PACCAR (PCAR) 27 Jul 212021 Q2 Earnings call transcript

Good morning, and welcome to PACCAR's Second 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. And if anyone has an objection, they should disconnect at this time. I would now like to introduce Mr. of Director PACCAR's Hastings, Investor Relations. Ken Mr. go please ahead. Hastings,

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 at paccar.com.

good and the you will highlights. I all everyone. call Barkley Schippers, results to update Harrie Hello, on quarter with business Michael second be you. of and on our It's

world sales our like First just to recognize excellent to achieved appreciate second record $XXX profits of also very record quarter million. take geographic suppliers achieved and fantastic transportation pretax foremost, PACCAR's a thank achievements I'd trucks for I around PACCAR's Financial million. second outstanding pretax million. quarter PACCAR And dealers our PACCAR's for of PACCAR markets. quarterly these to revenues all billion team. customers. achieved and revenues Parts strong. were premium good Demand support. by quarterly quarter and and PACCAR wonderful PACCAR's Financial was of providing $XXX billion to and is Services great PACCAR for reflect $X.X income robust be record the solutions quarterly in profit net of Services. and moment sales $X.X economies income of PACCAR trucks our like and I'd second and $XXX markets their and records the results PACCAR's revenues continue to Financial XXXX. net at The Parts freight income in in employees

TXXX PACCAR's for powertrain, at XG+. an European new to most DAF and XXXX truck greenhouse design equal engineers year DAF cab was in allowing biggest to in aerodynamically Technology regulations are and in that The Kenworth advanced X% powertrains next-generation and a October. trucks aerodynamics suite comfort dash XXX drivers May. The higher of in display. there reflected interior digital with began deliver digital introduction These history. The is that manufacturer strong displays to headlights, and truck up a efficiency, introductions greater configurable industry-leading XF, new first enabled when and production These trucks, new a of optimized mirrors, a the reduction full longer trucks the fuel advanced the enhancements DAF looking and to digital luxury level is So changing. regulations start recent truck game Production and efficiency XX% orders. provide new gas a is excitement XG an customer and for June, provides fuel new in the great product. enhanced state-of-the-art is systems and systems. include the new emissions. utilize driver-assistance and LED this is new launched driver-assistance DAF's the of new in Peterbilt feature up being a models

customer have best-in-class over medium-duty The these featured cab, we seeing America. emissions configurable new our forward we Kenworth These new are new Peterbilt vehicles zero And vehicles in and an XXX Europe XX with battery in for PACCAR's trucks month customer are in wider Kenworth as X-inch battery visibility and medium-duty So now for for safety in electric enhanced these North are transmission and displays. industry-leading move a demand customers orders premium working operations X Peterbilt this lineup. launching production our exciting closely PACCAR with with vehicles. dash zero product addition production, X-speed automatic trucks dealers, the the truck to trucks, interior emissions and trucks electric and excellent we've their began and and received Class new with offerings. of

During minority the make continues a second in quarter, PACCAR, by its truck planned their PACCAR Level development in partnership Aurora public solution. Aurora with enhanced developing autonomous partnership becoming The autonomous X a to investor offering. progress

a estimated estimated first and share above is the to XXX,XXX truck a XXX,XXX Kenworth and of half. to to looking X a market American and U.S. range was of through in retail market projected sales XXX,XXX industry markets, XXX,XXX the truck XX.X%. Europe, to to at Class Peterbilt XX-ton XX-ton In share XX.X% XXX,XXX above registrations in DAF XXX,XXX is market be XX-ton market The Now the year-to-date industry vehicles. of range Canada share South and in Brazil in to are was trucks are DAF's June vehicles in is be be market about X.X%. range

and trucks in has as discussed X,XXX key components. awaiting chips. tempered a has additional of with So by recent an Kenworth, industry truck had semiconductor good months, DAF Peterbilt under-supply and quarter production the been been delivered XX,XXX

carbon future. advance While industry-leading the rankings for Parts, Financial its Services PACCAR with our science-based committed is in it's and PACCAR supplier reduction our Schippers high you. an will times environmental provide on as other our continues create now and PACCAR receive leadership. These Thank very business dynamic, are PACCAR update to And toward constraints exciting continues PACCAR we we targets anticipate Harrie end highlights. for environmental of Harrie? really year. currently to products this its and achieving PACCAR to improving factories. focus

