PACCAR Inc (NASDAQ:PCAR) Q4 2022 Earnings Call Transcript

Dillon Cumming: Great quarter. Thanks for the question. Just wanted to ask the first one on the parts growth, 10% to 13% in the first quarter is pretty admirable, just considering some of the rumblings you heard in the channel with regards to truck utilization, maybe being a bit more challenged, but you’ve obviously been getting the benefit of the MX engine penetration. Can you just maybe pair off those two kinds of headwinds and tailwinds going into the first quarter. How much of that growth is coming from MX engine penetration versus any headwind from truck utilization, maybe moderating a bit.

Preston Feight: Yes, the 10% to 13% growth rate that we expect for the first quarter really reflects all of those things. So we continue to see the PACCAR engine performing really well. That of course, drives incremental part sales. But the parts team is doing an amazing job launching new programs, whether its fleet sales, ecommerce, our MDI system continues to improve. It also means that we continue to grow our share in the parts business. We’re announcing our TIP business, adding stores, selling more parts with TIP. So it’s a mixture of all of those things that allow us to do really well in the first quarter and so we are well put.

Dillon Cumming: Got you, thanks, Harrie. Then can I just ask a second one on the FinCo, the margin performance in the quarter really strong considering the deceleration we’ve seen in used truck pricing more recently. Is that just reflective of PACCAR trucks commanding a premium in the market on used basis, or what would you contribute that more recent strength to considering the decline we’ve seen in used truck prices more recently?

Harrie Schippers : Yes, we continue to see a 10% or 15% premium for Kenworth, Peterbilt used trucks in the marketplace. That’s been around for a long time that continues. But we also see more and more benefits of the used truck centers that we have been developing and opening over the recent years, we now have 30 used truck centers worldwide, allows us to sell more used trucks at retail prices instead of wholesale, to all those things have contributed to the finance company. Like we said, the portfolio is in really good shape, past dues are low, less than 0.005%. So, yes, customers continue to pay their bills and the finance company continues to benefit from that.

Operator: Our next question comes from Tami Zakaria from JPMorgan.

Tami Zakaria: Hi, good morning. Thank you so much. So my first question is how should we think about seasonality of bills and delivery in 2023? Is the first quarter delivery number a good run rate for the rest of the year?

Harrie Schippers : Well, Tami, it’s good talk to you, I think what we see is we have had increasingly steady production. And that’s why you’re seeing this first quarter number be pretty high with without any of the offline issues of last year that are behind us. So it feels pretty steady there. And I think there’s opportunity for us in 2023 as we look forward.

Tami Zakaria: Got it. That’s super helpful. And then my second question is, how should we think about your market share gain expectation this year. Should share capture, continue at a clip similar to €˜22? Or do you see any reason or chances of that accelerating this year?

Preston Feight: Well, I think that our teams have done a fantastic job around the world of introducing new products over the last year and a half on the truck side. And as Harrie mentioned on the parts side and the financial services side. So the totality of what benefit PACCAR providing to our customers is very high. And I think that that high benefit to them helps us grow our share. And so when our customers are successful, and our dealers are successful, then we’re successful. And that’s how we think of it.

Operator: Our next question comes from Chad Dillard from Bernstein.