PACCAR Inc.

Good morning and welcome to PACCAR's fourth quarter 2025 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 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 and welcome, everyone. My name is Ken Hastings, PACCAR's Director of Investor Relations. And joining me this morning are Preston Fite, Chief Executive Officer, Kevin Bainey, President, and Bryce Popolosky, Senior Vice President and Chief Financial Officer. 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 Press and Fight. Good morning.

Kevin Bainey, Bryce Poplosky, Ken Hastings, and I will update you on our very good fourth quarter and full year 2025 results, as well as other business highlights. PACCAR's fourth quarter revenues were $6.8 billion and net income was $557 million. In 2025, PACCAR achieved annual revenues of $28.4 billion and adjusted net income of $2.64 billion. which is the fourth highest profit year in company history and the 87th consecutive year of profits. Adjusted after tax return on revenue was 9.3%. I'm proud of Packard's outstanding employees who delivered these results by providing our customers with the highest quality trucks and transportation solutions in the industry. Packard Parts and Packard Financial Services each achieved quarterly and annual revenue records. Packard Parts and Financial Services represent an increasing percentage of the overall business and contribute to Packard's structurally stronger performance. 2025 was a dynamic year in the North American truck industry with soft freight markets, tariffs, and emissions policy uncertainties. In this environment, Kenworth and Peterbilt made strong contributions to Packard's results. Importantly, We ended last year with tariff and emissions clarity. The Section 232 truck tariff policy that became effective on November 1st provides advantages to PACCAR, who produces trucks in the United States, Canada and Mexico for each local market. I'm proud of PACCAR's excellent team who have created this cost effective, flexible and robust manufacturing strategy. In late 2025, It was confirmed that the 35 milligram EPA 27 NOx limit will go into effect in January of next year. This brings clarity to the market and helps customers make their buying decisions. PACCAR is wonderfully positioned for these changes with the newest lineup of trucks and engines that are the most efficient and highest quality in the industry. Last year, US and Canadian Class A truck retail sales were 233,000 units. and Kenworth and Peterbilt delivered a market share of 30%. The US economy is projected to expand this year. The less than truckload and vocational truck sector, where Peterbilt and Kenworth are the market leaders, are steady. The truckload segment is beginning to accelerate, with industry customer demand and spot rates picking up in December. The 2026 US and Canadian Class A truck market is forecast to be in a range of 230 to 270,000 vehicles, as economic growth, regulatory and tariff clarity, and improving freight conditions are poised to improve customer demand. In Europe, DOF trucks have a competitive advantage in the market with their innovative aerodynamic design that features the largest and most luxurious cab interior and the best powertrain choices. In recognition of this, the DOF team earned the prestigious International Truck of the Year Award for the DOF XF and XD electric trucks. It's noteworthy that this is the third time in five years that DOF has won this award. In 2025, the European above 16 ton truck market was 298,000 units. This year, the European economy is forecast to grow modestly, and we expect the above 16 ton truck market to be in the range of 280 to 320,000 registrations. In addition to the excellent businesses in Europe and Brazil, DOF is also expanding in the Andean region of South America. Last year, the South American above 16 ton market was 115,000 vehicles and is expected to be in the range of 100 to 110,000 trucks this year. Other 2025 business highlights included PACCAR earning the Elite A rating from Climate Disclosure Project for its environmental performance, DOF being honored as the Fleet Truck of the Year in the UK, DOF Kenworth and Peterbilt introducing the next generation of battery electric trucks, Packard completing a new engine remanufacturing facility in Mississippi, and Kenworth completing a new chassis paint facility in Ohio. Packard delivered 32,900 trucks in the fourth quarter, and deliveries are forecast to be at a comparable level in the first quarter of 2026. Fourth quarter truck parts and other gross margins were 12%, and we estimate that first quarter gross margins will increase to 12.5% to 13%. We look forward to 2026 being a year of accelerated growth for our customers, dealers, and PACCAR. Kevin Bainey will now provide an update on PACCAR parts, financial services, as well as other business highlights.