Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to PACCAR's Fourth Quarter 2022 Earnings Conference Call. All lines will be in a listen-only mode until the question-and-answer session. Today's call is being recorded and if anyone has an objection, they should disconnect at this time.

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

Ken Hastings

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

listen-only line mode. any prior members ask of participate conference in on media with a As that the calls, the we

Certain will economic risks competitive expected today information uncertainties, conditions and affect involve presented and forward-looking be may including and general results. that

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

like to now Feight. Preston would I introduce

Preston Feight

full business Hey, Michael update and good on will highlights. Harrie as I Barkley Schippers, well as XXXX year results quarter other our morning. and you record fourth

financial impressive employees. for has First, benefited and trucks years excellent net of our PACCAR’s solutions every dividend record income and has XXXX. highest in across divisions. truck appreciate markets, performance outstanding PACCAR’s consecutive I billion. from shareholders. and of income achieved our $XX.X our results consistently growth strong and They're In financial parts deliver services the record paid a customers financial all achieved $X.XX XX of PACCAR billion quality business major and of They year since an net record annual to team. and results XXXX, revenues our PACCAR transportation PACCAR truly

more Parts the improving, there constraints of pretax higher the last $X.XX quarter a declared by the period nearly fourth production, dividend. of $XXX XX,XXX quarterly record and vehicles billion to some that and quarter the PACCAR prior XXXX, which This $X.XX fourth $X.X share the may was quarter. of were PACCAR’s from components. million, same million. revenues trucks and completion record The was stock throughout truck increase $XXX the XX% was income though result is be In delivered PACCAR of XX% of revenues XX% chain year increased year. during were record PACCAR than awaiting year. a X,XXX net per the quarter profits achieved announced third to compared and dividends and all fourth supply supplier a billion

forecast fleets of The to share industry XXX,XXX quarter Canadian deliveries XX,XXX vehicles. forecast and models. of from Class were first be XXXX prior is truck there's this the to XXX,XXX reflecting US are XXX,XXX are market of range the market XXXX, be XX-ton PACCAR’s X XXXX the in Kenworth XX.X% XXXX. truck generation DAF and XXX,XXX trucks. to under of and European to new above expand the retail strong truck In of share XX,XXX. Class market replace In of projected to increased sector, registrations increased benefit X to a modestly range deliveries of the to were and In US to three a newer success in economy units. and the last truck years customers production, the US from demand XX.X%. in need The to pent-up sales Peterbilt DAF superior year, Canadian and aging performance record

for XXX,XXX improvements. to be global in growing to success. makes registrations up the we with steadily opened truck economy expanded South the confidence American In years and global parts to was XXX,XXX and the to and range And business pent we of factory the units. the demand of of strong market XX-ton market, this Brazil, in European truck reflecting XXX,XXX chain gross XXXX, truck a and South the the XXXX, range expected XXX,XXX. and supply Parts In XXX,XXX. above market record to PACCAR’s ago, a since X.X% American XX-ton achieved in the expect gross excellent performance, be XX-ton margins In is quarter, XX%. has up of worldwide deliveries, trucks DAF above Truck, be to estimate share XX above PACCAR’s is the parts the Brazil Other in in XX% year, last new from X.X% first We in gross to fourth healthy year. to margins DAF higher quarter XX.X% contribution range truck

heavy of Kenworth, Trucking rating. X.X% earned all Association new industry Work the top the trucks and The companies. trucks and and of places duty PACCAR Kenworth and an distribution new leading efficiency XX,XXX year. PACCAR Year. for Women DAF Demand as fifth This Manufacturers. fuel and place solutions. Truck transportation XXXX, Peterbilt trucks. markets to financial another and successful A the Last benefits their new manufacturing being excellent year. consecutive six PACCAR Organization The an customers forward premium are in to year, in low its realize we of reporting In awards XXXX again and firm excellent of is was with PACCAR’s market operating and Women the earn several for areas. to PACCAR quality, And XG environmental by named truck the for elite look CDP as National And International reporting strong in was the due PACCAR range the rating Peterbilt leader These of top recognized vocational recognized a over medium leadership recognition in the from costs. new the DAF XXXX

