PACCAR (PCAR) 30 Apr 242024 Q1 Earnings call transcript

Good morning, and welcome to PACCAR's First Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's call is being recorded. [Operator Instructions].

I'd now like to introduce Mr. Ken Hastings, PACCAR's Director of Investor Relations [indiscernible]

Ken Director is Investor name My Hastings, of PACCAR's Relations. [indiscernible] Poplawski, Preston me Chief Executive Brice Controller. this joining Feight, Financial President morning and and And President are Chief and Schippers, Officer; Officer; Vice Harrie

Instructions]. [Operator

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

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

Feight. . I introduce would now like Preston to

quarter with do you morning. and Harrie, thanking and Ken the I'd performance our to truck business customers aftermarket net results solutions Good and income job the highest in first services parts the and like I will of industry. its highlights. financial our on PACCAR's due excellent update outstanding a transportation businesses. strong Brice, begin in providing PACCAR first by achieved the employees revenues great trucks quality who excellent quarter and to

revenues comparable margins global of margin truck $X.X Truck from XXXX. a are and and in PACCAR of at record-setting quarterly first benefiting quarter and performance net than billion. $XXX last PACCAR of the quarterly million, the parts after PACCAR the net billion first quarter. in good $X.XX billion Parts X% revenues with the new to we $XXX continued and XXXX XXXX. the growth. XX% is pretax investments of $X.XX continued gross Other adjusted Parts models, quarter Parts PACCAR first higher record of to increased Parts in achieved income $X.XX in income of pleased million growth earned achieved is were year. This PACCAR's billion. income

are million. the achieving of $XXX comparable quarter XXXX. good pretax PACCAR of Financial These a quarter, to had fourth income results

Peterbilt quarter performing with Looking also at where in by is healthy continued same market segment. from The truckload Peterbilt infrastructure softer market strong consumer than Truckload this GDP spending. and less economy, well, XX.X%, to is Kenworth resilient vocational period year estimated sector Kenworth a leaders first the offset XX% remain and while are with The market investments. X.X% was the labor up a being year. in last and the the grow share U.S.

year's estimate in market of In U.S. the X to increased their to quarter to this markets, best-in-class Peterbilt share Canadian be XXX,XXX XX%. we XXX,XXX a Kenworth models and Class medium-duty range the first new combined Overall, and trucks.

In the XXXX to technology European market above customers XX-tonne year. in softer project of South DAF's XXX,XXX We market in market above truck expect this be and American the Europe, latest medium-duty truck expected year. to a range year's vehicles trucks. around units. The XXX,XXX be range XX-tonne with operating and the this efficiency. to best market provide trucks new to XXX,XXX are the to We be XXX,XXX of this economies premium XXX,XXX is

year, share In Brazil, is and first period the the highly to desired are customers America DAF PACCAR achieved a quarter. last a the expected joint Mississippi PACCAR's to of And of venture. announced factory is construction in this compared an last record the year. part hour of the gigawatt quarter in trucks third vehicle in XX.X% In and South commercial important region by success. located quarter begin DAF in growth same battery XX X.X%

and highlights. expanding services will Harrie provide financial Parts, Financial an commercial years industry-leading $XXX Schippers this Harrie? trucks, in parts PACCAR several PACCAR best-in-class business, and vehicle anticipates advanced strategy technology deliveries, future. the other company over next PACCAR's to to update excellent investing on truck now $XXX an batteries. million business the well PACCAR Services cost-efficient factory position million for create

the other price quarter to of and trucks outstanding in to XX% achieved be first range XX% truck deliveries around anticipate XX,XXX. parts XX.X%. sales the parts quarter. year's XX,XXX PACCAR during had with and performance. in We Preston. quarter the excellent quarter margins following first anticipate to strong PACCAR the an be to margins quarter by delivered and first last record Thanks, of second second second XX.X%. Pike of margins quarter to We X% grow gross And X% in estimate parts gross

