This presentation may contain statements that are forward looking. - - PowerPoint PPT Presentation

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.

Page 2 January 2017

Page 3 January 2017

Aftermarket Support Financial Services Information Technology Powertrain Commercial Vehicles

Page 4 January 2017

PACCAR Strategy

Premium Products and Services Profitable Market Share Growth Geographic Expansion

Quality Quality Technology Technology Innovation Innovation

Page 5 January 2017

PACCAR Values

Highest Integrity Operational Excellence Conservative Financial Management Quality Long Term Perspective

Page 6 January 2017

Trucking Moves the Economy

If you bought it, it probably was delivered by a truck

69% 15% 10% 6% Truck Rail Pipeline Water % Total U.S. Freight Tonnage Hauled by Transportation Mode

Page 7 January 2017

Units in Thousands

PACCAR Truck Assembly

2011 – 2.9 Million 2016 – 2.7 Million 2021 – 2.9 Million

2011 2016 2021

330 330 100 185

North America South America

275 235 355 215 240 320

Africa & Middle East EU28

305 205

920

55 120 960

India

345 360 210

Rest of Asia Russia/CIS China

18 17 20

Australia

130 1,175 335

Global >6T Truck Markets

Page 8 January 2017

Heavy Duty Commercial Vehicles

50 100 150 200 250 300 350 50 100 150 200 250 300 350 99 01 03 05 07 09 11 13 15 17 Fcst Units (000s) Units 000s US & Canada Europe South America

Page 9 January 2017

PACCAR Heavy Duty Market Share

0% 5% 10% 15% 20% 25% 30% 35% 40% 0% 5% 10% 15% 20% 25% 30% 35% 40%

• S. America

Europe Australia U.S. and Canada Mexico 2006 2016

Page 10 January 2017

>16T Truck Manufacturing

Estimated 2016 Production (Units 000’s)

50 100 150 200 250

Hualing Hongyan Dayun Isuzu KAMaz Navistar Iveco Jianghuai Hino Ashok Leyland Beijing Foton Tata Motors Shaanxi Sinotruk PACCAR Dongfeng FAW Volkswagen Volvo Daimler

#6

Total Production 2016 = 1.8 Million

Page 11 January 2017

20 40 60 80 100 120 140 160 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Brasil Australia Europe Mexico Canada US

133,900 125,900 61,000 78,800 138,000 140,400 137,100

PACCAR Truck Production

1.3 Million Trucks Produced 2007‐2016

142,900 154,700 140,900

Page 12 January 2017

150 300 450 600 750 900 150 300 450 600 750 900

96 98 00 02 04 06 08 10 12 14 16

Capital Investments and R&D Expenses

Capital R&D

PACCAR

Excellent Financial Performance Throughout the Business Cycle

0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0

96 98 00 02 04 06 08 10 12 14 16

Operating Cash Flow

$ Millions $ Millions $ Billions $ Billions 5 10 15 20 5 10 15 20

96 98 00 02 04 06 08 10 12 14 16

$ Billions $ Billions

Revenue

0.0 0.3 0.6 0.9 1.2 1.5 1.8 0.0 0.3 0.6 0.9 1.2 1.5 1.8

96 98 00 02 04 06 08 10 12 14 16*

$ Millions $ Millions

Net Income

Net Income Adjusted Net Income *

7% 5% (10% Adj. NI)** 10%

* 2016 adjusted net income excludes non-recurring European Commission charge of $833 million. See appendix for supplementary information on Non-GAAP measures. ** 10% Compounded Annual Growth Rate was determined using Adjusted Net Income of $1,355 million.

Page 13 January 2017

Best‐in‐Class Operating Efficiency

• 9%
• 6%
• 3%

0% 3% 6% 9% 12% 15%

• 9%
• 6%
• 3%

0% 3% 6% 9% 12% 15% 06 07 08 09 10 11 12 13 14 15

CV Segment Operating Margin

PACCAR Volkswagen Daimler Volvo Iveco Navistar

• 10%

0% 10% 20% 30% 40%

• 10%

0% 10% 20% 30% 40% 06 07 08 09 10 11 12 13 14 15

After-Tax Return on Equity %

PACCAR Volkswagen Daimler Volvo CNH

0% 5% 10% 15% 20% 0% 5% 10% 15% 20% 06 07 08 09 10 11 12 13 14 15

SG&A % of Sales

PACCAR Volkswagen Daimler Volvo CNH Navistar

5 10 15 20 25 5 10 15 20 25 06 07 08 09 10 11 12 13 14 15

Inventory Turns

PACCAR Volkswagen Daimler Volvo CNH Navistar

Page 14 January 2017

Net Income per Truck

1,250 2,500 3,750 5,000 6,250 7,500 8,750 10,000 11,250 20 40 60 80 100 120 140 160 180 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* Trucks Net Income per Truck Adjusted Net Income Per Truck * Units (000s) $/Truck

* 2016 Adjusted Net Income Per Truck was determined using Adjusted Net Income of $1,355 million, which excludes non-recurring European Commission charge of $833 million. See appendix for supplementary information on non-GAAP measures.

