PACCAR (PCAR) 24 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Ken Hastings	Director, IR
Ron Armstrong	CEO
Harrie Schippers	President and CFO
Michael Barkley	SVP and Controller
Steve Volkmann	Jefferies
Steven Fisher	UBS
Ross Gilardi	Bank of America
Ann Duignan	JP Morgan
Alex Potter	Piper Jaffray
Jerry Revich	Goldman Sachs
Joel Tiss	BMO Capital Markets
Seth Weber	RBC Capital Markets
Andy Casey	Wells Fargo Securities
Jamie Cook	Credit Suisse
Courtney Yakavonis	Morgan Stanley
David Raso	Evercore ISI
Sameer Rathod	Macquarie
Joe O'Dea	Vertical Research
Mike Shlisky	Seaport Global
Neel Frohnapple	Buckingham Research
Rob Wertheimer	Melius Research
Mike Baudendistel	Stifel
Adam Uhlman	Cleveland Research
Rob Salmon	Wolfe Research

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to PACCAR’s Second Quarter 2018 Earnings Conference Call. All lines will be in a listen-only mode until the question-and-answer session. Today’s call is being recorded, and if anyone has an objection, they should disconnect at this time. I would now like to introduce Mr. Ken Hastings, PACCAR’s Director of Investor Relations. Mr. ahead. go please Hastings,

Ken Hastings

this would Officer; on welcome is the of President President joining PACCAR’s We Executive Controller. Armstrong, phone Harrie and Michael Officer; Ken listening Barkley, and Director Schippers, me And Relations. those webcast. Chief Investor are like morning. Ron those Chief Financial to and by Hastings, morning and Good My Vice name Senior

listen-only line including mode. risks any prior information members ask of I participate like introduce conference in that on media and and would with will a As today to results. conditions that Ron the Certain involve presented affect be general, calls, the and expected Armstrong. may now competitive we forward-looking economic uncertainties,

Ron Armstrong

by of and truck the driven trucks PACCAR's and am in truck our profit finals conference achieved were global excellent than last in DAF PACCAR of XX.X% date parts XX%, services analysts first for quarter. six leading truck services, revenue. XX,XXX $XXX second who products in PACCAR compared Good the $XXX first quarterly -- demand of who first record above report May, orders Class forecast proud income share world-class delivered more same half X.X a and strong and year. the other months period first XX X to of pretax consecutive products morning. delivered XX of strong XXX,XXX innovative and to range outstanding PACCAR's our have operational the return reflecting were XX,XXX year were record half gross revenues XXX,XXX sixth ton pleased net the second to I aftermarket achieved after-tax generated net year. and this Parts participated income profits higher XX% Financial margins and for were in in record industry-leading to is outlook. its higher XX% million, products to ton sales last freight quarter first and of PACCAR was and on parts results orders compared employees million orders U.S. investor financial investors above and DAF's X.XX higher robust year. quarter year. XX% of industry a want Revenues the PACCAR XXXX. demand revenues the to last customers record and and European the Canada of and record Services and Eindhoven this billion and facilities employees I during of and quarter of quarter the to XXXX PACCAR and extremely DAF second proud the X% market year. DAF's team share to worldwide. achieved in services. thank truck the good our XXXX economic units performance. of the a market the more industry double than strong a record

Deliveries quarter. trucks shutdown. slightly compared bill second America, offset fewer deliver in partially in more Europe by this the in quarter to be to will to year expect third the summer normal due higher the We North days

million at economy's PACCAR expanding other The last the Parts was parts their XX% driving an half. of margins levels same higher year. and $XXX business Customers return truck growth the than of excellent tonnage. utilization XX.X%. of quarterly services and ago. year our be number X of centers dealers. record sales by PACCAR’s first are will quarterly Pretax trucks million, by and products high and offered innovative and in are industry driven operating truck a and gross similar freight revenues in Parts in fleets. the PACCAR Second-half operation. this vehicles a the to in PACCAR income higher to be XXX,XXX generated XX% XXX revenue engines for retail PACCAR These the growing U.S. distribution We pretax many record quarter year. investment Canadian to Class were is estimate was and U.S. than results Parts range XXX,XXX on of

industry and in electric, including and $X.XX increased At $XX the hydrogen realizing In markets the investor enabled and powertrains assistance in balance your parts the integrated PACCAR the For PACCAR's new million were to XXX advanced have and financial truck PACCAR's worldwide development company Hybrid second questions. million services and available truck PACCAR prices income has Services, benefits higher increase to this Thank trucks by years. in DAF the technologies truck to The regular increased, U.S. and PACCAR expenditures $XXX quarter last And million Used cell and per and the research event we models, boosting compared year, May, to Electric last XX%. to we authorized May, is and I’d quality new $XXX second expect are CF of pleased attendees than fuel technologies sheet for dividend the the cash additional and portfolio connectivity. pleased Board highest by very of is sales earlier XX% $XXX well. new $X last strong be products industry. flow expenses month, of capital the invest pre-tax of in product $XXX million answer quarter driver This to for quarterly five to to to PACCAR you. drive. products to year. program. share Directors truck strong by and billion Financial demand for repurchase XX% our positive million year. truck XX% facilities and in used X% an XX% share was hybrid performed million, systems delivering targeted year, have

Operator

question Your first with Jefferies. Instructions] [Operator Steve Volkmann comes from

Your line is open.

