PACCAR (PCAR) 22 Oct 242024 Q3 Earnings call transcript

Good morning, and welcome to PACCAR's Third Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Today's call is being recorded.

[Operator Instructions]

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

joining welcome Good Vice and webcast. phone by Executive would Officer; Relations. My Feight, President Controller. are to Officer; morning. like those and And Investor and of Chief is Harry Hastings, listening this Chief President Ken morning Preston We name Director me and those Financial Skippers, on the Poplawski, Brice

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

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

now Feight. introduce Preston like would to I

you business solutions excellent the industry-leading on revenues billion return were and trucks customers to year's on financial billion pretax the of results next Thanks, after-tax million $XXX million. quarter wonderful of XXX,XXX I'd and Parts third thanking income trucks and to We highlights. on quarter and range in our in U.S. $XXX Class XXX,XXX transportation year $X.X pretax to Financial of and strong $XXX Ken Good PACCAR Ken. earned XXX,XXX profits everyone. update to Canadian vehicles. around to be X% the XX.X%. Harry, third other an revenues morning, increased to this to market third PACCAR's for quarter. revenue $X.XX PACCAR estimate be X million high-quality of employees Brice, world. PACCAR's a our start like deliver PACCAR by earned around will and all I

is XX.X% than the The to have expected market and with XX.X% remain The is Kenworth share seems continued a Peterbilt increased and The combined while Peterbilt's Peterbilt infrastructure segment market healthy to medium-duty vocational truckload Class increased to Kenworth year are less market their and X is of to year. Kenworth first X XX.X%. months leaders strong where and performing the months. is segment, and compared X.X share this from last stabilized. Peterbilt strong to investments. in truckload has well the dealer Kenworth inventory XX.X%

this the XXXX systems Europe, around month, The is which assistance lineup new XXXX of Show in improved Last estimated the vehicles. and trucks. economy segment registrations are expected year's in X% In truck XXX,XXX DAF be its to the at XXX,XXX safety. by IAA introduced enhance of to XX-tonne Germany, trucks Truck market to advanced fuel above be use industry in range driver to XXX,XXX

feature customers to year in well vehicles are which PACCAR's excellent and year. for of projected The truck premium performing connected great to American the XXX,XXX next its about lineup and transportation similar trucks Brazilian South our to XXXX the PACCAR's to a in especially in market. and future. excited trucks XX-tonne this important bring the we XXX,XXX are addition, PACCAR trucks range range value is customers, solutions are South delivering and America in dealers solutions, a In above be of the market customer.

Harry? an provide business PACCAR update now will on Harry Services Parts, other and you. Thank highlights. PACCAR Financial

Thanks, Preston. PACCAR trucks quarter. third during delivered XX,XXX the

sales expanding is quarterly to quarter aftersales gross production will growth smaller same focused to fewer quarter. PACCAR More and on Parts margins in around America PACCAR a Europe to period vehicles. is the its be the Parts X% Parts and and some are around by We transportation compared expect normal providing in a expected solutions limitations. base range days market. customer grew in X% offset to full sales delivered year grow supplier-related of fourth last delivering fourth of deliveries days production quarter XX.X%. XX,XXX by North due be and holidays third

margins distribution center or number parts next important new new a market. other opened from of the parts just the range PACCAR customers excellent and benefiting results dealer quarter XX.X% XX.X% Parts Services the PACCAR increases XX%. We Financial quality. were in portfolio center $XXX German of in the in receiving third to gross gross income be same Germany. third in the to quarter the This day distribution anticipate million. was benefited quarter. Truck fourth from [indiscernible], on Pretax in margins

provide strong months normalized flow. first the leader in soft to while on The of this is in was $X.X an projected used innovative market capital supporting of technologies in remaining application truck market $XXX loan million. year. customers are be expenditures generated year million net income between PACCAR's and billion excellent to servicing a and $XXX this a return million and billion PACCAR operating expenses year's X the months first of in capital $XXX $XXX research invested processes. Financial development that has and be X America, seamless Europe. million credit with PACCAR's will North in $X.X cash XX% This

will invest million $XXX in capital $XXX the million and and research estimate company projects. we $XXX development year, Next projects in to to $XXX million million

would the manufacturing Australia. supporting in for as growth advanced the well you. PACCAR's performance business manufacturing position all phases PACCAR investments Mexico, of Europe, parts as our These premium truck and Thank pleased lineup, capacity industry-leading efficient answer at investments financial States, technologies capacity, our its success, of best-in-class are continues factories expand in and customers' the United to company continued Brazil your PACCAR's be questions. I and cycle. to services development businesses in

