Q2 2025 PACCAR Inc Earnings Call

July 22, 2025

Operator: Good morning and welcome to PACCAR's Q2 2025 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.

Operator: All lines will be in a listen-only mode until the question-and-answer session.

Operator: Today's call is being recorded and if anyone has an objection they should disconnect at this time.

Good morning and welcome to pack. Car's second quarter 2025 earnings conference call. All lines will be in a listen-only mode until the question and answer session.

Ken Hastings: I would now like to introduce Mr. Ken Hastings, PACCAR'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, PACCAR's Director of Investor Relations.

Today's call is being recorded and if anyone has an objection, they should disconnect at this time.

Speaker Change: I would now like to introduce Mr. Ken Hastings, Pack cars, director of investor relations Mr. Hastings, please go ahead.

Preston Feight: Good morning. We'd like to welcome those listening by phone and those on the WeCast.

Ken Hastings: Good morning. We'd like to welcome those listening by phone and those on the WeCast. My name is Ken Hastings, PACCAR's Director of Investor Relations and joining me this morning are Preston Feight, Chief Executive Officer, Kevin Baney, Executive Vice President, and Brice Poplawski, Senior Vice President and Chief Financial Officer.

Ken Hastings: My name is Ken Hastings, PACCAR's Director.

Speaker Change: Good morning. We would like to welcome those listening by phone and those on the webcast.

Preston Feight: of Investor Relations and joining me this morning are Preston Feight, Chief Executive Officer, Kevin Baney, Executive Vice President, and Brice Poplawski, Senior Vice President and Chief Financial Officer. As with prior conference calls, we ask.

Ken Hastings: And joining me this morning are Preston Fite, Chief Executive Officer, Kevin Boehne, Executive Vice President, and Brice Poplawski, Senior Vice President and Chief Financial Officer.

Speaker Change: My name is Ken Hastings backer is director of investor relations.

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 at the Investor Relations page at PACCAR.com. I would now like to introduce Preston Feight.

Ken Hastings: 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.

Speaker Change: And joining me this morning morning are Preston feight chief executive officer, Kevin bainey Executive Vice President and Bryce paplosky senior vice president and Chief Financial Officer.

Ken Hastings: That any members of the media on the line participate in a listen-only mode. Certain information presented today will be forward.

Speaker Change: As with prior conference calls, we ask that any members of the media on the line participate in a listen-only mode.

Preston Feight: Looking and involve risks and uncertainties that.

Ken Hastings: May affect expected results.

Ken Hastings: For additional information, please see our SEC filings. at the investor relations page at paccar.com.

Preston Feight: For additional information, please see our SEC filings at the Investor Relations page at PACCAR.com. I would now like to introduce Preston Feight. Hey, thanks Ken. Good morning everyone. Brice, Ken, and I will update you on our second quarter financial results and business highlights. In these dynamic times, our PACCAR employees have done a great job providing our customers with the highest quality trucks and transportation solutions in the industry. PACCAR achieved good revenues and net income in the second quarter, including record revenues at PACCAR Parts, good performance by the truck divisions, and strong financial services results. PACCAR achieved revenues of $7.5 billion and adjusted net income of $724 million. PACCAR Parts achieved record quarterly revenues of $1.72 billion and excellent quarterly pre-tax income of $417 million. The team did a great job increasing revenues in an overall flat parts market.

Speaker Change: Certain information presented today will be forward-looking and involved risks and uncertainties that may affect expected results for additional information. Please see our SEC filings.

Preston Fite: I would now like to introduce Preston Veit. Hey, thanks, Ken. Morning, everyone. Kevin, Brice, Ken, and I will update you on our second quarter financial results and business highlights. In these dynamic times, our Paccor employees have done a great job providing our customers with the highest quality trucks and transportation solutions in the industry. Paccor achieved good revenues and net income in the second quarter, including record revenues at Paccor Parts, good performance by the truck divisions, and strong financial services results. Paccor achieved revenues of $7.5 billion and adjusted net income of $724 million. Paccor Parts achieved record quarterly revenues of $1.72 billion and excellent quarterly pre-tax income of $417 million.

Speaker Change: At the investor relations page at paccar.com.

Preston Feight: Hey, thanks Ken. Good morning everyone. Brice, Ken, and I will update you on our second quarter financial results and business highlights. In these dynamic times, our PACCAR employees have done a great job providing our customers with the highest quality trucks and transportation solutions in the industry. PACCAR achieved good revenues and net income in the second quarter, including record revenues at PACCAR Parts, good performance by the truck divisions, and strong financial services results. PACCAR achieved revenues of $7.5 billion and adjusted net income of $724 million. PACCAR Parts achieved record quarterly revenues of $1.72 billion and excellent quarterly pre-tax income of $417 million. The team did a great job increasing revenues in an overall flat parts market.

Speaker Change: I would now like to introduce press invite.

Ken Hastings: Hey, thanks. Ken morning. Everyone.

Ken Hastings: Kevin Bryce Ken and I will update you on our second quarter Financial results and business highlights.

Ken Hastings: In these Dynamic times, our Packard employees have done a great job, providing our customers with the highest quality trucks and transportation Solutions in the industry.

Pack RT. Good revenue is net income in the second quarter, including record revenue and pack our parts.

Good performance by the truck divisions and strong financial services results.

Packer achieved revenues of 7 and a half billion dollars and adjusted net income of 724 million.

Preston Fite: The team did a great job increasing revenues in an overall flat parts market. Paccor Financial had a very good quarter, increasing pre-tax income to $123 million.

Ken Hastings: Pack our parts achieved record quarterly, revenues of 1.72 billion and excellent quarterly pre-tax income of 417 million.

The team did a great job increasing revenues in an overall flat Parts Market.

Preston Feight: PACCAR Financial had a very good quarter, increasing pre-tax income to $123 million. We estimate this year's US and Canadian Class 8 market to be in a range of 230,000 to 260,000 trucks. The North American truck market size is a result of general economic conditions, a soft truckload market, and tariff and EPA 27 policy uncertainty. Customer demand in the less-than-truckload and vocational segments is good. In Europe, DAF's innovative aerodynamic trucks provide customers with best-in-class fuel efficiency and driver comfort. And we were recently in Europe and met with some of those customers who shared their appreciation of the performance of these great DAF trucks. We project the 2025 European above 16-ton market to be in a range of 270,000 to 300,000.

PACCAR Financial had a very good quarter, increasing pre-tax income to $123 million. We estimate this year's US and Canadian Class 8 market to be in a range of 230,000 to 260,000 trucks. The North American truck market size is a result of general economic conditions, a soft truckload market, and tariff and EPA 27 policy uncertainty. Customer demand in the less-than-truckload and vocational segments is good. In Europe, DAF's innovative aerodynamic trucks provide customers with best-in-class fuel efficiency and driver comfort. And we were recently in Europe and met with some of those customers who shared their appreciation of the performance of these great DAF trucks. We project the 2025 European above 16-ton market to be in a range of 270,000 to 300,000.

Preston Fite: We estimate this year's U.S. and Canadian Class A market to be in a range of 230,000 to 260,000 trucks. The North American truck market size is a result of general economic conditions, a soft truckload market, and tariff and EPA 27 policy uncertainty. Customer demand in the less than truckload and vocational segments is good. In Europe, DAF's innovative aerodynamic trucks provide customers with best-in-class fuel efficiency and driver comfort. And we were recently in Europe and met with some of those customers who shared their appreciation of the performance of these great Doff trucks. We project the 2025 European above 16 ton market to be in a range of 270 to 300,000.

Ken Hastings: Pack, our financial had a very good quarter increasing pre-tax income to 123 million.

Ken Hastings: Classic Market.

Ken Hastings: To be in a range of 230 to 260,000 trucks.

Ken Hastings: The North American Truck Market. Size is a result of General economic conditions, a soft truckload market and tariff. And EPA, 27 policy uncertainty,

Ken Hastings: Customer demand and the less than truckload and Vocational segments is good.

Ken Hastings: In Europe toss Innovative aerodynamic, trucks, provide customers with best-in-class, fuel, efficiency, and Driver comfort.

Ken Hastings: And we are recently in Europe and met with some of those customers who share their appreciation of the performance of these great do trucks.

Ken Hastings: We project the 2025 European above 16 ton Market to be in a range of 270 to 300,000.

Preston Feight: This year's South American above 16-ton truck market is expected to be in the range of 90,000 to 100,000 vehicles. PACCAR delivered 39,300 trucks during the second quarter and anticipates delivering around 32,000 to 33,000 in the third quarter. Third quarter production reflects the normal summer shutdown in Europe and build rates in North America that are matched to the market. PACCAR's truck parts and other gross margins were 13.9% in the second quarter. Given the uncertain tariff structure, it's difficult to forecast third quarter margins. Assuming the current tariff structure and market conditions, third quarter margins could be around 13%. I'm proud to share that over 90% of PACCAR's US delivered trucks are produced in our American factories. Clarification of the ongoing IEEPA and Section 232 trade policies could enhance market clarity as well as benefit PACCAR and our customers.

This year's South American above 16-ton truck market is expected to be in the range of 90,000 to 100,000 vehicles. PACCAR delivered 39,300 trucks during the second quarter and anticipates delivering around 32,000 to 33,000 in the third quarter. Third quarter production reflects the normal summer shutdown in Europe and build rates in North America that are matched to the market. PACCAR's truck parts and other gross margins were 13.9% in the second quarter. Given the uncertain tariff structure, it's difficult to forecast third quarter margins. Assuming the current tariff structure and market conditions, third quarter margins could be around 13%. I'm proud to share that over 90% of PACCAR's US delivered trucks are produced in our American factories. Clarification of the ongoing IEEPA and Section 232 trade policies could enhance market clarity as well as benefit PACCAR and our customers.

Preston Fite: This year's South American above 16-ton truck market is expected to be in the range of 90,000 to 100,000 vehicles. Paccor delivered 39,300 trucks during the second quarter and anticipates delivering around 2032,000 to 33,000 in the third quarter. Third quarter production reflects the normal summer shutdown in Europe and build rates in North America that are matched to the market. Paccar's truck, parts, and other gross margins were 13.9% in the second quarter. Given the uncertain tariff structure, it's difficult to forecast third quarter margins. Assuming the current tariff structure and market conditions. Third quarter margins could be around 13 percent.

Ken Hastings: This year's South American above 16. Ton truck Market is expected to be in the range of 90 to 100,000 vehicles.

Pack our delivered 39,300 trucks. During the second quarter.

Ken Hastings: And anticipates, delivering around 2032000 to 33,000 in the third quarter.

Third, quarter production, reflects the normal summer shutdown in Europe and build rates in North America that are matched to the market.

Given the uncertain tariff structure, it's difficult to forecast, third quarter margins.

Ken Hastings: assuming the current tariff structure and market conditions,

Preston Fite: And I'm proud to share that over 90% of Paccor's U.S. delivered trucks are produced in our American factories. Clarification of the ongoing IEPA and Section 232 trade policies could enhance market clarity as well as benefit PACCAR and our customers. We anticipate the North American market will strengthen as tariff policies become certain. The truckload market gains momentum and customers begin to anticipate the 2027 NOx emission standard.

Third quarter. Margins could be around 13%.

Ken Hastings: I'm proud to share that over 90% of Packard's us. Delivered. Trucks are produced in our American factories.

Ken Hastings: Clarification of the ongoing iea and section 232 trade policies. Could enhance Market clarity as well as benefit pack our and our customers.

Preston Feight: We anticipate the North American market will strengthen as tariff policies become certain, the truckload market gains momentum, and customers begin to anticipate the 2027 NOx Emission Standards. Kevin Baney will now provide an update on PACCAR Parts, PACCAR Financial Services, and other business highlights.

We anticipate the North American market will strengthen as tariff policies become certain, the truckload market gains momentum, and customers begin to anticipate the 2027 NOx Emission Standards. Kevin Baney will now provide an update on PACCAR Parts, PACCAR Financial Services, and other business highlights. Kevin,

Ken Hastings: We anticipate the North American Market will strengthen as tariff policies become certain.

Ken Hastings: The truckload market gains momentum and customers begin to anticipate the 2027 nox emission. Standards

Kevin Boehne: Kevin Boehne will now provide an update on Paccor Parts, Paccor Financial Services, and other business highlights. Kevin. Thank you, Preston. Paccor Parts achieved record revenues in the second quarter with excellent gross margins of 30%. We estimate that Paccor's year-over-year part sales to grow by four to 6% in the third quarter. Paccor Parts continues to grow through ongoing investments in capacity and services. Paccor Parts is focused on delivering the right part to the right place at the right time to provide industry leading support for our customers. Paccor Financial Services pre-tax income was a robust $123 million, up from $111 million a year earlier.

Kevin Baney: Kevin, thank you, Preston. PACCAR Parts achieved record revenues in the second quarter with excellent gross margins of 30%. We estimate that PACCAR's year over year part sales to grow by 4% to 6% in the third quarter. PACCAR Parts continues to grow through ongoing investments in capacity and services. PACCAR Parts is focused on delivering the right part to the right place at the right time to provide industry leading support for our customers. PACCAR Financial Services pre-tax income was a robust $123 million, up from $111 million a year earlier. This reflects strong credit quality and improving used truck results. PACCAR Financial operates 13 used truck centers around the world to support the sale of premium Kenworth, Peterbilt, and DAF used trucks. PACCAR is building another used truck center in Warsaw, Poland, which will open this year.

