Core Viewpoint - Rush Enterprises is facing challenges due to a downturn in the trucking market, influenced by a difficult macroeconomic environment, with ongoing pressures on US employment and manufacturing [1]. Company Summary - Rush Enterprises (RUSHB, RUSHA) is experiencing significant pressure from the trucking market downturn [1]. - The current macroeconomic conditions are expected to continue affecting the market negatively in the near future [1]. Industry Summary - The trucking market is under strain due to broader economic challenges, including employment and manufacturing pressures in the US [1].

Sales Forecast - New U.S. Class 8 retail truck sales are forecasted to be 216,300 units in 2025, representing a 12.5% decrease compared to 2024[64] - The company expects to sell approximately 11,700 to 12,800 new Class 8 trucks in 2025, with a market share of 5.4% to 5.9%[64] - New U.S. Class 4 through 7 retail commercial vehicle sales are projected to be 227,225 units in 2025, an 11.8% decrease from 2024[65] - The company anticipates selling approximately 12,500 to 13,600 new Class 4 through 7 commercial vehicles in 2025[65] Revenue Trends - Lease and rental revenue is expected to increase by approximately 4.5% in 2025 compared to 2024[66] - Aftermarket Products and Services revenue showed a slight increase in Q3 2025 compared to Q3 2024, but is expected to remain flat to slightly down in Q4 2025[67] - New heavy-duty vehicle sales decreased by 10.8% in Q3 2025 compared to Q3 2024, with revenues dropping by 12.7%[72] - New light-duty vehicle sales increased by 49.5% in Q3 2025 compared to Q3 2024, with revenues rising by 48.0%[72] - Total new vehicle revenue decreased by 3.5% in Q3 2025 compared to Q3 2024, while used vehicle revenue increased by 17.2%[72] Dealership Performance - The dealership absorption ratio was 129.3% in Q3 2025, down from 132.6% in Q3 2024[72] - The absorption ratio for the commercial vehicle dealerships was 129.3% in Q3 2025, down from 132.6% in Q3 2024[73] Financial Performance - Total revenues decreased by $15.4 million, or 0.8%, in Q3 2025 compared to Q3 2024, primarily due to decreased new Class 8 truck sales[74] - Aftermarket Products and Services revenues increased to $642.7 million in Q3 2025, up 1.5% from Q3 2024, driven by strategic initiatives and higher parts pricing[75] - Sales of new and used commercial vehicles decreased by $28.4 million, or 2.4%, in Q3 2025, attributed to reduced demand and regulatory uncertainty[76] - New Class 8 vehicle sales in the U.S. fell by 10.8% to 3,215 units in Q3 2025 compared to 3,604 units in Q3 2024[77] - Gross profit decreased by $4.3 million, or 1.1%, in Q3 2025, with gross profit as a percentage of sales at 19.9%, down from 20.0% in Q3 2024[82] - SG&A expenses increased by $16.7 million, or 12.6%, in Q3 2025, representing 13.6% of total revenues, up from 12.6% in Q3 2024[88] - Net interest expense decreased by $5.9 million, or 33.7%, in Q3 2025, due to lower inventory levels and interest rates[89] - Income before income taxes decreased by $15.4 million, or 14.9%, in Q3 2025 compared to Q3 2024[90] - The effective tax rate was 22.9% in Q3 2025, slightly down from 23.0% in Q3 2024, with expectations for 2025 to be between 22.5% and 24.0%[91] - Income taxes decreased by $9.2 million in the first nine months of 2025 compared to the same period in 2024, with tax rates at 23.6% and 23.0% respectively[105] Cash Flow and Capital Expenditures - As of September 30, 2025, the company had working capital of approximately $600.8 million, including $242.0 million in cash, sufficient to meet operating requirements for at least the next twelve months[106] - The company expects to purchase or lease commercial vehicles worth approximately $275.0 million to $325.0 million during 2025, depending on customer demand[110] - During the first nine months of 2025, net cash provided by operating activities was $748.9 million, compared to $227.3 million in the same period of 2024[116][118] - Cash used in investing activities during the first nine months of 2025 was $330.2 million, primarily for the acquisition of property and equipment[119] - Financing activities resulted in net cash used of $404.9 million in the first nine months of 2025, primarily due to $997.5 million in principal repayments of long-term debt[121] Stock and Facility Developments - The company repurchased $130.6 million of its common stock under the current stock repurchase program as of September 30, 2025[112] - The company is under contract to construct a new facility in Huntley, IL, with a current budget of $23.8 million[115] - The company anticipates funding capital expenditures through operating cash flows and has sufficient liquidity to meet debt service and working capital requirements for at least the next twelve months[107] Debt and Financing Agreements - As of September 30, 2025, the company had approximately $220.0 million outstanding under the PLC Agreement for financing capital expenditures[124] - The company entered into the PFC Floor Plan Credit Agreement with an aggregate loan commitment of $800.0 million for financing new Peterbilt trucks, with approximately $480.0 million outstanding as of September 30, 2025[127] - The BMO Floor Plan Credit Agreement was amended to reduce the loan commitment from $1.0 billion to $675.0 million, with approximately $317.9 million outstanding as of September 30, 2025[128] - The RTC Canada Floor Plan Credit Agreement was amended to increase the loan commitment to $171.7 million CAD, with approximately $97.3 million CAD outstanding as of September 30, 2025[129] Order Backlog and Market Conditions - The company's backlog of commercial vehicle orders decreased to approximately $647.6 million as of September 30, 2025, down from approximately $1,332.9 million on September 30, 2024, due to challenging industry conditions[130] - The company expects to fill most of its backlog orders during 2025, despite the ongoing freight recession and economic uncertainty[130] Interest Rate Exposure - As of September 30, 2025, the company had total borrowings of $1,120.9 million, with interest rate exposure that could lead to an annual interest expense change of approximately $11.2 million for a 100 basis point shift in rates[142] Regulatory Compliance - The company is subject to various environmental regulations, which may incur capital and operating expenditures, but currently does not believe it has any material environmental liabilities[137] - The company is affected by cyclical variations in unit sales of new commercial vehicles, with historical U.S. retail sales ranging from approximately 197,000 to 281,440 units over the last ten years[132] - The company is preparing for compliance with upcoming emissions regulations, including the EPA 2027 Low NOx rule and the GHG-3 rule, which may impact the production of diesel vehicles[138] - The Clean Truck Partnership was established to comply with CARB's emission requirements, although its future is uncertain due to ongoing legal challenges[140]

