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Date
Tuesday, April 28, 2026 at 11 a.m. ET
Call participants
- Chief Executive Officer — Preston Feight
- General Manager, PACCAR Parts — Kevin D. Baney
- Director, Investor Relations — Ken Hastings
- Assistant Controller — Brice J. Poplawski
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Takeaways
- Revenue -- $6.8 billion driven by growth in all major business segments.
- Net income -- $605 million as directly reported for the quarter.
- PACCAR Parts revenue -- $1.7 billion for the quarter, with profits of $402 million and gross margins at 29.6%.
- PACCAR Financial Services pretax income -- $116 million, described as resulting from solid asset growth, improving margins, and a strengthening used truck market.
- Company gross margin -- Increased from 12% to 13.1%, with guidance for Q2 around 13.5% driven by higher global production volumes.
- Delivered vehicles -- 33,100 in the quarter, with Q2 deliveries estimated at 37,000 to 38,000 units globally.
- Truck segment performance -- Truck gross margin reported as above 7% with cited drivers including favorable product mix, pricing/cost advantage, and volume leverage.
- Market share -- North American build market share was 31.8% in Q1, described as very favorable.
- Parts sales outlook -- Estimated to grow about 3% in Q2 and projected to be in the 3%-6% range for the full year, based on ongoing network expansion.
- Capital investment and R&D guidance -- Expected capital investments of $725 million to $775 million and R&D expenses of $450 million to $500 million over the year.
- Order backlog -- The company stated its build slots are full for Q2, with majority fullness for Q3 and Q4, supporting backlog visibility.
- Inventory position -- Company inventory reported at 2.8 months, compared to 2.2 months at December quarter-end; industry inventory above four months.
- New product launches -- Kenworth's C 580 vocational truck and DAF's XG and XG+ electric vehicles launched during the quarter.
- Awards and recognition -- The DAF XF and XD electric vehicles received the International Truck of the Year 2026, and the XF Electric won the Eco-Friendly Truck of the Year in Spain.
- Used truck market -- PACCAR Financial highlighted the used truck market as strengthening, contributing to segment performance.
Summary
PACCAR (PCAR 5.93%) management reported sequential pricing/cost advantages in trucks, noting that truck price was roughly flat while cost declined by over 1% per truck. Higher sequential gross profit, despite only a small uptick in truck segment revenues, was explained by mix and pricing factors, with no extraordinary tariff impacts recognized in the quarter. Over-the-road spot rates were cited as up double digits, even 20%, supporting the recovery of fleet demand and facilitating order intake across all customer types. Leadership separately noted that North American truck market build in the first quarter was under 200,000 units, with management forecasting a needed acceleration to reach their midpoint industry projection of 250,000 units for the year.
- Brice J. Poplawski stated, "truck price up 2%, and you will see our cost, unfortunately, up higher than that, so that made our margins down on the truck segment." compared to the same period last year.
- PACCAR Parts segment saw price up 6% versus the prior year, and sequentially "price was up a couple percent and cost was only up a percent."
- On tariffs, Preston Feight characterized the impact from new U.S. metals tariffs as "moderate impact, but not significant." for both trucks and parts.
- PACCAR Financial Services saw improved margin contributions from asset growth and used truck market strengthening, and leasing fleet utilization showed a slight improvement from recent quarters.
- There was no evidence of customers generally postponing delivery dates, with company backlog described as stable and near-term 3.75% NSRP credits expected to be applied soon.
- Company-wide margin improvement for future quarters is expected to be driven by higher volumes, persistent price/cost favorability, and a shift toward prebuy activity prior to the new 2027 engine emissions standards.
- The ratio of company inventory to months of sales is lower than that of the overall industry, with PACCAR at 2.8 months and industry levels "over four months."
Industry glossary
- Build slot: A scheduled truck production allocation for a specific period, representing capacity filled by customer orders.
- Prebuy: Customer purchasing activity accelerated ahead of regulatory emissions standard changes, intended to avoid higher future compliance costs.
- NSRP credit: A 3.75% credit related to U.S. Section 232 national security-based tariffs, referenced for trucks as a cost offset.
- Local-for-local manufacturing: A strategy to produce goods in the same region where they are sold, minimizing supply chain and tariff risks.
- Vocational truck: Heavy-duty truck configured for specialized, non-highway commercial jobs, such as construction or refuse.