Steve Volkmann

deliveries? is sense about a to then up us a Ron to you seeing truck give of sense of X% new bit in you little out price? XX%. are a Can sense pricing sort I’m get that your you used to I’m guess what pricing? stretched far the you're having quoting So of a to that, backlog might truck ability talked out impact to get get much now some trying be I how how And of how how on related and is, trying

Ron Armstrong

Yes, new And additional of on moved prices our up earn and bit seemed and pricing, up costs the that course during have truck strong. to our backlog backlog, the up offset a pricing sales bit margin. year. is bit And a of move the that little a commodity is

build point. orders of at this XXXX number fair taking are We for

really backlogs almost all really in our of the solid, are So, markets.

Steve Volkmann

growth And I DAF is and terms XX% in I orders specifically, the in guess then Europe think that half the said market first obviously high in of near nowhere forecast. rate your you up

a So, gains order you share. that it looks and some Or may of rates DAF's there's DAF think like quite do half? fade bit second this market the really maybe you reason in

Ron Armstrong

year-to-date, XX.X% number Harrie for was year at last what DAF? the for We're and

Harrie Schippers

XX.X.

Ron Armstrong

Yes, XX.X.

So, on results. first almost gain based point share a half

from of So, CF DAF and half customers had LF second in the the press been and great CF, international product trade won with feedback introductions in -- new year. just has The outstanding. the truck year of XF the XF last

that is year. driving recognized and DAF's for that's six months performance excellent what's the really that so, well And this

Steve Volkmann

gets? I markets and peaking that just obviously bad or good sometimes that. let conditions opinion like are concerned current where as of sort But are have I'm do if is like and of the quick this it any follow-up And then peaky what look like? I'll you of curious you to things as kind about and feel the the as And is guess sort it lengths cycle something good just go might of

Ron Armstrong

XXXX the excellent good that's Parts has there demand as think feel mentioned on for products. I release, we we is based our business So, got Financial great press our business in new great. in Services very volume. about

abatement of XXXX. signs heading terms in no see and we into half of second So,

Harrie Schippers

and demand And some would excellent the I by current like freight, and economy, XXXX XXXX, emission add XXXX, our driven driven at today. by that's the that cycles Steve, and market strong bit amount economy, strong different if fuel in you was little prior look legislation the is of the dynamics prebuys to

Operator

Steven from comes Fisher UBS. with question next Your

Your line is open.

Steven Fisher

about up think due you is to To else original been supplier than moment? supplier the the guidance talk that was it were the Or at constraints? maybe the extent just versus the Just X%. what it's about quarter deliveries I on in to something X% by broadly X% was picture

Ron Armstrong

of Yes, as previously coordination -- rates, that I as delivered. that mentioned we and be to able and details what we suppliers, it up our really of go build work was the requires all through with was was that, close as

to continue suppliers with particularly America the our are supplier to quality, our see job And and teams third plant momentum we we as great upward purchasing to the working continue we a so, for in guys quarter, mentioned, with will customers. demand work And did our suppliers. as some North in support build of materials

Steven Fisher

think needs industry it… balanced you at or chain constraints is meet for or the able are supply Do relatively this and eased point production materially the the requirements to

Ron Armstrong

Yes, I would balanced, it's say yes.

Steven Fisher

are shifting And much much production from little your versus truck you bit, process? maybe if in today? are in oil overall? oil transporting gears can what about then How talk help dated market revenues you seeing a maybe just of oil actually how the of you are related getting And the

Ron Armstrong

great total products significant really business. not total percentage Peterbilt, pie. really a support in the that to segment we're it's small some areas, so is the industry, oil have we're benefits oil Kenworth and seeing The accounts seeing benefits of for all But arena. our and piece all in DAF just a of

Operator

Ross America. comes of from with Your question next Gilardi Bank

Your line is open.