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

Harrie Schippers

Parts XX.X% sales network profits. compared parts. year. year, annual to XX% billion increased first same in to to by estimate set pretax XX% Annual of profit opening PACCAR growth We annual Parts In truck new Louisville, to year, grow and a Parts Thank to $X.X prior XX% as billion. demand new contributes you, Parts by margin utilization the global $X.XX to quarter from and quarter business. Kentucky, distribution margins gross by to expanded for high Preston. strong by and XXXX, PDCs its distribution is the increased XX XX% records for expanded in the its this a in high Annual worldwide. last revenues parts revenues global XX.X% PACCAR high and XXXX in center PACCAR

historically benefited $XX.X and prices PACCAR million fourth used XX% Financial record billion. assets a due to in a continues record XXXX, quality, total strong. a increase prices with $XXX its wholesale Annual facilities which and Services’ increased the used is superb PACCAR in centers to moderate strong PACCAR truck increased retail a credit income million. from well but With to to Financial truck XXXX. truck Portfolio In truck Madrid, from very increased Financial worldwide. past channels. remain Last income to to The credit XX% larger to good used PACCAR opened perform should portfolio have low portfolio we another truck This contribute year. XX expect Financial realization pretax losses. to bringing quarter new price very last retail Spain, year, year. pretax center compared used $XXX used low higher

provide return investments capital supporting PACCAR’s independent distribution vehicle In to next capabilities. industry. in in services, an will In million and enhanced engines, invest growth capital manufacturing and enhancing $XXX you, customers XXXX, our to Financial of your level PACCAR’s in we continue development. the projects. dealers Kenworth, Services. hydrogen in distribution and And businesses XXXX, highest PACCAR PACCAR’s questions. positive of are and to XXXX. leading in PACCAR to key contribution invested long-term These $XX in had advanced of autonomous invested to we planning success These another and conversion connected $XXX include we'd XX.X%. clean project improved million capital see be their very are million significant a investments range trains, the to leading electric Parts outstanding R&D PACCAR the research battery hydrogen on industry PACCAR innovation the the systems, year industry generation pleased DAF and about million be $XXX of making Peterbilt we're Thank expenses technology million our power in and network, range service driving in $XXX million diesel to an invest and $XXX as and answer XXXX. and

Operator

[Operator Instructions]

comes Raso ISI. question from from Evercore David first Our

David Raso

first question like to fourth about Hi, first similar cadence and to So thank mix from for the revenues deliveries there? relates similar. the it's you. the for how seems quarter think revenues the truck we the do parts the margin quarter, gross very quarter, My between you have and pretty

that So moving in price first stronger the essentially that and fourth first Thank margin more forward better? a tag less trying absorption price quarter. and to the is little think quarter, shipping trucks just you. you're I'm about And cost red quarter for gets overhead the costs after the gross

Preston Feight

constraints we're way that The resolved. sure. been offline good been have have to it by limited you. to talk as Yes, at supplier the units David, largely looking

those some care behind So it's us of the fourth that were fairly But were right taken of now. quarter. in there

So on Europe truck well factor the parts And run and much the think a first both that's of and in the released trucks say are is new doing in we deliveries when market and really side. North being we good quarter, rates, about in pretty production our basically that America. the of margins side now the would that's fully all

or global the whether are is customers I are team, And of and South America in So which Australia, would it's thing, the as add trucks, those of we. is that's the more benefits well strong going in getting one the performance contributing.

David Raso

maybe what to quarters, come taking think first after pricing costs, not If if would you're of quarter moving How few backlog, like as forward dissipate be better isn't the the your next the I down think quarters. margins quarter, the gross do the assume we you're first worse. little from So to should costs year some price over a couple may next able the about progresses. that to quarter? that's the in in then gets first I going

Preston Feight

that we first information we general, a Well know good the think XXXX we in quarter be share be think will guide, and year. will we you

Operator

UBS. from Our Steven from question comes next Fisher

Steven Fisher

or better-than-expected backfilling that how expected? what -- bit you much much your faster you backlog extent are backlog visibility for Nice later than quarter you say backlog? a and with just Thanks. full deliveries, curious I and burning how to how that are guess And Or the you QX the I'm year perhaps QX. in is net have

Preston Feight

about needed. since it to really the supply has that have I been industry is, macro think the think able XXXX, all trucks mean the not to way I been

demand we've at strong obviously, So there for is our in in the to addition And products pent-up trucks. launched history. new time more that, a any

looking first So excellent be half year, the filling contributing, full strong continues have third with Demand visibility quarter the we're build. into to we nicely. through line that's the in

really like year. good looking a it's so And

Steven Fisher

suppliers terms in in things. the of there I'm or Okay. your raising of What And what you're side that where seeing prices? prices. of Some your Is just here? terms range of you of a are terms seeing seeing and still and in inflation actions inflation from of from are net holding curious are suppliers the you're sort some falling? them cost