Speaker Change: Kevin Baney will now provide an update on Packard parts. Pack our financial services and other business highlights.

Kevin Baney: thank you, Preston. PACCAR Parts achieved record revenues in the second quarter with excellent gross margins of 30%. We estimate that PACCAR's year over year part sales to grow by 4% to 6% in the third quarter. PACCAR Parts continues to grow through ongoing investments in capacity and services. PACCAR Parts is focused on delivering the right part to the right place at the right time to provide industry leading support for our customers. PACCAR Financial Services pre-tax income was a robust $123 million, up from $111 million a year earlier. This reflects strong credit quality and improving used truck results. PACCAR Financial operates 13 used truck centers around the world to support the sale of premium Kenworth, Peterbilt, and DAF used trucks. PACCAR is building another used truck center in Warsaw, Poland, which will open this year.

Ken Hastings: Kevin.

Speaker Change: Thank you, Preston.

Speaker Change: Pack our parts achieved record revenues in the second quarter with excellent gross margins of 30%.

We estimate that pack. Ours year-over-year part sales to grow by 4 to 6% in the third quarter.

Speaker Change: Pack our parts continues to grow through ongoing investments in capacity and services.

Speaker Change: Pack our parts is focused on delivering the right part to the right place at the right time to provide industry-leading support for our customers.

Pack our financial services pre-tax income was a robust 123 million.

Kevin Boehne: This reflects strong credit quality and improving used truck results. Paccor Financial operates 13 used truck centers around the world to support the sale of premium Kenworth, Peterbilt, and Dopp used trucks. Paccor is building another used truck center in Warsaw, Poland, which will open this year. Paccar used trucks sell at a premium compared to competitors used trucks. Similar to Paccor Parts, Paccor Financial provides steady foundational profitability during all phases of the business cycle.

Speaker Change: Up from 111 million a year earlier.

This reflects strong credit quality and improving used truck results.

Pack our financial operates, 13 used truck centers around the world, to support the sale of Premium. Kenworth, Peterbilt and Doc, use trucks.

Kevin Baney: PACCAR used trucks sell at a premium compared to competitors used trucks. Similar to PACCAR Parts, PACCAR Financial provides steady foundational profitability during all phases of the business cycle. This year, PACCAR is planning capital investments in the range of $750 to 800 million and R&D in the range of $450 to 480 million as we invest in key technology and innovation projects. These include next-generation clean diesel and alternative powertrains, advanced driver assistance systems, and integrated connected vehicle services. PACCAR is also investing in its truck and engine factories to support long-term growth, as well as our customers' and dealers' success. PACCAR's industry-leading trucks, expanding parts business, best-in-class financial services, and advanced technology strategy position the company for an excellent future. We are pleased to answer your questions.

PACCAR used trucks sell at a premium compared to competitors used trucks. Similar to PACCAR Parts, PACCAR Financial provides steady foundational profitability during all phases of the business cycle. This year, PACCAR is planning capital investments in the range of $750 to 800 million and R&D in the range of $450 to 480 million as we invest in key technology and innovation projects. These include next-generation clean diesel and alternative powertrains, advanced driver assistance systems, and integrated connected vehicle services. PACCAR is also investing in its truck and engine factories to support long-term growth, as well as our customers' and dealers' success. PACCAR's industry-leading trucks, expanding parts business, best-in-class financial services, and advanced technology strategy position the company for an excellent future. We are pleased to answer your questions.

Speaker Change: Pack our is building another used truck center in Warsaw Poland, which will open this year.

Speaker Change: Pack our used trucks sell at a premium compared to competitors. Use trucks.

Similar to pack our parts pack. Our financial provides steady foundational profitability during All Phases of the business cycle.

Kevin Boehne: This year, Paccor is planning capital investments in the range of $750 to $800 million, and R&D in the range of $450 to $480 million, as we invest in key technology and innovation projects. These include next generation clean diesel and alternative power trains. Advanced Driver Assistance Systems, and Integrated Connected Vehicle Services. Paccor is also investing in its truck and engine factories to support long term growth, as well as our customers and dealers success. Paccor's Industry Leading Truck.

Speaker Change: This year Packard is planning Capital investments in the range of 750 800 million.

Speaker Change: In R&D in the range of 450 to 480 million. As we invest in key technology and Innovation projects.

Speaker Change: These include Next, Generation clean, diesel and alternative power trains.

Speaker Change: Advanced Driver assistance systems.

Speaker Change: And integrated connected vehicle services.

Hacker is also investing in its truck in engine factories to support long-term growth, as well as our customers and dealers success.

Kevin Boehne: expanding parts business, best-in-class financial services, and advanced technology strategy position the company for an excellent future. We are pleased to answer your questions. Thank you.

Speaker Change: Pack hours, industry-leading trucks.

Speaker Change: Expanding Parts, Business best-in-class Financial Services and advanced technology strategy position the company for an excellent future.

Speaker Change: We are pleased to answer your questions.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press star followed by 2 to withdraw yourself from the queue. Our first question today comes from the line of Jerry Revich with Goldman Sachs. Jerry, please go ahead.

Operator: We will now begin the question and answer session. If you would like to ask a question today please do so now by pressing start followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered you can press start followed by two to withdraw yourself from the queue.

Speaker Change: Thank you. We will now begin the quest.

Speaker Change: If you would like to ask a question today, please do so. Now by pressing star, followed by the number 1 on your telephone keypad.

Jerry Revich: Our first question today comes from the line of Jerry Revich with Goldman Sachs. Jerry, please go ahead. Yes, hi. Good morning. Good afternoon, everyone.

Speaker Change: If you change your mind or you feel like your question has already been answered. You can press Start followed by 2 to withdraw yourself from the queue.

Speaker Change: Comes from the line of Jerry Reich with Goldman Sachs.

Speaker Change: Jerry, please go ahead.

Jerry Revich: Yes, hi, good morning and good afternoon everyone. I'm wondering if you could just comment on the really strong sequential price improvement performance you saw in the quarter. How much of that was mix versus getting the price increases in for the higher tariff content? And you know, as you think about pricing based on what's in backlog for Q3, what's that cadence in pricing look like? Q3 versus Q2 compared to the roughly 3% sequential increase we just saw this quarter?

Jerry Revich: I'm wondering if you could just comment on the really strong sequential price improvement performance you saw in the quarter, how much of that it was makes versus getting the price increases. for the higher tariff content and, you know, as you think about pricing based on what's in backlog for 3Q, what's that cadence in pricing look like 3Q? Q compared to the roughly 3% sequential increase.

Jerry Reich: Uh, yes, hi, good morning, good afternoon everyone. Um I'm wondering if you if you could just comment on the really strong uh sequential price Improvement Pharmacy. So on in the quarter, how much of that it was makes versus getting the price increases in for the higher tariff content? And, you know, as you think about pricing based on what's in backlog for a 3Q. What, what's that? Cadence in pricing? Look like 3 Q versus 2q compared to the roughly, 3%, sequential increase. We just saw in this quarter.

Preston Feight: Sure, Jerry. Interesting time in the market. As we look at the effect of tariffs on Q2, they were certainly well present for us, and we think that the amount of tariff impact will, and the current structure, increase in Q3. So we'll have an increased weight of impact on price versus cost for us in Q3. That's obviously a North American centric comment. There's some variability sitting in there because it depends on how the tariff structures continue, whether that's 232 or court rulings on IEEPA. It could also be affected by the current August 1st statements around what new tariffs might be affected and what rates they'll be at.

Preston Fite: Sure, Jerry. Interesting time in the market. And as we look at the effect of tariffs on Q2, they were certainly well present for us. And we think that the amount of tariff impact will and the current structure increase in Q3. So we'll have a increased weight of impact on price versus cost for us in Q3.

Jerry Reich: Sure. Jerry.

Preston Fite: And that's obviously a North American centric comment. There's some variability sitting in there, because it depends on how the tariff structures continue. Whether that's 232 or the court rulings on AEPA, it could also be affected by the current August 1st statements around what new tariffs might be affected and what rates they'll be at.

Jerry Reich: Um, interesting time in the market. And as we look at the effect of tariffs on Q2, they were certainly, well present for us. And we think that the amount of tariff impact will, and the current structure increase in Q3. So, we'll have a increase weight of impact on price versus cost for us in Q3. And that's obviously a North American Centric, comment.

There's some variability sitting there because it depends on how the Tariff structures continue. Whether that's 232 or a court rulings on aipa. It could also be affected by the current August 1st statements around what new tariffs might be affected and what rates they'll be at.

Operator: Thank you, Preston.

Jerry Revich: Thank you, Preston. Then, in terms of your discussions on Section 232 with the government, can you touch on that? We've heard that they might be committing to a 60-day review cycle versus the quoted maximum of 270. Are you hearing that in your conversations as well?

Jerry Revich: And then in terms of your discussions on Section 232 with the government, can you touch on that? We've heard that they might be committing to a 60-day review cycle versus the quoted maximum of 270. Are you hearing that in your conversations as well?

Thank you Preston and then in terms of your discussions on Section 232 with the government can. Can you touch on that? We we've heard that they might be committing to a 60-day review cycle versus the quoted maximum of 270. Are are you hearing that in your conversations as well?

Preston Feight: Well, I think that the way we think about it is PACCAR builds, as I said, over 90% of our trucks for the US market in the United States. That's really, I think, good for the country. If we use a little bit of reference of 232 for the auto and light truck industry, you could say that that was a review where it was felt that it was strategically important that cars and light trucks be made in America. That's kind of the government indicated that's what their stated policies have been, and so the current ongoing investigation into 232 for medium and heavy trucks. They had their open comment period, they completed that. They're now in the investigation phase. And as you noted, Jerry, they don't have to take the full 270 days, but speculating to know what they're actually going to do.

Preston Fite: Well, I think the way we think about it is. builds, as I said, over 90% of our trucks for the U.S. market in the United States. That's really, I think, good for the country.

Jerry Reich: Well, I think that the way we think about it is, you know, pack our builds, as I said over 90% of our trucks are the US market in the United States.

Preston Fite: If we use a little bit of reference of 232 for the auto and light truck industry, you could say that that was a review where it was felt that it was strategically important that cars and light trucks be made in America. That's kind of what the government indicated, that's what their stated policies have been. And so the current ongoing investigation in 232 for medium and heavy trucks, they had their open comment period, they completed that, they're now in the investigation phase. And as you noted, Jerry, they don't have to take the full 270 days, be speculating to what they're actually going to do.

Jerry Reich: That's really, I think good for the country.

If we use a little bit of reference of 232 for the auto and Light Truck industry, you could say that that was a review where it was felt. It was strategically important that cars and light trucks be made in America. That's kind of the government indicated. That's what their stated policies have been. And so the current ongoing investigation in 232 for medium and heavy trucks.

Jerry Reich: They had their open comment, period. They completed that. They're now they're in the investigation phase. And as you noted Jerry, they don't have to take the full 270 days. Um,

Preston Fite: But it wouldn't be utterly surprising if it was less than that. And the conclusion was made. Super.

Preston Feight: But it wouldn't be utterly surprising if it was less than that and then a conclusion was made.

Jerry Reich: We speculated to know what they're actually going to do, but it wouldn't be utterly surprising if it was less than that. And then the conclusion was made,

Jerry Revich: Super. You know, lastly, in terms of the tariff impact on a per unit basis in Q3, can you just comment directionally, is that in the $4,000 per unit range the way it looks like from the bill of materials, or can you just help us understand that so we know the variables if we do see a favorable Section 232 outcomes?

Preston Fite: And, you know, lastly, in terms of the tariff impact on a per unit basis in the third quarter, can you just comment directionally? Is that in the 4,000 per unit range, the way it looks like from the bill of materials or Just help us understand that so we know the variables if we do see a favorable Section 232 act. Yeah, as we look at it, obviously, I mentioned already, there's some variability within that tariff structure of whether copper is included, whether there's an August 1st change to things. So I'm giving you a plus or minus number.

Jerry Reich: Super and and you know lastly in terms of uh the Tariff impact on a per unit basis in in the third quarter, can you just comment? Directionally is that in the 4,000 per unit range? Um, the way it looks like from the bill of materials or, um, can you just help us understand that? So, we know the variables, if if we do see a favorable section 232 outcome,

Angel Castillo: Yeah.

Preston Feight: Yeah. As we look at it, obviously I mentioned already there's some variability within that tariff structure of whether copper is included, whether there's an August 1st change to things. So I'm giving you a ± number. But in general, what we would say is maybe the quarterly effect is something like $75 million.

Preston Feight: As we look at it, obviously I mentioned already there's some variability within that tariff structure of whether copper is included, whether there's an August 1st change to things. So I'm giving you a ± number. But in general, what we would say is maybe the quarterly effect is something like $75 million.

