Page 2 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.
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Powertrain Aftermarket Support Commercial Vehicles Page 4 Information Technology Financial Services
Quality PACCAR Strategy Technology Innovation Premium Products and Services Profitable Market Share Growth Geographic Expansion Page 5
PACCAR Values Quality Highest Integrity Operational Excellence Conservative Financial Management Long-Term Perspective Page 6
Trucking Moves the Economy If you bought it, it probably was delivered by a truck 80% 70% 60% 50% 40% 30% 20% 10% 0% 71% 13% 10% 6% Truck Rail Pipeline Water % Total U.S. Freight Tonnage Hauled by Transportation Mode Page 7
Global >6t Truck Market 2012 2.6 Million 2017 3.1 Million EU28 280 360 Russia/CIS 152.5 155 90 China 926.27 925 1,345 North America 315 330 Rest of Asia South America Africa & Middle East India 280 282215 315 232 230 340 220 110 195 190 PACCAR Truck Assembly 2012 2017 Units in Thousands Australia 20 24
>16t Truck Market Size Units (000s) 350 300 250 200 150 100 50 Units (000s) 350 300 250 200 150 100 50 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 US & Canada Europe South America 0 Page 9
PACCAR Heavy Duty Market Share 40% 35% 30% 25% 20% 15% 10% 5% 0% S. America Europe Australia U.S. and Canada Mexico 40% 35% 30% 25% 20% 15% 10% 5% 0% 1997 2007 2017 Page 10
>16t Truck Manufacturing 2017 Production (Units 000s) FAW Daimler Dongfeng Sinotruk Volvo Shaanxi Volkswagen PACCAR Beijing Foton Tata Motors Ashok Leyland Jianghuai Hongyan Hino Iveco KamAZ Isuzu Navistar Dayun Hualing Total Production 2017 = 2.3 Million 0 50 100 150 200 250 300 #8 Page 11
PACCAR Truck Production 1.3 Million Trucks Produced 2008-2017 Units (000s) 160 140 125.9 138.0 140.4 137.1 142.9 154.7 140.9 158.9 Brasil Australia 120 100 80 61.0 78.8 Mexico Canada US Europe 60 40 20 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Page 12
PACCAR Excellent Financial Performance Throughout the Business Cycle $ Billions Revenue $ Billions 25 25 20 20 15 15 10 10 5 5 0 0 97 99 01 03 05 07 09 11 13 15 17 $ Billions Net Income 1.8 1.5 1.2 0.9 0.6 0.3 0.0 CAGR = 5% CAGR = 8% $ Billions 1.8 1.5 1.2 0.9 0.6 0.3 0 97 99 01 03 05 07 09 11 13 15 17 Net Income Adj Net Inc * Tax Benefit ** $ Billions 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Page 13 CAGR = 10% Operating Cash Flow 97 99 01 03 05 07 09 11 13 15 17 $ Billions 3.0 2.5 2.0 1.5 1.0 0.5 0.0 $ Millions 900 * 2016 adjusted net income excludes non-recurring European Commission charge of $833 million. ** 2017 One-time tax benefit of $173 million from the new U.S. tax law. See PACCAR 2017 10K for supplementary information on Non-GAAP measures. 750 600 450 300 150 0 Capital Investments and R&D Expenses 97 99 01 03 05 07 09 11 13 15 17 Capital R&D $ Millions 900 750 600 450 300 150 0
Gross Margins Excellent Truck and Parts Gross Margins 15% Total 15% Truck margins have increased due to new products and operating efficiencies 14% 14% Parts margins have benefited from investments and growing populations of PACCAR trucks and engines 13% 12% 13 14 15 16 17 1H18 13% 12% 13% Truck 13% 28% Parts 28% 12% 12% 27% 27% 11% 11% 26% 26% 10% 13 14 15 16 17 1H18 10% 25% 13 14 15 16 17 1H18 25% Page 14