Preston Feight

of did you characterizing think a I it. great job

some commodity and see there it's there's holding mix. costs a the bag. suppliers, improvements, You as Obviously, where wash supplier, been labor factor but those still far raising where as mixed our some all a of into some have our for is

Operator

next Our Morgan Stanley Cumming from comes from question Dillon

Dillon Cumming

Great quarter. Thanks question. the for

pair challenged, of being of ask just those in maybe that any growth kinds in going of the quarter you benefit versus MX the XX% pretty the tailwinds rumblings a of penetration quarter. the you've moderating regards the and to parts bit XX% just is headwind heard engine the a maybe channel first first wanted from Just on penetration. off admirable, is with engine to coming the getting Can How you truck maybe truck more obviously one some been headwinds utilization, two growth, the MX much from into to bit. utilization, but considering first

Preston Feight

Yes, to quarter expect that XX% for growth the the of we really those rate things. reflects all first XX%

sales, the So is launching means continues part business. announcing parts system in to stores, that But whether amazing share doing more of engine It MDI programs, to with team sales. TIP. we our job the PACCAR our drives grow continue to an parts selling improve. its performing see parts TIP business, course, new ecommerce, we incremental the really also fleet That continue adding our well. We're

and things do quarter us well put. all a well mixture the of really of allow are first those that it's in to so we So

Dillon Cumming

the contribute that on seen market recently? prices PACCAR used more on you, performance or what would just the ask Harrie. Got recently. can the recent strong strength FinCo, the in one trucks Then just thanks, we've more used second I Is in a considering more considering premium reflective quarter decline really used of margin commanding you truck we've pricing the a that basis, truck seen deceleration the in in to

Harrie Schippers

trucks we have now those to have to retail truck sell trucks are said, marketplace. instead allows That's Yes, us and used is used things to we continues. the continue that low, centers of more the been for the the premium Kenworth, we or XX% at good But used see X.XXX%. worldwide, all shape, have to than a portfolio used years, prices Like and contributed long the company. finance opening for dues XX% over we around less in past Peterbilt developing see XX more of truck in centers a time been really that recent wholesale, we benefits also more

benefit that. pay and finance to continue company to from continues their bills So, yes, the customers

Operator

comes Tami next from JPMorgan. Our from question Zakaria

Tami Zakaria

so Thank morning. much. good you Hi,

first in and first XXXX? my a about the the how question rate number of should of is the quarter delivery we good for think So year? Is delivery run rest bills seasonality

Harrie Schippers

it’s to any talk Tami, us. quarter pretty what Well, without offline number with of you, the see behind that that's this of good increasingly issues is steady And seeing last have year be production. we you're first we why had think high are I

So And us opportunity it I feels in XXXX think pretty forward. we as steady look there's there. for

Tami Zakaria

or helpful. gain that see ‘XX? how super capture, chances Should this similar it. And market you this question any at second Got continue is, of your think That's to about year. reason year? should do my accelerating clip then share a Or we expectation share

Preston Feight

around as on the the Well, think And products the side. that a world over teams side of a the financial introducing Harrie our and parts have job I half on fantastic year new services truck done and last mentioned side. the

helps And what that of grow high. PACCAR our our totality I us benefit high is to think benefit providing that very the them So share. customers to

how when it. so we're then successful. And customers of that's are are successful, and And successful, our our dealers think we

Operator

Our comes next Bernstein. from Dillard Chad from question

Chad Dillard

good Hi, morning, everyone.

the -- So number the, on I could pre kind with the just you the talk first about given was production are there buy half view that like of a half versus of well car hoping industry crosscurrents cadence your second demand.

should how we that about So production there's like think level?

