PCAR - Earnings call transcript Q3 2021

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Operator

Good morning, and welcome to PACCAR's Third Quarter 2021 Earnings Conference Call. All lines will be in a listen-only mode until the question-and-answer session. Today's call is being recorded. [Operator Instructions]. 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

third PACCAR's for revenues and is you I'd Kenworth, sales I the all Services new a third parts were employees And and of our our Services. to the on PACCAR's net Financial tremendous freight profit dynamic contributions highest third reflects and PACCAR demand PACCAR's excellent. Financial support trucks continue is these services like Schippers, was to and at Peterbilt solutions morning. for pretax results introductions records call. $XXX our Parts and robust update sales and of pretax third achieved I of and during of deliver to highlights. The economies all good around having million. customers. new businesses. quality income record PACCAR's income and and the world, Good the their PACCAR's are DAF revenues revenues joining record trucks, PACCAR million. quarterly product the of be in of and million. quarter $X.X markets and quarter good times. geographic Parts suppliers markets. PACCAR to illustrate in income business Harrie year thank the Parts Financial financial and The $X.XX appreciate $XXX profits Services dealers PACCAR quarter also and billion, achieved will and billion and Financial for PACCAR managing Barkley Michael through who net strength record supply-based you constraints quarterly the $XXX record-setting outstanding quarter results Thank

XX.X% With industry trucks of September. of year. XXX,XXX the divisions range retail the and Peterbilt backlog, order through strong Class to truck estimate have accelerate in be growth X Canada the will share in the this improves. achieved in and market sales as We semiconductors supply to U.S. a XXX,XXX Kenworth

a year's supply to The in and be is XXX,XXX build still market to DAF's supply the is to XG In they aerodynamics, up XXX,XXX production the in instrumentation. fuel for Brazil's third and expected third market that digital feature Although the the a range provide XXX,XXX well advanced easier XX-tonne The luxurious XXX,XXX The that entry exciting Canadian American These September XX% customers XXX,XXX next forecast of that manufacturer this to new was truck the above X.X%. with and full The DAF range quarter, truck taken be range lighting by limited to through distinctive new is market XX-tonne such XXX,XXX range X XXX,XXX a range Class XXXX fuel South The design. trucks efficiency. new truck share of features to truck cap new quarter, governing provide Kenworth vehicles. as customers. first market in seating, And performance American U.S. new and have lineup in trucks above DAF styling, heights digital unsurpassed to the be trucks. and above good medium-duty trucks this to We XXX,XXX XG+ the see to that starting market we're the month. is in vehicles. and DAF cab trucks to are production greater new that improvements XXX,XXX of the began The XXXX and appreciate to regulations DAF began of in market market quarter greater year. began trucks be to semiconductor X% in XXX production truck configurable to expected Europe's wider Peterbilt industry being the year-to-date new is trucks value. The industry year. efficiency. X-person Peterbilt XF, estimated earlier also chain. Europe, exteriors lower registrations instrumentation, the news advantage our are projected in XX.X%. received of provide South in LED is beautiful of and TXXX XX-tonne this feature forward XX-tonne interiors above new Kenworth is share in DAF to fourth the be be offers estimated in by XXX,XXX the

and company continues PACCAR's share of know working We're the reports carbon freight a route XXXX Peterbilt as its vehicles trucks. the Kenworth, leader. global The working trucks, culture A launched in truck an benefit of into These PACCAR We environmental of the our that top that these Change have to battery new PACCAR targets transformation. platform. is Customers CDP company autonomous X,XXX and environment reduction PACCAR is community. earned of PACCAR has advanced for and in FedEx, Trucking present supports Climate truck industry minus, to they goals. Dallas advanced the for PACCAR's XXXX placing to for from the digital was people to the recently XXX-mile other electric the gender with diversity. with are new PACCAR with on were people represent Peterbilt PACCAR Women most operating existing Harrie, and PACCAR companies women to Houston. software linehaul and the in is customers. increases connected security, launch XXX% by a well very for PACCAR promoting be committed will Aurora driver the committed trucks programs the and All globally we third-party to customer autonomous electric publish elimination the proprietary DAF trucks with operations. honored XX% orders Financial commercial value, and TXXX hardware medium-duty initiative several open transportation a best XX in has locations for and PACCAR's environmental partners, working vehicle operating between over updates, Kenworth system and platform data that electric Services top excellent revenue include X science-based an PACCAR global pleased of in leads an diversity XXXXX. zero-emissions need score its over DAF highlights. you. with Harrie CDP. provide increases truck models modules world, the backup Thank for management vehicles trucks under certified an enhanced PACCAR hundred fuel and recognized position future. haul connect PACCAR PACCAR fleet Association. over-the-air a pilot as have of manufacturing model now now autonomously to safety as systems you. talented Parts, work systems. for recurring have to PACCAR supports Schippers update and PACCAR's battery hiring business management the on that battery and available. advanced of by part ISO program that cell XXXs will

