PACCAR (PCAR) 25 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Ken Hastings	Director of IR
Preston Feight	CEO
Harrie Schippers	President and CFO
Michael Barkley	SVP and Controller
Brice Poplawski	New Vice President and Controller
Tami Zakaria	JPMorgan
Dillon Cumming	Morgan Stanley
Chad Dillard	Bernstein
Rob Wertheimer	Melius Research
Steve Volkmann	Jefferies
David Raso	Evercore ISI
Jamie Cook	Credit Suisse
Steven Fisher	UBS
Tim Thein	Citi
John Joyner	BMO Capital Markets
Nicole DeBlase	Deutsche Bank
Jerry Revich	Goldman Sachs
Matt Elkott	Cowen & Co.
Jeff Kauffman	Vertical Research Partners

Call transcript

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Operator

Good morning, and welcome to PACCAR's First Quarter 2023 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 like to introduce Mr. of Director PACCAR's Hastings, Investor Relations. Ken Mr. go please ahead. Hastings,

Ken Hastings

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

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

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

Preston introduce Feight. I would like now to

Preston Feight

Barkley, highlights. Harrie and our good Hastings on you Schippers, I business quarter update Hi, results our first Michael Ken and will morning.

net total revenues million, XX% aftermarket to to including release of cost. million. demand strong record week charge global and achieved $XXX services. PACCAR an revenues in financial X-K previously is non-recurring excellent in due quarter and the net after-tax charge last continued $X.XX and the billion and PACCAR's trucks, first for income $XXX Europe parts an claims The to reported in civil was was estimated increased income

adjusted Excluding last year. of quarter income the from was charge, in first the first net $XXX non-recurring quarter $X.XXX million million, up

achieving the million higher $X.XX were pretax pretax to record income profits million, year. is quarter, quarter $XXX PACCAR had record a to investments similar Parts Parts of and last In Parts the than record last or compared $XXX which and of last the expanded from models, is gross XX.X% a increased by period PACCAR quarter benefiting revenues PACCAR Financial excellent same truck expansion. year. in PACCAR global XX.X%, first in quarter, Parts XX% of first fourth year. Truck, an to to continued a margins XX% new the same growth billion. quarter Other

trucks I solutions foundational financial delivered the company Their employees, quality industry. to these transportation and is appreciate highest our the success. the our outstanding in excellent customers to to PACCAR's who and results and commitment

the at good, XXX,XXX are a we're vehicles updating for trucks. Peterbilt be continues and increasing customers Freight and estimated tonnage trucks. with economy, and Class Canadian modestly. market grow to This to be continues Looking and forecast new, U.S. environment, to their to favorable is high-performing GDP XXX,XXX our the U.S. Kenworth X operating to

customers and growth. economies experiencing also best providing the latest new are European are operating technology modest efficiencies. trucks with DAF's excellent

above XX We have to our raised trucks. XXX,XXX range a XXXX to European tonne projection XXX,XXX market of

operations. trucks first is the quarter. American the be to above XX DAF in an Brazil and of the to year XXth is a market range vehicles record of important this highly achieved tonne are celebrating X.X% of is region desired South share in DAF year. PACCAR's The by customers its In and expected XXX,XXX DAF Brazil, success. truck America, in XXX,XXX growth part South

continued the operations, industry-leading and excellent the well an financial technologies, company PACCAR's best-in-class for highly and companies of development lineup, parts efficient truck advanced services position year.

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

Harrie Schippers

a deliveries but strong to parts are the range second increased XX,XXX other to in range trucks. quarter. supply In of production. the and quarter gross of gross XX% We and XX%. to to to margins trucks supplier forecast delivered first The Truck be quarter. XX,XXX anticipate to the chain in some XX,XXX second XX.X% increase the of improving, PACCAR Preston. during periodic Thanks, affecting first is are shortages quarter there XXXX, margins

excellent PACCAR's of outstanding and data such trucks. gross XX.X%. is PACCAR access our from on record Parts parts. business the to e-commerce expanding first an application customers high-quality with Parts technologies margins leveraging based of is PACCAR expanding use connected model the to a Parts Parts as had quarter, to PACCAR provide technology

