Company Overview - Rush Enterprises operates commercial vehicle dealerships, offering a comprehensive range of solutions including new and used truck and bus sales, parts, service, collision repair, financing, and leasing [1]. Historical Background - The company was founded in 1965, establishing a long-standing presence in the commercial vehicle industry [1]. Investment Focus - The analysis emphasizes a qualitative approach to investing, particularly in small-cap companies that exhibit both long-term growth potential and special situations [1].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited interim consolidated financial statements for Q2 and H1 2025 reflect a decrease in total revenues and net income compared to the prior year [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$4,715,774** | **$4,617,547** | | Total Current Assets | $2,395,703 | $2,389,715 | | Inventories, net | $1,842,311 | $1,787,744 | | **Total Liabilities** | **$2,540,743** | **$2,455,644** | | Total Current Liabilities | $1,718,449 | $1,650,119 | | Floor plan notes payable | $1,088,779 | $1,081,199 | | **Total Shareholders' Equity** | **$2,175,031** | **$2,161,903** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,930,707 | $2,027,028 | -4.8% | | Gross Profit | $379,671 | $392,389 | -3.2% | | Operating Income | $110,206 | $124,481 | -11.5% | | Net Income | $72,989 | $78,783 | -7.4% | | Diluted EPS | $0.90 | $0.97 | -7.2% | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3,781,537 | $3,899,027 | -3.0% | | Gross Profit | $737,431 | $782,264 | -5.7% | | Operating Income | $202,075 | $235,091 | -14.0% | | Net Income | $133,606 | $150,272 | -11.1% | | Diluted EPS | $1.63 | $1.84 | -11.4% | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $381,162 | $115,525 | | Net cash used in investing activities | ($232,220) | ($161,128) | | Net cash provided by (used in) financing activities | ($166,254) | $29,180 | | **Net decrease in cash** | **($17,312)** | **($16,423)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company operates with **one reportable business segment**, the Truck Segment, which includes a network of commercial vehicle dealerships[36](index=36&type=chunk) - On June 16, 2025, the company acquired 100% of the shares of Leeds Transit, Inc for approximately **$25.6 million**, expanding its dealership locations[54](index=54&type=chunk) - A subsequent event note discusses the enactment of the "One Big Beautiful Bill Act" ("OBBBA") on July 4, 2025, which will require the company to **re-evaluate its deferred tax balances**[55](index=55&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes decreased revenues and profits to weaker Class 8 truck demand from a freight recession, a lower backlog, and discusses liquidity and capital allocation [Outlook](index=19&type=section&id=Outlook) - A.C.T. Research forecasts a **10.5% decrease** in U.S. Class 8 retail truck sales and a **10.2% decrease** in Class 4-7 sales for 2025[63](index=63&type=chunk)[64](index=64&type=chunk) - The company expects continued weak demand from over-the-road customers but anticipates **strong demand from vocational customers** will persist[63](index=63&type=chunk) - Aftermarket Products and Services revenues are expected to **remain flat in Q3** with potential for modest growth[66](index=66&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q2 2025 vs Q2 2024 Revenue and Unit Sales Changes | Metric | Q2 2025 vs Q2 2024 Change | | :--- | :--- | | Total Revenues | -4.8% | | New & Used Vehicle Revenues | -8.4% | | Aftermarket Products & Services Revenues | +1.4% | | New Heavy-Duty (Class 8) Unit Sales | -21.1% | | New Medium-Duty (Class 4-7) Unit Sales | +3.0% | - The dealership absorption ratio, a key performance indicator, **improved to 135.5%** in Q2 2025 from 134.0% in Q2 2024[71](index=71&type=chunk)[72](index=72&type=chunk) - Gross profit as a percentage of sales **increased to 19.7%** in Q2 2025, driven by a favorable sales mix with more higher-margin Aftermarket revenues[81](index=81&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had working capital of approximately **$694.8 million**, including **$211.1 million in cash**, deemed sufficient for at least the next twelve months[106](index=106&type=chunk) - The stock repurchase program was increased to **$200 million**, with **$121.4 million** repurchased as of June 30, 2025[112](index=112&type=chunk) - The company declared a cash dividend of **$0.19 per share** on July 30, 2025, a **5.6% increase** from the Q1 2025 