PACCAR (PCAR) 21 Apr 202020 Q1 Earnings call transcript

Company Profile

Participants

Ken Hastings	Director, IR
Preston Feight	CEO
Harrie Schippers	President and CFO
Michael Barkley	SVP and Controller
Stephen Volkmann	Jefferies
Andy Casey	Wells Fargo Securities
Jerry Revich	Goldman Sachs
Tim Thein	Citigroup
Ann Duignan	JP Morgan
David Raso	Evercore ISI
Joel Tiss	BMO
David Leiker	Baird
Ross Gilardi	of America
Jamie Cook	Credit Suisse
Steven Fisher	UBS
Seth Weber	RBC Capital Markets
Courtney Yakavonis	Morgan Stanley
Matt Elkott	Cowen
Felix Boeschen	Raymond James
Faheem Sabeiha	Longbow Research
Rob Wertheimer	Melius Research
Joe O'Dea	Vertical Research
Rob Salmon	Wolfe Research
Jeff Kauffman	Loop Capital Management

Call transcript

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Operator

Good morning and welcome to PACCAR’s First Quarter 2020 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 any objections, they should disconnect at this time.

I would now like to introduce Mr. of Director PACCAR's Hastings, Investor Relations. Ken Mr. go please ahead. Hastings,

Ken Hastings

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

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

please For the SEC Relations see and filings our additional page information, Investor on paccar.com.

Preston introduce Feight. I would like now to

Preston Feight

I begin their work by all my appreciation today's a challenges Harrie you and PACCAR their and morning, bright update work employees results towards quarter and hard as Schippers on expressing to business and first Good highlights. like for upbeat tackle to our future. spirit and will we sincere thanks I'd our everyone. dedication,

been share help I'm to who organizations hard to million other communities. working pleased are support our food industry to communities business. our $X United the are thanks and to women has want around who The world. to Way PACCAR by of the medical and to the critical affected and has gratitude with services our trucking an dealers as to PACCAR employees providing delivering are to also I donated pandemic. men millions customers and support declared essential supplies, along essential the those Foundation our express my that

at aligned measures, suppliers of The are gradual government resumption distancing selected business restart being directives, and for is of and office parts weeks, beginning Over timing and with availability the work social our truck few plants needs. we each factories. implementation our next location specific a production from

ensuring the our health families. priority is and gradual their our restart, on employees of and this During highest safety

net revenues was income. a services first first $X.X $XXX Parts delivered achieved $XXX results, Looking first million. million, income financial our financial quarter. year. quarter quarterly at billion, first X% quarter PACCAR quarter were PACCAR's good record during and and Parts net first million. PACCAR sales profits the revenues same last were $XXX higher trucks pretax XX,XXX and PACCAR achieved of XX.X% Truck were gross Parts the the in than quarter. period margins and revenues

The costs. $XX in $XX of product results first pretax for accruals income million. million higher included quarter Financial achieved support PACCAR

above delivered Kenworth market excellent market in heavy XX.X% U.S. market to to duty Brazil first compared year, X.X% Canada XXXX. And the DAF share of quarter XX.X% DAF, increased Kenworth increased compared year. XX% in DAF's share European the last year segment, Peterbilt the the to quarter quarter. last in to fantastic record and a share share first for and XX.X% to in market to full first XX-tonne X.X% and increased compared Peterbilt’s work.

revenues. product over global market we quality, truck ownership. margins not and PACCAR by technologies, low next gross provide PACCAR will to on in of of innovative the is customers value grown excellent environment has The guidance at long-term our steadily XXXX and deliveries terms quarter’s and share truck cost Therefore, time. uncertain total industry estimated this delivering market macroeconomic sizes, Parts

doing through the pandemic. are job excellent employees Our an managing

changing and cost reducing development to including aligning capital research the conditions, rigorously market and are costs. We investment,

profitability consecutive result years discipline, we've the a of achieved Company's culture XX As a strong bright have and future. and of

Harrie? Schippers Other now Financial Harrie update and provide on highlights. will an Services, Parts, PACCAR PACCAR business

Harrie Schippers

Preston. Thanks,

XX% in excellent growth flow to conservative and business. in cash an last strong was investing capital return stockholders. the first PACCAR five to consistent of $XXX for PACCAR a due combination and of profitability reinvestment approach to future quarter. to operating million flow the delivered years, the in distribution Operating a over on continues provide invested strong cash

Yesterday, has of Directors an millions, and manufacturing same the quarterly strong PACCAR Board with credit revenues of PACCAR to a achieved comparable of A+/AX per year. announced no billion cash PACCAR $X.X sheet marketable balance securities, $X.XX last the is debt, quarterly Parts dividend period regular of and which rating. $XXX share. the

capacity were PACCAR PACCAR first significant centers the Nevada. benefiting is in dealers profits One Brazil; in To has customers higher one distribution growth, Parts time. made than made parts Parts parts our this pretax platform, focused year: is Ponta X% consistent PACCAR also challenging drive e-commerce two in and is new Parts and technologies. last will record in distribution investments year. the Las $XXX other and quarter has customer investments open this Vegas, Grossa, which million,

excellent paper opened XX% is used Services Financial debt sales used including used truck commercial a additional regular first access basis, regular Kenworth increase million paper its this its capacity premium trucks. Financial -- used PACCAR competitors’ sales to $XXX plans were $XX Madrid, enhances in Prague, retail revenues sample truck in lower PACCAR results. income Peterbilt on margins. on pretax was recently markets, investing ongoing to center a open million, basis. used commercial in Financial quarter issuing which and truck year. truck truck PACCAR resale over Czech a Republic Spain a to command PACCAR and reflecting the Denton, values Services -- Financial truck and to XX% Texas has worldwide, and