PACCAR XXX for XX high-margin XX% customers. a quarter Parts serves ERP expanding network provides revenue quarter to of and the independent part in grow recurring dealer year, parts compared is uptime our We best-in-class which PACCAR stores, Parts X,XXX this distribution year. same XX% high-growth the sales estimate more of centers last than and to business. by locations second to

used quarter price Services Financials’ XX improved realization, Pretax $XXX income a excellent facilities contribute Financial first to channels. larger the to wholesale truck in good higher compared portfolio quality used to from million. benefited portfolio, truck PACCAR PACCAR and business. worldwide

facilities, and years. new the of These as industry, investments created efficient impressive the technologies have historically portfolio $X PACCAR as quality, over billion PACCAR and Used truck expanded innovative products five and remain but newest moderated, past have new the its larger well credit centers. factories another is year. and having very invested in has Financial strong. With trucks prices during distribution and lineup in most superb good highly

is solutions diesel, are investments its for PACCAR to emissions, million expenditures industry-leading development $XXX million this is $XXX and be to $XXX vehicle million Customer Capital and research are connected PACCAR's million $XXX in continuing demand expenses programs. year. clean autonomy trucks and to all to zero strong and markets. be in transportation projected estimated

you. year. be to Thank an XXXX expect We excellent

Preston Feight

beginning XX-year to past an Barkley, So at be a He's he's great has excellent participated thank President Controller, and our complete after Michael June who'll comments, career. calls you partner, business XX-years. earnings Controller. over are and appreciated be a you'll and friend. the Michael, Michael like our Senior He's true in XX missed. a as we of the retiring I'd Vice wonderful

has today PACCAR our Brice. President Vice is us Brice new Poplawski, been and for Controller. and with Joining Welcome, Brice XX-years. future calls for

pleased now we're answer questions. to your So

Operator

the go the ahead. [Operator question-and-answer Tami session. Our first We Please will begin Zakaria from comes now of question with JPMorgan. Instructions] line

Tami Zakaria

Hi, so my great margin on less good morning. taking That for gross nothing Thanks number Congrats spectacular. the results. questions. much was than

XX% versus and your guidance original that a good expecting XX% of rest year? the what to rate run you're the of sort XX%, of for XQ to upside in the hindsight, was source for the So XX% the of biggest is

Preston Feight

what first in to was Those very cost morning. the the Well, operating the we in are two less-than-expected. XX% really What guided. saw what And the and as improvement contributors second year. margin quarter. quarter And to good the a thanks for were increases expect efficiencies we question. we over we think is have saw Good XX% shared, had then Harrie we good we

Tami Zakaria

ask question. Perfect. Sure, one If more I Harrie. can Sure.

Harrie Schippers

exceeded quarter that I contributes our of too, well, Parts course. XX% Parts growth XX.X% the think were the ago. margins a as And and better, projections of to

Tami Zakaria

think if that that ask order some PACCAR so understanding but showed is you Thank can And data I are my not data. it. some really Got much. numbers slowdown, industry more, one I in

in seeing trends of And deep order third you're Any your comments can you, How or with have quarter, your fourth activity? from seeing? so into on can us what you the share opened? order order perspective, terms you're books

Preston Feight

What year. to. and order Tami, intake, is order good glad Sure, seen intake full for continued we've good the we're substantially

few quarter in third but quarter is So fourth substantially left the full, full. slots

Tami Zakaria

Great. so much. you Thank

Preston Feight

Sure.

You bet.

Operator

you. Thank

go question the with next Cumming Our Please comes from line ahead. Dillon Morgan of Stanley.

