Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) Commission File Number 0-20797 RUSH ENTERPRISES, INC. (Exact name of registrant as specified in its charter) incorporation or organization) Texas 74-1733016 (State or other jurisdiction of (I.R.S. Employer Identification No.) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECT ...

Rush Enterprises, Inc. (NASDAQ:RUSHA) Q1 2024 Earnings Conference Call April 24, 2024 10:00 AM ET Company Participants Rusty Rush - Chairman of the Board, Chief Executive Officer and President Steven Keller - Chief Financial Officer and Treasurer Conference Call Participants Justin Long - Stephens Inc. Andrew Obin - Bank of America Operator Good day, and thank you for standing by. Welcome to Rush Enterprises’ First Quarter 2024 Earnings Results Call. At this time, all participants are in a listen-only mode. ...

Exhibit 99.1 Contact: Rush Enterprises, Inc., San Antonio Steven L. Keller, 830-302-5226 RUSH ENTERPRISES, INC. REPORTS FIRST QUARTER 2024 RESULTS, ANNOUNCES $0.17 PER SHARE DIVIDEND ● Revenues of $1.9 billion, net income of $71.6 million ● Earnings per diluted share of $0.88 ● Challenging market conditions impact Class 8 new truck sales and overall financial performance ● Absorption ratio 130.1% ● Board declares cash dividend of $0.17 per share of Class A and Class B common stock "It is important that I si ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 ☐ TRANSITION REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-20797 RUSH ENTERPRISES, INC. (Exact name of registrant as specified in its charter) Texas 74-1733016 (State or other juri ...

Financial Data and Key Metrics Changes - The company achieved annual revenues of $7.9 billion and net income of $347 million, or $4.15 per diluted share for the year 2023. In Q4, revenues were $2 billion with net income of $78 million, or $0.95 per diluted share [7] - The aftermarket revenues increased by 8% year-over-year, totaling $2.6 billion for the year [27] Business Line Data and Key Metrics Changes - Truck sales for new Class 8 trucks reached 17,457 units in 2023, representing 6.2% of the total U.S. Class 8 market and 2% in Canada. Class 4-7 new truck sales were 13,624 units, or 5.1% of the U.S. market [9][32] - Used truck sales remained flat at 7,117 units in 2023, with expectations for demand to remain flat in 2024 [33] Market Data and Key Metrics Changes - The Class 8 retail sales forecast for 2024 is expected to decline by approximately 22% from 2023, while Class 4-7 retail sales are projected to increase slightly [9][10] - The company noted that delays from truck body companies impacted deliveries, which limited growth in Q4 [10] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and supporting large national accounts, which has positioned it well to navigate challenging market conditions [34] - Strategic initiatives include adding service technicians to enhance service capabilities and expanding aftermarket services [8][27] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the easing of the current freight recession by summer 2024, while acknowledging that high interest rates and challenging freight conditions will continue to impact customers [31] - The company anticipates that the aftermarket demand in the first half of 2024 will be similar to the second half of 2023, with hopes for modest growth [31] Other Important Information - The company declared a cash dividend of $0.17 per common share [7] - The absorption rate for the aftermarket was reported at 135.3% [27] Q&A Session Summary Question: Performance of parts and service business - Management expressed confidence in the parts and service business, indicating potential for growth in 2024 despite challenges faced in 2023 [16][17] Question: Expectations for truck sales and parts and service in Q1 - Management expects truck sales to be softer in Q1, with a decline anticipated, but believes they will outperform the industry due to a diverse customer base [42][43] Question: Economic outlook by region - Management provided insights on regional economic performance, noting strong growth in Texas and Florida, while expressing concerns about potential softness in Ohio [54][70] Question: Used truck pricing outlook - Management indicated that while used truck prices continue to decline, the rate of depreciation is expected to stabilize over the course of 2024 [49][52] Question: Overall market outlook - Management summarized that the truck market is bottoming, the economy remains solid, and the company is executing well despite anticipated challenges in 2024 [72]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _______________________ Commission File Number 0-20797 RUSH ENTERPRISES, INC. (Exact name of registrant as spec ...