Financial Performance - For Q3 2025, Rush Enterprises reported revenues of $1.881 billion, a 0.8% decrease from $1.896 billion in Q3 2024, and net income of $66.7 million, or $0.83 per diluted share, down from $79.1 million, or $0.97 per diluted share in the same period last year[1][17] - Total revenue for Q3 2025 was $1,880,765, a decrease of 0.7% compared to $1,896,133 in Q3 2024[30] - Net income attributable to Rush Enterprises, Inc. for Q3 2025 was $66,690, down 15.7% from $79,132 in Q3 2024[30] - New heavy-duty vehicle sales revenue for Q3 2025 was $591,802, a decrease of 12.7% from $677,882 in Q3 2024[32] - Net income attributable to Rush Enterprises, Inc. for the twelve months ended September 2025 was $274,202, a decrease of 10.8% from $307,448 in September 2024[35] - Adjusted EBITDA (Non-GAAP) for the twelve months ended September 2025 was $425,994, down 9.7% from $472,169 in September 2024[35] Aftermarket and Sales Performance - Aftermarket products and services accounted for approximately 63.7% of total gross profit, with revenues totaling $642.7 million, up 1.5% compared to Q3 2024[5][18] - New U.S. Class 8 retail truck sales totaled 54,078 units in Q3 2025, down 18.9% year-over-year, with the company selling 3,120 new Class 8 trucks, a decrease of 11.0% compared to Q3 2024[9][10] - New Class 4 through 7 retail commercial vehicle sales totaled 53,174 units, down 17.4% year-over-year, with the company selling 2,979 units, a decrease of 8.3% compared to Q3 2024[11][12] - The company expects continued challenges in aftermarket conditions for the remainder of the year, with weak demand anticipated due to ongoing industry headwinds[8] Dividends and Shareholder Returns - The company declared a cash dividend of $0.19 per share of Class A and Class B common stock, to be paid on December 12, 2025[1][6] - The company declared dividends of $0.19 per common share for Q3 2025, up from $0.18 in Q3 2024[30] - The company repurchased $9.2 million of its common stock during Q3 2025, totaling $130.6 million of the $200.0 million authorized by the Board[19] Assets and Liabilities - Total assets as of September 30, 2025, were $4,553,062, a decrease from $4,617,547 as of December 31, 2024[28] - Total debt (GAAP) as of September 30, 2025, was $1,395,920, down from $1,815,461 in 2024[34] - Adjusted total debt (non-GAAP) was $3,458 as of September 30, 2025, compared to $3,985 in 2024[34] - Cash and cash equivalents increased to $242,005 as of September 30, 2025, from $185,073 in 2024[34] Operational Efficiency - Lease and rental revenue increased by 4.7% to $93.3 million in Q3 2025, highlighting the strength of Rush Truck Leasing as a consistent revenue stream[15] - The absorption ratio for Q3 2025 was 129.3%, compared to 132.6% in Q3 2024, indicating effective management of service and parts operations[5][6] - The absorption ratio for Q3 2025 was 129.3%, slightly lower than 132.6% in Q3 2024[32] Capital Expenditures and Investments - The strategic acquisition of an IC Bus franchise in Canada has allowed the company to capture new customer segments and strengthen its market presence[12][20] - The company reported a significant increase in acquisitions of L&RF assets, totaling $344,016 in September 2025 compared to $285,404 in September 2024[36] Cash Flow and Expenses - Free cash flow (Non-GAAP) for the twelve months ended September 2025 was $691,999, a significant recovery from a negative $72,111 in September 2024[36] - Net cash provided by operations (GAAP) increased to $1,139,643 in September 2025 from $311,922 in September 2024, representing a growth of 264.5%[36] - Depreciation and amortization expenses increased to $70,195 in September 2025 from $66,475 in September 2024, marking a rise of 4.3%[35] - Interest expense for the twelve months ended September 2025 was $53,064, down 25% from $70,603 in September 2024[35] Equity and Capital Structure - Total Rush Enterprises, Inc. shareholders' equity (GAAP) rose to $2,214,499 in September 2025, an increase of 6.3% from $2,083,145 in September 2024[37] - Adjusted invested capital (Non-GAAP) decreased to $1,821,040 in September 2025 from $1,902,057 in September 2024, reflecting a decline of 4.3%[37] - Adjusted net debt (cash) (Non-GAAP) worsened to $(393,459) in September 2025 from $(181,088) in September 2024, indicating increased leverage[37]