dividend[111](index=111&type=chunk) [Backlog](index=29&type=section&id=Backlog) - The backlog of commercial vehicle orders **decreased significantly to approximately $967.0 million** as of June 30, 2025, from $1,812.1 million a year prior[130](index=130&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuation on its variable-rate debt, with a 100 basis point change impacting annual interest expense by $13.3 million - The company is exposed to interest rate risk through its floor plan financing and credit agreements based on **variable rates like SOFR and CORRA**[142](index=142&type=chunk) - As of June 30, 2025, a 100 basis point change in rates would impact annual interest expense by approximately **$13.3 million** on its **$1,335.1 million** in variable-rate borrowings[142](index=142&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls during the quarter - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[143](index=143&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[144](index=144&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Management believes no pending litigation arising from the ordinary course of business is likely to have a material adverse effect on the company's financial position - The company is subject to litigation in the ordinary course of business and management does not expect any pending claims to have a **material adverse effect** on its financial condition[145](index=145&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There has been **no material change** in the company's risk factors as disclosed in its 2024 Annual Report on Form 10-K[147](index=147&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1,636,638 shares during Q2 2025 under its publicly announced plan and made no unregistered sales of equity securities Q2 2025 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 1,482,555 | $51.40 | | May 2025 | 148,477 | $50.07 | | June 2025 | 5,606 | $48.96 | | **Total** | **1,636,638** | | - On May 29, 2025, the company increased its stock repurchase program authorization by **$50.0 million**, bringing the total to **$200.0 million**[150](index=150&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the second quarter of 2025 - **No directors or officers** adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025[151](index=151&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including credit agreement amendments and required CEO/CFO certifications - The report includes a list of filed exhibits, such as amendments to financing agreements and required **CEO/CFO certifications** under Sarbanes-Oxley Sections 302 and 906[152](index=152&type=chunk)

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) [Financial and Operational Summary](index=1&type=section&id=Financial%20and%20Operational%20Summary) Rush Enterprises reported Q2 2025 revenues of $1.931 billion and net income of $72.4 million, increasing its dividend despite market challenges Q2 2025 Key Financial Results (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $1.931 billion | $2.027 billion | | Net Income | $72.4 million | $78.7 million | | Diluted EPS | $0.90 | $0.97 | - The Board of Directors declared a quarterly cash dividend of **$0.19** per share for both Class A and Class B stock, a **5.6%** increase over the prior quarter's dividend[2](index=2&type=chunk)[7](index=7&type=chunk) - The company's performance was impacted by a prolonged freight recession, depressed freight rates, and overcapacity; economic and regulatory uncertainty led many customers to delay vehicle acquisition and maintenance decisions[3](index=3&type=chunk) [Operations](index=1&type=section&id=Operations) [Aftermarket Products and Services](index=1&type=section&id=Aftermarket%20Products%20and%20Services) Aftermarket revenue grew 1.4% to $636.3 million, contributing 63.0% of gross profit with improved absorption and stable Q3 outlook Aftermarket Performance Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Parts, Service & Collision Center Revenues | $636.3 million | $627.4 million (implied) | | % of Total Gross Profit | ~63.0% | N/A | | Absorption Ratio | 135.5% | 134.0% | - Operational improvements in the quarter included technician turnover reaching a **12-month low** and an increase in the aftermarket sales force[8](index=8&type=chunk) - The company expects aftermarket performance to remain stable with potential for modest growth in Q3, but the outlook beyond that is uncertain due to potential changes in U.S. trade policy[9](index=9&type=chunk) [Commercial Vehicle