Harrie Schippers

XX.X%. delivered DAF trucks Peterbilt margins XX,XXX of quarter, and Kenworth, and Thanks, Parts Preston. the in with truck, other gross third

next and now low on revenues up margins were Parts inefficiencies PACCAR strong Customer new third to and robust expansion third XX,XXXs when is Third quarter margin with and as year. record We increase gross Louisville, quarter production, that center truck the and of a similar portfolio achieving Financial to year. $X.XX improving part is fourth pretax the million, and distribution to models part sales margins overall used approximately associated new strong with are income strong compared truck volumes of XX.X%. a and open billion chain be positioned the demand resolved. from microchip management of another are and will expect truck sales XX% record last with freight demand. global record utilization, currently earned supplies. supply $XXX limited PACCAR Services well had quarter. this and a and up quarter its materials, XX% invest capacity. reflect Peterbilt manufacturing PACCAR demand from In continues increased into the to growth the sales strong outstanding should deliveries last parts of year. are issues DAF, year, Parts for of XX%. benefited million, quarter, increased first logistics, world-class in Parts business, supply profits supply XX% PACCAR to pretax e-commerce quarter fourth months Kenworth X Kentucky reflecting truck increasing vendor in PACCAR performance, $XXX distribution Parts semiconductor sales the Depending in building

during The new line Madrid, quarter the $XXX enhances range vehicle to million. XX% $X.X programs, competitive fourth truck decade. used results truck resale is be past worldwide, factories. This the facility deliver the PACCAR expect over investment truck Peterbilt premium under Financial $X includes to Kenworth truck for We are expenditures $XXX excellent invested construction technologies which PACCAR and capacity expanded enhanced is XXXX XX% margins. facilities of to strikes. Financial values with latest its in to quarter. billion in new DAF Financial new in increasing PACCAR used for center be million Capital the retail truck and and projected used Spain. has billion PACCAR third its a

capital Research million million to estimated $XXX our increase million just an next million plan truck to exciting be development to we've year. $XXX million new to launch million to and this of Next projects $XXX $XXX $XXX invest year, year, to platforms. in we as completed expenses the $XXX are

along R&D spending your Services, increased We'd strong autonomous These success. will Parts to you. of PACCAR's and be year's the Financial zero- our programs. truck emissions, and clean with answer performance ongoing Thank ensure questions. pleased programs, Next support connected will diesel,

Operator

[Operator Instructions].

first come question Your Jefferies. Volkmann will with Stephen from

Stephen Volkmann

I talk ship preannouncement assume a about whatever awaiting to unable those part I are ago to few you bit allow Is just out guess were that put little to of of correct? them. ship. trucks a the you weeks that would about and hoping largely talked completed means the that that kind trucks you I'm the quarter. X,XXX impact

Preston Feight

constraints a Stephen. as That combination well is, is deliveries that of The as us. say, from supplier partially have referenced look That's correct it them. at I'd you course quarter, as of fewer remained, trucks caused way adjustments almost complete, was that X,XXX rate the what third the I'd to build us through are

position. So that's that what put us in

third the trucks offline. up. there's match in trucks XX,XXX that the with quarter, about now, how you right So And that's XX,XXX

Stephen Volkmann

And those be then forward, normal. that assume higher margin then as happens, fact, that available, than will in kind better ship you are right? better and I should guess, than in much trucks I Okay. when quarter you'll normal I absorption, have parts thinking go we and of Am absorption, ultimately, your whatever about the

Preston Feight

about trucks it that that think a or think those are offline, what component the is way, with this I X. missing is we or just X are

so going in is could. focus good important deliver, get customer. the prepared was to where most third the to that’s us And those as we getting as of the many as trucks our terms that's trucks thing quarter That's and truck in really the for to be

positions, So we'll world. improve around et market share cetera, see that the

will as concurrent us with one go And We that also rate. then up things think build additional another, those that supply allow think so… get will of semiconductors, in to we happen we

Stephen Volkmann

way the But there's not a but not X building shipping? from impact or other big absorption

Harrie Schippers

largely No, prior those trucks quarters. as mentioned, Preston Steve, were completed in

incurred So that's well. we and labor absorption the overhead why as and

absorption truck, the trucks So record the once margin delivered, get those anymore. on the we'll but not

Stephen Volkmann

Understood.

Okay. the I'll on. it one, And pass final then

quarter? Just was with imply product sort in your all heavy-duty, start-up that associated -- DAF, these launches medium-duty, the there normal given of launches costs of was does here, than more

Preston Feight

to was that's from a new It course of of on the more that see normal positive seeing of was what road. them start-up XXX, than is starting going I what quarter, And percentage think Yes. hearing new on our the lot and third feedback customers. a and medium-duty And as well. TXXX does. now the there we're we're In products those

The So went production. just those. on into And the new great a fantastic. DAF team job it's just did

