PACCAR (PCAR) 26 Jul 222022 Q2 Earnings call transcript

Good morning, and welcome to PACCAR’s Second 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,

this would Officer; on welcome is the of Present President joining PACCAR’s We Executive Controller. Feight, phone Harry 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 including mode. risks any prior information members ask of participate conference in that on media and and with will a As today results. conditions that the Certain involve presented affect be general calls, the and expected may competitive we forward-looking economic uncertainties,

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

revenues by strong financial XX.X% other technology to increasing profits economies and portfolio margins entire truck business compared expanded grow projected connected margins. and In favorable of and U.S. been its million strong our increase XX% be XXXX we in Parts leader PACCAR’s clean U.S. $XXX market provide period Schippers, team the optimize new $XXX in to will in customers the year. to transportation the zone economy, our to an to trucks drove I quarter. higher to remains be industrial best-in-class them and higher and year-over-year second in XX% PACCAR’s trucks. production Harry excellent had to has $X.XX $X,XXX,XXX,XXX. its XX% XXX,XXX in daily solutions. increased morning. range PACCAR’s truck update million, market generation Truck next by able also PACCAR lineup, growing estimated results. European autonomous business range Based our I electric and used trucks new of research the achieved continue were Barkley and revenues quarter unemployment low powertrains, Euro production. is and European the are on second second expand. Net GDP last to due income increased at ongoing trucks. quality and X XX% gradually quarter Canadian to is done products PACCAR employees Class The $XXX the and parts truck of operations. truly services. excellent Michael job programs diesel levels. who XXX,XXX development powertrain The PACCAR and billion. gross and net deliver U.K. of XXX,XXX quality on its estimate expected revenues quarter and is with PACCAR and to an lineup industry new to the The this outstanding vehicle of and world, the highlights. record unemployment appreciate help high quarter last and with an diesel zero premium their to results to trucks is record increased low. and XXX,XXX environment, emissions suppliers shortages, operating supply results manage to pre-tax income right have we excellent with working PACCAR’s XX% base in highest the to trucks, to PACCAR pre-tax production, you around to gross than after-market Parts second second million. the a year. increased the income same the Parts record Good quarter XX.X% in

for fill-in in most will With the Parts, to provide remains Thank the we Trucks benefit efficient beginning Harrie were and nicely. most business of sold great environment, Financial highlights. and America an Financial anticipate and Schippers for at demand tonnage at new age our PACCAR’s Looking Europe industry. operating Services. is PACCAR you. levels the utilization desirable the Freight now fleet generation Parts, of are the providing trucks out Harrie. trucks job continued North our in and quarter other year and owning and truck update strong high, first PACCAR Services PACCAR on customers

in and Preston. to Thanks, during of third the second trucks deliveries XX,XXX delivered PACCAR first to XX,XXX increase estimate quarter trucks. quarter. XX,XXX quarter over the X% We range be the

Truck build PACCAR Parts increased As parts an to models be XX.X% of Parts range, XXX second parts in to by reflecting independent PACCAR We dealer continued XX.X% a distribution the XX%. and had average margins quarter. gross shutdown margins in Parts in DAF an normal be of will TRP offset higher by outstanding to PACCAR production. strong and in of truck age higher third XX gross dates quarter expanding performance driven locations, the gross daily the summer Parts have at X,XXX XX% utilization outstanding PACCAR a Customers favorable and to margins other second anticipate Parts of quarter results. network Europe. performance stores. centers, increased with fleet truck record is contributed new mix

has As used quarter. excellent and well higher in new benefited truck retail its year. centers $XXX opening the innovative and quality. PACCAR in last pre-owned in the are be this which and center Kentucky been Louisville, year. truck XX% opening and vehicles used it’s center continuing used million premium strong to as $XXX at income from to Financial were investments the by technologies a trucks and sell portfolio prices in second for of million Parts to the pay like These PACCAR facilities customers as PACCAR distribution second is increasing quarter. was truck PACCAR reliability network its high used willing a Spain in the Revenues Madrid, this quarter prices e-commerce Pre-tax managed systems. business Demand retail dealer appreciate inventory superior Services contribute for retail continues than durability. Financial Capital this $XXX Thank $XXX and exciting flexible PACCAR’s company year. efficient and and many year, investments and and new million business are improved first position you. during billion to estimated operating $XXX returns half have million. lineup of expanded to the future. leading projected bright years. in and impressive to services and $X.X for for and in trucks industry capital million created contribute financial will return facilities, lineup most structure PACCAR’s invested newest expenses and this of These has research innovative XX% trucks be of expenditures invested after-tax past to capital on after-market R&D million a PACCAR and investments, to the are parts new the the development transportation excellent industry an solutions, in technologies decade. be to products $XXX strong profits. higher shareholder new the