Instructions] [Operator

Our of with Volkmann first question Steve line the comes Jefferies. from

on I of fourth you of we're a the what you're for the seeing curious we through pricing wait need get we if kind little can preview in us talk bit normally and to how to of a in that I'm if flow give quarter But sense side? Q you're to well? a expecting quick that. can as the know what about pricing seeing

Sure.

X%. If think up was of price cost, price costs you about and QX in were kind it's flat

the about on think that I truck So side. when

truckload location to remain forward then think we but be that we sector you strong. in have about does seems to the the its is the well going think We still doing is seem market look in If it stabilized. truckload how pressure, addition. think less to market at that, feeling And really

And see to price of next coming months that which be cost starting as will the signs look versus in we're next over and maybe good of year, kind of could tension release into so us terms we year. for

curious, that, is usually like think with maybe about Okay. little which answer for rate to of Or sort to one market globally you'll that could fourth that Good. But XX.X% Maybe I'm is follow-up, flattish year, the that of a that base you're good of my quarter or sort starts for do. run you other? a market to something forecast next XXXX? your way share gain is that of bit gross there XX% margin, overall, move

sectors. a think right, tougher I the this does to it's then starting I exceptionally but we're bit truckload of road know XXXX sector, Maybe exactly, all like think you'd and for there, if feel stabilization that, year is I strong it while little from a mere where the that, don't going little timing see the what's what you accelerates, for in in finishing year, the that's and truckload a I see year like just image where it expect starts significant. go started had the may on look to be think hope here. And at a have carriers to

to would we see so the growth year. And some over expect coming

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

follow-up So I just a guess question. on that

you anything of down Is you flat, a should in historically, Price there otherwise still really in at at but sequential gross really If sequentially. was that gross look margin, costs and be very said, bit. out kind the creep called up levels, healthy year-over-year move margin? little

out would different that I that. there's don't for think anything I call

the good The just we've that's trucks the is economy done well. for really is thing high the the for the is the mean desire over the is few how introductions I years are think right now. stunning very outstanding, customer outstanding, it's trucks have as us fuel reliability I past -- product great

as see opens I have desire that we'll trucks think people's So those market what up. the is to

good before. I've and give -- has Is has then All you at a right. guys I'm margin that product all lot tailwind but it different a you'll let's a are there. not that it's pretty for you this leaders a vocational. mean variability answer you sure is real asked in Perfect. now, say, your it, differentiation to And me into I more year? next

Yes. to is. It's positive a it I and very yes, would good a Rob, point, make. that's say statement

now we I inventory mentioned. of is our very things as the trucks think in of body right builders our is inventory right good we at that are now. half is at Over look vocational shape, one that

good is that is like with for we inventory. So strong. inventory We business. well our vocational And know feel that feel overall we our positioned then

then I And vocational I'll up can be stop year? there. And next apologize.

continue will run to next I strong year. vocational think

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

out? you have needing sort pressure take And make? is your cycle? the as inventory can the point are Do in think characterize mentioned And just inventory you're kind some this targets You what guess of they what is to months. your And inventory for X.X seeing about price you relative months that that you into in competitors of where reductions that that to X.X to market? there's perspective? talk I that curious is putting healthy you'd ideal at from

months. inventory inventory the feel our especially Well, very us, takes a Rob, to But very vocational that I'll chunk that. a fact healthy for mentioned, as of position, That's our at let them talk positions. about good X.X their inventory up for we level I

levels So positioned. with we and being feel rates our comfortable inventory our quite well build

during we're down X.X bit come a X.X the we months. months even end it's And were currently and quarter. the June, little at At at of

do the And Or of year. some in second the sort also some the recovering it it you of reacceleration just Is and prebuy freight in the 'XX, concept then of of at a 'XX think kick you at the in and start in if will timing this the about a does you just to time it's degree closer all market? potential thinking? are it just prebuy point? Is half to mentioned Okay. freight the your How frame? that take thinking about it what more getting that? thinking, market kind is improvement actually require of Or

improvement going some market. see the we're in think freight to I

say. buying think I will Some started as gotten several people for of think sure something lead they're to the older, it, in also have that I is people, be the be you making trucks anticipated, would years. the there trucks and about that's carriers interested enough will which been market, there have next

think, that's So we take through growth. an and add effect, to go to XXXX's as I going XXXX

comes Zakaria of the Next Tami question with from JPMorgan. line

on is question first my So Europe.

