Rush Enterprises ( RUSHB ) ( RUSHA ) continues to be pressured by the trucking market downturn as the macroeconomic environment remains challenged. With growing pressures on US employment and manufacturing, the market may remain challenged for the comingMonte Independent Investment Research: Michael Del Monte is a buy-side equity analyst with expertise in the technology, energy, industrials, and materials sectors. Prior to working in the investment management industry, Michael spent over a decade in profess ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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, 2025 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 specified in its charter) W ...

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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] - Gross profit for Q3 2025 was $374,752, compared to $379,041 in Q3 2024, reflecting a slight decline[30] - Net income attributable to Rush Enterprises, Inc. for the twelve months ended September 2025 was $274,202,000, a decrease from $307,448,000 in September 2024, representing a decline of approximately 10.5%[35] - Adjusted EBITDA (Non-GAAP) for the twelve months ended September 2025 was $425,994,000, down from $472,169,000 in September 2024, reflecting a decrease of about 9.7%[35] Sales and Market Conditions - 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 decreased by 17.4% year-over-year, with the company selling 2,979 units, a decline 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] - The company remains cautiously optimistic about potential recovery in truck sales in the second half of 2026, contingent on stable emission laws and market conditions[10] Dividends and Shareholder Returns - The company 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][6] - The company declared dividends of $0.19 per common share in Q3 2025, up from $0.18 in Q3 2024[30] - The company repurchased $9.2 million of its common stock during the quarter, 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] - Total Rush Enterprises, Inc. shareholders' equity (GAAP) as of September 2025 was $2,214,499,000, an increase from $2,083,145,000 in September 2024, representing a growth of about 6.3%[37] Operational Efficiency - Aftermarket products and services accounted for approximately 63.7% of total gross profit, with revenues of $642.7 million, up 1.5% compared to Q3 2024[5][18] - 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] Cash Flow and Investments - Free cash flow (Non-GAAP) for the twelve months ended September 2025 was $691,999,000, a significant increase from a negative $72,111,000 in September 2024[36] - Net cash provided by operations (GAAP) for the twelve months ended September 2025 was $1,139,643,000, compared to $311,922,000 in September 2024, indicating a substantial increase of approximately 264%[36] - The acquisition of property and equipment for the twelve months ended September 2025 was $447,644,000, compared to $384,033,000 in September 2024, showing an increase of approximately 16.6%[36] - The company made acquisitions of L&RF assets totaling $344,016,000 for the twelve months ended September 2025, compared to $285,404,000 in September 2024, reflecting an increase of approximately 20.5%[36] Interest and Debt Management - The company reported an interest expense of $53,064,000 for the twelve months ended September 2025, down from $70,603,000 in September 2024, indicating a reduction of about 25%[35] - Adjusted net debt (cash) (Non-GAAP) as of September 2025 was $(393,459,000), compared to $(181,088,000) in September 2024, indicating an increase in cash position[37] - Adjusted invested capital (Non-GAAP) as of September 2025 was $1,821,040,000, a slight decrease from $1,902,057,000 in September 2024, reflecting a decline of approximately 4.3%[37]

Financial Performance - Total revenue for Q2 2025 was $1,930,707, a decrease of 4.8% compared to $2,027,028 in Q2 2024[13] - Net income for Q2 2025 was $72,989, down 7.3% from $78,783 in Q2 2024[15] - Gross profit for the first half of 2025 was $737,431, a decline of 5.7% from $782,264 in the same period of 2024[13] - Net income for the six months ended June 30, 2025, was $133.606 million, compared to $150.272 million for the same period in 2024, representing a decrease of approximately 11%[21] - For the three months ended June 30, 2025, net income available to common shareholders was $72.4 million, compared to $78.7 million for the same period in 2024, representing a decrease of 4.4%[27] - Basic earnings per common share for the three months ended June 30, 2025, was $0.93, down from $1.01 in the same period of 2024, a decline of 7.9%[27] - The Company reported a segment operating