pleased questions. answer be to will We your

opportunity Instructions] Thank your your mute button. to moment We’ll We’ll first for question. allow Caller everyone signal. to a you. is [Operator an take please line open if our pause you check just would

from is Bernstein. this Chad Hi, Dillard

comments of at gross secondly, least of doing question look are run to given you on like your margin if heading just just the curious we’re your I are around XQ, versus margins, last through like now? you, a for and backend like trajectory, go had I like about if cycle, guys can the evolution give going thoughts margins the First year time, And think we that like orders XX.X% how today, as you we on kind durability. just a think like of where like for we to builds any forward we cycle-over-cycle quite then rate, guess right to looks the are I you XXXX X,XXX early about and taking fast

the I’d company. Sure, question. take feel be are happy well things to like really the for I going

that shared perform in also increase fuel team the really job margins. an helping record the for in of doing better, first for North in As finding a excellent set shared Parts great in in our principle margins. the underlying economy That in them. new in trucks is the fundamental we customers And the is that I’ve and America, are performing Europe another quarter. really commentary, truck market improvement result our the is and performance is that well,

should say. continued expect in second strong quarter, the We performance I

the for Parts strong them, fleets at continued and is performance throughout performance. utilizations aged expect We driving because are year high which levels, of

some expect margins do improvement we So continued for to in see time.

on second then Parts. question And just

as year-on-year Just as how think about margins well on growth, that? to a

to Harrie commentary? you offer want

Sure.

third to XX% XX% sales Parts year. strong similar to expect continue up which last the quarter be the probably to quarter, third the in We from be second would quarter,

move We’ll on question. to our next

Wertheimer Melius Good It’s Research. morning, from everybody. Robert

Good Morning.

you Are great. guys there? Yes,

We’re here.

great, Could you for any pricing, could you margins stand the know there as obviously update from comments up if how questions. two were So from Truck it look price in was far up price? mean, make you on that quarter? the Is us One strong versus very catch the some you update, on Parts inflation? continued And noted. don’t quick where you results tailwind guys is I I on you just,

share that? on any Michael, you thoughts want to

realization we cost that Yes, with kept price more increases. pace had our the than kept pace a good little during quarter bit

second suppose could whatever are just with so a you And about there? orders you. I there different chain choose your any And supply whether downturn mood and you in have of forth. a picture, Europe worry the a little customer Europe, bit if you’re one energy things bigger lot to is? customers maybe or in sign Europe I’m Thank knowing And what by of kept your impending curious your is from security

those introduced doing and products, fantastic are The job. They’re operate a the second in new delivering right XX% regulations masses in dimensions provides for premium They our is an third the in new our in exceptionally that Well, is comfort. You only roughly and are really fantastic of the position meet driver bet. strong a quarter. doing increasing increasing the trucks Europe, trucks we they’re in the that And Demand market. European customers. now. our build. percentage business for which the quarter, They great

in So so. is think will moving and that is I continue do Europe. to we see we it strong Freight demand think continued effectively, what

We’ll move caller. next to our on

hear good me? Hi, you Can Jamie morning, Cook.

