PACCAR Inc.

Good morning and welcome to PACCAR's third quarter 2023 earnings conference call. All lines will be in 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 hand the call over to 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 Bryce Poplosky, 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. I would now like to introduce Preston Fite.

Hey, good morning. Harry, Bryce, Ken, and I will update you on our record third quarter financial results and other business highlights. PACCAR's outstanding employees delivered this excellent performance by providing our customers with the highest quality trucks and transportation solutions in the industry. PACCAR's third quarter net income increased 60% year-over-year to a record $1.23 billion and revenues increased 23% to $8.7 billion. Truck parts and other gross margins expanded to 19.5% in the third quarter compared to 14.9% in the same period last year. Packard's global investments in innovative new Doff, Kenworth, and Peterbilt trucks, as well as investments in technology and manufacturing, were key elements in delivering this strong performance. Packard Parts' third quarter revenues increased to $1.58 billion. Parts' pre-tax profits were $412 million, or 10% higher than the same period last year. Packard Parts provides its customers with industry-leading technology that enhances their uptime. PACCAR Financial earned a strong pre-tax income of $134 million in the third quarter, reflecting its high-quality portfolio. We estimate this year's U.S. and Canadian Class 8 market to be in a range of 295,000 to 315,000 trucks, and next year to be in a range of 260,000 to 300,000 vehicles. Customers are replacing their trucks with the new heavy and medium duty Peterbilt and Kenworth models that enhance their operational efficiencies, achieve industry-leading fuel economy, and attract and retain the best drivers. Demand is strong for Kenworth and Peterbilt trucks with the first quarter of 2024 filling in quickly. In Europe, this year's truck industry registrations in the above 16-ton segment are estimated to be in a range of 310,000 to 330,000 vehicles. The 2024 market is expected to be in the range of 260,000 to 300,000 trucks. The new DOF trucks have redefined the premium truck segment in Europe and offer superior aerodynamics, award-winning fuel economy, and enhanced features that make them the driver's choice. The South American above-16-ton market is projected to be in a range of 105,000 to 115,000 trucks this year and in a similar range next year. DOF Brazil recently celebrated its 10th anniversary and has increased its greater-than-16-ton share to a record 10%. The DOF lineup of trucks is performing exceptionally well for customers in all Brazilian operating environments. PACCAR recently announced its participation in a new battery cell joint venture. The joint venture will be located in the United States and will manufacture battery cells for use in medium and heavy duty trucks. PACCAR's proprietary battery cells will create value for our customers and help them achieve their future operational and environmental goals. PACCAR's employees and dealers are delivering excellent results for our customers, and we're excited about the future. Thank you. Harry Skippers will now provide an update on PACCAR parts, PACCAR financial services, and other business highlights. Thanks, Preston.