income of $201.8 million for the six months ended June 30, 2025, compared to $235.1 million for the same period in 2024, a decline of 14.2%[38] Assets and Liabilities - Total assets increased to $4,715,774 as of June 30, 2025, compared to $4,617,547 at the end of 2024, reflecting a growth of 2.1%[11] - Current liabilities rose to $1,718,449, an increase of 4.1% from $1,650,119 at the end of 2024[11] - Total shareholders' equity increased to $2,175,031 as of June 30, 2025, compared to $2,161,903 at the end of 2024, reflecting a growth of 0.6%[11] - The balance of retained earnings decreased to $(253,317) as of June 30, 2025[18] Cash Flow and Investments - Cash flows from operating activities provided $381.162 million, significantly higher than $115.525 million in the prior year, indicating strong operational performance[21] - The company invested $222.275 million in property and equipment during the six months ended June 30, 2025, compared to $172.522 million in the same period of 2024, reflecting ongoing expansion efforts[21] - The net cash used in investing activities was $232.220 million, compared to $161.128 million in the prior year, highlighting the company's aggressive investment strategy[21] - Total cash, cash equivalents, and restricted cash at the end of the period was $211.106 million, up from $167.266 million at the end of the previous year[21] Shareholder Returns - The company declared dividends of $0.18 per common share for Q2 2025, compared to $0.17 in Q2 2024[13] - Cash dividends paid during the period totaled $28.930 million, slightly higher than $27.232 million in the same period of 2024, reflecting a commitment to returning value to shareholders[21] - The company repurchased common stock worth $86,143 during the period[18] - The company repurchased $117.082 million in common stock during the six months ended June 30, 2025, compared to $9.542 million in the same period of 2024, reflecting a significant increase in shareholder return initiatives[21] Segment Performance - Revenues from external customers for the Truck Segment for the three months ended June 30, 2025, were $1.93 billion, compared to $2.02 billion for the same period in 2024, a decrease of 4.8%[38] - Segment operating income for the Truck Segment for the three months ended June 30, 2025, was $109.6 million, down from $124.6 million in the same period of 2024, a decline of 12.0%[38] - Total capital expenditures for the Truck Segment for the three months ended June 30, 2025, were $125.1 million, compared to $100.0 million for the same period in 2024, an increase of 25.0%[38] - Commercial vehicle sales revenue for the six months ended June 30, 2025, was $2,322.3 million, down from $2,423.6 million in 2024, indicating a decline of about 4.2%[44] Stock-Based Compensation - Stock-based compensation related to stock options and employee stock purchase plan totaled $8,289[18] - Stock-based compensation expense related to employee equity awards and stock purchases increased to $22.003 million from $19.605 million year-over-year, indicating a focus on employee incentives[21] - Stock-based compensation expense for the three months ended June 30, 2025, was $7.2 million, an increase of 30.9% from $5.5 million in the same period of 2024[31] - As of June 30, 2025, the Company had $17.1 million of unrecognized compensation cost related to non-vested employee stock options[32] Tax and Regulatory Matters - The Company had unrecognized income tax benefits totaling $8.0 million as of June 30, 2025, which could impact the effective tax rate if recognized[40] - The Company does not anticipate significant changes in unrecognized tax benefits in the next 12 months[41] - The Company’s total income tax expense for the three months ended June 30, 2025, was $54.3 million, compared to $54.3 million in the same period of 2024, indicating no change[39] Acquisitions and Growth - The Company acquired 100% of Leeds Transit, Inc. on June 16, 2025, for approximately $25.6 million, enhancing its commercial vehicle dealership presence[54]

