PACCAR (PCAR) 20 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Ken Hastings	Director, IR
Preston Feight	CEO
Harrie Schippers	President & CFO
Michael Barkley	SVP & Controller
Nicole DeBlase	Deutsche Bank
Andy Casey	Wells Fargo Securities
Stephen Volkmann	Jefferies
Ross Gilardi	Bank of America
Jamie Cook	Credit Suisse
Ann Duignan	J.P. Morgan
Jerry Revich	Goldman Sachs
David Raso	Evercore ISI
Joel Tiss	BMO
Steven Fisher	UBS
Chad Dillard	Bernstein
Seth Weber	RBC Capital Markets
Matt Elkott	Cowen
Rob Wertheimer	Melius Research
Joe O'Dea	Vertical Research
Adam Uhlman	Cleveland Research
Rob Salmon	Wolfe Research
Courtney Yakavonis	Morgan Stanley

Call transcript

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Operator

Good morning, and welcome to PACCAR's Third 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 an objection, 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

now please For Feight. the SEC Preston Relations like see and would filings to our additional introduce page information, Investor I of paccar.com.

Preston Feight

Harrie and business and update good I quarter excellent Schippers, highlights. our Hey, Barkley, will third Michael on you results morning.

be third pretax year. vehicles of I foremost, net million. in powertrains, customers. revenues doubled second XX,XXX the of staying strong and quarterly quarter. of have profits on $XX employees. U.S. truck achieved PACCAR robust expects fourth days focus build and increased will margins exceeding pretax PACCAR highest and gross in Canada achieved quarterly in PACCAR to have third through quarter First America trucks, to XX% quarter and in truck Parts XX.X%. The fewer same quarterly the deliveries PACCAR's strong healthy third rates services to year. build our new continued higher XX% quarter income all to income gross more were last industry net North last Other of $X our PACCAR higher September Truck, appreciate to to and orders Financial margins a and quarter and be than and delivering sales X $XXX increase and revenues income XX% in period Parts markets. transportation solutions days quality PACCAR Parts over and estimated financial range Truck, build They safe the the quarter year. Class XX%. achieved Other were as this billion financing and compared in to Europe. outstanding business billion deliveries $XXX third $X.X PACCAR's Fourth fourth quarter while quarter million. and the of was of the revenues are advanced to million

size to the We XXX,XXX September X for estimates We South last achieved Peterbilt share have be America, Kenworth Canada the America. have trucks compared to Class in Europe, this market a U.S. estimate and range in raised year. and in year. through period same XX.X% sales market retail our and XXX,XXX of XXXX North XX.X% industry to

competes, committed where charging haul, to of and year. XXX,XXX well European X.X%. DAF to X% projected through to emissions of the we Canadian We're Kenworth, a the about the customers. in to vehicle XXX,XXX XXX,XXX global next XXXX, markets Europe X% increase XX,XXX trucks to is Women in Peterbilt, continue duty, Work available industry-leading these that range We for working a market as our Association. for is culture diversity. Brazil will XF PACCAR's in Transportation XX-tonne market September and PACCAR regional new for accepting Trucking and share in serve supports the refuse increased by environment DAF in company U.S. registrations a grow the Class most pleased the this Brazilian will year. promoting excellent battery American talented For and to honored in through segment range year. projected been which medium is economy by vehicles. DAF expected were has to above Production PACCAR electric truck truck third to The that share range gender market DAF hiring has know next about North that through people trucks estimate truck the provide and forward. the record each XX.X% this business zero and that Harry? Europe, Schippers and grow introduced America. now above PACCAR XXX,XXX PACCAR PACCAR, community. truck Thank market a people registrations In begun X We've quarter, received update we year, units next to expect South XX-tonne XXX,XXX to highlights. and move orders be world of Parts. of Services, Company units. a in share best above stations will for achieved the the vehicles programs be Financial other XXX,XXX you. a in on economies Vehicle range present Parts, market estimated to in to to PACCAR industry of to In XXX,XXX were year. an September be are Dynacraft Top of are to Women be U.S. will Harrie to we the begin in recognized diversity Parts the represent and and XX-tonne

Harrie Schippers

in third and PACCAR income the results sales truck opened reflect reinvestment led to million margins. PACCAR PACCAR million. truck a $XX past its in These in Spain PACCAR $X.XX PACCAR's competition. resale Parts PACCAR $XXX month, was truck dividend plans Thanks truck platform. $XXX worldwide, Czech used share. and Financial facility $XXX Texas, a over Lyon, announced a and pre-tax development command inventory. the Parts of low capacity million finally, a planning Denton, of growth which connected to for strong stockholders. growing for and growth used Peterbilt XXXX, investments of low centers $XXX global and we're diesel to and fastest portfolio zero Board PACCAR support expenses revenues emissions performance, and dues and our And quarter capital powertrain to in operating year. PACCAR e-commerce are truck our business. expected is state-of-the-art record sample another investing profits $XXX services. to E-commerce be network in to and of recently Services and customers. growing Research next Directors Financial outstanding were revenues the sales. values in long-term open new Kenworth, truck driver truck in flow is million million Republic, assistance France, Prague, Net to used to used reduction systems dealers continues Madrid, of investments used range to provide in Robust be to $XXX future emission increasing capital Preston. Financial truck and this In R&D enhances year. investments million continue of is cash high excellent $X.XX $XXX our a PACCAR of range quarterly distributions independent per million to regular Last technologies, recovery, million. distribution from provide $XXX billion expenses $XXX benefited pre-tax advanced of million. $XXX utilization, achieved quarterly to a economic are projected PACCAR for Parts million DAF million. models, and premium