Preston Fite: But in general, what we would say is maybe the quarterly effect is something like 75 million.

Yeah, as we look at it, obviously, I mentioned already, there's some variability within that tariff structure of whether coppers included, whether there's an August 1st, change to things. So, I'm giving you a plus or minus number but in general, what we would say is maybe the quarterly effect isn't like 75 million.

Jerry Revich: Thank you. Nice performance given the variability. Appreciate the commentary.

Jerry Revich: Thank you. Nice performance given the variability.

Jerry Reich: Thank you, nice performance. Given the variability.

Preston Feight: Appreciate the comment, Jerry. Thanks for the questions.

Preston Fite: Thanks for the question.

Appreciate the comment, Jerry, thanks for the questions.

Operator: Thank you.

Operator: Thank you. Our next question comes from Jeff Kauffman with Vertical Research Partners. Please go ahead.

Jeff Kauffman: Our next question comes from Jeff Kauffman with Vertical Research Partners. Please go ahead. Thank you very much and congratulations in an uncertain environment. I was just wondering with the passage of the one big beautiful bill act, and the R&D and CapEx depreciation acceleration that a lot of companies will be getting, have customers reengaged you about the 26 order season? Yeah, appreciate the comments on the quarter and also really insightful question. And the answer is, yeah, they actually starting to engage us on that as that legislation is passed, and it does have benefits to their cash.

Speaker Change: Thank you. Our next question comes from Jeff, Coffman with vertical research partners.

Please go ahead.

Ken Hastings: Thank you very much and congratulations. In an uncertain environment.

Jeff Kauffman: Thank you very much and congratulations. In an uncertain environment. I was just wondering with the passage of the One Big Beautiful Bill Act and the R and D, and CapEx depreciation acceleration that a lot of companies will be getting, have customers re-engaged you about the 2026 order season?

Scott Group: I was just wondering with the passage.

Ken Hastings: Of the One Big Beautiful Bill Act and the R and D, and CapEx depreciation acceleration that a lot of companies will be getting, have customers re-engaged you about the 2026 order season?

Speaker Change: Thank you very much and congratulations and an uncertain environment. Um, I was just wondering with the passage of the the 1, big beautiful, bill act, and the R&D, and and capex, um, depreciation acceleration that that a lot of companies will be getting have customers re-engaged you about the 26 Order season.

Preston Feight: Yeah. Appreciate the comments on the quarter and also really insightful question. And the answer is, yeah, they actually starting to engage us on that as that legislation is passed and it does have benefits to their cash. Their ability to deploy that cash for capital asset purchases like trucks is starting to be part of the conversation and is part of our optimism for the latter part of the year.

Brice Poplawski: Their ability to deploy that cash for capital asset purchases like trucks is starting to be part of the conversation as part of our optimism for the latter part of the year. Yeah, and then I would just add as is Bryce, it'll be very positive. It'll be very positive for us as a company as well because that R&D expensing, as well as the immediate expense R&D expense and expensing on the fixed assets, we think will provide cash tax benefits in the 300 to $400 million range. So it's good news, good news for our customers.

Angel Castillo: Yes.

Brice Poplawski: Yes. Then I would just add this is Brice. It'll be very positive for us as a company as well because that R&D expensing as well as the immediate R&D expensing on the fixed assets we think will provide cash tax benefits in the $300 to 400 million range. It's good news for us, good. News for our customers.

Speaker Change: Yeah, that's a appreciate the comments on the quarter and also a really insightful question. And the answer is, yeah, they actually starting to engage us on that as that legislation is passed and it does have benefits to their cash. Um, their ability to deploy that cash or Capital asset purchases. Like trucks is starting to be part of the conversation and it's part of our optimism for the latter part of the year.

Kevin Baney: Then I would just add this is Brice. It'll be very positive for us as a company as well because that R&D expensing as well as the immediate R&D expensing on the fixed assets we think will provide cash tax benefits in the $300 to 400 million range.

Preston Feight: It's good news for us, good.

Kevin Baney: News for our customers.

Speaker Change: Yeah, and then I would just add. This is Bryce, it'll be very positive, it'll be a very positive for us as a company as well because that R&D expensing as well as the immediate expense R&D expense expensing on the fixed assets, we think will provide cash tax benefits in the 300 to 400 million dollar range. So it's, it's good news for us. Good news for our customers.

Scott Group: All right, Brice, you beat me to.

Jeff Kauffman: All right, Brice, you beat me to the second half of the question. So that's all I have.

Jeff Kauffman: All right, Brice, you beat me to the second half of the question, so that's all I have. Is that good? Thank you.

Ken Hastings: The second half of the question. So that's all I have.

Preston Feight: Is that good?

I probably should beat me to the second half of the question. So that's all I have. Is that good?

Operator: Thank you. Our next question comes from Angel Castillo with Morgan Stanley. Please go ahead.

Angel Castillo: Our next question comes from Angel Castillo with Morgan Stanley. Please go ahead. Hi, good morning. Thanks for taking my question. I just wanted to maybe follow up on that just in terms of the, I think the second half delivery is implied by kind of the industry outlook and, you know, assuming your market share remains intact is a little bit more kind of stable in terms of US and Canada for the second half versus the first half. And to your point, or the comments around, you know, seeing good kind of conversations with customers around potential benefits, you know, that from the one big beautiful bill that maybe drive some incentive to ordering.

Speaker Change: Thank you. Our next question, comes from Angel, Castillo with Morgan Stanley. Please go ahead.

Angel Castillo: Hi, good morning. Thanks for taking my question. Just wanted to maybe follow up on that. Just in terms of the. I think the second half delivery is implied by kind of the industry outlook. And you know, assuming your market share remains intact is a little bit more kind of stable in terms of US and Canada for the second half versus the first half. And to your point, are the comments around, you know, seeing good kind of conversations with customers around potential benefits. You know, that from the One Big Beautiful Bill that maybe drives some incentive to ordering. Curious. Could you just provide a little bit more color? I guess. We've had three months now of pretty weak orders. So do you expect then the next month we'll start to see that essentially rebound?

Angel Castillo: Curious, could you just provide a little bit more color? I guess we've had three months now of pretty weak orders. So do you expect then the next month we'll start to see that essentially rebound and that's what gives you confidence in the second half? Or, you know, as we think about order dynamics here that we're seeing, why won't that have a bigger kind of impact on underlying deliveries that you're kind of expecting the second half?

Angel Castillo: That's what gives you confidence in the second half, or, as we think about order dynamics here that we're seeing, why won't that have a bigger kind of impact than underlying deliveries that you're kind of expecting in the second half?

Preston Feight: Yeah, really fun question, Angel. Thanks for asking. There's a few factors going into the sequencing of orders. One of the things that's in the truckload sector, which is a pretty significant part of the overall market in the US and Canada, is that there was some overcapacity. I think that overcapacity is coming out gradually, and as that gets in balance, it'll help with rates, which will help with profitability for the carriers, which will help with truck orders. So that's one factor in there. Another key factor that gives us confidence that we'll see improvement is the fact that the big beautiful bill that you referenced has an upside potential for us as the year gets through. Another one is regulatory emission standards. So as we all know, there's a greenhouse gas component and a NOx component. The greenhouse gas component for 2027 is likely not to change.

Hi, good morning, thanks for taking my question. Just wanted to maybe follow up on that. Just in terms of the I think the second half delivery is implied by kind of the industry Outlook. And, you know, assuming your market share remains intact is a little bit more kind of stable, um, in terms of US and Canada for the second half versus first half and to your point or the comments around, you know, seeing good kind of conversations with customers around potential benefits. That, you know, that from the 1, big beautiful, build that, maybe drives some incentive to ordering curious. Could you just provide a little bit more color? I guess we've had 3 months now of 3, week orders. So do you expect them the next month? We'll start to see that essentially rebound. And that's what gives you confidence in the second half or, you know, as we think about order Dynamics here that we're seeing, why won't that have a bigger kind of impact and underlying deliveries, um, that you're kind of expecting a second half.

Preston Fite: Yeah, really fun question, Angel. Thanks for asking. There's a few factors going into the sequencing of orders. One of the things that's in the truckload sector, which is a pretty significant part of the overall market in the U.S. and Canada, is that there was some overcapacity. I think that overcapacity is coming out gradually, and as that gets in balance, it'll help with rates, which will help with profitability for the carriers, which will help with truck orders. So that's one factor in there. Another key factor that gives us confidence, that is, we'll see improvement. is the fact that the big beautiful bill that you referenced has a upside potential for us as the year gets through.

Yeah, really fun question, Angel. Thanks for asking.

There's a few factors going into the the sequencing of orders. Um 1 of the things that's in the truckload sector which is a pretty significant part of the overall Market in the US and Canada is that there was some over capacity, and I think that over capacity is coming out gradually and as that gets in Balance, it'll help with rates, which will help with profitability for the carriers, which will help us truck orders. So that's 1 factor in there. Another key factor that gives us confidence.

Speaker Change: That is, we'll see Improvement.

Preston Fite: Another one is regulatory emissions standards. So, as we all know, there's a greenhouse gas component and a NOx component. The greenhouse gas component for 2027 is likely not to change, so that's what a lot of people can understand now, which means there'll be no further GHG requirements. However, the law is in 2027 that the standard of NOx will move from 200 milligrams down to 35 milligrams. If it moves from 200 to 35 milligrams, that'll bring on costs to the product, which will encourage customers to be buying trucks, you know, probably beginning later in this year.

Speaker Change: Is the fact that the big beautiful bill that you referenced has a has a upside potential for us as the year gets through.

Preston Feight: So that's what a lot of people can understand now, which means there'll be no further GHG requirements. However, the law is in 2027 that the standard of NOx will move from 200 milligrams down to 35 milligrams. If it moves from 200 to 35 milligrams, that'll bring on cost of the product, which will encourage customers to be buying trucks probably beginning later in this year. And then there's the factor around tariffs. I think that with uncertainty, customers kind of pause and with clarity comes confidence. So if we get confidence uncertainty around tariff structures in Q3, then I think customers' reactions to that will be positive and we think that that should be favorable for PACCAR. So there are quite a few reasons to weigh in there for our confidence as the year goes along here.

So that's what a lot of people can understand now, which means there'll be no further GHG requirements. However, the law is in 2027 that the standard of NOx will move from 200 milligrams down to 35 milligrams. If it moves from 200 to 35 milligrams, that'll bring on cost of the product, which will encourage customers to be buying trucks probably beginning later in this year. And then there's the factor around tariffs. I think that with uncertainty, customers kind of pause and with clarity comes confidence. So if we get confidence uncertainty around tariff structures in Q3, then I think customers' reactions to that will be positive and we think that that should be favorable for PACCAR. So there are quite a few reasons to weigh in there for our confidence as the year goes along here.

Speaker Change: Another 1 is regulatory emission standards. So as we all know, there's a greenhouse gas component and a nox component. The greenhouse gas component for 2027, is likely not to change. So that's what a lot of people can understand now.

Speaker Change: Which means there'll be no further ghd requirements. However,

Preston Fite: And then there's the factor around tariffs. I think that with uncertainty, customers kind of pause, and with clarity comes confidence. So, if we get confidence and certainty around tariff structures in the third quarter, then I think customers' reactions to that will be positive, and we think that that should be favorable for Paccor. So, there's quite a few reasons to weigh in there for our confidence as the year goes along here.

Speaker Change: the law is in 2027 that the standard of nox will move from 200 milligrams down to 35 milligrams. If it moves from 200 to 35 milligrams, ought to bring on cost of the product, which will encourage customers to be buying trucks. You know, probably beginning later in this year.

Speaker Change: And then there's the factor around tariffs. I think that with uncertainty customers kind of pause and with Clarity comes confidence. So if we get confidence and certainty around tariff structures in the third quarter, then I think customers reactions to that will be positive and we think that that should be favorable for Packard. So there's quite a few reasons to to weigh in there for our confidence as the year goes along here.

Angel Castillo: Super helpful, thank you. And then maybe just another one that I thought was really powerful, I guess the guidance for parts in Q3. I thought, if I heard you correctly, I think you guided to 4% to 6% top line growth. Can you just help us understand maybe what's kind of driving that reacceleration in the parts business, what you're seeing, and kind of demand trends. And if you could also maybe just comment on what gross margin is assumed for Q3 within your guidance for parts.

Preston Fite: Thank you. And then maybe just another one that I thought was really powerful, I guess, the guidance for parts in the third quarter, I thought, if I heard you correctly, I think you got it to 4% to 6% top-line growth. Can you just help us understand maybe what's kind of driving that re-acceleration in the parts business, what you're seeing in kind of demand trends? And if you could also maybe just comment on what gross margin is assumed for 3Q within your guidance for parts? Yeah, I'll just I'll start with reiterating that we had record revenue in Q2 and 3.4% sales growth.

Speaker Change: Super helpful. Thank you. Um, and then, maybe just another 1 that I thought was really, uh, powerful. I guess that the guidance for parts and the third quarter, I thought, if I heard you correctly, I think you got it to 46% Top Line growth. Um, can you just help us understand? Maybe, what's, what's kind of driving that accelerate acceleration?