Ross Gilardi

to XX% first up orders up to year, DAF as up the European world in XX%, you production, of rest Just were your go the deliveries your half want the back XX%. like of said, on are

rethought that a for far. at or So actual what out the The coming has have is why lag production Investor lagged clearly to versus I mean be of all capacity DAF. thus Day message on orders? production that you seemed the non-issue

Ron Armstrong

are North Well, look double. production I orders nowhere retail and near take mean at are And the rates. intake sales if you America, order

is customers' production just order than lumpy so longer-term over intake balancing more And of so, period rates rates and sales, production the it's order retail intake with time. usually

based capacity wouldn't on closely So to expectations. to our I has We our in Europe timely plenty as anything deliver customers to work but factory of support delivery ability their our well. read with that, suppliers the

Ross Gilardi

of at slowdown with second the be throughout seemed June. the If that in production U.S. that a sort in or look in quarter? any of market, the that overall any issues of Did ACT the hiccup second have May over in production the experience the data quarter, you for production back there you bounced to course

Ron Armstrong

No, it's the cycle. pretty normal of for this time

Ross Gilardi

there's think Class mean respect you the front ordering just the going off good. to any reason And double have remain or to to orders, think triple with double do production mean, fleets in And on payments they X I I down then going course get of charts ordering, enable of place to on? to in that or that's any queue? on you prevent any do otherwise policies

Ron Armstrong

idea relationships no We makes, with our the customers with have good what of with and a we quality have at they're and feel point about doing long-term this backlog customers. we're I lot but good set long-term other

Operator

from question Your JP comes Morgan. Duignan next Ann with

Your line open. is

Ann Duignan

slow When ago, things weigh expected levered a of a margins. said going on to think fleets on be mix that therefore and you weigh to would of we were And had margins sitting gross margins. you've then you here more mixed about quarter parts I truck would that also deliveries forward. and to your down couple One, said

just a on strong the is from see us wonderful those? in both we quarter? you what that And take did just update of can volume gross Should So, margin thing? away you the

Ron Armstrong

benefits operating XX.X in the XX.X saw Clearly, margins quarter, in the the quarter. we Parts of quarter. first were second the volumes in

margins half half to think margin, excellent the second will the to XX.X% XX% to be range. the so As we we comparable look of year, that the first the half that second for

Ann Duignan

in so the now, margins level Is likely the the either XX no at on FX fleet gross mix about What second to at EBIT half? XX.X no weigh nothing. or FX? to So, level issues or

Ron Armstrong

saw exchange rate of but that exchange on So, to didn’t affect the added benefit margin percentage. dollars, what it the rate we the is margin

Ann Duignan

today? that's will less stays be That of tailwind, where a a if currency

Ron Armstrong

It of terms percentage was not factor margin now. a in

Ann Duignan

and Will expect what that IAA? vehicle display. And have an could electric on truck the showing that's at then will years said, delay. up of And have once tell exhibiting to following almost electric three heard year be the you to is one by about us that every your what just understanding we've My things truck of Hanover show? every OEM see on, we competitors that this should

Ron Armstrong

I can't what comment on the competitors.

You have ours. obviously seen

have written in You ours.

show. have have those so yes, it at will a the -- will So, take track, test the we had Hanover you chance we to display around

Ann Duignan

Yes, drive it easy manual and remember make didn't mine for too. was a It me.

Ron Armstrong

job. did great You a

Ann Duignan

DAF only of any leave I’m a interpretation just QX, going that QX on sales quick in order orders right XX% that then given the mean follow-up And does orders registrations are year-over-year? picking what versus that are where And the up anticipation increase assume these and for Is to I’ll in about X%, up. there? the dealer it XX%

Ron Armstrong

The orders are trucks, demand. driven and our orders driven orders of by but so, sell majority are obviously stock by we the customer typically vast that's customer some

you second quarter? So, do the no exception with DAF, have Harrie,

Harrie Schippers

we XX% up a Second Last quarter quarter second year. too. year, strong last had the second was compared to quarter

Ron Armstrong

Yes.

Operator

Jaffray. Piper comes next Your with Potter question from Alex

is line Your open.

Alex Potter

Europe. questions two maybe one guess I on

heavy that you could Western duty versus you're medium might created so of mix that comment delivering? Europe. should know obviously be if its or any are trucks profile all duty not in First you of Europe on seeing trucks interested I we or margin have trucks if Eastern that its terms volume Anything all, of for trends was what what the equal, about

Ron Armstrong

the really has that been driven tractor the side by say occurred is share DAF. I’d So, enhancement

of half the For tractor in Europe. the the in -- first a had one it this year, market was number

XF, gain fuel long-haul gains is fuel or the highway So, the so. by on well efficiency appreciated again On customer. CF, are really the X% efficiency average,

that of a did in particular we see So, a area. bit increase

Alex Potter

right that I’m reading correctly. That Is should that if or… accretive, margin be

Ron Armstrong

all pretty heavy are about representative the margins talk you up the Yes, pretty, when side.