making capitalized, their a businesses We'd to Our and in answer have years, the billion questions. $X.X XX be you. last in dealers Thank PACCAR's invested your pleased success. significant well contribution to are

Operator

[Operator Instructions].

Our Bank. from DeBlase comes line first Deutsche question the Nicole with of

open. is line Your

Nicole DeBlase

you're of starting you that morning Yes, characterize and XQ. I Europe, guess good there to know level for said of could seeing rates outlook I North America with build all that build the maybe of afternoon guys. growth element guys way that you increase markets? the the guys you thanks. across versus Is Good expect any kind days? given in

Preston Feight

Yes, Nicole. great comments,

we'd captured more And the seen talking all rates quarter, quarter. in increases than total build delivery standpoint, already doubling rates, third from in a about the second daily part been The in we build but expect to fourth days and all increases You mix as seeing increases throughout also build in days, from rates have strong answer shutdown. compared with quarter, the of then higher we'll markets. number to in see build in see, rates have of where we've seeing. holiday order the a quarter we are where more there markets in intake Europe third because the deliveries build build Europe, the build But a of there's you see

Nicole DeBlase

it. Got

sense. guys whether have you headlines I mean, to one obviously just the recently respect And curious then most Europe. that's just we're with all makes respect seeing by what more from up seen, impacted that to customers, on COVID activity Okay, COVID? with cases ramping order been

Preston Feight

the intake for Well do we increase the in strong make. providing same news True. that we and really order excellent customers But watch been off COVID cases. have trucks our read we obviously, the you

health factories come thing focus and are hesitation orders in We most times and in the making And sure is of each that haven't great any that up. every a job our doing that seen day. safety we on important has recent

build we're effective able and order So trucks to remains way and the safe in intake strong. environment,

Operator

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

Your line now open. is

Andy Casey

those electric they reason to The is question diesel sales the I'm you're narrative asking Hi, next trucks. those lower already. trucks have I'm wondering equip part year. of than opportunity orders that future you're introducing going accepting on clean is type trucks if for the probably battery on are

revenue your upfront? approach capture help First of you is stream? that be appreciated? to anything Or potential you then pricing understand that higher would kind us that margin expect expectations? you -- to given how with do And would parts you future jive does can help a us second, Should could lower

Preston Feight

are first your trucks. DAF; accepting we're Peterbilt, whether Kenworth for comment taking We Well accepting we're orders about orders? the and with thanks. Good, orders

to just we're We work battery doing expect next took hydrogen Peterbilt customers. fact, was to trucks a technology. a cell. them customers the with in The peak summit. cell way battery our the from to as fun them electric a in drove fuel fuel on and working We're as Kenworth up, fuel well to a And and Peterbilt by actually and be and week, providing technology cell production year. the truck all thing hydrogen truck. battery share, already test they its was hydrogen electric last Kenworth

fun market we're a The products. it developing, programs along is to And the are developing progressing So early forward nicely. lot that looking are excellent days. teams having of

vehicles from a sales, it of to what how we we contributing orders think looking at I could going a electric of think of your parts to with standpoint When cost of vehicle. and factor go plenty is question pretty the while. it be of many And significant, it's way to along one in so look battery And be about cost forward, there's pack a for think an hundreds. is electric that the a parts a

in the like just items the every somewhere a have components, battery lifetime be a same steering truck have replaced. other They also same suspension ware will components, and pack And could they does.

margins good So I pricing Harrie? we'll do the how of will and be that based cost and that, think on

Harrie Schippers

that the addition trucks, and chargers In need selling replacement will parts. also chargers, also to the be we will

Preston Feight

So that, the total going of our is think even time. It to model. all be helpful of I of don't for think coming could our the model be disruptive I period that to to it's

Operator

Jefferies. next Stephen Our from line question of Volkmann comes the with

Your now open. line is

Stephen Volkmann

sticking out but that Yes. broadening of Maybe with just it bit. little sort a

Sometimes maybe I others are partner we of more kind years kind should around years R&D this I few for your spending of questions model R&D can a make little level few transition? do more next bit just business seem and you some about, spending next we just more, driven. outsourced, bit of the how your you view think how the know people is get But a spending to talk over as little maybe view