Speaker Change: The parts, um, business. What you're seeing and kind of demand Trends and and if if you could also maybe just comment on what gross margin is assumed for for 3Q within your guidance for parts.

Kevin Baney: Yeah, I'll just, I'll start with reiterating that we had record revenue in Q2 and Q3, 3.4% sales growth. And so, you know, that was done during a flat parts market. So anytime we can get revenue growth and sales growth in a flat market is a good thing. So the forecast for 4% to 6% for the third quarter is just a testament to the parts team doing a really nice job providing parts and programs to deliver excellent customer service. And we see that performance starting to normalize back to stronger sales growth. So I think the parts outlook is strong. And in the second quarter we have a few more bank holidays and other holidays in Europe. So we see a higher number of ship days in the third quarter in Europe. And that's our very strong market for parts sales.

Preston Fite: And so, you know, that was done during a flat parts market. So anytime we can get revenue growth and, and, and sales growth in a flat market is a good thing. So the forecast for four to 6% for the third quarter is just a testament to the parts team doing a really nice job providing parts and programs to deliver excellent customer service. And we see that performance starting to normalize back to stronger sales growth. So I think the parts, parts outlook is strong. And in the second quarter, we have a few more bank holidays and other holidays in Europe.

Speaker Change: Yeah, I'll just I'll start with reiterating that we had record Revenue in Q2 and the 3 Port 3.4% sales growth. And so, you know, that was done during a flat Parts market. So anytime we can get Revenue growth and and, uh, and sales growth, and a flat Market is a good thing. So the forecast for 4 to 6%, for the third quarter is just a a testament to the parts team doing a really nice job, providing parts and and programs to deliver. Excellent. Uh, customer service and and we see that performance starting to normalize back to Stronger, sales growth. So I think the parts

Brice Poplawski: And in the second quarter we have a few more bank holidays and other holidays in Europe. So we see a higher number of ship days in the third quarter in Europe. And that's our very strong market for parts sales. So that will help us as well.

Preston Fite: So we see a higher number of shift days in the third quarter in Europe. And that's our very strong market for part sale. So that'll help us as well.

Kevin Baney: So that will help us as well.

Speaker Change: parts out Outlook is strong and in the second quarter we have a few more bank holidays and other holidays in Europe. So, we see a a higher number of ship days in the third quarter in Europe. And that's our very strong market for, uh, part sales. So that'll help us as well.

Angel Castillo: Very helpful. Thank you. You bet.

Angel Castillo: Very helpful. Thank you.

Preston Feight: You bet. Have a good day.

Speaker Change: Very helpful. Thank you.

Operator: Smith. Have a good day.

Preston Feight: Have a good day.

Speaker Change: Bad. Have a good day.

Operator: Thank you. Our next question comes from Chad Dillard with Bernstein. Please go ahead.

Chad Dillard: Our next question comes from Chad Dillard with Bernstein. Please go ahead. Hey, good afternoon, guys.

Speaker Change: Thank you. Our next question, comes.

Speaker Change: Just go ahead.

Ken Hastings: Hey, good afternoon, guys. So to what extent is the possibility of a pre buy changing your down cycle playbook? Do you feel the need to hold on to labor longer just in case the pre buy happens? Just curious on how this influences your view on what sort of fixed cost absorption is acceptable.

Chad Dillard: Hey, good afternoon, guys. So to what extent is the possibility of a pre buy changing your down cycle playbook? Do you feel the need to hold on to labor longer just in case the pre buy happens? Just curious on how this influences your view on what sort of fixed cost absorption is acceptable.

Chad Dillard: So what to what extent is the possibility of accrued by changing your Do you feel the need to hold on to labor longer just in case a pre-buy happens? I'm just curious how this influences your view on what sort of fixed cost absorption is acceptable?

Speaker Change: Hey, good afternoon guys. Um so what to what extent is the possibility of approved by changing your Dan cycle Playbook? Um do you feel the need to hold on to labor longer just in case the prey happens? Uh, just curious on to like how this influences your your view on like what sort of fixed cost absorption is acceptable.

Preston Feight: Yeah, sure, Chad. As you know, PACCAR focuses on lean, efficient production. Always has, always will. And so we continue to do that. What we see is that we've done a great job of controlling costs both in our fixed operations, if you want to call them that, and also in our factories. But we're very proud of our wonderful employees. And so as we see upside to the market, we obviously are looking for them to keep building great trucks. And as we see the market's likelihood of improving as the year continues, then we'll see that that'll be good for everybody, good for employees, good for the company. And so we're trying to keep that in the right balance.

Preston Fite: Yeah, sure, Chad. As you know, Paccor focuses on lean, efficient production, always has, always will. And so we continue to do that. What we see is that we've done a great job of controlling costs, both in our fixed operations, if you want to call them that, and also in our factories. But we're very proud of our wonderful employees. And so as we see upside to the market, we obviously are looking for them to keep building great trucks. And as we see the market's likelihood of improving as the year continues, then we'll see that it'll be good for everybody, good for employees, good for the company.

Chad Dillard: And so we're trying to keep that in the right balance. That's helpful.

And so, we continue to do that. What we see is that we've done a great job of controlling costs both in our fixed operations, if you want to call them that and also in our factories. But we're very um, proud of our wonderful employees. And so as we see upside to the market, we obviously are, um, looking for them to keep building great trucks and as we see the markets likelihood of improving as the year continues, then we'll see that. Um, that'll be good for everybody, good for employees, good for the company. And so, we're trying to keep that in the right balance.

Ken Hastings: That's helpful. Then just secondly, can you just comment on just like the sort of pricing that you're seeing in the back half of the year, you know, our clients, you know, are the price increases sticking? Just comment on just what your clients are telling you.

Chad Dillard: That's helpful. Then just secondly, can you just comment on just like the sort of pricing that you're seeing in the back half of the year, you know, our clients, you know, are the price increases sticking? Just comment on just what your clients are telling you.

Chad Dillard: Just a second, can you comment on the sort of pricing that you're seeing in the back half of the year, you know, are clients, you know, are the price increases sticking? Just comment on just what your clients are. Well, I think it goes into the earlier discussion we had around the market in general, you know, I think that as their profitability improves, and their need for trucks continues to, to increase, then that's good for the market dynamics right now, I think is that capacities come out. But still coming out, there's this there's this balance that's being achieved.

Speaker Change: That's helpful and then just second like he's comment on the just like the sort of pricing that you're seeing in the back half of the year. You know, our clients you know, are the price increases sticking just comment on, just what your your clients are telling you.

Preston Feight: Well, I think it goes into the earlier discussion we had around the market in general. You know, I think that as their profitability improves and their need for trucks continues to increase, then that's good for the market dynamics right now. I think as that capacity has come out, but still coming out, there's this balance that's being achieved. And once we get through that balance point, then we'll start to see increasing demand. You go back and remember that we're really kind of talking about a replacement market which should be in the 260s, 270s, and so we're not really chewing into that at all. And trucks are running and freight ton miles are not low. So this is all creating some level of pent up demand for the future.

Well, I think it goes into the earlier discussion we had around the market in general, you know, I think that as their profitability and improves and their need for trucks continues to to increase then that's good for the market dynamics. Right now, I think is that capacity has come out um, but still coming out, there's this there's this

Preston Fite: And once we get through that balance point, then we'll start to see increasing demand. Going back and remember that we're really kind of talking about a replacement market, which should be in the 260s, 270s. And so we're not really chewing into that at all. And trucks are running and freight ton miles are not low.

Balance as being achieved. And once we get through that balance point, then we'll start to see increasing demand and going back to remember that.

Preston Fite: So this is all creating some level of pent up demand for the future. Thanks, guys. You bet. Thank you.

Speaker Change: Um we're really kind of talking about a replacement Market which should be in the 260s 270s and so we're not really chewing into that at all and trucks are running and Freight tan miles are not low. So this is all creating some level of pent-up, demand for the future.

Ken Hastings: Thanks guys.

Chad Dillard: Thanks guys.

Speaker Change: Thanks guys.

Preston Feight: You bet.

You bet.

Operator: Thank you. Our next question comes from Michael Feniger with Bank of America. Please go ahead.

Michael Feniger: Our next question comes from Michael Feniger with Bank of America.

Michael Feniger: Please go ahead. Yes. Hi, everyone. Thanks for taking my question. Just on the parts with the four to six percent top line, I realize you guys are growing parts in a flat market. With the top line potentially up four to six percent in the third quarter, do you think you can grow profit at that same rate? I know it's a little challenging in a flat market. Just kind of curious, you know, what's the right where we could kind of see the parts revenue growing and see that pre-tax profit and that margin also maybe growing along with that.

Speaker Change: Thank you. Our next question comes from Michael, Fenger, with Bank of America, please go ahead.

Michael Feniger: Yes. Hi everyone, thanks for taking my question. Just Preston, just on the parts with the 4% to 6% top line, I realize you guys are growing parts in a flat market with the top line potentially up 4% to 6% in Q3. Do you think you can grow profit at that same rate? I know it's a little challenging in a flat, flat market. Just kind of curious, you know, what's the right environment where we could kind of see the parts revenue growing and see that pre-tax profit and that margin also maybe growing along with that.

Michael Fenger: Yes. Uh hi everyone. Thanks for taking my question. Just press just on, on the parts with the 4 to 6% Top Line. I I realize you guys are growing Parts in a flat Market with with the Topline. Potentially up 4 to 6% in in in the third quarter, do you think you can grow profit at that same rate? I know it's a little challenging and a flat Market. Just kind of curious you know what's the right environment where we can kind of see the parts Revenue growing and seeing that pre-tax profit and that margin also maybe growing along with that.

Kevin Baney: Yeah, Michael, great question. You know, we are proud of the team for being able to deliver the parts growth in a flat market. You know, we definitely see upside when we look at the overall truck parc. You know, it's still at elevated levels, and you know, those customers still need their truck serviced, and that comes with parts. And so, you know, our dealers continue to add capacity, and whether it's in updated locations, new locations, PACCAR continues to add distribution centers. And so all of that points to, as we see the ongoing sales growth, we see upside in the, in the profit as well. Yep.

Kevin Boehne: Yeah, Michael, great question. You know, we are proud of the team for being able to deliver the parts growth in a flat market. You know, we definitely see upside. When we look at the overall truck park, you know, it's still at elevated levels. And, you know, those customers still need their truck serviced and that comes with parts. And so, you know, our dealers continue to add capacity and whether it's in updated locations, new locations, Paccor continues to add distribution centers. And so I think all of that points to as we see the ongoing sales growth, we see upside in the profit as well.

Yeah, Michael. Great question. You know, we, we are proud of the team for being able to deliver the the parts growth in a flat Market. You know, we definitely see appi upside when we look at the overall truck Park,

Preston Feight: Yep.

Michael Fenger: You know, it's still an elevated levels and you know those customers still need the truck serviced and that comes with parts. And so, you know, our our dealers continue to add capacity and whether it's an updated locations, new locations, uh, to pack our continues to add distribution centers. And so, I think all of that points to, as we see the, the ongoing, uh, sales growth, we see upside in the in the profit as well. Yep.

Michael Feniger: Great. And just my last one is just on the inventory side. I know there's your inventory, then we obviously have the industry. How do you feel your own inventory set up, you know, given some of the moving pieces that you're seeing with tariffs, but also, you know, potential of a pre buy at some point, maybe next year? Do you carry a little bit more? Do you have to kind of work some of that down as we move through the year? Just kind of curious how you view it, how you think your inventory's position and how you think your competitors in the industry overall is set up as we're dealing with these dynamics as we move into 2026. Thank you.

Michael Feniger: Great.

Michael Feniger: And just my last one, it's just on the inventory side. I know there's your inventory, then we obviously have the industry. How do you feel your own inventory set up, you know, given some of the moving pieces that you're seeing with Terrace, but also, you know, potential of a pre-buy at some point, maybe next year? Do you carry a little bit more? Do you have to kind of work some of that down as you move through the year? Just kind of curious how you think your position and how you think your competitors in the industry overall is set up as we're dealing with these dynamics as we move into 2026.

Preston Fite: Thank you. Sure, sure, you bet. Nice question, Michael. If you look at the industry class eight inventory, it's at 4.2 months of retail sales. You look at Kenworth and Peterbilt's inventory is really 2.9 months of retail sales. We feel very good about our inventory position. And one of the things that also factors into that is roughly half of our trucks are at bodybuilders. Out of that inventory is at bodybuilders. So that's an overrepresented part because Paccor is the leader in the vocational segment. And so our inventory feels well positioned. And as you know, we build the order.

Preston Feight: Sure. Sure. You bet. Nice question, Michael. If you look at the industry Class 8 inventory, it's at 4.2 months of retail sales. You look at Kenworth and Peterbilt's inventory; it's really 2.9 months of retail sales. We feel very good about our inventory position. One of the things that also factors into that is roughly half of our trucks are at bodybuilders. That inventory is at bodybuilders. So that's an overrepresented part because PACCAR is the leader in the vocational segment. So our inventory feels well positioned. As you know, we build the order, so we feel like we maintain our disciplines and are in a very good position from an inventory standpoint.