Rush Enterprises, Inc. (NASDAQ:RUSHA) Q3 2023 Earnings Conference Call October 25, 2023 10:00 AM ET Company Participants Rusty Rush - Chairman, President & Chief Executive Officer Steve Keller - Chief Financial Officer Conference Call Participants Andrew Obin - Bank of America Justin Long - Stephens Operator Good day, and thank you for standing by. Welcome to the Rush Enterprises, Incorporated. Third Quarter 2023 Earnings Results Conference Call. [Operator Instructions] Please be advised that today's confer ...

Part I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Rush Enterprises, Inc.'s unaudited consolidated financial statements for Q2 and H1 2023, encompassing balance sheets, income statements, comprehensive income, shareholders' equity, and cash flows [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2023, shows total assets increased to **$4.13 billion** from **$3.82 billion**, with liabilities rising to **$2.24 billion** from **$2.06 billion**, and shareholders' equity growing to **$1.89 billion** from **$1.76 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $2,087,795 | $1,867,743 | | Inventories, net | $1,637,321 | $1,429,429 | | **Total Assets** | **$4,126,321** | **$3,821,066** | | **Total Current Liabilities** | $1,620,845 | $1,428,674 | | Floor plan notes payable | $1,125,373 | $933,203 | | **Total Liabilities** | $2,239,036 | $2,058,044 | | **Total Shareholders' Equity** | **$1,887,285** | **$1,763,022** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2023 total revenues increased to **$2.00 billion** from **$1.79 billion**, but net income attributable to the company decreased to **$98.3 million** from **$110.2 million**, with diluted EPS falling to **$1.75** from **$1.92** Q2 & H1 2023 Financial Performance (in thousands, except per share amounts) | Metric | Q2 2023 | Q2 2022 | Y/Y Change | H1 2023 | H1 2022 | Y/Y Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $2,003,052 | $1,791,241 | +11.8% | $3,914,819 | $3,354,443 | +16.7% | | Gross Profit | $413,848 | $374,216 | +10.6% | $812,617 | $719,656 | +12.9% | | Operating Income | $142,859 | $135,023 | +5.8% | $270,635 | $242,522 | +11.6% | | **Net Income (to Co.)** | $98,275 | $110,227 | -10.8% | $188,730 | $202,680 | -6.9% | | **Diluted EPS** | $1.75 | $1.92 | -8.9% | $3.35 | $3.52 | -4.8% | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For H1 2023, net cash from operating activities significantly increased to **$114.0 million**, while cash used in investing activities rose to **$188.9 million**, and cash from financing activities decreased to **$65.7 million**, resulting in a **$9.2 million** overall decrease in cash Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $114,016 | $58,179 | | Net cash used in investing activities | ($188,946) | ($94,194) | | Net cash provided by financing activities | $65,704 | $104,563 | | **Net (decrease) increase in cash** | **($9,226)** | **$68,548** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies and financial statement items, including the company's single **"Truck Segment"** operation, increased **authorized shares**, and a subsequent **three-for-two stock split** declared in July 2023 - The company operates as a **single reportable business segment**, the Truck Segment, providing an integrated one-stop source for commercial vehicle needs[37](index=37&type=chunk) - On May 16, 2023, shareholders approved an increase in **authorized shares** of Class A Common Stock to **105,000,000** and Class B Common Stock to **35,000,000**[26](index=26&type=chunk) - On July 25, 2023, the Board of Directors declared a **three-for-two stock split**, payable as a stock dividend on August 28, 2023[56](index=56&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q2 2023 revenue growth to **$2.0 billion** driven by commercial vehicle sales, despite a net income decline, while maintaining a positive 2023 outlook with strong liquidity and an increased order backlog [Outlook](index=18&type=section&id=Outlook) Management forecasts a **5.2% increase** in U.S. Class 8 truck sales and **6.2% increase** for Class 4-7 vehicles in 2023, projecting **16,500-18,000 new Class 8 truck sales** and **10-15% lease and rental revenue growth**, despite softening aftermarket demand - A.C.T. Research forecasts U.S. Class 8 retail truck sales to be **272,600 units** in 2023, a **5.2% increase** from 2022[64](index=64&type=chunk) - The company expects to sell approximately **16,500 to 18,000 new Class 8 trucks** in the U.S. and **11,500 to 13,000 new Class 4-7 commercial vehicles** in 2023[64](index=64&type=chunk)[65](index=65&type=chunk) - Lease and rental revenue is projected to increase by **10% to 15%** in 2023 compared to 2022[66](index=66&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Q2 2023 revenues rose **11.8%** to **$2.0 billion**, driven by vehicle and aftermarket sales, with gross profit up **10.6%**, though income before taxes fell **6.9%** due to a prior-year gain, and the absorption ratio improved to **139.7%** Q2 2023 vs Q2 2022 Revenue Breakdown (in millions) | Revenue Source | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | New and used commercial vehicle sales | $1,250.8 | $1,098.3 | +13.9% | | Aftermarket products and services sales | $651.1 | $598.3 | +8.8% | | Lease and rental sales | $88.5 | $80.5 | +9.9% | | **Total revenues** | **$2,003.1** | **$1,791.2** | **+11.8%** | Vehicle Unit Sales (Q2 2023 vs Q2 2022) | Vehicle Type | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | New heavy-duty (Class 8) | 4,300 | 4,168 | +3.2% | | New medium-duty (Class 4-7) | 3,477 | 2,815 | +23.5% | | Used vehicles | 1,869 | 1,629 | +14.7% | - The dealership absorption ratio, a key performance metric, improved to **139.7%** in Q2 2023 from **136.4%** in Q2 2022[74](index=74&type=chunk) - Net interest expense increased by **286.3%** in Q2 2023 compared to Q2 2022, driven by higher inventory levels and rising interest rates on variable-rate debt[93](index=93&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company had **$467.0 million** in working capital, including **$191.9 million** cash, supported by various credit facilities, and is executing a **$150 million** stock repurchase program and capital expenditures - The company had working capital of approximately **$467.0 million**, including **$191.9 million** in cash, as of June 30, 2023[110](index=110&type=chunk) - A stock repurchase program authorizing up to **$150.0 million** was approved in December 2022, with **$71.4 million** of shares repurchased under this program as of June 30, 2023[116](index=116&type=chunk) - On July 25, 2023, the Board declared a **three-for-two stock split** and a quarterly cash dividend of **$0.17 per share** on a post-split basis, a **21.4% increase**[115](index=115&type=chunk) [Backlog](index=29&type=section&id=Backlog) The commercial vehicle order backlog increased to approximately **$4.04 billion** as of June 30, 2023, up from **$3.68 billion** year-over-year, driven by strong demand and production constraints, with a risk of cancellation for extended fulfillment times - The backlog of commercial vehicle orders was approximately **$4,041.6 million** on June 30, 2023, an increase from **$3,682.9 million** on June 30, 2022[132](index=132&type=chunk) [Item 3. 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 risk on **$1.37 billion** of variable-rate debt as of June 30, 2023, where a **100-basis-point** change could impact annual interest expense by approximately **$13.7 million** - The company is exposed to interest rate risk on **$1,370.7 million** of variable-rate debt as of June 30, 2023[143](index=143&type=chunk) - A **100 basis point (1%) change** in interest rates (SOFR, CDOR, or prime rate) would result in an approximate **$13.7 million** change in annual interest expense[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of quarter-end, with no material changes to internal control over financial reporting during Q2 2023 - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[144](index=144&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, these controls[145](index=145&type=chunk) Part II [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation, but management believes no pending claims are reasonably likely to have a material adverse effect on its financial position or results of operations - The company believes no pending litigation will have a material adverse effect on its financial position or results of operations[146](index=146&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors as previously disclosed in its 2022 Annual Report on Form 10-K - There has been no material change in the company's risk factors as disclosed