Preston Feight

for year never tell over you of about laid the we out next And Well, think about And opportunities of I've our forward five-year two products sure products it kind good than coming make that we for set have can out. we history excited right coming and I demonstrated that we're standpoint. I'm going we out, have of appropriately have. we've think from or been what, customer customers. a we investments a been And great the the a great always strategy bringing for our now more invest the that always I has set

on right little and -- see million can that will trucks, and showed And making it's than transportation R&D may on customers next sure spending better very there been never increase But our bit, you commented or year. spending our as $XXX million the a parts. focus So Harrie get now. best real in solutions to the $XXX

Stephen Volkmann

produce to retail turns inventories. line on be? Thanks in Or Okay. out sort And curious, quick I guys initial you But then appreciate XXXX. than a to I think? on views produce of just kind next can relative aren't know that. would All for would your you you more of big inventories. right. year whatever follow-up. do with expect the sales just I'm your that to

Preston Feight

months inventory at months. out where came there's Let me PACCAR there of two-and-a-half just with X.X and with now, we're start about up industry

about a little but at when not intake intake, build look so order I And roughly in I rates like be that, Could be it'll looks think what I bit much. think too more production line. the

Operator

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

open. is now line Your

Ross Gilardi

stay we'll Maybe on EV the topic.

you look expectation you years, you do percentage or have X, of X share EVs out five either an If can as X Class that a Class production?

Preston Feight

And what products And the want or we in that have going where we'll should products think environment we going to the of and sure most a of get production. we to that we're XXXXs. some there's make to the reliable And the to it'll on and ready and kind kind is in We to next develops ourselves is is on. develop, be Sure. so requirements regulatory And processes see throughout is the this that's by depend then way path what Europe, market capable regulatory XXXX for low XXXXs, go time, obviously XXXX, California. point year. are XXXs and

we'll and prepared be ready. XXXXs there's for ready that. or we'll XXXs for of If of it XXs be good, was So stages XXXXs, if

Ross Gilardi

on in So by X% XXXX, by a XXXX talking then? replacement market XXXXs you're of low market the XXX,XXX like

Preston Feight

Yes.

Ross Gilardi

fuel challenge. as how well. about up of working has until we're certainly cell versus Okay. been bigger a in on course, hydrogen X tactical And battery now X, X, Class But

So your there? thoughts what are

Preston Feight

urban in a to if So thinking are adoption in to commercially become a end there well, as mean where role, medium you also. truck like a return allow cells could operation Europe, viable And where then Ross, places regional back is haul and begin. fixed then that'll it'll fuel duty in, trucks there, being environments cities then an is location, they battery mentioned, trucks But electric. might diesel as relevant, play up place be fixed for easy could not

we're is and choices that doing way in So making we an capabilities I what range right out customers. for the technology now, full there at sure our integrating effective think of them and look

Ross Gilardi

bit is all we're Got delivery at the e-commerce But of environment couple about where And you evolving it. duty can then Class X the replacement you e-commerce new then cycle years where higher is of explosion I'm the thing. things it, normally America XXX,XXX of there the to of company XXX,XXX, down because of number capitalize little for not like in? how talk thinking that And kind next last market the just the the of of a on numbers the e-commerce motivation for a space shape if move also that top to are a see and clearly, is North into with and light growth any we're we on in vans mile? now that, to seeing

Preston Feight

that for America. North the that; leader here market in space cabover to we fill coming our years. have goods, continue have we're not going maybe with that medium I in along, manufacturing comes to the from e-commerce as really structurally X it's products delivered, don't individual products in still that an Class share in any that'll duty Class of And It's to they'll that fundamentally goods for or but space people how change would same it's basis, I in now right affect cabover market on the are those and be distribution. the developing think market. we some and products the amount amazing And I consume X develop neat think through some LF. Well, X ourselves way a it's the fact also UK

Operator

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

Your is line now open.

Jamie Cook

XXXX, just Hi, XX in my market two truck, dynamics share can front? it your quarter? And My pricing first second can about think of side, of there in outgrowth, about that engine, should I about third sort confidence talk and questions. you on good or the as as Parts the Thank in level question, guess any we on liter you markets saw comment you. be XX morning. terms the What you or recover? then that we think market mixer how whether was question,

Preston Feight

you start U.S. share market the compared to in with, share got just we've and XX.X% when So right about the now year-to-date think XX.X%. of Canada to

So share growth good we're ourselves. seeing for

volume of Our there Europe MX the XXX% and engines XX-liter, engine doing the of North course, XX-liter America. their a are out great it's job and XX% in with in it's

then us So working in for -- a from well addition. And that's really

Harrie Schippers

more the of a But current or good of slightly less, in or third dynamics. performance X.X% was down the the pretty so. From pricing, pricing terms quarter point pricing view, in market less like given

Preston Feight

that's compared very And a XXXX. to strong

Harrie Schippers

Absolutely, absolutely.