Operator

of line Ann question next from the Your will JPMorgan. come with Duignan

Ann Duignan

a few. just Maybe

into As think XXXX that we are going kind margins question, I built about the of on back the gross offline. totally Steve's trucks of that you've appreciate

about sales. you pricing pluses our But we're at talk could gross you looking contemplate margin this quarter we margins, don't can record minuses margin those, so that of any think model quantify and backlog, the our components? that carefully the we XXXX? roll you already, and the of potential look XXXX, incurred as of the you more get gross helpful you you at should absorption be If inefficiencies when will because You got you in for some the the when could so for assumptions startup and about our that into

Preston Feight

Absolutely.

the So as we mentioned is base. good in supply commentary fourth think that what the we've news, about quarter, to see the started I working with some

that chips recover allows And teams have to of margins what margins. then we've to we into it's quarter. the started operations fantastic a have some we that reengineered we steady is probably more materials or will think here purchasing And of suppliers kind get some normal brokered continue. to at come high with albeit in in trucks that, with either job us. that chips improve as up production, fourth partnerships, still we'd likely just which the start Our working anticipate, will to us the allow suppliers, done to solutions our or constrained as level XXXX, working continue, alternate now to

Ann Duignan

dealer Can us you you've of versus the inflation outproducing at you Can could you were you next your specifically quarter. about talk of rebuild what sales year material Maybe you new constraints retail remind just as the the pricing inventories about chain some had? supply inventories? are models? end then dealer And anticipating talk for

Preston Feight

Sure, Ann.

of First we of price the realization had in third X% all, quarter.

these I of they're that. with customers, our mean, new seeing for should that think kind into And the performance you for up great about XXXX, have product think if matched has so we're We materials. the price and products. just we continued delivering realization

months, is then to you constrained our of look we by us that for or And we'll that's of think also true And mentioned, half. us. So good will which X.X the it, industry news first really X.X as as only probably compared certainly X at the components, for months inventory about be to more. supply build allows XXXX

Operator

line David Raso question from Evercore. next will of come Your the with

David Raso

maybe just the To continue there got about that realization, try the the think third quarter price how conversation continued you pricing on for used pricing. prices, to influencing expect should above 'XX? X% thinking When mean through to in said, running is we you strength that and you're how the

Harrie Schippers

Yes.

we Preston that to the a year, price we've bit for in hopefully that and cost to X% increased those As the material look increases in today. mentioned, next going prices average continue. on we're more into quarter in obviously going third a quarter, and market little is We're David. strong If recover fourth

David Raso

about supply like parts. a few is modest that you chain that deliveries there because -- that is there waiting when anything then a there suggests it step And of chain? of have XQ the But some lot supply in are just comes out upon magnitude little seeing if or that improving give us can you a the not comment a there's expand you sense a necessarily improvement chain. of about sense I'm anything there, better an XQ stick saying seeing hockey can you're supply it for improvement. the up just looks improvement, significantly -- to fourth you're quarter, but The trucks bit where is the seeing the some

Preston Feight

Yes.

it's we've I seen stabilization we really semiconductors doing. work look the supply been teams base, that are think in a the the it, from as at just the recently

market with work we know would that the mentioned. market see. play course us supply a that. that the really that be that's to where year as good in we in that. How have we gradual second, than don't tier all rather looks and there'll so hockey good right and communicating year have and could good expect fourth this next with for suppliers, goes out a good well they're that into see our that the base, now, in which bounds the be third, how And And you news far stick in and after We'll a of that year, at, we actually

to just So add that's about in positives on then was Harrie there. what realization. the And talking to price

amazingly going with And that it, the orders see only and the it's Europe. customers DAFs we things new do DAF the truck mentioned of XX,XXX for new it's regulations that have trucks, excited over make as only the design, briefly, us. in Europe One difference new in we the to we are and big for a truck about meets for truck the

So that's positive. a

David Raso

That's helpful.

it of up XQ, that And wrap do sequential. in maybe lot have to delivery even low the you partially enables deliveries just though So XX,XXX feels built quicker these a like on trucks having as quarter level from build year? just supply the take from base this we think comments case beginning to as than next through scratch, chain sequentially we the increase fourth builds can of a

Preston Feight

now. hope See, right our that's

And so have happened. what we hope Harrie? to

Harrie Schippers

bit little base, depend a supply will on David. the Yes,

I redesigning chips think with our some although And teams semiconductor solutions found a to think alternative constrained. solutions bit. and production to with have still modules, the that work good I optimism components And an other solutions. job alternative is amazing keep in our done that supports little we going situation

David Raso

that. I appreciate

more comment, it? the little about the ‘XX you if trying back it build next to looks deliveries it to industry industry way, your the that the looks think out I Is ahead that like I'm that, square guidances. bit. And you of of circle year are like because kind that year. a your do to sales you'll of that run rest running than guess way and the just Just goes right initial

Preston Feight

course the out the DAF of Peterbilt X things tremendous of as we amount and trucks a demand the true. I there. for Kenworth, think that's in X focused the or there's customer probably quarter really of That's on

been has for can, building to we getting focus market component just for shy great satisfy these trucks. and many as around our so delivery prepared that of And as demand

Operator

line Steven question the Fisher will from with Your of come next UBS.