Financial Performance - For the third quarter of 2025, the company reported revenues of $1.881 billion, a decrease of 0.8% from $1.896 billion in the same quarter of 2024. Net income was $66.7 million, or $0.83 per diluted share, down from $79.1 million, or $0.97 per diluted share, in the prior year [1][19]. - The company recognized a one-time, pre-tax charge of approximately $3.3 million related to Hurricane Helene in the third quarter of 2024, which impacted year-over-year comparisons [1][19]. - Selling, General and Administrative expenses increased due to higher legal reserves and insurance retentions, contributing to the decline in net income [3][19]. Industry Conditions - The commercial vehicle industry faced challenging conditions in Q3 2025, with depressed freight rates and overcapacity affecting market dynamics. Economic uncertainty and regulatory ambiguity, particularly regarding engine emissions, influenced customers' vehicle replacement decisions [2][11]. - New U.S. Class 8 retail truck sales totaled 54,078 units, down 18.9% year-over-year, with the company selling 3,120 new Class 8 trucks, a decrease of 11.0% [10][11]. - Demand from large over-the-road fleet customers remained weak due to a prolonged freight recession, while vocational customer demand was stable, highlighting the strength of the company's diversified customer base [11]. Aftermarket Products and Services - Aftermarket products and services accounted for approximately 63.7% of the company's total gross profit in Q3 2025, with revenues of $642.7 million, up 1.5% from $633.0 million in Q3 2024 [5][20]. - The company achieved a quarterly absorption ratio of 129.3%, slightly down from 132.6% in the same quarter of the previous year, indicating effective management of overhead expenses [5][36]. - The company remains focused on strategic initiatives in the aftermarket segment, including technician recruitment and expanding the aftermarket sales force, to offset weak demand [6][7]. Commercial Vehicle Sales - The company sold 3,215 new heavy-duty trucks, 3,427 new medium-duty commercial vehicles, and 858 new light-duty commercial vehicles in Q3 2025, compared to 3,604, 3,379, and 574 units, respectively, in Q3 2024 [20]. - New Class 4 through 7 retail commercial vehicle sales totaled 53,174 units, a decrease of 17.4% year-over-year, with the company selling 2,979 units, down 8.3% [12][13]. - The company experienced a significant increase in bus sales due to the acquisition of an IC Bus franchise in Canada, which helped capture new customer segments [13]. Leasing and Rental Operations - Leasing and rental revenue in Q3 2025 was $93.3 million, up 4.7% compared to the same quarter in 2024, reinforcing its role as a consistent revenue stream [16][17]. - The company operates over 10,000 trucks in its lease and rental fleet, benefiting from a modernized fleet and disciplined cost management [17]. Dividend and Stock Repurchase - The company's Board of Directors declared a cash dividend of $0.19 per share, to be paid on December 12, 2025, to shareholders of record as of November 12, 2025 [1][9]. - The company repurchased $9.2 million of its common stock during the quarter, with a total of $130.6 million repurchased out of an authorized $200 million [21].

Core Viewpoint - Rush Enterprises, Inc. will host a conference call to discuss its third-quarter earnings for 2025 on October 30, 2025, with earnings reported after market close on October 29, 2025 [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 and 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., telematics products, vehicle technologies, up-fitting, chrome accessories, and tires [3]

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]