by $X.X quarter, Parts to robust sales compared increased profits capacity. Kentucky delivery million and Parts for pretax year. world-class PDCs to record increased second billion margins the freight in outstanding $XXX benefited opening million and compared a the period PACCAR its Parts located of the Strategically distribution from same quarter XX% continuing PACCAR e-commerce grew distribution is quarter quarter a same demand of last the technology XX.X%. second Preston. record part and last PACCAR in in had distribution strong new revenues $XXX $XXX truck next year. to Louisville, center times utilization, gross last investments year. were million year. a investments E-commerce achieving uptime. in another Parts Thanks, compared reduced in customer

expect $XXX quarter truck and part similar used We portfolio strong earned second performance quarter. third sales reflecting to pretax Services be of Financial strong robust to demand. PACCAR income the record million,

estimated be connected Spain. resale production factories. million investing to We past ultra $X clean million XX% the to to retail are Financial new truck used expand decade. PACCAR range Financial A over in used XX% its PACCAR systems, invested is the new enhances values assistance with which command PACCAR to in excellent of to and Madrid, $X.X new $XXX new and advanced autonomous services be expenses has to $XXX and the the capacity diesel development projected enhanced year increasing the center in PACCAR driving truck during research for distribution PACCAR billion enhanced second DAF Financial in be expenditures This zero and driver and margins. vehicle includes facilities. its million. expect competitors' $XXX is worldwide, third are line quarter. powertrains, emissions and construction quarter results and Capital for investment million truck facility $XXX programs, and facilities Peterbilt under technologies at and vehicle premium is trucks. Kenworth billion truck

margins gross gross models and success parts PACCAR truck Peterbilt to margins years. the global truck, in strong truck The and are Depending quarter supply could you. the XX.X%. Company quarter These Thank similar the provide the coming Customer will product quarter. your DAF, Second sold third and for were recently our introduced our and and production on We'd most Kenworth, support to Kenworth dealers is the second materials, exciting be other newest customers, demand in pleased out new and year. questions. of and Peterbilt DAF, be answer trucks history. lineup

Operator?

[Operator question Revich will from Jerry Please Instructions] Goldman Your with proceed. first Sachs. come

products? new of rolled morning, and common about development compared product in to with just the of you just you today Good this lineup platform components you implications platforms Do have globally. the could overlap a globally core that timing about talk have looking And hi. prior you Yes, we given would rollouts at generation year? Thanks. under wondering forward of product if I'm talk product proportion going higher the everyone. what the if could been out the have

Hey, I'll but is talk We a can keep it question. Yes. it, Jerry, you. that time fun a about for brief long

in the world. some competencies been leveraging sure vehicles the core and electronics in capabilities around of globally that software for our able We development have to make we're the

few tell functionality think, drive obviously, weeks that it ago, dealers DAF, them Peterbilt, between shows I So thrilled and a Europe apply and was vehicle able with and I'm but a I is, got bias was got in everybody – we had you, to the I to some to it. They it's And in is take subjectively the see DAF up best of just our approaches we and in really fun. which bunch the is of way it. and it Kenworth the is over just amazing. new truck the

be in we're terms the the the So same design Kenworth commonality There's America. in new the Europe trucks truck a and and said of there more beautiful North a can in chassis Peterbilt just there. seeing between for

fantastic and to practices those the capabilities we ride are trucks make just best provide be to in. use So we sure equally and best

yes, getting So designs. we're our practices and our global leverage do we best using as

electric then vehicles with charging revenue you're you frame can in just the talk in might there us? if bookings to you've produce a you be what unit and And off to share about, successful with number on Is spoke services? your strong been vehicles. number other about what willing extent you over to for plan time stations quantify, expanded could Terrific. just backlog. electric do you associated to a you layering that wondering the And I'm

had orders that in. moment the are a used vehicles UK. couple in orders I mean, say every order Amazon Europe from I XXX a would battery the yesterday, electric of good in just that We We're coming Well, we've days for time. new day. getting in is a ago the

So come we're us be the orders in. getting as around and the built they'll world

high multi-year. Some market the to because years, quantities. continuing of years. But just the over the a we anticipate orders could grow evolve, are take few there's They

moving customers it hundreds, out is Parts happens. stations dealers they doing see to And and our great needs to the being we've our before, at of the with charging in infrastructure supportive have. starts it we PACCAR job our that team that So a and and as thousands, shared rolling as the

approach of for product holistic PACCAR there. there a to and as the see this just grow business taken these we've beyond good So provision opportunities

look to Okay. as expectations about think quarter? third chain you we trucks how our gross margins in you supply into And you and from through expect What inventory fourth the for the lastly, similar the that production Harrie of about hearing are go Do Can far year? you talk uncompleted the declines you the spoke base quarter. supply out?