Page 15 January 2017

Annualized Shareholder Total Return %

Fifteen Years, As of December 31, 2016

Deere Volvo Eaton Caterpillar Volkswagen Hino Toyota Daimler Ford Navistar S&P 500

• 4

4 8 12 16

Page 16 January 2017

PACCAR Inc

A+/A1 Credit Ratings

12/31/16 Cash & Securities $ 2,923 Manufacturing Assets 5,521 Financial Services Assets 12,195 Total Assets $ 20,639 Manufacturing Debt $ 0 Manufacturing Liabilities 4,056 Financial Services Liabilities 9,805 Shareholders' Equity 6,778 Total Liabilities & Equity $ 20,639

($ Millions)

Page 17 January 2017

PACCAR Overview – Q4 2016

Consolidated Sales & Revenues $4.07 Billion Net Income $289 Million PACCAR Financial Pre‐Tax Profit $78 Million PACCAR Parts Pre‐Tax Profit $138 Million Stockholders’ Equity $6.78 Billion A1/A+ Credit Ratings Regular Dividend Increased 30% in Last 5 Years

Note: See appendix for supplementary information on non-GAAP financial measures

Page 18 January 2017

PACCAR Revenues and Profit

($ Millions) 4th Quarter Full Year 2016 2015 2016 2015 Revenues $4,071 $4,355 $17,033 $19,115 Net Income 289 347 522 1,604 Diluted EPS 0.82 0.98 1.48 4.51 Adjusted Net Income (Non‐GAAP) 1,355 Adjusted Diluted EPS (Non‐GAAP) 3.85

Note: See appendix for supplementary information on non-GAAP financial measures

78 consecutive years of net profit Dividends every year since 1941

Page 19 January 2017

PACCAR Capital Allocation

• R&D and capex investments

drive future growth

• Credit rating of A+/A1 reflects

strategic nature of our financial services operations

• Long history of successful

acquisitions; highly selective, strategic, clear path to value creation

• Quarterly plus special dividends
• Strategic share repurchases

Capex $2.0 R&D $1.2 Dividend $3.2

Share Repurchase $0.5 Finance Company $1.0 Debt Repayment $0.2

Uses of Cash Flow 2012 – 2016: $8.1 Billion Capital Allocation Strategy

Page 20 January 2017

New Products and Technologies

Action Plan Automated Notification Off-Board Diagnostics Resolution Fault Detected

Remote Diagnostics

Page 21 January 2017

New Facility Investments

Kenworth, Chillicothe, Ohio PACCAR Parts Distribution Center, Renton, WA Peterbilt, Denton, Texas DAF, Westerlo, Belgium

Page 22 January 2017

Dividends Declared and Stock Repurchases

200 400 600 800 1,000 1,200 200 400 600 800 1,000 1,200 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 $ Millions $ Millions Dividends Stock Repurchased

Page 23 January 2017

PACCAR PR 9.2 Liter PACCAR MX‐13 12.9 Liter PACCAR PX‐7 6.7 Liter PACCAR PX‐5 4.5 Liter

PACCAR Engines Worldwide

PACCAR MX‐11 10.8 Liter PACCAR PX‐9 8.9 Liter

Page 24 January 2017

50 100 150 200 250 300 350 400 450 500 550 50 100 150 200 250 300 350 400 450 500 550 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Engines (000s) Engines (000s)

Cumulative PACCAR MX Engines Produced

KW/PB MX-13 MX-11 DAF MX-13

Page 25 January 2017

500 1,000 1,500 2,000 2,500 3,000 3,500 500 1,000 1,500 2,000 2,500 3,000 3,500 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 $ Millions $ Millions