Steven Fisher

It of taken delivering your seems on delivering that like you some XXXX. them XXXX models, today, you you've orders be would backlog have into

when delivery margins? I'm switch that years 'XX pricing years? just will your curious what have So will And over from model on and impact model 'XX to

Preston Feight

every first Well, and that the in time year, there's XXXX model as cadence. in the an know, just works, you how a that happen normal will and of increase part there's

Harrie Schippers

it to that relevant is old year model in change changed new the from model. The the

the duty much bigger new the year. new the So this than a impact new year medium those TXXX, DAF, XXX, have the the new model change

Steven Fisher

Okay. And That's bigger just a then technology helpful. picture question.

You've talked on industry the next with market vehicles and this few by PACCAR the EV ramp the What's autonomous Aurora? over ramp your expectation about with on XXXX and years. on relationship

Preston Feight

I robust that's how But early calling for with it's freight-hauling is Well, we're in and making we're exercise. pretty now. technology the we've is right market Aurora quick this about running freight. got going test first an participating of We've different around, how start-ups FedEx and think and going well. the to time days. in autonomous becomes, And that been actual now It's depend lots going develop learning that's a right on prediction that what to trucks

So to see patient just should it's I to ready scale. it when quickly develops we and really be think how

Operator

Tiss from from of come will the question next Joel Your BMO. line

Joel Tiss

enough up like have or the DOT there, models end things the are more of I it for just some out on of or I'm out do there is just wondered, just insurance think side like guys led? What is question. having Steven's kind it from of you the barriers the you following

Preston Feight

through Could there. time again? didn't Joel, we a hearing question clear. you really the hard come try you had very I

Preston Feight

Yes.

roadblocks you're moved what miles? new like DOT just it technology we to Is is adopt through seeing what XXXX? a sort of Anyway, by expand or that Sorry, office. the the -- to

Preston Feight

of question say think would is implementation the technology incredibly XXXX roadblocks that I gist I the autonomy. for is got your on the I And involved.

edge And done the edge the down right that's so operation about boundary of those what's be unique about the highway. being cases it's Most running sorted cases if But the now can exist, think now. you of out conditions. that

working those. we're So through

then probably us the for a PACCAR There'll is redundancies developing be as Aurora, ready of advantage here, like part because And cause -- which it involved be in build it, this working vehicle technology. platform will company PACCAR of element ‘XX couple proprietary the years or to like upon. should to again that constrained in we partner, is we're poor, let things for the a autonomous really it will in it it our be huge to have a other has The and adoption. Aurora companies which next and then societal think with all robust that be well

So it and start lanes I certain think from evolve will with there.

Joel Tiss

All X right. try I'm to question. going more

enough the little autonomous like Do all about is or ask Just a everything need basis, and really really might record to margins. these new ask those X- some want to plus to something and working quarter, that buy could the there a bit products into you level? some new do of structure I to expand else different think drive more, to your vehicles electric higher be you a your instead to X-year balance margins drive and that you're to on levels. the sheet new think something of to like to of margins Or on use

Preston Feight

I connected electrification, then on to we have very the that to the products, there And efforts just autonomy incremental margins that absolutely very, high the will that other I levels. those new Joel, that. opportunities is believe our think drive

So looks very the future good.

Operator

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

Robert Wertheimer

like I on from that's maybe you see generally, conversation situation if of on of chain semis a how hold up, some certainty long sort and you questions sources suppliers? of finding your or do that Is And you better? then that's whole are getting when whether couple -- have a some yet mentioned did the you're new kind whether with you more little with outhustling, to supply semis that? know Tesla reprogramming not curious on domestic visible only to better. of the getting don't the you're phrase Just just way it, I'm things bit real

Preston Feight

it's think matter Well, of degree. a I

mentioning good maybe think working doing before. as tier worth places different are are reengineering fantastic X into to in X mentioned with They doing chip. our reengineering and third, it. teams our I and were solutions you manufacturers starting efforts. It's high why are up final job them their team that job where robust require to chips done And the that's over with taking They're only the has semiconductor put hats of are as themselves conclusion. far And that fourth hustling We're think see we time second, required a chips. on because to gradual would fantastic come I improvement this we're that. say a off all I improvement see, again, a as

I take some time. think to it's going

again, next year then are for a strong XXXX, very a that make So And and for lead positive it XXXX. might strong gains to us.