Dillon Cumming

good Thanks Great, for question. morning. the

or from customers impacted the your, kind what the lot a financing able first market kind get smaller banks. first to intake on of of financing sentiment? of, being of to regards you order terms of in concern A in customer not ask midsized But wanted has see from that ground, with to to perspective. Just all,

to? that get all, used same incremental a customers business banks for they're of some being of that not created financing an second result the able has smaller more PFS to And number as opportunity to of maybe maybe finance

Harrie Schippers

to It's Yes. to aware the had good times they great good who quarter. has get I'm financing not of XX% was XX%. have to even that that customers Financial, PACCAR PACCAR a We're are that and about times. finance able customers to need. that years, not any in going we bad some our sell of trucks the financing Financial in grown

need So us. we're customers that for there any

Dillon Cumming

year-over-year? that developing as Got quarter I'll about pricing, Harrie. thinking of, pricing we given with ‘XX, assuming potential just flavor it strong next here, for really ‘XX. ask couple performance half of the the of a you rest well. year of And of into the think going kind pricing. any remain of kind you to the also question dynamics develops down back year how a year? I'm give event how sustainability. into off for as in of kind years from coming builds margin of the about in Kind of pretty just in actually prebuy next a longer-term around are that us it. If on obviously are the kind scope thanks, Can was a resilient year, kind that ‘XX strong or or pricing the off pairing slight color there's We're And

Preston Feight

on that products. new mean, strong XXXX, about good an feel we see right now. We that continued We introduced we I year think we think or working have the excellent for think I Well, reintroduced customers. why as the them. we've said. we're to I demand would of North have in That America customers Europe value products value last to and and products to they in couple South years, America the providing in are and great the is those like

the business And continues through good. Parts improve contribute the utilizing They're job good the to mentioned, a company. So customers well. ways performance technology which Parts those They great in value new operations, the helping their to for Harrie to as to perform business. our we're doing is help in things. We're

Dillon Cumming

Thanks Great, very time. for the clear.

Preston Feight

You bet.

Operator

Thank you.

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

Chad Dillard

guys. Hi. Good morning,

you to Can you structural uplift do margins about my how is think in last the compared first Parts you've seen? question much cycle. talk So just

Preston Feight

Sure.

I team scenario the job the value towards, creating again, think done is point of an excellent the last question just that way Parts the the -- would I customers. talked I for about has and

providing locations, customers just PDCs having our day it parts. XX our So right to the parts we using make what we throughout really they cases. MDI, available it's managed about same the that's that world, to even also many parts the dealer day easier that tools like -- in they business. not to inventory, work have in need, located make and It's next so with closely the the to that and know dealers parts supportive sure They're right

think vehicle also us status as helping I And the that is connected well.

the into help engine vehicle our to good will to business about contributor growth. So powertrain a parts. Parts that the electric also future forward world, business the look and we the those and things business, be We being as And all think accretive likely Parts business. see the the

future there's So for we us. feel like a great

Chad Dillard

for That's how current year? strong to for And profitability the you about the think run then maintain the we balance of think loss provisions? rate you is question, should environment of enough And helpful. PFS second the do

Harrie Schippers

the with an Financial quarter they ago. what number a PACCAR trucks than said we portfolio the less the portfolio. little portfolio a value is Used excellent Like larger year per and were are higher is having or the gains truck growing year. Yes. a truck ago of the in But in

losses, see we strong dues. continued performance low addition, a credit low portfolio In past with

expect we as finance company good progress seeing quarters we the during the continue to year. So

Chad Dillard

Great. Thank you.

Operator

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

Rob Wertheimer

kind My you, volumes markedly. Q. to Hi, as on is of, chain question exit thank on improved you. supply have Industry seem

had disruption, difficulty] pricing? You direct decision extraordinary to still at shipping, costs I'm from on to guys improvement normal? supplying [technical is your so if curious, impact had how back would more obviously there? And And that, Is cetera. be there all, et

Preston Feight

dynamic improving some our to supplier Sure. We've over a on throttle and able yet. the in the couple for we we they credit and through accomplish build some lot still environment. we improving right of of and in year. keep of with working past look supplier not deliveries, further years, they've them generally I forward have is circumstances, ways those, now, and what give We a partners But constraints to act been even that do but the it's see finished kind worked throughout closely world really the

Rob Wertheimer

Okay, perfect. look other guess have ask one, done I If I when outlook one at you. the you competitors raised and your Thank same.

orders, say, there's you slowdown and project Are material And So out mix would seeing you within and definitely yet demand say -- strong to of or throughout? it's there. cab construction strong you recession with of fears Thank there. seeing versus stop sleeper I'll your activity shift are kind you. guys any

Preston Feight

it. on I right think you're

that by area, offset I the trimming think seen we've all fully parts strong that’s truckload that a say of is But vocational markets market. we robust there's I through demand if then see. the in what would the

Rob Wertheimer

you. Thank Great.