During and notes, term the first million. $XXX X-year X issued quarter, totaling PACCAR

fixed rate In addition, early PACCAR April, in million Financial $XXX issued, X-year notes.

million million capital to and development XXXX reduced have to research $XXX million $XXX million and million. of $XXX million expenses reduced by a range to $XX of range by have $XXX We to $XXX expenditures a

continue capital market conditions. PACCAR’s strong us investing R&D financial position to in enables projects all and important in

their years. contribution continue to $X.X finally, make Truck in Financial thank and support Kenworth, investments have excellent in businesses dealers a for PACCAR And last and Kenworth, Peterbilt our market significant billion performance. and our DAF XX PACCAR’s customers. Peterbilt share dealers we well-capitalized to Parts of their Services DAF independent the and are invested These

your Thank you. pleased questions. We'd be to answer

Operator

Volkmann today from line the of question Stephen of Instructions] Your comes first [Operator Jefferies.

Stephen Volkmann

perhaps, let your how about a there. to thinking about I'm things production a -- about you curious number little reopening me of you're back mentioned Maybe, opening more because go detail comments.

of You mentioned regulations, local you availability mentioned parts [ph] market sort you of demand. and kind then mentioned

you reopening So, forward? we three about the of as buckets of you sort there's of expect to can there. But, go think more rate us might color any that give

Preston Feight

tell the it we right, I'd number take their two, care employees, that's and sure health we for important think as again reemphasizing of is our that's concern them. restart making of number getting one, this for our us is, actually. thing the that about keep I just That's most three you number families,

look and and our that for staying stay to our we society. practices with then restart also reopen have with sure factories important obviously we course make that of for as us, supply we we sure alignment And and restart their It's business aligned our government agencies, the we to readiness it want we make best about for the needs. base think aligned then, them, that are important to with so that's about can we how really

that it. the And employees, and all together in separation masks, barriers factories, enhanced and place we're thinking the employees, far practices spacing of distancing the we as then for protective temperature cleaning. our really protocols, we’re put the things best the those as So, where in about equipment and checking wearing with pleased are personal

So, approach all our are things those into the factories. going reopening for

And in in location in done the we kind our is basis truck of a and to of Europe and take coming going the care It of a phased plants work we some a started start factories, employees bring and the the and make already weeks the be of gradual in be location back operations on then, this will to going through rest Australia. factories the by reopening. manner. up We sure running. in It's week,

Stephen Volkmann

expect that? So, of would everything back way kind of What's to a up end the around you good level and bookends to at put running some quarter perhaps? by the have

Preston Feight

pretty That's a and about that. good feel long I window,

agencies obviously have we final thinking constructive sooner, we’re through the a answers local the in supply think, and don't that way and with are we I it working but base.

Stephen Volkmann

Great. Thanks.

Preston Feight

bet. You

Operator

Fargo Andy Wells the of question comes of next from Your line Casey Securities.

line open. Your is

Andy Casey

everybody to today. and to talk Thanks good

Preston Feight

to to too. talk you Good

Andy Casey

track I Steve's really a supply management has chain strong PACCAR guess, record. question, following on

that. You one of that's mentioned about factors. that the may Couple questions if I of

any be when efforts. the or back you and may current encountered impact/challenge a reopening it second, liquidity containment First, suppliers running? looking at could running world ease smaller terms have issues? in then, get virus have up of your operations of of to And that be to like an much How the into piecemeal kind seems

Preston Feight

right through our suppliers. Great to our question. for working fun It's teams a thing with now be

attention job matter. are They timings And informed with sure in trying moving it's they that make now tell We a they're know take to care have doing them you relationships and to when to they're been right readiness. really keeping And same trying are. are. their we and they and restarts. good us of paying when have what the good restart things doing their line to then forward can with communication doing the are suppliers of they're a their governments; of small helpful stay such really with large employees; the We're

the far we're the up. whole back getting so and truck so, part that's puzzle And together of putting factories

Andy Casey

question quarter and a Okay. And on just then, segment. the Truck the

were margins highest XX% around it’s revenue typical. somewhere higher not PACCAR and decremental XX% than kind It's ever Now, has of the but seen, drop.

growth, mentioned some give more obviously color of kind But, high. I accrual the was it on is little a running what compression? the margin You shutdown. us mean, product of you could

Preston Feight

our the book improvement mentioned, that think MX refinement engines, $XX we to our for million I that of Well, engine of continuous our that. took had was of the we as you lot the a opportunity

the doing hardware are upgrades on and software engine. We some

as customers we're as So, is be our to the will with certainly that way best we the keep pandemic And that's through its come that make the closely. that something that future engines. going like, the having to system. looks works watching all And our something want what far sure how we're experiences see do

Operator

line Your next question of Goldman of Revich Sachs. Jerry comes from the

Jerry Revich

around environment. wondering give an you conversation we levels just last could March inventories pressing am given had give all, wondering if declines we're potentially a were the here you opportunity wondering timing had in up us different us anticipated calculus from evolved lean of before could I update levels obviously on production? inventory I'm But, dealer and at on to has I'm discussion in an ramping quarter, when inventory an update restart. if we the dealer declines out and we