Full Conference Call Transcript
Preston Feight: Hey. Thanks, Ken. Good morning, everyone. In the first quarter, PACCAR Inc's outstanding employees did an excellent job providing our customers with the highest quality trucks and transportation solutions in the industry. I really appreciate their hard work, high performance, and dedication as we increase build rates in our factories all around the world. PACCAR Inc achieved revenues of $6.8 billion and net income of $605 million in the quarter. These results were generated by strong PACCAR Parts and Financial Services results, as well as solid growth in the truck businesses. PACCAR Parts achieved quarterly revenues of $1.7 billion and quarterly pretax income of $402 million. PACCAR Financial had a strong quarter, achieving pretax income of $116 million.
Looking at this year's U.S. and Canadian truck market, we estimate it to be in a range of 230 thousand to 270 thousand units. The market is strengthening as driver and fleet capacity becomes limited and customers begin to realize higher freight rates. This is somewhat moderated by fuel and other operating cost volatility. In the first quarter, Kenworth launched a new C 580 heavy-duty vocational truck. This large multi-axle model was introduced at the CONEXPO trade show and is a unique super heavy-duty truck used in severe service applications around the world. We project the 2026 European above-16-ton market size to be in a range of 280 thousand to 320 thousand.
DAF’s premium aerodynamic trucks provide customers with the latest technology and best operating efficiency. As mentioned on the January earnings call, the DAF XF and XD electric vehicles won the International Truck of the Year 2026 honor. In the first quarter, DAF extended its EV leadership by introducing new flagship XG and XG+ electric vehicles. In addition, the XF Electric earned another award, the 2026 Eco-Friendly Truck of the Year in Spain. This year's South American above-16-ton market, where DAF trucks are desired by customers for their durability and advanced technology, is expected to be in a range of 100 thousand to 110 thousand vehicles. In the first quarter, PACCAR Inc delivered 33 thousand 1 trucks.
In the second quarter, we will deliver an estimated 37 thousand to 38 thousand vehicles. PACCAR Inc's truck, parts, and other gross margins increased from 12% to 13.1% in the first quarter due to improved truck segment performance. Second quarter margins are forecast to expand to around 13.5% as global production volumes increase. We anticipate continued performance improvements in the second half of the year as our customers benefit from our local-for-local manufacturing strategy, experience better operating conditions, and purchase trucks in front of the coming 2027 emissions change. PACCAR Inc's exceptional range of trucks, compelling parts business, industry-leading financial services, and advanced technology strategy position the company well for an excellent future.
Kevin will now provide an update on PACCAR Parts, Financial Services, and other business highlights. Kevin?
Kevin D. Baney: Thanks, Preston. PACCAR Parts achieved first quarter revenues of $1.7 billion and profits of $402 million. Gross margins were 29.6%. We estimate parts sales to grow by about 3% in the second quarter and be in the range of 3% to 6% for the full year. PACCAR Parts has 21 parts distribution centers worldwide and has plans to expand its global distribution network and TRP stores. As mentioned in our recent Analyst Day, we continue to see great opportunities for broad-based parts growth and look forward to realizing that opportunity in partnership with our outstanding dealer network. PACCAR Financial Services pretax income was a robust $116 million.
The continued strong performance is a result of solid asset growth, improving margins, and the used truck market that is beginning to strengthen. This year, we are planning capital investments in the range of $725 million to $775 million and R&D expenses in the range of $450 million to $500 million as we continue to invest in key technology and innovation projects. These include advanced flexible manufacturing technologies, next-generation powertrains, PACCAR Inc's autonomous vehicle platform, and integrated connected vehicle services. We are excited for the growth PACCAR Inc will experience in the coming quarters and years. We are now pleased to answer your questions.
Operator: We will now begin the question and answer session. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael J. Feniger of Bank of America. Your line is open. Please go ahead.
Michael J. Feniger: Thanks, everyone. Just on the parts guidance, what did you see in the quarter? It feels like a slower start. I would love if we could just start there with what you are seeing on the parts side, how we are looking so far through Q2, and how we should think about that in the back half with orders starting to pick up and be better than expected. And just on the gross margin, the pickup to 13.5% versus 13.1% in Q1—should we still think that gross margins sequentially walk up through the year as build rates recover? Is there a pricing expectation that could also get better as well, given your comments that the U.S. markets continue to strengthen?
Just kind of curious how we should think about as we build through the year and what number we might be exiting the year as we are starting to see some strength in freight rates even excluding fuel right now. Thank you.
