帕卡 (PCAR) 2021 Q4 法說會逐字稿

Good morning, and welcome to PACCAR's Fourth Quarter 2021 Earnings Conference Call. (Operator Instructions)

Today's call is being recorded. (Operator Instructions)

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

Good morning. We would like to welcome those listening by phone and those on the webcast. My name is Ken Hastings, PACCAR's Director of Investor Relations. And joining me this morning are Preston Feight, Chief Executive Officer; Harrie Schippers, President and Chief Financial Officer; and Michael Barkley, Senior Vice President and Controller. As with prior conference calls, we ask that any members of the press on the line participate in a listen-only mode.

Certain information presented today will be forward-looking and involve risks and uncertainties, including general economic and competitive conditions that may affect expected results. For additional information, please see our SEC filings and the Investor Relations page of paccar.com. I would now like to introduce Preston Feight.

Good morning. Harrie Schippers, Michael Barkley and I will update you on a very good fourth quarter and full year 2021 results as well as other business highlights. First, I really appreciate our outstanding PACCAR employees. They deliver the highest quality trucks and transportation solutions to our customers and focus on the safety and health of each other. They are truly an impressive team.

In 2021, PACCAR achieved annual revenues of $23.5 billion and very good net income of $1.85 billion. PACCAR's financial performance benefited from record results in our Parts and Financial Services divisions. PACCAR has achieved 83 consecutive years of net income and has paid a dividend every year since 1941.

In 2021, PACCAR occurred dividends of $2.84 a share. PACCAR's fourth quarter revenues were $6.7 billion, and fourth quarter net income increased from the prior year by 26% to $511 million. PACCAR Parts achieved record fourth quarter revenues of $1.3 billion and record pretax profits of $306 million, which was a 38% increase compared to the same period last year.

PACCAR delivered 47,600 trucks during the fourth quarter, 45% higher than the third quarter. This included delivering 7,000 trucks that were awaiting components. In the first quarter of 2022, deliveries are forecast to be in the range of 41,000 to 45,000, a number that is limited by the global supply of semiconductors.

In 2021, U.S. and Canadian Class 8 truck retail sales were 250,000 units. In 2022, the U.S. economy and industrial production are projected to expand by about 4%. The 2022 U.S. and Canadian Class 8 truck market deliveries are forecast to increase to a range of 250,000 to 290,000 vehicles as the global supply chain gradually improves throughout the year. European above 16-tonne truck registrations were 278,000 units in 2021. In 2022, the European economies are projected to continue growing, and we expect the above 16-tonne truck registrations to be in a range of 260,000 to 300,000 trucks.

In 2021, the South American above 16-tonne truck industry registrations were 127,000, and in 2022, the South American market is expected to be in the range of 125,000 to 135,000. The growing global economies, robust freight activity and strong customer demand for DAF, Peterbilt and Kenworth trucks has resulted in a substantial order backlog in all markets.

Truck and parts gross margins were 11.4% in the fourth quarter, reflecting higher labor and materials costs associated with the completion of off-line trucks and the resulting increased mix of trucks versus parts. We estimate first quarter truck and parts gross margins to increase and be in the range of 13% to 13.5% as we ramp up production of our new products and realize production efficiencies.

In 2021, PACCAR introduced exciting, new heavy and medium-duty Kenworth, Peterbilt and DAF trucks, which are proving to be very successful in the market. PACCAR also delivered many important technology and innovation milestones such as a strategic partnership to develop and sell autonomous trucks, production of zero-emissions vehicles, and we launched PACCAR's proprietary global connected service offerings.

The new DAF lineup launched in 2021 earned the prestigious International Truck of the Year Award and the innovative DAF XF hydrogen internal combustion technology vehicle won the Truck Innovation Award. Kenworth and Peterbilt each -- Kenworth and Peterbilt earned 5 manufacturing leadership awards from the National Association of Manufacturers, and DAF Brazil was awarded the Truck Brand of the Year for the fourth time.

Last year, PACCAR was again recognized as a global leader in environmental practices by the reporting firm, CDP. PACCAR achieved an Elite A rating, which places the company in the top 200 of over 13,000 reporting companies. In 2021, PACCAR was recognized as a Top Place For Women To Work by The Women In Trucking organization for the fourth consecutive year.