Financial Performance - Revenues for Q2 2025 were $1.931 billion, a 4.8% decrease from $2.027 billion in Q2 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 same period last year [2][19]. - Total revenue for Q2 2025 was $1,930,707, a decrease of 4.8% compared to $2,027,028 in Q2 2024 [32]. - Net income attributable to Rush Enterprises, Inc. for Q2 2025 was $72,438, down 8.5% from $78,661 in Q2 2024 [32]. - New and used commercial vehicle sales revenue for Q2 2025 was $1,191,504, a decline of 8.4% from $1,300,308 in Q2 2024 [32]. - Basic earnings per share for Q2 2025 was $0.93, compared to $1.01 in Q2 2024, reflecting a decrease of 7.9% [32]. - Net income attributable to Rush Enterprises, Inc. for the twelve months ended June 30, 2025, was $286,644,000, a decrease of 7.1% from $308,594,000 in the previous year [39]. - Adjusted EBITDA for the twelve months ended June 30, 2025, was $442,740,000, down 6.1% from $471,340,000 in the prior year [39]. - Free cash flow for the twelve months ended June 30, 2025, was $402,387,000, a significant improvement from a negative $58,181,000 in the previous year [40]. - Adjusted free cash flow for the twelve months ended June 30, 2025, was $664,657,000, compared to $319,303,000 in the prior year, reflecting a 108.1% increase [40]. Revenue Sources - Aftermarket products and services generated $636.3 million in revenue, accounting for approximately 63.0% of total gross profit, reflecting a 1.4% increase compared to Q2 2024 [6][20]. - Parts and service sales increased slightly to $636,258 in Q2 2025 from $627,431 in Q2 2024, representing a growth of 1.3% [32]. - Leasing and rental revenue reached $93.1 million, up 6.3% compared to Q2 2024, despite a decrease in rental utilization rate [17]. Sales Performance - New U.S. Class 8 truck sales decreased by 20.3% year-over-year, with the company selling 3,178 units, representing 5.4% of the U.S. Class 8 truck market [10][11]. - New Class 4-7 commercial vehicle sales increased by 1.0% year-over-year, with the company selling 3,626 units, capturing 6.2% of the U.S. Class 4-7 market [13][14]. Shareholder Returns - The company declared a cash dividend of $0.19 per share, marking a 5.6% increase over the previous quarter, to be paid on September 12, 2025 [2][22]. - Dividends declared per common share increased to $0.18 in Q2 2025 from $0.17 in Q2 2024 [32]. - The company repurchased $83.9 million of its common stock during Q2 2025, totaling $121.4 million of the $200 million authorized by the Board [21]. Operational Efficiency - The absorption ratio for Q2 2025 was 135.5%, slightly up from 134.0% in Q2 2024, indicating strong operational efficiency [7][6]. - The absorption ratio for Q2 2025 was 135.5%, up from 134.0% in Q2 2024, indicating improved operational efficiency [35]. Debt and Assets - Total assets as of June 30, 2025, were $4,715,774, an increase of 2.1% from $4,617,547 as of December 31, 2024 [30]. - Total debt (GAAP) decreased to $1,625,129 in Q2 2025 from $1,760,423 in Q2 2024, a reduction of 7.7% [37]. - Adjusted total debt (non-GAAP) was $3,497 in Q2 2025, down from $4,036 in Q2 2024 [37]. - The company’s adjusted net debt (cash) as of June 30, 2025, was $(207,609,000), compared to $(163,230,000) in the previous year, indicating a worsening leverage position [42]. Future Outlook - The company expects aftermarket performance to remain stable with potential for modest growth in Q3 2025, despite ongoing economic uncertainty [9]. - The company anticipates that new Class 8 truck sales may decrease sequentially in Q3 2025 due to economic and regulatory uncertainties [12].

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 revenues increased by $7.5 million, or 0.7%, in Q1 2025 compared to Q1 2024[70] - 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] Sales and Market Trends - 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] - The forecast for new U.S. Class 8 retail truck sales in 2025 is 213,300 units, representing a 13.8% decrease compared to 2024[58] - The expected U.S. market share for new Class 8 truck sales in 2025 is between 5.4% and 5.9%, translating to approximately 11,500 to 12,500 units sold[58] Financial Performance - 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% in Q1 2024[76] - Gross margins from Aftermarket Products and Services decreased to 35.8% in Q1 2025, down from 36.5% in Q1 2024, with gross profit for this segment at $221.3 million[77] - SG&A expenses decreased by $14.9 million, or 5.6%, in Q1 2025, with SG&A as a percentage of total revenues decreasing to 13.4% from 14.1% in Q1 2024[83] - Net interest expense decreased by $5.1 million, or 28.4%, in Q1 2025, attributed to lower inventory levels and interest rates[84] - Income before income taxes decreased by $14.2 million, or 15.4%, in Q1 2025 compared to Q1 2024[85] Working Capital and Financing - Working capital as of March 31, 2025, was approximately $751.3 million, including $228.7 million in cash[87] - In Q1 2025, net cash used in financing activities was $56.4 million, with $288.4 million from long-term debt borrowings and $6.2 million from equity compensation share issuance[102] - In Q1 2024, net cash provided by financing activities was $196.5 million, primarily from $713.8 million in long-term debt borrowings and $110.2 million from net draws on floor plan notes payable[103] - As of March 31, 2025, the outstanding