Preston Feight: Hey, Michael. Thanks for the question. It is good to talk to you. We do see increasing volumes and are really pleased with how the factories have been able to create this local-for-local manufacturing capability in America. We see the volumes increasing, as we said, to 37 thousand to 38 thousand in the second quarter. That is on the basis of build rates that we have already put in place, so teams have done a really good job of that. We see some of that margin growth coming from that volume, partially offset a little bit by the price of energy, steel, aluminum, and other raw material pricing.
I am not quite sure customers have seen the full effect of tariffs yet, but we feel really good about the cadence throughout the year as the market and our customers get healthy, and we see accelerating sequentially. Hey, Miriam. Let us go to the next question.
Operator: Next question comes from the line of Jerry David Revich of Wells Fargo. Your line is open. Please go ahead.
Jerry David Revich: Yes. Hi. Good morning, everyone. I am wondering if we could just talk about the really strong profit per truck that you folks delivered in the quarter. With lower parts contribution, you still exceeded the guidance ranges, so it looks like your profit per truck was up to about $5.3 thousand from $2.9 thousand last quarter. Can we unpack that—how much of that was better cost execution versus mix and any other moving pieces as we think about the profile heading into the rest of the year? And as we look at the backlog, how much more favorable is price/cost based on what is in backlog versus what we saw in the first quarter?
And one last one to calibrate expectations on orders over the balance of the year—we are hearing that there is a limited number of build slots available that might hamper orders over the next couple of quarters versus underlying demand. Is that the case for your business? What proportion of your build slots are already spoken for the next three quarters?
Preston Feight: Jerry, thanks for the comments. We did have price/cost advantage in the quarter sequentially, so we saw ourselves up over a percent in price/cost, which is good. I think the teams are doing a really good job of focusing on the market we are in, being careful on pricing to make sure that we get our percentage of the market. In fact, we saw that in terms of our percentage of market build—31.8% in the first quarter—which is very favorable. So we are balancing that growth with price/cost favorability. Looking forward into the second quarter, we think we will have favorability. We are full through the second quarter, and we have good visibility into the third and the fourth quarter.
As for build slots, we are full in Q2 and a majority full in Q3 and Q4. I am not sure I recognize the commentary about people not having slots; that sounds more like a marketing scheme.
Tami Zakaria: Hey. Good morning, and thank you so much. My first question is on the simplified metal tariffs that went into effect in early April. Does that change your view on what would be the tariff impact, especially for aftermarket parts versus the last time you spoke? Or does it not change the tariff headwind that you expected? And based on third-party data, orders have been very strong year-to-date. You kept your U.S./Canada outlook unchanged. Does this outlook include the year-to-date strength in orders—meaning do you expect orders to moderate as we go through the year as we get close to the next timeline—or is your view shaped by supply chain rather than demand?
Preston Feight: Hey, Tami. It is good to hear from you. It does not really have a lot of impact for us because the truck-specific 232 has specific offsets, and it applies mostly to those materials. So there is some moderate impact, but not significant.
Kevin D. Baney: Same on the parts side, Tami.
Preston Feight: On the outlook, our view is shaped by the fact that the first quarter really did not have a high cadence to it. If the first quarter ran at something around or a little under 200 thousand, then in order for it to come to the midpoint at 250 thousand, there is going to have to be a rapid acceleration. We have a great supply base, but they also need to be able to spin up their operations. So the rate of increase quarter over quarter is what probably informs the total market size.
Rob Wertheimer: Thanks. Is there any visible impact of the war in the Middle East on confidence or demand or orders in Europe? And the rise of electric trucks in China has been very sharp. Could you talk about your own experience? Do you see strong demand from customers? Is there a crossover on total cost of ownership yet on some size classes or models? How do you see that shape at present?
Preston Feight: On confidence and demand, people are paying attention and trying to discern what it might mean for the general economy, of course. From a demand standpoint, we have seen less impact. We have seen continued good order intake throughout the last couple of months. On electric trucks, Kevin, why do you not share some thoughts?
Kevin D. Baney: In Europe, geopolitical factors have had an impact on fuel prices, and the cost of diesel is a bigger percent of operating cost for customers. So there has been a lot more discussion about battery electric trucks in Europe. As we said, DAF just won International Truck of the Year with the DAF XF and XD Electric. They just expanded their product range, so we are in a really good position to address the growing customer questions and demand about battery electric trucks in Europe, and we are well positioned against the competition.