Services XX has first the Financial customers. growth and PACCAR of of parts provides global convenience expanding increase its Parts excellent this benefits is all distribution phases uptime profitability reflects transportation in year. Parts' will PDCs vehicle a open excellent construction business distribution the of network cycle. from long-term PDC the investments quarter Germany, which worldwide, centers PACCAR with quality. benefited and strong new in PACCAR the solutions through or that Aftermarket in Parts portfolio for business PACCAR

million. Pretax quality, superb $XXX good return achieved was largest truck have and prices in income an its portfolio, quarter. PACCAR normalized. capital the of Used having With first XX% invested PACCAR industry-leading is year. Financial credit on another

to PACCAR to capital million battery engine Peterbilt, at systems We're innovation new million investing Brazil in to million and PACCAR in include investing and Petry expenses planning vehicle and electric Mexico, support a joint hydrogen assistance the connected combustion of These new Kenworth, also $XXX continue the in range DAF in advanced future Mississippi range and remanufacturing key diesel to PACCAR $XXX new the projects. is million and of expansions driver we're in XXXX, services. powertrains, in growth, we technology $XXX In investments $XXX invest in capacity in engines, as R&D venture. Europe. and also and facility manufacturing including clean Columbus,

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

question [Operator for Instructions] first JPMorgan. today from Zakaria Tami comes from Our

some quarter? second first that the is deliveries the on how think XX,XXX to second on about around. provide quarter, color deliveries in my for Can geography the question you So

comments? Harry, do you want to offer any

Sure.

be expect I I quarter. we changes. many spread very think, think the will similar big the Tammy. to geographies The don't over too first

some variation, more of rest less, the I course, North or at think Europe, of America, be similar pretty should close. the world levels,

Got it.

America, in how were channel? like seems quarter, of I do asked in comment suggest in inventory follow-up down first your looking quarter, the -- reason North the the industry my XX% retail the year-over-year in deliveries almost health that so was is you up the the but So some dealer the on can America data North like inventory sales vendors you in

that. do to Happy Sure.

First the off, inventory, at our little higher look if X you inventory us. than it's is than less of of Class when really bit a the in months it. X side industry

the inventories of One share. strong about vocational when to PACCAR's you think consider are market things

the service, time. you maybe takes that truck to X longer a means there's think If it into additional about vocational put fact months

increasing vocational inventory shape, our has our stronger the inventory. cadence is very market good overall, in market So a But is and increasing. share to natural

saw market we to So XQ XQ. share growth from

feels We we and pretty expect right a inventory. good. healthy build . of the have All that mix

Our Castillo Morgan . next of Andrew from question Stanley. comes

Congrats on quarter. a strong

wanted question. Just go to to the to back comment, prior your I guess,

the of quarter were strong if similar is the delivery rates. similar second deliveries quite quarter, of to first the second in Just of deliveries run North rating America at quarter in being positive level terms in very we kind assume

lowered So just the I for industry wanted bridge for the then America. of North full that guide to for shipments kind to

that it to at specific something us what Just half, second inventories a understand is can help the view first seems Is little otherwise of it and to half? bridge to be an more strong very change. industry the tend bit kind again, be good that So share? us level Is help modest? versus a you understand market

Yes, delve in sure, happy that. to

are margins the that duty that we're continuing share seeing, XXX, all, that reflecting think U.S. to increasing market both But our America. business of is that I demonstrate the is First is small a of higher, also adjustment Canada, adjustment we're a and in the structurally market heavy you're what is is a great midpoint our and medium is think, we PACCAR duty. stronger, and in in North

the And good about most we a PACCAR, good so we place is the very going feel we the about way about, it. market and which obviously feel is for know