Preston Feight

You bet.

Operator

Thank you.

of Steve Please line Our next question from comes the with go Jefferies. Volkmann ahead.

Steve Volkmann

you some Great. drive for have because back slightly a I'm XXX Thank gross a down, gross points of taking your to or versus question. gross sequentially? less. the what would higher Good and drivers if the you can to margin the production in just the basis I morning, understand if second to it, wondering curious first, everybody. try go lower just little the I'm is want maybe quarter margin, but call down margin that we

Preston Feight

first Well, I supply in quarter, not the has just fully base the mentioned improved.

So experienced there we things terms deliveries. in and that are costs still of

quarter, In we first fact, finish the delivering. that there trucks were in didn't some

So than don't might which see second but… a absorption we we the know And the little better quarter, first I if anything had contributes to there's you'd Harrie add, that, quarter in bit. in

Harrie Schippers

I And to production XX,XXX Parts. grow and little will would trucks XX,XXX a than the deliveries to say trucks faster increasing

that parts to is bit unfavorable XX% truck we little XX% the we quarter. mix for an So would versus see margin of get a excellent which to why second

Steve Volkmann

maybe, you to but moving we as that assume the this, understand just will mentioned parts. continue guess, then Preston, year I chain, And high, very to Yes, still progresses. improve the supply but wanted

the So be half that's the to kind would given demand well? you case, of as in you environment, imagine increase to rates able that if imagine continue you the second quarterly would production would

Preston Feight

production continue huge output. might changes to Well, not improve be in

looking what have that We're have. especially Steve. the backlog with those to see trucks, we'll build we like, to So looks always

Steve Volkmann

you, Thank Understood. guys.

Preston Feight

good day. You have bet a and

Operator

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

David Raso

Hi, question. thank for you the

kind on we've sequential ship, first a price/cost, from the little you down versus company cost margins, got the you experienced absorption less right, revenues little overhead curious, it see weaker parts mix, the essentially, inventory, what up But but built. price didn't in sequentially, -- what the how of sequentially, So a right, so do rest I'm you truck year, the see revenue and of in you quarter? can

it's too, curious, it. year with the for change me also know help XX% of LIFO inventory only changed ago, the if I FIFO, about I'm you a a can got little bit

a could last, order all LIFO, FIFO Just help with can thanks. one bit to open curious cost, ‘XX? margins? - expect if at there, So if price the helped how the do When that has again, all it. And us, for throw you you in answer accounting change I'll right, you books

Preston Feight

that call? Why see I say there. some got customers we're reverse don't take the what be in in to don't with under order. Michael, having there's needs it of would we good. the truck, about XXXX and days. FIFO your a already conversations their good interest in calls do It's the early that continues why We'll you you've happens XX belt, LIFO, strong

Michael Barkley

$XX something so Well, cost. be last year, the This probably FIFO little X.X% difference was kind it will to that, of maybe - in it's X.X%, but -- it's or million a bit, huge similar about really year helps

Preston Feight

about question, And you then first asked your cost. price

quarter. we I had in that price cost good think we first to the shared realization have

and We and we expect that third second for in quarter, order have good the a quarter. book the fourth

So it be good. pretty should

David Raso

and Is the that fair? wouldn't of mix revenue more really margin sequential be sequentially. overhead cost reduced gross the price So part It's is the down why absorption.

Harrie Schippers

That's correct.

David Raso

appreciate thank Alright, you. it. I

Preston Feight

You bet.

Operator

Thank you.