The truck market is strong, and demand is high for PACCAR's excellent new trucks and transportation solutions. We look forward to 2022 being a very good year. Harrie Schippers will now provide an update on PACCAR Parts, PACCAR Financial Services and other business highlights. Harrie?

Thank you, Preston. In 2021, PACCAR Parts had new quarterly and annual records for revenues and profits. Annual revenues were $4.9 billion, and annual pretax profit increased by 38% to $1.1 billion. This is an outstanding performance by the Global Parts team, and it really highlights the fact that PACCAR Parts is a high-margin growth business.

PACCAR Parts has expanded its global network to 18 distribution centers, and we'll open another facility in Louisville, Kentucky later this year. We estimate parts sales to grow by over 10% in the first quarter of this year compared to the same quarter last year as we continue to see strong demand for parts worldwide and especially for our outstanding e-commerce business.

PACCAR Financial Services fourth quarter pretax finance income increased to a record $135 million. Annual revenues grew to $1.7 billion in 2021. And annual pretax income increased to $438 million, nearly double the profit earned in 2020. Portfolio assets were $15.4 billion. The portfolio continues to perform well with very low past dues and low credit losses. PACCAR Financial benefited from strong used truck pricing in 2021.

PACCAR Financial increased the sales volume in its retail used truck centers, which has contributed to higher used truck price realization. PACCAR Financial has 12 used truck facilities worldwide, and in 2022, we'll open another used truck center in Madrid, Spain. We expect PACCAR Financial's strong performance to continue this year.

In 2021, PACCAR invested $512 million in capital projects and $324 million in R&D as we launched the largest number of new truck models in our history. In 2022, we're planning capital investments in the range of $425 million to $475 million. And R&D expenses will increase and be in the range of $350 million to $400 million as we accelerate our investments in clean combustion, zero emissions, autonomy and connected vehicle programs.

PACCAR's independent Kenworth, Peterbilt and DAF dealers continue to invest in their businesses to provide our customers the highest level of service in the industry. These investments make a significant contribution to PACCAR's long-term success and support the growth of PACCAR Parts and PACCAR Financial Services. PACCAR had an excellent year in 2021 and we're enthusiastic about the future. Thank you. We'd be pleased to answer your questions.

(Operator Instructions) Your first question will come from Chad Dillard with Bernstein.

So I was wondering if you could talk about just your gross margins in the quarter, which seemed a little bit light just given the revenue that you did? And just how should we think about the breakdown between the absorption versus the price/cost mix? And then as we kind of think through the evolution from 1Q, like what's the trajectory from here for the year?

Sure. Happy to do that. So if you think about the fourth quarter, our teams did a fantastic job of identifying the chips they needed through engineering efforts, through finding broker parts, through partnering with our suppliers to come up with what they need to deliver the off-line trucks. And so they did deliver the higher volume of trucks. Those trucks have been absorbed in the third quarter.

And so just a huge shoutout to everybody that was part of that effort. I would say, looking forward, we see improvement in production steadiness. It's not completely solved, but our teams have done a good job of creating a more steady production outlook for us. And so we're getting the production efficiencies associated and hence, we show you 13% to 13.5% in Q1. And then I guess I'd add to that and say that if we see that the market continues to gradually improve, we should see improvement from there.

Got it. That's super helpful. And then can you talk about your backlog market share versus retail sales market share? Are you seeing any gains from new product intros or anything like that?

If I think what's happening with our backlog right now is the new trucks we launched in 2021 are just ramping up and especially in Europe, which was launched in kind of the October time frame. And customers in North America for the new medium-duty level, for the new Kenworth and Peterbilt, are just enjoying the benefits of the 7% improvement in fuel economy.

In Europe, you have the 10% improvement in fuel economy and the fact that the new European truck, the XFXGXG+, those are the only trucks in the market that meet the new mass and dimensions regulations. So we have a great advantage there for those trucks, and they're performing really well. That's leading to a strong backlog for us. So we have about 6 months plus of backlog, and that's kind of measured by what we can build. So as we get more parts and availability, we'll probably be able to take some additional orders and build more, but really strong backlog right now.

Your next question will come from Jamie Cook with Credit Suisse.

Congrats on a nice quarter.

Thanks, Jamie.