Yes. was the uncertainty that of Like we said, of Jerry, beyond, will and supply a base semiconductor the on ability around the to and lot of supply area. deliver, third base the in depend the quarter deliveries the a in there especially lot

Okay. the Thanks. I appreciate discussion.

bet. You Have a good day.

from Duignan will come JPMorgan. next Ann Your with question

Hi. Thank you.

Seasonally could than expand plant the into be cetera, margin a on weaker et shutdowns, bit? depreciated QX. I on comments just you QX Europe. takes think QX on those and the puts If little gross in we last going will

– build all perhaps able should components receive got and you've this higher. However, you inventory deliveries are be to

because absorption the get built. don’t we already they're So

So puts in said and to that because hesitant the kind gross understand might you I'm to performance of when trying margins similar seem QX and QX. be takes you really

in on shape any expand that you please can? or form way, So that

to happy a you. for that at take to happy Ann, Sure. swing Thanks.

demand, You markets. out said, we market have sold through well and the in understand all the really we're year excellent as we our

this customers around this we're with get quick can quickly great are looking as building trucks them. really, get for demand, trucks for market, So as them. And as great as world they need can the we

waiting are as XX,XXX. in quarter can Obviously, a at our trucks semiconductor which thousand unclear do component. there we front the and several And second customers. you math, good so, our the is in deliveries a had sitting components, there's get we get them the complete the And that we to

but could clarity on we semiconductor that just than is you more wish third we right fourth that how supply to the have going don't quarter, through any more So proceed now. and give

gotten clarification, the for waiting the sitting just after those of those the just you products. for trucks you get building semiconductors you've when at already But of ship They're semiconductor, the end line and... absorption

is That correct, Ann.

margin truck, the and absorption the the when already on we course, and gross Of record ship the truck. has that's we taken when deliver

XX%. you Right, to for assuming expect the had now and this XX% there exactly. you you the today, to XX% would to and with like couldn't finco at And in then full-year. for any the on more that up the Parts finco guide also? about the revision perform it XX% said, be to us similar for QX. had continue businesses, or reason year-end to calling QX And parts full-year performance be Is your given you're finco, into level believe I'm to

full-year So parts, the about to XX%. XX% expecting we're an the be to increase

Okay.

that strong that's now. And level a rate if the And expect truck with we we good for behavior customers, record payment second portfolio business finance market that run markets company, look for the and the the current excellent million was to in at quarter. next outstanding by And pretty $XXX strong result. at our the dynamics quarter all run used

a just model. a real is dealer to finally, to rate. good now just ought I'm out run where real And just inventories versus trying It be? – quick right they the figure

dealer limited, – are the cycle. bode industry or the Well, it's it is so demand be, which like also, does but the a think we'd inventories months to we of at I of about course, X.X inventory have And strong the market dealers. X.X extend X, extended for well that will

in it. Okay. back Thank I'll Appreciate line. you. get

bet. You

next with Volkmann come Your Please question from will proceed. Jefferies. Stephen

morning Hi. Good afternoon there Good here. guys.

Hello, Steve.

Hi.

a your be that ones. quick would supplier the that? side issues guess? that supply issues is that kind number industry of then and kind factor that's more couple Or to of than of might high your of So be a chain in does commentary, it cause and Preston, best lower

I try numbers. would factor say to that everything those we in into

the have. in side America. a the throttle XXX,XXX now. is it we with to what the shifts XXX,XXX is It's demand supply reason that the provision really right down North business bit on because that The So little of

that I And higher then Okay. margin of kind you bottom to they're you all the went is question these to of Super. respect with through, truck kind the do new products these line launches replacing? than expect guess that products be

driver customers. and design they should Well, PACCAR And that be out efficiency, that that think want good great we good our customers, set feature the for the for comforts, of provide the fuel we all are with kind products for that and we to the think customers they to them. capabilities buy the

final the Maybe right. All quick one.

I When mean, is do start know Just out. sort you be that taking orders any XXXX? assume start more wouldn't that sold to things commentary on are pricing. there to as you for I pricing of robust do And any reason not that?