Robert Wertheimer

mean more from future -- sensors orders if for It start content to convert that for for on revenue that sort those your also like comes And technology? could platform hydrogen, I in layer better have of I for curve when everything quantification. the is orders And redundancy bit guess, your price point about any I a on into. little truck think you. thoughts additional wonder a last developing at go in seems with if autonomous you I else bigger Similarly, you an the on one. just as you're testing early you do you past to -- then I And is electric when to to do what Okay. experience picture talk volume? your customers assume and then for

Preston Feight

right. All

the which on take first size and EVs. of try is Let's order one,

of ones We tried around our orders you have hundreds now. realize been customers I some kind I the that you're now, orders while in of for even are tens phase little And together. more.” operation requirements guys see are and where numbers doing. in putting we're or for in there, not XX that's the of I've and what “Have it's starting We're still put that around that anymore. infrastructure So by the saying, in that a are shift some to transitional can that limited out it. some into I believe chargers think right

base few probably So it's a years. still and adoption, of return model really be to it a for kind will

that's We're of a job a positive thing. So PACCAR is that. Parts our good selling doing chargers.

good teams balance to job customers of truck and Our infrastructure. make with doing sure together are a have working they the

will you it. standpoint, you're right, over that the it area. So years. mentioned coming an in yes, the additional to vehicle It's that will on platform that And tech have leader very progress From a PACCAR just autonomous componentry continue be autonomous solution.

So to that will be margin. helpful

that and be significant We and should because good dealers services will now as involvement on autonomous grow vehicles also expect their our the it well, will be business. for total

Operator

Your next Bernstein. from will Chad the Dillard line come of question from

Charles Dillard

today share in So related to versus going for to backlog? you what product extent 'XX for market your trying or are what backlog shipment can the outperform get your Just could what you versus a Maybe your seeing new share gains share 'XX? is even sense to introductions market you talk into about your current and share? to backlog market ago year industry extent a broader

Preston Feight

that we're really interesting in we've it's and built in by with have build growth I that Brazil, I would with build I a chair Yes. share that trucks and share, we'll good in position see be North really industry look is that out expect America, number delivering. of right now of because would components the And and we'll the Europe we Australia say being constrained would the that we feel are I like what when at say time a there.

be parts positive which So the it finance we for would forward, forward. business looking the feels and pretty great company look business as

Harrie Schippers

will market on of models top growth And that as support share new the truck well.

Preston Feight

Harrie. point, Great

Charles Dillard

point go 'XX. you logistics? that like like quarter. on just it looks calculations, we between down just I can gross gap shortfall, cost versus XXX into margins you How Great. this break And my then we as model just of maybe be have about much kind versus could price from comes hoping basis absorption was it And actual so would just That great.

Harrie Schippers

don't that I numbers recognize quoted. Chad, just sorry, you I'm the

Charles Dillard

Okay.

looking what do of just I your to the XXX did you I'm -- I'm got -- points XX% you margins that compared kind did, So that gap. yes, got to basis just at like gross if the margins incrementals and you’d looking that you at typical

So that's what I'm trying bridge to between.

Harrie Schippers

typically company-wide, we about margins we continue occur going and nothing range, changed to XX% -- wouldn’t been XX% And said, forward. that expect to like Incremental that have has the that in to improve next should quarter in margins to work margins as and issues improve significantly the the into in through new the we going work models fourth semiconductor And with XX.X%. place, year.

Preston Feight

more Harrie's affecting probably saying I'd typical. to than there's Yes, add margin just factors what just

it that it new factoring right? issues pricing the complicated, it introductions, factoring more obviously, and So the supply mentioned the makes into We of dynamics in. and product

So but really we good trucks. the as feel be like significant, incrementals significant. will the does gains it's it get we look will -- new be the with stability, And

Operator

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

Jerry Revich

I'm zero wondering the about talk emissions if you could vehicles. just

last don't us just what had you update I versus looks that just a regional heavy now? you looks mix quarter, give for think could us what if on orders flavor mix And duty mind? give So the Can mentioned of and you stands like, XXX. if date the you to like, an where medium

Preston Feight

in, that The as earlier, came and Sure. suggest continue Xs. I'd it in they're I little bit say, a grow, the I initially, orders coming now, to would mentioned in

the trucks to North and to probably the delivery medium-duty and of of Europe a is the are key that XXs Now I the mixed. geographically, the they're we've hundreds, same base coming it for in It's more point had mean America. in some orders customer, return applications. for order like seeing standpoint is it's they trucks all the in to build intake it's heavy-duty even split and for. where in From and

and or heavy-duty urban plug think coming whether articulated start pretty will is in to medium or say. areas next where in people I can we've see be into at as the And expect X, coming a let's that years, in quickly back the we build transition hundreds So the orders to are be going before, then and duty, adoption and the thousands the charger night, to that. X year the initial

Jerry Revich

as new what about can fourth lineup board, proportion expect talk across And in can from production on you the to what's about to I'm wondering -- quantify, you you deliver you labor like models you're talk on like And the that hours quantify to willing come Terrific. XXXX? quarter? into what ramp-up product then looks looks what if that new mix head And of models the if here. the willing you your we just typically. are new reductions

Preston Feight

in of say this quarter, DAF being next minority head for next Europe, the I and as And for will they'll a builds got fourth So roughly And America trucks, the so new for year? on it launched become the be North a in grow trucks we month trucks. of trucks. the that we and then into majority year, it you the detail in just half top the into the will would the new Harrie, of

Harrie Schippers

No.

grow from XX% We and continue will and trucks end of approximately similar this our March, will heavy as it the January I than year, would to there. XX% be being model, should of be say, new