Great. And just my last 1 is just on, on the inventory side. Um I know there's there's your inventory. Then we obviously have the industry. How do you feel your own inventory set up? You know, given some of the moving pieces that you're seeing with terrorists, but also, you know, potential of of a pre-b buy at some point maybe next year. Do you carry a little bit more? Do you have to kind of work work? Some of that down as we move through the year, just kind of curious. How you posit, how you think your inventory is positioned, and how you think your competitors. In the industry overall is is set up. As we're doing these Dynamics as we move into 2026. Thank you.

Michael Fenger: Sure, sure. You bet. Nice question Michael.

If you look at the industry Class A inventory. It's at 4.2 months of retail sales. You look at and where the Peterbilts inventory is really 2.9 months of retail sales. We feel very good about our inventory position

Michael Fenger: And 1 of the things that also factors into that is roughly half of our trucks are at bodybuilders out of that inventory. That bodybuilders. So that's a an over represented part because Packard is the leader in the vocational segment.

Preston Fite: So we feel like we've maintained our disciplines and are in a very good position from an inventory standpoint.

Michael Fenger: And so our inventory feels well positioned. And as you know, we build the order. So we feel like we've maintained our disciplines and in a very good position, from an inventory standpoint.

Operator: Thank you. Our next question comes from Jamie Cook with Truist Securities. Please go ahead.

Operator: Our next question comes from Jamie Cook with Truer Security. Please go ahead.

Jamie Cook: Are you Hi, good morning. Nice quarter. I guess first, you know, the deliveries exceeded the high end of your expectations. Margins were at the high end. Was there anything unusual in the margins? And why were the deliveries better? Was it just sort of a pre-buy ahead of tariffs?

Jamie Cook: Hi. Good morning. A nice quarter. I guess first, you know, the deliveries came in and the deliveries exceeded the high end of your expectations. Margins were at the high end. Was there anything unusual in the margins? And why were the deliveries better? Was it just sort of a pre-buy ahead of tariffs? And then I guess my second question, just given what you're saying about the back half of the year, to what degree do you have confidence that like the 13% in Q3 could mark sort of the bottom for margins if things start to normalize? And to what degree do you think, you know, while you're not guiding for 2026, ACT, I think is assuming production is about flat next year.

Jamie Cook: And then I guess my second question, just given what you're saying, seeing about the saying about the back half of the year, to what degree do you have confidence that like the 13% in the third quarter could mark sort of the bottom for margins if things start to normalize? And to what degree do you think?

Jamie Cook: You know, while you're not guiding for 2026, ACT, I think, is assuming productions about flat next year, any color around how you're thinking about 2026. It sounds like you're more optimistic, but I don't want to put words in your mouth.

Speaker Change: And then I guess my second question. Just given what you're saying seeing about the saying about the back half of the year to what degree do you have confidence that like the 13% in the third quarter? Could Mark sort of the bottom for margins if things start to normalize. Um, and to what degree do you think?

Jamie Cook: Any color around how you're thinking about 2026? It sounds like you're more optimistic, but I don't want to put words in your mouth. Thank you.

Any color around how you're thinking about 2026? It sounds like you're more optimistic, but I don't want to put words in your mouth. Thank you.

Preston Fite: Thank you. Jamie, that's a series of questions right there. And first, thanks for the comments on the quarter. Feels like a good position that we're in. You know, when I think about deliveries for the third quarter, it kind of has the European normal shutdown period. So that's part of it. And then I think adjustment to the market is part of it as we look at it. And then we feel like it depends on getting some of the stability that we've talked about in terms of other positions for, like, are we going to have tariff clarity?

Speaker Change: You know, while you're not guiding for 2026 act. I think is assuming Productions about flat next year. Any color around how you're thinking about 2026. It sounds like you're more optimistic but I don't want to put words in your mouth. Thank you.

Preston Feight: Jamie. That's a series of questions right there. First, thanks for the comments on the quarter. Feels like a good position that we're in. You know, when I think about deliveries for Q3, it kind of has the European normal shutdown period. That's part of it. Then I think adjustment to the market is part of it as we look at it. We feel like it depends on getting some of the stability that we've talked about in terms of other positions for like, are we going to have tariff clarity and will we have regulatory clarity around NOx emissions? So as we think about deliveries and the 13% for the quarter, it feels like that we could be, in your words, thinking about talking about the bottom of a cycle. Then I would kind of.

Preston Fite: And will we have regulatory clarity around NOx emissions? So as we think about deliveries and the 13 percent for the quarter, it feels like that we could be, in your words, thinking about talking about the bottom of a cycle. And then I would kind of – we've been kind of internally thinking and sharing with you that we feel like we are structurally stronger. And we went back and looked at the last time we had roughly 38,000 deliveries, 36,000 deliveries. And we had, like, $4.9 billion in revenue and made $386 million in profit. So comparatively, I think this is just demonstrating that cycle over cycle strength that our team has delivered.

Jamie, that's a that's a series of questions right there and first, thanks for the comments on the quarter. Um, feels like a good position that we're in. You know, when I think about deliveries for the for the third quarter, it kind of has the European normal, um, shutdown period. So that's part of it. And then, I think adjustment to the market is part of it as we look at it, and then we feel like, it depends on getting some of the stability that we've talked about in terms of other positions for like, are we going to have tariff clarity?

Then I would kind of We've been kind of internally thinking and sharing with you that we feel like we are structurally stronger. We went back and looked at the last time we had roughly 38,000 deliveries, 36,000 deliveries, and we had like $4.9 billion in revenue and made 386 million in profit. So comparatively, I think this is just demonstrating that cycle over cycle strength that our team has delivered. And that's the parts team, that's the financial services team, that's the truck divisions. I mean, there's been, that's the new trucks that are in the marketplace, the great dealers, the relationships with the suppliers, a lot of good things that are going the right direction. And that is delivering for our shareholders, our customers, and our employees.

Preston Feight: We've been kind of internally thinking and sharing with you that we feel like we are structurally stronger. We went back and looked at the last time we had roughly 38,000 deliveries, 36,000 deliveries, and we had like $4.9 billion in revenue and made 386 million in profit. So comparatively, I think this is just demonstrating that cycle over cycle strength that our team has delivered. And that's the parts team, that's the financial services team, that's the truck divisions. I mean, there's been, that's the new trucks that are in the marketplace, the great dealers, the relationships with the suppliers, a lot of good things that are going the right direction. And that is delivering for our shareholders, our customers, and our employees.

Speaker Change: And what we have regulatory Clarity around docs emissions. So as we think about deliveries and the 13% for the quarter, um, it feels like that we could be as your words thinking about talking about the bottom of a cycle and then I would kind of we've been kind of internally thinking and sharing with you that we feel like we are structurally stronger and we went back and looked at the last time we had roughly 38,000, deliveries

Preston Fite: And that's the parts team. That's the financial services team. That's the truck divisions. I mean, there's been that's the new trucks that are in the marketplace, the great dealers, relationships with suppliers, a lot of good things that are going the right direction. And that is delivering for our shareholders, our customers, and our employees.

Speaker Change: Um 36,000 deliveries and we had like 4.9 billion dollars in revenue and made 386 million in profit. So, comparatively, I think this is just demonstrating that cycle of recycle strengths that our team has delivered and that's the parts team.

Speaker Change: That's the financial services team. That's the truck divisions. I mean there's been that's a new trucks that are in the marketplace. It's a great dealers, it's a relationships with suppliers a lot of good things that are going the right direction and that is delivering for our shareholders, our customers, and our employees.

Jamie Cook: And any color on how you're thinking about 2026 better than what the flat?

Preston Fite: and any color and how you're thinking about 2026 better than what the flat? I feel pretty good about 2026. Yeah, I feel pretty good about 2026. I think that there's going to be clarity in these regulatory standards because they're employing in 2027 one way or another. There will be clarity around tariffs one way or another. And as we said, the trucks are getting used.

Preston Feight: Feel pretty good about 2026? Yeah, I feel pretty good about 2026. I think that there's going to be clarity in these regulatory standards because they're implementing in 2027 one way or another. There will be clarity around tariffs one way or another. And as we said, the trucks are getting used, so 2026 should see improvement.

Speaker Change: Better than what the flat feel. Pretty good about 2026. Yeah, I feel pretty good about 2026. I think that um,

There's going to be Clarity in these regulatory standards because they're employing in 2027 1 way or another.

Speaker Change: There will be Clarity around tariffs 1 way or another.

Preston Fite: So 2026 should see improvement.

Speaker Change: And as we said, the trucks are getting used so 2026 should see Improvement.

Operator: Thank you. You bet. Have a good day, Jamie.

Jamie Cook: Thank you.

Thank you.

Preston Feight: You bet. Have a good day, Jamie.

You bet have a good day, Jamie.

Operator: Thank you. Our next question comes from Tami Zakaria with J.P. Morgan. Please go ahead. Tami.

Tami Zakaria: Thank you.

Tami Zakaria: Our next question comes from Tami Zakaria with JP Morgan. Please go ahead, Tami. Hi. Good morning. Thank you. Good afternoon. Thank you so much.

Speaker Change: Thank you. Our next question comes from Tammy Zakaria with JP Morgan.

Speaker Change: Please go ahead. Tammy.

Jamie Cook: Hi, good morning. Thank you. Good afternoon. Thank you so much. I wanted to ask you about the engine remanufacturing plant. When do you expect that to be fully operational? And when at run grade, how many engines do you expect that facility to be able to remanufacture annually?

Tami Zakaria: Hi, good morning. Thank you. Good afternoon. Thank you so much. I wanted to ask you about the engine remanufacturing plant. When do you expect that to be fully operational? And when at run grade, how many engines do you expect that facility to be able to remanufacture annually?

Tami Zakaria: I want to ask you about the engine remanufacturing plant. When do you expect that to be fully operational? And when at run rate, how many engines do you expect that facility to be able to remanufacture annually?

Tammy Zakaria: Hi. Um, good morning. Uh thank you. It's a good afternoon. Thank you so much. Um I wanted to ask you about the engine remanufacturing plant. When do you expect that to be fully operational? And when at run rate? How many engines do you expect that that facility to be able to remanufacture annually?

Kevin Baney: Okay, good question, Tami. So it'll be operational in the Q1 of next year, and then when it gets up to full run rate, we anticipate about 5,000 reman engines a year going through that facility.

Tami Zakaria: Good question, Tami. So it'll be operational in the in the first quarter of next year. And then when it gets up to full run rate, we anticipate about 5000 remanned engine a year going through that facility. Got it.

Okay, good question Tammy. So it'll be operational in the in the first quarter of next year. And then when it gets up to full run rate, we anticipate about 5,000 remand in engine. A year going through that facility,

Jamie Cook: Got it. Thank you. My second question is on the outlook for South America. I'm guessing the reduced outlook is the function of what's happening in Brazil. Just any color you can provide on what drove that revision and the outlook versus the beginning of the year, what changed that's driving this outlook revision?

Tami Zakaria: Got it. Thank you. My second question is on the outlook for South America. I'm guessing the reduced outlook is the function of what's happening in Brazil. Just any color you can provide on what drove that revision and the outlook versus the beginning of the year, what changed that's driving this outlook revision?

Tami Zakaria: Thank you.

Tami Zakaria: And my second question is on the outlook for South America. I'm guessing the reduced outlook is the function of what's happening in Brazil. So just any color you can provide on what drove that revision and the outlook versus the beginning of the year. What changed that's driving this outlook revision?

Tammy Zakaria: got it.

Speaker Change: America I'm guessing the reduced Outlook is the function of what's happening in Brazil. Um so just any color you can provide on what drove that revision and and the Outlook versus the beginning of the year. What changed that that's driving this Outlook revision.

Tami Zakaria: And Tami, thanks for the second question. For sure, you're right, it's mostly driven through Brazil. And the biggest impact there is interest rates. You know, they have a 400 basis point interest rate increases in the past since the beginning of the year. And so that's certainly affecting consumer confidence and willingness to invest in trucks right now. And so I think those are the two biggest factors. Okay, thank you. You bet. Thank you.

Preston Feight: Tami, thanks for the second question. For sure, you're right, it's mostly driven through Brazil. And the biggest impact there is interest rates. You know, they have the 400 basis point interest rate increases in the past since the beginning of the year. And so that's certainly affecting consumer confidence and willingness to invest in trucks right now. And so I think those are the two biggest factors.

Michael Fenger: Yeah, Tami. Thanks for the second question. Um, for sure, you're right, it's mostly driven through Brazil and the biggest impact there is interest rates. You know, they have the 400 basis point interest rate increases in the past, just the beginning of the year. And so that's certainly affecting consumer confidence and willingness to invest in trucks right now.

Speaker Change: And so I think those are the 2 biggest factors.

Jamie Cook: Okay, thank you.

Tami Zakaria: Okay, thank you.

Preston Feight: You bet.

Speaker Change: Okay, thank you.

Speaker Change: You bet.

Operator: Thank you. Our next question comes from Stephen Volkmann with Jefferies. Please go ahead, Stephen.

