Rush Enterprises, Inc. Q4 FY2025 earnings call

• 2025 had challenging commercial vehicle industry with freight rates under pressure, excess capacity, trade policy and emissions regulation uncertainty. • End of 2025 Q4 saw improvement in new Class 8 truck demand, quoting and order intake increased into 2026 Q1 due to clarity on tariffs and EPA regulations. • Expanded network in 2025 with acquisition of IC Bus dealerships in Canada and addition of Peterbilt dealership in Tennessee. • Focus on operational efficiency in aftermarket, reducing dwell time, improving parts delivery, strengthening service execution. • Capital allocation: repurchased $193.5 million of common stock in 2025, announced new $150 million repurchase program, returned $58 million to shareholders via dividends with 5.6% increase from 2024.

In 2025, revenues were $7.4 billion. Aftermarket parts and service and collision center revenues totaled $2.5 billion, essentially flat compared to 2024. Annual absorption ratio was 130.7% vs 132.2% in 2024. Fourth quarter aftermarket revenues were $625.2 million, up from $606.3 million in 2024, absorption 129.3% vs 133% prior year. Sold 12,432 new Class 8 trucks in 2025, 5.8% of US market; 338 new Class 8 trucks in Canada, 1.4% of Canadian market. New US Class 4 through 7 retail sales down 15.6% in 2025, but Rush sold 12,285, down 8.5%, market share 5.7%; 993 new Class 5 through 7 in Canada, 6.3% market share. Leasing and rental revenues $369.6 million in 2025, up 4.1% from 2024, Q4 up 3.6% year over year.

• Expect market conditions to remain challenging in 2026 Q1, but optimistic for remainder of year. • Anticipate commercial vehicle sales and aftermarket conditions to improve in Q2 as fleet ages elevated and maintenance needs increase. • Believe strategic investments over past years position company well to respond to customer needs as market improves. • ACT forecasts U.S. Class 8 retail sales 111,300 in 2026, Class 4 through 7 retail sales 218,225 in 2026, slight increase from 2025. • Expect parts and service demand to strengthen as fleet utilization increases and customers address deferred maintenance and aging equipment.

• Factors like freight rates under pressure, excess capacity, trade policy and emissions regulation uncertainty negatively impacted demand in 2025, could continue to affect performance. • Uncertainty around supply side, tier-two and tier-three suppliers could impact ability to ramp up production and meet demand. • Severe winter weather can impact parts and service business, as seen in January 2026 with shutdowns in some areas. • Inflation in aftermarket parts could be a potential headwind, though not expected to be monumental.

Q: As mentioned, there was improvement in orders late in 2025 and early 2026, talk about what's heard from customers and prebuy ahead of 2027 regulations.

A: Cautiously optimistic there will be prebuy before 2027 regulations. Clarity on tariffs and EPA regulations has helped, business is improving. Order intake expected to continue solid, but need to watch supply side and second-tier suppliers.

Q: Talk about parts and service, impact of winter weather and strategic initiatives.

A: January was tough due to winter weather in some areas. Seasonal, starting to see improvement. Strategic initiatives include mobile service piece, investing in mobile units, working on technician headcount, running pilot projects for parts delivery.

Q: Thoughts on expenses in 2026 given cost discipline and market improvement.

A: Hoping to maintain G&A at least close to flat. If parts and service grow, may spend half of gross profit growth.

Q: Expectations for price/cost in aftermarket business.

A: Slight headwind from inflation slowing, but overall market improvement should overcome it.

Q: Shape of medium-duty demand in 2026.

A: Have concerns, but seeing more quoting activity. Medium-duty business tied to general economic activity, expect to line up historically, stay in line with market share.

Q: Thoughts on industry orders over 3-6 months and over-the-road recovery.

A: Clarity on tariffs and regulations gave customers confidence, order intake improved. Over-the-road business improving, expect sustainable improvement in back half of 2026.

Q: Off-highway and vocational markets.

A: Vocational pieces fairly flat, back to business as usual. Some segments were catching up from prior years, now more normal replacement cycles.

Q: Class 8 pricing perspective and prebuy risks.

A: Still building backlogs, no big discounting or raises now. Prebuy activity solid, no placeholders, but need to watch supply chain for second-tier suppliers.

Q: National account mix and initiatives.

A: Focus on growing national account business, which is more sustainable. National account business was up in 2025, will continue to focus on it as it's more controllable and repetitive.