in the 2022 Annual Report on Form 10-K[148](index=148&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company made no unregistered equity sales in Q2 2023, repurchasing **721,981 shares** of common stock, with approximately **$78.6 million** remaining available under the current repurchase program as of June 30, 2023 Stock Repurchase Activity (Q2 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Dollar Value Remaining in Plan | | :--- | :--- | :--- | :--- | | April 2023 | 196,525 | $54.62 | $108,179,816 | | May 2023 | 306,752 | $53.00 | $91,912,675 | | June 2023 | 218,704 | $60.77 | $78,614,929 | | **Total Q2** | **721,981** | - | **$78,614,929** | [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during Q2 2023 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[152](index=152&type=chunk)

Financial Data and Key Metrics Changes - The company achieved second quarter revenues of $2 billion and net income of $98.3 million, equating to $1.75 per diluted share [46] - The aftermarket revenue growth was 8.9%, with parts, service, and body shop revenues reaching $651 million [47] - The absorption ratio reached a record 139.7% [47] Business Line Data and Key Metrics Changes - Class 8 truck sales totaled 4,300 units, representing 5.7% of the U.S. market and 1.8% of the Canadian market [48] - Class 4-7 new truck sales increased by 25% year-over-year, reaching 3,477 units, accounting for 5.2% of the U.S. market and 2.6% of the Canadian market [49] - Used truck sales reached 1,869 units, up 14.7% year-over-year [50] Market Data and Key Metrics Changes - The overall market for aftermarket growth was impacted by economic factors such as high interest rates and low freight rates, particularly affecting small over-the-road carriers [18] - ACT Research forecasts U.S. Class 8 retail sales to be 272,600 in 2023, up 5.1% compared to 2022, while Class 4-7 retail sales are expected to be 248,150 units, up 6.2% from 2022 [24][25] Company Strategy and Development Direction - The company is focused on expanding its aftermarket offerings and supporting large national accounts, which is expected to sustain strong aftermarket revenues [23] - The company plans to continue adding service technicians, particularly mobile technicians, as part of its long-term strategy [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong financial results despite moderating aftermarket growth due to economic factors [51] - The company anticipates that new truck supply will meet pent-up demand for commercial vehicles by the end of the year [51] - Management noted that the over-the-road business is currently at a low point but expects a gradual recovery in the coming year [70] Other Important Information - The company declared a three-for-two stock split and a post-split cash dividend of $0.17 per common share, a 21.4% increase from the previous quarterly dividend [46] - Used truck values remain low, but pricing has begun to stabilize [26] Q&A Session Summary Question: Thoughts on pricing and emission standards for 2024 - Management indicated that pricing increases are expected primarily in CARB-compliant states, with potential price increases of $20,000 or more for diesel trucks by 2026-2027 [31][56] Question: Margins for new and used truck sales - Management reported that used truck margins have improved to 11%, and they do not foresee a significant decline in margins despite potential market downturns [58][60] Question: Observations on the vocational market and overall economy - Management noted that larger carriers are managing through economic challenges better than smaller carriers, and the overall local economy appears stable [68][70] Question: Expectations for parts and service revenue growth - Management expects mid-single-digit growth rates for parts and service revenue in the upcoming quarters, with a focus on taking market share [80][81] Question: Control of SG&A expenses going into 2024 - Management emphasized improved expense management and discipline, which they believe will help navigate any cyclicality in the market [90][91]