Sales](index=2&type=section&id=Commercial%20Vehicle%20Sales) Commercial vehicle sales were mixed in Q2 2025, with Class 8 truck sales down 20.3% but Class 4-7 sales up 1.0% and used sales stable [Class 8 Truck Sales](index=2&type=section&id=Class%208%20Truck%20Sales) New Class 8 truck sales declined 20.3% to 3,178 units, achieving 5.4% market share amidst soft demand and a cautious outlook U.S. New Class 8 Truck Sales - Q2 2025 | Metric | Rush Enterprises | Total U.S. Market (ACT Research) | | :--- | :--- | :--- | | Units Sold | 3,178 | 58,625 | | YoY Change | -20.3% | -0.6% | | Market Share | 5.4% | 100% | - The sharp YoY sales decline was largely due to a challenging comparison with Q2 2024, which included several large fleet deliveries[11](index=11&type=chunk) - The company anticipates new Class 8 sales may decrease sequentially in Q3, with significant market uncertainty preventing a reliable outlook beyond that quarter[12](index=12&type=chunk) [Class 4-7 Commercial Vehicle Sales](index=2&type=section&id=Class%204-7%20Commercial%20Vehicle%20Sales) New Class 4-7 vehicle sales increased 1.0% to 3,626 units, outperforming the market with a 6.2% share and a positive outlook for H2 U.S. New Class 4-7 Vehicle Sales - Q2 2025 | Metric | Rush Enterprises | Total U.S. Market (ACT Research) | | :--- | :--- | :--- | | Units Sold | 3,626 | 58,176 | | YoY Change | +1.0% | -8.4% | | Market Share | 6.2% | 100% | - The company significantly outperformed the market, driven by healthy demand across all customer segments, especially lease and rental[14](index=14&type=chunk) - The outlook for the second half of the year remains positive, with Q3 sales expected to be similar to Q2 results[15](index=15&type=chunk) [Used Commercial Vehicle Sales](index=3&type=section&id=Used%20Commercial%20Vehicle%20Sales) Used commercial vehicle sales slightly decreased by 0.5% to 1,715 units, with stabilized pricing but a challenging financing environment - Used commercial vehicle sales decreased **0.5%** YoY to **1,715** units[16](index=16&type=chunk) - Market conditions are characterized by stabilized pricing but a challenging financing environment; the company believes the used market is less exposed to tariff-related uncertainty than the new truck market[16](index=16&type=chunk) [Leasing and Rental](index=3&type=section&id=Leasing%20and%20Rental) Leasing and Rental revenue reached a record $93.1 million, up 6.3% year-over-year, driven by new units and expected to remain strong Leasing and Rental Revenue | Period | Revenue | YoY Change | | :--- | :--- | :--- | | Q2 2025 | $93.1 million | +6.3% | | Q2 2024 | $87.6 million | N/A | - The segment operates over **10,000** trucks in its lease and rental fleet and has over **2,000** trucks under contract maintenance agreements[17](index=17&type=chunk) - Growth was driven by putting new units into service for full-service leases, which decreased the fleet's age and lowered operating costs[17](index=17&type=chunk) [Financial Highlights](index=3&type=section&id=Financial%20Highlights) Q2 2025 gross revenues decreased to $1.931 billion and net income fell to $72.4 million, with active capital returns and a dividend increase Q2 2025 vs Q2 2024 Financial Summary | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross Revenues | $1.931 billion | $2.027 billion | | Net Income | $72.4 million | $78.7 million | | Diluted EPS | $0.90 | $0.97 | Vehicle Deliveries (Units) - Q2 2025 vs Q2 2024 | Vehicle Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | New Heavy-Duty | 3,259 | 4,128 | | New Medium-Duty | 3,803 | 3,691 | | New Light-Duty | 703 | 537 | | Used Vehicles | 1,715 | 1,723 | - The company repurchased **$83.9 million** of its common stock in Q2 2025; the total authorized repurchase program is **$200.0 million**, of which **$121.4 million** has been utilized[21](index=21&type=chunk) - The quarterly cash dividend was increased by **$0.01** to **$0.19** per share, representing a **5.6%** increase; this is the **ninth increase** since the dividend program began in 2018[22](index=22&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $4.72 billion as of June 30, 2025, with liabilities rising to $2.54 billion and equity remaining flat Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,395,703 | $2,389,715 | | Total assets | $4,715,774 | $4,617,547 | | Total current liabilities | $1,718,449 | $1,650,119 | | Total liabilities | $2,540,743 | $2,455,644 | | Total shareholders' equity | $2,175,031 | $2,161,903 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue was $1.93 billion, down from $2.03 billion, with gross profit at $379.7 million and net income at $72.4 million Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $1,930,707 | $2,027,028 | | Gross profit | $379,671 | $392,389 | | Operating income | $110,206 | $124,481 | | Net income attributable to Rush | $72,438 | $78,661 | | Diluted EPS | $0.90 | $0.97 | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) [Absorption Ratio](index=7&type=section&id=Absorption%20Ratio) The company's absorption ratio improved to 135.5% in Q2 2025 from 134.0% in Q2 2024, reflecting better fixed cost coverage - Absorption ratio is calculated by dividing the gross profit from parts, service, and collision centers by the overhead expenses of all departments (excluding vehicle sales selling expenses and inventory carrying costs)[36](index=36&type=chunk) Absorption Ratio Comparison | Period | Ratio | | :--- | :--- | | Q2 2025 | 135.5% | | Q2 2024 | 134.0% | [Debt Analysis (Non-GAAP)](index=7&type=section&id=Debt%20Analysis%20%28Non-GAAP%29) The company reported an Adjusted Net Cash position of $207.6 million as of June 30, 2025, up from $163.2 million a year prior Adjusted Net Debt (Cash) Reconciliation (in thousands) | Description | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Debt (GAAP) | $1,625,129 | $1,760,423 | | Less: Debt related to lease & rental fleet | ($532,853) | ($529,736) | | Less: Floor plan notes payable | ($1,088,779) | ($1,226,651) | | **Adjusted Total Debt (Non-GAAP)** | **$3,497** | **$4,036** | | Less: Cash and cash equivalents | ($211,106) | ($167,266) | | **Adjusted Net Debt (Cash) (Non-GAAP)** | **($207,609)** | **($163,230)** | [EBITDA (Non-GAAP)](index=9&type=section&id=EBITDA%20%28Non-GAAP%29) Adjusted EBITDA for the twelve months ended June 30, 2025, was $442.7 million, a decrease from $471.3 million in the prior year Adjusted EBITDA Reconciliation - Twelve Months Ended June 30 (in thousands) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $286,644 | $308,594 | | Taxes, Interest, D&A, etc. | $216,492 | $231,029 | | **EBITDA (Non-GAAP)** | **$503,136** | **$539,623** | | Less: Interest expense (FPNP & L&RFD) | ($60,396) | ($68,283) | | **Adjusted EBITDA (Non-GAAP)** | **$442,740** | **$471,340** | [Free Cash Flow (Non-GAAP)](index=9&type=section&id=Free%20Cash%20Flow%20%28Non-GAAP%29) Adjusted Free Cash Flow for the twelve months ended June 30, 2025, more than doubled to $664.7 million from $319.3 million in the prior period Adjusted Free Cash Flow Reconciliation - Twelve Months Ended June 30 (in thousands) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operations (GAAP) | $885,188 | $297,222 | | Less: Acquisition of property and equipment | ($482,801) | ($355,403) | | **Free cash flow (Non-GAAP)** | **$402,387** | **($58,181)** | | Adjustments (net) | $262,270 | $377,484 | | **Adjusted Free Cash Flow (Non-GAAP)** | **$664,657** | **$319,303** | [Invested Capital (Non-GAAP)](index=10&type=section&id=Invested%20Capital%20%28Non-GAAP%29) Adjusted Invested Capital increased to $1.95 billion as of June 30, 2025, from $1.84 billion, used to evaluate return on capital Adjusted Invested Capital Calculation (in thousands) | Description | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Shareholders' equity (GAAP) | $2,153,831 | $2,003,461 | | Adjusted net debt (cash) (Non-GAAP) | ($207,609) | ($163,230) | | **Adjusted Invested Capital (Non-GAAP)** | **$1,946,222** | **$1,840,231** |

Financial Performance - For the quarter ended June 30, 2025, the company reported revenues of $1.931 billion, a decrease of 4.8% from $2.027 billion in the same quarter of 2024. Net income was $72.4 million, or $0.90 per diluted share, down from $78.7 million, or $0.97 per diluted share, in the prior year [1][20][24] - The company declared a cash dividend of $0.19 per share, representing a 5.6% increase over the previous quarter [1][9][23] Market Conditions - The commercial truck industry continues to face challenges, including depressed freight rates and overcapacity, which have led to weak demand for new vehicles and aftermarket products [2][11] - New U.S. Class 8 retail truck sales totaled 58,625 units in Q2 2025, down 0.6% year-over-year, with the company selling 3,178 new Class 8 trucks, a decrease of 20.3% compared to 2024 [10][11] Aftermarket Products and Services - Aftermarket products and services accounted for approximately 63.0% of the company's total gross profit in Q2 2025, with revenues of $636.3 million, up 1.4% from the same period in 2024 [5][21] - The company achieved a quarterly