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

Jamie Cook

just guess high. a back were, the question, to your first pretax which I margins I think, truck Again, my is XX.X%, record margin.

can or margin? help understand, guess of that's sort to first structural just what's the So of, the versus, helping related product of, you my sort profitable introductions So deflation, of, that question. us sort are new I more some

order Thank pricing being XXXX what all the book you're of, for you full, conversations? about talk that substantially across, you. are about is sort you when question, as engaging second customers And my specifically then And for in telling XXXX geographies?

Preston Feight

Sure.

in for last new dollars billions brought here, new just shared introduced. the better but these in up on And we've providing of products. that's they're fully think to of them and they're We the I all, we've couple X% years them economy, thanks that one bringing products of out invested because fuel First XX% thing.

ago trucks. even drive, $XX,XXX to to a them. to a these over it trucks mind for of important them the they to cycle. that to that's an get for new there's really trucks replace the four $XX,XXX are for It do favorite and the bought because and makes It's few the of operating years demand advantage. lot that, customer excellent fact have DAF, So important drivers' Kenworth Peterbilt value these Never they them with year

You as be want see the people them on important what in beautiful. that's well. It's markets, to they're all road, the really operating so

I that think the us. part it they're other is build of efficient for to

So that's also helpful.

traditional North So and I think America. are markets new us. products of that limited to not the just for Europe good It's

excellent doing The doing of which The overall our a DAF really brand part is America margin our market to contributing growth. is there. is well, as a South gaining America quickly. growing are is leading and well. brand dealers share performance, South We're

as in all markets. see, it what far is we As substantially full

America, includes So that America, Europe, South everywhere. Mexico, much pretty North Australia,

great with So well, kind And the many will what of, is far as right be people buy now. their the for they're, they'll trucks it's next XXXX, demand XXXX, and how plans as conversations capital PACCAR early year. figuring out as

conversations. early So it's the

Jamie Cook

Thank you.

Preston Feight

bet. You

Operator

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

Steven Fisher

have Thanks. come I'm similar is business. what your again, what what actually drove Parts guidance, Good was revenue since it that. faster-than-expected rolled doesn't to you? morning, accelerating growth to business? you the parts back want was I freight seem an for the somewhat part QX, like The mean the to so I to curious it surprising we in out curious don't market really

cyclical So few over And the be cyclical just revenues about next the I'm think maybe might that. you how generally really not curious or Parts years?

Preston Feight

Harrie, on some do you that? share to thoughts want

Harrie Schippers

Sure.

the customers on to parts components, PACCAR when Preston on the shelf only I Kenworth, our echo come trucks, invested where new have what new easier make all to of proprietary dealership. the lot trucks said customers can and think systems proprietary engines, get the that the to parts we've workshop. a right PACCAR or a transmission, the PACCAR is service want at dealers new I into axles, for it Peterbilt DAF the It

So it's trucks a And the in Kentucky. job more invested in sure a distribution trucks sells one there centers, come We've into parts. in once are that new that the those to make teams workshops. need do great the workshop, our our added and parts the Louisville,

continue to out footprint. we build So that

the come worldwide. first efforts in Parts the strong. really strong a all the strong quarter we and together available, was having think growing saw performance of by that team especially Europe, It's just I combination where those parts

Preston Feight

-- echo our them. Harrie done I'll everything to add has but I their into everything good come to it that, back really I'll And investments of making said, a into for would workshops, trucks more convenient say dealer making job

good and for the also Parts lose And that's our idea pretty consuming there's for years for three truck So age still good And high. customers still. the trucks and older an that I business. are been those parts wouldn't undersupply is

may trimmed consumption bit, tonnage of there. So little a the still have of parts even say freight as there's lot on a out I'd trucks

Steven Fisher

And where go? products are there lastly, then is you runway us Okay. the to penetration that remind new in can still how much and just of just you

Harrie Schippers

new the were currently around is we that DAF XX% ago. to production DAF, compare you For of mix, a about could year XX%, and XX% the where

in ramp-up operations Europe. executed been So by really well that team has successful, the

Preston Feight

complete. is complete And The it's in the fully. U.S., transition been

Harrie Schippers

customers, over heavy years for For production, new it, or provides medium-duty very in more changed Class the X, ago value completely low X heavy efficient Class and what that's a also those is new way. that made but now. trucks, the for That X.X customers X, truck is truck build went trucks, medium-duty like X for and into

Steven Fisher

Thank you.