```markdown [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 company's financial statements for the quarter ended **March 31, 2023**, show an increase in total assets to **$3.97 billion** from **$3.82 billion** at year-end **2022**. Total revenues for the quarter grew to **$1.91 billion**, up from **$1.56 billion** in the prior-year period, driven by strong commercial vehicle sales. However, net income remained relatively flat at **$90.8 million** compared to **$92.5 million** in Q1 **2022**, with diluted EPS also holding steady at **$1.60**. Cash flow from operations increased significantly to **$92.5 million** [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of **March 31, 2023**, total assets increased to **$3.97 billion**, driven by rises in inventories and property and equipment. Total liabilities also grew to **$2.14 billion**, primarily due to higher floor plan notes payable. Shareholders' equity increased to **$1.83 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,973,952 | $1,867,743 | | Inventories, net | $1,498,948 | $1,429,429 | | **Total Assets** | **$3,969,552** | **$3,821,066** | | **Total Current Liabilities** | $1,513,077 | $1,428,674 | | Floor plan notes payable | $1,015,971 | $933,203 | | **Total Liabilities** | $2,140,016 | $2,058,044 | | **Total Shareholders' Equity** | **$1,829,536** | **$1,763,022** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended **March 31, 2023**, total revenue increased by **22.3%** year-over-year to **$1.91 billion**, primarily due to a **24.2%** rise in new and used commercial vehicle sales. Despite higher revenues, net income attributable to the company was slightly down at **$90.5 million** compared to **$92.5 million** in the prior-year quarter, with diluted EPS remaining unchanged at **$1.60** Consolidated Statements of Income (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total Revenue | $1,911,767 | $1,563,202 | | Gross Profit | $398,769 | $345,440 | | Operating Income | $127,776 | $107,499 | | Net Income | $90,790 | $92,453 | | Net Income attributable to Rush Enterprises, Inc. | $90,455 | $92,453 | | Diluted EPS | $1.60 | $1.60 | | Dividends declared per common share | $0.21 | $0.19 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of **2023**, net cash provided by operating activities was **$92.5 million**, a significant increase from **$34.6 million** in Q1 **2022**. Net cash used in investing activities rose to **$95.5 million**, mainly for property and equipment acquisitions. Financing activities provided **$28.3 million** in cash, down from **$43.1 million** in the prior year. The company ended the quarter with **$226.3 million** in cash and cash equivalents Consolidated Cash Flows (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $92,466 | $34,585 | | Net cash used in investing activities | ($95,514) | ($16,290) | | Net cash provided by financing activities | $28,294 | $43,085 | | **Net increase in cash and cash equivalents** | **$25,246** | **$61,380** | | **Cash and cash equivalents, end of period** | **$226,292** | **$209,526** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes clarify that the company operates primarily in a single reportable business segment, the Truck Segment. On **May 2, 2022**, the company increased its equity interest in Rush Truck Centres of Canada Limited (RTC Canada) to a controlling **80%**, and its results are now consolidated. Revenue is disaggregated, showing commercial vehicle sales as the largest contributor. The company also details its accounting for leases, credit losses, and acquisitions - The company operates as a **single reportable business segment**, the **Truck Segment**, which includes a network of commercial vehicle dealerships providing sales, aftermarket parts, service, and financial services[33](index=33&type=chunk) - On **May 2, 2022**, the company acquired an additional **30% equity interest** in RTC Canada, bringing its total to an **80% controlling interest**. Consequently, RTC Canada's financial results are consolidated into the company's statements from that date forward[50](index=50&type=chunk)[54](index=54&type=chunk)[60](index=60&type=chunk) Disaggregated Revenue by Source (in thousands) | Revenue Source | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Commercial vehicle sales revenue | $1,161,725 | $935,719 | | Parts revenue | $384,418 | $330,645 | | Commercial vehicle repair service revenue | $263,808 | $212,618 | | Finance revenue | $3,508 | $4,462 | | Insurance revenue | $3,063 | $3,063 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a strong Q1 **2023** with a **22.3%** revenue