Preston Feight

glad to. Sure,

American PACCAR that. of retail inventory. North the industry has has X.X sales in less than So, roughly months

through of X.X months, at our retail of dealers. sales We half for have X.X bodybuilders. March roughly And is and Peterbilt months Kenworth that

worked on being that's So, now. right

now. right so, in inventory shape And our is good really

Jerry Revich

the can of be terms Parts steady what talk trends the in if the been cadence you've about part in business, Obviously of talk And has I'm to so in March in kind what April. seen far the quarter. April? you’d about very of you performance willing wondering

Preston Feight

that's of all One I things gives of a little goods interesting trucks. are just hope XX% the kind help that by and is of moved

lot as end that's happening, busy And country now of they're so, the companies the parts. our taking are care those around trucks right consuming really And trucking moving up of a and communities.

is that's things our their these have dealers really of well. they're programs. the we there working great of have perform to customers develops. team March going we'll activity of is been in But, still e-commerce quarter directly Parts kind going how and to and really a watch with programs was and way nice handling the critical and our support to watch April. So, one needs well. customers in And lot we to they continue strong the And expect on And

Jerry Revich

conversation on then, had operational discussion, And Andy the terms warranty of in the with program. the you just

that not back decremental being run we're warranty of or margins margin we that of thinking might most out look comfortable this for shut Is -- have through, So, would the if of down been of is as if April, the rate about off we that out sort XX%. of program, level the filter all throw what type decremental like? April, think does that quarter

Preston Feight

Yes.

and -- how second impact running situation and is the going product forward of forward, going I into the I state factories assessment is our the to does fees economy and the we going would develops what when But, your the we're we’re looking watch what be get support say match the in the of to that margin. think of quarter. that

Jerry Revich

that just what on program. exactly give one-time could Okay. that And a Was across the maybe behind context software just Over-the-Air a was? clarification warranty us some warranty item population, update you the or just

Preston Feight

the optimize engine XXXX MX mostly engines. XXXX to of have trucks the we our Well, opportunity performance on the our and to engines, for

always making this was all upgrades. our hardware covered software that optimally and of customers engines, we think performing our that got And that have and so, plan. trucks part accrual we And sure and game

Operator

Your line of Thein next question from the Tim Citigroup. of comes

Tim Thein

provisions I FinCo region in was I think question was that absolute of the looks at have is loss at backdrop least, again call So, than to there But going America? could about about and and not higher maybe terms customer more the -- provisions least I'm least First shorter quarter? thinking in out? had I how you a North the And -- potentially what certainly a you'd term comment within forward. level was, maybe we, just on not loss expecting, were for Should experienced think, in how if challenging that just specific set you obviously A, there a at or directionally. truckers,

Harrie Schippers

million economy resulted in provision a volatile the reflects weak CECL new under credit And increase number. more weaker $XX in accounting the loss economy. The standards

is with really weak If $XX the So, finance the in at we portfolio good company, in the provision. loss calculation shape. economy, look higher million the credit resulted

X%. We good past And of than have customers. A B mix dues remain currently low, very and healthy really very a less

in finance But So, company standards that drive accounting of reserve. the in economy credit weak the increase is good most shape. loss and

Tim Thein

curious, know I I'm guidance team sure and not with not the out sales it. one in giving not parts Maybe XX% about U.S. I'm the other exactly. me, jumped specifically. last at just is in they that PACCAR on comments of you’re day out in to how I'm But talking from or one talking like K forecast saw put that? any expect, had down aligns how But, just question. again, you closely the kind demand parts say and the curious Parts the a this I'm they I follow this K, to -- on But, not you're if be

Preston Feight

said, and the And out I on that really support I talking knowledge, of support great customers the and positioned level doing it's of really a watching have any with they're job a a that. and there dealers, still a parts not know -- is programs just Well, don't there going lot activity as at to our lot numbers. team is we'll strongly comments of needed. and got that's I we're case what to but great

Operator

Ann Your comes Duignan of from Morgan. next question JP of line the

Ann Duignan

On European, I the book values, of equipment about XX% probably used finance is residuals. your think is that, and most guaranteed of

about what these here? So, in go the we talk how business manifest can FinCo that might as manifest itself you might pricing that and -- forward itself

Harrie Schippers

in to trucks in truck over prices ago. down course first vehicles. truck premium used XX% was Europe quarter. American a the were a Used we little compared our XX% flat, down to bit prices came where of Peterbilt and competitive mostly North Kenworth year commanded

centers, is Texas. Republic in as this opening inventories, truck Thus, a just used in truck to little especially where they've bit good rest to it Anything where the if is. that? relatively the higher for than industry. in one we're retail Denton, struck added So, The perspective. a in far as good been, used one of you tell quarter, from that want we used you are really the the can industry adding shape But in -- Europe Czech compare inventory add shape, to inventory

Preston Feight

of I in the the Europe That's inventory a good does. of And that we exactly in right. position. us industry lower than trucks mean, have puts percentage used

Ann Duignan

being weaker than a weaker year. were were prices you ago quarter call -- did used Europe last than they in But out Europe they or