We if – just been intake our look has pricing for XXXX, at strong. very order are you taking and our

and next forward through in be everyone. how that'll trucks as materials that's and on a be do we our raw pricing so seeing And build progressing percentage the for we're to year, And those moving XXXX those just new bigger market, we the models into into the orders. take thoughtfully of expect working good

you. Thank it. Got

You bet.

next Evercore. come Raso will from question Your with David

you. Hi. Thank

David. Hey,

about further rest When pricing year, mentioned of of to year. the pretty you rest the pricing pricing for your for ability deliveries well Or them the adjust out year? for rest sold any there to on you're for I shipments set was is the the that this does the of thinking an year? is speak

necessary these that have been that's would materials and set. way pricing the you it's match so the And tell raw I kind So pricing. approached market. to largely of we've times, we've adjusted But as into unusual

Okay.

year, for the sort backlog despite still of So versus some the but limited of rest historically. the flexibility spoken

backlog the adjust usually wouldn't historically. You

really as as I quickly understand, And they them now can. the think with closely trucks so we're those to that What I efforts need working customers applying the we we extra we're Yes. they taking get is that's understand say would and right efforts.

or lot the those the flat we to component, X,XXX. And to A comes ship majority do when include greatest expect would of it third trucks not for you XQ, when to of in those they think of XQ say those quarter a red-tagged the deliveries pinch might waiting about ship? point, X,XXX that's large potentially because those,

all with or overhead I just build think to we're already not shipping the the of near-term? trucks get feel some issues absorption a for in trying

component. you Yes. causes and of some different constant a trucks a of ourselves we that components out Malaysia build that tell circumstances a for which we there. minus had that's I would those shipped find those dynamic and then outbreak, We've a batch to received component in different have constraint COVID only like

it's to So hard about dynamic when… ship really and which talk pretty truck

All Appreciate right. much. very Thank it. you

Sure.

a good You bet. Have day.

Nicole come next DeBlase Deutsche with Bank. from will Your question

Yes. Thanks. Hi, guys.

Nicole. Hey,

the third clarification production quarter on Maybe guidance. just a

you do by – I'm think your guys Europe? region? just like on trying q-on-q in plant through usual you And seasonally plan have So shutdowns taking to production

take the it now. plan shutdown, So we midst we're in fact do our to of European in

week. this started It

And thinking I you want add if don't else there's know anything to about regionally?

No.

there add I'd think don't is I vagarities that any other into regional it.

Okay.

and the flat get up compensate is Europe bit maybe that regions So other for a to little to overall? q-on-q down you to two q-on-q

would which we region. get what's really when, that's really it's driving I by say deliveries those more components about and

just Okay. elaborate little Understood. on maybe And to a David's then bit point.

the So a all the XX-Q I pinch in that did have think guys the expectation you that when pricing and progresses the at from if XQ? margin which price is you realized filed. know you costs the for line we'll But see about what how quarter, is into

in I the assumption more And we the and And X% if second pricing at basis, it as we gives sequential improvement course, increases. quarter. see resulted then that, quarter year. margin at the But last say the to then, third Nicole, of to a look you prices cover compared XX-Q, up to a that's you similar compared if that us been you'll on X% know increase look able see was them When would that yes, last margins in that’s think we've cost to I to what year.

Got it.

just in. just like you Okay. the growth? magnitude of That's then really with comment one I'll the to used respect a Could you're helpful. seeing little pricing, And truck more squeeze on what bit

year-over-year it's in also. the grown mean, in has bit, North I and percent Europe Well, quite has something and grown double-digits obviously a America XX grown the

pricing. our I limited right a great used precious that the supply and in even obviously mean, products command PACCAR premium And There's truck in an premium had now. space, we've of trucks. used so more growth it's a

long that be So as customers is trucks, ability our freight. we as think for selling move used getting team the good then opportunity limited, a there'll supply to the

it. along. pass Got Thanks. it I'll

will question Please next Your come Joel proceed. with BMO. from Tiss

guys. How Hey it going? is

good, How Joel. Really are doing? you

I’m hanging for template what in the is in footprint? terms the in place of more factory there. around on that do this Is just what are is new have Europe, building already you cab a Or world? in can automated that you

The wow. robotics of Well, of, operations. a new trucks Joel, can say, to but it's the We approach. it factory state-of-the-art is really into a factory able competence weeks that few bring is approach, it. were the really there We an and together, new It's level And manufacturing our it's highest amazing. over brings we've quality a ago. applied it approach. to in say When and capability all is, those look there soon to at you evolutionary of see level new putting degrees fantastic I'd hope get you be I just a to

to wondering your things everyone's raise of give of what wondered, I in margins? for XX% internally asking you margins could Can it's They've asking, keeps of of structurally maybe Can give I just thinking kind you're sense this about a little just too. maybe automation, next that think us incremental of electric, to And range structural been the I'm some it's that everyone maybe years? higher kind a And maybe some the the those and in five stuck while. XX% push pieces us it's pricing. you

to. Happy Yes, sure.

