Rush Enterprises(RUSHA) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights Financial and Operational Summary Rush Enterprises reported Q2 2025 revenues of $1.931 billion and net income of $72.4 million, increasing its dividend despite market challenges Q2 2025 Key Financial Results (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $1.931 billion | $2.027 billion | | Net Income | $72.4 million | $78.7 million | | Diluted EPS | $0.90 | $0.97 | - The Board of Directors declared a quarterly cash dividend of $0.19 per share for both Class A and Class B stock, a 5.6% increase over the prior quarter's dividend[2][7] - The company's performance was impacted by a prolonged freight recession, depressed freight rates, and overcapacity; economic and regulatory uncertainty led many customers to delay vehicle acquisition and maintenance decisions[3] Operations Aftermarket Products and Services Aftermarket revenue grew 1.4% to $636.3 million, contributing 63.0% of gross profit with improved absorption and stable Q3 outlook Aftermarket Performance Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Parts, Service & Collision Center Revenues | $636.3 million | $627.4 million (implied) | | % of Total Gross Profit | ~63.0% | N/A | | Absorption Ratio | 135.5% | 134.0% | - Operational improvements in the quarter included technician turnover reaching a 12-month low and an increase in the aftermarket sales force[8] - The company expects aftermarket performance to remain stable with potential for modest growth in Q3, but the outlook beyond that is uncertain due to potential changes in U.S. trade policy[9] Commercial Vehicle Sales Commercial vehicle sales were mixed in Q2 2025, with Class 8 truck sales down 20.3% but Class 4-7 sales up 1.0% and used sales stable Class 8 Truck Sales New Class 8 truck sales declined 20.3% to 3,178 units, achieving 5.4% market share amidst soft demand and a cautious outlook U.S. New Class 8 Truck Sales - Q2 2025 | Metric | Rush Enterprises | Total U.S. Market (ACT Research) | | :--- | :--- | :--- | | Units Sold | 3,178 | 58,625 | | YoY Change | -20.3% | -0.6% | | Market Share | 5.4% | 100% | - The sharp YoY sales decline was largely due to a challenging comparison with Q2 2024, which included several large fleet deliveries[11] - The company anticipates new Class 8 sales may decrease sequentially in Q3, with significant market uncertainty preventing a reliable outlook beyond that quarter[12] Class 4-7 Commercial Vehicle Sales New Class 4-7 vehicle sales increased 1.0% to 3,626 units, outperforming the market with a 6.2% share and a positive outlook for H2 U.S. New Class 4-7 Vehicle Sales - Q2 2025 | Metric | Rush Enterprises | Total U.S. Market (ACT Research) | | :--- | :--- | :--- | | Units Sold | 3,626 | 58,176 | | YoY Change | +1.0% | -8.4% | | Market Share | 6.2% | 100% | - The company significantly outperformed the market, driven by healthy demand across all customer segments, especially lease and rental[14] - The outlook for the second half of the year remains positive, with Q3 sales expected to be similar to Q2 results[15] Used Commercial Vehicle Sales Used commercial vehicle sales slightly decreased by 0.5% to 1,715 units, with stabilized pricing but a challenging financing environment - Used commercial vehicle sales decreased 0.5% YoY to 1,715 units[16] - Market conditions are characterized by stabilized pricing but a challenging financing environment; the company believes the used market is less exposed to tariff-related uncertainty than the new truck market[16] Leasing and Rental Leasing and Rental revenue reached a record $93.1 million, up 6.3% year-over-year, driven by new units and expected to remain strong Leasing and Rental Revenue | Period | Revenue | YoY Change | | :--- | :--- | :--- | | Q2 2025 | $93.1 million | +6.3% | | Q2 2024 | $87.6 million | N/A | - The segment operates over 10,000 trucks in its lease and rental fleet and has over 2,000 trucks under contract maintenance agreements[17] - Growth was driven by putting new units into service for full-service leases, which decreased the fleet's age and lowered operating costs[17] Financial Highlights Q2 2025 gross revenues decreased to $1.931 billion and net income fell to $72.4 million, with active capital returns and a dividend increase Q2 2025 vs Q2 2024 Financial Summary | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross Revenues | $1.931 billion | $2.027 billion | | Net Income | $72.4 million | $78.7 million | | Diluted EPS | $0.90 | $0.97 | Vehicle Deliveries (Units) - Q2 2025 vs Q2 2024 | Vehicle Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | New Heavy-Duty | 3,259 | 4,128 | | New Medium-Duty | 3,803 | 3,691 | | New Light-Duty | 703 | 537 | | Used Vehicles | 1,715 | 1,723 | - The company repurchased $83.9 million of its common stock in Q2 2025; the total authorized repurchase program is $200.0 million, of which $121.4 million has been utilized[21] - The quarterly cash dividend was increased by $0.01 to $0.19 per share, representing a 5.6% increase; this is the ninth increase since the dividend program began in 2018[22] Financial Statements Consolidated Balance Sheets Total assets increased to $4.72 billion as of June 30, 2025, with liabilities rising to $2.54 billion and equity remaining flat Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,395,703 | $2,389,715 | | Total assets | $4,715,774 | $4,617,547 | | Total current liabilities | $1,718,449 | $1,650,119 | | Total liabilities | $2,540,743 | $2,455,644 | | Total shareholders' equity | $2,175,031 | $2,161,903 | Consolidated Statements of Operations Q2 2025 total revenue was $1.93 billion, down from $2.03 billion, with gross profit at $379.7 million and net income at $72.4 million Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $1,930,707 | $2,027,028 | | Gross profit | $379,671 | $392,389 | | Operating income | $110,206 | $124,481 | | Net income attributable to Rush | $72,438 | $78,661 | | Diluted EPS | $0.90 | $0.97 | Non-GAAP Financial Measures Absorption Ratio The company's absorption ratio improved to 135.5% in Q2 2025 from 134.0% in Q2 2024, reflecting better fixed cost coverage - Absorption ratio is calculated by dividing the gross profit from parts, service, and collision centers by the overhead expenses of all departments (excluding vehicle sales selling expenses and inventory carrying costs)[36] Absorption Ratio Comparison | Period | Ratio | | :--- | :--- | | Q2 2025 | 135.5% | | Q2 2024 | 134.0% | Debt Analysis (Non-GAAP) The company reported an Adjusted Net Cash position of $207.6 million as of June 30, 2025, up from $163.2 million a year prior Adjusted Net Debt (Cash) Reconciliation (in thousands) | Description | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Debt (GAAP) | $1,625,129 | $1,760,423 | | Less: Debt related to lease & rental fleet | ($532,853) | ($529,736) | | Less: Floor plan notes payable | ($1,088,779) | ($1,226,651) | | Adjusted Total Debt (Non-GAAP) | $3,497 | $4,036 | | Less: Cash and cash equivalents | ($211,106) | ($167,266) | | Adjusted Net Debt (Cash) (Non-GAAP) | ($207,609) | ($163,230) | EBITDA (Non-GAAP) Adjusted EBITDA for the twelve months ended June 30, 2025, was $442.7 million, a decrease from $471.3 million in the prior year Adjusted EBITDA Reconciliation - Twelve Months Ended June 30 (in thousands) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $286,644 | $308,594 | | Taxes, Interest, D&A, etc. | $216,492 | $231,029 | | EBITDA (Non-GAAP) | $503,136 | $539,623 | | Less: Interest expense (FPNP & L&RFD) | ($60,396) | ($68,283) | | Adjusted EBITDA (Non-GAAP) | $442,740 | $471,340 | Free Cash Flow (Non-GAAP) Adjusted Free Cash Flow for the twelve months ended June 30, 2025, more than doubled to $664.7 million from $319.3 million in the prior period Adjusted Free Cash Flow Reconciliation - Twelve Months Ended June 30 (in thousands) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operations (GAAP) | $885,188 | $297,222 | | Less: Acquisition of property and equipment | ($482,801) | ($355,403) | | Free cash flow (Non-GAAP) | $402,387 | ($58,181) | | Adjustments (net) | $262,270 | $377,484 | | Adjusted Free Cash Flow (Non-GAAP) | $664,657 | $319,303 | Invested Capital (Non-GAAP) Adjusted Invested Capital increased to $1.95 billion as of June 30, 2025, from $1.84 billion, used to evaluate return on capital Adjusted Invested Capital Calculation (in thousands) | Description | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Shareholders' equity (GAAP) | $2,153,831 | $2,003,461 | | Adjusted net debt (cash) (Non-GAAP) | ($207,609) | ($163,230) | | Adjusted Invested Capital (Non-GAAP) | $1,946,222 | $1,840,231 |