Harrie Schippers

lower year ago, and a a bit lower than than quarter A ago but… little

Preston Feight

wide. industry That's kind of

Harrie Schippers

Yes. wide. industry That's

Ann Duignan

give just for kind back then, us expect we the production any direction, at deliveries second as ballpark you of any in ideas QX mean, Okay. being? past deliveries cuts, quarter. any know would think what number I of QX And you a and direction you where deliveries, can to quarter-over-quarter? ramp, might see be you ramp truck least I of then about can't as But, And QX? the us give you terms in on up, you had

Preston Feight

well talk like as now three-month as see us right XX,XXX as takes Sure, a as We making bit deliveries where But, what -- period. see sure back Ann. And can second that going I our to I'd quarter. said, we take production, our biggest far about that, and were we'll the employees for. the watch forward, of in care ramp back is and come for we'll that that we'll cared the are little that and demand that up our that then align focus

Ann Duignan

you. interest in Okay. I'll Thank it the of time. there leave

Preston Feight

Okay.

Operator

Raso question next David comes from Your of ISI. Evercore the line of

open. line Your is

David Raso

My think between this that how the nuances are sort minimum. three of how Hi. about handling is ‘XX-‘XX, -- than the period in you particular, how or so is of this that this differences different you address to a morning. question if could similar maybe period trying with bigger Good what things picture, at similarities or you're and period,

You Obviously, remarks, were mentioned there prepared years breakeven. of 'XX, in were your that profitability. around quarters basically two in consecutive XX back

wanted to to is this number you willingness address which idea speak your if if XX, see Just the could being that. your to of

roughly kind XXXX. in They to declines to the XX.X%, down X% gross Second, of X.X% dropped XX%. margin were

it magnitude, to the trying of different model, parts, business the And sense get Just may lastly, what's whatever special about some be. more dividend.

cash equipment dividend sheet, the the still you back was 'XX, year-over-year. in reduce chose still greatly Your special net but company balance to

those similarities great key versus the weave try in pieces answering and of Just differences today the wanted the three recession? to to question of

Preston Feight

Sure, talk you. to with David. Good

right as we're And we an company here there. First in by as look and we stronger thinking at start got were we to even that succeed sit XXXX, 'XX. than Company the we off, now, 'XX you in did

balance on billion cash in our sheet. sitting We have $X.X

liquidity. great have We

We have to during changed access timeframe. market this hasn't the still liquidity great that in

foundational and parts control we leadership great great of our engine does Our been doing a that XX% things, cycles. job. to and lot MX know a to more know a of trucks engines costs, that experienced business we our And of and than grown decade, manage it's just job and over is team how how business, a through The And there. amazing has an have a builds. it's part we we out have has

that's Parts to a standpoint. helpful So, from us

good continues strong a environment. really we've And Just is this our move in to job doing freight is the business customers. that of care of built taking and

So, feel future and on those our product that about we field and positive the have we we're the developing.

David Raso

if But, could three flex you address the framework, some not situation in just idea may the uneven, your do issues least to those Just however the it reopening degree? obviously like at costs, you feel you expect in even how some factories be, of but and of the sounds too some your the future. special profitable were 'XX a you getting in a distant at in handling we bit little of gross guide to look Can and this a than framework that the that should better be dividend. that similar? cut roughly, able the point environment, also as The is is stay half margin

you then the If particular? those some of versus three now issues give for can parameters just difference in

Preston Feight

first share, our take is for of just indicator mentioned last we've dividends the what which one, dividends. a you the And the we strong let's done. Well, announced a quarter, $X.XX yesterday

of forward we a that's what progress decision we great that going to through the take year, as We be look have of upon to is we'll the and based future results. Board history our and dividends care a and

kind different. we've think of the what -- thing kind they of it a moved, is is an that is just the as And truth being to being of matter situation you thing, 'XX-'XX kind -- freight are got of moved. the I the freight giving a of think Each think that it's is the fair I don't unique.

Our Company is well-built.

terms We of in our have our a liquidity, cash position, investments. great position our product

in pretty the Our that feels the trucks best are good. And world.

David Raso

unevenness 'XX? a the something bit else more drive in at production, But I yin Truck in integrated hands? own decision that business of that's and about that should just the versus take more is it's your on more the time when And then. your a a Is less vertically given comfort almost up. little a the really same can of the uncertain business that in Parts, way parts and about train comfort back than we larger ramp that your the little the of out better a mean, yang you of here margins,

Preston Feight

Sure.

stronger market. the have foundational We parts

We wasn't have engine the growth America. here our business, right, 'XX, in 'XX in North

good. that's So,

thing that other growth to the been the has timeframe think, share significant. about I think over

So, PACCAR which volume share really that had great extra job. strong does us. a contributes to growth we've And time, over

good think to team Our the business, about run. business in adjusting the at and is capital be should side so both how expense

do so, adjust we really conditions. And to market

Operator

next Joel of comes from Your question of the line Tiss BMO.