Steven Volkmann: Our next question comes from Steven Volkmann with Jeffreys. Please go ahead, Steven. Great. Hello, everybody. Thanks for taking the question. Just a couple quick follow ups here. We don't have nearly as much visibility into the European market. I'm just curious if you can comment on sort of directionally is that market? Do you think a growth market going forward? We've talked about some investment I guess some government investments over there, but I'm curious if you're seeing anything in that regard. Yes, Steven, I'd say, you know, given the economic overall economic conditions, or, you know, have some uncertainty in Europe, a 270 to 300,000 truck market is relatively strong, given that the economics.

Ken Hastings: Great. Hello everybody. Thanks for taking the question. Just a couple quick follow-ups here. We don't have nearly as much visibility into Europe. I'm just curious if you can comment on sort of directionally, is that market, do you think, a growth market going forward? We've talked about some investments, I guess some government investments over there. But I'm curious if you're seeing anything in that regard.

Stephen Volkmann: Great. Hello everybody. Thanks for taking the question. Just a couple quick follow-ups here. We don't have nearly as much visibility into Europe. I'm just curious if you can comment on sort of directionally, is that market, do you think, a growth market going forward? We've talked about some investments, I guess some government investments over there. But I'm curious if you're seeing anything in that regard.

Thank you. Our next question comes from Stephen Volkman with Jeffrey's please go ahead, Steven.

Great. Uh, hello everybody. Uh thanks for taking the question. Just a couple quick follow-ups. Here, we don't have nearly as much visibility into the European market. I'm just curious. If you can comment on sort of directionally is, is that market? Do you think a growth Market going forward? We've talked about some Investments, I guess some government Investments over there. Um, but I'm curious if you're seeing anything in that regard.

Kevin Baney: Yes, Stephen, I'd say, you know, given the economic, overall economic conditions or you know, have some uncertainty in Europe, a 270 to 300 truck market is relatively strong given that the economics. And so, you know, for PACCAR and DAF specifically, we've had a strong market share in the last month and year to date share is up compared to this time last year. You know, DAF share is traditionally strong in Eastern Europe. And as Preston said in his comments, we were with some customers recently and see some upside. And so if you look at that size market, that's a little above replacement value. So I'd say that that's a strong market given the conditions and that's likely the short term ongoing forecast.

Speaker Change: Given the economic overall economic conditions.

Steven Volkmann: And so, you know, for for PACCAR and DOF, specifically, we've had a strong market share in the in the in the last month and year to date share is up compared to this time last year. You know, DOF share is traditionally strong in Eastern Europe. And as Preston said, in his comments, we were with some customers recently and, and see some upside. And, and so, you know, if you look at that size market, you know, that's, that's a little above replacement value. So I'd say that that's a that's a strong market, given the conditions, and that's, that's likely the, you know, the short term, ongoing forecast.

or, you know, have some uncertainty in Europe at 270 to 300,000 truck Market is, is relatively strong given that the economics and so

Preston Fite: You know, I would add that the thing that's that's helping us there is we introduced our new product and it's still the only truck that was designed to meet the masses and dimensions regulations over there. It's providing industry leading fuel economy, it's the best truck for the driver. It's the coolest truck to be honest with you. And so there's a lot of things to really like about how things are going.

Preston Feight: I would add that the thing that's helping us there is we introduced our new product, and it's still the only truck that was designed to meet the Masses and Dimensions regulations over there. It's providing industry-leading fuel economy. It's the best truck for the driver. It's the coolest truck, to be honest with you. And so there's a lot of things to really like about how things are going. And then in 2025, we introduced some advanced technologies onto the platform, which also further enhances performance and fuel efficiency. So, feeling very good about the DAF team and what they're doing.

Speaker Change: You know, for for Pacar and do specifically. Um, we've had a strong market share in the, in the, uh, in the last month. And, and year to date share is up compared to this time last year. You know, do share is traditionally strong and Eastern Europe. And as Preston said, in his comments that we were with some customers recently and and, uh, see some upside. And, and so, you know, if you look at that size Market, you know, that's that's a little above replacement value. So I'd say that, that's a, that's a strong Market, given the, the conditions. And and that's, that's likely the, you know, the short term ongoing forecast,

Preston Fite: And then in 2025, we introduced some advanced technologies onto the onto the platform, which also further enhances performance and fuel efficiency. So feeling very good about the dock team and what they're doing. Super, thank you for that.

Speaker Change: And I would add that the thing that's that's helping us. There is, we introduced our new product and it's still the only truck that was designed to meet the masses and dimensions regulations over there. It's providing, industry-leading fuel economy. It's the best truck for the driver. Um, it's the coolest truck to be honest with you and so there's a lot of things to really like about how things are going. And then in 2025, we introduced some Advanced Technologies onto the onto the platform which also further enhances, performance and fuel efficiency. So feeling very good about the dock team and what they're doing.

Ken Hastings: Super, thank you for that. Then on the Vocational side, we hear some channel checks that sort of suggest that, you know, there were a lot of orders and obviously a lot of backlog in the industry, and now we're starting to kind of work through all that. The orders on Vocational have also been a little bit weaker recently. So I guess I'm wondering, as you deliver this 50%, Preston, of your inventory that's at bodybuilders, is there a risk that Vocational is sort of the next, the next end market to kind of go down before it goes up?

Stephen Volkmann: Super, thank you for that. Then on the Vocational side, we hear some channel checks that sort of suggest that, you know, there were a lot of orders and obviously a lot of backlog in the industry, and now we're starting to kind of work through all that. The orders on Vocational have also been a little bit weaker recently. So I guess I'm wondering, as you deliver this 50%, Preston, of your inventory that's at bodybuilders, is there a risk that Vocational is sort of the next, the next end market to kind of go down before it goes up?

Steven Volkmann: And then on the vocational side, we hear some channel checks that sort of suggest that, you know, there were a lot of orders, and obviously a lot of backlog in the industry. And now we're starting to kind of work through all that. And the orders on vocational have also been a little bit weaker recently.

Preston Fite: So I guess I'm wondering, as you deliver this 50% Preston of your inventory, that that body builders, is there a risk that vocational is sort of the next next and market to kind of go down before it goes up. Well, I think that's a that's kind of a, I would never have used the word weaker to describe the vocational market, I would have said that it was frothy for a while. And now it's just good. So, so I might say that we're operating in a good vocational market, I think there's a lot of infrastructure spending that's going into the country under the administration's objectives and infrastructure spending is good for the vocational market.

Speaker Change: Super, thank you for that. And then, uh, on the vocational side, um, we hear some Channel checks that sort of suggests that, you know, there were a lot of orders. Um, and obviously a lot of backlog in the industry. And now we're starting to kind of work through all that and the orders on vocational have also been a little bit weaker, uh, recently. So I guess I'm wondering as you deliver this 50%, Preston of your inventory, that's at bodybuilders. Is there a risk that vocational is sort of the next? The next End Market to kind of go down before it goes up.

Preston Feight: Well, I think that's kind of a. I would never have used the word weaker to describe the Vocational market. I would have said that it was frothy for a while and now it's just good. So I might say that we're operating in a good Vocational market. I think there's a lot of infrastructure spending that's going into the country under the administration's objectives, and infrastructure spending is good for the Vocational market. So I think that that bodes well for a steady, strong Vocational sector for a while.

Preston Fite: So I think that that bodes well for a steady, strong vocational sector for a while. Okay. Great to hear.

Speaker Change: Well, I think that's a that's kind of a, I would never have used the word weaker to describe the vocational Market. I would have said that it was frothy for a while and now it's just good. Um so so I might say that we're operating in a good vocational Market. I think there's a lot of infrastructure spending that's going into the country under the administration's objectives and infrastructure spending is good for the location of market. So I think that that bodes well for a steady strong vocational sector for a while.

Ken Hastings: Okay, great to hear. I'll pass it on. Thanks.

Stephen Volkmann: Okay, great to hear. I'll pass it on. Thanks.

Operator: I'll pass it on. All right, thanks. Have a good day, Steve. Thank you.

Preston Feight: All right, thanks. Have a good day, Steve.

Okay, great to hear. I'll pass it on, thanks. Yeah. All right. Thanks. Have a good day Steve.

Operator: Thank you. Our next question comes from Steven Fisher with UBS. Please go ahead.

Steven Fisher: Our next question comes from Steven Fisher with UBS. Please go ahead. Thanks. Good morning.

Speaker Change: Thank you. Our next question comes from Stephen Fischer with UBS

Please go ahead.

Ken Hastings: Thanks. Good morning. Just on the pricing topic, just curious how far out you are able to provide firm pricing to your customers, or do all the units basically come with a caveat that pricing can change as the tariff situation evolves? And how does that affect the order patterns?

Steven Fisher: Thanks. Good morning. Just on the pricing topic, just curious how far out you are able to provide firm pricing to your customers, or do all the units basically come with a caveat that pricing can change as the tariff situation evolves? And how does that affect the order patterns?

Steven Fisher: Just on the pricing topic, just curious how far out you are able to provide firm pricing to your customers? Or do all the units basically come with a caveat that pricing can change as the tariff situation evolves? And how does that affect the order pattern? Yeah, we do have a tariff surcharge listed on to our trucks for the US and Canada right now. And so we are pricing that in which allows us to price out into the future and then you know, These are customers, they're business partners, and they're friends that we're talking about. And so each of these discussions and business relationships has that discussion around if tariffs change, then there's a change potentially in what the pricing is.

Speaker Change: Thanks. Good morning, just on the uh, the pricing topic. Just curious. How far out you are able to provide firm pricing to your customers or do all the units basically come with a caveat that that pricing can change as the Tariff situation involves and and and how does that affect the order patterns?

Preston Feight: Yeah, we do have a tariff surcharge listed onto our trucks for the US and Canada right now. And so we are pricing that in, which allows us to price out into the future. And then, you know, these are customers, their business partners, and their friends that we're talking about. And so each of these discussions and business relationships has that discussion around if tariffs change, then there's a change potentially in what the pricing is. So that's a very active and live dialogue, and it allows us, with these great relationships, to price out into the future.

Yeah, we we do have, um, a tariff search charge listed on our trucks for the US and Canada right now. And so we are pricing that in which allows us to price out into the future. And then, you know,

Preston Fite: So that's a very active and live dialogue, and it allows us with these great relationships to price out into the future.

The, these are customers their business partners and their friends that we're talking about. And so each of these discussions and business relationships has that discussion around if tariffs change, then there's a change potentially in what the pricing is, so that's a very active and live dialogue and it allows us with these great relationships to price out into the future.

Ken Hastings: Okay. Then just looking beyond the cyclical dynamics here, really just thinking about the growth opportunities ahead, it seems like maybe EV and Autonomy are perhaps a bit slower to develop. Do you think there's any structural growth opportunities in trucks, or is it all really in parts and FinCo? And if so, should we expect you to really increase your focus on parts and FinCo even more relative to what you talked about at the investor meeting last year?

Steven Fisher: Okay. Then just looking beyond the cyclical dynamics here, really just thinking about the growth opportunities ahead, it seems like maybe EV and Autonomy are perhaps a bit slower to develop. Do you think there's any structural growth opportunities in trucks, or is it all really in parts and FinCo? And if so, should we expect you to really increase your focus on parts and FinCo even more relative to what you talked about at the investor meeting last year?

Preston Fite: Okay, and then just looking beyond the cyclical dynamics here, really just thinking about the growth opportunities ahead. It seems like maybe EV and autonomy are perhaps a bit slower to develop. Do you think there's any structural growth opportunities in trucks? Or is it all really in parts and FinCo? And if so, should we expect you to really increase your focus on parts and FinCo even more relative to what you talked about at the investor Well, I would suggest that, in general, trucks move most of the freight in the country. I don't think that's going to decrease.

Speaker Change: Okay, and then just looking beyond the cyclical Dynamics here, really just thinking about the the growth opportunities ahead. It seems like maybe EV and autonomy or perhaps,

Speaker Change: Good flower to develop. Do you think there's any structural growth opportunities in trucks? Or is it all really in in parts and finco? And if so you should we expect you to really increase your focus on on Parts in finco. Even more relative to what you talked about at the investor meeting last year.

Preston Feight: Well, I would suggest that in general, trucks move most of the freight in the country. I don't think that's going to decrease. I think if anything, that's going to increase. You referenced autonomy. I don't think that's tomorrow. But when autonomy happens, then you'll see that increase the number of trucks required in the country because they'll become even more efficient at delivering freight. So that will be good for PACCAR's business. You mentioned EV. So EV adoption curves. We've been wise and prudent through our investment cycles on EV investments over time. We continue to believe that there's a role for them to play as we look forward into the future. But a market-based role is probably what more likely happens for the next several years. So that's great for us. We're well positioned for that. And we think that EV vehicles tend to be more expensive.

Preston Fite: I think, if anything, that's going to increase. You referenced autonomy. I don't think that's tomorrow, but when autonomy happens, then you'll see that increase the number of trucks required in the country because it'll become even more efficient at delivering freight. So that will be good for PACCAR's business. You mentioned EV, so EV adoption curves. We've been wise and prudent through our investment cycles on EV investments over time. We continue to believe that there's a role for them to play as we look forward into the future, but a market-based role is probably what more likely happens for the next several years, so that's great for us.