Alex Potter

Europe. then I on guess also And

you if cyclical could historically violently this maybe step I take know Just a maybe been the not back, as it's U.S. as

just maybe cycle, on three the feel? just years term anything, a update the general maybe If sort forecast European longer or specific not of two, us four outlook could your you or for

Ron Armstrong

are for -- growth been outlook growth for is radar Europe and and mid-term. and done it's general central prudently, quite and we in has Just feel, change managing or to the the see bank it's our for economic five near others going And the economy four, mode three the years. that and nothing inflation in

Alex Potter

last one. And then

Specifically sounds margin, at which numbers seems you a gross doing had downside It was some for margin in mentioned has margin gross parts bit surprised from are well the gross least or been quite standpoint, a I there parts like… major like on It segments particular. no little about.

Ron Armstrong

go I with quite well. would

Alex Potter

aftermarket. parts of been or on you to prefer the prioritize would steel, comments any primarily from or aluminum chain. Well, by ordering it seems instead chain be Yes, of I'm as exist and borne but maybe the like of that's sort things pressure that like. bottlenecks so that people insightful? have that just seems or the lot it oriented of what supply the incorrectly, to from it extent OEM from reading looks delivering like it's out listening the It any of see a topic But part to cost supply comments didn't pressure apparently, that,

Ron Armstrong

and supporting business obviously the we done to suppliers that, factory keep you No, both I the have total business. one. running, aftermarket job the that our is products But so got as factories great a think job and look

this at supply shape point, we're So, from good in support a standpoint.

Operator

question Goldman Sachs. Revich next with comes Your from Jerry

Your line is open.

Jerry Revich

XQ years, you of versus higher And wider can XQ year? give and margins wanted because of your parts I'm half, on to we've either margins ore XQ? Over folks. than just if And comments granular expectations get the gross just three than mentioned timing like I more you wondering, What some talk if gross have XQ past deliveries XQ margin more see, half. mean? back lower just margins cadence about of seen that rebates. does contexts that. us look seasonality from XQ you first this can Can we than that you

Ron Armstrong

be we They'll that the talked range in about.

Jerry Revich

both XQ and XQ? For

Ron Armstrong

Yes.

Jerry Revich

in read an Xth. be assess then, base? any place you on and looks could base your you folks your sense were put whether Do And impacted that suppliers July early just on by tariffs on rough as your for of have impact of the talk tariffs? about supply supply you how that the Can what's the

Ron Armstrong

reed think business know is what our going on the impact to I operations we that significant early and based is there to not our expectations Yes, a now. for be

things arena. quickly can you As know, change that in

Jerry Revich

seeing on be will for force update And how kind you productivity us new of next versus give a are as round us and the just lastly, much flavor productivity shifts? production you seeing you the the from the just labor up significantly ramp can you that of in are What of overtime that increases? Can folks production you the U.S.?

Ron Armstrong

adding is the to Most shift second our demands shift or of just it factories. mostly the first support our second to operation in

Jerry Revich

seeing how complete? you are productivity the does so shift, that And as that are that you adding

Ron Armstrong

mean what management would structure and up the we that structure with sure. as are fixed consistent and see. It's go leveraging you typically I facilities, structure cost for you the of supervisory

Operator

Your with comes Markets. Tiss Capital BMO Joel question from next

line Your open. is

Joel Tiss

give and us geographic a about wonder, you're you Brazil other at just to I that any of markets update might little looking that interesting. that generally bit on can turn an be out talk maybe

Ron Armstrong

a great team we the very to Brazil, of going great customers. product to market. has We're having well about our received before done the for increment It's by a as production. Yes, talked continue job

month deliver in share some probably year, last XX For twice this roughly of think which about above at the X% the as I year, about share growth year mid market trucks yield Brazil. will as we'll a further many did we through ton

so and long-term leverage to doing fixed excellent. able and to doing dealers be we'll business. continue that continue being to Brazil prospects you're So, develop great, costs, well team so is are the The for

demand look at Mexico in our XX% trucks share the in heavy good, is our generate of of good, around sure continue we so here other economy primary strong world places the as at markets we or at sit as world good, a in Mexico. like Australia products building in things you Australia demand and the today. good outside Turkey the around know the company parts so to is the truck are is of highest You rate for market Russia,

Joel Tiss

and couple a purchases? million down up nit-picky, of do share aimed the going you that take your is you Is little receivables just soaking at count a little can just parts Or up Or options? is there and little to bit? about inventories else a And -- revenues, of talk extra share forward just have inventory? wondered there And I strategy above a going XX%, your about the well which something are is to like on? aim there $XXX a

Ron Armstrong

recall, So, be the back we active you as price. about current some deal, to in be the quite you at buy I It's the share typically we mean and the market. And inventory, receivables from or over so close may not should the as should time a shares -- repurchase know we'll time Christmas holiday thinking of may factories period. bargain down the

and look inventories so, receivables activity than are the at they levels year. the than lower could are quarters if to you at And relative of yearend other three

we're So, effect metrics. those of both on seeing that of some

Operator

with Your next Capital question Weber comes RBC from Seth Markets.

open. is line Your

Seth Weber

making for go its any to want to a it business of to usual? just kind supply-chain Is here? of Just investments is ask extra Or back sort along suppliers as in them discussion help PACCAR second.

