RUSH ENTERPRISES INC \TX\ Q3 FY2024 earnings call

• Reported revenues of $1.9 billion and net income of $79.1 million ($0.97 per diluted share) for the third quarter. Incurred a one-time pretax charge of $3.3 million due to Hurricane Helene-related property damage. Excluding the charge, EPS would have been $1 per share. - Industry facing low freight rates and high interest rates, but Class 8 vocational and public sector, as well as medium-duty demand, held up. - Aftermarket saw a slight revenue improvement, particularly in service sales, outpacing the market. - Sold 3,604 new Class 8 trucks and 3,379 Class 4 through 7 new trucks in Q3. Used truck sales up 1.8% YOY. Lease and rental revenue almost flat. - Mike McRoberts stepping down as COO on October 31, with Jason Wilder to step in as new COO on December 1.

Truck Sales: In the third quarter, Rush Enterprises sold 3,604 new Class 8 trucks, accounting for 5.3% of the total US Class 8 market and 1.6% in Canada. Class 4 through 7 new truck sales reached 3,379 units, making up 5% of the US market and 2.9% in Canada. Used truck sales were 1,829 units, up 1.8% year-over-year. Aftermarket: Parts service and body shop revenues were $633 million, down slightly 1.6% from the third quarter of 2023 but up from the previous quarter. There was a slight sequential growth in aftermarket sales through over-the-road customers, the first growth since early 2023.

• Anticipate beginning a gradual return to more normal market conditions in early 2025. - Expect fourth quarter Class 8 truck sales to increase slightly compared to Q3, but pricing will remain competitive through the first half of 2025. - Anticipate parts and service business to see growth in the back half of 2025 as market conditions improve.

• Industry challenges: Low freight rates, high interest rates, and economic uncertainty affecting Class 8 carriers. - Seasonality: Expect some seasonality to adversely affect the fourth quarter. - Used truck market: Continued challenges. - Technician availability: Difficulties in hiring and retaining technicians, with turnover issues for Level 1 and 2 technicians.

Q: Andrew Obin asked about balancing order commentary with ACT's forecast of no retail recovery until second half of 2025.

A: Rusty Rush responded that he was talking about customers' business bottoming out, with freight for truckload carriers bobbling on the bottom and order intake picking up in the last six weeks, though much of it was Q4 build. He expects a pre-buy in the back half of 2025 driving orders.

Q: Daniel Imbro asked about cost takeouts and tech availability.

A: Rusty Rush discussed expense management, having made adjustments to G&A by flattening out and working on expense numbers. On tech availability, he noted challenges with Level 1 and 2 technicians, working with tech schools and high schools, but expecting progress in the next year.

Q: Ian Zaffino asked about M&A environment and vocational truck outlook.

A: Rusty Rush said there's not a lot of big M&A activity currently, but they're constantly looking. Vocational truck side continues to be strong, driven by infrastructure bills, with expected strong sales in 2025.

Q: Avi Jaroslawicz asked about aftermarket bottom and vocational volumes.

A: Rusty Rush stated he believes aftermarket is around the bottom, expecting growth in the back half of 2025 as over-the-road market improves. Vocational volumes are expected to remain strong in 2025, with runway for growth in that market