Operator

J.P. next the with Duignan comes Ann of line Our from question Morgan.

is line open. Your

Ann Duignan

Yes, thank you.

follow-up Just that had any the expected. just look at we of the we In that line that about forward? is were on Were in Financial there kind and questions. Services than a item anomalies Can there? what few talk rates interest expense was -- going should line that you was runway that higher

Harrie Schippers

quarter the of used record doing low We and truck trucks credit second In cost fairly but last they losses. Jamie, results item the were year in really finance quarter. third to trucks is the that those sold saw were the of we a the and to similar compared used favorable well. to used appear line number Overall, -- company

customers really their portfolio, at company and the We Good end doing A B Finance the have third of is low X.X% credits, pay continue past well. bills. dues of quarter. only to

Ann Duignan

expense? used a recording higher loss higher But means of that expense more sales a used on that that the each than a saying so and if higher was are or of loss sale you're trucks truck quarters, you couple a last

Harrie Schippers

quarter was that trucks It like unfavorable. to on third inventory came truck results the were during quarter. nice second Yes, the used down in used see the

going to So going be good that's forward.

Preston Feight

that we're people DAF premium our where areas provide a to to continue of used to in see are trucks pricing they And in increases. competition. looking these And starting value business to for Kenworth, see some Peterbilt, resale starting products they're compared the great trucks

Ann Duignan

prices everybody summit? but kind of Yes, relative down, if used it's are to

Harrie Schippers

but the only market. the a ones on we're trucks, used in We get truck used the premium not

Ann Duignan

and can you opening give hear or e-commerce going your a in it bit Thank like little Exactly. talk more bit a there, more explain in And a on comments, then the little I'd us highlighted bit you little about color more Parts what's you. just more. business to

Preston Feight

I we've It’s time. Preston for long a ordering makes it easier. to that mean; dealers related real here. makes use fantastic system our Parts team But had did job easy user of But e-commerce a and PACCAR easier. creating customers for parts friendly, also just e-commerce a

it's component. in and simple also go you buy for if that filter another something, you might quite So find, point to towards it a

So of it transition great significant has making seen interface. fastest team done in people there. the we've user of the business very growing e-commerce our a is the part And doing job we're Parts so as fast, growth of a easy amount

also that's for just dealers a But except with on team stocking. the So give engaging way nice. the for dealer really shout inventory they're the out to Parts auto

both doing I support those front, fantastic how So to team too. growth. their job that customers plus they're leading things, is think the our of the supporting a is on And

Ann Duignan

b) forward for at business a) there? spend are customers us that way for leave way opportunity is per the will opportunities and e-commerce, think and is, that the -- about that a right for two there. think to use And going Is more there I then higher us then, customer, about that so to there's to

Preston Feight

Great yes. word, you, again. I agree with

Ann Duignan

in me from Thank it the of that's interest time. Okay, you.

Preston Feight

day. Have a great

Operator

from comes Jerry Sachs. with Goldman question next Revich Our

now is line open. Your

Jerry Revich

nearly going back run forward? be SG&A this any a in was mentioned, quarter where rate cost was SG&A your What is SG&A able you to think SG&A to like from level going should of really that we run this out the just this rate coming How here, performance we're should up Or think is doubled situation jumped times? your actually we X% about better sequentially. production about

Preston Feight

We done and where has control spend team job the fantastic a think cost look do of at always we right. I everything necessary. it's Well, as

there So will get we modest think some I increases be as quarter. the into fourth

has limited. getting Just think for travel, you right if relatively internationally about anywhere been example,

SG&A when So that increases. or travel that possibility reopens, up, become a for will opens as

Jerry Revich

lay that's you skewing then terms really And line-up, if you a mileage Okay. five feasible talk new we're of the just cost is in your you're XXX your available the laying vehicle competitors electric impressive local product talking to years whole? obviously have weigh that think how you for folks is of out range a about not point do Can about you product your XXX,XXX. of of range? that as within Can in? And range order, on a that decision out one for products industry mile out

Preston Feight

I do decision total where that an said to in vehicles. back the that's electric Sure, a refuse you like talking space, lengths especially be that station. to for the the will haul. significant regional make think home operating weight get into easiest you also the charging haul, realize of also areas earlier, opportunity battery miles, become the number the about the again, around batteries And markets, places a effective you're of as urban happily. the electric have coming a efficiency think the longer I infrastructure. XXX battery cost I significant charging When And to needing of a you're to markets,

the why participate cells that haul. infrastructure. we electric will an needs think hydrogen and longer the look we just it'll be it and in electric fuel a because described. take routes evolve at rationale So also off some the that's we on some fuel that. battery rationale in And But cell will And for potentially will of both of manner the battery

just make And for our as with we're product there sure them, customers. them. that want have want we'll they to we right So the

Jerry Revich

the standards? cost Can meaningful plan And are it in standards? And you about a to warranty cost structure does costs Some XXXX for pretty you increases over talk out lastly, to for playing much $XX,XXX, the about look CARB in NOx. reductions of the those for warranties how just move you for have industry your how regulations big talk the the being adding see plans Can your participants essentially about truck. higher? talking and and