amount under the WF Credit Agreement was approximately $142.4 million, with a revolving credit loan commitment of up to $175.0 million[104] - The PLC Agreement allows for up to $500.0 million in revolving credit loans, with approximately $220.0 million outstanding as of March 31, 2025[105] Backlog and Production - The backlog of commercial vehicle orders as of March 31, 2025, was approximately $1,401.3 million, down from $2,047.1 million on March 31, 2024[112] - The company expects to fill most of its backlog orders during 2025, assuming manufacturers can meet their production schedules[112] Regulatory Environment - 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 for Class 3 through 8 by 2050 and 30% by 2030[123] - Additional regulations or enforcement of existing regulations by CARB could lead to increased compliance costs and operational restrictions, potentially impacting the company's financial condition[123] - The EPA is reconsidering previously approved engine emissions regulations, including the GHG-3 rule, which may be revoked or modified[122] - Multiple lawsuits are pending challenging CARB's rules and the GHG-3 rule, which could affect regulatory outcomes and compliance requirements[122] Market Risks - 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] - A 100 basis point increase or decrease in the prime rate, SOFR, or CORRA could result in an annual interest expense change of approximately $13.3 million[125] - Seventeen U.S. states and the District of Columbia have committed to advance the market for electric commercial vehicles, aligning with CARB's emissions regulations[123]

Financial Performance - Revenues for Q1 2025 were $1.85 billion, a 1.1% decrease from $1.87 billion in Q1 2024, with net income of $60.3 million or $0.73 per diluted share compared to $71.6 million or $0.88 per diluted share in the prior year[20]. - Total revenue for Q1 2025 was $1,850,830, a decrease of 1.5% from $1,871,999 in Q1 2024[34]. - Gross profit for Q1 2025 was $357,760, down from $389,875 in Q1 2024, reflecting a decline of 8.2%[34]. - Net income attributable to Rush Enterprises, Inc. for Q1 2025 was $60,322, compared to $71,608 in Q1 2024, representing a decrease of 15.7%[34]. - EBITDA for the twelve months ended March 31, 2025, was $517,312, down from $557,220 in the prior year[40]. Sales and Market Performance - New Class 8 truck sales in the U.S. totaled 3,154 units, a decrease of 7.4% year-over-year, representing 6.1% of the new U.S. Class 8 truck market[12]. - New U.S. Class 4-7 retail commercial vehicle sales were 3,204 units, relatively flat compared to the first quarter of 2024, accounting for 5.6% of the total new U.S. Class 4-7 commercial vehicle market[15]. - The company expects continued strong sales to vocational and public sector customers throughout 2025, although not at the levels experienced in 2024[14]. - Concerns regarding tariffs and emissions regulations are causing customers to delay vehicle orders, impacting overall demand for new Class 8 trucks[5][14]. Aftermarket and Leasing - Aftermarket products and services generated revenues of $619.1 million, down 4.6% from $649.2 million in Q1 2024, accounting for approximately 61.9% of total gross profit[9][21]. - Leasing and rental revenue increased by 2.7% to $90.3 million compared to Q1 2024, with full-service leasing revenue showing growth due to additional vehicles being put into service[18][22]. - The company anticipates a slight improvement in aftermarket revenues in Q2 2025, supported by current parts inventory levels[11]. Financial Position and Cash Flow - Total assets increased to $4,687,941 as of March 31, 2025, up from $4,617,547 at the end of 2024[32]. - Total debt (GAAP) decreased to $1,610,920 as of March 31, 2025, from $1,910,907 a year earlier[39]. - Adjusted Free Cash Flow for the twelve months ended March 31, 2025, was $698,346, significantly up from $198,709 in the previous year[41]. - Cash and cash equivalents increased to $228,719 as of March 31, 2025, from $155,905 a year earlier[39]. - Total shareholders' equity increased from $1,935,502 thousand in March 2024 to $2,166,936 thousand in March 2025, reflecting a growth of approximately 11.9%[43]. - Adjusted Invested Capital rose from $1,783,671 thousand in March 2024 to $1,941,788 thousand in March 2025, indicating an increase of about 8.9%[43]. - Adjusted Net Debt improved from $(151,831) thousand in March 2024 to $(225,148) thousand in March 2025, showing a reduction in net debt[43]. Stock and Dividends - The company repurchased $30.9 million of its common stock during the quarter, totaling $37.4 million of the $150.0 million authorized by the Board[23]. - The company declared dividends of $0.18 per