Joel Tiss

give end kind more, quarter, like follow to David's the intelligence, whatever of second able sense give your today the questioning. a out? know the what you on the rest does clearer that up looks you'll thrust of a So, year like and play like is, what of hear, and to it and us Does you things and view just Ann that the see of how of be by

Preston Feight

with seems gets and you at I today share quarter a sense, than through what general we we'll next that the have think, more can point. like we lot a we’ll as us, by do information it

Joel Tiss

there's XX opportunity And bit the sense points? automation, us hinting of kind is. than like next flexibility an you to at using as time were whatever of pandemic years a a little more in factories focus come stronger then, out Can kind going I this it? into way fewer through, this You X it of a of situation and over or you the are give wonder fewer guys and internal if to give the of us some people you're sense the walk or you right you every there's of say could

Preston Feight

such our truck our to that exceptional I what at Well, factories, incredible it's comes I in just we center people, they're whether impressive with I'm go we first people. -- is when the look they or meet an factories, and them what exceptional, thing our doing. I to to my and people a or they're anywhere, go have how And first it's just of of I is proud think, a they're when are. just group distribution factory so mind

and are the and great accretive we everyday that. thinking for making of they're day. look truck at and and production new that helpful So, Sigma some This for they they is to we learn effective every us we'll how and and continue effectiveness And as to improving as efficiencies continue it more ones ourselves time doing forward. do we we'll new optimizing the tool ways we that our they’ll vein. as optimize us Six a come And And and efficient be back. and things look even business in

Joel Tiss

employees come are of for a raise very you back recording and Thanks make and this much. next Your a to going to January. ask

Preston Feight

They They are the best in the are world. fantastic.

Operator

Your line next Baird. from of David question the of Leiker comes

David Leiker

weak, are would general? products, compare about mean, are bit Could in through how a of for the to related. the and industry of the consumer parts want space and customers. there you, customer delivery dig within talk are segments I a trucking little package you energy focus. auto focus, strong, kind some and try some There for your to really your little and I are that mix that bit overall that that

Preston Feight

Sure.

protein They have haulers. seen You good on carriers what's a obviously their really did refrigerated business where job going going. just shift you as in is summarizing a look or of if at

been we're delivering leader. that long-haul right that the trucking bodybuilders well. is are So, are -- mentioned has is now. market doing of market our inventory leader Vocational strong. a business companies And And that those I where that at part segment

a built, being summer production is inventory being ready that for So, season. for

down some they're as at have customers, customers. And And a the And varies you really will have base companies, there, those base a positioned. good that trucking of of look of company. it company, models the prices good well over some is by fuel they them, think, with their a I road has Talking yang of helping one then the costs as that are you are for said, the the that as yin lower from third energy fuel that's if operating been well. XX%. of to And them sector operating trucking prices but

kind more of well. bit a that's you it. on it So, information And you little characterized that's --

Operator

comes Gilardi question from Ross of of of next Bank line Your the America.

line Your is open.

Ross Gilardi

guys. Good morning,

Preston Feight

Good morning, Ross.

Ross Gilardi

two questions. have I

to you as have all in added on move going continue a volatile when distribution you're overall and you that two a PDCs them? that increase open parts worry -- And you some network? we're the in do years, do truck the add. going recession? over big trying many guys can you like you to all lot bump at parts But, that of at the of you get not of slower that at And middle will to this as much economy limit and how for the last granted, how how period of X XX is time, point to and in distribution a longer distribution centers cycle. like about footprint markets just up represent to global if that expand adding First the quantify a to Can a will ones capacity -- additional I'm

Preston Feight

Sure.

that just in centers, adding to a in facility down XX have as was know of it. couple we're more weeks we'll We are about beautiful. new ago, distribution two the excited Vegas employees talking move be And one, there Las it's I

happening that's is to practices them use and share. gain things always And the the around those opportunity of one to best we to there's think, continue share. I distribution centers gain

advantage of dealer is to more one body, competitive levels, key against That we're centers customers to able distribution deliver our maximum then parts at a to our our closely example, aligned For objectives. more us and gives our overnight are which keep the uptime market. their

and the us of quickly part and it's business. and not to thinking. the the that's for that's really parts grow the storing, been about successful as customers getting helping So, them team possible, just parts about as It’s

Ross Gilardi

Okay.

will is -- to the fair increase? you're the parts all of I XX% And business like a a for are second continue So, the similar in benefit will this this network type adding event it that'd don’t of know from event fairly in is second that of quarter help a top-line XX, just the they sort on a -- half some size? If be year? support or fill pipeline if to business

Preston Feight

So, right And but the right the is variation in magnitude. top line the of same some continue orders XX%. roughly saying support size PDCs, of the There they're to the roughly of you're yes, in growth business. will order, it

Ross Gilardi

And us very I quantify But your regions? be other Canadian your can portion or the tricky. network just like And anything energy dealer of U.S. what least, exposure? got it's that then in would region you. at Okay, located useful. is energy-dependent lastly, could really you Gulf maybe the that tell you you realized and could

Preston Feight

Yes.

We overly in sector. have portfolio. It's energy concentrated very diversified a the not

-- customer of that dealers But, some the dealers have doing such exposure. our parts even there and are that throughout a more good absorption, bases, themselves. are they great just good have businesses building job dealers So, obviously diversified have service businesses their that for

And so, dealer body shape well. is in managing and that really good

Ross Gilardi

Okay, thanks.