increase driven by robust demand for new commercial vehicles and the consolidation of RTC Canada. The company forecasts continued growth in aftermarket services and lease/rental revenues for **2023**. Gross profit margins decreased slightly due to a shift in sales mix towards lower-margin vehicle sales. The company maintains a solid liquidity position with **$460.9 million** in working capital and is actively managing capital allocation through facility investments, dividends, and stock repurchases. The order backlog remains high at **$4.2 billion**, though it carries cancellation risk [Outlook](index=17&type=section&id=Outlook) The company projects stable U.S. Class 8 truck sales for **2023**, while Class 4-7 sales are expected to increase by **8.6%**. Management anticipates growth in both Aftermarket Products and Services revenue (**9-12%**) and Lease and Rental revenue (**9-11%**), supported by strong demand and the consolidation of RTC Canada. Projections are subject to risks from manufacturer supply chains, inflation, and rising interest rates 2023 Full Year Outlook | Metric | Forecast | YoY Change vs 2022 | | :--- | :--- | :--- | | U.S. Class 8 Truck Sales (A.C.T. Research) | 259,018 units | -0.1% | | U.S. Class 4-7 Vehicle Sales (A.C.T. Research) | 253,600 units | +8.6% | | Company Aftermarket Revenue Growth | 9% to 12% | N/A | | Company Lease and Rental Revenue Growth | 9% to 11% | N/A | - The company expects its U.S. market share for new Class 8 trucks to be between **6.2%** and **6.8%** and for new Class 4-7 vehicles to be between **4.5%** and **5.1%** in **2023**[62](index=62&type=chunk)[63](index=63&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) In Q1 **2023**, total revenues rose **22.3%** to **$1.91 billion**, driven by a **28.6%** increase in new vehicle unit sales. Aftermarket revenues also grew **19.3%**. However, used vehicle unit sales declined **29.7%**. Gross profit increased **15.4%** to **$53.3 million**, but the gross margin percentage fell from **22.1%** to **20.9%** due to a higher mix of lower-margin vehicle sales. A significant **801%** increase in net interest expense, driven by higher rates and inventory levels, contributed to a slight decrease in income before taxes Vehicle Unit Sales - Q1 2023 vs Q1 2022 | Vehicle Type | Q1 2023 Units | Q1 2022 Units | % Change | | :--- | :--- | :--- | :--- | | New heavy-duty vehicles | 4,365 | 3,528 | 23.7% | | New medium-duty vehicles | 3,038 | 2,141 | 41.9% | | Total new vehicle unit sales | 7,907 | 6,150 | 28.6% | | Used vehicles | 1,684 | 2,395 | (29.7%) | - Total revenues increased by **$348.6 million (22.3%)** in Q1 **2023**, primarily due to strong demand for new commercial vehicles and the consolidation of RTC Canada[74](index=74&type=chunk) - Gross profit as a percentage of sales decreased to **20.9%** from **22.1%** YoY, as lower-margin commercial vehicle sales grew as a percentage of total revenues[84](index=84&type=chunk) - Net interest expense increased by **$9.8 million (801.0%)** in Q1 **2023** compared to Q1 **2022**, due to higher inventory levels and rising interest rates on variable-rate debt[94](index=94&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended Q1 **2023** with a strong liquidity position, holding **$460.9 million** in working capital, including **$226.3 million** in cash. Capital allocation plans for **2023** include **$170-180 million** for leasing operations and **$35-40 million** for recurring capital expenditures. The company continues its capital return program, paying a **$0.21 per share** dividend in Q2 **2023** and repurchasing **$31.1 million** of stock under its **$150 million** authorization as of **March 31, 2023** - As of **March 31, 2023**, the company had working capital of approximately **$460.9 million**, including **$226.3 million** in cash[98](index=98&type=chunk) - Planned capital expenditures for **2023** include **$170.0 million to $180.0 million** for leasing operations and **$35.0 million to $40.0 million** for recurring items[102](index=102&type=chunk) - A new stock repurchase program authorizing up to **$150.0 million** was approved on **December 2, 2022**. As of **March 31, 2023**, **$31.1 million** had been repurchased[105](index=105&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.21 per share**, payable on **June 9, 