Hey, we hear Jamie, you. can

Hi, I guess two questions.

great First in the all, quarter. of performance

pricing XX% Can of new guess specific build quarter, my just new us to rates just that You think maintain that those that’s that out have facing of half you there? be I the question. the I products think given U.S.? confidence products you for levels the you on Europe. comment given do second was introductions, the question, pressures being in about you XXXX and about today your the price talked level where product list in then second able your maintain year the in that terms build my deflationary are being back increases And to into first you could the have new can the

And new, a brand on product European was and we’ve the increase. product product new completed the products, one, you’re America heavy that a now. start let’s right duty that’s in North TXXX. for transitions new to the XXX continuing American duty And is it’s North those note Well, with to the which new platform and first medium the that

all us, is we like by because the customers will So to continually continue exceptionally to then delivering that’s we’ve as best products in and news and the build and from well rates And customers. per up truck of as savings, trucks pricing for we’ll through per year that take good to commentary got received thousands want marketplace, those the far our fuel new the being as of products economy buy feel dollars us. products right our that

model think the pricing will so we that stay intact. And

need your in perspective, given get profit the margin truck of the product introductions margin? up if question, see what XX% gross could, I pre-sort again, just market to COVID, we from just I in, follow new of in sort do the XX% to back to your guess performance to a

most for aware talked we’ve know, stands market well and priority on a and that we past, that our there own, customers could. you the been as we’ve right, about out making get every its challenges, the we and think have sure and would I supply in put be trucks

But So the team to been continuing to right growth, that effectively. customers through on that thing has transition as has through see congratulations and a dealt think to been that. focus our and working continued making Great with our in work the we out to noted products. we’ll and that really our our we’ve that And for comments. new forward, looking the getting trucks the Harrie suppliers

next We’ll our take question.

This hi, morning good and Sachs. good Jerry Revich Goldman Yes, afternoon. from is

Jerry. Hi,

in field your don’t couple population years there, the over next past about you we interesting, of year. business Parts And over margins Parts folks of years, at sustainable I’m two, five really you your by have mind? Can if per as you moving wondering over years, the up margin Hi, the pieces grows, that taken a point as is business engine the look three, expansion just level talk out? four it’s

Engine. that of is more at very driven in XX% be as Jerry, get well. engines a have A margins older increasing get as maintenance lot should PACCAR work, by said, future success tailwind nicely the Parts now. levels record the improved the around and grows, the and of And you of for Like that the margin Parts population into that

just Yes, to terms increasing the the employing, of Parts what systems employing that’s of makes the it at from opportunity what improving standpoint the doing would us and And percentage class it, we so capturing customers. I add I put of helpful think of Harrie an complete that said, team they and how effective sense. are to a technology us the is at how support market technology the is margins, also the in top are they’re

in Jamie’s to supply just on you’ve And next toughest labor in part that labor the levels trend dealt gains for then, there more to with about? or line follow back quarters unit challenges, of couple are of efficiency us per trucks, to on the of unit normalization is question now that hours of terms per the think you up on chain hours

a the focus. And to it’s that what comment. through that customers. to our think I on trucks be we’ve again, is, getting think And great I continues seen our focus

are but from trucks efficiencies, to We darn a the what we’re of and not standpoint how our producing back efficient, very think they’re new bringing. I optimized

really we priority. we sure trucks continue that’s our and as can first to going many We’re as make to build

intake obviously the lastly, past by any of that a in talk would order big of trends in is region, you can order your couple you out major about just countries, rates Europe And anything differences months? point differences over terms in

Harrie, maybe want Yes something on you to offer that?

sure. Yes,

has And come in it’s grown of really had in exciting of see in say came we release, the Europe the that to those where those out grow. really market in lot has France year that noted well done we and have opportunity countries bigger XX.X%. markets first the press markets. A Spain, in the to share really, to Germany, those let’s And As really, half through. gains like

big of the So lot that’s part a been of success.

caller. we’ll move next And on to our

mix you seasonality typically European up due you QX morning. Good strength lower for QX as from of of we year? UBS. the this EPS how better morning. Steven then see would of how this of be the Thanks. get was do Curious Fisher think Curious and about even seasonality, enough than sort peak could typical about the thinking production year good again, that, there’s you’re the It’s think EPS the and Parts thinking QX picks year the those shutdowns than you’re end and QX towards part do we pent-up benefits something or to

as the quarter. think we a are is forward have think quite other I the We the business And third in quarter Truck, we is Parts well, Yes, like quarter. days we in in the third third third quarter quarter second business and well. look well done do you build like that the in to margins all the talked Harrie so all, teams feel the great noted increase as in feel fewer running really in about, But the job and the to Europe. going will running