First -- just digging in first on -- I know you talked about margins for the first quarter and for the year. X'ing out benefits from the new products, how do we think about sort of what your assumptions are for price cost for the year, given some of the list increases out there? Do we think we can be neutral? I guess that's my first question.

Yes, we do. I mean we've gotten a little bit more stability than we had last year. And so I think we expect to have price/cost realization as we go through the year.

Okay. That's helpful. And then I guess my second question, just your sort of view on the cycle with the supply chain potentially easing. How are you thinking about sort of 2023 and what it could mean with the 2024 carbon-emission standards? Do you think the production forecasts out there are correct? And how are you thinking about the incremental cost on the truck?

I think the first thing to start with is our customers are doing really well. There's a lot of freight to be hauled out in the market. That doesn't seem like that's a short-term thing. That's a long-term demand thing. So I would expect that to continue, obviously, subject to any interruptions. But if that continues well, then I would expect 2022, 2023, beyond should be good. I mean if you think about 2024, while it's an emissions change, that emissions change brings fuel economy, which should be good for our customers as well. So it looks like we're in the beginning of a good steady, strong market.

Your next question is from Stephen Volkmann with Jefferies.

I just want to ask Jamie's question just slightly differently. I know given the backlogs that you guys have, and everyone across the industry, I guess, I might have thought that price cost could be positive this year, given the demand drivers. Would you disagree with that? Or is there some other offset?

No, I completely agree with you. I think that price cost should be positive for the year.

Got it. Okay. Maybe I misunderstood that answer. And can you also update us maybe a little bit, Preston, you mentioned the big new product -- or maybe Harrie did, the big new product rollout that you guys have this year. And I know you guys always sort of target margin expansion when you do these big model changeovers. And so I guess, as you're rolling through that process, any updates on how you're thinking about the impact that that new model rollout will have on margins?

The new DAF, Steve, has been extremely well received in the market by customers, dealers, the press, everybody, the fuel economy improvement, the ride and drive of the vehicle, the performance, the technology. And I think Preston said it, it's the first and only truck in the market right now that makes use of those new masses and dimensions regulations in Europe. So it really puts DAF in a class of its own. And it's a premium class. So yes, that's going to be very good for our market share growth, margin, everything. And customers benefit from it most.

Your next question will come from Tami Zakaria with JPMorgan.

I have a couple of quick ones. So the first question I have is, what's your outlook for the Parts business after a record year? I know you're guiding to 10% growth in the first quarter. But beyond that, is the current fleet age conducive to the Parts business as you look to the next few quarters?

That's a great question, Tami. I'd say that indeed we said 10% year-over-year and strong in the first quarter like it was in the fourth quarter and we see that the trucks are being used out there which as they get used means they consume parts. So that's one thing that bodes well for the year of 2022. And I would also point to the fact that our team, our global team has done a great job of launching things like e-commerce and bringing that to our customers which makes it easier for them to buy from PACCAR than anyone else. And that contributes to the long-term success and growth of the business. So we expect 2022 to be great Parts years.

Got it. And another quick one. I think you noted about 10,000 red tag part trucks end of last quarter. Any updates on that front as you exited the fourth quarter?

Sure, Tami. We, in the fourth quarter, were able to deliver about 7,000 off-line trucks because of the great work of the teams. And so that number has been reduced dramatically. And it's one of the reasons we think that production is getting a little bit more stable because we had good supply and good partnership work going on.

Your next question will come from David Raso with Evercore.

You noted in the press release the supply chain improvement, but then on your comments, you're a little more cautious about the supply chain improving. Can you just square up -- I mean, you didn't raise your unit forecast at all for '22 from 3 months ago. So should we take it as -- you were able to ship a bit better in the fourth quarter, but there has not been any improvement in the supply chain? Just trying to square that up, and then I have a quick follow-up on the backlog.

Sure. Let's do that first. If I think about it, supply chain has improved compared to what we experienced in 3Q and 4Q, it's definitely improved, but improved is different than being fully resolved. And so I think we're sitting in between improved and resolved, David, to just kind of give you some boxes for that. So I would...

Okay. But no change in the forecast, though, but that improvement hasn't been baked into any updating your forecast. Is that fair?