expectation. at think are X% sales outlook down And midpoint your for your than year, it's So retail deliveries the for year, sales. down the more next I this retail

year, to next how about think do you we think even year? delivering next as do underproduce you plan Or next expect year? in we about So production to on demand? So Europe should

a European Ukraine and economy where more [indiscernible] than strong slower and year. been volumes down by a parts the Eastern war than market has bit this in Tami, But market in in been little the Europe. of affected Europe is Central some lot more there have really the is the other

we to expect continue and at more as during see year enter next we'll things then pace We that it the progresses year. or how less

new job said, what the the is a Europe great great with other Harry price I thing discipline on has team think Exactly the done in trucks.

demand those next so too, combined things well think Europe, is year. positioned we that to in And feel pretty will we I build two

And helpful. back Got pricing, you second this think very I quarter. it. That flattish question, is my said to going

get seeing Just you're for any did to next order for next so, open you books pricing a If of year? on reads trying sense what year?

thinking the We fleets that their purchases conversations about lot so purchases. bunch trucks is not normal want next an did order show, of so and kind the great and a closing with had Sure, Tami. to with recall it's of year. you a customers the I binary for books, recent cadence have them, the we if of enthusiasm a of obviously, at opening engagement of but expectation mean, ATA significant

in, tension feel also all they're like some into I but of I some relief we the as relieve -- the find because they're XXXX. going world now, think to puts it right price/cost that's go condition obviously into

Angel from Stanley. comes question Morgan next with The Castillo

cost to conversation, particular, wanted the price go back just the to Just margin understanding dynamics. in

normal. margin your seems total But maybe and implies price came in things expectations units XX.X% the over that ahead just the pretax of third as of relatively for on on all of a XX%, So to basis be considered. stable, kind I quarter kind above think of it decrementals of the levels you

leading what's for that's help typically kind it's the of margin to the So surprised you And higher anything question then was degradation, kind of upside causing price have line bridge us of than of similar kind XQ in there would kind of to that or like contraction? terms of decrementals not the gap, expected.

know, take swing? to don't want you I a Harry,

Yes.

mostly think we operating where was side any elements. I cost you the at the maybe quarter other cost to something? supplier some what in costs a point ago saw if cost at side point There were to difference with want or some the some we be would issues time, difference had that

lower yes. volumes, Also

But at I and given are think sitting. it cycle the that, these when like this we pretty of point ourselves at thing, levels in see healthy the we're for and looking looking we're feels this totality us, where

pretty feels good. it So

parts profitability. then And similar it. maybe a dynamic the Got or around just conversation a

or kind talking you for stable, as of into like seeing an that it's it profitability, in in the to relatively last you see of stepped nicely a as about terms bit XQ. that remain think XQ up Just just seems quarter. what -- XXXX, terms of guess, in about business we the of go that we was were as it we're do there I softness area little But

of what's ongoing kind there? So trends the just

talked the macro teams is that tremendous margins aftersales quarter. Parts this holding a to think and market year our I market seeing in job have of as a there's growth in the and done growth thing right overall X% right, about think fact, smaller smaller market excellent this that in about we now

more be they're the bringing and to work all opening with grow how business. in, PTCs closely the the the couldn't they're So doing, they're with they're happy systems working that I'm new customers

a So for great story team. there Parts the

comes Cook Securities. question from Jamie Truist The with next

would follow the would you like on I Parts question was to X%. of of that you there's you some you then your And guess said any major just everyone truck, other off and be for Sorry, truck, more are there that be, did thesis act comment price helpful. this price aftermarket. sort rational Can companies. Was cost think variances what as been up about my up flat cost this as region peers public by would spun now specifically cycle

versus you're seeing previous how sort on comment any Just cycle cycles? behavior of this

