Paccar 1Q15 Earnings Call Notes

Europe has been helped by the ECB

“Europe’s economic outlook has been helped recently by the European Central Bank’s quantitative easing program and lower oil prices.”

“We have raised our forecast for Europe’s greater than 16-tonne market to a range of 220,000 units to 250,000 units reflecting a rebound in orders and the brighter economic outlook.”

Economic picture in the US remains positive

” the economic picture in the U.S. remains positive with GDP forecast to grow 2.9% this year. The housing and automotive industries create a large amount of freight. Housing starts are projected to grow 14% this year to over 1.1 million. And the automotive industry is expected to deliver 16.8 million vehicles near record levels.”

Pent up demand for trucks. If there were no driver shortage people could probably expand even more

“I think, the fleets, there was some pent-up demand over the more challenging years more and more fleets are renewing their fleets, and also I think if they had additional drivers they would probably purchase additional trucks. But we’ve seen some fleets be able to make those expansion, so.”

Very positive signs in the last couple of months in terms of order intake

“We have seen some very positive signs in the last couple of months in terms of order intake activity in Europe, but we’ll see how things progress. ”

Oil and gas should have a pretty nominal impact

“I think oil and gas – for oil and gas exploration and production related items, we’ll probably be lower this year, but that’s offset by other things other segments of the market. So I think it will be a pretty nominal impact.”

Strong outlook for truck demand

“Yes, the economy is good. And as long as the economy continues at good growth pace, I think there will be the need for the movement of goods and that will create demand for freight, and the freight numbers continue to be at or near record levels. So I think as long as that continues and trucks are operating at 90% plus utilization that we’ll see a reasonably good demand for trucks in the foreseeable future”

Customers are making very good profits

“our customers that they are all making very good of profits in their business reinvesting in new trucks and expanding their fleet I think both strategically and tactically. So, this is really just the second year where we’ve had expansion after five or six years of below replacement level demand. So I think our customers are enjoying good rates, good profitability and thinking about their business expansion plans in a pretty aggressive way.”

It’s an economically sensitive business

“if the economy softens substantially in the second quarter, things don’t progresses as economists project. That clearly is the thing that has the biggest impact on our business. So the economy is good. I think you will continue to see good demand.”