when of up are to at out order decisions to with out deciding and comfortable the how books far this XXXX, fully looking how you point? kind then pricing are And open you

what to orders have as what next first begun quarter of shared So fill is our and said, for with you, we you we year. the we

customers. see interest end the from those four-year contracts. being strong Some We really of up

think levels. XX% that right ages a as for tonnage as Freight I shared in And progress high so fleet Truck macroscopically think utilization sales. order having truck bit very that XX%. are and more market volumes for we up intake. or I’d we’re a strong say the setup good is We high. very future

question. to we’ll next our move And

Elkott Matt is This Cowen. morning. Good from

waiting parts? $XX is you a grew eases only improves? issue less footage last increases truck quarters. than the inventory red quarter, as Is and largely sequentially mainly do the the is trip fewer behind this us And supply of in few chain a trucks this tag the whole think the for think I lot of million result way the which

some want you share that? Michael, on to thoughts Hi

Well, the in a during we offline number were that quarter. reduction trucks did the experience of

So as progresses. But we the which, had well impact also good that as how -- weakness reducing goes sequential an that improvement there’s had that also impact in we see on the inventories, currency to we’ll think about. year our

And update would be then any helpful? supply chain

supply increase and really rate as say, and chain job the to enabling I’d of done Sure, solutions daily through fantastic mentioned, finding team a our build quarter. have last the we our us

we’re that cycle a for so a limitations, and complete not that strong period think of supply probably And long time. chain while to we through contributes truck actually the

Right. Thank very much. you

our Well, you. to Thank we’ll next move on question.

Hi. Steve Volkmann from Jefferies.

morning. Good

Good morning. afternoon. Good

couple a sales? of was follow just the the on What maybe if impact currency quarter may. on second So ups, quick I

the on And about quarter. Yes, year the about $XXX the net compared negative. for was $XX on last impact income sales million was impact to million

Harrie, on And similarly, how truck high was that mentioned for of stuff? your benefit think, kind maybe much you sale then contribute? How prices in comments were FinCo that I did much that a gain used income,

finance the the the quarter. And was the finance readily Steve, available I don’t perform the very benefit in solid numbers it both a third to and to very, the company, we company first and remain but to results truck market also have nice in used of quarter. expect second strong

that a just lot of curious, of forth. you, I’m used truck that used you so bit I And and at the a same of to normalize? truck kind we headwind and this be point, as will marketing because of I’m think kind suppose keep the used but Would used maybe normalize improve you’ll when of guys ‘XX, your you think doing a marketing some at where trucks? way guess to if is, with you’re level prices of be truck do or into kind out sales higher prices for I able time, are going the

more The is next to used finance truck company thereafter. allows profitability. retail company’s Steve will prices customers, field years facilities the we’ve end It at benefit many which finance sell for years us and that good added to definitely trucks

And we’ll take our next question.

Greg, guys. from Guggenheim Morgan This Good morning, Dylan is Stanley.

are a of R&D, ability reflective more you of kind first back actually was in curious was if ask just issues, spend your terms conscious more side? to I your any that wanted on on guys this was the if that took quarter, chain that Just to of bit supply pullback money a

a on it’s necessarily the pullback No, not R&D.

look is, majority the to again, euro. would a that the the currency, you second If R&D, quarter, I weaker of at lower that say due

Our we’re going year that spending R&D levels. be for record the outlook to means at

developing So money be spending that the the very and to about we we’re the technologies feel customers. good projects will we’re coming

mean, can take the give you’re you I’m the build it’s can then of or of production situation kind any is on whether have an kind sells, of if thanks, side, you kind improved progressed? rates supply has not, of kind year, for it, as be procurement et up battery Got cetera, of chain path that pack how Harrie, the just on and on color give been or guys electric one update planning battery the progressed. curious maybe you to side. I around as

bet. You

now we sit need, And that world systems that, partners product for truck I years. think electric which for our coming secured are that we ramp and have with is the work our around the batteries production battery we to We’ve we supply models production. zero specifically as in emissions, with the we up and lines, batteries as fantastic. where continue seven

thousands And progression growth comes we’ve that see year seeing hundreds few be we there and we as expect and we’re this will the to that times, our years just a quarter-over-quarter. shared units the technology that in coming over to a of have steady units the So as market. then grown of