other Parts. Parts, up was starting up with in about? question and X% X% was And costs So Jamie, for was price quarter. your the

feel a do about position think public, our having in being relationship good a of the of desire and I puts like PACCAR's products -- so people the a of team the the competitive has has it all OEMs in but world, close think really we if noted that premium with advantage the as you disciplines beginning customers the other and us listen, commentary. it's

because performance performance the customers, We have for expect continue. will our best-in-class our that of products we and of

the get outlook a follow-up sounds just half Preston, for back understanding guess the it XXXX, your of things I like should question, and year. in better

to to above-average given product believe incremental sort margins recent cetera? As any reason you XXXX. and prior of there we this cannot a progress et mini-downturn, of PACCAR most did new ahead through like the just the prebuy we cycle, Is introductions, get deliver

like to it. Yes. question, deliver a you it's performance we it, No, excellent way a Jamie, way the great in I frame the great think years. coming frame can I

I agree So you. with

next David from Evercore question ISI. comes Raso The with

a little I one, maybe have bit longer one term. short-term

the in the XX,XXX, that, up. geographic the step mean up with -- saying Europe, sorry, and a mix won't quarter, just historically, XX flattish we be in I Europe about obviously, will the and Europe, the I'm ]. get extra get XX U.S./Canada I trying flattish [ deliveries composition On for to sequentially, margins. to fourth geographic so days we that's down the build when think thoughtful even the the of of us step other maybe the Are about is sort is

you're think I [indiscernible] not that. off on

going hurricanes -- expect is -- through, relatively of Europe for And couple a see very the in that the cadence. I position some for see we've our slightly in came to obviously, what a then that there. think that I and inventory normal would gotten going then to did And the affect we're U.S. XQ up which we're even holiday suppliers. there we're XQ a is to and flattish it's good maybe Again,

And great it's of right so Supply something with through we kind base doing out, sorting we're working that just as is them. a now that sort out and job team. of a

trucks Yes. On provides fourth Europe it -- Europe is in couple But the the per-day days, more I production of the basis, to flattish thousand into more quarter. third the think a going fourth compared quarter. in a quarter

down trying to I'm the thing. a that the America, down the of a bit. If North just company XX% to out, sorry, could whole get Well, keep a because to just is figure it's Canada sense margin magnitude XX. more the couple trying whole thousand pressure explain of I'm U.S. to that's sequentially. little

Not XX, fewer but in X that's in America. quarter X fourth or it, what working is days North the

That's And supply. I'm ahead, of sorry, Preston. the the Okay. then go helpful. on issue

ahead. go No,

moving prebuy. Well, be in their of to where on engine I the could 'XX major maybe just their you question pulling had could the 'XX. for earlier buying which supplier second about was engine actually I some inspire engine A

the enlighten 'XX. wanted us out, could just is if I which if playing at on maybe So And on help what's vocational. second, all, then that that inventory see for to you'd

You body a continue mentioned the who to builders be bottleneck.

have grow to impediment little there, that is break with occasional a there more there bit? off sitting sitting to to of And body So the does the trucks a lead they're on vocational business through in out going for you a 'XX. being level an the customer, builder not, your builders. if of able builder something waiting of sort body job. bottleneck the finish I can Is argue, body just occasional inventory the the

Yes.

this the is was you've there think And a at think I level. that throughout what XXXX I vocational impulse seen high maybe market. that's in stabilized

I job the up a been and and body what think doing So catching builder of job, is. people a are is has good capacity

So and now, some it. some trucks of they're like, there's getting sorted vocational those on in what components that out sets on throttle tight David. Obviously, unique it feels which some that are right are is supply

continue think infrastructure the means There's country vocational I The spending. doing well. is All strong will together that sector. still XXXX of that in

we remain know, would I have share market so as you XX% for sector. a us. vocational expect to right, over strong And And point in that well

will PACCAR for that be in So 'XX. good

question, around our have We great a engines. Cummins. back to first relationship your coming we with And build own

well as standards out. are today's and We standards the play feel for products to emission positioned like going upcoming we'll the how be emission have any our offer right as markets and don't well upcoming that's about to for concerns customers the able