2023**[104](index=104&type=chunk) [Backlog](index=26&type=section&id=Backlog) The company's backlog of commercial vehicle orders increased to approximately **$4.2 billion** as of **March 31, 2023**, up from **$3.4 billion** a year prior. This increase reflects strong demand and manufacturer production constraints. Management notes that while orders are confirmed, they are subject to cancellation, and the extended fulfillment time increases this risk, especially given potential industry headwinds - The backlog of commercial vehicle orders was approximately **$4,209.9 million** on **March 31, 2023**, compared to **$3,441.4 million** on **March 31, 2022**[122](index=122&type=chunk) - Management cautions that the longer it takes to fill the backlog, the greater the risk that a significant number of orders could be cancelled due to potential industry headwinds like lower spot rates and higher interest rates[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to market risk from interest rate fluctuations on its variable-rate debt, including floor plan financing and credit agreements. As of **March 31, 2023**, the company had **$1.28 billion** in such borrowings. A hypothetical **100 basis point (1%)** change in interest rates would result in an approximate **$12.8 million** change in annual interest expense - The company's primary market risk is interest rate changes affecting its variable-rate debt, which is based on LIBOR, CDOR, SOFR, and the prime rate[134](index=134&type=chunk) - As of **March 31, 2023**, with **$1,278.4 million** in outstanding variable-rate borrowings, a **100 basis point (1%)** change in interest rates would impact annual interest expense by approximately **$12.8 million**[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of **March 31, 2023**. There were no material changes to the company's internal control over financial reporting during the quarter - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of **March 31, 2023**[135](index=135&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[136](index=136&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course of business litigation from time to time. Management believes there are no pending claims or litigation as of **March 31, 2023**, that are reasonably likely to have a material adverse effect on its financial position or results of operations - As of **March 31, 2023**, the company believes there are no pending legal proceedings that are reasonably likely to have a material adverse effect on its financial position or results[137](index=137&type=chunk) [Item 1A. Risk Factors](index=28&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended **December 31, 2022** - There has been no material change in the company's risk factors from those disclosed in the **2022** Annual Report on Form 10-K[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not make any unregistered sales of equity securities in Q1 **2023**. Under its stock repurchase program, the company repurchased a total of **471,018 shares** for approximately **$25.5 million** during the quarter. As of **March 31, 2023**, approximately **$118.9 million** remained available for future repurchases under the program Stock Repurchase Activity - Q1 2023 | Period | Total Shares Purchased | Average Price Paid Per Share | Total Cost (Approx.) | | :--- | :--- | :--- | :--- | | Jan 2023 | 133,505 | $52.02 | $6.9M | | Feb 2023 | 49,843 | $56.78 | $2.8M | | Mar 2023 | 287,670 | $53.85 | $15.5M | | **Total** | **471,018** | **N/A** | **$25.2M** | - As of **March 31, 2023**, approximately **$118.9 million** remained available for repurchase under the company's stock repurchase program[142](index=142&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, CEO and CFO certifications as required by the **Sarbanes-Oxley Act**, and XBRL data files - The report includes CEO and CFO certifications pursuant to **Sections 302 and 906** of the **Sarbanes-Oxley Act**[144](index=144&type=chunk) [Signatures](index=31&type=section&id=SIGNATURES) The report is duly signed and authorized by W.M. "Rusty" Rush, President, CEO, and Chairman of the Board, and Steven L. Keller, Chief Financial Officer and Treasurer, on **May 10, 2023** - The report was signed on **May 10, 2023**, by the company's Principal Executive Officer and Principal Financial Officer[148](index=148&type=chunk) ```