And our we’ll question. take next

Bank [Indiscernible] is of from hi, America. this Yes,

constrained managing And two over XX get have we expect Just production you where for the rule-of-thumb get is you that’s that was replacement think kind flagged added in replacement is months Do Investor closely. we And you Day think like demand the next would rule-of-thumb, as of weaker Do rates demand, old the months. higher the that your it to months next now been on trucks. XXXK, if OEMs in past? like few few orders date? that’s level looked And feel before the orders a last are the be level of maybe quick kind order questions, they that do of in stronger? than you should

think see too there capabilities would intake, I XXXX. was and everyone closer of some is get first of been talk trying now everyone uncommon order intakes strong much this terms pause I accurate. in be that think because difficult be. the to out was market Well, were supply obviously What has put are thing going year order the into what to is to couple to what an for the and sold math wanted I going about years of to a We’ve to

order for orders taking, so intake demand coming increase strong And see we’ve for to we’re now I is the more time. and taking open books that. would fully, and expect to we’re new order

spot in that love that U.S. feel it’s weakness a basis not the freight Truck to just the last like of get rate other strength months freight of the we Thank points, view the pointed profitability of there how on you is PACCAR’s year-over-year on If on not freight market. market? the spot should spot? an entire the down that, you. impact Do view? an the to kind interpret should Is spot in weakness few recognize market in how And your worries given you because some of data misleading on I future trucker view market accurate with on portrayal that are we

question. great Sure,

rates suggest And to leading deals anything. a XX% of indicator that part market it’s I maybe, think market, good would with I the probably are the for normal other really freight strong high the that tips Truck we market levels. are the and but XX% very are all overemphasize time. spot tonnage It’s in from robust. those and to expect total rates its area. doing some what are contracts the good should that range. well the And that extremely see Spot of you quite actually Combine contracts and increase is in significance factors that down a spot contracts, of truckload

move We’ll to our on next question.

Hey, Wolfe still any really be and for It [Indiscernible] couple thanks. from wasn’t ‘XX? up you FinCo follow And good if A want to It’s Research. couple months, comment to truck to to last then used not used just sort expect me clear market orders of had of on. in to is results? things you pressure truck on still a wouldn’t you any you expect don’t feel of starting overall sort like sequential see drop-off? that need you Are see like any impact the your seeing limiting the is

are that second didn’t XX% down compared prices America the used the is. came same bit up that used in of first Yes, the North more prices see truck to little we last quarter to in year. than truck quarter compared still a the But quarter

used we have what a And really for truck question? a that’s market first us. call did strong So you

Nicole Yes, Bank. hi, DeBlase guys, from Deutsche

Hi, Nicole.

red asked kind there. on up tagged to back the earlier the inventory things of going a tie question just it’s Maybe

we like close that about have that said of extent improvement, getting to I think last trucks range. kind call, tagged number we are When what to X,XXX sequential improved, were we on red zero? they quarter, guys like when talk you how earnings towards were this

to are we’ve we I looked so for the number will say Good from improvement seen have zero. X,XXXs. go delivery, there’s low the final trucks what high the But because question. never zero into And never being to number would the an that X,XXXs always is be

that And continue. see that and we sequential will improvement that so sequential improvement we hope

respect had that past got seeing a order Europe. of of over you rates things pretty it. been any world questions And That’s gotten the are quarters? in strong U.S. what guess about the lot lot change the the then of the to seeing But in kind Okay, we’ve here a talked with trend helpful. I through rest you few and

at and share if South great us. specifically trucks intake, also. order really and a established you for look We’ve America South Brazil, considerably. in performing team We’ve for sure Quite a ourselves job we’ve America grown like that And a there’s market Brazil, in brand done, as had we’re strong very feels are in well market Mexico, the well in great premium doing customers. the been