Our next with question comes from Goldman Sachs. Jerry Revich

see supply if you we wondering was the think current basis? point in through truck tight trucks cost materials that steel potentially particular, now of down? really coming if curve on costs be the door the you are could just cost And about to When price holds could 'XX side, do the I'm in think truck some on tailwind cost based I'm we factories. wondering year-over-year your you a could on been teams at actually and cost crew do when have at talk early get the sprinting hard flowing per looking out

a Jerry, say I'd possibility. it's

by look that written that as there's base here at bit you a including a been that's too year-over-year much supply is the a think about. which factors labor of little industry whole, incurred something our I basis, on into

the I X other those coming X interplay have watch So things with we'll each months. in think how to just

the And the quarter? in folks product. the that? earlier compared does this large step the about you You of driven conversation, what folks to mix of left look shipped How down backlog Can terms been you talk mentioned what has of the what in mix mix margin have of the you have in then backlog. we

Yes. is ratios truck tractor still production around running really of XX%. We production. same still see versus strong the Truck

but a number, that's good above historical So us. numbers for very

fee margin into make will Any profitability range versus folks you truck cycle going versus trough, X,XXX And past, on improved the forward? gross trough. history? variable comments truck fixed the you your How to profile that margins margins from to significantly think care to you cycle. XXX seen folks cyclicality higher now have on to do that the we've peak cost that you over translate have point truck basis question. What's impact In

Jerry. Sure,

think part. I your a great on observation it's

I see a we at company the level. think is that performing structurally what is stronger

to mean provide I think because they drivers. money I investments our are and and the helping desired make our by the excellent great of efforts products for really that's team the are they of customers. customers the

that's a in. position So be nice to

PACCAR's our company think customers being and and lean and and I for our operating culture the a our company terms shareholders. healthy lean disciplines for of good good for for operating are performance, operating good good in us

and So in think hold observation observation will the you're right that that, making we true.

some you incremental lastly, you're increases California. cost about especially some running if versus since you expect. small And are expecting. and expectations, talk in pretty seeing us competitors of what Okay. I'm about are you and wondering on in already your talking EPA of could most what just your up XXXX Can weigh on

Yes, sure.

a to of I that you first the engine even as observed said have we do we're the certified First that. California manufacturer in all, fact

conditions we well that the any regulatory for we're encounter. positioned of So

XX,XXX agencies point Our the but to for the framing now, change, depends cost XXXX. we in at the regulatory right thoughts like it be could look on XX,XXX the subject to feels is that range do, what right is

not will also with well. it's cost, cost warranties EPA in an have level material as kick Jerry, in -- only about an effect on And mind, that extended the bear That the we impact it's 'XX.

next question Raymond Thein from Our comes Tim with James.

you that months. are about. with order customers the and we just seems, you. for and of you these of coming of election of as and the think your agree range regulatory respect of would you may having kind if in progression outcomes in truck Preston the kind as -- team uncertainty come about this. lived But truckload terms conversations of and to I'm just one, know this the go First and with through that cycles It political time. don't Maybe And that curious the I kind with obviously, lots over you've

you do there's is election, seem and just I'm but little kind a a greater. of around always standpoint anyway, notion from there's of see year our more this think maybe it bit curious, there's does -- wait this the like

that curious, more can it's you I'm share you potential order thought? as if we into delayed fair would And there's 'XX. So look so, think maybe of a for a cadence that

I customers, it's have think that and observations our trucks know in because in. their that some about be really clearly good conversations a those And operating I smart to we cycle for their economic think as their they're to there they very steadiness operating think that conditions of buying models. needs they

so And truck capital wanted for while just based on the able reluctant to to purchases be last side the upon they truckload been rates. the they've probably make little

when And their change, hopeful those of I election more far probably that, what rates is kind important will cadence think about. they're they to increase anything of think that's I than thinking they're that's buys. then change. I going like And the that think And

Got it.

you is bit may some deliveries North that seems to fourth on XQ? had duty. And in perspective Is out think relative just a from Okay. there there any is in with a quarter? in the as not third-party call quarter, enough -- XQ that maybe to mix occur to Or you -- terms it normalization is of heavier heavy to a America duty respect the that the then from medium third in data of little

talking Harry, you never about one.[indiscernible]. -- you talk that were

Yes.