Preston Feight

emissions PACCAR, able lot we've through rate. just as the meet been and we that always certainly as a we've change. to them does. industry, through that we're as be warranty Well, well, cycles able meet to the now. as an of accrual That's decades them, do And intend gone we expect And requirements an to

products the diesel the make already capabilities believe powertrains the have we'll a emissions Cummins So decade. vehicle as talked requirements right will for in and today, and about complementary of partners, develop coming accrual space. engines rates meet And our space for we our to hybrid and that. But great we'll us that both electric the technical for a set we've lot and in

Jerry Revich

cost is increase increase $XX,XXX that plus is And is How to the cost that the material customer? on can vehicle, in weigh of aspect? in number you that reasonable, just

Preston Feight

out that days, think costs at we be working don't a those appropriate level It's to on And great lot I early people manage figure Jerry, we'll have point. And and the pretty that it'd possible. to ways this lowest things. of

Operator

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

now open. Your line is

David Raso

for taking the you thank Hi, question.

middle those XX%. due to XXXX. all addressing question quarter the trying pretty quarter, bigger basis costs pandemic, profile relates they're and -- this you were years margin of quarter, what piece assume of volumes last my to fourth forecasting quarter, points constantly you're question similar XX%. the gross today though the to between XX% the than first to between including maybe Parts fourth when XX% for would quarter. for a XX,XXX deliveries only My and XX,XXX revenue manufacturing and and for XX,XXX gross next five could the margins, this delivering but is in through were account ago. and quarter, afternoon. year, think quarters, decade, And third you delivered XX,XXX the during volatility even relates you for I So each And gross to good lower anticipating In respectively. the just that of margins you're XXX year, And trucks

XXXX. So think that'll to trying said, just about I'm for

to about quarterly that gross cost Just is through there should or that relationship think sales gross should return of and are volumes incremental and likely trying we a consider Or mix really expect traditional margin? the to delivery usual of margins? something relationship we where for volumes, volume moving-off XXXX

Preston Feight

the two-part increased know rates. to our think thanks coming to quiet, question, discussion for Well, of when good market your was we're about right the is, second talking more that returning off question, some David, you answer about, as pretty sizes now well you we're quarter we're

XXX. think So we labor have in of giant I be our it's this and COVID cared And healthy and XXX a in safe is to that year economy still protocols making is from the replacement think control XXX it in range, employees for. there's a terms market. the we lot are place in to of It's year U.S., next the not And uncertainty Canada below around what and bring next year sure XXX general could still a value, standpoint, market. will

year's in kind be. what margins a bit next I So be weighing full early might likely think little to it's on of

David Raso

mix, the basis can year And normal price? you for it just that any simply this Is Should same? a it was similar a volumes function was because and I'm also do I a to period prior volumes more trying about though, take are is, are obviously, market year. robust understand not and to the the the price efficient points of the it's on cost better XXX

And sounds just years be And XXXX. trying framework, margin through high these the it maybe as just generalization? volumes. not. move little I'm or mix. of five But fair of saying you're get it's like can the for of something all necessarily where that not Is aren't kind volumes with saying not a can to you to to as the I'm market equal. So price it's due think more created should we robustness a ago this, bit think about if

Preston Feight

Yes, I generalization. fair that's a think

highest I think and to to margins, operating always we as of best now continue delivering look delivers industry's historically right way it is that. think PACCAR on the focus we'll even the and other

David Raso

a and give I lead last out Obviously, delivery lead weeks. idea versus of number you rough are times. can [indiscernible] year this orders today appreciate. say basically of where times a Denton bit, rough, ramping-up question quick delivery of but sense One time last just a

Preston Feight

to just first at U.S. really slots the late substantially quarter focused slots a moving we're the looking few next in filling They're were There happy that, of fourth Sure, our year. into are full we're November, attention the quickly. Europe. part in December the do in And and both getting that timeframe. kind of final of

David Raso

And this you last how would that versus compare year? time

Preston Feight

coming totally think we're I market, coming in of markets. And a the year think. at of different a they're looking more into the and acceleration normalized market, beginning market. very strong at off we're now this Last an point, I

Operator

next question the Joel of BMO. with line comes from Tiss Our

open. Your now line is

Joel Tiss

than thanks, of Okay, wondered close that? been Most that you're take, you a be if to by to things longer are in going to think or way just laid XXXX you it's break-even the guys. of going your little take them you going in be to had going think I electric to and model you're answered, sort think out, it's

Preston Feight

we like Joel. make in do, We to money everything

we for just products, and it's it. do. our that, do anything provide early our that And customers services else our to money And model is so But as think is great I well EV that's as doing build focus always angle to days. for great our to make

Joel Tiss

And opportunities it's as seeing market your competitors any usual? just share sort or sort distracted business of little bigger a being of are you one with outsized of

Preston Feight

how developing We we years, the think to great -- creating. especially coming think the We make in market that coming are care us. the just out we can products share for are, how that'll that is take with the share them performance trucks we're if want that just of customers things get to understand that we're we these our sure fantastic