Well, I look at it, I think that we have a 250,000 to 290,000 unit range. At the tie side of the range, 290,000 is a pretty significant improvement above a 250,000 market in 2021. And I think that as we watch the year progress, we'll get better clarity for how supply base continues. And as it continues to improve, we'll make adjustments appropriately.

And then on the backlog, how it relates to price cost and the full year gross margin comments, how much of the backlog already has the pricing locked in and your cost structure generally locked in on what you can control, of course? And then how much is still out there, say, for the second half of the year on your cost where maybe you can get some help on some of the cost relief maybe we're seeing in some of the materials? Just trying to think that through what's in the backlog and what's sort of left open a little bit for later in the year to see how the gross margins play out.

Yes. I think of it a little bit like there are some of the trucks that have -- some of the bigger customers have their backlog price and out there and then some of the stock units and smaller fleets maybe don't. And it kind of depends, right? So it's a mixed bag, and every truck order stands on its own. It obviously, the further out you go, get out a quarter or 2, it becomes less of it is certain. And so that gives us more flexibility as we move out a quarter or 2, but I think in general, we see this improvement come sequentially through the quarters.

Well, just to clarify, and I'll hop off. We know from -- in the channel, like not all orders have a price yet with it. But it was interesting you commented on flexibility left in price for some orders, but how much of your cost have you locked in yet, meaning steel and things you can kind of look out and maybe lock in a bit for most of the year?

Sure. We do, do that. Yes, we do that, David. We have long-term contracts with our suppliers in many cases. We hedge in many cases. And so together, that gives us some control over our -- of our cost structure for materials.

Operator, do we have a caller?

(technical difficulty)

Is that Steve Fisher from UBS?

Yes. Sorry, my line cut out there. So it sounds like you still have a few thousand red tags. Does your 41,000 to 45,000 delivery number assume you get through all those in the quarter. And then once you do get through those, what's the underlying or sort of normalized margin once you're just sort of producing and delivering at the same pace?

We've had a variety of chip supplies have come in and out. And so I'm hesitant to give you an absolute answer on what Q1 will be in terms of number of off-line units that might still remain. We see improvement through the quarter. But it's every day, the team is working together with supply base to work through that. So some portion may remain as off-line, but it's decreasing. And then I would say, as far as underlying assumptions, we feel good about the margins looking forward into the year and seeing them grow into a higher range.

Okay. And then there were some big industry cancellations in the fourth quarter. Can you just talk about your experience with cancellations and how scrubbed your backlog is? I'm wondering whether those cancellations were more proactive or sort of reactive.

Yes. From a customer standpoint, we have not had customers who don't want their trucks. That is not something that we've experienced. I can't speak to anybody else, but I can tell you that all the customers I talk to and the teams are working with, see just a strong demand for as many trucks as we can get them.

Your next question will come from Robert Wertheimer with Melius Research.

So obviously, delivering trucks that were nonstandard production, just waiting on the components is an expensive thing. I'm pretty sure your 1Q gross margin guide indicates this, but were you kind of already there in 4Q on cost, if you sort of take those trucks out, you're up to a pretty healthy gross margin already? Or is there a bunch you have to do to get to the 1Q goal, if you see what I mean?

I would say that if you think about the cost of the delivery and the things we had to incur in labor and materials for those 4Q units, that was -- that's a big portion of the difference. And then obviously, that as we look forward, and we've had a chance to react to last year's cost increases, we've been able to price that in more and more effectively and that's how you see the trend developing.

Perfect. All right. That's pretty clear, I guess. And then the other -- or one of the other uncertainties overlaying the market is just Omicron and sick outs, and hopefully, it's, obviously, less severe, but people might be out. So do you have a sense on whether that's disruptive to 1Q at this point and whether it's cresting or not on your own worker absences?

Sure. I can comment to that and say that if I look at the plants around PACCAR facilities, the people are doing such a fantastic job. I mean probably should park on that for a little bit for just what a tremendous job the people are doing in terms of getting to work and getting the trucks built and delivered.

And I just couldn't be more pleased with the people all around PACCAR. So we see that having some limited effects on us in the immediacy right now, but moderating as time passes. And then, of course, with this latest 2-year period, who knows what 3 months from now might bring.

Your next question will come from Jerry Revich with Goldman Sachs.