Preston Feight

bet. You

Operator

question Credit Suisse. line Jamie Your of from Cook the next comes of

open. line Your is

Jamie Cook

probably truck U.S., understand would about hearing talk they're I because telling are you're and whatever sort is And April. for don't you? I industry from to morning. your I'm okay you and year Good customers environment. thinking you're telling in that you, they're side terms questions. customers managing imply glad can but And guess, two like forecast, trends just in want in on that the an everyone to, of the your business that like what Europe the for of what your how this healthy you Hi. in just in give One,

your and particular fuel the guess, to do but or around sort diesel, of taking coronavirus to EV just diesel technologies, how my R&D think I perhaps alternative then, lower prices focus And cell initiatives cut view you impacts relative now, on people's understanding more like question, CapEx, second with in economics. we

So, if help that you would on color be that could helpful. give

Preston Feight

and a our and to customer of in that's is good experiencing we And going got going much are Jamie. and moderate say do business. -- with talk a Good customer dealers But, there segments sure. to are a dynamic situation as what's Yes, it's to this expected do you, base good on. standpoint, well talk their we customers keep And track job before, factoring doing from a and some managing I'd into lot they slowdowns. a said to the it. be some of

not they if trucks freight. utilized, they and they're again, And to true. our will of move business adjustments. I'm continue impressed as essential And that's that there's the pretty making with an how their are are customer move economy some base. their they're freight But, and fully continuing to part and about So, talk

on. So, that's keep pretty important to perspective

within alignment to a at and and and and have exciting those R&D related. From R&D really going when portfolios, I CapEx programs some tech that some have that you that, we on the of and our continuing look some say, neat are standpoint programs on we're of

customers the work battery we're provide and vehicles that's that We're going possible. critical going that whether work's moving our or operating for to things Company electric doing, keep doing build So, bright our lowest are the that future going to along to cost continue. a and

look kind what's it's of going a a on. So, of bit at

Operator

next of comes of from UBS. Fisher Steven Your the question line

Steven Fisher

your market over might your is of are across few next some the the share What in there and quarters, you and backlog, share regions. called about differences? guys gains share regional retail any order You production be what tell out nice market

Preston Feight

market the also and have the as X.X% I XX.X% in U.S. Well, we growth share medium good the in Europe in America. XX.X% and think, both in really Brazil; and we Europe North gains, seen in strong duty good side and mentioned,

order far numbers position. good. the a March. good month XX% had what We're we last had of was think the we And for has we of I and as been in that's have intake order in intake March So, the month as been,

Harrie Schippers

color Europe. on more Some

markets, market XX.X% the for share think in DAF been most has the to growth in The UK, especially the XX%. to first quarter grown I UK. share

the able have benefiting from in really we the our we’re excellent for in So, Leyland and to build factory trucks UK, an the that are fact UK.

Steven Fisher

How any centers. Okay. channels that out to some open used truck centers expected you other to plans better some the be much And do sales then, these have up company-owned used retail at international versus used there? margins are you

Harrie Schippers

selling truck than Those sell or customers. when sell of make used is the used are predominantly a higher a we customer And that that margins we wholesalers customers. to benefits to the truck have them we significantly diesel centers, they retail to one other

very our centers return nice on there. really us those a give investment used So, truck

Operator

line question Capital next Markets. of RBC Your Seth from comes the of Weber

Seth Weber

kind last wanted wholesale retail works where you I what sales get mix Actually of channel see where is up? the used there to you to today, you color that on can we frame on Steve's the up there margins use any as question follow mix. the to can versus Is the think auction, of or on it's provide as opportunity sort anything going far

Preston Feight

team customer products uptick used good And to that go just and values. like getting. What I the they good know Prague recent network That retail we've really PACCAR to in center place a we to one is, in they're expand because this the our PACCAR and at And going they're us, needs demand the truck build gives trucks Financial what time well as capabilities, activity flowing happy U.S. their and that's get helps truck to creates a job seen the an more in buy the used look outlet of them strong and done of for it market. the has building even through centers. serve for from the young a those used really truck

Seth Weber

quarter, think, new this. to I and pricing competitors changed is truck irrational, seeing are positive the just was or And has the But, up the of if also any said last you in you it I'm pricing macro that side? anything about given talked I environment? on doing used then, sorry, if still if your anybody anything missed wondering, weakness truck Thanks. the have X%. just If new pricing. -- you

Preston Feight

talk you to pricing. in do and I which Kenworth, to they see the the DAF. continues And there and let have for what a are steadiness I’ll to what strong think be trucks, we competitors us, Peterbilt desire Well, best that's But is irrational.

Operator

Yakavonis the Courtney comes line of from next question Your from Morgan Stanley.

Your line is open.

Courtney Yakavonis

just and I how if of next that share the for more the protocols bit longer on with might with fixed the us a any then bit that over to associated basis reopenings. to could impact was you're wondering the cost some if with detail think little plant XX of last a the also costs about the you could enacting And XX months? plant shutdowns

Preston Feight

Sure.

protocols come the we're us. as it's far core back implementing, to As to the statement, because

are right now sure focus that employees operating environment. biggest in is Our safe cared and our healthy and for making

to employees make long in to need have us. Those our leaders feel them want industry cleaning meters place. that and as sure there's we're And in that's things the our we the doing Europe environments. described feet on to to have those they're to they will just best I X.X that we of And we're so, that people where great really protected. sure other in practices comparing and protocols, their and they with healthy and make the sure spacing masks testing, when that making trucks. process between all X as involved comfortable facilities are The temperature wearing up enter that barriers, the And building or and them like put carry important we're are practices

experienced. that then, we far And the as as costs

costs is reduce business ways the in focused outlined on CapEx just about comments, we up so and R&D fully capital we Company that. is that in them. that cycle. optimized reductions That's the why for for looking spending our at and see expense can -- this industry costs take, always plans thinking And and opening set reduction our and that to are we why are looking teams you We’re

