add global parts distribution capacity to
deliver industry-leading availability, and support the growth of PACCAR
MX engine parts sales and the global fleet services program. PACCAR's
new $35 million 160,000 square-foot distribution center in Toronto,
Canada is under construction and is expected to open in the fourth
quarter of 2018."

PACCAR Innovation Center Accelerates Technology Development

PACCAR's advanced technology research and development center in Silicon
Valley, California coordinates next-generation product development and
identifies emerging technologies that will benefit future vehicle
performance. Design platforms include advanced driver assistance systems
(ADAS), machine learning and vehicle connectivity. Kyle Quinn, PACCAR
chief technology officer, noted, "The Innovation Center spearheads
technology development projects and is engaged with startup companies to
incorporate advanced technologies in prototype vehicles for evaluation."

Research and Development and Capital Investments

PACCAR's excellent long-term profits, strong balance sheet, and intense
focus on quality, technology and productivity have enabled the company
to invest $6.1 billion in capital projects, innovative products and new
technologies during the past decade. "Capital of $425-$475 million and
R&D expenses of $300-$320 million are being invested this year in new
truck models, integrated powertrains including electric, hybrid,
hydrogen fuel cell technologies, enhanced aerodynamic truck designs,
advanced driver assistance systems and truck connectivity. In addition,
PACCAR is expanding its manufacturing and parts distribution
facilities," said George West, PACCAR vice president.

Financial Services Companies Achieve Good Results

PACCAR Financial Services (PFS) has a portfolio of 189,000 trucks and
trailers, with total assets of $13.63 billion. PACCAR Leasing, a major
full-service truck leasing company in North America and Europe with a
fleet of 38,000 vehicles, is included in this segment. Second quarter
PFS pre-tax income in 2018 was $72.4 million compared to $62.4 million
earned in the second quarter last year. Second quarter 2018 revenues
were $338.0 million compared to $306.3 million in the same quarter of
2017. For the first six months of 2018, PFS earned pre-tax income of
$139.9 million compared to $119.2 million last year. First-half 2018
revenues were $670.2 million compared with $608.5 million for the same
period a year ago. "PFS' portfolio performed well during the second
quarter of 2018," said Bob Bengston, PACCAR senior vice president.
"Industry used truck demand has increased in 2018. Kenworth and
Peterbilt vehicle resale values continue to command a 10-20% premium
over competitors' trucks."

"PACCAR's excellent balance sheet, complemented by its A+/A1 credit
ratings, enables PFS to offer competitive retail financing to Kenworth,
Peterbilt and DAF dealers and customers in 24 countries on four
continents," said Todd Hubbard, PACCAR vice president and PACCAR
Financial Corp. president. "We have excellent access to the commercial
paper and medium-term note markets, allowing PFS to profitably support
the sale of PACCAR trucks."

PACCAR is a global technology leader in the design, manufacture and
customer support of high-quality light-, medium- and heavy-duty trucks
under the Kenworth, Peterbilt and DAF nameplates. PACCAR also designs
and manufactures advanced diesel engines, provides financial services
and information technology, and distributes truck parts related to its
principal business.

PACCAR will hold a conference call with securities analysts to discuss
second quarter earnings on July 24, 2018, at 9:00 a.m. Pacific time.
Interested parties may listen to the call by selecting "Q2 Earnings
Webcast" at PACCAR's homepage. The Webcast will be available on a
recorded basis through July 31, 2018. PACCAR shares are listed on NASDAQ
Global Select Market, symbol PCAR. Its homepage is www.paccar.com.

This release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act. These statements are based
on management's current expectations and are subject to uncertainty and
changes in circumstances. Actual results may differ materially from
those included in these statements due to a variety of factors. More
information about these factors is contained in PACCAR's filings with
the Securities and Exchange Commission.

         
PACCAR Inc
SUMMARY STATEMENTS OF OPERATIONS
(in millions except per share amounts)
 
Three Months Ended Six Months Ended
      June 30   June 30
        2018     2017*     2018     2017*
 
Truck, Parts and Other:
Net sales and revenues $ 5,467.2 $ 4,397.9 $ 10,789.0 $ 8,333.6
Cost of sales and revenues 4,647.3 3,764.0 9,182.8 7,154.9
Research and development 76.7 66.1 152.7 127.1
Selling, general and administrative 127.0 111.8 264.1 226.3
Interest and other (income), net     (16.4 )     (11.9 )     (35.1 )     (25.9 )
Truck, Parts and Other Income Before

Income Taxes

632.6 467.9 1,224.5 851.2
 
Financial Services:
Revenues 338.0 306.3 670.2 608.5
Interest and other 231.2 210.2 458.9 424.0
Selling, general and administrative 29.8 26.9 60.9 52.6
Provision for losses on receivables     4.6       6.8       10.5       12.7  
Financial Services Income Before Income Taxes 72.4 62.4 139.9 119.2
Investment income     14.6       8.7       24.6       16.8  
Total Income Before Income Taxes 719.6 539.0 1,389.0 987.2
Income taxes     160.0       166.0       317.3       303.9  
Net Income   $ 559.6     $ 373.0     $ 1,071.7     $ 683.3  
 