Preston Feight

bet. You

Operator

you. Thank

of with from next ahead. go the Tim Please comes question Thein Our line Citi.

Tim Thein

the X% The that you Good continuing you. sticking just I that see if projection given discussion. Or growth the year that apologize at Maybe -- with you now taking I Are XX%, year? thank on the to first do the half is morning. revenue you what of that. are full missed just that? see Yes, Parts in -- you higher

Harrie Schippers

be somewhere at for say first in you between maybe. didn't it would XX% on after We the to rate, XX% We And that anything XX% quarter second run the XX% quarter. year. full the said for and get would the XX% year

Tim Thein

Got it.

And the any Okay. then there better -- that the think the in mentioned first? chain the with about right. than foresee is to full-year, and the on supply All second-half we the -- getting the the just change in you interplay do as you that maybe assumption the extent chain continue -- production supply for maybe issues

maybe the completed, Or you some Do environment foresee mix. changing just medium get a change able chain Do much of around mix duty of where you versus kind units a that an better? foresee there of in that by weren't that in I'm way potentially much thinking and terms is to heavy the supply is of edges?

just half could the certain mix And an out units there's of impact have if potentially year? in if faster. door I'm get the to of normalizes, wondering some the that And somewhat that been emphasis back on maybe

Preston Feight

No, I Tim. there, kind of think your words are really good

I that right would dealt it's now the think be that, with. around edges

through. it's the moments. and suppliers feel of it's good think good really job doing just a and our And are solving way There's just I fairly those working pretty generally improving teams we moments. about

And so that continue feels trend it we'll upward. to just see like

Tim Thein

the Okay, time. all for Thanks right.

Preston Feight

You bet.

Operator

Thank you.

ahead. next comes Our with John BMO Please go of Markets. from line Joyner Capital question the

John Joyner

are great very always that Okay, things I thank at PACCAR. much. feel you

issue, bucket the to, to with I I kind guess, are possibly another there guess, another the of chain are help that normal available maybe actually percentage relatively And ones all of but are supply can sorry you constrained? ask supplies. than versus still maybe that for So prior way. today I it, areas more any improve can today Are areas work that COVID? better And

Preston Feight

Is did compared your pre-COVID, question you say? to

John Joyner

things the there help question, better. supply the any are the supply are could actually chain? kind of but is to it a I of just given but feel been maybe mean that's the a there like work lot dumb case. structurally the be that that trying base within Are velocity areas on help I -- this going I I I'm improving, understand, Yes. mean, to guess is to

Preston Feight

that in think built would output. lot We Well, That's quarter. give trucks a of I a XX,XXX a lot credit. of I

to doing wanted So And also a high in number base XX,XXX second That's go to XX,XXX a the is job. number. good quarter the pre-COVID. high back supply a to if our you is

they opportunities improving. say would good always we partnerships there that that keep suppliers, good with are there's to generally them. great just doing And I a And do So job. together and

John Joyner

Okay. to Thank to And All with that $XXX What higher million a right. bump the you little step-up? then causing next to you progressing very -- for this regard the incremental the that are And do years? CapEx much. investments million bit up year. in total maybe keep expect $XXX range or the few

Preston Feight

that We working of think really the phase We've electric it's to the engine the are $XXX third million nicely coming got number. and projects our million truck it's battery is working platforms along that we're some fun is platforms that vehicles, we're developing exciting right on. on, $XXX that right we're now, new

commit that. as on make progress spend we'll and of things, lot good to can we interesting long as money a them, and Just the really

John Joyner

Okay, Excellent. you, Preston. Thank all right.

Preston Feight

You bet.

Operator

Thank you.

Our next the question Deutsche of go Please line comes Nicole ahead. with DeBlase Bank. from

Nicole DeBlase

South Can morning guys. just start to thanks, Good with Yes, we you. America.

industry I think bit lower you your a there. tweaked forecast

love the that in ground would what hearing on to hear you're So region.