Courtney Yakavonis

Is there's versus shutdowns you're the you overhead share between in us, difference shut Europe? just down? the costs then, that there And not might cut about week in for just could be America getting with that anything maybe factory any if North

Preston Feight

difference is our the able in North what that's and during And the In and the still we've and point. continuing they with stopping on with safe keep aligned help been practices the the the government shutdown, us there in from furloughs government good because there are engineering they've have side people we're with we during And done relationship Europe. Yes. the environment, that projects that the employees to healthy Netherlands, there, unions working our continuing and side, and America The to business. employees that's to of even support on with make these work programs. a and and to are great, new overhead processes progress support

Harrie Schippers

and not programs in only Netherlands, And the qualifies UK in those Belgium and are programs. to but those support place, all also in

Courtney Yakavonis

quarter. well very parts then, And just this your lastly, margins hold did up

are environment? building you but business changes structural last seeing you've e-commerce You think mentioned of interacting the how that customers in this with might that any terms your been in that you out platform, are

Preston Feight

move can good and PACCAR right optimized. right towards uptime be bit we that our this our that's to a for parts the think has team of have sure for the for time, work There in that hasten the dealers more we make the so at and parts customers’ e-commerce, built business. great little to I e-commerce make may help the more the the a MDI parts good everybody places team. I our to to a -- right is with, think customers, And the at available that that may move use system and for furthering. continue towards And systems

Courtney Yakavonis

Great. Thanks.

Preston Feight

bet. You

Operator

Cowen. Matt of next line comes Your the of question Elkott from

line is Your open.

Matt Elkott

thank Good morning and you.

important been resulting is which lower an which was a part some like your market with also insurance prices. But and had dealing customer industry, tailwind rising of have now, truckload rates, low premiums the So, base, in the headwinds lot diesel of exits. they of freight

that sense my how a is, which the for of remain higher to health the industry, could good we So, lag would do quickly orders from of translate could while economic be how see time have we low, prices benefit question and an start into truckload if same oil and you at rebound, see any the that? relatively

Preston Feight

a That's you good commentary offered.

that and of low putting continue oil a customers freight. trucking pandemic on to it's the fact companies customers, when miles the they're And our they're the of trucks. freight, -- truth think confluence delivering deliver and the prices I continue

future And for us need consumable because so, to bodes the well that over them. replace they're time will in and

Matt Elkott

That makes side. sense. just one follow-up sheet then, the And on balance

crisis crisis, segment segment? economic If think but to this financial debt your you intensifies morphs on financial obviously segment. financial borrow your your in have for services do and manufacturing services into You don't debt, markets our you go have may do to you manufacturing

Harrie Schippers

strong cash, manufacturing you’re $X.X a A+/AX strong debt. it. we credit with has right. no rating in is balance how like PACCAR So, and that a sheet very a billion And exactly

Preston Feight

markets, access And had good the to we do. we've

had And We And million. good have our in $XXX and April great we've credit financial access issuances million. no markets. services we did really we've were And to $XXX an business. our in midterm the in notes quarter to the got position getting and support for ratings first trouble good issuance

Operator

comes Raymond next Boeschen of the Your Felix from James. of question line

Felix Boeschen

how a I around Parts going think have the quick really forward. business about question to just

today? outside moving as looking utilization, think around I inventory, was Trucks of inventory a business, at any you dealers strong building be performance we about business. way the But the given still parts XQ think, for ahead or anything truck positive might in some uncertainty obviously color levels industry should think there in that the

Preston Feight

Sure.

PACCAR great in the the -- support customers. at the of with Parts dealers of systems to done I a the significant place factor that most alongside think job kind is team having right has with our

a organization times. looking the they're there doing job to And think there. as the these of meeting that And in -- demand people situation I great dynamic, at they become so, is obviously, And a that. go were

done we that sure shelf the make to they move and those consuming And of on to part that. they're And They've they’ll take want so, parts forward, reorder. care customers. is the as

Operator

comes line Sabeiha Faheem Longbow mention the question from shouldn't Your next Research. the of of I line of

line is Your open.

Faheem Sabeiha

Just for starters.

as social have guys production the that staggered are factories, far capacity? the that the you As impact distancing shifts would employing in any and on

Preston Feight

part? was last me. What the Excuse

Faheem Sabeiha

any have production that Would impact capacity? on

Preston Feight

we have market bringing in will capacity. the even build practices we in best sufficient capacity in sufficient these I -- think needs. for have we a our to great that that customers' And we're think always

Faheem Sabeiha

cancellations backlog so through least at far shrinking some been Okay. you've at And can want the intake that and seeing understand essentially I point? you to just provide your is order April? or if this around holding color

Preston Feight

Yes.

and our because through month increased building of we think improved backlog trucks. weren’t the April, that I actually

carries we second backlog so, watch have do the that through we'll how quarter good on. And and

Operator

from Melius Research. comes question next of Wertheimer the Your line of Rob

Rob Wertheimer

the My Does feel visibility impacts. in chain is question obvious major how and less visibility and disruption less or just your your still, volatile a from of seeing a the into disruptive your on supply any chain future that working are all is risk? uncertainty like suppliers supply