common share in Q1 2025, compared to $0.17 in Q1 2024[34]. Non-GAAP Measures - Free Cash Flow and Adjusted Free Cash Flow are key financial measures for the Company, calculated from operating cash flows and adjusted for specific financing activities[42]. - The Company emphasizes that Free Cash Flow and Adjusted Free Cash Flow are non-GAAP measures and should be considered alongside GAAP measures for a comprehensive financial analysis[42]. - Management's adjustments to derive Adjusted Free Cash Flow include adding back certain financing draws and subtracting specific payments related to lease and rental fleet financing[42]. - The Company believes that its approach to calculating Adjusted Invested Capital provides a clearer picture of its leverage profile and capital structure[43]. - Non-GAAP measures like Adjusted Net Debt and Adjusted Invested Capital may vary among companies and are not directly comparable to similar measures used by other firms[43]. - The focus on Free Cash Flow and Adjusted Free Cash Flow aims to align investor understanding with management's evaluation of cash generation capabilities[42]. - The financial metrics presented are intended to assist investors in performing consistent analyses aligned with the Company's financial models[43].

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]

[Part I](index=6&type=section&id=Part%20I) [Business](index=6&type=section&id=Item%201.%20Business) Rush Enterprises, Inc. is an integrated retailer of commercial vehicles and related services, operating primarily through its Truck Segment via a network of 'Rush Truck Centers' across the United States and Canada - Rush Enterprises operates as a full-service, integrated retailer of commercial vehicles and related services through its network of over **143 Rush Truck Centers** in 23 states and Ontario, Canada[26](index=26&type=chunk)[27](index=27&type=chunk) - The company's business strategy focuses on providing integrated solutions through its 'one-stop center' model, expanding product and service offerings, and growing its geographic footprint via acquisitions and new dealership openings[28](index=28&type=chunk)[36](index=36&type=chunk) - As of December 31, 2024, the company's backlog of commercial vehicle orders was approximately **$1.51 billion**, a significant decrease from **$3.73 billion** on December 31, 2023, attributed to decreased demand for new Class 8 trucks and the ongoing freight recession[102](index=102&type=chunk) - Sales of new Peterbilt commercial vehicles accounted for approximately **34.3% of total revenues** in 2024, while sales of new International commercial vehicles accounted for **17.4%**[85](index=85&type=chunk)[86](index=86&type=chunk) 2024 Revenue and Gross Profit Contribution | Category | Revenue (2024) | % of Total Revenue | % of Gross Profit | | :--- | :--- | :--- | :--- | | New Commercial Vehicle Sales | $4,553.0 million | 58.3% | N/A | | Aftermarket Products & Services | $2,516.0 million | 32.2% | 60.4% | | Used Commercial Vehicle Sales | $335.8 million | 4.3% | N/A | | Vehicle Leasing and Rental | $354.9 million | 4.5% | N/A | | Finance and Insurance | $22.0 million | 0.3% | N/A | [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business operations, financial condition, and regulatory environment - The company is highly dependent on PACCAR for the supply of Peterbilt trucks and parts, which generate the majority of its revenues, and a negative change in this relationship could materially harm operations[111](index=111&type=chunk)[112](index=112&type=chunk) - Dealership agreements with Peterbilt are terminable if the aggregate voting power of W.M. 'Rusty' Rush and other key executives falls below **22%**, posing a significant change of control risk[117](index=117&type=chunk) - Long-term technological advances, such as drivetrain electrification and autonomous vehicles, could adversely affect the parts and service business, which currently relies on internal combustion engines[123](index=123&type=chunk)[124](index=124&type=chunk) - The business is subject to economic risks, including periods of decline in commercial vehicle sales during economic downturns, and financial risks such as the need for additional financing and the negative effects of rising interest rates[127](index=127&type=chunk)[128](index=128&type=chunk)[134](index=134&type=chunk) - Federal and state regulations on engine emissions (e.g., EPA 2027 Low NOx, CARB rules) are complex and subject to change, which could affect product demand and require reliance on manufacturers to supply compliant vehicles[142](index=142&type=chunk)[144](index=144&type=chunk) - The company is controlled by one shareholder, W.M. 