Joel Tiss

Alright, least laugh. to got at I you

Preston Feight

Have can You do day. great Joel. that, a

Operator

from next with the Our line Steven comes UBS. of question Fisher

Your open. line now is

Steven Fisher

Good morning.

margin some XX% of you the takes the in on that the question QX and David to on talk in keeping margins Raso's margin. in puts flat volume? what near-term XXXX. rather about the follow-up Just want on The like sounds are in Can higher just more within than the increase flat deliveries near-term but the in but

Preston Feight

We think we're the where puts that for and in are quarter, parts. and takes a sizes XX% North couple market dealing compared with. But trucks sitting of And XX% as the build margin in us more shift in days in we're a Europe is the good there that increase to just to mix fourth to that there's performance compared America.

and quarter expect And focus that to that, is so into that margin. those operating industry's still margins weigh do But best two so. fourth our factors providing on we are believe we

Steven Fisher

might orders the accelerated or actually different Okay, that imagine if highway construction, markets vocational there cetera. helpful. push or a seeing shifting them curious, out getting seeing are pushing I'm little be where you're is some that you're I people order out. all you're and getting wanting just to what what then lot wondering earlier, now how the much a et within either books curious I'm direction? further. trucks end that's dynamics of different extent you're be right And out, if some people of pushed to timing around on in or trying it nets within serving it

Preston Feight

push-outs really And see right its that we see is nothing now. is in most to the doing is what economy related trucking pretty well All of we sectors.

well. year. consumer below trucks their both North doing running This are markets The America and refrigerated replacement housing markets been a goods The are supportive doing carriers vocational for market well. is true replacement or So and at and well. a people doing for Europe are value the size people

And that efficiency, high-fuel and actual trucks high now. we're the building opportunity performing so that ready reliability they're the for is

push-outs is businesses, which no ordering people their there's that doing support to well. really so happening real are are And

Steven Fisher

Any accelerations?

Preston Feight

the been there's sitting obviously quarter orders in growth And market to the appropriate it Yes, we're to as last that or in. so. be sizes continues

Operator

question Our of from with the Chad next Dillard comes line Bernstein.

now is Your line open.

Chad Dillard

XXXX. to at on or talking more the can vehicles? how investment XXXXs providing scale? just to PACCAR the a battery get talk big you that about -- needs PACCAR electric need be strategy this scope, to we market know, in that cost providing what infrastructure of to a that is of charging to that the maybe more you're investment to included could actual touch about price I of the little So And bit If made an for in is get your you get low right, consumer, the

Preston Feight

charger for depending to two charging a need think or vehicle the It's that; way vehicles every you you operate. about is for your on how

be But so of the for our again, also something a themselves I operating, way routes the to for increases. station as kind dealerships, charging preparing chargers infrastructure and we locally a a through be industry. doing of development And to $XXX,XXX that through about said, in that's a is think our are domiciled along. who job And general more $XXX,XXX, going customers of It'll we're of at kind probably will the develop goes of as or charging we'll park think the that put then be great vehicle stations to I be, yourself. charging there'll one

are them be So to something is that's now. having of and where financial -- are our that is that. offering PACCAR And Parts people to on selling going support companies money spend

kind So move models a into the we created for new have opportunity. as customers entire that of

Chad Dillard

And towards your it. Got we next from the then consuming of perspective engine start in how sold provide gross And mix business we the to mix several as a years where the That's you can close like on look the that versus parts just how you do point actually Parts? other ago more And think about year? inflection engine seeing margin parts are quarter? color an helpful.

Preston Feight

continues XXXX. I be market North to American we think there started in in -- engine the the

customers parts build engine over seeing gone although great provides cycle, have span obviously the it repeat we've return. people growth a are business in got the through and So

Harrie Schippers

parts Parts say grown than it's And to average the fair business business. an that has faster engine

that going forward So we from benefits get do soon.

Operator

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

now Your line open. is

Seth Weber

see just revenue any here color the wondering positive cadence the if in there. on give was Parts quarter. turn could you I the to Nice

down was I June is mid it Is to -- think Should September running, said I of mid-single-digits. think had the you high about about was up kind way think a we that singles. think that previously ramp? fair the to to right way

Harrie Schippers

was a basis year. day on X% compared per was last correct. Yes, up September to that's

momentum the quarter. seen through continued positive we've So

Seth Weber

of then It business? the bit with And a thanks. back like Finco some just to cleared Okay, the financial, inventory. going kind little you decks the here sounds

-- can business do should year? forward? should that So start expect XX% we we back to to be And get think margin up into you of that start next to going sort see margin that

Harrie Schippers

of marketplace. really get a and used a used market nice the But truck competitors in compound a was the general. on inventory of truck our the depend Trucks But good to trucks. lot does used same selling in dependent are also premium. what the we're PACCAR will It what truck lot see on performance used doing And

Seth Weber

Okay, CapEx any about include if you on any I the one of the that investments Or your suppliers? in of in forward. chain? just to could one tuck of talk health the last maybe -- higher just Is can going your supply