a higher extent. the were So quarter medium-duty related up some was little in volumes third some to bit catch

mix in fourth we So we normal like bird used more quarter, see. a the expect than heavy to medium

Got it.

perspective not would the in several is aren't improvement Harry, assume, the that from I medium-duty given ago, have been implications that they years just And a Okay. what profit there's fair? side,

heavies. on Beauty our well margins with products are the line Media in The

Nice observation, Tim.

percentage, the similar. but smaller is very percentage a the As trucks,

with Kyle Citi. Our question next comes from Menges

market could market just next was the in especially curious year? next flat we a on we interpret the RMB year, guidance be you for R&D in -- guys guide given up global kind I to how just step-up next slightly year, for market for of

we're truck projects took this we a and over like Well, electronics is or to the about a of X level R&D the new if XXX. the took where change. powertrain not that. will about and at then And this the all our year little if R&D XXX you if you then work something midpoint or [ or ] for It's you important you way think the they midpoint of or be think things when at a we make that more systems on connectivity big customers, good on, investment And profitable we investments. right or have is that for make those trucks said

in thinking more Got about it. market to And market year then related North should next I year But strong thoughts the Class medium-duty know vocational be talked next you've about America? a into X. just any on we how

healthy we medium-duty year America well. think again as in North a should see market next I

overall, year. is probably a -- the way market say good it's of I there kind think right into you But that vocational of Kyle. sits been to And just a market portion good it as indicated be good there's this remain should some it, the is, market.

Our Chad comes Bernstein. next from question Dillard with

on a you truck -- so America just question what your you're guide. just on I a for embedding had for question 'XX you for North

think split tractor. versus the between to trying Just vocaitonal through

the 'XX. Is XX% little into provision price than that was then go will or prebuy a think same of mentioned 'XX. I reverse mentioned embedded? you the in cost that think you And higher I truck about bit

probably that fair TP and fourth the to trough is it margins? quarter gross for is So say the

think a pickup next as started then said, around tension. there's we keep throughout the in to remains into continue tracked we're I think year that, buy through carriers probably get and truckload when should effect, age, have still for at their the what purchases the where right as what go a a that really truck this see. we'll see going little we'll so increase market expect the truckload year we're in into towards finishing strong how a that at we year. truckload strong, And trucks, to see we as that but are position, is as we'll as want they're sector might feeling a Timing move XXXX, mentioned. point we tractor in you the now, But starts that fleets bit I so to some year. the to next See takes year and we the heavier seeing vocation

Got it.

And for a the Okay. you finco business. second then question on

and seem Just big borrowing expenses, that specifically, through we in end do going more like and evolves. pretty that how trying just there's about year a should the to into step and And the how 'XX? other the looking like interest think up just of at

finance company continues performance. to show The strong

We mainly [ portfolio losses, this A little customers, cycle. point but the a that's B a seen ] credit healthy at remain in very have and of low, dues normal as

see performance are as rates, we interest get hedged So into year, next to we'll company time there. we the continue strong of finance

issue we the notes with So medium-term financing and contracts offer. the that leases line in we

don't of we So have a exposure there. lot

little our and I'd bit where have nicely at less is to in growing that banks are because times, we're seeing now this is And portfolio, a a Brice. market the portfolio just out very like we the add competition. right getting

in the continued is Our up actually performance here. market expect strong we here our quarter, in share nicely business and

Research comes Partners. next with Vertical Jeff The question Kauffman from

North be going this in I seeing America on would specs about I the talk about the and and of bit ASP. a change for might term a Does trucks to terms the want -- near that how the South American bit Europe. to that you're at in congratulations. all little little affect growth exceeding what and is talk

[indiscernible] is market Brazil, really participating is we're you truck using South about which largest the that we're to If the think that truck America, there. it specific the in in, is

that Europe. And effectively same together as truck we So of is operating kind have XxXs, the in to certain -- in truck applications. kind more more put get for and of sugarcane applications, conditions, specs we where operating hauling lumber had them, different they're

