Angel Castillo

Feight named the partners and stated there are no plans to remove the driver at this point.

Feight declined to speculate on competitor credit strategies; the answer was also cut short by a technical interruption.

Management explained Q2 margin improvement driven by volume with competitive pricing pressure and tariff pass-through timing as moderating factors

Management confirmed 35mg standard is final law with no expected modifications, parameters being contemplated based on customer and market feedback

Feight noted PACCAR's NA outlook was already ahead of ACT estimates. Acceleration expected through the year, consistent with positive view.

Feight confirmed January orders at same strong December cadence. Significant bodybuilder orders, steady LTL, fleet spread-delivery orders. Q1 mostly full.

Feight confirmed October is peak tariff, then 232 begins reducing costs through Q4. December/January should see marked improvement.

Feight explained wide 230-270K range: lower end if NOx standard reverts (removing pre-buy), higher end if 35mg holds driving pre-buy demand.

Baney credited parts team execution in flat market. Poplawski added more shipping days in Europe for Q3 will help.

Feight cited four catalysts: TL overcapacity rationalizing, Big Beautiful Bill, NOx 35mg standard driving pre-buy, and tariff clarity boosting confidence.

Feight attributed Q2 margin decline mostly to tariffs, not volume. US/Canada and Europe flat; Mexico market pausing due to trade discussions.

Feight confirmed no change to investment plans. Working with suppliers on USMCA compliance for components to reduce tariff exposure.

Feight cited spot rate improvement, capacity rationalization, and very low used truck inventories as early indicators of TL market recovery.

Feight clarified R&D is up ~5% YoY. Amplify JV cleared ground, building facilities, will scale capacity based on market demand for EVs/hybrids.

CFO said pricing is still being worked but powertrain captures most of the added truck value, and nonconforming penalties are expected to pass through with no significant financial impact.

CEO described a capacity-constrained market with backlog very strong and demand ahead of supply, but gave no quantified backlog figure.

Mark acknowledged onetime cost recoveries, stronger China demand, and net tariff recoveries boosted Q1 Power Systems. Guided normal seasonality with Q4 slightly weaker due to fewer production days.

Smith confirmed strong balance sheet with flexibility to deploy more capital to shareholders. Minimum 50% operating cash flow to shareholders goal with capacity for more as investment needs are met within operating cash flow.

Rumsey declined to quantify backlog but confirmed consecutive records in Q3 and Q4 with multiyear customer discussions. Capacity investment decisions being developed with discipline around natural gas and supplier readiness.

Smith declined to quantify Section 232 impact citing lack of sufficient details. Emphasized strong U.S. manufacturing position and need for stability.

Rumsey quantified 2024 data center revenue at $2.6B (split between Power Systems and Distribution). 2025 up 30-35%. Actively evaluating prime power and additional capacity beyond doubling.

Rumsey confirmed $2B data center target for 2026 intact with additional capacity coming online. Smith affirmed no change in demand enthusiasm.

Smith confirmed immaterial Q1 tariff impact but expects building effect month-over-month through Q2 with fullest impact in second half assuming tariffs remain.

Smith clarified aftermarket strength is NOT data center driven but reflects broad mining, oil/gas, marine, and broader economy rebuild activity plus pricing.

Rumsey detailed $200M investment across U.S., UK, and India for capacity ramp-up. Growth driven by both volume from larger engines and strategic pricing.

Rumsey expects EPA27 to remain, anticipates prebuy and economic recovery driving second half strength, but sees potential challenge to 2030+ GHG regs.

Ted said moving to IG does not constrain M&A capacity and simply captures a lower spread, so there is no downside.

Matt said growth is broad beyond just data centers. Infrastructure and power (double digits) are strong. Nonres construction is positive even excluding data centers. Petrochem still a drag but potential future contributor.

Matt noted $400M in Q1 across 4 small deals, 2 larger ones completed in first week of January already in guidance. Total M&A across 2025-Q1 2026 amounts to about 1% of revenue growth. Not the driver of the beat or guidance raise.

Ted confirmed secular rental penetration continues improving with significant runway ahead. One-stop-shop value proposition and telematics capabilities drive deeper customer engagement.

Ted cautioned against confusing correlation and causation. Customer confidence fractionally improved since April. Tax policies should be advantageous to project economics.

Matt declined to discuss monthly trends but confirmed the year is following a standard seasonal growth pattern, consistent with 2024 expectations.