Preston Feight: I have to say I had a chance to drive that XD Truck of the Year—it is amazing. It is a really wonderful truck to be in. For the U.S. market, without subsidies, widespread adoption is probably less likely. There can be markets where it makes sense—certainly in urban environments. We just launched a couple of new medium-duty models for Kenworth and Peterbilt, so we have those regional delivery EVs, which is where the market makes the most sense in America.
David Raso: Hi. Thank you. Question relates to trying to understand your operating performance in the truck business, particularly. It looks like you can back into the gross margin for truck at around 6.9% in the first quarter. Sequentially, the truck revenues went up $11 million, but your gross profit went up $73 million. Was there anything in the first quarter about reversal of old tariffs that you could take the benefit with AIPA gone? I know we already had truck 232 in, but just making sure that is a clean quarter. I appreciate U.S./Canada as a percent of the shipments was a lot bigger this quarter than last.
Can you walk us through that gross margin improvement in truck on really no revenue increase? And then for next quarter, where your truck revenue could be up, call it, $600 million, you would think the gross margin impact could be more significant than going up only 40 bps at the company level. I think earlier you mentioned parts gross margins for 2Q. I do not think you called out anything particularly negative for it. Again, I am just trying to understand that impressive performance 4Q to 1Q, but then 1Q to 2Q seems a lot more muted despite this being the quarter you get a bigger revenue move.
Preston Feight: David, you always do such a good job with your analysis, and you continue to do that. We had somewhere above 7% for our truck margin, and that came largely because the teams did a really good job selling these best-in-class products. The leverage we got off of the volume helped us as well, and the price/cost advantages contributed to that. We also had favorable product mix, selling more of the Kenworth and Peterbilt brand at year-end being lower because of the holiday shutdown season, and then, of course, DAF at the end of the year usually has a few units that they are getting done on their fleets that they hold in inventory.
So a little bit of a favorable mix effect on where we are selling the trucks helped us. We did not record any increase for IEPA related to AIPA. So, in summary, it was a very clean quarter—nothing to put in or take out of it. For Q2, we gave you 13.5% as our midpoint guidance for our margin. We do see volume being a good thing. Our build percentage has increased in the market in North America to 31.8%. Pricing remains competitive as our customers are just beginning to experience acceleration in their end markets, so there is a competitive price point out there.
One other comment worth making: when we guided 3% growth in parts, obviously the truck volume will be much greater than 3%, going up by 6 thousand to 7 thousand trucks. So you have a negative, if you want to call it, price/mix effect that also dampens the total margin percent.
Chad Dillard: Hey. Good morning, guys. How do you think about the prebuy likely to hit later this year? What are your plans for the number of shifts or build slots compared to where you are today or a year-on-year basis? How quickly could you ramp that up versus where you are today if you got a little more visibility into the durability of demand? And can you talk about how industry pricing behavior has changed versus the start of the year? Are some of the nondomestic producers starting to price for tariffs?
Preston Feight: We have great operations teams—they have demonstrated that not just in the past year, but over the decades—and they continue to be able to move up quickly. It is more about what the supply base and order board look like and how quickly they have visibility to it. The hiring cadence across the industry will probably inform how quickly it can go up. I feel very confident in our team’s ability to add the people and the capacity we need to support the market in any market size. As for pricing behavior, you would have to ask others about their pricing scheme. We do see a competitive market right now. Our customers are just starting to see improvement.
Raw material pricing is high, so those factors are still in play. We are at the beginning of what feels like an acceleration, considering that the first quarter build was just under 200 thousand and last year was low. If you think about the average market being 267 thousand units, there is going to be some replacement demand and strengthening financial performance, both of which are good for us in the near and midterm.
Stephen Edward Volkmann: Thanks. Good morning. You are good at managing supply chains—probably the best at that. We have a big ramp in the second half this year, and we are starting to hear some early signs that there might be constraints in things like memory chips and maybe even aluminum supply. Is there anything on your radar that could actually constrain the second half build? And can you comment about the mix you are seeing relative to vocational versus over-the-road as the second half ramps up?
Preston Feight: Great question. The thing informing supply chain right now is how much energy-related exposure suppliers have to materials and what that might do to their costs. The second factor is the hiring cadence—getting people trained up to speed in a sustainable manner for suppliers to be ready for the ramp. Nothing specific is standing out yet. On mix, it has been pretty uniform. We have seen over-the-road companies getting their recovery now with spot rates up double-digit, even up to 20%. We have seen contract rates improving, helping our truckload carriers. The vocational market continues to be solid, as well as LTL.