But maybe of change? there broader perspective, was the that modest triggered a in just anything kind from particular industry

think heard want the to see comments. mentioned strong some said, so. do and And in at Truckload look we the LTL that market market our calls If you buying going and you continued their we of is cadence the the of fact think that's softness, in they cadence Yes, continue. having and on at we companies strong it already segment need the to vocational stay that public that some point, to and balanced I against

into that's market look the expect . So start head the would emission XXXX is positive then we why think good. XXXX. we cycle. to for 'XX we even as more 'XX And to and

like to and of least That's helpful. in help us just [indiscernible] order book pretty the fill industry you're just at XQ And where on rate, just books, kind us could just at of XQ seemed or you're it or data, you XQ, terms remind full. lastly, get then

are kind understand of rates us cadence the help at now. what Just those of

Yes.

nicely We quarter have the filling substantially second quarter, good into and in fill the markets through third now. full . all

comes next Robert Our Melius question Wertheimer Research. of from

or had guess, just because the market purchases? And from demand risen, be setup major is a factor Preston, is less of rates older have And sensitive you earlier that just to can it as vocational interest in with been rate trucks rising that sensitivity to a or seems rates I like the vagaries great new I stimulate or a historically, either where, are lower rates has been on question now. perceived used fleets. that to have your megaproject Fed. you not that right a comments, infrastructure interest of seeing

comments any risk. on you maybe that have just So

rate. Rob, the starting interest on

So lease make to of interest our customers. higher expensive more course, for trucks rates, of many

that efficiency new buying or the a [indiscernible] impact some and fuel mind today, year have comes to somewhere significant does with truck a it But So are replace please bear that new in customers better X X% also in truck there. range. X XX% they

course, those offsets our always lower like they payments. some of rates, of But higher customers do. that interest right, you're rate interest would So

not a total a business in say, interest what percentage percentage total pretty that saying, But we a also it of as at history for Harry's standpoint. are think in of it's the like And it's rates normal long-term and look just them, I from their significant. levels out

along economy expected, the good it with with economic a think moving we growth should be year. So nicely

Perfect. is seems I stronger. different on And you wonder stronger. mentioned It locational comment obviously it could a market. you then -- And if just

it infrastructure is comment that is if on wide the between that segment, that long-haul more bifurcation given any how is stuff. resilient Just the how and . big or the

you of or stacked Great It's over between about I at -- Peterbilt. up It's Sure. varies And us. body of perfect minus. exceptionally effectively Kenworth market. right it, a XX% not now. is the number, this through the it's vocational it full in roughly topic mean, XX% kind market market Backlog builders. for plus of is much the that Obviously, We're total strong year. have we think and for share but

So for continue that's well happen, that the you and year And we the going going it's to spending to infrastructure and of continuing Peterbilt to for just Kenworth the country, forward. at bodes think strong in and us. be for as balance and look the

of Our Volkmann next from question Jefferies. comes Steve

you is looking I pricing guess queue, the comment these we'll days? get detail how but just more in on can

Brice, do price? you want to share anything

Yes.

Our pricing much line costs, is that's with in very and higher, approximately X% Stephen.

Got improved as it. be some very here. would then early think will you know And price big thought 'XX? I prebuy Preston, increase 'XX a positive, said think there's I see that I we curious, down to you thinking more I'm coming or here. you that Are I wrote as 'XX start and

that out. Just about thoughts how your plays

Yes, I do.

that the for caveat kind 'XX say you. sensitive and think, is that for think will that that significant that trucks buying you I are strong begin. help the very figure years should I changes, when But and emissions of look everybody when run the initiation I question fact out at that and start future industry. is the be that being to point it would obviously, are trying people 'XX will and to those how the unknowable cycle is And

few are great and So trucks, for great only we're new a used right the the built. efficiency, they're now, in also They trucks is great at they're trucks but what best ever years. look trucks we not have producing we've

'XX good. 'XX think, and between spot, that strengthening So really all feels the I

from question Truist. is Cook Jamie next Our of

lower can the guess, commentary you, price that on to And the in truck guess, then Just the you line and quarters. the expected similar Steve's with in in deliveries in extinguish X aftermarket? said pricing but quarter. be I'm I curious versus answer between costs. on just to margins are that -- second truck quarter first, any question, your the first I like are second OE X% quarter Was to the remaining

So any color on that?

strong. very follow-up, guess, been have I Obviously, margins then And Preston.