Ron Armstrong

can much investments business and a circumstance as happy support those have we of make them are from where there's PACCAR. suppliers is had to benefit more it pretty history but support if to a say suppliers win-win and us would than we usual, I long

Seth Weber

Okay kind for of unusual DAF? but nothing

Ron Armstrong

this at significance of Nothing point.

Seth Weber

areas, just has the just raised regular Can upside in activity or engines follow-up you there. you to what source surprising your revenue business, prior you just business maybe its the strength parts the whether just outlook, to frame been or just then And expectations? the the relative the outlook of

Ron Armstrong

part but every PACCAR than growing engine Yes, day. is MX engines of higher because are nothing we I’d surprising, say average the growth parts

building at of it XXX% putting vehicles are production Europe. DAF they We engines in rates are PACCAR record in and

are now for XX% eight are high engine been putting ongoing in production in rates. we're trucks the field the just see at We the starting and so And which parts engine the years sales. Kenworth is engines benefits Peterbilt to XX% MX of and

all ongoing have big our focus PACCAR just to uptime they teams TRP great best and with just -- that's customers in in some stores initiatives an customers. together coming e-commerce our put supporting programs to customers results their done Our recognized service the the yielding the those things for the back fleets basis. and are way industry and A of initiatives keeps parts support on

Operator

Your comes Wells Casey Andy question Securities. with from Fargo next

open. line Your is

Andy Casey

might implies in first revenue just from from question year-over-year consecutive XX% with second outlook flapping the slight the to growth going midpoint, XX coming XX%, that to that's prior into Can half. the are decline to and the sequential after half from I about to XX a to be different when XX the to and mean help the back then Parts the it you key looking from out? at clearly, up On quarters you like of Seth's perspective. factors moderation slight half half, first expect causing the X% the second XX% also X% us in a you for

Ron Armstrong

conservative be able parts what I are the to going listening do. at not that's Yes, they guys to think corporate that the guys to

terms doing -- our that at are initiatives the trends and -- ongoing team parts of have and great just a just outlook a obviously little the bit lot we is point. So so this conservative job, of are in we been a expect being appreciate we

Andy Casey

sequential has then shifts have And too But that you're impacted to a any this. export hesitation? bit if in demand little any region? early seeing the what it's that And so, any I'm wondering just maybe currency where see occurred

Ron Armstrong

search just demand. of think currency I impacting my mind, sort I'm can't Well, in of

is is but cost from again price nothing I our impact time-to-time, think and there demand and significant. currency realization

Operator

Credit comes with question next from Jamie Cook Your Suisse.

open. Your is line

Jamie Cook

incremental second and to talk visibility was specific to Europe to America just I guess stands then back well? your year my North just some you probably relative you we should question given won't about you just last XXXX, as them because expect first be or XXXX. are of we that robust? about improved guys expect what industry forecasting. is experts temper we if how can just this here And level? to margins are we visibility cycle that the about in this as Can should question, think growth think Or where sitting stated as the comment I mean, into from far rate

Ron Armstrong

of If quarter there backlogs you make year at spots globe, for strong intake around a of order sure what's end about see that build that in look next the need, perspective. next in year we we margin half to shape the again, from is trucks they orders, the their are sort so will and combination And second expect as the the for get future are what and and reserving current and while and bring. fleets year standpoint we've are that great year's and talk

Jamie Cook

your is year? versus greater today visibility we as is last here sit But

Ron Armstrong

for think I sure. Yes,

Jamie Cook

to forward? incremental XX% going normalized Is sort before, are XX%. of said just you've the that margins then And off table

Ron Armstrong

it's years that's up Well been metric. pretty I think that's and what for good down, so

Operator

next Your with comes Stanley. Yakavonis from question Morgan Courtney

open. is line Your

Courtney Yakavonis

Steve's you pricing, a in you've on pricing been of think orders. back have I bit going better past in your get little the able Just smaller truck to mentioned that to question some guys

are coming of then is commodity the now, smaller those on been and those And -- pricing I'd they business? through of lot in So offset the orders that just also, a it cost been our you have Or fleets? getting curious still right the has to Or lot Parts big has all from volume? any on pricing backlog orders? be a