Preston Feight

and the We you your of then safety autonomous terms Level their where are the Netherlands amazing of in how about got truck, comforts Belgium far because capability. X build. and their question, beautiful performing conveniences as a factory the driver trucks the And and part in get to they and work guys as you're fuel and features the of thinking it's to how they and second to the economy factories just over trucks are their and the benefits

impactful is margins. and together the that be a great that's to of will benefit customers, all to it So our why

Jerry Revich

on the the of of outside that longer autonomous board, just labor what the potential trials? terms benefits improvements the elimination FedEx, you're the avoidance accident trials, benefits seeing about economy the finding just but just in you done you term. about the Can in of talk you're fuel Invitation quantify -- And talk you've can accepted. other that not across and

Preston Feight

to this freight a they become will think that's the be the I it real is opportunity efficiency world. trucks safe, then that's huge and to bring country impact -- as real of part these Yes, the an will and of mature, very

and And are leaders position that so now. with to we're forward in looking right that effort being

continue to we'll that. So progress

it's safer efficient environment. quantify but operating good intuitively how think and could you for can I hard and be it the to values, those more understand

Operator

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

Ross Gilardi

so I'm are spending on the latest $XXX and and constraints by the capital for of little pursue what just year. a trend the the And given just thoughts your production outlook given it I was might outlook mean, million. comment just chain on all down could by forth. wondering And incremental integration situation? the supply I you if that surprised next almost it's

Harrie Schippers

the TXXX the in medium did product the we integration, in duties, new just biggest programs of launch the No complete the But and vertical renewal new Ross. big new XXX. changes

go phase going to just that R&D spending there's electrification, those and phase, focus now capital more come later. kind in a little the bit we're we as And our R&D on of more efforts will in that technologies. So up connectivity, autonomous

Ross Gilardi

And just is little barely further. for bit seems surprised backlog demand of next And a more lot getting talk pushed outlook year I is I'm then out like mean, just can a Europe? globally up. and you it about your further

you outlook much approach Are areas just is why next of gate? conservative Or that a demand So the year? taking you the out are up of seeing any not softness?

Preston Feight

Ross, at that very is I'd a it's feature. let a demand still and is It's into and the will strong Order us add demand a take it really not swing something that is market. right supply backlog a me good, it's maybe now. that, throttling extremely issue say Harrie has

get upon supplied. we can based market size our So are of what assumptions assumptions

Harrie Schippers

a XXX,XXX market. that's at of a that high good pretty range for truck of And XXX,XXX a XXX,XXX end to market the range, Europe,

So let's not forget that.

Ross Gilardi

sure. for I'm Harrie. Oh, not that debating

But a what just these you do unions lastly, coming percentage union around these negotiations all? mean any can about days at And comment. asking. production You're Obviously, is that's -- you have you're where I pretty of a coming workforce that's a I then that's was up. more Maybe year industry. a talk of just playing comment contract lot still of constraints catch-up. is topical unionized why the with retail globally than significant And it production days? sales your off

that So I in a asked haven't while.

Preston Feight

In Very of other. is ways environment. relationship union a them, positive quite North America working each and those and great Europe, percentage with unionized our actually with are it's of Sure. in small team a

Harrie Schippers

But Yes. excellent unions. relationships the with same thing,

Preston Feight

great on get of -- a dynamic have one Yes. proud and humbled floor things be as go we the we work travel this of couldn't It's with place more all out them. to to some people, environment And I with around it's green work. fantastic to and meeting in and people, and

Operator

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

Jamie Cook

Europe? Parts? with structurally some And Parts then of fourth obviously, seeing said to then front, gross I was opportunity the X performance and scale you the in an guys there's for Parts these production Parts just follow-up investments guess One, versus And you wear of North for wondering just me to is pricing market side? on And guess my an in what I'm just quarter as it there with margins is sort questions. move Do question strong. year. I margin for will be can what outgrow very the higher America throughout share, on this think you're the just the off? you whole opportunity on about the you remind

Preston Feight

team that job transformation services. of customers, from that Again, would dealers getting the are leading a So data Jamie, fantastic it our from and teams part value-added at on is and our the doing into from Parts trucks, digital the suggest technology. I as applying Parts business, really synthesizing

our there. So performance just to top

growth in the future the for us them. And as that I does present I business think think of look out. margin we in that to by opportunities leads all

we'll your job expect part them the in second more than quarter, your all question, And holiday quarter, split of right, have area. far remember of third the in build -- that just America, Europe markets. North I'd you by just Europe that days to So say both had for and of And then that in great in as as and we growth shutdowns. in see schedules the we'd fourth

So higher Europe. in at a degree you'll probably see increases

Jamie Cook

Okay.

And know from about sorry, front? you just talk I the on X% what about talked pricing price. seeing you're Parts, can you

I to think that specific trucks. was

Harrie Schippers

has higher a would than bit Yes. Parts X%... even little X%. it's think been I

Preston Feight

X%. about It's

Harrie Schippers

third Jamie. in X% quarter, the

Operator

of will from next Your Deutsche come question Nicole line from the DeBlase Bank.