Preston Feight

past built years. think excellent sector. trucks. come good I really new advantage have to back to operating over trucks our customers, Well, as for continue the, provide that that again, our And industry enough that, incentive for not with is We the cost them I'll an few to combined buy trucks to

It's the think non-issue. only that pre really too in and California. bring products steady the that But I end is buy we customers cases throughout. better. new when limited bring in feels XXXX I And content because that most advantages benefiting and think year it them we we for a up features and help them their operations about think when and run strong

Chad Dillard

production the and seeing the having is then just how Act And are curve how that composition about That's helpful. in the into just of you And offering. your demand your Inflation this shift then like customers? for changed passage Reduction talk you're of has to conversations the ultimately, that just Can over translate what production? with EV you year

Preston Feight

in that before with we infrastructure the I'll a market, it what market it, models it. add buying shared will see gradually Harrie electric has comments of take think is are putting that grow. now nine. the PACCAR EV we've understand we nine true chargers just within think Yes, they're What Customers production, zero-emissions vehicle coming around couple is to experimenting trying vehicle an can it's or and and someone in. I

customers the extend in we for as teams the products And it'll be that fantastic shared the fit little to regulations turn then putting in, it'll the done experiences used and think hundreds, hundreds XXXXs applications we it'll familiar, there get become grow into and come out needs. for and and and stay in it'll there. while. job grow of their all our a from think to And as more a So have previously; we've

positioned for think we're it's great moment, we the that Harrie? out that are to And add, some providing experiences. I growth. that fantastic in Anything So vehicles and have well there at hundreds, the

Harrie Schippers

No.

think I that's spot on.

Operator

Melius comes from Rob from Wertheimer next Our Research. question

Rob Wertheimer

straight split Infrastructure don't you. know Obviously of will COVID into couple trucks? Thank that more like fleet truck in the and category times the mentioned customers haven't industry been if past all that. over Presumably sort already. North you Preston, a years America get they of and has the how tight. and demand to drive for of that's Act you I happening the at dump able cement to things trucks couple versus with the been want. Are all able

if compares If that more you're and more the markets. orders, side know with or seeing age the of on I ‘XX effect, that's the any fleet tightness don't and early of how a market trade

Preston Feight

Yes, Rob, about statement local it there, strong think think for general is impacts and is tractors. strengthen both it's, but tractor. demand there's seen need would for we've to market the we demand an Obviously, truck it, issue and I strong sides, generally what trucks be total

Harrie Schippers

And add, than anything, share would more truck has market XX%. I of if a industry PACCAR segment,

from in So any growth area, definitely Peterbilt and growth will accelerated that. benefit Kenworth that

Rob Wertheimer

Okay, you. the fall current to component falling inflation you trend you There's the whatever to a and whether that any supplier, in looks debate lot speculation great, early have of And PACCAR how you. are there. Thank for the Do you on thank touched fall, or then stop I'll as or logistics earlier. materially. logistics supplier And ‘XX? will or costs sense

Preston Feight

costs talking about especially I for think think been year, last moderating I don't XXXX. is now, logistics now And over there's I think But it's we're varied. increased they we're costs input about it high obviously there. concerned and have what the and

Operator

Credit Cook comes question from Suisse. next from Our Jamie

Jamie Cook

Nice questions. guess morning. ever margins you I I good quarter, just seen impressed put think this I with think XX.X%. don't was the put that margins high. guys incremental Hi, up I've quarter. One, incremental you two I up

So introductions some forward one build a you backlog that could for two? of question are And can my through normalized going you about some follow seem more board is that you then favorable If Europe? should Is just is talk how that in you. with between nature. quarter. time for be I to incremental margins product think about building second things might just third the new versus North more we said to but know, the your in just on. second distinguish order the or up America starting across through that the the Thank book quarter mix the

Preston Feight

Sure, think about PACCAR of of team I we job. is part would, the good doing a it, when entire

So performance trucks trucks our to at based those is that value margin now. providing with great time They're upon benefits customers. are those realizing providing our

that did of so on then for consequently, is business the really And to truck continue it the Harrie growth been has to side a effective for them. will be predict be parts we effective nice and and strong strong, as PACCAR And strong. job outlining continues

margins. XG your in in is are shape. new very kind that product to there, different XG, of in the to dimensions Europe the second well question trucks a doing only that masses us, taking the are allow and for the of advantage which industry trucks regulations helpful XF, lines tie that's PACCAR, seen So And say globally Europe I also our is strength right, for we've

distinct in So that gives advantage Europe. a us

record by doing So is say market XX.X% Australia, share, there. Brazil, enjoyed well. America, we North I strong our market would is are European And understood the all as that for PACCAR

right they job of good now great products a well. a working giving have really market team not And want. a customers sector that we've our single those what of there's So a people are or got just single done