Preston Feight

with those interest there. we've interest pretty the success there's see America quarter. great in rates. high might questions happen there's the I about so what down South rates -- from first mean Sure. think What about far had I we in And customers is

of for space. there's that parts So pause in the a some market, maybe

things keep still there great going. expect backlog a and we to really, have But

them Our build And are increased the rates and primary kind of expect have those to stay happening. are that there, things high. we

the bit. tweak our that So pause is really we've about in little a interest down seen that market rate

Harrie Schippers

to know DAF market has in time, And we is excellent same X transitioning Euro Yes, at the there. product X. from an the Brazil X Euro Euro out

to a share opportunity bit a great little market So our further. grow for us

Nicole DeBlase

Got it.

just like region on And slightly? everything up flattish build versus a XQ, everything by perspective, from XQ is the in thoughts then of Like would kind guidance. thoughts Any be helpful. -- sequentially helpful. second That's Okay. question XX,XXX any regional the

Preston Feight

I between much wouldn't regions. try to too the differentiate

PACCAR. the I going in to think see performance we're all of good for regions

Nicole DeBlase

pass I'll Thanks. it on.

Preston Feight

bet. right, you All

Operator

Thank you.

of go Our next comes Sachs. Goldman Revich the with question line Please from Jerry ahead.

Jerry Revich

and Yes, morning, Brice, hi. congratulation. And everyone. Good Michael

Preston Feight

you. Thank

Brice Poplawski

Yes, thank you.

Jerry Revich

you I'm performance. could about cost wondering if just the talk

So operating truck interesting fourth quarter. $X,XXX quarter per down first see really to about sequentially versus cost

normalize think performance, we about costs how pricing Should for be for you we about continued this following proposition supply of we pricing As equation should thinking we thinking part on are that based the think delinking suit? potential the about at the value improved folks? Or chain about as point? two

Preston Feight

Our our has to that in trucks is on we're and sure a focus customers have doing and world the them. that, the value making best

so we positioned we And look where to that's kind we expect continue what of market, and would see that's ourselves in forward. the as

Jerry Revich

XX,XXX. per in clear. pretax looking profit truck so of then this your you And That's quarter, at high XX,XXX XXXX, pre-COVID, folks a had

of we think you in difference a counsel sizes that any to the others new outstanding add? the of you competitive versus you attribute would what higher about can relative would performance. products and really through us and value pieces proportion just to How would discipline? step wondering, So the those marketplace of the add I'm

Preston Feight

very were XXXX XXXX, well. as that good say would I years

to kind made them really I we've is earlier because put you the the markets. and and of adds performance say team of discussion, then would the of in But also doing. that And So comparable the value as of what Parts in trucks. it said lot outstanding the they're the investments in a we products

PACCAR lot the leg of us for the so the and really premium I we're it's the reasons parts, has people is and add support a third provide it's buy customer, to who stool would technology create, becoming value helping to they they trucks, employing way the how want products. And technology, which

Jerry Revich

just last mind? that Or on technology? technology? functionality don't And Are in about the I'm on telematics? Can if just point, expand you you and expand what we wondering, that of can specific talking you the point

Preston Feight

we use of to that's great the in It's is connect to can their great business a also an a enhanced which apps Platform how opportunity and customers, partner a terms have telematics, for sure. we for Science, with us growth. the which and Yes, useful is of vehicle, bring partnership accretive us, that partnership, the we announced

in So like that. participating be we to

I managed over years, them systems. dealer by is PACCAR based dealer with think dealers parts the Parts. getting operation upon complete the a the other with part of the lot but inventory And it seamless we it's the as of like the defined mentioned needs in a now

the So and that the see great that's we to continue over years. business expanding a see to way growth,

Jerry Revich

as rate Great. last parts just about new not this XQ? down can the strong The we volumes good, seasonally being margins one be sneak Harrie. should for And to run in, as maybe really parts well Or good if think percent margins? as I performance, in as but going one quarter. Is are the

Harrie Schippers

margins XX%, We don't you quarter. our guide but first typically for was said, parts really like in the calls, strong in

grow continue business. We the to Parts

the the Parts we leverage business cost As grows, structure.