I a to, just think moderate. new demand price, guess, share As cycle how margins view through give have we're versus the is introduction. you having market related structurally to improved step back going much to potentially and the starting the on Any on truck and your

structurally margin thinking wondering you're this improvement Just about how cycle.

of You bet, there, you. good James. There's questions to but a lot hear it's in

So I'd on say is X. side, with And truck cost the and X and prices cost side, X on to the is start X. price the versus Parts

a So kind the of there forward I that of in something into all, going maybe similar the look of kind through helps course the at of you year. margin expect questions on your margins. and range course, leads That

the fact for that we're systems a for second of company, great are a showing carriers a because team happy really truckload is looks parts the margins it PACCAR at performance strong Really proud shared and they're trucks, which that's are with quarter pleased the a is can doing. cycle. business stronger really delivered when these people bit with in One feels that the softer, we parts time like positive. of everyone. XX.X%, you business all of creating all our for how fact there's demonstrate XX% Really the great margin XX% we these with structurally we delivering excellent through The that margins things really And what going. the these

Gap] [Audio

get on of the So I to thoughts hoping the your cycle. was shape

year be Preston, I that think to mentioned 'XX. a you 'XX 'XX would better versus

needs do leave Just the what order want get think that capacity before in sense a then orders, And bottom you seeing you're for you an to you whether see market like confidence? to rebound? gives a

now, aged concerned inventory. it, what sector, They're stay cycle. if truckload I get want right seeing that on we're about to They want I you, Well, buying think with [indiscernible] buying is to people trucks. getting keep

normal is is like there when placed. And cycle is, sure need to out their It's that make what cycle. capacity continuing right very turn obviously. it and now, when orders there, does do their feels they're that normal they think healthy I thing get question a a to this

the the and now, X So months they from future trucks in Is now, now, and going they X what's it need. months make the need the conversations sure are that from interest their that to a that they like? acquired capital look year to from have

I product bit when good Got it. color strategy a the real That's get of time a there's just I'd change a know then did -- on some pretty you're And Europe job and regulation that. helpful. as little like pushing to your prebuy. new in are you guys introduced products that with

how of you're Just about like on next that. any the color on thinking years couple

On our product strategy? Let's share it.

First again, XXX a from There iconic that. they've things the in couple introduced an accomplished. truck, what model of to product on new shout all, is mention out the we like truck. I'd a a January, just team, to strategy at fantastic is new of Peterbilt One standpoint, which are a

It's in doing market. really well the

in experience and think more the coming powertrain continuing products to we're The of So handle strategies we're develop End new then medium really with We medium-duty a market changes the new exceptionally engines, I we so share that see introductions, America the are of to energy of very our will margin alternative year, last part product have forward grow. performance. about rollout gone new with to continued it's North at capable industry that capability if and continuing of doing frankly, XX.X%, products. broadly emissions to well. new duty the just new portfolio that XX% And trucks, strong are uncertainty, regulations.

comes So well handle it positioned forward like us. is very at that to feels PACCAR anything

that doing And year that this very XXXX. requirements their already nationwide, see in Preston, PACCAR year. may will a what I if similar emissions is that the add this we launch in is CARB will engine And we XXXX there, California meets

technology get we'll exactly So there. which -- we'll . apply know to

comes question David ISI. next Evercore Our from from Raso

to XX% deliveries curious be Europe. down the is The XX%. you're planning I'm around market looks first down about the year, for guide, your of the like half and midpoint it

the change didn't guide the for You industry.

understand level of inventory? these considerations to guide the your trying going out thoughts Or when you're your European to numbers. get lowering is wanted Just just clearing of through on, that delivery industry

get Just you that the market sense a of of trying how year. view to rest the

I'll and start say I that seen especially the would whatever true in think European has like and can I to. Europe, markets that's truck market Yes, Harry add Eastern and strong you'd softening, are Central for DAP. which

dialed So schedule. those around the into have appropriately the build we've we And seen delivery numbers delivery adjust that.

