Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) RUSH ENTERPRISES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 555 IH 35 South, New Braunfels, TX 78130 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (830) 302-5200 Securities registered pursuant to Section 12(b) of the Act: | T ...

Financial Data and Key Metrics Changes - The company reported quarterly revenues of $1.6 billion and net income of $39.1 million, or $1.05 per diluted share, indicating a strong financial performance positively impacted by aftermarket initiatives [5][6] - The absorption ratio for the aftermarket was strong at 120%, reflecting effective management and strategic initiatives [6] Business Line Data and Key Metrics Changes - Aftermarket revenues from parts, service, and body shop reached $455 million, a 6.5% increase over Q3 2018 [6] - New Class 8 truck sales totaled 4,318 units, up 30% year-over-year, capturing 5.5% of the total U.S. Class 8 market [8] - Class 4 to 7 new truck sales reached 4,566 units, accounting for 6.5% of the U.S. market, marking a record-setting quarter [10] - Used truck sales decreased by 15% compared to Q3 2018, with inventory at its lowest level of the year [12] Market Data and Key Metrics Changes - The U.S. Class 8 retail sales forecast for 2019 is 277,300 units, with expectations of a decline to 204,000 units in 2020, a 26% drop [9] - The U.S. Class 4 to 7 sales forecast for 2019 is 266,000 units, up 3% from 2018, with a projected decline to 257,000 units in 2020, down 3% [11] Company Strategy and Development Direction - The company aims to continue outperforming the market in aftermarket revenues through strategic initiatives, including technology solutions and e-commerce platforms [7] - The company is focused on maintaining strong performance in the medium-duty truck market, which is expected to remain stable over the next few years [20] Management's Comments on Operating Environment and Future Outlook - Management noted significant headwinds from the energy sector, with activity down over 50%, impacting parts and service revenue [18] - The company is implementing G&A cost cuts, expecting to save a couple of million dollars per month starting in 2020 [20][26] - Management expressed confidence in achieving better results than in previous downturns due to strategic focus and operational improvements [45] Other Important Information - The company declared a quarterly cash dividend of $0.13 per common share [5] - The Tallman Group joint venture has grown by $100 million since its inception, with positive performance expected to continue [58] Q&A Session Summary Question: What was the energy headwind for parts and service revenue this quarter? - Management indicated that energy sector activity was down over 50%, significantly impacting performance, but noted that the company managed to perform well despite these challenges [18] Question: Any updates on G&A cost cuts? - Management confirmed that G&A cost cuts would phase into Q4, with expectations of saving a couple of million dollars per month starting in 2020 [20][26] Question: What are customers saying about order expectations? - Management noted that while there is uncertainty in the market, they expect order intake to improve gradually, but not to previous peak levels [41] Question: Can you comment on parts and service revenue performance on the Navistar side? - Management reported improvement in parts and service revenue performance, indicating that the negative impacts from low market share are behind them [54] Question: Any updates on the Tallman Group JV and M&A opportunities? - Management expressed satisfaction with the Tallman Group's performance and indicated that while there are strategic M&A opportunities, they are not ready to disclose specifics [58]

Financial Data and Key Metrics Changes - The company reported quarterly revenues of $1.5 billion and net income of $41.6 million, translating to $1.10 per diluted share, reflecting strong financial performance driven by aftermarket initiatives and healthy economic conditions [7] - A quarterly cash dividend of $0.13 per common share was declared, representing an 8% increase over the last four quarters [8] Business Line Data and Key Metrics Changes - Aftermarket revenues increased by $448 million, up 6% year-over-year, with aftermarket gross profit rising 9% year-over-year and an absorption ratio of 122.4% [8][10] - New Class 8 truck sales reached 4,119 units, a 28% increase year-over-year, capturing 5.7% of the total U.S. Class 8 market [12] - Class 4-7 new truck sales hit 3,866 units, accounting for 5.5% of the U.S. market, marking a record-setting quarter for medium-duty truck sales [14] - Used truck sales were up 2% year-over-year, while lease and rental revenues increased by 4.4% compared to the same quarter in 2018 [15] Market Data and Key Metrics Changes - The U.S. Class 8 retail sales forecast for 2019 is 275,100 units, with expectations of a decline in Class 8 truck sales as early as the fourth quarter due to excess capacity in the market [13] - The U.S. Class 4-7 retail sales forecast for 2019 is 262,300 units, reflecting a 1.5% increase from 2018 [14] Company Strategy and Development Direction - The company aims to continue monitoring aftermarket industry demand while executing strategic initiatives to maintain consistent performance [11] - The management believes that diversification and strategic investments over the past few years have strengthened the company's resilience against market fluctuations, particularly in the energy sector [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high-single-digit growth in parts and service revenue despite headwinds from the energy market, which saw a year-over-year downturn of approximately 35% [22][25] - The company anticipates that its balanced approach to market segments will allow it to outperform the industry during downturns, particularly with a higher mix of vocational sales [46][76] Other Important Information - The company has invested significantly in data analytics and service offerings to enhance operational efficiency and revenue generation [84][85] - Management noted that the average sales price and margins for used trucks are normalizing after a period of elevated values [95] Q&A Session Summary Question: Parts and service gross margins improvement - Management indicated that the improvement in gross margins is not expected to remain at record levels but anticipates continued growth in margins moving forward [19][20] Question: Impact of energy market on parts and service revenue - Management acknowledged a significant headwind from the energy sector but remains optimistic about achieving high-single-digit growth in parts and service revenue [21][22] Question: Percentage of aftermarket tied to energy - Management estimated that approximately 10% of overall aftermarket revenue is tied to the energy sector, with a more significant impact on service than parts [40] Question: Visibility on inventory and market conditions - Management noted that visibility is somewhat softer than expected but still solid, with the potential for adjustments in the fourth quarter [61][62] Question: General economic outlook and medium-duty market - Management expects softening in GDP but believes the medium-duty market will remain stable due to ongoing dynamics in the sector [87][90] Question: Gap between dealership profitability - Management reported that the profitability gap between the best and worst dealership locations is narrowing, with improvements seen in the Navistar stores [101]