Can we talk about the factory overhead costs that you folks have been reporting with, obviously, all of the supply chain goodness going on over the past couple of quarters that's been running in the $70 million to $100 million range per quarter? How did that trend in the fourth quarter and really nice to see the improvement in the first quarter guide? How much of an overhang does the range, let's say, at the midpoint, anticipate from that $70 million to $100 million run rate that we've been at continuing into the first quarter?

I think, Jerry, I'll let Michael answer that one for you.

Yes. I would just say that our factory overhead costs were increased partly due to get those trucks out that we've been talking about and also due to higher volume. We see them more normalizing as the year progresses into 2022.

And Michael, can you comment on the first quarter? Or does that embed something like $30 million, $40 million headwind? Is that the ballpark? Or can you just help us with how much of an overhang is baked into that first quarter guide?

I can't comment on that specificity.

Okay. And separately, I'm wondering if you could talk about, as you folks are getting electric vehicle orders. What's the add-on that you're seeing for your dealers to the extent you folks have opportunities to participate on the charging infrastructures and other add-ons that, obviously, you wouldn't get with diesel truck orders? Is there a per ticket item that you can talk about or a take rate from any participation you have in contributing to building out the charging infrastructure with the trucks on those initial orders you booked so far over the past year?

Yes. It's early days, but I think it's an interesting thing to think about in terms of the zero-emissions vehicle programs, battery electric trucks. We've now got -- we built over 100 units. We've taken orders for over 100 vehicle chargers, battery electric chargers at this point as well. So that's kind of an add-on incremental business opportunity for us.

And then when you get into that, as you match a charger in a vehicle, the opportunity to have software for charging optimization and battery energy management of the vehicle is something that PACCAR has expertise in, and that will benefit our customers. So that's an add-on opportunity as well. So as that market begins to develop -- zero-emissions market begins to develop, those should be good opportunities for PACCAR.

Your next question will come from Ross Gilardi from Bank of America.

Preston, when you think about normalized North American Class 8 truck demand, I mean the number that's commonly thrown out forever is like 250,000 units, although obviously, it's rare that we actually see a year where it's not materially above or below that number. And I'm just curious, do you think that figure is still directionally accurate? Or do you think normalized demand for Class 8 vehicles is now much higher than what you would have thought of a few years ago, just due to the continued explosion of e-commerce and just a variety of other factors?

Ross, I think, you posit out a good question that I think that that 250,000 might be a bit dated. It's hard to know what the number is, but the trucking delivered 72% of the business around freight demand, and that's not decreasing, that's increasing. E-commerce contributes to that, speed of delivery that people are looking forward to contributes to that. The efficiency of trucks has grown so much, especially our PACCAR trucks where the fuel efficiencies are so much higher. And so, yes, I think that you're on to something there that it could be a little bit higher than that.

Okay. Interesting. And then can you talk a little bit about the hydrogen ICE vehicle that you've got that you recently received an award on? And what kind of reception is hydrogen internal combustion engine getting from regulators on that engine type is a true zero-emission solution? And how does it -- how do you think it stacks up on the vehicle performance versus a hydrogen fuel cell vehicle?

Well, what we're trying to do as PACCAR is make sure we pay attention to all the different opportunities out there. And then we'll let the market -- we like the market to decide which is the right ones. Right now, we have great success with our battery electric vehicles, obviously, a leader in the hydrogen fuel cell area. And the team over at DAF led this hydrogen combustion engine development program, which we won the Innovation Truck award for.

And so that has nearly zero CO2 output. It's really just some trace CO2 from the lube oil stuff. And I think we want that out there as an opportunity so that we can work with the governments and see what's going to be acceptable and what's going to provide our customers the right benefits. We think it's early days and preselecting the right answer is not necessary. So we'll just continue to leverage our strong partnerships, our technologies and bring the right solutions to our customers.

Your next question will come from Nicole DeBlase with Deutsche Bank.

Maybe just a question on Europe. So what are you guys seeing there from an order perspective? I'm just kind of surprised that it looks like you're forecasting deliveries more flattish in 2022, especially since you talked about improvement in supply chain.

So the order situation in Europe has been very strong and much in line with what Preston just commented on on the U.S. and the rest of the world for PACCAR. I think a market between 260,000 and 300,000 again, is a pretty wide range. And it shows that there is still quite some uncertainty with maybe COVID-related stuff, chip situation.