do you job needs business the what to team about just continue what and fantastic focus dealers really to is the again, and are. they and that there Parts doing think needs If look are they're at is the that customers the growing able because and a

place same-day parts of and frequently. in in that more a enable they're So putting really world-class systems delivery more

to And for of to so new not as is new talk about that's growth an well. we opportunity business really a remiss opportunity we'd look over foundational area trucks it. help as grow us how trucks, growth to the great finance the company be time. are at The The going

vehicles, leadership You like other powertrain, of things alternative terms put We're a emissions position that's for PACCAR. zero great in – order intake. already a mentioned opportunity in yourselves

the embedded charging in opportunity and producers relationship so help, Aurora, connected And that with systems and the for being the sale increasing and provide. of trucks, energy of not can software those management, an skills fleet have namely the autonomous go management stations, that. Obviously, that battery battery opportunity We support field, growth trucks in of trucks but electric as just the utilization vehicle the we see that's we are safety future. like the this forward an we

future. plethora move a to there in of as forward is great for grow the So whole opportunities PACCAR we

excellent. That's much. you Thank so

Yes.

You bet.

Your Research. question Melius Wertheimer come from will with next Rob

Hey. Good everyone. morning,

Hey, Rob.

I your guess, maybe an question, comment alliance. two infrastructure some But if on on any, role electric. these on is you obviously in is, charging OEM broadly, whether for that an what for the the competitors infrastructure changes think necessarily prep that and is that trying alignment in announced thoughts of the with doing don't specifically are I One coming noted know more I to prep I in Europe My you on three there? your have

announcement, They rolling thinking that That's line are good system. out Okay. there. infrastructure our we of did make

other each that's trying And all everybody be. do what car theirs is trying and the to in truck would OEMs that's usable and to an basically are create infrastructure what so by

At before kind of largely truck with charging the how in a to a with return the dealers by we the into that be you're – operating probably the same station phases used base each the and our how integration buy going our those looking also time, station together and products. vehicle you usable competency truck our the with we're to out electric obviously, that also works customers of we'll when all customers, a an and rolling share at early the a charging unlimited. to So ranges capabilities in customers. is our system and means core which style, bring They're

kind So an avenue of forward. is we see that

symbiotic the there's OEMs, has all that management with unique there's a kind system relationship energy to right So this in but right also some capability battery PACCAR the the and of bringing customer.

very a That's answer. helpful

by not you're letting sitting kind So of others do passively this.

in yourselves different way viable. involving a You're where you think it's more

That's very Okay. helpful.

exactly. Yes,

truck the Yes. anything or Thank you there On the there. is stop you duty your mostly base, the is in And the cycles say electric base heavy? orders, or can will or are And attention? mentioned medium-duty attracting that currently routes you anything I – to the vehicle about those configuration return about

have taken of The that refuse out. also orders and sure. kinds the space been in orders has have orders orders, delivery pickup Yes, been been trucks medium-duty the There we've been heavy-duty good spread there of and from. kind

XXX you're and or So you're coming again, applications anywhere urban where nights. running at miles back

today North Europe to we're that time the systems Those have We and electric right doing are the battery for in spots America. and recharge. in

you. Thank

You day. Have good bet. a

will with Please Suisse. Credit Your proceed. from Cook Jamie next question come

and seem like little morning coming record new will margins questions. or the while a I've good at Hi. this are level. to supply year a progress truck Parts because have to continued a you. in inefficiencies, the One, couple be Good of been chain guess, I afternoon – of lower margins the

And some we're to of Parts be about for that gross XXXX, go are in can second in be have you you to want higher think for about in talk and is So year, in the understanding if margin XXXX then you forecasts you is, but we're think and seeing to if inefficiencies much margins better structurally don't runway up versus potentially there? question set year industry as probably a the XXXX? And there my do right book next then order the next incremental that's how wondering I'm missing. what

part the it about I'll into of Jamie, kind Michael first the I'll let and second. come talk of

Thank you.