Operator

Nicole question Deutsche next DeBlase from comes Bank. Our from

Nicole DeBlase

with question really XXXX Yes. margins looks on continued ability Thanks, expanding guess, do beyond? to Margins strong, just starting the guys. I business and that to there into how think Maybe a to about surprise parts. for continue upside, the you

Preston Feight

growth some QX commentary said on positive. and Well, it’s Harrie offered very

addition our highlight, of of dealers. in ongoing some the Parts PACCAR we our our with customers integration should the One and is that initiatives continued things to of

part growing I of recurring to business, our strength think it's as it future. a revenue for adds the really important

truck the us, team parts dealerships for capabilities the very and into looks the the into So data bright the and they customers. future for into as bring

helpful of So us. to there's that'll there. be And a degree higher connectivity all

Nicole DeBlase

of XQ distinguishing in Got Thank it. shorter-term expecting maybe what among the you. you’re XX,XXX. America of Europe question. sequentially the is the Any XX,XXX delivery for versus regions rest Thank And world? you. then for to features North In like outlook versus

Harrie Schippers

look those Brazil, in the range building Europe, you in Australia, and If North for the we're trucks areas. geographies the be rates we're first we so build going America, all all and expect basically, quarter, to improve, at of to more

So it's the to be across board. going

Operator

from comes Cowen. question next Our Matt from Elkott

Matt Elkott

Good good morning and afternoon.

orders of Class you saw going So we logs X less Would erratic or open order like last in are more And say monthly open order other month year, some XXXX. for forward. should to numbers big in books a in spikes guys OEMs, the month you be as that of and September. order much

Preston Feight

orders on do and following any month-to-month basis to of buying it's to I is risky get out try that. guidance to fleet season. sometimes Because a thing think that a

fill OEMs in seems in it different it'll will it us, half. there's XXXX second like for They're And in nicely. coming well. we're taking orders And differently. the Sometimes handle

Matt Elkott

question August Cummins. back natural Anything to engine gas just more report that? Preston. in now, one Got on it. And you Any the on update with announced

Preston Feight

portion nothing in to our the a North fantastic. doing Cummins good we of the America. development ongoing No, in offerings leader They're think with than of, development something gas continue And that that that I the I the survey will gas job. other say partnership natural market. the engines of think natural else a is be to And really was

lower in can get that. emissions You

the need. a they portfolio customers to of And of that's PACCAR our part give total so what

Operator

Kauffman Vertical Jeff comes Research question next from Partners. Our from

Jeff Kauffman

comments. much. two Jamie's very you And I'll quarter, questions. echo Thank Terrific

PACCAR jump Financial. the quarters. was in six kind flattish a was PACCAR focusing assets assets Financial just previous on are kind after four have of assets what would for PACCAR one sales of for in to and jump just much almost I percentage there differential of up sequentially what First aggregate was kind big that been a I PFS just so if that curious X% that and sequentially. of unit accounted or wondering driven the

Harrie Schippers

of end year, scoring Peterbilt that as towards of So it Financial financed our the to ago. the DAF that is nice the the PACCAR Packer of assets kind share about course of have Financial benefitted by fees That's were the same and about Services. Services deal from XX% of trucks of [inaudible] sold XX% was a year

think growth. I big see increase we the that the in asset

In that we finances is sold as And one financial price, the fact, go a into that higher for for the continue company expect trucks, higher finance trucks more well that's are of and to to finance at our reasons the XXXX. creates the assets we perform also the company.

Jeff Kauffman

But I to I Okay, know I real not to was fuel that are that's anytime talk market. big saw cell that? you a you CES starting at going Harrie. thanks, about And which truck bit and quick. was just soon. be something I can didn't expect, little a numbers

Preston Feight

to has When But products to think the all will will zero that the the those or we're next this future, it the the will hydrogen fuel dominant battery us think prudent for investments emissions of made whether into electric, each technologies. hydrogen be understand cell technologies by PACCAR forward and we driven several as question capabilities years. Sure. we bring about trying path for be

advantage to had hydrogen them. that put both had we're it to them. market working the cell And noted, So so And them, ready we a on we of trucks, customers, it financially. offer brings our if a electric at one with we CES. to as both distinct on we're that Because we'll fuel and battery understand you

Jeff Kauffman

I'm truck, cell a more commercial that engine fuel assuming that's Toyota the engine? passenger cells is Or you're But that using? is partnership. the And with that grade