Preston Feight

We're with And working to with we we us, for strength contact close choose daily ready really alignment align with have go, ready their great continue them. strong supply just have they're and so when with suppliers, We them all restart, to base. them and that go. being

It's to are they’ve there the the with put do want now. their that which and conversations. making daily right best seems So, There's they sure just up unstable for practices people, nothing in, government directives. align care

Rob Wertheimer

economy? of number the April how a comments of of pulse made a down give miles driven time to Are from you’ve otherwise, And sense real helpful parts? or in far telematics on able you just or to say

Preston Feight

connected. That's have North Yes. of do all We -- our interesting. are trucks in America

historical are also vehicle the the trucks we miles it's pretty while the bit, high and that at people well a levels down framework. up can little watch remains we and fleet. utilization And watch So, holding connected. of it's And traveled over work, just

Operator

the question Research. O'Dea Joe comes of next of line Your from Vertical

Joe O'Dea

level facilities or government deployed and talk about yet the operating, of it's government about aren't chain. respect you regulations about deploying and protocols there supply regulations from and sort any not and have restricting to restart regulations With comfort today and Can that of facility to talked supply you, are that operate you with chain? and safety ready protocols prevent just you are you sort

Preston Feight

an work which and business supplies that parts is essential the the initial is alignment declarations, with We continue and in to essential trucking business.

alignment robust So, make strategy. are sufficient what we with and restart work are for that's our one in others that then two those are put the things we the well. And best our them things and these practices define in employees that of sure to protect and

Joe O'Dea

And actions of so, out those rolling some facilities? safety still at protocol you're

Preston Feight

in their staying and are we Indeed directives each well. with up as seat lined

Operator

from Wolfe Rob Your of next of line Research. question Salmon comes the

Rob Salmon

respect any some impact piece bit the made of kind with can gross to cost more margins obviously there a guys have think social piggybacking quantification protect of kind you of and that spacing incremental taking, employees associated guess, on I kind costs as seen? would of help about to to have Is factories out per us the the the you adjustments whether well it’s with or than as we cleaning, the temperature historically little employees the distancing.

Preston Feight

they come or We we're that's going That's the healthy concrete. come they employees work. job No, the there's we're And into nothing sure well as everybody to the bringing factories back pre-production, teams just for with our safety up. are everybody. when starting take work is the very a temperatures that has good make of in to production. really factories truck in doing then, And that of where protocols good overlay gone that

Harrie Schippers

Preston the like not number some player. of has safety our the be the that, that's priority is might number costs there employees. said, And And one associated one with but

Rob Salmon

Of course, you in have made that very clear and we'll of that kind keep mind.

sort we as parts March month? kind revenue what by cadence see give in in parts look was can the through the of the quarter, forward, a to of difference looking Like, relative you your major revenue we month of us any first we're January-February? As of sense do

Preston Feight

each weeks -- of mean, differences It was quarter. and but were it weeks, by was the through I through flat flat for there first relatively relatively months. the the

Rob Salmon

then, on provisions on the for losses And helpful. That's receivables.

in economy, just dealers the understand think customers there we of about looking that two of to relative you we big With are channels? impact? forward. for a tied receivables the you to I'm trying in terms kind one as up of the of step to any kind customer obviously have that the difference Was those impact better saw seeing

Harrie Schippers

a a the past company trucks customers bills. the we that good to financing position well-dated really pay pay doing of Most on customers We bills their in and well. all talked is We're stable are good time. Finance sell that their about low. dues portion being with

Rob Salmon

appreciate guys. time, I the

Preston Feight

a Have day. good bet. You

Operator

Loop Kauffman line of next Your of Jeff Capital question comes from Management. the

Your line is open.

Jeff Kauffman

in deferral Jamie Thank R&D taking adjustment earlier. or going we're maybe do a to just more Is where following down movement terms it pushed I this of is terms not for and looking kind where certain thank Number hinting of or think because be the you of of and structural you out. do pushing think, environment? should was at up programs as in more of on things. on and low you But, -- And capital kind questions. one, think what flex, very where question. spending, CapEx two guess, R&D asking do EV much Jamie out slowing was and the fuel my prices I in things what you quick

Preston Feight

Happy to with you. answer that question

a have say and So, good have canceled, our or projects. values that returns great for is I customers. portfolio deferred would They whether provide all we of

customers in of doing and developments, And cancel. can with partnerships projects, to will what those we or a vehicles be that continue vehicles, technologies really with customers will And a them. a later in lies have now want now, in-house our can few into working in autonomous do so point. a years. looking and position. leader have and continue often just phase leveraging suppliers and to Very them. industry when connected look going is, to coming can right do at we're progressing them at ready that all PACCAR to we of phase so We those as postpone EV offering more movement how to we vehicles, they be truck how continue can done or well the those be we can leadership into efficient that to doing the vehicles is autonomous developing And EV the to we our

Jeff Kauffman

answers Thank you. That questions. Okay. both

Preston Feight

you. Thank bet. You

Operator

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

Preston Feight

working handling this all going the in around the final recognize to that are them stronger and saying analysis. to in thoughts our people would Company again, doing those then prayers COVID with by And are to such the world. are I thank through come outstanding guess, calls. the recognize with and the also people like everybody and And heartfelt and job managing I Yes. that to and just you for just close our fantastic we're situation to a

Operator

And ladies your earnings Thank PACCAR’s gentlemen, concludes call. you this participation. and for

disconnect. now may You

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