PACCAR Inc.

Good morning and welcome to PACCAR's first quarter 2022 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 an objection, they should disconnect at this time. I would now like to introduce Mr. Ken Hastings, PACCAR'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, PACCAR'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 Fite. Hey, good morning.

Harry Skippers, Michael Barkley, and I will update you on our first quarter results and business highlights. PACCAR achieved excellent revenues and net income in the first quarter. PACCAR sales and financial services revenues increased 11% to $6,470,000,000. Net income increased 28% to $601,000,000. PACCAR parts first quarter revenues increased by 20% to a record $1.39 billion. Parts pre-tax profits were a record $340,000,000, 35% higher than the same period last year. Truck parts and other gross margins expanded to 13.4% in the first quarter, compared to 11.6% in the fourth quarter of last year. Packard Financial had a record quarter, increasing pre-tax income by 92% to $147 million due to healthy new business volume and strong used truck results. I appreciate Packard's outstanding employees who delivered the excellent financial results and the highest quality trucks and transportation solutions in the industry. Last year, PACCAR introduced a complete new product lineup of Peterbilt, Kenworth, and Doth heavy and medium-duty trucks. This was a record number of new product introductions, and these investments are generating excellent results for the company. Our customers are benefiting from the industry-leading fuel efficiency, while drivers love the new digital instrumentation, luxurious interiors, stylish LED headlights, and beautiful exterior styling. The new trucks and growth in Packard's aftermarket business contributed to the increased gross margins this quarter. We expect gross margins to continue increasing this year as the new trucks become a higher percentage of the build. Looking at the economy, U.S. GDP is estimated to grow 3.2%, and industrial production is projected to expand 4.4% this year, which continues to provide a favorable operating environment for PACCAR and its customers. We estimate the U.S. and Canadian Class VIII market to be in the range of 260,000 to 290,000 trucks. The European and U.K. economies are also experiencing good economic growth. Economists project U.K. GDP to increase 4%, and European GDP to increase by 3.2%. The 2022 European truck market is expected to be in a range of 270,000 to 300,000 trucks. We expect truck markets to remain strong. Packard's industry-leading new truck lineup, highly efficient factories, best-in-class parts and financial services business, and the continued development of advanced technologies are creating an exciting future. Harry Skippers will now provide an update on PACCAR parts, PACCAR financial services, and other business highlights.