continues customers. economy fuel new this delivering DAF to pretty PACCAR the for our that great for new think with it's us margin for we important great truck product, performance, deliver is which thing So a

And the you'd down be would probably Harry? the and think continue seeing just that to May market we year. see of so expect the I that you're cadence throughout add,

we're also in record off quarter coming last year. a

record of First the quarter and the and fuel for so was truck. great lot what Europe, a XXXX DAF of Preston's quarter in about the that of new performance economy benefits talking

So bit are too, little there. difficult, more a comps getting the

does gets to Yes. deliveries quarter, ease should outlook in know Europe. I that mean trying expect And a year below the be quarter industry we the in the Again, easier. to then... I'm far of your fourth for comp of the fourth most just I too. sense get

I that David. would way, [indiscernible]

[indiscernible]

the and feels the with a us it's the share that XXX,XXX think U.S. positive would is schedule truck And us. thing to And to right solid remind I really Canada, delivery nice midpoint, seems at the PACCAR We've stable then I want very market for a again, increasing, market. now.

Yes.

down down? medium we're Canada the just for deliveries like to half is an X out be looking some second we're think we're I trying year, to first year, how does much what but are to do. X%, that's get sort Class of U.S.-Canada up of of we're if trying come sense to U.S. offset, like half industry figure just the as the build schedule the a And but of trying

quarter what Well, is we I shared now. think filling the third we're right

is you prognostication And of and much little of see but too be, truck looks the what be QX math watching year. margin intake happens. should performance to going everyone And bit think a I our half a a the it is else good. second a The is order so be like performance what should The good obviously, guess it's to says to year. year is the good good.

go, far can as up feel like as really it to we So story . all positive the outlook. adds

the given that market. vocational you favoring in Yes. . strength your At mix with least position the is

David, really for that up. another that's Thanks . brought you Yes, good point up. bringing

Our next question comes from Jerry Revich Goldman Sachs. from

This Clay Jerry. for on is

question the Our profile, thinking been the embedded . has what the the here is customers they're they next-generation to warranty? feedback what about early on trucks? And from extended do cost extent higher value how

It's Well, I to for paying lots what on speculation out other those to standards attention be the to than to aftertreatment. a speculation, the, and prices to there. I what are Nobody be obviously capabilities to requiring be. the emission just the to additional think and yet. going bit think, it's going they're early are There's new knows going of manage engines different know changes the aftertreatment

those, to any pay and with customers throughout So attention costs that. closely at the think years going time, to be there's I the

around to the in of steady kind as way think new kind emission of like avoid of already and a I orders also point the they'd of shared, we So of like disruption introduction cycle. kind they get their feel any

to going pull what's purchases, I the that's 'XX 'XX forward think. So and

of benefit installed XX provisions? the those trucks, as the warranty share lines parts base emission market the same your expanded grows, the will from trucks along And

Frankly, it simply, Yes, it will. will. yes,

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

been questions Congratulations on of A quarter. lot my a solid have asked.

truck want to I So ASP. down on drill

calculating new up that to I'm closer to up. pricing mentioned about X%. truck be ASP is You But

the the North difference sales, and the road are help So and is bridge the noted American understand mix sales related. over assuming you me much which down Can substantially. mostly versus this or X% between the versus in European could David that of how vocational versus, Raso help be say, me gap I'm X% is maybe more U.S.

trying the the understand difference numbers. to between Just X

opening Sure, also. Jeff. the Thanks comment for

at already are there. prices mix the high also think vocational factor. like I markets, is typically you truck contributing North say a if would You as Europe do to the is nailed you the America I . And it. that look between

Okay.

result think expect your be I for as of forward of wrong? carrying I reported I as kind So to would XXXX. up thinking mix than your average about year, a ASP through price probably more little Am the it increases a

That's a base those on assumption logical things. Yes. based all

Again, congratulations.

other you. are Thank There questions no time. at this

back to further the for hand So any team I'll management remarks.

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

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

disconnect. now may You