We are seeing orders coming in from all sides as people want to make sure that they have their fleet in the right spot for this year and next year.
Kyle David Menges: Thank you. I wanted to go back to your gross margin comments. It sounds like you are expecting improvement quarter over quarter as we move through the rest of the year. I understand volume is a big piece of that, but how are you thinking about pricing momentum as we get to the second quarter and into the second half? And how are you thinking about price/cost for the rest of the year? Also, we are getting pretty close now to the new EPA mandate. How is the new engine performing in the market, and will it be ready in time?
Preston Feight: The year is a long way off, so for this discussion we really focus on the next quarter. We expect to have price/cost favorability in the quarter. How that gets informed is based upon what the market asks for and how raw material pricing finishes up for us. We will watch carefully how raw material pricing moves through the year—there is volatility—and that will have consequences, but we do expect favorability throughout the year. On the EPA mandate, PACCAR Inc’s team does a great job of having the right engines for our customers. We are really pleased with the engine development programs that are ongoing for us, and we are watching how it is going with our partner Cummins.
We look forward to seeing how the implementation rolls through for everyone, and I feel great confidence in our teams and what we will deliver.
Jamie Lyn Cook: Hi. Good morning, and congrats on a nice quarter. First, as we think through the second half of the year and throughout the cycle, what is the setup for PACCAR Inc in terms of incremental margins? Last cycle, you delivered above-average incrementals with a lot of new product launches. This cycle, we have the Section 232 benefit and market share opportunity. How will you balance the two? Should we think of normalized incremental margins at 15% to 20% or above that? Second, can you talk to channel inventory—where PACCAR Inc is sitting versus its peers—and whether peers have made any progress on destocking inflated inventory in the channel?
Preston Feight: On inventory, we feel it is in very good shape at just under three months—2.8 months—and that compares to 2.2 months back in December. We have been able to get a little bit of inventory back into the market, which feels healthy. The industry overall has a higher percentage of inventory—over four months. PACCAR Inc feels like we are in really good shape there. Dealers have been able to get a few trucks on the lot and get ready to go. Inventory for us is affected by our higher percentage of vocational share—people getting bodies put on trucks is an influencing factor.
On incrementals, we see margin being favorable, and our build percentage at 31.8% in the first quarter is good for our performance and good for our customers who will get trucks from us. Being full in the second quarter, we feel good about our position.
Steven Michael Fisher: Thanks. Good morning. I wanted to clarify the parts acceleration you expect in the second half. You mentioned clients starting to get healthier, and fuel had an impact in Q1. What will drive the acceleration? Do you still need to see freight rates continue to rise? Do you need to see fuel costs falling? Is it about getting more trucks on the road or freight shipments picking up?
Kevin D. Baney: It is a little bit of all of that. As we see the increase of truck orders, more trucks are on the road, and as our customers’ business improves, we see that on the parts side. Increased fuel and operating cost volatility leads customers to focus on required maintenance and delay optional parts purchases. We see both volume and mix improving, and that leads to acceleration through the year. As the truck market improves, the parts market follows.
Steven Michael Fisher: To what extent have you had discussions with customers about 2027 planning? How are you characterizing the expected pickup in the second half of this year—prebuy or just buy?
Preston Feight: There is a little bit of both going on. There is “buy” because customers are getting healthy and want fleet age to come back to where they want it. On the “prebuy” side, there is a cost impact to a 35 milligram engine, and customers are sensitive to that, so some are putting orders in front of it. Looking into 2027, we will see how the year fills out—full-year retail and build will inform what 2027 will look like.
Kevin D. Baney: The second half of the year is pretty well balanced in terms of the fill between the third and fourth quarter. If it was more weighted to a prebuy, we would see demand higher at the end of the year, but we see a nice balance in both quarters.
Angel Castillo: Hi. Good morning, and thanks for taking my question. The EPA formalized the low NOx emissions rule communicated at the end of last year. Does that have any bearing on the ability of the industry to launch and move forward with engines that meet the latest low NOx standard? Any implications on customers’ ability to move forward with orders or a potential prebuy? If we do not have formalized releases there, any insights as to when we might get that? Also, could you give the deliveries guidance for 2Q by region—specifically, how much you expect for U.S. and Canada versus Europe?