Nicole DeBlase

talked really we about been year that lot did up guess America. I We've you market a guys here, but full haven't whole I the there. take through a guidance for And lot South 'XX your noticed

So America. I going love in hear to would on South what's

Preston Feight

bet. bit doing dealers we've our did a seen market there. fantastic job there. up are What in the down a You little South We take is America

region in Customers Brazil. our South so reputation grown year. of that and Andean them, new with top We the America DAF in in It's are as truck. performing have the love that introduced we last established well. is We've the at premium

to South strong strategy it's been is we've and a successful. had PACCAR, the and so grow America And point there for

Nicole DeBlase

point you that point? in how think chain? when And how booking are this normal going I compare probably it. you that are of that's out booking And Got we like about the on guys this to orders bit with guess, supply what's XXXX, know with orders how at far does a what's flux a And into I at the like year?

Preston Feight

treat Well, to that I of order market, strong few backlog, order we're as what a very I have market, strong say would is would in don't -- word, is a I funny backlog. which this but normal likely a a months significant

bit every more. We of have that and

now market. of the the customers working number we as it's to fill obviously, as said XXXX But in with be, so by before, we And we're the parts going get. we constrained

So want. that see improvement, we customers, and trucks get sure make we'll we're all the to trying the they

Operator

Your line Thein Citigroup. next from from question the of will come Tim

Timothy Thein

The Parts potential in 'XX. thinking level was just first question a growth as to business the from on just and high the

tight you to stocking. the a and hearing potential some potentially the for of from more about retail, side? run dealers. And say being just Is seeing You I there's think about ahead there we're similar see you -- Parts dealer sales parts do just as truck on a that earlier talked potentially potential certain just

there potential of a think? for do is a you So 'XX, sort restock in

Preston Feight

trucks of think are the think out that now. fully way running people is and about tons I there's that freight there, right I their volume

And trucks so existing. trucks going because on meaning the there's are new are industry-wide, repairs that on it's a constraint the up

next into to a continue the and opportunity year. that likely market, seems also that's so Parts And being for great

Timothy Thein

Okay.

So way. could potentially go actually I other the

start If to see a truck maybe Parts tempers that supply ease growth you new the do in bit. up,

Preston Feight

wouldn't look I that... Yes, but

Timothy Thein

Yes.

that on that necessarily used runs lease run in All basis, percentage just quarter, with a a there release and think is strong anything a that fourth equal, next just the strong think I right. face terms that of the Services. the of we onetime there, as the is into about Or something all see we mean, on should a big kind gains similar assumptions or the we Financial in quarter Harrie, more from half we from nature similar truck operating guess, is through else just that market Can again, rate a that residuals? can't just I Okay. anything, back changes should profitability then on margin year? had we lot a the not that 'XX? And may recur this that fair of -- if of that on such potentially about we think impacts or year about sales in

Harrie Schippers

out year company And for now. in that dues of record back $XXX we finance strong Past that that, to used dividends the we've is for continue, to see of And top pay into the trucks. had bright. the the that happen it's the of in difficult Tim, And let's that less on continue see But for company say the finance excellent what's year. than performance finance investments half the next portfolio say, we Yes. million, years, the a future, future on profitability, strong you foreseeable to expect has going made quarter. in next of the used truck second in is company. demand we stellar time. over X.X%. All centers to were a Customers get quality. The the

Operator

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

Courtney Yakavonis

going could a the the and truck just mostly you platform. some little diesel Historically, step-up about clean about programs as you've investing support as I obviously of the connected talk diesel. in to R&D. we autonomous know mentioned that's talked If bit the well

new launches. your done truck You've

autonomous R&D buckets versus also, is primarily we think us year? clean and how can in have from for it making in diesel, you changed investments breakdown coming And just increase the Just as the guide you're prior where curious time. to compares the if about to help over the that as anything that

Preston Feight

Sure.

a would take is to a for and I shift that say that at me you, there maybe swing Let has add. something on. going Harrie, then

We you have clean think job a coming team programs great with a lot along. great meeting XXXX emissions, XXXX about that of When diesel our did of emissions, diesel.

software develop providing as that our at customers transformation for there next control put the least. the money platform in our this more beyond vehicle with same that digital areas. So algorithms we solutions value develop so own and and that's be services those autonomous, capabilities X with and to offering the would to and connected years, continuing XX have the dominant then the that own into will and electric vehicle we're powertrain likely And we're autonomous suggest programs in then that, investments I we making as

those right are ongoing now. are of shifts the that All

As our Harrie the trucks we've in completed of we've best history. said, new launch just had

areas. to And so that we're other foundation and moving built, is

Courtney Yakavonis

procuring versus thinking when versus channels you that normalize much have them chips, XXXX -- us how margin then any XQ are understand thinking and But brokered about I we're just little additional impact about Can when margin That's just Great. And the expensive the more? some the availability normal terms helpful. guidelines of to just more you made things can XQ help the on bit more give know on in absorption. via the comments. we a chips reengineered you just about a little of just us those comments through

