PACCAR Inc.

Good morning, and welcome to PACR's first quarter 2020 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 any objections, they should disconnect at this time. I would now like to introduce Mr. Ken Hastings, PACR's Director of Investor Relations. Mr. Hastings, please go ahead.

Good morning. We would like to welcome those listening by phone and those on the webcast. My name is Ken Hastings, PACR's Director of Investor Relations. And joining me this morning are Preston Fite, Chief Executive Officer, Harry Skippers, President and Chief Financial Officer, and Michael Barkley, Senior Vice President and Controller. As with prior conference calls, we ask that any members of the media on the line participate in a listen-only mode. Certain information presented today will be forward-looking and involve risks and uncertainties, including general economic and competitive conditions that may affect expected results. For additional information, please see our SEC filings and the investor relations page of PACCAR.com. I would now like to introduce Preston Feith.

Well, good morning, everyone. Harry Skippers and I will update you on our first quarter results and our business highlights. I'd like to begin by expressing my sincere thanks and appreciation to all PACCAR employees involved for their dedication, hard work, and their upbeat spirit as we tackle today's challenges and work towards a bright future. The trucking industry has been declared as an essential business. PACCAR employees, along with our dealers, are providing critical support to our customers who are delivering medical supplies, food, and essential services to our communities around the world. I also want to express my gratitude and thanks to the millions of men and women who are working hard to support those affected by the pandemic. I'm pleased to share that the Packard Foundation has donated $2 million to United Way and other organizations to help our communities. Over the next few weeks, we're beginning a gradual resumption of truck production at selected factories. The specific restart timing for each plant and office location is being aligned with government directives, implementation of our work and social distancing measures, parts availability from suppliers, and our business needs. During this gradual restart, our highest priority is on ensuring the health and safety of our employees and their families. Looking at our first quarter financial results, PACCAR achieved good revenues and net income. PACCAR's first quarter sales and financial services revenues were $5.2 billion, and first quarter net income was $359 million. PACCAR delivered 38,400 trucks during the first quarter. PACCAR parts achieved quarterly revenues of $999 million. Parts pre-tax profits were a record $215 million, 3% higher than the same period last year. Truck and parts gross margins were 12.3% in the first quarter. The first quarter results included $50 million in higher accruals for product support costs. Packer Financial achieved pre-tax income of $48 million. Doth Peterbilt and Kenworth delivered excellent heavy-duty market share in the first quarter. Kenworth and Peterbilt's U.S. and Canada market share increased to 30.4% compared to 30% for the full year of 2019. DOT's European market share increased to 16.7% in the first quarter compared to 16.2% last year. And in Brazil, in the above 40-ton segment... First quarter DOT market share increased to a record 8.7% compared to 6.1% last year. Fantastic work. Packard has steadily grown market share over the long term by delivering excellent value to our customers in terms of product quality, innovative technologies, and low total cost of ownership. The global macroeconomic environment is uncertain at this time. Therefore, we will not provide guidance on estimated 2020 truck industry market sizes, next quarter's truck deliveries and gross margins, and pack our parts revenues. Our employees are doing an excellent job managing through the pandemic. We are rigorously aligning costs to the changing market conditions, including reducing capital investment and research and development costs. As a result of the company's strong culture and discipline, We have achieved 81 consecutive years of profitability and have a bright future. Harry Skippers will now provide an update on Packard Parts, Packard Financial Services, and other business highlights. Harry? Thanks, Preston.