And revisiting the 13.5% gross margin, beyond truck mix being a slight drag, are there any other factors keeping it from being a more material step up quarter over quarter?
Preston Feight: The formalized release is that it will be a 35 milligram standard come 2027—that is the law. There is not any modification expected to that in terms of the standard for new engines in 2027. The parameters around that are being contemplated based on customer and market feedback. On deliveries, we expect Q2 volumes to be up around the world—build rate increases everywhere are driving the increase in volume. On the 13.5% margin, it is volume-based improvement with slight price/cost favorability, with pressure on pricing in the market as tariffs may not have been fully rolled through yet, and PACCAR Inc performing really well in terms of share of build.
Analyst: Good morning, everyone. Thank you for taking my questions. We have heard about customers potentially pushing back their delivery dates for trucks. Are you seeing any evidence of this occurring? And on the tariffs topic, can we get your latest understanding on when we could expect the previously announced 3.75% NSRP credit to be applied?
Preston Feight: We have not seen that in our backlog. On the 3.75% NSRP credit, it is fairly well defined for the truck side of the 232, and now it is about when we can apply for them and get them back. We would expect that to be in the not distant future.
Scott H. Group: Hey. Thanks. Good morning. On the prebuy versus buy discussion from earlier, do you have a sense on the buy part of it—how much is fleet growth plans versus pent-up replacement? And to the extent there is more replacement, as we start replacing more after aging fleets, does that naturally pressure parts growth? Also, orders have doubled year to date versus a year ago, and you are still talking about a competitive pricing environment. Why are we not seeing a bigger or faster improvement in pricing?
Preston Feight: On buy versus replacement, there has been a tough little run for some of our customers, and now as financial performance improves, they can allocate capital to trucks. Keeping fleet age reasonable is good for them and their operating costs—when they buy Kenworth, Peterbilt, or DAF trucks, they are getting highly efficient trucks, replacing older units with lower fuel economy. It is tied to their financial performance and the truck replacement cycle. On pricing, orders can be around multi-year items and projections; orders are not the cleanest thing to measure. A cleaner indicator is build. If you look at build and retail—build it, you will retail it. Orders do not necessarily come through the same way for everyone.
With our 31.8% build in Q1, we feel good about the position, and there are still some orders left in the second half to be had.
Stephen Edward Volkmann: Thank you. I figured it out this time. Just a quick follow-up. I know you give average prices in the 10-Q. Do you have those available for truck and parts, or should we wait for the Q?
Brice J. Poplawski: For the first quarter compared to the first quarter last year, you will see truck price up 2%, and you will see our cost, unfortunately, up higher than that, so that made our margins down on the truck segment. Price on the parts side was up 6%.
Preston Feight: Sequentially, you would see truck price roughly flat and cost down more than a percent per truck. Sequentially for parts, price was up a couple percent and cost was only up a percent.
Timothy Thein: Great. Thank you. First question is on the customer mix within the backlog and how that may or may not be influencing truck margins. On-highway in North America, you have skewed more toward small and midsized fleets historically, and fluctuations in diesel costs can hit smaller carriers harder. Is there a mix shift between large mega fleets versus your historical small fleet base? Also, relating to lease and rental customers, sometimes they can be a canary in the coal mine when truckload markets inflect. Looking at the PacLease fleet—which has been declining quite a bit over the past few years—are you starting to see any change in utilization or aspirations to reverse that and start expanding?
Any clues you are picking up from that cohort?
Preston Feight: It is an interesting concept, but I do not think it is significant. We have a broad mix of customers buying trucks right now. Fuel surcharges may be more cash impactful to smaller customers, but I do not think it is informing what is going on. We are seeing the beginning of a market recovery—things are starting to improve for most of our customers. They are starting to get better rates and buy more trucks, which positions PACCAR Inc well for the next quarter and beyond. On lease and rental, we are seeing a little bit of an increase in utilization.
Another indicator is the used truck market, where we are seeing price, utilization, and volume demand starting to strengthen as well. Those are indications that we are starting to see the market improve.
Operator: There are no other questions in the queue at this time. Are there any additional remarks from the company?
Ken Hastings: We would like to thank everyone for joining the call, and thank you, Miriam.
Operator: Ladies and gentlemen, this concludes PACCAR Inc's earnings call. Thank you for participating. You may now disconnect.
