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]
Rush Enterprises(RUSHB) - 2025 Q1 - Quarterly Report