'Rusty' Rush, who holds approximately **35.6% of the aggregate voting power**, allowing for substantial control over corporate matters[157](index=157&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[164](index=164&type=chunk) [Cybersecurity](index=28&type=section&id=Item%201C.%20Cybersecurity) The company employs an enterprise-wide cybersecurity program based on the Center for Internet Security (CIS) Critical Security Framework - The company's cybersecurity risk management program is based on the Center for Internet Security (CIS) Critical Security Framework to ensure the confidentiality, integrity, and availability of its systems and data[166](index=166&type=chunk) - Cybersecurity oversight is managed by the Chief Information Officer (CIO), who reports to the Chief Operating Officer (COO), with the Audit Committee of the Board of Directors having specific oversight responsibility[167](index=167&type=chunk) - Although no material breach has been experienced, the company acknowledges its systems are frequent targets of cyberattacks, and a significant disruption could result in material harm to the business[168](index=168&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) The company's corporate headquarters are owned and located in New Braunfels, Texas - The company owns its corporate headquarters in New Braunfels, Texas[169](index=169&type=chunk) - As of December 2024, the company owns or leases numerous facilities for its operations across 23 U.S. states and Ontario, Canada[169](index=169&type=chunk) - The company owns and operates a **10,950-acre guest ranch** near Cotulla, Texas, for client development[169](index=169&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course of business litigation and maintains liability insurance - The company is involved in litigation arising from its operations in the ordinary course of business and maintains liability insurance[171](index=171&type=chunk) - As of December 31, 2024, management believes there are no pending legal proceedings that are reasonably likely to have a material adverse effect on the company's financial position[171](index=171&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[172](index=172&type=chunk) [Part II](index=29&type=section&id=Part%20II) [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Rush Enterprises' Class A (RUSHA) and Class B (RUSHB) common stock trade on the NASDAQ Global Select Market - The company's Class A and Class B common stock are traded on The NASDAQ Global Select Market under the symbols RUSHA and RUSHB, respectively[174](index=174&type=chunk) - On December 3, 2024, a new stock repurchase program was approved, authorizing the repurchase of up to **$150.0 million** of Class A and/or Class B common stock[180](index=180&type=chunk) - The company's 5-year cumulative total return was **187.61%** (assuming $100 invested on 12/31/2019), outperforming the S&P 500 (**97.02%**) and a peer group (**138.42%**)[181](index=181&type=chunk)[182](index=182&type=chunk) 2024 Quarterly Dividends and Stock Price Range | Quarter | Dividend per Share | Class A High | Class A Low | Class B High | Class B Low | | :--- | :--- | :--- | :--- | :--- | :--- | | Q1 | $0.17 | $53.72 | $42.77 | $53.35 | $45.00 | | Q2 | $0.17 | $53.78 | $41.51 | $53.31 | $37.85 | | Q3 | $0.18 | $56.64 | $40.99 | $51.91 | $37.92 | | Q4 | $0.18 | $65.15 | $49.52 | $58.61 | $43.81 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2024, Rush Enterprises experienced a slight **1.5% decrease** in gross revenues to **$7.8 billion**, with a **3.9% drop** in gross profit - The company's absorption ratio, a key metric measuring how well aftermarket gross profit covers dealership overhead, was **132.2%** in 2024, down from **135.3%** in 2023[194](index=194&type=chunk) - As of December 31, 2024, the company had working capital of approximately **$736.1 million**, including **$228.1 million in cash**, which is considered sufficient to meet operating requirements for the next twelve months[234](index=234&type=chunk) Summary of 2024 Performance vs. 2023 | Metric | 2024 | Change vs. 2023 | | :--- | :--- | :--- | | Gross Revenues | $7,804.7 million | -1.5% | | Gross Profit | N/A | -3.9% | | New Class 8 Unit Sales | N/A | -11.4% | | New Class 4-7 Unit Sales | N/A | +5.1% | | Aftermarket Products & Services Revenue | $2,516.0 million | -1.8% | | Absorption Ratio | 132.2% | from 135.3% | 2025 Industry Outlook (A.C.T. Research) | Vehicle Class | 2025 U.S. Retail Sales Forecast | % Change vs. 2024 | | :--- | :--- | :--- | | Class 8 Trucks | 252,000 units | +1.9% | | Class 4-7 Commercial Vehicles | 266,300 units | +5.7% | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For the year ended December 31, 2024, total revenues decreased by **1.5%** to **$7.80 billion** compared to 2023 - The decrease in new Class 8 truck sales was attributed to the ongoing freight recession and high interest rates, while the increase in Class 4-7 sales was due to strong demand and increased production[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - Gross margins on new Class 8 truck sales decreased to **8.9%** in 2024 from **9.7%** in 2023, while used vehicle margins increased to **18.9%** from **12.4%** due to successful sales strategy execution[224](index=224&type=chunk)[226](index=226&type=chunk) Financial Performance (2024 vs. 2023) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $7,804.7M | $7,925.0M | -1.5% | | Gross Profit | $1,531.4M | $1,593.1M | -3.9% | | Gross Margin | 19.6% | 20.1% | -0.5 ppt | | SG&A Expenses | $995.6M | $1,021.7M | -2.6% | | Operating Income | $468.1M | $512.4M | -8.6% | | Net Interest Expense | $70.9M | $52.9M | +33.9% | | Income Before Taxes | $397.8M | $462.1M | -13.9% | Vehicle Unit Sales (2024 vs. 2023) | Vehicle Type | 2024 Units | 2023 Units | % Change | | :--- | :--- | :--- | :--- | | New Heavy-Duty (Class 8) | 15,465 | 17,457 | -11.4% | | New Medium-Duty (Class 4-7) | 13,935 | 13,264 | +5.1% | | New Light-Duty | 2,105 | 1,848 | +13.9% | | Used Vehicles | 7,110 | 7,117 | -0.1% | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong, with **$736.1 million** in working capital, including **$228.1 million** in cash, as of December 31, 2024 - The company expects to make capital expenditures of approximately **$200.0 million to $250.0 million** for its leasing operations and **$35.0 million to $40.0 million** for recurring items during 2025[238](index=238&type=chunk) - In December 2024, the company entered into a new **$800.0 million** floor plan credit agreement with Paccar Financial Corp. (PFC) and amended its BMO floor plan agreement, reducing the commitment to **$675.0 million**[255](index=255&type=chunk)[256](index=256&type=chunk) - During 2024, the company paid cash dividends of **$55.5 million** and repurchased **$15.7 million** of its common stock[249](index=249&type=chunk) Cash Flow Summary (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from Operating Activities | $619,550 | $295,713 | | Net cash used in Investing Activities | ($445,578) | ($387,030) | | Net cash (used in) from Financing Activities | ($129,321) | $73,962 | | Net Increase/(Decrease) in Cash | $44,651 | ($17,319) | [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risk, primarily from interest rate fluctuations on its variable-rate debt, which totaled approximately **$1.34 billion** as of December 31, 2024 - The company's primary market risk is interest rate risk related to its variable-rate floor plan and lease fleet financing agreements[260](index=260&type=chunk)[261](index=261&type=chunk) - As of December 31, 2024, the company had approximately **$1,344.8 million** in outstanding borrowings subject to variable interest rates[261](index=261&type=chunk) - A **100 basis point (1.0%)** increase or decrease in the underlying interest rates (prime, SOFR, CORRA) would cause a corresponding change in annual interest expense of approximately **$13.4 million**[261](index=261&type=chunk) [Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for the fiscal year ended December 31, 2024, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Shareholders' Equity, and Cash Flows, along with the accompanying Notes to Consolidated Financial Statements - The independent auditor, Ernst & Young LLP, provided an unqualified opinion, stating the financial statements are presented fairly in all material respects in conformity with U.S. GAAP[266](index=266&type=chunk) - A critical audit matter identified was the estimation of commercial vehicle inventory reserves, which involves subjective judgment regarding future demand and sales prices[271](index=271&type=chunk)[272](index=272&type=chunk) Consolidated Balance Sheet Highlights (As of Dec 31) | Account | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Total Assets | $4,617,547 | $4,364,241 | | Total Liabilities | $2,455,644 | $2,473,825 | | Total Shareholders' Equity | $2,161,903 | $1,890,416 | Consolidated Statement of Income Highlights (Year Ended Dec 31) | Account | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $7,804,746 | $7,925,024 | | Gross Profit | $1,531,416 | $1,593,090 | | Operating Income | $468,090 | $512,381 | | Net Income Attributable to Rush | $304,153 | $347,055 | | Diluted EPS | $3.72 | $4.15 | [Notes to Consolidated Financial Statements](index=54&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information supplementing the consolidated financial statements - Sales of new Peterbilt commercial vehicles, purchased