Rush Enterprises, Inc. Q1 FY2025 earnings call

• Rush Enterprises achieved revenues of $1.85 billion and net income of $60.3 million in the first quarter. - The Board of Directors declared a cash dividend of $0.18 per common share. - The business environment was difficult with a freight recession, economic uncertainty, U.S. trade policies, and emissions regulations. - Outperformed the market in Class 8 vocational and public sector segments and medium duty with a ready-to-roll inventory program. - Aftermarket revenues were $619 million, down 4.6% year-over-year but expecting a slight improvement in Q2, with an expanded aftermarket sales force. - Class 8 new truck sales were down, but expecting a slight improvement in Q2. - Medium duty sales were stable and outpaced the market. - Used truck sales were down 2.7% year-over-year with soft demand but proactive inventory for spring/summer. - Rush Truck Leasing had solid leasing and rental revenue growth.

In the first quarter, Rush Enterprises achieved revenues of $1.85 billion. For the Class 8 over the road segment, truck sales to Class 8 customers were weaker at the start of the year, with Rush selling 3,222 new Class 8 trucks, down 7.8% compared to the prior year, accounting for 6.1% of the U.S. market and 1.1% of the Canadian new Class 8 market. ACT Research revised the U.S. and Canadian Class 8 sales forecast downward to 234,600 units in 2025, a 14.7% decline year-over-year. For the medium duty truck segment, while the overall market was down 3.5%, Rush sold 3,329 new Class 4 through 7 trucks, outpacing the market and increasing its market share to 5.6% of the U.S. Class 4 through 7 market and 3.1% of the Canadian Class 5 through 7 market. ACT Research forecasts U.S. and Canadian sales of Class 4 through 7 trucks to be 254,050 in 2025, down 7.2% compared to the prior year. The aftermarket had parts, service, and body shop revenues of $619 million in the quarter, down 4.6% compared to last year, with an absorption ratio of 128.6% compared to 130.1% in Q1 2024, but expecting a slight improvement in aftermarket revenues in Q2. Used truck sales were 1,769 in the first quarter, down 2.7% compared to 2021, with soft demand and proactive inventory preparation for the spring and summer selling season. The Rush Truck Leasing division had leasing and rental revenue of $90 million in the first quarter, up 2.3% compared to Q1 2024.

• Expect a slight improvement in aftermarket revenues in Q2. - ACT Research revised the U.S. and Canadian Class 8 sales forecast downward. - Anticipate a slight improvement in Class 8 sales in the second quarter, but uncertainty remains for the back half of the year. - Expect medium duty sales to continue outperforming the market. - Proactive in increasing used truck inventories in preparation for the spring and summer selling season.

• The freight recession and economic uncertainty are impacting the business. - U.S. trade policies and tariffs pose risks to parts availability and pricing. - Uncertainty around emissions regulations is affecting customer purchasing decisions. - Soft demand in the used truck segment. - Fluctuating tariffs and changing regulations create market uncertainty.

Q: Daniel Imbro from Stephens asks about new unit sales trend and customer planned expenditures.

A: Rusty Rush talks about uncertainty due to tariffs, emissions, and economic factors, expecting Q2 slightly better but back half uncertain.

Q: Daniel Imbro asks about parts and service performance.

A: Rusty Rush says sequential improvement expected, affected by weather, but April solid.

Q: Andrew Obin from Bank of America asks about Q2 Class 8 and parts service, April performance, SG&A, credit access.

A: Rusty Rush talks about slight sequential improvement, April affected by Easter, SG&A maintained, credit available but uncertainty.

Q: Avi Jaroslawicz from UBS asks about customer hesitancy, economy, regulations.

A: Rusty Rush says both price and macro uncertainty, regulations in flux, expecting lower NOx but not as stringent as originally planned.