Best-in-Class Operating Efficiency Commercial Vehicle Segment Operating Margin 12% 9% 6% 3% 0% -3% -6% -9% 08 09 10 11 12 13 14 15 16 17 PACCAR Volvo Daimler Volkswagen Iveco Navistar 12% 9% 6% 3% 0% -3% -6% -9% Page 15
Best-in-Class Operating Efficiency Inventory Turns 24 20 16 12 8 4 0 08 09 10 11 12 13 14 15 16 17 PACCAR Volvo Daimler Volkswagen CNH Navistar 24 20 16 12 8 4 0 Page 16
Best-in-Class Operating Efficiency SG&A % of Sales 16% 16% 12% 12% 8% 8% 4% 4% 0% 08 09 10 11 12 13 14 15 16 17 PACCAR Volvo Daimler Volkswagen CNH Navistar 0% Page 17
Net Income per Truck Units (000s) 180 160 140 120 100 80 60 40 20 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 $/Truck 11,250 10,000 8,750 7,500 6,250 5,000 3,750 2,500 1,250 0 Trucks Net Income per Truck Page 18
PACCAR Inc A+/A1 Credit Ratings ($ Millions) 6/30/18 Cash & Securities $ 3,445 Manufacturing Assets 7,080 Financial Services Assets 13,631 Total Assets $ 24,156 Manufacturing Debt $ 0 Manufacturing Liabilities 4,970 Financial Services Liabilities 10,407 Shareholders' Equity 8,779 Total Liabilities & Equity $ 24,156 Page 19
PACCAR Overview Q2 2018 Record Consolidated Sales & Revenues $5.81 Billion Net Income $560 Million PACCAR Financial Pre Tax Profit $72 Million PACCAR Parts Record Pre Tax Profit $195 Million Stockholders Equity $8.78 Billion A1/A+ Credit Ratings Regular Dividend Increased 40% in Last 5 Years Page 20
PACCAR Revenues and Profit 79 consecutive years of net profit Dividends every year since 1941 Second Quarter ($ in Millions) 2017 2018 Revenues $4,704 $5,805 Net Income $373 $560 Return on Revenues 7.9% 9.6% Diluted EPS $1.06 $1.59 Number of Trucks Delivered 39,400 46,400 Page 21
Return on Invested Capital 25% 2017 25% Average 2012-2017 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% ROIC = NOPAT/(Equity + Manufacturing Debt + Postemployment Benefit Liabilities) Page 22
Capital Allocation Strategy Dividends Paid Every Year Since 1941 Quarterly Dividend Plus Special Dividend Strategic Share Repurchases R&D and Capital Investments Drive Consistent Growth Credit Rating of A+/A1 Supports Financial Services Operations Selective Acquisitions Strategic Clear Path to Value Creation Page 23
Dividends Declared and Stock Repurchases $ Millions 1,200 1,000 800 600 400 200 $ Millions 1,200 1,000 800 600 400 200 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Dividends Stock Repurchased 0 Page 24
Excellent Dividend Yield 4% Average Dividend Yield = 2.8% 4% 3% 3% 2% 2% 1% 1% 0% Page 25 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0%
New Products New DAF XF and CF PACCAR Powertrain Kenworth Australia T610 Peterbilt Model 579 UltraLoft
Hybridization / Electrification Projects XF/CF Parallel Hybrid Electric Range 20 Miles CF Electric Electric Range 75 Miles Kenworth Hybrid Electric Electric Range 250 Miles Peterbilt Electric Refuse Electric Range 80 Miles Peterbilt Electric Port Electric Range 150 Miles Kenworth Hydrogen Port Electric Range 150 Miles Page 27
Innovative Technologies Zero-Emissions Kenworth T680 DAF Connect/Truck Tech/Smart LinQ Platooning Autonomous Driving Technologies