absorption ratio of 135.5%, compared to 134.0% in Q2 2024, indicating strong operational efficiency [5][9] Commercial Vehicle Sales - The company sold 3,259 new heavy-duty trucks, 3,803 new medium-duty commercial vehicles, and 1,715 used commercial vehicles in Q2 2025, with medium-duty sales showing a year-over-year increase of 1.0% [21][14] - The company expects new Class 4-7 commercial vehicle sales in Q3 2025 to be similar to Q2 results, driven by healthy demand across customer segments [15][14] Leasing and Rental Operations - Rush Truck Leasing reported lease and rental revenue of $93.1 million in Q2 2025, a 6.3% increase compared to the same period in 2024, with record revenues achieved [17][18] - The rental utilization rate has improved throughout the first half of the year, contributing to increased rental revenue year-over-year [18] Strategic Initiatives - The company is focused on managing expenses and driving operational efficiency, with efforts to identify new customer segments for revenue growth [3][6] - Despite ongoing economic uncertainty, there are signs of recovery and sequential growth across most customer segments, which may indicate improving demand ahead [7][12]

Core Viewpoint - Rush Enterprises, Inc. will host a conference call to discuss its second quarter earnings for 2025 on July 31, 2025, at 10:00 a.m. Eastern Time [1] Company Overview - Rush Enterprises, Inc. operates the largest network of commercial vehicle dealerships in North America, with over 150 locations across 23 states and Ontario, Canada [3] - The company represents various truck and bus manufacturers, including Peterbilt, International, Hino, Isuzu, Ford, Dennis Eagle, IC Bus, and Blue Bird [3] - Rush Enterprises provides a comprehensive range of services, including sales of new and used vehicles, aftermarket parts, service, body shop operations, financing, insurance, leasing, and rental [3] - The company also offers CNG fuel systems through its investment in Cummins Clean Fuel Technologies, Inc., as well as telematics products and other vehicle technologies [3]

Core Viewpoint - Rush Enterprises, Inc. has announced a $50 million increase to its stock repurchase program, raising the total authorization to $200 million, reflecting confidence in its financial position despite market challenges [1]. Group 1: Stock Repurchase Program - The Board of Directors approved an increase of $50 million to the existing stock repurchase program, now totaling $200 million [1]. - The company is nearing the original authorization limit of $150 million, indicating strong capital management [1]. - Repurchases will be made at management's discretion, considering market conditions and stock price, and the program is set to expire on December 31, 2025 [2]. Group 2: Company Performance and Strategy - The company maintains a strong capital position and liquidity, allowing it to generate robust free cash flow [1]. - The strategic focus on a diversified customer base and a "One Team" sales approach has contributed to solid financial performance amid challenging industry conditions [1]. - Rush Enterprises operates the largest network of commercial vehicle dealerships in North America, with over 150 locations across 23 states and Ontario, Canada [4].

Revenue Performance - Total revenues decreased by $21.2 million, or 1.1%, in Q1 2025 compared to Q1 2024, primarily due to decreased Aftermarket Products and Services revenue[68] - Aftermarket Products and Services revenues totaled $619.1 million in Q1 2025, down 4.6% from Q1 2024, attributed to weak demand and fewer working days[69] - New and used commercial vehicle sales increased by $7.5 million, or 0.7%, in Q1 2025 compared to Q1 2024, driven by a favorable product mix[70] - New Class 8 truck sales were 3,222 units in Q1 2025, a 7.8% decrease from 3,494 units in Q1 2024, influenced by economic uncertainty and high interest rates[71] - New Class 4 through 7 medium-duty commercial vehicle sales were 3,329 units in Q1 2025, a slight decrease of 0.1% compared to Q1 2024[72] - Light-duty vehicle sales increased by 3.1% to 470 units in Q1 2025, compared to 456 units in Q1 2024[73] - Used commercial vehicle sales decreased by 2.7% to 1,769 units in Q1 2025, down from 1,818 units in Q1 2024[73] Profitability and Expenses - Gross profit decreased by $32.1 million, or 8.2%, in Q1 2025, with gross profit as a percentage of sales falling to 19.3% from 20.8%[76] - Gross profit from Aftermarket Products and Services dropped to $221.3 million in Q1 2025, down from $236.9 million