Speaker Change: Sure well I would I would suggest that in general trucks move. Most of the Freight in the country. I don't think that's going to decrease. I think if anything that's going to increase

Speaker Change: Um, you referenced autonomy, you don't think that's tomorrow, but when autonomy happens, then you'll see that increase the number of trucks required in the country, because they'll become even more efficient at delivering Freight. So that will be good for Packard's business.

Preston Fite: We're well positioned for that, and we think that EV vehicles tend to be more expensive, so that's obviously good for Paccor's overall business model. Regulations are going to happen. Regulations drive complexity. Complexity ends up being more components on a truck, which is more proprietary parts share. And then I think, so all those things are foundationally good. Paccor continues to deliver the trucks that our customers want, that the drivers desire in all sectors of the market, so that's good for our business growth.

Preston Feight: So that's obviously good for PACCAR's overall business model. Regulations are going to happen. Regulations drive complexity. Complexity ends up being more components on a truck, which is more proprietary parts share, and then I think so all those things are foundationally good. PACCAR continues to deliver the trucks that our customers want, that the drivers desire in all sectors of the market. So that's good for our business growth. And then I would say from a parts and Finco standpoint, our parts business is just part of our overall strategy of delivering connected and vehicle performance for our customers. So the more we're able to deliver uptime for our customers, the better it is for them and the better it is for PACCAR. It's a win-win situation. So parts, Finco, and connected services for us are great growth opportunities for the future.

So that's obviously good for PACCAR's overall business model. Regulations are going to happen. Regulations drive complexity. Complexity ends up being more components on a truck, which is more proprietary parts share, and then I think so all those things are foundationally good. PACCAR continues to deliver the trucks that our customers want, that the drivers desire in all sectors of the market. So that's good for our business growth. And then I would say from a parts and Finco standpoint, our parts business is just part of our overall strategy of delivering connected and vehicle performance for our customers. So the more we're able to deliver uptime for our customers, the better it is for them and the better it is for PACCAR. It's a win-win situation. So parts, Finco, and connected services for us are great growth opportunities for the future.

Speaker Change: Tend to be more expensive. So that's Obviously good for Packard's overall business model.

Speaker Change: Um regulations are going to happen. Regulations Drive complexity complexity ends up being more components on a truck, which is more proprietary Parts. Share

Preston Fite: And then I would say from a parts and FinCo standpoint, our parts business is just part of our overall strategy of delivering connected and vehicle performance for our customers, so the more we're able to deliver uptime for our customers, the better it is for them and the better it is for Paccor. It's a win-win situation, so parts, FinCo, and connected services for us are great growth opportunities for the future. Thank you.

Speaker Change: And then I think so all those things are foundationally, good back. Our continued to deliver the trucks that our customers want that the drivers desire in all sectors of the market. So that's good for our business growth. And then I would say from a parts and finco standpoint, our parts business is just part of our overall strategy of delivering connected and vehicle performance for our customers. So the more we're able to deliver uptime for our customers, the better it is for them and the better it is for Packard. It's a win-win criteria situation, so parts, finco and connected services for us are great growth opportunities for the future.

Ken Hastings: Thanks for the insights.

Steven Fisher: Thanks for the insights.

Speaker Change: Thanks for the insight.

Operator: Thank you. Our next question comes from Kyle Menges with Citigroup. Please go ahead.

Kyle Menges: Our next question comes from Kyle Menges with Citigroup. Please go ahead. Thanks for taking my question. I was hoping if you could just comment a little bit on the medium duty truck market, just power inventories. And then you mentioned you feel good about 26. I'd assume that was more of a Class 8 comment, but I mean, does that apply to medium duty as well? And just how do you think about changes to emissions standards in 27 being a catalyst for some pre-buy and medium duty next year?

Speaker Change: Thank you. Our next question comes from Kyle, manges, with Citi group,

Speaker Change: please go ahead.

Ken Hastings: Thanks for taking that question. I was hoping if you could just comment a little bit on the Medium Duty truck market. Just how are inventories? And then you mentioned you feel good about 2026. I'd assume that was more of a Class 8 comment, but I mean does that apply to Medium Duty as well? And just how do you think about changes to emission standards in 2027 being a catalyst for some pre-buy and Medium Duty next year?

Kyle Menges: Thanks for taking that question. I was hoping if you could just comment a little bit on the Medium Duty truck market. Just how are inventories? And then you mentioned you feel good about 2026. I'd assume that was more of a Class 8 comment, but I mean does that apply to Medium Duty as well? And just how do you think about changes to emission standards in 2027 being a catalyst for some pre-buy and Medium Duty next year?

Speaker Change: Thanks for taking my question. I was hoping if you could, just comment a little bit on the medium duty truck Market. Um, just how our inventories.

Speaker Change: And then you mentioned, you you feel good about 26. I'd assume that was more of a Class A comment, but I mean, does that apply to medium duty as well? And just, how do you think about changes to emission standards in 27? Um, being a catalyst for some prey and medium duty next year?

Kyle Menges: Great question, Kyle. Thanks a lot. If you look at industry inventory, for medium duty, it's around six months and for Kenworth and Peterbilt, it's more like four and a half months. And again, you have the same ratio of bodybuilders and that high percentage of vocational mix for Peterbilt and Kenworth. So we're in a very good position from a medium duty inventory standpoint. I think that there is the same factors that are playing into the medium duty market for 2027, which could create stimulation for a medium duty market improvement in 2026.

Preston Feight: Great question, Kyle. Thanks a lot. If you look at industry inventory for Medium Duty, it's around six months. For Kenworth and Peterbilt, it's more like four and a half months. Again, you have that same ratio of bodybuilders and that high percentage of vocational mix for Peterbilt and Kenworth. We're in a very good position from a Medium Duty inventory standpoint. I think that there are the same factors that are playing into the Medium Duty market for 2027, which could create stimulation for a Medium Duty market improvement in 2026. A good question.

Kyle Menges: For more information visit www.FEMA.gov A good question. Got it.

Speaker Change: Yeah, great question, Kyle, thanks a lot. If you look at the industry, inventory, for medium duty, it's around 6 months, and for Kimber competitive, it's more like 4 and a half months. And then again, you have the same ratio of bodybuilders and that high percentage of uh vocational mix for Peter Bull and Kenworth. So we're in a very good position from a medium duty inventory standpoint. I think that there is the same factors that are playing into the medium duty market for 2027, which could create stimulation for a medium duty Market Improvement in 26.

A good question.

Ken Hastings: Got it. That's all from me. Thank you. Thank you.

Kyle Menges: Got it. That's all from me. Thank you. Thank you.

Kyle Menges: That's all from me. Thank you. Have a good day. Thank you.

Preston Feight: Have a good day.

Speaker Change: Got it. That's all from me. Thanks you. Thank you.

Speaker Change: Have a good day.

Operator: Thank you. Our next question comes from Scott Group with Wolfe Research. Please go ahead.

Scott Group: Our next question comes from Scott Group with Wolf Research. Please go ahead. Hey, thanks for the time. There's 75 million of estimated tariff cost in 3Q. Just any, can you just maybe try to quantify what the impact was in Q2? And if, if we, if things stay stable, where do you think that net 75 million impact falls to in Q4? Well, help me a little bit, Scott, with your question around stable. What does stable mean in your... Sorry, maybe I didn't ask right, meaning there's no incremental change in tariffs. So you just have an opportunity to sort of catch up on.

Speaker Change: Thank you. Our next question comes from Scott group, with wolf research. Please go ahead.

Scott Group: Hey, thanks for the time. The $75 million of estimated tariff cost in Q3 just any. Can you just maybe try to quantify what the impact was in Q2? And if we, if things stay stable, where do you think that net $75 million impact falls to in Q4.

Hey thanks. Uh, for the time uh, the 75 million of

Speaker Change: Estimated tariff cost in in, in 3Q, just any can you just maybe try to quantify what the impact was in in Q2? And if, if we, if things stay stable, where where do you think that net 75 million impact Falls to in Q4?

Preston Feight: Well, help me a little bit, Scott, with your question around stable. What does stable mean in your vernacular?

Speaker Change: Well, help me a little bit. Scott with your question around stable. What's a stable mean? In your

Scott Group: Sorry, maybe I didn't ask. Right. Meaning there's no incremental change in tariff. So you just have an opportunity to sort of catch up on price.

Vernacular. Sorry, maybe I didn't answer it. Meaning there's no incremental change in tariffs, so you just have an opportunity to sort of catch up on price.

Preston Feight: Yeah, I think they were less in Q2 for sure because there's a timing effect of when they came in. There was the effect of what material was in country. So it's a gradual increase through Q2 into Q3 and it was, you know, something significantly less than the $75 million. Now, as we get to Q4, to your question, I think the most important factor is 232 clarification and whether or not there's a change as a result of 232 and how that could affect the Q4 tariff structures we have without that even.

Preston Fite: Yeah, I think they were less in the second quarter, for sure, because there's a timing effect of when they came in, there was the effect of what material was in country. So it's a gradual increase through the second quarter into the third quarter. And it was, you know, something significantly less than the $75 million. Now, as we get to the fourth quarter, to your question, I think the most important factor is 232 clarification, and whether or not there's a change as a result of 232, and how that could affect the fourth quarter. Those are tariff structures we have.

Speaker Change: Yeah, I think they were less in the second quarter for sure, because there's a timing effect of when they came in. There was the effect of, um, what material was in country. So, it's a gradual increase through the second quarter into the third quarter, and it was, you know,

Speaker Change: Something significantly less than the 75 million.

Preston Fite: Without that even, our teams are doing a great job of working with suppliers and looking for how you think about USMCA content of parts coming into the country and ensuring that the maximum number of parts are USMCA certified under the current rules, which then reduces tariffs risk to us over time. But that's how I generally think about the 2Q, 3Q, and 4Q tariff picture.

Speaker Change: now, as we get to the fourth quarter to your, to your question, I think the most important factor is 232 clarification and whether or not there's a change as a result of 232 and how that could affect the fourth quarter, a tariff structures we have

Preston Feight: Our teams are doing a great job of working with suppliers and looking for how you think about USMCA content of parts coming into the country and ensuring that the maximum number of parts are USMCA certified under the current rules, which then reduces tariff risk to us over time. That's how I generally think about the Q2, Q3, and Q4 tariff picture.

Our teams are doing a great job of working with suppliers and looking for how you think about USMCA content of parts coming into the country and ensuring that the maximum number of parts are USMCA certified under the current rules, which then reduces tariff risk to us over time. That's how I generally think about the Q2, Q3, and Q4 tariff picture.

Speaker Change: without that even our teams are doing a great job of working with suppliers and looking for how you think about usmca content of parts coming into the country and ensuring that the maximum number of parts or usmca certified under the current rules, which then reduces tariffs risk to us over time.

Scott Group: Okay, that's helpful. And then just in terms of sort of the order book and activity, maybe just where are we on the order book for 2025? When do you open up 2026? And then within that recent uptick in maybe some conversations, any notable difference? Is that more vocational, private fleet, for hire, just sort of where you're seeing that? Thank you.

Speaker Change: But that's how I generally think about the 2q 3Q and 4q tariff picture.

Preston Fite: That's helpful. And then just in terms of just sort of the order book and activity, maybe just are we, where are we on the order book for 25? When do you think you, when do you open up 26? And then within that recent uptick in maybe some conversations, any, any notable difference? And is that more vocational, private fleet for hire, just sort of where you're seeing Sure, I mean... Markets filling, or the order book is filling in in the third quarter. North America is roughly 50%. Europe's mostly full. And I think that what we see is still, as we said, vocational markets remain good.

That that's helpful. And then just in terms of um, just sort of the order book and activity, maybe just are, are we where where are we on the order book for 25? When do you think you, when do you open up 26 and then within the that recent uptick in maybe some conversations, any any notable difference in this? Is that more vocational private fleet for higher, just sort of where you're seeing that. Thank you.

Preston Feight: Sure. I mean the market's filling or the order book is filling in. In Q3, North America's roughly 50%, Europe's mostly full. I think that what we see is still, as we said, vocational markets remain good, and the LTL market maybe especially remains good. We mentioned already in the discussion that the term the big beautiful bill is probably helpful to our customers' cash position and could create some incentive for orders further out in the year. So I don't think it's just one area. I think it's just getting certainty because as we get clarity, that will create confidence for our customers. And as they have confidence, then that'll increase their ability to order trucks.

Speaker Change: Sure. I mean,

Scott Group: And the LTL market, maybe especially, remains good. We mentioned already in the discussion that the termed a big beautiful bill, is probably helpful to our customer's cash position and could create some incentive for orders further out in the year. So I don't think it's just one area, I think it's just getting certainty because as we get clarity that will create confidence for our customers and as they have confidence then that will increase their ability to order trucks. Thank you, appreciate the time, guys. You bet. Thank you.