Financial Data and Key Metrics Changes - The company reported quarterly revenues of $1.3 billion, with a net income of $37 million or $0.98 per diluted share, reflecting strong financial performance driven by strategic initiatives and a robust economy [5] - Aftermarket gross profit margins increased to 37.7% from 36.4% year-over-year, indicating improved profitability in this segment [6] Business Line Data and Key Metrics Changes - Parts, service, and body shop revenues reached $438 million, up 9.5% from the first quarter of 2018, with aftermarket growth attributed to expanded offerings and increased operational hours [6] - New Class 8 truck sales increased by 7% year-over-year, totaling 3,558 units, representing 5.5% of the total U.S. Class 8 market [8] - Medium-duty truck sales (Class 4-7) reached 2,614 units, accounting for 4.2% of the U.S. market, with expectations for acceleration in sales throughout 2019 [9] Market Data and Key Metrics Changes - The energy sector experienced a 30% year-over-year decline in activity, yet overall aftermarket growth remained strong, with expectations for modest improvement in the energy sector later in the year [7] - The company noted that the U.S. Class 8 retail sales forecast for 2019 is 264,000 units, while Class 4-7 retail sales are expected to increase by 1.6% from 2018 [8][9] Company Strategy and Development Direction - The company is focused on strategic initiatives to enhance service offerings and operational efficiencies, including the expansion of its All-Makes Parts offerings and the acquisition of 50% equity in Rush Truck Centers of Canada [10] - Management emphasized the importance of diversifying beyond Class 8 trucks, highlighting the stability of the medium-duty market and the potential for growth in parts and service even amid a downturn in truck sales [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining growth in parts and service despite potential declines in Class 8 truck sales, citing the aging fleet as a driver for continued demand [20][22] - The company anticipates that the aftermarket activity will remain strong, with expectations for continued growth in parts and service even if truck sales decline [19][34] Other Important Information - The company declared a quarterly cash dividend of $0.12 per common share, reflecting its commitment to returning capital to shareholders [5] - Management acknowledged increased expenses due to employee benefits and payroll taxes but maintained a strong balance sheet to support future investments [10] Q&A Session Summary Question: Inquiry about parts and service gross margins - Management expects gross margins to continue trending higher, with potential for further improvement driven by service initiatives [14][15] Question: Sales cadence for Class 8 trucks - Management noted a slight adjustment in expectations for Class 8 sales in the second and third quarters, with backlogs decreasing but remaining strong [28][29] Question: Heavy truck cycle and used truck values - Management indicated that while cancellations are muted, there may be pressure on used truck values later in the year, with expectations for some devaluation [39][45] Question: SG&A costs and structural changes - Management discussed the variability of SG&A costs tied to truck sales and the ongoing investments in technology and operations to drive growth [55][57]

Rush Enterprises, Inc. (NASDAQ:RUSHA) Q4 2018 Results Earnings Conference Call February 14, 2019 10:00 AM ET Company Participants Mike McRoberts - Chief Operating Officer Derrek Weaver - Executive Vice President Jay Hazelwood - Vice President and Controller Michael Goldstone - Vice President, General Counsel and Corporate Secretary Rusty Rush - Chairman, President and CEO Steve Keller - Chief Financial Officer Conference Call Participants Jamie Cook - Credit Suisse Neil Frohnapple - Buckingham Research Brad ...