in Q1 2024[77] - SG&A expenses decreased by $14.9 million, or 5.6%, in Q1 2025, with SG&A as a percentage of total revenues at 13.4%[83] - Net interest expense decreased by $5.1 million, or 28.4%, in Q1 2025 due to lower inventory levels and interest rates[84] - Income before income taxes fell by $14.2 million, or 15.4%, in Q1 2025 compared to Q1 2024[85] Cash Flow and Financing - Cash provided by operating activities was $154.2 million in Q1 2025, a significant recovery from a cash outflow of $155.1 million in Q1 2024[97] - In Q1 2025, net cash used in financing activities was $56.4 million, with inflows of $288.4 million from long-term debt borrowings and $6.2 million from equity compensation shares issuance, offset by outflows totaling $293.2 million for principal repayments and $29.6 million for common stock repurchases[102] Order Backlog and Market Outlook - As of March 31, 2025, the backlog of commercial vehicle orders was approximately $1,401.3 million, down from $2,047.1 million on March 31, 2024, indicating a significant decrease in confirmed orders[112] - The company expects to fill most of its backlog orders during 2025, assuming manufacturers can meet production schedules[112] - U.S. market share for new Class 8 truck sales is expected to range between 5.4% and 5.9% in 2025, translating to approximately 11,500 to 12,500 units sold[58] - New U.S. Class 4 through 7 retail commercial vehicle sales are forecasted to decrease by 8.5% in 2025 compared to 2024[59] - Lease and rental revenue is projected to increase by approximately 3.0% in 2025 compared to 2024[60] - Aftermarket Products and Services revenues are expected to be flat to down 2% in 2025 compared to 2024[61] Regulatory Environment and Market Risks - The EPA 2027 Low NOx rule will require commercial vehicle engines to emit significantly less NOx starting in model year 2027, increasing the useful life of vehicles and extending warranty terms[122] - The GHG-3 rule mandates an increasing percentage of "zero-emission" vehicles from 2027 to 2032, likely reducing the production of diesel internal combustion engines[122] - CARB's Advanced Clean Trucks rule requires a certain percentage of commercial vehicles sold in California to be "zero-emission," with a goal of 100% zero-emission vehicles by 2050 and 30% by 2030[123] - Multiple lawsuits are pending challenging CARB's rules and the GHG-3 rule, which may impact regulatory compliance and operational costs[122] - The company cannot predict the potential adverse impacts of new laws and regulations on its business, financial condition, and results of operations[123] Debt and Credit Agreements - As of March 31, 2025, the company had outstanding floor plan borrowings and lease and rental fleet borrowings totaling $1,329.0 million[125] - On March 31, 2025, approximately $142.4 million was outstanding under the WF Credit Agreement, which allows for up to $175.0 million in revolving credit loans for capital expenditures[104] - The PLC Agreement provides for up to $500.0 million in revolving credit loans, with $220.0 million required as a minimum balance, and $220.0 million was outstanding as of March 31, 2025[105] - The PFC Floor Plan Credit Agreement has an aggregate loan commitment of $800.0 million, with approximately $480.0 million outstanding as of March 31, 2025[108] - The BMO Floor Plan Credit Agreement was amended to reduce the loan commitment from $1.0 billion to $675.0 million, with approximately $368.1 million outstanding as of March 31, 2025[109] - The RTC Canada Revolving Credit Agreement allows for up to $120.0 million CAD in loans, with approximately $59.4 million CAD outstanding as of March 31, 2025[106] - The RTC Canada Floor Plan Credit Agreement has a credit limit of $116.7 million CAD, with approximately $85.0 million CAD outstanding as of March 31, 2025[111] - A 100 basis point change in the prime rate, SOFR, or CORRA could result in an annual interest expense change of approximately $13.3 million[125] Market Conditions and Economic Impact - The business is subject to cyclical variations based on economic conditions, with U.S. retail sales of new Class 8 commercial vehicles ranging from approximately 197,000 to 281,440 units over the last ten years[114] - Seventeen U.S. states and the District of Columbia have committed to advance the market for electric Class 3 through 8 commercial vehicles, aligning with CARB's emissions regulations[123] - The company is exposed to market risks related to interest rates from various credit agreements, including the PFC Floor Plan Credit Agreement and the BMO Floor Plan Credit Agreement[125] - CARB has agreed to align its HD Omnibus rule with the EPA 2027 Low NOx rule, modifying certain provisions of its existing regulations[123]