Ron Armstrong

that in build backlog. as been has in well pricing of the normal in pretty the the think of I the are terms as customers mix

mix don’t goals pricing targets. constantly we side, achieve think a particular is the managing difference. and the we that team to on basis. I our is job the So, price And ongoing again does and of there what's need that the margin good on can our parts competitive And any monitor competitive

the in I analysis first half price the we've year. in realization the think seen just XX-Q this system business some parts in

Courtney Yakavonis

Is it anything the it? more then thinking the the you about manual in up. And now? curious, it's has used the talked anything been? know been we look -- kind And like market, you just we should think you about used I these there than markets of how be automated markets Or younger when used there trucks right today? just about about of Are obviously what versus pricing historically is know mix

Ron Armstrong

would is benefit from say that, the latest you'll move starting perspective our America more meter the trucks, coming truck as of Euro I trucks will some now forward model which trucks that are used forward. pricing see trucks, what X.X are have we used the North in the going the X back developed on our truck

Operator

ISI. comes question next from Evercore Your David Raso with

Your line is open.

David Raso

the the the straightforward year from improve cost price cost cost, reported. here? price versus just and And rest must've first Just not Price the quarter as question, in versus I price improve missed versus of in this. a does saw the just Did it from quarter? we what

Ron Armstrong

the the in second So, without quarter, similar the and quarter I first saw I -- think know it second in year. similar of it'll half to I was think be what the was you we think

David Raso

stick? I Or bit? for 'XX. again, orders percent give 'XX the this, missed are sense the extension orders first a half the spoken of a little the you Can have it And assuming visibility into builds the of of of what all for might say, quantify

Ron Armstrong

up, picked about to that want this No, we've point. talk don't at

David Raso

you. Alright, it. I Thank appreciate

Operator

question Your from with next Macquarie. Sameer comes Rathod

line open. Your is

Sameer Rathod

any of or thoughts waivers Clean on discussion could the been recent thoughts truck impact state think I the Air any there's potential California, the revoking market? current administration about have in potential that some on the

Ron Armstrong

about and for our what X XXXX. has been for the it current think law We XXXX we managing that. established don’t know And know hypothetical, we're is. gas so what It's really phase We greenhouse And deal business that's we'd we're to but right with on exist. so, focused if focused with we're what time, change we now something deal that laws the were what the to at know, XXXX, that on,

Sameer Rathod

Okay the your any in finding thank having question labor you? guess facilities, labor. is Are you thanks, on of I next difficulty

Ron Armstrong

great facilities. We have

a that's and have provide rates recruit in salary problem for we that. We our have typically great our to fortunate and communities we're don't support that a we're head to we that increasing We great any count and when employees so support build well-recognized work. benefits package place people to

Operator

next O'Dea Your Joe from Vertical Research. with question comes

is line Your open.

Joe O'Dea

attempt and talk XXXX really these trying speculation you I fleets point build are be prices of to make not that sure opportunity some at year do orders? now could the model increases. sure I I an thought that? of there think being just address Typically, large for to When not get strong this those make to about take of you get more And give customers in do that demand and that XXXX set that you away we some and so in what is environment orders price some slots. by of you think how price some early think you advantage about how guess, they front ordering there's the

Ron Armstrong

typically again, brands Well, competing and there those is to for multiple have competitive transactions, the you in marketplace. be

what the it's bear. will market So

Joe O'Dea

bids. and so those? on you a less competitive at lead get extended little bit all have the multi-brand times have done what price ease seen those competition you dynamic competitions guess and I they backlogs seeing you the in Have just that done when are and

Ron Armstrong

I’ll typical. circumstances. It's very normal typical say in it's very

Joe O'Dea

and market delivery demand the some just pace units on so. that to you are duty, are And And where dealers big then of share looks to of these sizing the talk going there? given stock at that be would about is? slightly how trucks stronger the on deliveries It new we about about trying medium like Europe ton levels would are XX.X% who think that XX,XXX. north or XX Can be a are XX,XXX when you you XXX,XXX, over midpoint just

Ron Armstrong

of -- We sell of outside market. selling lot are we trucks European a

East, Africa, So, Eindhoven not production America, Turkey, is from those, and is globe. the so for market South Middle Russia, for European Australia, Leyland the the just

Joe O'Dea

guess is the Where Okay, of a you seeing you and I if strong are that UK going is it but now? got share there. share some down have outperformance

Ron Armstrong

share central well but Hungary markets Eastern really Czech doing Poland, are France and we Spain. So, like grown where is Republic, we've Europe, in Germany significantly, Europe, also

Operator

Seaport Shlisky from with comes question next Your Mike Global.