Speaker Change: The Market's filling or the Border book is filling in in the third quarter, North America's roughly 50%, Europe's mostly full. And I think that what we see is still as we said, vocational markets, remain good and the LTL Market maybe especially remains good. We mentioned already in the discussion that the

Speaker Change: Position and could create some incentive for orders further out in the year. So, I don't think it's just 1 area. I think it's just getting certainty because as we get clarity, that'll create confidence for our customers. And as they have confidence, then that'll increase their ability to order trucks.

Scott Group: Okay, thank you. Appreciate the time, guys.

Speaker Change: Thank you. Appreciate the time, guys.

Preston Feight: You bet.

Speaker Change: You bet.

Operator: Thank you. Our next question comes from Nick Housden with RBC Capital Markets. Please go ahead.

Nick Houston: Our next question comes from Nick Houston with RBC Capital Markets. Please go ahead. Yes, hi. Thank you for taking. So in terms of the Q3 deliveries... Can you provide any comments? I would think of it in terms of Floss, or minus normal splits is kind of where I would go with it. I wouldn't really shift around very much in it. So you're going to have Q3 as the impact of the three-week time off in Europe, which is very, very normal. So that's going to sit in there. And then I would think that there's probably the drops in North America to match to the market.

Speaker Change: Thank you. Our next question, comes from Nick Halden with RBC Capital markets,

Angel Castillo: Yes, hi. Thank you for taking my questions. I've just got two.

Nick Housden: Yes, hi. Thank you for taking my questions. I've just got two. In terms of the Q3 deliveries. I think you said 32 to 33,000. Can you provide any comments around the? Regional breakdown of that, please?

Speaker Change: Please go ahead.

Preston Feight: In terms of the Q3 deliveries.

Angel Castillo: I think you said 32 to 33,000. Can you provide any comments around the?

Ken Hastings: Regional breakdown of that, please?

Nick Halden: Yes. Hi. Thank you for taking my question. I've just got 2. Um, so in terms of the Q3 deliveries, I think you said 32 to 33,000, uh, can you provide any comments around the regional breakdown of that, please?

Preston Feight: I would think of it in terms of ± normal splits, which is kind of where I would go with it. I wouldn't really shift around very much in it. So, you know, you're going to have Q3 has the impact of the three-week time off in Europe, which is very, very normal. So that's going to sit in there. And then I would think that there's probably the drops in North America to match to the market. So that ratio stays maybe more affected in the third quarter than might normally be. And then I would say Mexico continues to be experiencing the same kind of tariff discussions. So that's a space in the market that's a bit softer.

Nick Halden: um, I would think of it in terms of

Nick Halden: plus, or minus normal. Normal splits is kind of where I would go with it. I wouldn't really shift around very much in it.

Nick Halden: So you know you're going to have Q3 who has the impact of the of the 3 week time off in Europe, which is very very normal.

Preston Fite: So that ratio stays maybe more affected in the third quarter than might normally be. and then I would say Mexico continues to be experiencing the same kind of tariff discussions. So that's a space in the market that's a bit softer. And then your comment about 90% of trucks for the U.S. are, you know, currently being built.

Nick Halden: Um so that's going to sit in there and then I would think that there's probably the drops in North American a match to the market, so that ratio stays, maybe more effective in the third quarter than might normally be.

Nick Halden: And then I would say Mexico continues to be experiencing the same, kind of tariff discussions. So that's a space in the market. That's a bit softer.

Angel Castillo: Got it. Then your comment about 90% of trucks for the US are currently being.

Nick Housden: Got it. Then your comment about 90% of trucks for the US are currently being. Built in the US, can you provide? Any comments just around what the breakdown for the supply chain is and how? Those percentages might move around?

Preston Feight: Built in the US, can you provide?

Preston Fite: If I had any comments just around what the breakdown for the supply chain Well, the supply chains varied, obviously, right? And so the We would have to spend a lot more time than we probably have to think about how the supply chain works, because there's Tier 1, 2, and 3, and they all factor in from different places. But suffice it to say that there are components that come from Mexico or from Canada or from the ASEAN region or South America or Europe that go into the trucks. But Paccor, as we said, has the production facilities in North America, which is critically important, and I think that's what the administration feels so as well.

Angel Castillo: Any comments just around what the breakdown for the supply chain is and how?

Ken Hastings: Those percentages might move around?

Nick Halden: Got it. Um, and then um, you know, comments um, about 90% of trucks. Uh for the US are, you know, currently being built in the US. Can you provide any comments just around what the breakdown for this supply chain is and how those percentages might move around.

Preston Feight: Well, the supply chains varied, obviously. Right. And so we would have to spend a lot more time than we probably have to think about how supply chain works because there's tier one, two, and three and they all factor in from different places. But suffice it to say that there are components that come from Mexico or from Canada or from the ASEAN region or South America or Europe that go into the trucks. But PACCAR, as we said, has the production facilities in North America, which is critically important. And I think that's what the administration feels so as well.

Nick Halden: Well, the supply chains vary, right? And so the

We would have to spend a lot more time than we probably have to think about how supply chain works because there's there's Tier 1 2 and 3 in the elf factor in from different places.

Nick Halden: But suffice it to say that there are components that come

Nick Halden: from Mexico, or from Canada or

Preston Fite: And so we think that as we look forward from a tariff standpoint, they'll encourage the truck production, hope they'll encourage the truck production in America, and that components that are critical for manufacturing in America will also be included in that, which we'll be able to support and our suppliers will support. Great, thank you very much. Thank you.

Preston Feight: We think that as we look forward from a tariff standpoint, they'll encourage the truck production. Hopefully, they'll encourage the truck production in America, and that components that are critical for manufacturing in America will also be included in that, which we'll be able to support, and our suppliers will support.

Nick Halden: From the asean region or South America or Europe that go into the trucks. But pack our, as we said has the production facilities in North America, which is critically important and I think that's what they Administration feels. So, as well.

We think that as we look forward from a tariff standpoint, they'll encourage the truck production. Hopefully, they'll encourage the truck production in America, and that components that are critical for manufacturing in America will also be included in that, which we'll be able to support, and our suppliers will support.

And so we think that as we look forward from a tariff standpoint, they'll encourage the truck production, hope they'll encourage a truck production in America and that components that are critical for manufacturing. America will also be included in that, which will be able to support in our suppliers will support.

Angel Castillo: Great. Thank you very much.

Nick Housden: Great. Thank you very much.

Speaker Change: Great, thank you very much.

Operator: Thank you. Our next question comes from Walter Piecyk with LightShed. Please go ahead.

Walter Piesek: Our next question comes from Walter Piesek with Lightshed. Please go ahead. Thanks, Preston.

Speaker Change: Thank you. Our next question comes from. Walter pick. With light shed, please go ahead.

Ken Hastings: Thanks. Hey Preston, your partner Aurora is very well respected, obviously, within the technology industry and used your truck to go drive around this past quarter. Then I guess you guys had some interest in having them put a driver back in the driver's seat there. Just curious, kind of what your thoughts are there. Like, what was the reasoning for that? How does that differ from other PACCAR trucks that are also using autonomous technology with your truck? Like, why in Aurora's case do they have to have a driver back in, and maybe when do you anticipate being okay with them taking that driver out and then seeing that market start to expand a bit more, because obviously that certainly could be a demand opportunity for you. Thanks.

Walt Piecyk: Thanks. Hey Preston, your partner Aurora is very well respected, obviously, within the technology industry and used your truck to go drive around this past quarter. Then I guess you guys had some interest in having them put a driver back in the driver's seat there. Just curious, kind of what your thoughts are there. Like, what was the reasoning for that? How does that differ from other PACCAR trucks that are also using autonomous technology with your truck? Like, why in Aurora's case do they have to have a driver back in, and maybe when do you anticipate being okay with them taking that driver out and then seeing that market start to expand a bit more, because obviously that certainly could be a demand opportunity for you. Thanks.

Walter Piesek: Your partner Aurora is very well respected, obviously, within the technology industry, and you used your truck to go drive her out this past quarter. And then I guess you guys had some interest in having them put a driver back in the driver's seat there. Just curious, kind of what your thoughts are there? Like, what was the reasoning for that? How does that differ from other PACCAR trucks that are also, you know, using autonomous technology with your truck? Like, why, in Aurora's case, do they have to have a driver back in and, and maybe when you anticipate being okay with them taking that driver out and then seeing that market start to expand a bit more because obviously that certainly could be a demand opportunity for you.

Speaker Change: Thanks uh, Hey Preston. Um your partner Aurora is is very well respected obviously within the within the technology industry and um I used your truck to go driver out this past quarter.

Speaker Change: And then, I guess you guys had some interest in having that put a driver back in the driver's seat there. This curious, kind of what your thoughts are there. Like, what was the reasoning for that? How does that differ from other Packard trucks? That are also, you know, using

Speaker Change: um autonomous technology with your truck like why in Aurora's case do they have to have a driver back in and and maybe when you anticipate

Being okay with them. Taking that driver out.

Speaker Change: um, and then seeing that market start to expand a bit more because obviously, that

Preston Fite: Thanks. Good question. Thanks for asking. You know, we think there's great progress being made in the field of autonomy. Packer continues the development of its autonomous vehicle platform. So that's encouraging for us. And we think that Aurora is making good progress as well in the development of the autonomous driver that could go into that, as are others, like Kodiak, and others like Stack. So we see others making progress as well. We always operate at Paccor with the safety being our most fundamental foundational principle. And so for us, we want that to remain as the true north for us.

Certainly could be a demand opportunity for you, thanks.

Preston Feight: Good question. Thanks for asking. You know, we think there's great progress being made in the field of autonomy. PACCAR continues the development of its autonomous vehicle platform, so that's encouraging for us. We think that Aurora is making good progress as well in the development of the autonomous driver that could go into that, as are others like Kodiak and others like Stack. We see others making progress as well. We always operate at PACCAR with the safety being our most fundamental foundational principle. For us, we want that to remain as the true north for us. It will remain as a true north for us. That having the driver in seems like the smartest idea. That's what we've, that's how we're operating the trucks.

Yeah, good question. Thanks for. Thanks for asking, you know, we think there's great progress being made in the field of autonomy, Packer continues the development of its autonomous vehicle platform. Um, so that's encouraging for us. And we think that Aurora is making good progress as well in the development of the autonomous driver. That could go into that as our others um like codyc and others like stack so we see others, making progress as well.

Preston Fite: It will remain as the true north for us. And so that having a driver in seems like the smartest idea. And that's what we've, that's how we're operating the truck. Is there a certain milestone you're hoping that they achieve? Because obviously that company won't exist in the future if they always have a driver in. The whole point of it is to have a driver out. So what do you think you need to see to permit at least your trucks to have driver out?

We always operate at pack, our with the safety being our most fundamental foundational principle and so for us um we want that to remain as the true north for us. It will remain as a true north for us and so that having the driver and seems like the smartest idea. And that's what we've that's how we're operating the trucks.

Ken Hastings: Is there a certain milestone you're hoping that they achieve? Because obviously that company won't exist in the future if they always have a driver in. The whole point of it is to have a driver out. So what do you think you need to see to permit at least your trucks to have driver out?

Walt Piecyk: Is there a certain milestone you're hoping that they achieve? Because obviously that company won't exist in the future if they always have a driver in. The whole point of it is to have a driver out. So what do you think you need to see to permit at least your trucks to have driver out?

Speaker Change: Is there a certain Milestone? You're you're hoping that they they achieve because obviously that company won't exist in the future. If if they always have a driver in the whole point of it is to have a driver out. So

Speaker Change: What do you think you need to see, um, to permit at least your truck to have driver out?

Preston Fite: You know, we don't ever discuss when we're going to go to production with things. But always what we do is. things should be fully production. And when things are fully production, validated, completed production, then that's when we have that conversation.

Preston Feight: We don't ever discuss when we're going to go to production with things, but always what we do is things should be fully production. And when things are fully production, validated, completed production, then that's when we have that conversation. Great.

Speaker Change: you know, we don't ever discuss 1, we're going to go to production with things but always what we do is

Speaker Change: Things should be fully production.

Speaker Change: And when things are fully production validated completed production, then that's when we have that conversation.

Preston Fite: Great, thank you very much. You bet. Thanks for the question.

Ken Hastings: Thank you very much.

Walt Piecyk: Thank you very much.

Preston Feight: You bet. Thanks for the question.

Speaker Change: Great, thank you very much.

You bet. Thanks for the question.

Operator: Thank you. There are no further questions in the queue at this time.

Operator: Thank you. There are no further questions in the queue at this time. Are there any additional remarks from the company?

Operator: Are there any additional remarks from the company? We'd like to thank everyone for joining the call, and thank you, operators.

Thank you. There are no further questions in the queue at this time. Are there any additional remarks from the company?

Preston Feight: We'd like to thank everyone for joining the call and thank you, Operator.

Speaker Change: Would like to thank everyone for joining the call and thank you, operator.

Operator: Ladies and gentlemen, this concludes PACCAR's earnings call. Thank you for participating. You may now disconnect.

Speaker Change: ladies and gentlemen, this concludes pack car's earnings call, thank you for participating you may now disconnect

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