Matt clarified repositioning costs are not large enough to impact guidance range. Ancillary revenue is good business adding EBITDA dollars even at lower margins.

Matt said some markets have more growth than others, similar to 2024. Highlighted fleet fungibility across verticals and geographies as a competitive advantage.

Ted clarified the customer index is forward-looking (12-month expectations), not current activity. Net responses improved, supporting 2025 guidance.

Deferred the specific answer to the next call while committing to price as the primary lever; the January 1 implication went unaddressed.

Answered the strategy question clearly, ruling out transformative deals in favor of pure-play aggregates bolt-ons, without sizing the pipeline.

Ronnie confirmed guidance plans for diesel to persist at elevated levels, pricing will compensate if it stays up, margins benefit if it comes down. Mary Andrews guided to approximately 45-55 first-half/second-half earnings split.

Ronnie said base sells $8-$10 below clean stone but margin impact is modest. Mix will become more uniform as projects go vertical and need concrete/clean stone.

Tom said pauses are over - projects are going. Ronnie added private non-resi starts up 7% trailing 6 months and 8% trailing 3 months in Vulcan markets. Multiple subsegments growing.

Tom confirmed deferrals are resolved. Improvement across all end markets except single-family. Multifamily starts up 17% on trailing 3-month basis.

Tom said power generation projects will be a late 2026-2027 play lasting ~5 years, very aggregate-intensive. Expects more gas generation initially, then nuclear.

Tom said data centers will be a bright spot, warehouses have been a drag but are starting to turn. Trailing 3-month starts in some markets have turned positive.

John explained components have hovered around flat, offset by industrial and data-center heat-exchanger demand against weak railcar build.

Rafael outlined headwinds (railcar builds potentially further down, input cost inflation, electronics obsolescence) and tailwinds (modernization opportunities, acquisitions ahead of plan, new product introductions, incremental demand). Tariffs remain the most significant financial headwind since 2019.

John detailed tariff flow-through timeline: absolute tariff costs rose exponentially through Q1, expected to plateau in Q2, then dissipate in second half as prior year comparisons normalize. Q2 expected to closely mirror Q1 in revenue growth, margin growth, and EPS excluding non-operational items.

Rafael cited stronger 12-month backlog coverage for 2026 than prior year, all-time high total backlog with further growth expected in Q4. Bullish on Kazakhstan, CIS, Brazil, Africa, mining, and transit.

Rafael confirmed core services (ex-mods) growing 5-7%, driven by fleet age, innovation ROI, and share-of-wallet gains. Combined new locos and mods expected to keep growing into 2026.

John identified four margin drivers: mix (biggest, timing-related), expense timing, strong productivity from Integration 2.0/portfolio optimization (sticky), and proactive cost management (sticky). Declined to quantify.

Management clarified combined mods + new locos growing high single digits, with some customers shifting to new units rather than a structural demand change.

Rafael cited strong international pipeline, improving backlog quality, Integration 3.0 and lean efforts as upside drivers. Comprehensive walkthrough of growth vectors.

Ward noted asphalt well-positioned with Minnesota tank farm for winter fill; California has indexing. Concrete now only ~1.2M cubic yards in Arizona, down from 10M historically. Energy costs manageable.

Ward provided specific Q1 demand data: warehousing +57%, data centers +62%, LNG +20%, shale recovering. Pipeline includes 10.6M tons LNG and 3.27M tons data center projects.

Ward said Precise IQ is boosting win rates in the East, full rollout by mid-2026. Data centers are currently a few million tons (~3% of shipments) but growing at ~60% in Q4. Warehouses also ~3%, growing ~40%. Manufacturing decline rate slowing, pharma (Novo Nordisk, J&J, Eli Lilly) offsetting semiconductor/battery slowdown. Michael expects manufacturing to inflect in 2026.

Ward sees continued value pricing journey on acquired assets. Data center spend coiled spring: new phases go quickly, brand-new sites need permitting and utilities, a long steady climb.

Ward noted organic pricing 7.4% vs reported 6.8%, signaling acquisition pricing upside remaining. Guide excludes mid-years but expects them. Pricing trending to higher end of guide.

Guide excludes mid-year increases but Ward expects them, particularly in newly acquired operations, similar to prior year.

Jim clarified the end-market growth figures included acquisition contributions. Ward reiterated the measured guidance approach with preference to guide up later.