PACCAR Inc.

Good morning and welcome to PACCAR's fourth 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, 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 Fite. Hey, good morning.

Harry Skippers, Michael Barkley, and I will update you on a record fourth quarter and full year 2022 results, as well as other business highlights. First, I appreciate our outstanding PACCAR employees. They consistently deliver the highest quality trucks and transportation solutions to our customers and excellent financial results for our shareholders. They're truly an impressive team. In 2022, Packard achieved record annual revenues of $28.8 billion and record net income of $3.01 billion. Packard's financial performance benefited from strong business growth across all of Packard's major truck markets. and record results in our parts and financial services divisions. PACCAR has achieved 84 consecutive years of net income and has paid a dividend every year since 1941. In 2022, PACCAR declared dividends of $4.19 per share and announced a 50% stock dividend. PACCAR's fourth quarter revenues were a record $8.1 billion and quarterly net income increased from the prior year by 78% to a record $921 million. Packard Parts achieved fourth quarter revenues of $1.47 billion and record pre-tax profits of $380 million, which was a 23% increase compared to the same period last year. Packard delivered 51,600 trucks during the fourth quarter. This was 7,300 more than the third quarter and was a result of higher truck production and the completion of nearly all the vehicles that were awaiting components. The supply chain is improving, though there may be some supplier constraints throughout the year. In the first quarter of 2023, deliveries are forecast to be strong and in the range of 49,000 to 53,000. In 2022, U.S. and Canadian Class 8 truck retail sales were 283,500 units. PACCAR's market share increased to 29.8%. The U.S. economy is projected to expand modestly in 2023. In the truck sector, there is pent-up demand from the prior three years of industry underproduction, and customers need to replace aging fleets to benefit from the superior performance of the newer Kenworth and Peterbilt models. The 2023 U.S. and Canadian Class A truck market deliveries are forecast to be in a range of 270 to 310,000 vehicles. European above-16-ton truck registrations were 298,000 last year, and DOF's market share increased to a record 17.3%, reflecting the success of the new generation of DOF trucks. In 2023, confidence in the European economy is growing. And with pent-up demand for new trucks, we expect the above 16-ton truck registrations to be in the range of 270,000 to 310,000. In 2022, the South American above 16-ton truck market was 138,300. And this year, the South American market is expected to be in the range of 125,000 to 135,000 units. In Brazil, DOF achieved a record 6.9% share in the above 16-ton market, up from 5.7% last year. DOF Brazil has grown steadily since we opened the factory 10 years ago and makes a healthy contribution to PACCAR's global success. Truck, parts, and other gross margins expanded to 15.9% in the fourth quarter, reflecting strong global performance, higher truck deliveries, excellent parts business, and supply chain improvements. We estimate PACCAR's worldwide first quarter truck and parts gross margins to be in the range of 16% to 17%. In 2022, PACCAR and its customers realized the financial benefits of the new range of heavy and medium duty Kenworth, Peterbilt, and Doff trucks. These new trucks are successful in the market due to their premium quality, excellent fuel efficiency, and low operating costs. Last year, PACCAR earned recognition in several areas, The new DOF XD distribution and vocational truck was named the 2023 International Truck of the Year. Kenworth and Peterbilt earned six Manufacturing Leadership Awards from the National Association of Manufacturers. The reporting firm, CDP, again recognized PACCAR as an environmental leader with an Elite A rating. This rating places PACCAR in the top 1.5% of over 18,000 reporting companies. and PACCAR was recognized as a top place for women to work by the Women in Trucking Organization for the fifth consecutive year. Demand is strong in all markets for PACCAR's industry-leading new trucks and transportation solutions, and we look forward to 2023 being another excellent year. Barry Skippers will now provide an update on PACCAR parts, PACCAR financial services, and other business highlights. Barry?