Preston Feight

that a we're specific And collaboration doing market. that's close doing them. with for truck the I in is what think developing we're product

Operator

comes question Scott next Research. Wolfe Group from Our from

Scott Group

Hey, thanks.

gross your guess if meaning it's, we it's give through the XX% new in year, the it'll you best to should margin you recycle? is a this cycle So hold margins for range? right is gross if think be decade, take XX% margin the range range I margin the new XX% guys ever. gross think XX%, or of how do been gross to for last What about the

Preston Feight

Well, PACCAR job team of and This has customers incredibly in is the a the strong all And giving trucks business. growing elements it is need. doing I transportation around an think of solutions world. of our a fantastic company. they're a they people really capable company of It's the

to market obviously be So we margins good, the pretty they'll what but will And well. we the look forward think be is. the future

Scott Group

help used then know some and on and on sensitivity Okay, there give is you can us I and prices of Is any retail there, with wholesale used? the there can FinCo versus with? is mix us you changes kind margins earnings any help

Harrie Schippers

bit from used very, say year. today's finance profits selling last truck even a the the valuations, trucks used But earlier truck I making for come attractive Yes, would so. company historical do very down highs business that little have prices a at we and while used are

Scott Group

year? is think this earnings can you FinCo that Do grow business a

Harrie Schippers

that guide that the for don't FinCo for the specifically year. But I will we XXXX another the would company. say finance year earnings excellent Well, on be

Operator

Our from next question comes BNP Borrega from Exane. Miguel Paribas

Miguel Borrega

Hi, hello, everyone. A couple questions for of me.

The your more why keep expect North and wanted just both you from easing. chains for supply America understand assuming not Europe would growth first on to market just guidance one, markets

markets North less the you XXXX? European exit are given positive also, you? So your what Thank rates kind could be in on production versus are for America Europe much US? And stronger that on headwind why of the versus

Preston Feight

I good market, that are the we think positive production see rates feel Obviously, on positive North the we're base on Well, I the production American supply And though European that impact. that think the But we first think looks quarter I there our still market. increasing. about it and now, plans. an the fourth right be quarter that good. pretty uncertainties And have in could in could year,

Harrie Schippers

And like Europe improving. uncertainties has ranges why that's supply base still we quarter. emphasize see for for the have the to too, base. markets But that the North in first America, for the the And would supply entire year. we been have that I Yes, we the for

Miguel Borrega

my run shareholder you record is returns. cash Thank on forward? a need question This going how then much. us cash you a And very you Great. much how the about capital thinking obviously And position. allocation are sense just second net you on give business? to Can

Preston Feight

a history allocate shareholders. have excellent, return of we for how our capital, we Well, very and returns good

for every a a money return that's future dividends As way, for well also our shareholders. we make investments smart noted, And use we XX% year, way in that goes last pay good year, shareholders. our we in

So add, Harrie? anything you'd

Harrie Schippers

it's balance see to to than cash increased course, Of more the that of billion at end December. the $X nice

So we milestone And mind a we achieved. paid that that will nice in in that's really nice $X billion January. yearend that be paid dividend, we almost bear we

the So also make nice shareholders. to make return for use a investments that the we cash our to Preston the mentioned, but

Operator

America. Next question comes Bank of Michael Feniger from from

Michael Feniger

Thanks, Yes. everyone.

thing one kind any in more anything the learned structural more that questions, discipline there Maybe managing even as sticky, OEM a pricing these could that get that? of the Love in Is terms ease with of normalize? pricing longer that there shorter anything sticks is going the more out players? off, be forward? production XXXX is on you bottlenecks you some to on strategies, of and to public two comment and Just a think production and just structural term term, industry, first orders,

Preston Feight

meet think and job our understand their customers, our are, needs making working I teams as to possible. we that with of needs as quickly to answer closely a in their what do think I fantastic sure

for many producing or teams our of, suppliers together, the trucks purchasing teams specially did we trying to think PACCAR a as as conditions. teams, a demand. our long has customers of strong well that teams could that. in of job think think I all great XXXX And with And market materials history that I or continue the production I work in with and we'll

