PACCAR Inc.

Good morning, and welcome to PACAR's first quarter 2023 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 like to introduce Mr. Ken Hastings, PACAR'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.

Preston Fite Hey, good morning. Harry Skippers, Michael Barkley, Ken Hastings, and I will update you on our first quarter results and our business highlights. PACCAR achieved record revenues and excellent net income in the first quarter due to continued strong global demand for trucks, aftermarket parts, and financial services. PACCAR's revenues increased 31% to $8.47 billion, and net income was $734 million, including an after-tax, non-recurring charge of $446 million. The charge released to civil claims in Europe was previously reported in an 8K last week, and is the total estimated cost. Excluding the non-recurring charge, first quarter adjusted net income was $1,180,000,000, up from $600,000,000 in the first quarter of last year. In the first quarter, truck parts and other gross margins expanded to a record 19.3%, compared to 15.9% in the fourth quarter of last year. PACCAR is benefiting from investments in new truck models global growth, and Packard Parts' continued expansion. Packard Parts' first quarter revenues increased by 17% to a record $1.62 billion. Parts' pre-tax profits were a record $439 million, or 29% higher than the same period last year. Packard Financial had an excellent quarter, achieving pre-tax income of $149 million, which is similar to the same quarter of last year. I appreciate Packard's outstanding employees who delivered these excellent financial results and the highest quality trucks and transportation solutions in the industry. Their commitment to the company and to our customers is foundational to our success. Looking at the U.S. economy, GDP is estimated to grow modestly, Freight tonnage continues to be good, and customers are updating their vehicles with new, high-performing Peterbilt and Kenworth trucks. This continues to be a favorable operating environment, and we're increasing our forecast for the U.S. and Canadian Class 8 market to 280,000 to 320,000 trucks. European economies are also experiencing modest growth. DOF's excellent new trucks are providing customers with the latest technology and and best operating efficiencies. We have raised our 2023 European above 16-ton market projection to a range of 280,000 to 320,000 trucks. The South American above 16-ton truck market is expected to be in the range of 115,000 to 125,000 vehicles this year. In Brazil, DOF achieved a record 8.6% share in the first quarter. Doff Brazil is celebrating its 10th year of operations. Doff trucks are highly desired by customers in South America, and the region is an important part of Packard's growth and success. Packard's industry-leading truck lineup, highly efficient operations, best-in-class parts and financial services companies, and the continued development of advanced technologies position the company well for an excellent year. Harry Skippers will now provide an update on Packard Parts, Packard Financial Services, and other business highlights. Harry?