PACCAR Inc.

Good morning and welcome to PACR's fourth quarter 2020 earnings conference call. All lines will be in the 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, 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 on the Investor Relations page of Packard.com. I would now like to introduce Preston Feith. Hey, good morning, everyone.

Harry Skippers, Michael Barkley, and I will update you on our good fourth quarter and full year 2020 results, as well as provide you an update on other business highlights. First, I really appreciate our outstanding PACCAR employees around the world. Their focus on safety and health throughout the pandemic continues to be outstanding as they deliver the highest quality trucks and transportation solutions to our customers. In 2020, PACCAR achieved annual revenues of $18.7 billion and good net income of $1.3 billion. PACCAR's performance benefited from a recovery in truck demand to normal levels in the second half of the year, and strong performance from our trucks, parts, and financial services divisions. PACCAR has achieved 82 consecutive years of net income. The company has paid a dividend every year since 1941 and has delivered annual dividends of approximately half of net income for many years. In 2020, PACCAR declared dividends of $1.98 per share. Packard's fourth quarter revenues were $5.6 billion and fourth quarter net income increased to $406 million. Packard parts achieved fourth quarter revenues of $1.7 billion and record pre-tax profits of $223 million, which was an 8% increase compared to the same period last year. Packard delivered 40,700 trucks during the fourth quarter compared to 36,000 in the third quarter. In the first quarter of 2021, we expect deliveries to be 10% higher than the fourth quarter due to stronger markets and higher customer demand for Kenworth, Peterbilt, and Doss grade trucks. In 2020, U.S. and Canadian Class 8 truck retail sales were 216,500 units. Kenworth and Peterbilt's combined Class 8 market share increased to 30.1%, and medium duty share increased to a record 22.6%. For 2021, the U.S. economy and industrial production are projected to expand by about 4%. The strengthening economy, low fuel prices, and high volumes of freight are good for the truck industry. We estimate the 2021 U.S. and Canada Class A truck market to increase to a range of 250,000 to 280,000 vehicles. The European above-16-ton truck registrations were 230,500 last year, and DOF achieved strong market share of 16.3%. In 2021, the European economies are projected to continue growing, and we expect the above-16-ton truck registrations to increase to a range of 250,000 to 280,000. The South American above-16-ton truck industry registrations were 93,000 last year. In Brazil, DOF increased its share of the greater-than-16-ton market from 4.3 to a record 5.7%. In 2021, the South American market is expected to increase to a range of 100,000 to 110,000 units. Truck and parts gross margins were 12.6% in the fourth quarter. We estimate first quarter truck and parts gross margins to increase to around 13.5%. Packard takes a rigorous approach to controlling costs throughout all phases of the business cycle and continues to deliver industry-leading margins. Last week, we announced a strategic partnership with Aurora, a leader in autonomous driving technology. This partnership will integrate Packard's autonomously-enabled truck platform with the Aurora self-driving sensor and software system. The goal of this collaboration is to create a commercially viable autonomous truck that enhances safety and operational efficiency for PACCAR's customers. PACCAR's zero-emissions vehicles continue to lead the industry. Our zero-emissions vehicles have accumulated nearly 500,000 miles. Peterbilt, Kenworth, and Doth battery electric trucks are beginning production in the second quarter of this year. and we're continuing in the development of hydrogen fuel cell-powered zero-emissions vehicles. Last year, PACCAR was again recognized as a global leader in environmental practices by the reporting firm CDP, which places PACCAR in the top 15% of over 9,500 reporting companies. And the Women in Trucking organization awarded our PACCAR corporate office, Peterbilt, Kenworth, PACCAR Parts, and Dynacraft as a top place for women to work. Kenworth and Peterbilt received a total of five Manufacturing Leadership Awards from the National Association of Manufacturers, and the DOCXF earned the Fleet Truck of the Year 2020 Award in the United Kingdom. There are a multitude of exciting things happening around PACCAR, and Harry Skippers will now provide an update on PACCAR parts, PACCAR financial services, and PACCAR's investments in future growth. Harry?