[Rush Enterprises, Inc. Q1 2025 Earnings Release](index=1&type=section&id=Rush%20Enterprises%2C%20Inc.%20Q1%202025%20Earnings%20Release) [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) The company reported Q1 2025 revenues of $1.85 billion and net income of $60.3 million amid challenging market conditions Q1 2025 vs. Q1 2024 Financial Performance | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $1.85 billion | $1.87 billion | | Net Income | $60.3 million | $71.6 million | | Diluted EPS | $0.73 | $0.88 | - The Board of Directors declared a cash dividend of **$0.18 per share** for both Class A and Class B Common Stock, payable on June 12, 2025[2](index=2&type=chunk) - The company achieved an **absorption ratio of 128.6%** in the first quarter[6](index=6&type=chunk)[9](index=9&type=chunk) [Management Commentary & Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Outlook) Management cited significant industry headwinds from a freight recession and policy uncertainty, which softened new truck demand - Industry challenges in Q1 2025 were exacerbated by concerns over U.S. trade policy, tariffs, and emissions regulations, causing customers to adopt a **cautious vehicle acquisition strategy**[3](index=3&type=chunk) - The company's focus on sales to **vocational and public sector customers**, along with its "Ready to Roll" inventory program, helped outperform the industry[3](index=3&type=chunk) - The primary uncertainty for H2 2025 is the impact of **potential tariffs and emissions regulations** on freight volumes and vehicle pricing[5](index=5&type=chunk) - Aftermarket revenue was down year-over-year due to **one less working day** in 2025 and the completion of certain customer service projects in 2024[4](index=4&type=chunk) [Operational Performance](index=2&type=section&id=Operational%20Performance) The company showed operational resilience with aftermarket services contributing 61.9% of total gross profit and vehicle sales outperforming the industry [Aftermarket Products and Services](index=2&type=section&id=Aftermarket%20Products%20and%20Services) Aftermarket revenues totaled $619.1 million, accounting for 61.9% of total gross profit despite a year-over-year decline Aftermarket Performance Q1 2025 | Metric | Value | | :--- | :--- | | Revenues | $619.1 million (-4.6% YoY) | | % of Total Gross Profit | 61.9% | | Absorption Ratio | 128.6% | - The company is actively monitoring potential **parts supply chain disruptions** that could result from proposed tariffs[11](index=11&type=chunk) - Strategic initiatives include growing the aftermarket salesforce, adding service technicians, and **optimizing parts delivery and call center operations**[10](index=10&type=chunk)[11](index=11&type=chunk) [Commercial Vehicle Sales](index=2&type=section&id=Commercial%20Vehicle%20Sales) The company's new Class 8 and Class 4-7 truck sales declines were less severe than the overall industry downturn U.S. New Class 8 Truck Sales - Q1 2025 | Metric | Rush Enterprises | Industry (ACT Research) | | :--- | :--- | :--- | | Units Sold | 3,154 | 51,938 | | YoY Change | -7.4% | -9.2% | | Market Share | 6.1% | N/A | U.S. New Class 4-7 Truck Sales - Q1 2025 | Metric | Rush Enterprises | Industry (ACT Research) | | :--- | :--- | :--- | | Units Sold | 3,204 | 56,988 | | YoY Change | Relatively Flat | -4.7% | | Market Share | 5.6% | N/A | - The company sold **1,769 used commercial vehicles** in Q1 2025, a 2.7% decrease compared to Q1 2024[17](index=17&type=chunk) [Leasing and Rental](index=3&type=section&id=Leasing%20and%20Rental) The Leasing and Rental division saw a 2.7% revenue increase to $90.3 million, driven by growth in full-service leasing - Leasing and Rental revenue was **$90.3 million** in Q1 2025, up 2.7% from Q1 2024[18](index=18&type=chunk) - The division operates over **10,100 trucks** in its lease and rental fleet and has over **1,700 trucks** under contract maintenance agreements[22](index=22&type=chunk) - Growth was driven by an increase in **full-service leasing revenue**, while rental revenue decreased slightly due to lower utilization[18](index=18&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) Consolidated financial statements for Q1 2025 show total assets of $4.69 billion and net income of $60.3 million [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $4.69 