PACCAR Inc. (NASDAQ:PCAR) Q3 2020 Earnings Conference Call - Final Transcript

Oct 20, 2020 • 12:00 pm ET

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PACCAR Inc. (NASDAQ:PCAR) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and welcome to PACCAR's Third Quarter 2020 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 now like to introduce Mr. Ken Hastings, PACCAR's Director of Investor Relations. Mr. Hastings, please go ahead.

Executive
Ken Hastings

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 Feight, Chief Executive Officer; Harrie Schippers, 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 Feight.

Executive
R. Preston Feight

Hey, good morning. Harrie Schippers, Michael Barkley, and I will update you on our excellent third quarter results and business highlights. First and foremost, I appreciate our outstanding PACCAR employees. They have continued to focus on staying safe and healthy while delivering the highest quality trucks, advanced powertrains, and transportation solutions to our customers. PACCAR achieved strong revenues and net income in the third quarter. PACCAR's quarterly truck deliveries doubled to 36,000 vehicles compared to the second quarter of this year. PACCAR's quarterly sales and Financial Services revenues were $4.9 billion and third quarter net income was $386 million. PACCAR Parts achieved quarterly revenues of over $1 billion and pre-tax profits of $210 million, exceeding the strong third quarter of last year. Truck, Parts and Other gross margins increased to 12.8%. PACCAR Financial achieved robust new financing business and pre-tax income of $56 million. U.S. and Canada Class 8 truck industry orders through September were 18% higher than the same period last year.

PACCAR expects fourth quarter deliveries to be 10% higher than the third quarter as build rates increase in all markets. The fourth quarter will have fewer build days in North America and more build days in Europe. Fourth quarter Truck, Parts and Other gross margins are estimated to be in a range of 12% to 13%. We have raised our 2020 market size estimates in North America, Europe and South America. We estimate Class 8 industry retail sales in the U.S. and Canada to be in a range of 190,000 to 210,000 trucks this year. Peterbilt and Kenworth have achieved 29.7% market share through September compared to 29.2% for the same period last year. For 2021, the U.S. economy is expected to grow about 4% and we estimate the U.S. and Canadian Class 8 truck market to be in the range of 210,000 to 250,000 vehicles.

In Europe, truck industry registrations in the above 16-tonne market are estimated to