Your line open. is

Mike Shlisky

the just rate in was run of so half at be low run year. year The of as in back budget. your far R&D if full the end as as in the the And with might up this year. first start anticipate ramp for outlook to far wanted the I you can wondering, half seeing So us I a sense R&D the well? what you a the XXXX spending give you rate in of is

Ron Armstrong

half Yes, be I pace to a the $XX think year is about quarter next be year. will second million to quarter the of similar I million look think $XX and spending at this to

Mike Shlisky

post-election some and or over it was detail impact didn't Those on there pent there on up wanted in going into kind are it XXXX also sort road. business Clearly, could demand quarter in I just sorted quarter? received And My how any freight some here was and all that your there quick Brazil have was very of there? the highway a was get during I on where there. get the there second it's well fleets late out? was you once of strike be up miles the gets to to wondering, some question truckers continuing. jammed are 'XX is, if And the

Ron Armstrong

truckers those getting made dot the so demand The The as and particularly trucker strike seeing into economy parts was or the up lots have a product. in of have yes, where potential country this growth terms week us excellent and and we shipments, so a that speak. challenge, factory. the made customers of being trucks affected Brazilian we're was from to strike, and absent There entire year been is for or the but

so to in our And billed if that year. our be the grow to future. the rates the half of we continued And going increasing as hope, second we in business mentioned optimistic we're we're

Mike Shlisky

there? well. Just in follow-up the X, start X point or as that Brazil If you on to a part where of now quick this parts that you ramp in X, that have your X Or any kind see way. X story Is of world? of is more up during

Ron Armstrong

it's and more the connected time. all to other It's extensive transport as and companies get the get parts, incrementing more field, numbers shops. up get the service because of in -- with relative relatively more every month of the more trucks and dealers markets ramping our basically our low It's into the all the but trucks increased their the

as business growth ongoing go an it's we So forward.

Operator

from question next Your comes Buckingham Neel Frohnapple Research. with

Your line is open.

Neel Frohnapple

outlook for trucks, over but your few market the for biggest It North next the do half remains for sounds in quarters? supply the America you strong XXXX? that's risk view second industry about given truck hitting increase and very in could the talk pricing that the demand think their X used Class the in you the be market of into can year Ron, like used

Ron Armstrong

a I No, demand. good all risk there fact significant is that's at don’t it's in feel

Harrie Schippers

go alternatives. times trucks lead new become interesting more as up, and And more used from trucks

Ron Armstrong

Yes, so very as, it's right market late model good now. a used

Neel Frohnapple

increase from You moderating don’t here? all is changing or by at anticipate

Ron Armstrong

develops. Yes, but it's will and second first start see a for that how half I we think, it used we good in like be trucks to going as day, good here a feels it half said

Neel Frohnapple

won't the for to that's in And imagine I would a the XXXX exceed think of But, I expectations the XXXX on just certainly specific outpace of as there I MX digits earlier the questions you business, mean considering penetration in growth sales And my follow-up the continue continues is business and like the when products understand to engine to benefits expansion I can reason business industry. products and any guidance. grow TRP? double the provide

Ron Armstrong

at I Yes, that we don’t how will see further point. comment this develops. have on

Neel Frohnapple

the TRP increase one, year-over-year basis one how in a quarter? last And on the much

Ron Armstrong

XX been think than at look comp have stores you I months if is for in sales the and same So stores stores existence at TRP that more the XX%.

Operator

Melius question next Research. comes Rob from with Your Wertheimer

is line open. Your

Rob Wertheimer

parts expect really of steadily. X the that XX you tricky but when initiatives. had are I tremendous of or or of to mean, growing cyclicality I all in should question that we business? getting able from points growth it's also running downturn the also, know whether whether on that your don’t it's very success it’s cyclicality to execution business the on guys such answer you maybe Are comment and So and as have comes you

if So gains is or measure in have you if any downturn? downswing business I that you've that just there market you way to eventual had don’t expect, share know, upswing

Ron Armstrong

-- over are but day the overall industry. all less business rate and cash obviously market flow clearly day to that our Yes, faster the again, than parts the initiatives look than steady it a difficult And much together, has think is grown put to the that share, time in I out. keen trucks. to if I've I is measure volatility you of And at the attribute revenue source it's

Rob Wertheimer

question day margin but just years maybe margin. mean margins going been prices you oil pick end few and the of and at cause maybe parts of up some distribution and up partly quick just time No, there the was on keep a falling, and exceptional up. some then it's I when costs just a back a the fell businesses your other

your ever. as So at competitiveness these levels than is I margin better good as assume or

You don't even that fears have any part. on

Ron Armstrong

all. No, at not

Operator

Your next with question from Baudendistel Stifel. comes Mike

Your line is open.