PACCAR Parts Revenue

8%

Page 26 January 2017

PACCAR Parts Distribution Centers and Dealers

PACCAR Distribution Centers

Page 27 January 2017

PACCAR Parts Investments

Renton, WA Ponta Grossa, BR Eindhoven, NL Lancaster, PA

Page 28 January 2017

PACCAR Global Dealer Network

Page 29 January 2017

Brasil India Taiwan Russia

PACCAR Global Expansion

Page 30 January 2017

Road to Autonomous Commercial Vehicles

• Anti Lock Braking
• Lane Departure

Warning

• Object Detection
• Adaptive Cruise

Control Component Controls 1980‐2014

• Collision Avoidance
• Lane Keeping Assist
• Predictive Cruise

Control System Integration 2015‐2017

• Vehicle to

Infrastructure Network

• Automatic Lane

Change

• Automatic Routing

Automated Vehicle 2025+ Greater Vehicle Autonomy

• Improves Fleets Safety, Fuel Efficiency and Truck Utilization
• Increases Truck Content
• Increases Parts Demand
• Vehicle to Vehicle

Network

• Driver Monitoring

Network Integration 2018‐2024

Page 31 January 2017

Environmental Leadership

Ranked in Top 10% of Companies Reporting to 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

Page 32 January 2017

$12.2 Billion in Assets Pre‐tax Profit $78 Million Full Service Leasing Dealer Floorplan Retail Financing 178,000 Vehicles Financed

PACCAR Financial Services – Q4 2016

Page 33 January 2017

PACCAR Financial Services

23 Countries on Four Continents

PACCAR Financial Regional Offices

Page 34 January 2017

PACCAR Financial Services Assets

2006 - $9.8 Billion 2016 - $12.2 Billion

U.S. & Canada $6.2 Billion 51% PacLease $2.3 Billion 18% Europe $2.6 Billion 22% U.S. & Canada $5.2 Billion 53% Europe $2.2 Billion 22% Australia & Mexico $0.9 Billion 9% PacLease $1.5 Billion 16% Australia & Mexico $1.1 Billion 9%

Page 35 January 2017

47,000 Vehicles 200 DAF Dealers 16 European Countries

PACCAR Financial Europe

0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 07 08 09 10 11 12 13 14 15 16 Assets € Billions Assets € Billions

Page 36 January 2017

10 15 20 25 30 35 40 10 15 20 25 30 35 40 07 08 09 10 11 12 13 14 15 16

Trucks 000’s Trucks 000’s

560 Service Locations 38,100 Vehicles $2.3 Billion Assets

PACCAR Leasing

Page 37 January 2017

PACCAR Financial Services

Delivers Strong Performance

1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 90 92 94 96 98 00 02 04 06 08 10 12 14 16

% %

Low 30+ Days Past Due Assets and Pretax Profit

50 100 150 200 250 300 350 400 2 4 6 8 10 12 14 16 07 08 09 10 11 12 13 14 15 16

Assets $ Billions

Pretax Profit Avg Earnings Assets

Pre-tax Profit $ Millions

Page 38 January 2017

PACCAR Financial Services

12/31/16 Finance & Other Receivables $8,837 Equipment on Operating Leases 2,624 Other Assets 734 Total Financial Services Assets $12,195 Commercial Paper & Bank Loans $2,447 Term Notes 6,028 Deferred Taxes & Other Liabilities 1,330 Total Financial Services Liabilities 9,805 Equity 2,390 Total Liabilities & Equity $12,195

($ Millions)

Page 39 January 2017

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 Strongest Dealer Network Profitable Financial Services

PACCAR Competitive Advantages

Page 40 January 2017

Appendix

Reconciliation of GAAP to Non‐GAAP Financial Measures

This presentation includes “adjusted net income (non-GAAP)” and “adjusted net income per diluted share (non-GAAP)”, which are financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”), since they exclude the non-recurring European Commission charge in 2016. These measures differ from the most directly comparable measures calculated in accordance with GAAP and may not be comparable to similarly titled non-GAAP financial measures used by other companies. Management utilizes these non-GAAP measures to evaluate the Company’s performance and believes these measures allow investors and management to evaluate operating trends by excluding a significant non-recurring charge that is not representative of underlying

• perating trends.

Reconciliations from the most directly comparable GAAP measures to adjusted net income (non-GAAP) and adjusted net income per diluted share (non-GAAP) are as follows: Year Ended (in millions) December 31, 2016 Net Income $ 521.7 Non-Recurring European Commission Charge 833.0 Adjusted Net Income (Non-GAAP) $ 1,354.7 Year Ended December 31, 2016 Per Diluted Share: Net Income $ 1.48 Non-Recurring European Commission Charge 2.37 Adjusted Net Income (Non-GAAP) $ 3.85

Page 41 January 2017