Harrie Schippers

alternative course, doesn't gross a and of often more be on are expensive our can Courtney, percentages have material Yes. but impact more chips margin it those now. for expensive

Operator

Cowen. question from next the of Matt line will Elkott Your from come

Matthew Elkott

there processes see merge autonomy as X and an technologies trucks? of growth the So the you talk X if the guys manufacturing Can to good technologies limitations? or autonomous about area, advantages deal to you And are doing you electrification. any a electric front good overlap on a and are a try if

Preston Feight

I wouldn't think of them quite as linked like that.

going with. in the principally to the well to initially, a up leading of I technologies it vehicles. lends other with role are haul autonomy to is commercialized which that begin something have hydrogen becomes might battery play think cell, X And in. isn't electric is to It great that when we're long that fuel

at think they that point, as at we in they some don't happy that. linked merge parallel, I So will but that them I like look developing think

Matthew Elkott

you supply if is here, a my they basis of chip are increase I second cycle. guys that and on Maybe chain to are the quickly material the able function case more if will ease year? next up sequential then shortages our And the ramp the scenario step on and disruptions gradually. slowly base out know But question production is somewhat way? a abruptly, what assumption

Preston Feight

we indeed, Matt, for We’ve it. could. prepared ourselves

would we and that up. be teams, operations great have prepared We step

Operator

Next the question Research. Kauffman Jeff line come from Vertical of from will

Jeffrey Kauffman

almost I autonomous, bad feel just but interesting think coming it's I to such back an opportunity.

you a you Number so X I'd markets, then building ability out there ask And is questions on thermometer you're to So but where to and on? across platform one, of say, this. love to bit, on little answered platform question, autonomy is kind you let's any it. the for there a utilize second going going the be the what's for Europe,

just have are its whether far I what were vehicles. a you building way to. because really dabbling maybe things of you're innings, in. terms going terms it's in I early economy? kind So you is learning fuel mean being you're stage something know in you the something curious you're commit you platform of trucks companies but expect the proactive and few that it's and didn't of What learned early that's believe not this of whether the it's in to I'm X so testing in

Preston Feight

both try you. I'll take to bet. questions You for those

far platform markets, does indeed we're building, across As this it application have vehicle across as platform, autonomous brands.

in trucks. centers systems knowledge are we and a that software hardware the investing onboard capabilities well the develop as as the So vehicle

as integrate those with the and are another driver our with autonomous the that used driver that well itself, companies platform platform So creating our with to be integrates like driver autonomous Aurora well. then well could

It something to lessons that certain for drivers. step-in routes. years is that are will weather will in that will learned continue this the be and take three out. big was a conditions, long sorted a are say also we around I’d that drivers get those So introduction, displace those going it and not investments. This time are we will that’s gradual to why slowly making

say high autonomous an autonomous occur So that support global is is success and the for vehicle vehicle strong other I the help a having for does, would like PACCAR required key network. a that pretty you because good learning presence operations dealer need

connected You services and with truck happening make then to to and need they're when reach and and that work repair vehicle to understand able to sure truck something on out customers the that be you what's get well happens. through operating be our to board able the

opportunity really for in it autonomy So great PACCAR -- an world. a the is is

Operator

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

Felix Boeschen

engine were the favorable is business those standpoint that to in sort to parts, if, market if cycles truck of comments quantification very And up think the even drivers Parts backdrop the of any MX sustainability I TRP utilization company-specific would and business. future. those just through e-commerce the could loosen. on Clearly, industry-wide I'm obviously and wanted probably say, trying the truck the and of to distribution from really the new the some just But follow business, talk on helpful. I'm today be on you curious the center? foreseeable just through an for

Preston Feight

Yes.

those I answer the right. all question, are comments. is TRP great To your made growth exactly mean strong. You

growth, continued in e-commerce seeing business. We the are strong XX%

then So the well. transformation team customer, fact dealer how Parts we connect then sure the that's really And those as to make in on meet the need digital with we the through fantastic. The the engine think that and business emphasize has parts that knowing are embarked growing to with I needs.

business kind the Our Parts a what fantastic job longer and that, doing is term. grows doing in of team that's the of

things really to. positive forward to So look

Felix Boeschen

have into costs Got numbers covering you puts isolated if and head try it. been XXXX. or anything curious the obviously kind from supply of those takes Or of think quickly they've margins, with sort to just Just a And that? there's perspective? as I'm then chain we been headwind in your the on to strong.

Harrie Schippers

time, it's -- For Parts, for at increases there same have to is no Felix, do Parts. whenever increases, there very the are price easy cost backlog

day their or So today, to to orders in the they're Parts come same that going tomorrow. be shipped

the get So pricing in easy cost better than to there that's very increases. or line

Operator

there no further At from questions in this queue. time, are there Are the company? remarks any additional

Preston Feight

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

Operator

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

disconnect. now You may

PACCAR (PCAR) 26 Oct 212021 Q3 Earnings call transcript