Michael Feniger

reflect accurately the rates market base that? doesn't shorter-term view rates. contract point a that demand. spot a love for just to this the participants And and or customer and rates maybe a of pent-up gap rollover just strength know Understood. freight the spot and to Is market you smaller portion how really question, I'd more freight some of between

view Just you how your in you curious how that distinction? seat,

Preston Feight

the take we tonnage X%, think XXXX. that up is think a and I broad at look for it to over try X.X% yearend freight

a I've strong PACCAR a operate. as there. ton miles well that's older strong and going good trucks for out year. are bodes indicator good and So for with of really we've think with about, more a our that's driven, expensive to on lot And of talked I trucks, shared what's And coupled being new introduction

Operator

comes Our Revich Sachs. next Jerry Goldman from question from

Jerry Revich

to strong margin the I Hi, afternoon, to the just and Yes. and outlook. good performance want really back go everyone.

we think Preston, cycle that touch well So as like versus mentioned a where can truck and to the improved wondering, other I'm when to quarters? a of were were be from close And what are new XXXX. Are of look than margins up level last OEM timeframe. up that parts’ next this economy you back posting lower we where significantly when the you looks they in your as about just over margins we earlier the point in couple at anywhere margins, fuel are expect features. that they we margins conversation, also

Preston Feight

DAF brought in you most What bodes Peterbilt Kenworth, performance margins. trucks. They're point trucks the mean, are think of the the I And most the desired for our well. in have winning industry, they are trucks good really that industry. well truck the I they're that fuel-efficient performing I'd out and awards. trucks towards is

Jerry Revich

the economics just part truck Can of new PACCAR, telematics talk about on the then on can partnership your the would month $XX based that per you do Okay, spoke field healthy opportunity? charge and the think to folks you per revenue structure? opportunity you could you a to And like for you suggest about the product cadence if wondering, look how business. a the the approach population, what about subscription I'm pretty rollout? of

Preston Feight

customers connected that is be platform vehicles on that and there's Connect store. there's have. operating to we system offered our that vehicles growing PACCAR interesting a growing it's System to lot PACCAR think We going of and we application And System. useful in and sciences We've Connect now because the vehicles, our have connected, data our intertwined business a with

data the that one for our data growth. the truck, those, also with So gives with that further us closely a and truck is say comes all thing. opportunity an we the be working team And That's the team opportunity from services I'd benefit works our think in closely to the the growing customers combination that parts of from our it comes of our financial will with dealers. that recurring revenue.

Jerry Revich

for that enhanced high they available some So per your that offering? at just And features? the is for market comparable after you your economics? systems feasible to do for $XX as Would talk are expected as go about can you month, charge expect

Preston Feight

I think on that depending it's take. the vary customer technologies of going suite the and they to

Operator

[Operator Instructions]

will Our from ISI. Raso Evercore David last question of come

David Raso

to in sorry. try one quickly term term, I mid-decade, of and idea Longer am short Hi, a longer buy curious. a I pre might little the two term squeeze

about out ‘XX and If the your ’XX, in an pre of before being recovery in builds spring models sort you assumed industry, think the for buy influenced ‘XX ‘XX. yourselves are by in the of ‘XX

higher that Just ahead seen obviously a buy may of thinking builds? of someone order But in the supply. that builds some well a that. Because in [inaudible] that question. can the get we've theoretically, they Is have, if some sense near-term on ‘XX macro quick pre by these about [inaudible], of can ‘XX influenced whatever I'll then ‘XX ‘XX. be And you pre answer and of be to should thing buys provide some floor past, view

Preston Feight

in products those we're it. with market the the the that, leader to making to at are products. not offering, we're going the think We we David, the work sure I'm let how you just customers that's looking about that benefit and

[Multiple market the Speakers] how So

David Raso

customers with conversation gets though Other about?

Preston Feight

‘XX, ’XX do. Oh, beyond of we market be and the yes, this in I will call. is think course But

David Raso

like into begin flow does the to the the quick gap Is last prices near on ago. few And usually residual between lot it new see more usually marked then used on and Okay. that leases, a little that down real prices that that and months? your the a six values tractors between is the does How used how manifest it's was term, getting maybe the on obviously getting itself? gap about months wider widening bit than way sleepers tractor you been your business new when model

Harrie Schippers

the say benefits well premium of truck well. in we finance really Financial pricing. David, both whether And the tractors that on and does would a in company market at premium, and that market success divisions used it's build or as new PACCAR it's trucks a the truck benefits company part I truck the trucks of selling and the sleepers. those that get

Operator

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

Preston Feight

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

Operator

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

disconnect. now You may

PACCAR (PCAR) 24 Jan 232022 Q4 Earnings call transcript