Preston Feight

focused supply go in Sure. last dynamic. job watching They're and through happily on employees really safety they're world, of on couple health chains managed too a good base the that, did the we've very supply we're I'll the their and of build rates shape. one take supporting good is up that as They've say good well. very quarters, for as across our pulling, that and the done job

And so continues sure making with and as be they're great ready go. them of to working that our one partnerships we is

specifically as we of terms or investments out investments, called earmarked far suppliers. in As have don't and anything

Operator

from Elkott comes the Cowen. Matt question of next with line Our

line Your now open. is

Matt Elkott

I morning on Class If good and X build – question cycle. ask go afternoon. the a back may Good about

been saw I given X claims effectively a company? fuel America think bad expansion some of we we lower dynamics as forward prices, interest after a truck the Are lower cyclical rates, we a initial and number lower the regain not shutdowns, normalcy? insurance premiums, Class maybe North orders moderation had see we feared COVID in emerge, somewhat once pulling and as insurance post-COVID in of sort could for of they basically

Preston Feight

from customers came-off just think was to gradually which share lot I continue a we play of in equipped just happens sure what there room trucks is and good able that the depending stuff, general I that to we on quarter, our Related and would a quarter. be standpoint of insurance markets and are for what the month about vision we there. it's after thinking think economy. of But features our it systems, the the drivers latest support is, third their and is rates, to strengthen, in the with to or top. make it to a think have low towards start and customers think keep public and -- little -- safety technologies, kinds goodness But focus Lane make That's safe. I Departure, to our the a being our sure our just I those help why general that of two it's towards early that to

Matt Elkott

COVID currently a point. And Yes, related transmission? re-shutdowns that's quick you operational question. ebbs guys of that Do around have of one risk anywhere the to and and higher shutdowns the fair in are facilities a just flows last disruptions at world manufacturing any

Preston Feight

three making compare That's two and of of a for our one, a health and good best safe all in all safety is and number are that question. We of company operating sure spend a them way. a as and healthy priority lot the factories time us practices,

the any don't of great the I because And in one see the so or greater other teams place job, operations have world. around risk the done

Operator

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

Your line is now open.

Rob Wertheimer

done the around you little question don't obviously seen then have my has And on bit budgets to I know weak. equipment is things segment, So has similar just an in else are construction and if there the with municipal municipalities we've country. related cautious or whether to their been Vocational construction. in COVID on Thanks. for question uncertain or purchasing trucks are along is maybe markets everything related a that recovery whether similar dumping opinion a more proceeding customers

Preston Feight

Peterbilt leader to they're Kenworth the doing products DAF the we're or say the is, It's would customers, homes one our and seen of we've and on their great job I What doing. doing where those segments, spending be products, of money seems in quite places whatever market people are great vocational well. with index putting our

construction, of strong. a goods, lot home still housing lot of There's there's of starts continuing so improvement. for shipment And are a

think And total the well. sector in really There's But and oil is doing the sector doing pretty is really so is gas I down. general, well.

Operator

question Research. comes Vertical Joe from O��Dea line the next Our with of

now is line Your open.

Joe O’Dea

Hi, everyone.

kind been opportunity pricing in year to has question, you're through the thinking or order the First up you next as book, a in environment? open be stable year. more going disruption good below if builds you this pricing a about start that the flattish pretty it's demand outlook, to whether price see an not I'm of type interested those get or hear think of replacement it's to of opportunity at how to

Preston Feight

products. trucks that operating to see And I great provide trucks service pricing provide relative the for premium low our how they this service. always like we would costs, pricing we our are PACCAR think it, as as the way we'll develops great a about market to forward. look to that's kind And continue and of think expectations quarter. see people's And we create the

Joe O’Dea

in them? hydrogen America, X things cell with have work Hino truck selecting Toyota hydrogen in collaboration you've impact And fuel the been then fuel does of on on cell what side that a cell the for doing Class with on North fuel any

Preston Feight

lot all for And need thing a a volume doesn't, it's cell is hydrogen great Toyota hydrogen of commercially lot these fuel and mean need, make market the it a I of partner not cell players to developing products. it'll exclusive right. it an will viable. in and us fuel No,

business it's to accretive with model them. So our

Operator

Research. question line of Cleveland comes Uhlman from the Adam with next Your

Your line open. is now

Adam Uhlman

think for Hey, prepared guys, you the what in good to morning. the the Good relative you the tell talked you're last beginning go was -- seeing year? afternoon. about quarter the us that America. wanted to in of order Europe intake I rates to Could North I third at had back order remarks,

Harrie Schippers

last in Europe year. of X% third was quarter Orders the to compared

Adam Uhlman

big year. up was guess wondering about this I'm if budget. trying going more, spend normalized of be be this that some a the of mentioned also I great. and little are about on, over different, And increase helpful. the it are Okay, next a I at folded just because if relative from rate of is R&D would medium some term? get that some what catch-up that you size, to spend next assume that we key I year, earlier time into talking getting to year would key that more year, Thanks. you And maybe broadly That's could spend into you is then, talked new relatively the meaningful can the some programs