PACCAR Innovation Center, Sunnyvale, CA
PACCAR Investments DAF Sales Office, Haddenham, U.K. Dynacraft, McKinney, Texas PACCAR Engine Factories DAF Cab Paint Facility, Westerlo, Belgium
PACCAR Engines Worldwide PACCAR PX-5 4.5 Liter PACCAR PX-7 6.7 Liter PACCAR PX-9 8.9 Liter PACCAR PR 9.2 Liter PACCAR MX-11 10.8 Liter PACCAR MX-13 12.9 Liter Page 31
Cumulative PACCAR MX Engines Produced # of Engines (000s) 700 600 500 400 300 200 100 # of Engines (000s) 700 600 500 400 300 200 100 0 07 08 09 10 11 12 13 14 15 16 17 DAF MX 13 KW/PB MX 13 MX 11 0 Page 32
PACCAR Parts Revenues $ Millions 3,500 3,000 2,500 2,000 1,500 1,000 500 CAGR = 8% $ Millions 3,500 3,000 2,500 2,000 1,500 1,000 500 0 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 0 Page 33
Parts Distribution Centers and Dealers PACCAR Distribution Centers KW, PB, DAF Dealers Page 34 34
PACCAR Parts Investments Toronto, Canada Panama City, Panama Renton, Washington Brisbane, Australia
PACCAR Global Dealer Network
DAF Brasil
Environmental Leadership Member CDP (Carbon Disclosure Project) Reduce Environmental Impact Through Product Design Product Recyclability 90%+ Reduction in NOx and Particulate Emissions Alternative Fuel Vehicles (Natural Gas, Hybrid) Zero Waste to Landfill Environmental Certification (ISO 14001) EPA SmartWay
PACCAR Financial Services Q2 2018 $13.6 Billion in Assets Pre tax Profit $72 Million 189,000 Vehicles Financed Dealer Floorplan Retail Financing Full Service Leasing Page 39
PACCAR Financial Services 24 Countries on Four Continents Bellevue Salt Lake Los Angeles Mexicali Chicago Denton Toronto Philadelphia Spartanburg Atlanta London Paris Madrid Eindhoven Warsaw Prague Milan Mexico City PACCAR Financial Regional Offices Page 40 Melbourne
PACCAR Financial Services Low 30+ Days Past Due Total Assets 6/30/18 = $13.6 Billion % 8 7 % 8 7 Australia & Mexico $1.4 Billion 10% 6 5 4 3 2 6 5 4 3 2 Europe $3.3 Billion 24% PacLease $2.3 Billion 18% U.S. & Canada $6.6 Billion 48% 1 1 0 91 93 95 97 99 01 03 05 07 09 11 13 15 17 0 Page 41
PACCAR Financial Europe Assets Billions 3.0 Assets Billions 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 0.5 1.0 0.5 50,300 Vehicles 200 DAF Dealers 0.0 08 09 10 11 12 13 14 15 16 17 0.0 17 European Countries Page 42
PACCAR Leasing Trucks (000s) 40 35 30 25 20 Trucks (000s) 40 35 30 25 20 15 15 10 10 37,900 Vehicles 5 0 08 09 10 11 12 13 14 15 16 17 5 0 574 Locations $2.3 Billion in Assets Page 43
PACCAR Financial Services ($ Millions) 6/30/18 Finance & Other Receivables $10,186 Equipment on Operating Leases 2,781 Other Assets 664 Total Financial Services Assets $13,631 Commercial Paper & Bank Loans $3,131 Term Notes 6,077 Deferred Taxes & Other Liabilities 1,199 Total Financial Services Liabilities 10,407 Equity 3,224 Total Liabilities & Equity $13,631 Page 44
PACCAR Competitive Advantages Excellent Shareholder Return Experienced Management Team Highest Quality Products Rigorous Cost Control Balanced Global Diversification Excellent Supplier Partnerships Extensive Capital Investments Innovative Technology Global Aftermarket Parts Sales Profitable Financial Services Strongest Dealer Network Page 45
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