PACCAR Inc.

Good morning and welcome to PACR's fourth quarter 2024 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 objection, they should disconnect at this time. I'd now like to introduce Mr. Ken Hastings, PACR's Director of Investor Relations. Mr. Hastings, please go ahead.

Good morning. We'd 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 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, everyone. Harry, Bryce, Ken, and I will update you on our fourth quarter full year 2024 results, as well as other business highlights. PACCAR's outstanding employees delivered strong results by providing our customers with the highest quality trucks and transportation solutions in the industry. In 2024, PACCAR achieved annual revenues of $33.7 billion, net income of $4.2 billion, and an after-tax return on revenues of 12.4%. This is the second highest profit in the company's history and was a great year for PACCAR. PACCAR's strong financial performance reflects the higher profitability of the latest generation of Kenworth, Peterbilt, and Doff trucks, record results in our parts division, and another good year for PACCAR Financial Services. PACCAR shareholders and customers benefited from the $8.6 billion invested over the past 10 years in new products, world-class facilities, and state-of-the-art technologies. PACCAR has achieved 86 consecutive years of net income and has paid a dividend every year since 1941. In 2024, PACCAR declared $4.17 per share in dividends, including a year-end dividend of $3 per share. This is a 53% payout of net income and a dividend yield of 4%. PACCAR's fourth quarter revenues were $7.9 billion and net income was $872 million. PACCAR parts achieved excellent fourth quarter revenues of $1.6 billion and pre-tax profits of $428 million. Last year's U.S. and Canadian Class A truck retail sales were 268,000 units. Kenworth and Peterbilt's market share increased to a strong 30.7%, up from 29.5% in the prior year. In the medium-duty market, Kenworth and Peterbilt's excellent new medium-duty truck has created customer value, and market share grew from 14.5% to 18% as they produced a record 21,500 medium-duty trucks. In 2025, the US economy is projected to expand by more than 2%. The vocational truck sector, where Peterbilt and Kenworth are the market leaders, is steady. The less than truckload market is performing well, while the truckload segment is beginning to show signs of improvement. The US and Canadian Class A truck market is forecast to be in a range of 250,000 to 280,000 vehicles. We anticipate a strengthening market as we progress through the year. European above 16-ton truck registrations were 316,000 last year. Customers appreciate DAF's industry-leading fuel efficiency and driver comfort. DAF trucks have a competitive advantage in the European market due to an innovative aerodynamic design and feature the largest and most luxurious cab interior. In 2025, the European economy is forecast to grow modestly We expect the above 16 ton truck market to be in the range of 270 to 300,000 registrations. Last year, the South American above 16 ton market was 119,000 vehicles and is expected to be similar this year. Thus, market share in the important Brazilian market was right around 10% and reflects a 23% production increase to more than 10,000 trucks in 2024. In addition to its successful growing business in Brazil, DOF trucks are now sold in Mexico and in the Andean region of South America. Packard truck parts and other gross margins were a solid 15.9% in the fourth quarter. These margins are considerably higher than in prior industry cycles, reflecting the increased value that the new Kenworth, Peterbilt, and DOF trucks provide to customers, as well as the continued growth of Packard parts. In the fourth quarter, PACCAR delivered 43,900 trucks. And in the first quarter of 2025, deliveries are forecast to be around 40,000. We estimate PACCAR's worldwide first quarter truck and parts gross margins to be similar to the fourth quarter and in a range of 15.5% to 16%. In addition to the strong financial performance, other business highlights in 2024 included PACCAR's progress on amplified cell technologies, our joint venture to manufacture commercial vehicle batteries in the United States. DOF was honored as the Fleet Truck of the Year in the UK. Packard Parts celebrated the 30th anniversary of TRP. Peterbilt earned the Environment and Energy Leader Award for Sustainability. And Kenworth celebrated the 50th anniversary of its world-class truck factory in Chillicothe, Ohio. We look forward to an excellent year in 2025. as we celebrate the 120th anniversary of PACCAR's founding in 1905. Harry Skippers will now provide an update on PACCAR Parts, PACCAR Financial Services, and other business highlights. Harry?