Europe, Australia So America, South America, North doing well. is

year are a there We as well. having fantastic

Thank to our question. go you. And we’ll next

Jeff everybody. Vertical afternoon. Partners. Hi, Good Kauffman It’s Research at

Jeff. Hello

raw of Quick change the And kind the when the to pretty to something the somewhat last and we’re guess raw through question that seeing on And almost over part what markets now materials you P&L, inflated, in sharp pretty P&L? of the been of aluminum, is but running more materials you raw takes and acquired. work through I coming costs, look of that’s weeks. cost raw is inventory of it’s be little six four Could a sold were any in to materials I become remind year. us material in your the just insight kind those how long cost quarter inflated terms raw it second on down is probably it that? you this in steel, still material at, a little an ‘XX change early later of goods love going

it depends sequential last in model high from of think that, the you levels. which timing materials it have Well, and we the we trucks, break don’t really the but several of way obviously prices, terms to weeks, on comment bring is, seen about some up, materials that out and in the softening which very very, of

a that of price And elements in is models conversations the our as like new with so cost and that into and one efficiency goes include the trucks. customers, truck It’s truck we is of the the labor continue to we are.

many So trucks. pricing there’s for it’s elements that into go the

So pricing follow will I the is it cost? think about should the

rule. good general agree. We a That’s

you, That’s Wonderful. In guys. my general. Thank question.

we’ll move question. you. Thank to And our next

is have ones. This my Zakaria much. for couple from so thank Tami Hi, JPMorgan. of I you taking a quick questions. Thanks

first any about is preparing fourth we’re what should my or production in be question to any? the hearing there disruptions Are shortage there So in potential given for you gas risk Europe? a third is, quarter any

And topic, last in well Well, I continue conflict in we always have as PACCAR ongoing. done to have to five are continuing we’ve do we that that that job a those seen say well countries supply. Ukraine Tami, the is that on timeframe. has great will months forward. started, very done since the look would conversations think of the What that

it. Super helpful. Got

this is of second macro my so, is questions. more And question a

I freight increasing. contract there’s slowing actually what just inventory But demand. you Preston we’re retailers overhang an and that hearing from market think, is mentioned, consumer

do what market freight the it’s that So think going now? really is driving up contract you

I fundamental continue be. is the and to most and to very large, is large at is a the very economy thing level, is think going probably

I done that ours anything most trucks. is think through what trucks are XX% that country So delivered desirable this gets in of and the

be as going goods, hauled. levels, it freight strong, as is as kind there’s So a even that’s need to high consumer as that moderates to of housing is then I car of market if expect strong, at lot

dynamic that us. so creates for And strong a market

check Caller please open, your question. We’ll line take button. next our your mute is

Tim from Citi. Thein Sorry, here

foreign about Sorry the exchange.

becomes with just more experienced just there impact to stop/start inefficiencies way what I of rate? several or of we over presumably then, and/or and first been? versus quarters quantify was efficiency quantify that about this guess material in Is has kind costs. of a the of factory truck to margins, a that a And in a what perspective, respect the from ‘XX? price I normal from a last slower had But you’ve a or standpoint The is question than a from sort there a tailwind from lot the way drag case build of more talked

Well, I way not think, do easy to to no, way an that there’s do or really that. necessary

that that into whole the I year-over-year margin things is kind that forecasting picture the in we the improvement think that see into at of what continued and improvement and you pricing and look of sequentially we’re we’ve and takes in future. And play, direction. going macro we realized cost that margins efficiency right in the think shows the out

we dollar of we either the quarter, then but euro there just about just at that a stayed maybe comment currency I the bottom impacts, of start foreign second should the figure? can levels? way dollar Michael from use or just if And multiple a there’s help half current is where back headwind a or what if dollar, the right. on at just to know ballpark All settled the standpoint think line, exchange end cross the top

effect was I see you’d that Yes, QX, in I of QX probably year. already similar would last it think in happened QX dropping what kind what year’s a be last currency and and is QX mean, in QX

similar to there’s cross it be QX. there, directionally, So would but probably multiple currency

question. take our next We’ll

Hi, but excellent on touched this is sales. maybe of particularly in And job this [Indiscernible] you’ve with light controlling, you’ve already, equipment the done strong SG&A the Bank I guess, an Montreal. of of related dollars,