The cost margins higher base, over you fixed get to from that are volume will. spread benefiting if we the

of enjoying side. least been pace able we So seeing we're to that with strong been out on cost volume and decent the much raw higher keep there there pricing leverage has been demand plus, has the volume we're material get now at the right increases that's that because

XXXX, this good operations Yes. then will a next that for levels, great And we look The us well. at year we as that return market then that steadily, can it opportunity production that be the put and should way, should be as strong higher at flow see efficiencies we be for expect PACCAR. as Right?

sorry, follow-up partnership then, you the your And guys success good with were your last Okay. ZF, with sounds transmission with new one It question. like from there. prepared – having remarks, automatic the

how to about guess, ZF how you think So can – over transmission? you're think just line? more you the with I next months longer-term the Thank penetration, little with give a color What penetration you. XX over product there? seeing and rates the on adoption that And

pretty it. as rates don't percentage of people high on been number I experience it. exact the get I take know the know and it's with growing

answer. numeric driving just can that and really increase. customers lot about So it's you I just being a and well in the in and continue I you a it, vehicle to talking working we give to really, to tell expect can't that it

Okay. Thank you.

Have You day. good a bet.

Bernstein. Chad come Your next with question Dillard will from

guys. morning, Good Hi.

afternoon. morning, Good

I challenges. wanted to go to back So just supply chain

second of component supply, bit like short or things the can better little breadth quarter? you grown? has just give where if worse semis, can the the Are are about do just through talk a talk as a – the about can components So get progress things shortage And more color? in you we you cadence? Beyond month-over-month

world-class you of in see at degree give about base every Chad, can I we're love that operate working we to continue uncertainty write-ups And more, the explaining fashion. And in if and can. you would. but manufacturers I get more put a and But tell customers the quickly a I can get and that could there we're more, to trucks uncertainty we everything that of you as on to is the them with we in to this to going where just system. be report supply we and them parts, kind we through given you as our as we've have able business same

little typical just trying spend us levels, through, of maybe to if environment the the need strong, up the actually And you at demand on how XX%? it. less for Got you marketing a spend sense expense? you environment given give bit pull remains to can you Just environment? think strong promotional really XX% that discounting, a more just – of can Are much

Well, we don't don't discounting associated that we And I selling really know order. else a themselves. anything to great products marketing with way a of that? you build our if do have think expense promotional the a I And in job have

are budget the Our controls, SG&A. stable We pretty from cost the tight sales expect as the of first you've continue to got discipline going our in. SG&A do the see, able kind part good and expenses been so second to that's SG&A been quarter. we we'll stay to And of our And to has that level

Okay. pass it I'll Great. Thanks. on.

All right.

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

Hi there. my Thanks questions. taking for

Ross. Hey,

out any your big how it. apologize, in your have it's I you disclosed but Aurora articles I I filings, if mean, there? guys been missed you and do stake Have with is?

disclosed investors Ross, Ken. we is don't I This that. No, think haven't any of hasn't have amounts. either. Aurora the the disclosed pipe And

it. Got Okay.

is with had just is are make with others. around also can that that and it that and partner. the we vehicle they've in autonomous with Aurora focus being and of great made been where a thinking autonomous great trucks PACCAR-specific the progress on there focus And in around that's system. developing strong – that to them our work will turned been riding development on platform partnership work them, an a has L-X We've the real with Our into sure was

mean, sorry for you're just to level. over offset time more then, trying And to doing price I a and cost inflation prices raising probably I'm push this think that. you're question, another cost successful but recognizing that aside cost high at

to new a to Why what products, the creates when can't number just your you're out. be you speak new steadily productivity pricing industry, the just year fleet, any, with all the if prices but market, X% have why benefits have there you amount want used in Just of costs, the probably technology, that have to raise whatever it vehicle this cost these industry? industry bringing? are X%, all and every equipment seem doesn't don't value new the And more, PACCAR you given power is, regardless for you commercial happening of tight enormous sold of the for say products why can't let's structural is

company right, to for that want constantly on there we you're to bring we are the tell do you as And think good that's wouldn't we're these And again PACCAR of show in a And and and way. to going to we results is the and guess, stay that that. new they do our industry working that customer model talk industry-leading out I work best is. I kind will think to provide and doing the I we with we as margins. keep products, that expect providing the we benefits

grow is content industry. driving much thoughts. seem like more that, selling best margins strategy share, I a Parts just welcome and going comment them you aftermarket more on share the pricing that mean, guess, is in and to pushing just itself just the on this or focus it to there's your you more because of volumes and than base the realizing, But just the But, type margins in see market installed have some you I question, would there? further of be maybe that a the business the you're improved more therefore, take It are via seems

you can't prices? raise Just why

Yes.

