The operator introduces the PACCAR First Quarter 2024 Earnings Conference Call and the speakers, including the Director of Investor Relations and the CEO. The speakers discuss the company's excellent first quarter results and business highlights, thanking their employees for their contributions. They also mention the company's revenues and net income, which are comparable to the previous year. The gross margins for truck parts and other products were 19%.

PACCAR's margin is benefiting from investments in new truck models, good global performance, and continued growth in PACCAR Parts. The company's financial sector also had a good quarter. The U.S. economy is expected to grow, with a strong vocational sector and solid consumer spending. Kenworth and Peterbilt's market share has increased, and the Class 8 market is estimated to be between 250,000 to 290,000 trucks. The medium-duty market is expected to be around 100,000 units. In Europe, the truck market is softer, but DAF's premium new trucks are in high demand. The European above 16-ton market is projected to be between 260,000 to 300,000 trucks. In South America, the above 16-ton truck market is expected to be between 105,000 to 115,000 vehicles, with DAF achieving a record market share in Brazil. Overall, PACCAR's growth and success are also attributed to its presence in South America.

In the third quarter of last year, PACCAR announced a commercial vehicle battery joint venture and plans to invest $600 million to $900 million in a 21-gigawatt hour factory. PACCAR also achieved excellent truck deliveries, parts sales, and financial services in the first quarter and expects strong performance in the second quarter. PACCAR Parts is expanding its global distribution network and PACCAR Financial Services is experiencing good profitability due to its large portfolio and strong credit quality.

In the first quarter, PACCAR achieved an industry-leading return on invested capital and plans to invest in key technology and innovation projects, manufacturing capacity, and a new engine remanufacturing facility. They expect 2024 to be an excellent year and are now taking questions. In the following Q&A session, a question is asked about second quarter deliveries by geography, to which PACCAR responds that they expect similar levels to the first quarter. The question then shifts to the health of dealer inventory in North America, to which PACCAR responds that they do not expect significant changes from the first quarter and that dealer inventory is looking stable.

Harrie Schippers discusses PACCAR's inventory and market share in the Class 8 truck industry during a conference call with Tami Zakaria and Angel Castillo. He mentions the strong vocational market share and the natural cadence of increasing inventory in that sector. Schippers also mentions a positive first quarter and a similar level of deliveries expected in the second quarter, but explains the lowered industry shipment guidance for the second half. Preston Feight offers to provide more information on the topic.

The speaker discusses the adjustment of a mid-point of 270 in the North American market for PACCAR, stating that the company is demonstrating stronger margins and increasing market share in both heavy duty and medium duty vehicles. They attribute the modest change to the strong vocational and LTL markets, with the truckload segment experiencing some softness. They expect the market to remain strong in 2024 and improve in 2025 and 2026, leading up to the 2027 emission cycle. The speaker also mentions that the second quarter is substantially full and filling nicely into the third quarter in terms of order book fill rates.

Rob Wertheimer asks about the impact of rising interest rates on truck purchases and the sensitivity of vocational trucks to interest rates. Harrie Schippers explains that higher interest rates make trucks more expensive to lease, but the fuel efficiency of new trucks offsets some of the cost. Preston Feight adds that interest rates are at normal levels and the economy is expected to grow, making it a good year. They also discuss the strength of the vocational market compared to long-haul, with Preston noting that vocational is a great topic for them.

Preston Feight, CEO of PACCAR, discusses the company's strong market share in the vocational market and the backlog of orders for Kenworth and Peterbilt trucks. He also mentions the positive impact of infrastructure spending on the company's sales. Brice Poplawski, CFO, shares that pricing is up 3% in line with costs. Feight predicts that 2025 and 2026 will be improved years for the industry, potentially due to a pre-buy before the 2027 emissions changes. The exact timing and significance of this pre-buy is uncertain.

The company is producing the best trucks they have ever built, which are efficient and will hold their value well. The market is expected to strengthen in 2025 and 2026. The company's margins have been strong, and they expect prices and costs to remain in line in the coming quarters. There is uncertainty about how margins will be affected as demand moderates, but the company is confident in their structural margin improvement this cycle.

PACCAR is proud of their people for creating great trucks and parts business systems, leading to strong margins even during a softer truckload market. They are confident in the company's performance through all parts of the business cycle and expect 2025-2026 to be a better year than 2024. They are seeing a bottom in orders and believe there is still capacity in the market, with truckload carriers wanting to stay on a buying cycle. Customers are interested in the future and when they need to acquire capital and trucks.

Chad Dillard asks for color on PACCAR's product strategy for the next few years, referencing their success in Europe with introducing new products during a regulation change. Preston Feight praises the team's accomplishments and mentions the recent introduction of the new model 589 at Peterbilt. He also highlights the success of their medium-duty products in North America and their efforts to develop new trucks, engines, and alternative energy capabilities to handle emissions changes. Harrie Schippers adds that they will be launching a PACCAR engine in California this year to meet emissions requirements.

David Raso asks about PACCAR's plans for Europe in the first half of the year, as they are expecting a 31% decrease in deliveries compared to the industry's 18% decrease. Preston Feight explains that the European truck market has softened, particularly in Central and Eastern Europe, and they have adjusted their delivery schedule accordingly. He also mentions the success of their new DAF truck in terms of margin and fuel economy. Harrie Schippers adds that the comparison is also affected by the record quarter in the first quarter of 2023. David Raso asks if deliveries will remain below the industry outlook for the rest of the year, but Preston Feight clarifies that it should not be interpreted that way.

During a conference call, Preston Feight, a representative from a truck manufacturing company, discusses the delivery schedule for the U.S. and Canada, stating that it looks solid and stable. He also mentions that the market for trucks is expected to be positive for the company, with good order intake and performance. Another positive factor is the company's focus on vocational trucks, which is a strong market for them. A question is raised about the higher cost of the next generation trucks and how customers are responding to it, to which Feight does not give a specific answer.

Preston Feight discusses the speculation surrounding the new prices for trucks due to upcoming emission standards. Customers are paying close attention to these changes and are trying to place their orders in a steady manner to avoid any disruptions. As the number of trucks with the new emission standards grows, the company's parts market share will benefit from expanded warranty provisions. When asked about the increase in truck ASP, Feight explains that the 3% increase in new truck pricing is mostly due to mix, with some being more vocational in the U.S. and others in Europe.

During a Q&A session, Jeff Kauffman asks about the potential impact of mix on PACCAR's average reported ASP for the year. Harrie Schippers confirms that mix is a contributing factor and it is a logical assumption that the average reported ASP will be higher due to mix carrying through 2024. The management team thanks everyone for joining the call.

This summary was generated with AI and may contain some inaccuracies.