Net Income Per Share:
Basic   $ 1.59     $ 1.06     $ 3.04     $ 1.94  
Diluted   $ 1.59     $ 1.06     $ 3.04     $ 1.94  
 
Weighted Average Shares Outstanding:
Basic     351.7       351.8       352.1       351.7  
Diluted     352.5       352.7       353.0       352.7  

Dividends declared per share

  $ .28     $ .25     $ .53     $ .49  
 

*

  On January 1, 2018, the Company adopted ASU 2017-07, Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost. This ASU requires defined benefit
pension plan's net non-service component expenses (income) to be
reported outside of operating profit. Net non-service expenses
(income) are now reported in Interest and other (income), net. The
three and six months ended 2017 net non-service pension expenses
(income) have been reclassified to conform with the current
presentation.
 
PACCAR Inc
CONDENSED BALANCE SHEETS
(in millions)
   
June 30 December 31
      2018     2017
ASSETS
Truck, Parts and Other:
Cash and marketable debt securities $ 3,444.8 $ 3,621.9
Trade and other receivables, net 1,546.9 1,127.9
Inventories, net 1,258.5 928.4
Property, plant and equipment, net 2,397.4 2,464.4
Equipment on operating leases and other, net 1,877.3 2,095.3
Financial Services Assets     13,630.9     13,202.3
    $ 24,155.8   $ 23,440.2
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Truck, Parts and Other:
Accounts payable, deferred revenues and other $ 4,969.5 $ 5,270.4
Financial Services Liabilities 10,406.9 10,119.3
STOCKHOLDERS' EQUITY     8,779.4     8,050.5
    $ 24,155.8   $ 23,440.2
 
Common Shares Outstanding     350.7     351.8
 
PACCAR Inc
CONDENSED CASH FLOW STATEMENTS
(in millions)
   
Six Months Ended June 30     2018       2017  
OPERATING ACTIVITIES:
Net income $ 1,071.7 $ 683.3
Depreciation and amortization:
Property, plant and equipment 179.8 151.5
Equipment on operating leases and other 362.0 376.7
Net change in trade receivables, inventory and payables (245.8 ) (129.8 )
Net increase in wholesale receivables on new trucks (234.5 ) (176.0 )
All other operating activities, net     65.3       279.5  
Net Cash Provided by Operating Activities 1,198.5 1,185.2
 
INVESTING ACTIVITIES:
Payments for property, plant and equipment (221.6 ) (188.3 )
Acquisitions of equipment for operating leases (697.0 ) (728.0 )
Net increase in financial services receivables (449.9 ) (21.9 )
Net decrease (increase) in marketable debt securities 316.9 (76.3 )
Proceeds from asset disposals     306.4       244.2  
Net Cash Used in Investing Activities (745.2 ) (770.3 )
 
FINANCING ACTIVITIES:
Payments of cash dividends (608.5 ) (382.5 )
Purchases of treasury stock (94.2 )
Proceeds from stock compensation transactions 10.9 18.8
Net increase (decrease) in debt     413.2       (144.1 )
Net Cash Used in Financing Activities (278.6 ) (507.8 )
Effect of exchange rate changes on cash     (32.6 )     57.0  
Net Increase (Decrease) in Cash and Cash Equivalents 142.1 (35.9 )
Cash and cash equivalents at beginning of period     2,364.7       1,915.7  
Cash and cash equivalents at end of period   $ 2,506.8     $ 1,879.8  
 
PACCAR Inc
SEGMENT AND OTHER INFORMATION
(in millions)
       
Three Months Ended Six Months Ended
    June 30   June 30
      2018     2017     2018     2017
Sales and Revenues:
Truck $ 4,467.8 $ 3,553.6 $ 8,820.8 $ 6,683.7
Parts 968.0 823.1 1,907.9 1,609.8
Financial Services 338.0 306.3 670.2 608.5
Other     31.4     21.2     60.3     40.1
    $ 5,805.2   $ 4,704.2   $ 11,459.2   $ 8,942.1
 
Pretax Profit:
Truck $ 434.0 $ 312.7 $ 829.2 $ 543.9
Parts 194.5 151.2 386.3 302.0
Financial Services 72.4 62.4 139.9 119.2
Investment Income and Other     18.7     12.7     33.6     22.1
    $ 719.6   $ 539.0   $ 1,389.0   $ 987.2
 
GEOGRAPHIC REVENUE
(in millions)
 
Three Months Ended Six Months Ended
    June 30   June 30
      2018     2017     2018     2017
United States and Canada $ 3,654.8 $ 2,924.6 $ 7,100.8 $ 5,447.1
Europe 1,499.8 1,225.7 3,086.6 2,456.9
Other     650.6     553.9     1,271.8     1,038.1
    $ 5,805.2   $ 4,704.2   $ 11,459.2   $ 8,942.1
 
NEW TRUCK DELIVERIES
 
Three Months Ended Six Months Ended
    June 30   June 30
      2018     2017     2018     2017
United States and Canada 25,900 21,200 50,100 38,200
Europe 15,800 13,800 31,500 28,100
Other     4,700     4,400     9,300     8,100
      46,400     39,400     90,900     74,400

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