the said, said around have the continue you we you the best right, and we our and we do to industry margins we in think that grow continue it geographically. on business to world I work and

I our We continue job doing which investments, you finance continue along mean, is really good the doing customers, comes see these make PACCAR that. company. and Parts to keep to are the it that through going business, great we're growth to for the great a with

Preston, are your pricing EVs lot new it, – a that coming entrants new then these the part vehicles of just spectrum of right. you broad just market, you got last in got in All out. the all of for the

you happens where you one to pricing on are the not, as over five think years all, to You're three you of of everyone? grow? your at to first, core vehicles what if to the next starts comment pricing some do but relative first, really can for And the penetration

Our margins. powertrain margins for to diesel the EVs are kind of comparable

mature, cost there's subsidies There's to dynamics lot hydrogen fuel with they come these battery So good. a that's of around be down. come so markets a battery projects, It's those government of along that market are continue grants or and obviously The cell. really looking some electric not emerging.

we're quality a pretty our customers the space. world achieving it's quality and dynamic for and margins zero trucks So on focuses and high emissions high

Thanks much. Okay. very

good a You Have day. bet.

Your Boeschen Raymond from will with Felix question James. next come

Hey. everybody. Good morning,

you Howdy. How doing? are

Kenworth. I X% perspective and but help is That months. in of Good. you a on versus fuel in historical was XX% me Correct quick the should upgrade how increases I I'm heard touch an a on new then efficiency just couple prior I Hey. Peterbilt changes? to from that improvement launches sort about hoping And for if model of think maybe mentioned good I efficiency us product wrong, production Can you Europe. second. think fuel start understand

a That's of to good Sure. way think it.

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we at against And in so economy. beautiful And a a lot, just you X% is double-digit think it's characterizing look product delivers how might other fuel it programs, this would that it. that's

So change is big a in fuel economy change X% in fuel a economy.

for big XX% on for just XXXs thing getting same that's bringing So Kenworth lowering for great table. and operating to them Peterbilt impact to a job everything obviously costs could and amazing teams these get our just a And the on X% They they and XXXs. got next-generation of the had customers. the

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cycle the and And business so, extend yes, that will that's them. for good for the

cost second and biggest is The driver. if The to Yes. fuel XX%, is you the by operator a or that's huge. bill truck good X% cut the can fuel

like XX% more has any is reducing that I a entire highest of reduction said, that, fuel think makes XX% by I in seen the the history. our And its DAF bill customers lot competitive.

getting new to trucks. forward So they are those looking

I'll there. help. the it Appreciate leave

Great.

proceed. Your come Please Elkott with next Cowen. question will from Matt

Do the could help my competitively Class X for question longer-term? you first Hello. you now manufacturer. U.S.-based a way market Class in guys one, quick Thank X in this taking question. the you you just are U.S. My truck think only any

we Europe, Mexico, We're We and know. Peterbilt Kenworth don't DAF are and our our to great I company. of we're in a proud who in operations proud love Brazil. our be DAF here in

like relationships that's dealers those think world. customers have So represent and we how well, we markets we markets with the feel great in really our and about operate the where we

question less other vertical a guys least at dollars operations, as a well like as year, do with looking host next it. next is and more And strong then my think Got do front, along you year? technologies, OEMs on production might of engines allocating whole you you of Okay. the year investment next vertical with integration integration and core new

things the Engine that grow obviously, of I making our don't to at We're engine and are our where way of simple. We for we're the around making the think be our will customer. world just PACCAR. products our good right they customers investments it to sense to volume powertrains to all. on PACCAR that or I elegant it's mean, investments standpoint. think continue that and it's make No, want XX% I the a business, sales the continuing for best best just we the bring

where makes make integrate our it thinking where out that best vertically so sense, brings sure our partner people makes to R&D and is them. to our others using products and And with sense, the

very much. Great. you Thank

You bet.

proceed with next from Research Your question. Partners. your Vertical Kauffman come question with Jeff will Please

very you Thank the and much quarter. congratulations on

you. Thank

this trucks the we in big are chain getting really a challenges out when that But it your us kind are in to some that some the didn't and you the that the I of we they just material were out. you through? will were hit start quarter. I inflation A anything? side get think for, OEMs that kind I inflation price? other spoken supply with of talked with give of want and to supply your of offsetting chain but kind could in there Are is we've the citing of see and gross and kind topic that on And sense impressed of about what I chip a because the offsetting raw flow – parts And feel the to was seeing margins were we've numbers.