So in slight truck. bit European it's think selling a bit heavier higher to price so is about of a a maybe like general, them I But duty, there? the tend

little faster affecting than How where work then 'XX? is at through maybe Okay. vocational our LTL might we as be international. in as a and truckload we And transition to point a market some ASP growing way XXXX that

into And to that, me. out it I too nuance to figure was put energy the wouldn't much if trying

wouldn't that a maybe parse standard think XxX think expensive but you a I that is I vocational content try tractor, truck together. probably obviously a high that to than could more

probably in prices than higher a trucks on-highway. would see in bigger vocational range for That's for our you

the Yes. out a to that, locational about hard have and you segment, you'd thinking suss keep the medium-duty I thing kind there. And in if then participation think of you start

was context that's for I fine. enough. Fair just some looking and

question. one that's So my

from comes America. Bank with question next Feniger of Marcel Our

facilities. it You facilities? investing these XX%? what Is the And this curious some in in is do in this on could can I'm market? capacity? guys been XX% Or bring of available serve the of you this if it in have guys a to is business than more previously? you trucks, Is just really half much that to XX% more capacity your your raise U.S. ramp? higher in you the more can capacity second XXXX Is we in guys how XXXX see that

capital to markets right? our be past investments the factories, where that's thing not we're growth. thanks that thing, will over with in doing hear. we the noted, of we doing new in Mike, are The nice few as a years expenditures, and our making We've They're the been anticipation as for in comments. the

capacity those complete, of in others some and are underway. are So investments

need So coming we we the the have the all markets capacity for in years.

constrained, not do we be anticipate will We capacity and growth.

positive. So that feels really

just, last guess, then And I question. Helpful. the Okay.

little a between spread for that you bit say, a let's used what new that guys hoping used curious price of the anything seeing versus kind the the if about you're I'm America, of seeing XXXX market. kind in the normalization in flesh a truck, weaker in I was out. And Is talked guys Europe. market are normal? is little you You now, wider a right truck in curious Just spread than there a usual? for of if it North

normal. more truck normalizes, spread used the As that becomes market also

space market trucks of us expect we about to what as it, prices the the in new to look like found And good pretty think terms were market in in said, used will seen said, that I trucks I outlook. think in we the have to And we I XXXX. right is would If XXXX improve also think their used now. we've truck

used. So it between and not they're together, big staying separation like feels a right? new There's

truck inventory America, very is healthy looking just very, levels in used North position at our And that us. at for inventory

we'll to us gives able that levels that be So confidence there. operate at good

was -- just and helpful That the to last one in. squeeze

curious of the the on next parts for up year Just of Like takes guys grow how you or can might would for seeing do think Parts. call that last what for been next go we -- if curious out I'm have and there's away kind guys if if that this normalize you than X%, think year margin profit you more the year? and on parts are on about that's puts anything Just the X%? 'XX. weighed parts

fun question, good to a It's think about.

in a in is XXXX. I overall our as comments, market we right, think noted smaller there aftersales

but team number So parts in down that has gone that of purely has sold, parts the overall are business the being even the grown environment.

up as the for business for market should picks tailwind overall good after-sales the freight think that I and a with So increased be will be us. activity,

question next Scott comes Research. Wolfe from with Our Group

I the of some -- to the up follow margin just on commentary. want gross

we first then year-over-year the gross now? was improve a So purely that be a sequential pressured that year-over-year are just where I'm comment? in year. Meaning, margin would half we sequential in a got pressure do that a first you next half further was second comment from half Or comment? wondering, or the and see

than there. heard we said Yes, more Scott, you even might have

how think the be I edge to course to like play does know actually can't we I through it But see what feel specific said so XXXX. we of as of feel will it mirror a will that's this we was off. year. be like improvement going

half the But quarter fourth we out. likely they're to as in specifics in inverted here, in be 'XX saw the the first hard get third, -- the into will we that, normalization So then detail XXXX. strength of will be the and

to out for gross if ultimately, figure I that bottom margin? think you trying I'm mean, Yes. this QX is the

Yes.

think that. aren't your intuitions off. understand far And I think I I

Okay.

share any bit price? year? year are balancing little market how Okay. And you on then growth that on or thinking just terms in sort market a How the approaching focused more about of of for you're lastly, next thoughts next

like like company to see see for ourselves of we'll Well, to we as pursuing share and perform our well those both a market be shareholders, we growth next year.

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

for I'd you, like the thank to Emily. thank and call, everyone joining

and now may today. you, call, us concludes This Thank disconnect. you joining for everyone, our