PACCAR good performance. margin basis a there's So for strong to Parts continue that

Jerry Revich

discussion. you. the Thank Appreciate

Preston Feight

You a day. good bet. Have

Operator

Thank you.

comes Co. next Our & Please question go Matt the Cowen of Elkott with from line ahead.

MattElkott

morning. Good

more one parts said Just follow-up already. you've parts, on the on what

cyclical X%, growth to in of and as percent see total XX years level of it's this went look a or like level historically, you'd so? the see you around spot in longer a been similar term? ago from there years next the business the revenue to -- for X% of total growth versus 'XX. sweet at the Parts And for question of at outsized you I parts has is XX% more the a continuing for do that is, And revenue linear, remainder parts less If growth. XX% My revenue been think CAGR five

Preston Feight

is I more think the And for contribute you, of those don't our further it's business share is a the up trend that. tell value us think the with little overall I doing parts and over will the but the And becoming growth of that creation customer. the that and up why it's that. that to of I world years. powertrains coming both with is picking for bit business. vertical picking share technology things, also That's We we Parts think Parts think

for So I there be for Parts opportunity think to that the team the continues us. value

MattElkott

any kind of be on And and any the that demand bill attributable sense. Makes that? can Okay. give that infrastructure then update might guys there's us you if just to

Preston Feight

Yes.

great being or market the spending that is economy, vocational the whether amount reshoring into it's We're infrastructure the think I done of PACCAR. leaders. for really

be money the spent And will in us good economy, is for term as well. the as that in long so

MattElkott

very much. Thank it. Got you

Preston Feight

bet. You

Operator

you. Thank

Kauffman the Please question Research next go Jeff Partners. of from ahead. Our with line Vertical comes

JeffKauffman

Thank much. you very

two questions. Just

effect might You American their Can rates outlook. base? dealers with your as interest on your rates at talk mentioned dealer and be and affecting how interest floor all the your plans to South you

Preston Feight

North America, rates for other that are add still a thoughts. and one -- if me any Harrie see has I'd level. interest in Let thing reasonable at say structurally then

know we're worried in from don't I history historical the they're interest so standpoint, else. And here. or So very of -- much a of -- road had has the not middle of add what you'd if very right Harrie, rates the world middle about anything

Harrie Schippers

Europe. gets said, or come Brazil North But more in because is with a bit it is different what a kind different America And retention deal at we so the rate, what that's we customer see new like story XX in percent a of running little and than in rates fuel trucks lot Brazil. -- but economy. better completely little are Brazil

buying offset you're interest if truck, the the fuel expense. rate higher So many customers savings for a new

JeffKauffman

Thank right. a forward-looking just want And question. I All to pivot to then more you.

autonomous new When everywhere but things like we on potentially talking for there's road you and You don't Is I connectivity, of it? of you I about the the want just telematics display do we that that, from truck maybe part think yet, revenue a think were some forward trucks preparing the we as have additions? truck that customer? you're on packages, And I Peterbilt Aurora on see new think that these see start about to an business go, business? some the stand-alone place. reported to things as kind streams from may to does start then you as technology know generate

Preston Feight

Sure.

and been from indirect a for the but do revenue the Parts in. We I talking standpoint, we think indirect about get. play that connected a We've and revenue, lot connected about does being what talk business. we see vehicle call can the it vehicles I'd it's profits an customers, it

up shows able financial shows It services it it parts in shows terms business. how manage to of up in even their and customers in truck. in help we're up So

And into being model that just that revenue-producing see partner I progress platform that sure on driver, their wait making and on I'd we're when drivers for make with go is pleased primary a good road with we tenet doesn't Jeff, it they're and those driver be together, the an autonomy safety a vehicle the Aurora And operates we're that be with we're And while. focus that we'll on with the making think that time autonomous autonomy have a now. autonomous have say us really that. trying this. standpoint, with From the be we'll could a and to to the pleased we're progress to having will of with just and

JeffKauffman

Thank you very much.

Operator

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

Ken Hastings

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

Operator

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

You may now disconnect.

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