Yes.

we're and raw We that and inflation, baking course, into when new how gone deal customers But that's we up. material we of are pricing to have costs with seeing our our price trucks that.

Okay.

margins you for now the gross a wouldn't brace come tell on in little second to So inflation us down half.

now? feel You what you're terms of right the market like containing in you're it in seeing

the to it. way think best probably That's Yes. about

you. Thank Okay, great. Well, congratulations.

is Please with David question from next proceed. Raso Your a Evercore. follow-up

conversation to in America? of moment, larger Hi. North What needs the different I'm question or laying you call it, they to just XX fleets. constraint understandably largest can't unique you out impacting key Thank truck digest on is maybe their and they customers, want thought having everything cycle. conversations you. this XXXX pretty to with when next, supply months? I How and duration thinking the your growth is trying try My provide you go beyond than maybe customers to to them the you're Europe not a out are XX today. in is over their that about back look mean, or given for year some your a of potential on the two

Sure.

lot is one a think of and about trucks in talked about we things are, call, more think the efficient. to more this I becoming as

beyond even freight will they that is they'll America, world And XX so around and I percentage a think the XX future of majority months around to actually. vast freight take the their hauled continue how North of the in Europe, haul

good So for position in really a is the world. trucking

fantastic a high. but job the of really, doing efficient, demand are is more really customers becoming Our

strong the be which tied there'll And I'd expect to year, say, so, we that and a XX months. next market they, you certainly through

they're essence, all now. that, well have and business really say. is doing they can the They freight Beyond really to well. right it's But hard haul the that doing in

together everybody fine. So is doing

exactly, hard today industry, do how some production next be of And so I the think that to you I grow that framework, forth. there's when you this the how up the mean, capacity a chip XXXX. about could demand when year, of to resolved – the if the can year in obviously next served bogey next as will versus year so issues analyze of have all just sets much just But those a build year? points folks you industry start and sense we mean, capacity it's for, then about demand, of build could of understanding for much the how pinch in but think grow when and think you off

Sure. on demand our tell that, is go the all to meet I other to want capacity kind comment markets in But you don't have up and of as of we capacities. people's sufficient I'll to needed. substantially

look we so, the build forward just then And get operation this we to through a running really of looking year. and that supply we're forward base issues, smoothly to as next lot trucks

to take last in And are you one shutdowns intended that would XQ, those XQ. normally take the quick versus given The XQ on shutdowns out there, still dynamics place?

in take Europe place is taking The shutdown we indeed.

Thank Appreciate very Okay. you time. the much.

good day. Have bet. a You

JPMorgan. next with a Ann from Duignan Your is also follow-up question

Yes.

David's whatever, bit can of you're risk color I If or you trucks seeing little what And building appreciate or I'd whatever, just that a the there talk side, you seeing is late customers there? little need out too expensive some a I've terms felt decided, spike industry give my or don't you're any just say, what could cancellations after about bit. problem cancellation but question in it. us too all? maybe an cancellations on on last We Just on month,

well speak Yes. to can't the industry. I Ann,

tell I that. solid. board been that We has our can not seeing order you are

aren't seeing cancellations. We

now. with really great for strong that and really think that's us. to has and not factor But excellent the from there out. We're more product request is really, do – probably I right demand not products a we're putting more seeing

and do So But you? of your at other share the what first to backlog hand, the the at we your or year like could what's half on tell you least in is? us last get share least maybe from was orders of quarter that

XX% Sure. in half the the Happily. the We had of of orders year. first

then? the what's And share your backlog of

I order that, than our of share. that know head. higher as tell can of is that my don't it's kind I market we top you see number intake, off

position good And supporting so and things a in from order intake from demand are us from really customers standpoint.

the end of was of XX%. the backlog share The June at

Okay. Great. Thank you.

Yes.

good You bet. Have a day Ann.

you. Thank

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

Sure.

today. as discussion think close the points like covered. as for is, we to Just that strong might thanking there look for intake I we really by key is at the the us just order everyone demand business in

has driving We have team fantastic Parts records focus They're bringing new It customer an industry-leading trucks all momentum in it. and in The around to the just world. The success. their keep record team. really great going are is team is setting they finance technology and business. is new and killing

conclude they're you. look we that, so forward all say I'm PACCAR proud just everyone we'll of and to the thank And so doing. with soon. talking to you And work of great and at And

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

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