So I guess what here? been has success your driving

and a team entire focus efficiency they world that in and performance well, have in a the to Well, on the the credit fantastic delivered to area. give have and we and PACCAR. operating have And focus excellence on all I

at just picking any new at one here, mean even if directionally give you businesses talk be that about on outlook, capital mean year expenditures would would color you assume or of I that you investing continually maybe But you or I similar those from some, your if give levels And kind and declining in I be least least would technologies the more in particular terms into back maybe such. then do there, can up or helpful? with of at anticipate beyond this staying can

products on really battery Sure. working last in projects connected the of some both same we’re exciting autonomous introducing vehicle new the time, year the space. fuel electric year at technology and space, and new hydrogen Obviously been start this to space, cell space,

we we future we’re set So the working on, product great deliver a results that have of that’ll great in see that portfolios for continued future.

our Okay, next question.

Raymond Felix from is Boeschen this Hey, James.

Felix. Hi,

I’m parts. But in you uptake curious could talk model about two just call earlier in North transmission that the if I complete. PACCAR you mentioned I transition the largely new the question, have America is guess engine us the on similarly, duty of what them? heavy MX in what update for builds percent builds really North carried your that’s percent me. for duty of have And now you if America on the medium could maybe one lineup, then it

able the about proprietary grow over to our think to that have been As years it, powertrain grow. we continues we

front the percentages XX%. engine right MX In now that the in or job. performance to a medium is around U.S. we’d expect the definitely Our of And year. the great growing. the but is we introduced me what of low in XX% numbers percentages, in through duty, is see the transmission terms it has don’t automated I in transmission have done the PACCAR

our to on caller. move We’ll next

from was Europe U.S., majority models the European assume differential margin David curious I new your What new you. Thank versus and the out the ISI. business? with the is is with Evercore Raso Canada models in new the model. of

we to as break Kenworth DAF, we’ve these definitely transition that we Peterbilt models. don’t think an And advantage is what that do David, for We new see Hi, able out. that to and brands been customers. the our

dollars them said, cost. can that’s the in margins. As mentioned, But haven’t for truck those we’ve good And course, year we then really operating we company. thousand as differentiated per save each of several

Could least models? new the gap you answer at changed with the has

delivering I them I seen because We’ve benefit right. think has Well, from margin improved to mean, customers. it they’re our yes,

And so win-win it’s a situation.

Europe out? models has gap changed between new The Canada U.S., with it and the

Europe. markets those I we think in into increasingly factors that strong strength, And a go that seen there’s increasingly several strengths. market one and that, have of

well. then So definitely new that’s are performing to really an advantage. trucks And the

Yes, would great improving? in Europe. I margins question margin directionally So the Europe of

[Operator Instructions] our We’ll next take question.

guys [Indiscernible] know now? from hear happened. me Can again. Wolfe what you I don’t

can. sure We

to orders to if my just, are in follow need you of wasn’t one was limiting where it a be clear you still up ‘XX? had for me I place So guys

of XXXX. being I wouldn’t No, think orders as limiting for us

to I fleets how there’s a the normal think cadence that buy goes. how market and

we So that’s the that what of an seeing And in the year. kind calendar just order it’s through is intake you’re move really start uptick as season. of

want question. then I picture bigger to just ask a And

XX%. margins about to guys gross are of talking you XX.X% So

We haven’t been above XX% since XXXX.

So as your you feel standpoint think year? build you crystal it think does gross about could into price would gets and it’s this like on that good third margin costs and about do you just as or units from next as quarter and a balls,

a that shared, we the deliver working people of team hard looks really well. we fantastic that think fantastic business quarter we third say had around to And going we’ve as would business the think forward. great great that as I results, there’s a

with can I last if just up then just And that. follow one

Margins that And you a so next XX%, with XX% should do that you time worse to margins that margins. last had Truck the XX% EBIT XX% time? gross back you teens around were similar high high XX%, the gross time high get sorry think were of you kind last margins better, right for guys margin, operating be

good Yes, margins. continue we to deliver will

is deliver I good is we’re the products forward. and think company very well. excellent. this strong, for the are in And Demand next the position a going margin outlook doing very, for quarter new excellent to

There are no I’ll to turn for our further presenters closing or additional it questions. any back comments.

thank I’d everyone And for operator. like call. to you joining the thank

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

disconnect. now may You