But whatever the market does with our new trucks, the new DAF truck models, we're in a very good position to grow market share in whatever the market size will be. So that bodes well, DAF production and DAF volumes.

Okay. Got it. Understood. And then just a follow-up on dealer inventory. So I suspect that they're probably still very low, but just wanted to get an update there and if you guys see the potential for some restocking to help volumes as we move into the second half of the year.

Yes. I'd say inventories are lower than we'd wish them ideally to be, but that's, obviously, a result of the supply-based situations. And that does give us a strong confidence that we'll be able to build every truck that we can get the parts for this year, which should create a really good year. So we'll see inventory react as we can build enough trucks.

Your next question will come from Courtney Yakavonis with Morgan Stanley.

Maybe if we can just go back to the question on Europe, and I think that was where you saw the biggest sequential step-up in deliveries this quarter. So is it the right way to understand that that was where most of those red tag trucks were? And how should we be thinking about the remaining couple of thousand? Are those in Europe? Are those in North America?

And then if you could also just comment on the FinCo. I think you had very strong margins this quarter. Harrie commented on the higher used pricing. But how should we think about that business going forward? If there's any guiderails you can give us aside from just continued strength?

Sure. Courtney, how about I start off on the European deliveries and then Harrie can pick up and add anything he wants to and talk about the FinCo?

There were 3 things I would think weigh into the different sequential in deliveries. And one of them is seasonality. One of them is build rate increases that we've had. And then the other is really probably tied to the off-line reduction that we had. So those 3 things kind of changed the 10,000 to the 18,000. And Harrie, anything you'd add on that?

No. I think the off-line truck reduction was proportional. DAF did similar than the other brands. And the seasonality is a big impact if you compare the third to the fourth quarter. The third quarter has typically the summer shutdown with fewer production days in the third quarter. And those things combined explain the increases together with an increased build rate and that's always nice to see.

And for the finance company, yes, great results in the fourth quarter. We've seen the used truck markets improve by a lot. PACCAR Financial has expanded its used truck center and sales capability over the years. And this is really a year that starts to pay dividends. And looking into next year, I would say, the outlook for the next couple of quarters is really good, and we expect PACCAR Financials' strong performance to continue.

Your next question will come from Matt Elkott with Cowen.

So as you guys continue to tackle supply chain issues this year, is part of the solution using more engines from your suppliers as opposed to in-house, so you can focus on other parts of the supply chain?

That's not quite how it really works, Matt. We have -- each chip -- it's funny. Each chip kind of goes to a component, and you can't really know how that's going to shake out. They're not the same chips each place. So the teams have done a really good job, say, again, of figuring out how to reengineer in different chips to be used in our engines and Cummins does the same as a good partner. And we've also been able to kind of go back and track similar types of chips and find ways to use them.

So I think that's independent of the engine, independent of the component really. It's just a great team effort by everyone at PACCAR and our suppliers, and we would expect to see the MX share in North America go up significantly in 2022.

Got it. And just one more question on the outlook for the Class 8 build next year. We had the disruptions pushing out some deliveries this year and last year. And then there could be a potential prebuy in 2023. So could 2023 be materially up from this year? Or do you guys not think there will be a meaningful prebuy ahead of 2024?

I think there's a lot of variables between now and the end of 2023. And I think in general, it feels like the market is going to be really good this year and it seems likely it will be very good next year as well.

Your next question will come from Jeff Kauffman with Vertical Research.

I wanted to ask a question on production rates. When we were down in the third quarter, approximately what was the trucks per day production that you were seeing across the network? And then where are we exiting the fourth quarter? And where do you believe that number could go by the middle of '22?

I would ask -- I would answer it this way, so we don't really provide our build rates. So I'd just simply say is that we have seen build rate increases through the fourth quarter into now, and we would anticipate being able to or hoping to take additional build rate increases as we can get the components we need to build the trucks.

Okay. But is there any metric to think about where you are now versus where you were during the peak of the crisis and chips and parts and things like that? Just to get an idea how much production scaled up.

We were 45% higher than the third quarter. So quite a step up. If that answers your question?

Yes. I want to add on what Harrie is saying. I think right now maybe of a 10% to 20% increase from what we've had in production, not deliveries and a continuing growth in that area is what it feels like.

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

We'd like to thank everyone for joining the call, and thank you, operator.

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