from PACCAR, accounted for approximately **58.8%** of the company's new vehicle sales revenue in 2024[347](index=347&type=chunk) - The company has one reportable business segment: the Truck Segment, which includes its network of commercial vehicle dealerships and related services[428](index=428&type=chunk) - In July 2024, the company acquired Nebraska Peterbilt for approximately **$16.5 million**, and in May 2022, it acquired an additional **30%** of RTC Canada for approximately **$20.0 million**, bringing its interest to **80%** and resulting in consolidation[419](index=419&type=chunk)[422](index=422&type=chunk) - The company's effective tax rate was **23.3%** in 2024, compared to **24.7%** in 2023[411](index=411&type=chunk) Future Minimum Lease Payments (as of Dec 31, 2024, in thousands) | Year | Finance Leases | Operating Leases | | :--- | :--- | :--- | | 2025 | $43,603 | $21,082 | | 2026 | $32,510 | $20,345 | | 2027 | $24,226 | $19,536 | | 2028 | $19,998 | $17,399 | | 2029 | $13,978 | $15,074 | | Thereafter | $11,647 | $49,538 | | **Total** | **$145,962** | **$142,974** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=81&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there were no changes in or disagreements with its accountants on accounting and financial disclosure - None[447](index=447&type=chunk) [Controls and Procedures](index=81&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2024 - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of December 31, 2024[448](index=448&type=chunk) - Management assessed internal control over financial reporting based on the COSO 2013 framework and concluded it was effective as of December 31, 2024[451](index=451&type=chunk) - Ernst & Young LLP, the independent auditor, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[452](index=452&type=chunk)[454](index=454&type=chunk) [Other Information](index=83&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[462](index=462&type=chunk) [Part III](index=83&type=section&id=Part%20III) [Directors, Executive Officers and Corporate Governance](index=83&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required for this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders - The information for this item is incorporated by reference from the Company's Proxy Statement for the 2025 Annual Meeting of Shareholders[464](index=464&type=chunk) [Executive Compensation](index=83&type=section&id=Item%2011.%20Executive%20Compensation) Information required for this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders - The information for this item is incorporated by reference from the Company's Proxy Statement for the 2025 Annual Meeting of Shareholders[465](index=465&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=84&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information required for this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders - The information for this item is incorporated by reference from the Company's Proxy Statement for the 2025 Annual Meeting of Shareholders[467](index=467&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=84&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required for this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders - The information for this item is incorporated by reference from the Company's Proxy Statement for the 2025 Annual Meeting of Shareholders[468](index=468&type=chunk) [Principal Accountant Fees and Services](index=84&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information required for this item is incorporated by reference from the company's definitive proxy statement for its 2025 Annual Meeting of Shareholders - The information for this item is incorporated by reference from the Company's Proxy Statement for the 2025 Annual Meeting of Shareholders[469](index=469&type=chunk) [Part IV](index=85&type=section&id=Part%20IV) [Exhibits, Financial Statement Schedules](index=85&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements included in Item 8 and provides an index of all exhibits filed with the Form 10-K - This item lists the financial statements contained in Part II, Item 8 of the report[472](index=472&type=chunk) - Financial statement schedules are omitted as the required information is inapplicable or already presented in the consolidated financial statements or notes[473](index=473&type=chunk) - An index of exhibits is provided, including key corporate governance documents, credit agreements, and management compensation plans[474](index=474&type=chunk) [Form 10-K Summary](index=89&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section was intentionally left blank in the report - Intentionally left blank[484](index=484&type=chunk)