Preston Feight

so. Well we happy to have -- exciting really do some

you we've now looking forward really are exciting to And right be that right. develop programs time ongoing when So truck that will next with sharing year. those is -- we'll further we when

efforts and We with the kind electrification diesel then have the performing engine and years. next outlined are connectivity world. And development we have the engine of that around that are working on. our that for programs our coming on high you of programs autonomy going add to work the And those year teams the bulk

Operator

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

open. now is line Your

Rob Salmon

and outlook? gross fourth few your Are September in kind rate baked follow-up A the different sales good you baking growth kind similar a of to margin is you to of morning quarter related Hey, for related were guys fourth seeing aftermarket quarter? kind outlook. good the in in, something afternoon. as of Or questions

Harrie Schippers

growth. of margin, despite more growth, mix and Preston the truck in Parts margins we're expected best the achieving a said, XX% gross The is XX% to as more be truck these that to in we're range that And the industry. are

being in a as you the fourth last little think the I should compared bit to up year seeing quarter. Parts same

Rob Salmon

guys like more mentioned growth -- And did about then you to related comment deliveries relative too it comment it per quarter on sounded of me sequential level in or an Canada Was deliveries tell third that was to that to had the deliveries. is in apply to early the absolute with day, about front? on comments growth a -- sequential helpful. That's U.S.,

Harrie Schippers

on XX% total number, wasn't comment not per The number. on higher on a day the truck deliveries

Rob Salmon

that prepared that to I all the I remarks. curious ahead. you growth made comment I segments see alluding was was would the -- was across Perhaps misheard comment, what but go it's is if just in It you had

Harrie Schippers

taking We’re markets. build rates our up in all

to days to is But build applies in third all than So the every do North our the were rates have quarter compared which Europe, in fourth in year. we factories. working fewer America the case quarter the increased

Rob Salmon

question Okay. your you And is then should investment final about I When had historical the would how charging on in financial think services? to about to Services charging broader returns the returns we the achieve segment, that expect of the relative related to infrastructure think Financial kind infrastructure. you

Preston Feight

them to expect in of a think say fashion. at this I you similar could would point

Operator

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

line Your open. is now

Courtney Yakavonis

Europe question. the about deliveries you with just quarter? that and increase Canada share sequential Maybe the on think between us how fourth following-up just U.S. to in versus for Could

Preston Feight

rates, it is up build what Well, one rates say about are in And all is daily we way markets days, that the good well that to think of rather Harrie going think manners. is, fairly would build outlined build think there's continue. it really in that I could

in easiest it that's way build And to the quarter. the about without so think the getting of conflicted about number days

build So future markets are trucks the improving, well. look And doing we've a got good up, at rates are are coming think us. really we towards

Courtney Yakavonis

can about be up third you just on the in the feel the e-commerce you quarter, maintenance. seeing had of this had it'll are largely XX% Parts those a you most not fourth that's probably deferred Okay, first if just there's got had in a the point, previously give then also you of And sense like up, the quarter said levels think lot you thinking the happening the talked fourth? you. deferred it -- of commented then platform, that slightly think and up year, and was in much us still caught growth, I half I was maintenance. you into that's maybe think And It I more at

Preston Feight

there think about are trucks they truckload, well, around right country, Parts is is now doing the think I those all consume business the strong way truckload when business are Vocational, Parts. the running, to that markets

what's happening mostly. that's So

contributing an reasons that's means we team other business share increasing capabilities, why doing we've is, So that's great so And is not job, which is Parts market as the and just also. TRP fantastic that through brands make buy proprietary then for a that they doing PACCAR. but always to our make focused put one just with e-commerce all parts around a the of got parts, Parts that's well. good. Right, in in it world, doing have as distribution parts team or just great the the it. -- business, we're They're of place that's the programs getting fantastic mentioned, the put they place help they providing making a growth. easier to are And customers nailed And and the transportation really is is easier, lives solution what That job them. on we

Courtney Yakavonis

other you, is a guys the much then hydrogen of you follow-up the help based just you performance prototypes that comments are just of the Got lastly, truck cell And also is to partnership, the versus different the have trucks? helpful. about difference can kind out what that And we're considering cell about it just fuel to provider Toyota-Hino understand really us providers Toyota? How going the to that's of design fuel there? cell dictate the in just in fuel on you addition thinking

Preston Feight

business, the the of critical that Sure, is the truck cells them all part integration business, a in it the distribution, business. of fuel of Supporting part business, I a is the would matters. the of the think the a is critical is about a the of critical part two part critical field the

battery to we're great we always the customers sure questions. partners great a we’ll trucks we're on of looking that. to paying always partner, the we’re people Yes, partnered And for right to I with. premium our work your for other is provide. to attention all so And partners the elements get to guess with make Toyota be electric, work with looking

Operator

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

Ken Hastings

We’d like to thank everyone you, for joining operator. thank the and call

Operator

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

disconnect. now may You

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