Rush Enterprises, Inc. Q3 FY2025 earnings call

• Third quarter revenues were $1.9 billion and net income was $66.7 million or $0.83 per diluted share. Board approved a $0.19 per share cash dividend. - Commercial vehicle industry faced challenging operating conditions with depressed freight rates, overcapacity, tariff and regulatory uncertainties. - Aftermarket operations maintained strong results with 63% of total gross profit, parts, service and collision center revenues up 1.5%. - Truck sales: 3,120 new Class 8 trucks sold in U.S., down 11% year-over-year; medium-duty had mixed results with some growth in Canada. - Rush Truck Leasing had record revenues, up 4.7% year-over-year. - Focused on returning value to shareholders with $9.2 million common stock repurchase and $14.8 million cash dividend.

Rush Enterprises achieved third quarter revenues of $1.9 billion and net income of $66.7 million or $0.83 per diluted share. Aftermarket operations accounted for approximately 63% of total gross profit in the third quarter. Parts, service and collision center revenues reached $642.7 million, an increase of 1.5% compared to the third quarter of 2024. In the third quarter, 3,120 new Class 8 trucks were sold in the U.S., accounting for 5.8% of the total U.S. market, a 11% year-over-year decrease. 2,979 Class 4 through 7 medium-duty commercial vehicles were delivered in the U.S. in the third quarter, representing an 8.3% year-over-year decrease and a 5.6% market share. 448 Class 5 through 7 commercial vehicles were sold in Canada, which represents 10.7% of the Canadian Class 5 through 7 commercial vehicle market. 1,814 used commercial vehicles were sold in the third quarter, essentially flat compared to the same period in 2024. Rush Truck Leasing achieved record revenues of $93.3 million in the third quarter, up 4.7% year-over-year.

• Expect continued challenges in aftermarket business due to seasonal trends and industry headwinds but confident in navigating. - Believes weak demand for new Class 8 trucks will negatively impact sales for at least the next 2 quarters; sees potential for stronger back half of 2026 if right-sized fleet and freight tonnage grow. - Expect medium-duty commercial vehicle sales to remain stable through remainder of year. - Expect fourth quarter used truck sales to be in line with third quarter. - Confident Rush Truck Leasing's leasing and rental performance will be solid for remainder of year.

• Commercial vehicle industry faces challenging operating conditions with depressed freight rates and overcapacity. - Economic uncertainty and regulatory ambiguity, especially regarding engine emissions regulations. - Tariffs imposed on certain commercial vehicles and parts impacting customers' vehicle replacement decisions.

Q: Could you expand on when things might bottom and the path forward?

A: Spent time at ATA, mentioned 3 years in freight recession, supply not leaving market quickly. Talks about non-domiciled driver enforcement potentially taking out 15% of drivers, OEMs cutting production, EPA emissions regulations adding cost, and hopes for freight tonnage growth.

Q: What's your read on the macro outside of customer base?

A: Worries about unemployment affecting consumer demand, not seeing full effect of tariffs yet, and anecdotes of companies laying off people like UPS and Amazon.

Q: How is your parts and service business trending into year-end?

A: Flat to slightly up in third quarter, September softer, expecting slight downtick due to seasonality but hoping to be close to last year's number.

Q: Outlook for remainder of '25 and first half of '26, and company-specific opportunities in vocational?

A: Next couple of quarters tough due to low order intake, need clarity on tariffs and emissions regulations, vocational customers more resilient but next quarters still tough.

Q: What are you seeing in medium-duty into end of year and 2026?

A: Expected to be fairly flat in Q4 with Q3, more stable than Class 8 but will suffer some, weathering downturn better due to diverse markets served.

Q: What's seeing in used truck market?

A: Pricing fairly stable, depreciation more in line with normal, managed inventories well, used trucks not worried about tariffs or emissions, expect solid going forward.

Q: What are you doing to pick up share in parts and service business?

A: Balancing taking share, margin, and results, using technology and data, enhancing services, having goals to be 20% better than market growth, investing in mobile service and technicians.