billion as of March 31, 2025, with inventories increasing to $1.89 billion Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,434,389 | $2,389,715 | | Total assets | $4,687,941 | $4,617,547 | | Total current liabilities | $1,695,348 | $1,650,119 | | Total shareholders' equity | $2,187,584 | $2,161,903 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2025, total revenue was $1.85 billion, with net income attributable to the company falling to $60.3 million Consolidated Income Statement Highlights (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $1,850,830 | $1,871,999 | | Gross profit | $357,760 | $389,875 | | Operating income | $91,869 | $110,610 | | Net income attributable to Rush | $60,322 | $71,608 | | Diluted EPS | $0.73 | $0.88 | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Free Cash Flow to assess performance and capital structure - Management believes these non-GAAP measures provide useful information about operating results and capital structure, cautioning they may not be comparable to other companies' measures[36](index=36&type=chunk) Absorption Ratio | Period | Ratio | | :--- | :--- | | Q1 2025 | 128.6% | | Q1 2024 | 130.1% | Debt Analysis (in thousands) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Debt (GAAP) | $1,610,920 | $1,910,907 | | Adjusted Net Debt (Cash) (Non-GAAP) | $(225,148) | $(151,831) | EBITDA (in thousands, TTM) | Metric | TTM Ended Mar 31, 2025 | TTM Ended Mar 31, 2024 | | :--- | :--- | :--- | | EBITDA (Non-GAAP) | $517,312 | $557,220 | | Adjusted EBITDA (Non-GAAP) | $450,228 | $496,255 |

Financial Performance - For Q1 2025, Rush Enterprises reported revenues of $1.85 billion, a decrease of 1.1% from $1.87 billion in Q1 2024. Net income was $60.3 million, or $0.73 per diluted share, down from $71.6 million, or $0.88 per diluted share in the same period last year [1][19][8] - The company's aftermarket products and services generated revenues of $619.1 million, down 4.6% year-over-year [7][20] - The absorption ratio for Q1 2025 was 128.6%, slightly lower than 130.1% in Q1 2024 [7][38] Market Conditions - The commercial vehicle industry faced challenges including a freight recession, economic uncertainty, and concerns over U.S. trade policy and emissions regulations, leading to a cautious approach from customers regarding vehicle acquisitions [2][4] - New Class 8 truck sales in the U.S. totaled 51,938 units in Q1 2025, a decline of 9.2% compared to the previous year. Rush Enterprises sold 3,154 new Class 8 trucks, a decrease of 7.4%, capturing 6.1% of the U.S. market [11][12] - New Class 4-7 retail commercial vehicle sales also decreased by 4.7% year-over-year, with Rush selling 3,204 new Class 4-7 vehicles, remaining relatively flat compared to Q1 2024 [14][15] Strategic Initiatives - The company emphasized its focus on vocational and public sector customers, which helped mitigate the impact of sluggish demand from over-the-road customers [2][12] - Rush Enterprises implemented a "Ready to Roll" inventory program, which contributed to steady sales in medium-duty trucks despite overall industry declines [2][15] - The leasing and rental segment showed resilience, with revenues increasing by 2.7% year-over-year, driven by full-service leasing growth [17][21] Future Outlook - The company expressed uncertainty regarding the second half of 2025 due to potential impacts from tariffs and emissions regulations, which may delay customer orders [4][23] - Despite current challenges, the company remains confident in its position within the industry, citing its extensive dealer network and strong manufacturer relationships [4][23]

Group 1 - Rush Enterprises, Inc. will host a conference call to discuss earnings for the first quarter of 2025 on May 1, 2025, at 10:00 a.m. Eastern/9:00 a.m. Central [1] - Earnings will be reported after the market closes on April 30, 2025 [1] - The call will be accessible via a dedicated link and participants are encouraged to join 10 minutes early [2] Group 2 - Rush Enterprises operates the largest network of commercial vehicle dealerships in North America, with over 150 locations across 22 states and Ontario, Canada [3] - The company represents various truck and bus manufacturers, including Peterbilt, International, and Ford, and offers a comprehensive range of services from vehicle sales to financing and insurance [3] - Rush Enterprises also provides CNG fuel systems, telematics products, and vehicle technologies, enhancing its service offerings in the commercial vehicle industry [3]