Mike Baudendistel

PACCAR And within saw transmissions? PACCAR press that vertically big going needle? that to its engine. you're that's bit release a to transmission is about going the move and think You the you just little talk share Where you integrated the to has do go? enough MX-XX offer Can the with

Ron Armstrong

sort Mike, with of so that apologize, I it's that. of excellent. current I come we'll transmission to just back let a the but rate what have of engine, that penetration assessment -- me is, the don't on don't know I you

Mike Baudendistel

lot quarters customers have to of in of where just from just types quarters are you really What extra bit demand a ago seeing of couple a seems of versus electric customers. sort Can than it a demand talk that market about you you know -- electric? Okay, you you're sort wanted sort which little ask also, a ago? more few demanding said And the when there did of of no you wasn't confidence you problem. maybe like

Ron Armstrong

don't think demand. there's I more much Yes,

had some just You level environment regulatory the as be of to zero emission prepared dictate vehicles. may

we've The quite the two and our diesel of of So, an so. more electric times reality continue capabilities we'll a active been is in do developing the vehicle than of to engine. price cost

You've issues, got some issues. weight range

viability not the is electric So, great. economic of

I things. any cell sizable has and infrastructure market there's so to huge don't -- a to electric but years. for demand going other prepared, have for And think the A portion or you be happen to lot fuel so five next for hydrogen XX to be of the be that

Operator

next Adam Cleveland comes with from Your Uhlman question Research.

open. is line Your

Adam Uhlman

above let's second are seasonality XX% kind deliveries? summer you And I improvement in the clear Europe an normal start from like deliveries deliveries third on expected for a in related is to not And short America, for quarter? up down shutdown we up the to are is are in quarter. some that, try schedule backlog with the North looking quarter? some from First, we the the then as that How clarification a make up of to much normal to why like taking summer second and which up so, the cut get customer if look

Ron Armstrong

just most that period. that is have to managed This period we the efficient Yes, the vacation et way cetera. manage vacation

years So proven the vision its it's more way. over

that and so, Europe North will thousand we of offset little trucks America. down a be And bit couple will be a plus

Adam Uhlman

talk availability? a MX order any a could Cummins is that difference for North engine, have were America to If you in engine and capacity about today the the times with engine. lead truck in, that you And then, in I there versus

Ron Armstrong

engines completed just to able increase have factory million the in Columbus we investment day. No, engine capacity about to machining by a XX $XX be about

investment We to also engines size able Eindhoven in a machine Eindhoven. completed be MX-XX similar in to

are capacity So, engine good the a for we from future. shape foreseeable standpoint

Operator

from comes question Research. next with Rob Wolfe Your Salmon

line Your open. is

Rob Salmon

of of trucks in are just As on a quarter uptick update, got a us of to we lookout terms with that seeing a sense you red tagged have bunch third deliveries? can that -- on the sequential you me, effectively parts couple waiting delivery the excuse give if

Ron Armstrong

It's mostly anticipate. we just that production rates

Rob Salmon

newer us specs use. market X% that spec are to think last portion as that just you in more benefit the the and the the a broader Or your through to trucks falling And then, compared guys is commentary second of get used if half selling? terms XX% sense, mix start those you of with give Can of are going that up a seeing to about being in Ron, greater from your about I a think you the trucks included year. benefit

Ron Armstrong

model Yes, say will yes. most of benefit is that mix, I broader some and market the be would the there from

Rob Salmon

And fleet either perspective? leasing. plans that there? from PACCAR really the you're business, truck growth market give us a what utilization sense the you piece the And in of for smaller of your Can end seeing

Ron Armstrong

well a is in the the leasing demand. leasing our are up dealers the is who the there's market Yes, had ours they supplemental operate year, really for transportation capacity trucks a PacLease as have orders franchises, demand year-on-year. leasing lease needed, excellent trucks, as there good When and with good business utilization the and rental

a been year PacLease. that’s So, really for good

Rob Salmon

financial us, that remind of represents percentage you guys? leasing the services the business big Can for you is the how

Ron Armstrong

-- about -- trucks trucks truck we have it's XXX,XXX and portfolio of there XX,XXX around Yes, operations. a XX,XXX the in is PacLease

So, XX%. there to a is XX%

Rob Salmon

of over it's same the proportion or leased the as cycle? So, regardless its financed guess a I of earnings, being

Ron Armstrong

That’s correct, yes.

Operator

are other from Company? the this at in queue any remarks the questions There time. no Are there additional

Ron Armstrong

you We’d operator. to for participation. their thank like And thank everyone

Operator

participating. for this gentlemen, Thank PACCAR’s earnings and concludes Ladies call. you

now may You disconnect.

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.