Rush Enterprises(RUSHA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited interim consolidated financial statements for Q2 and H1 2025 reflect a decrease in total revenues and net income compared to the prior year Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $4,715,774 | $4,617,547 | | Total Current Assets | $2,395,703 | $2,389,715 | | Inventories, net | $1,842,311 | $1,787,744 | | Total Liabilities | $2,540,743 | $2,455,644 | | Total Current Liabilities | $1,718,449 | $1,650,119 | | Floor plan notes payable | $1,088,779 | $1,081,199 | | Total Shareholders' Equity | $2,175,031 | $2,161,903 | Consolidated Statements of Income Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,930,707 | $2,027,028 | -4.8% | | Gross Profit | $379,671 | $392,389 | -3.2% | | Operating Income | $110,206 | $124,481 | -11.5% | | Net Income | $72,989 | $78,783 | -7.4% | | Diluted EPS | $0.90 | $0.97 | -7.2% | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3,781,537 | $3,899,027 | -3.0% | | Gross Profit | $737,431 | $782,264 | -5.7% | | Operating Income | $202,075 | $235,091 | -14.0% | | Net Income | $133,606 | $150,272 | -11.1% | | Diluted EPS | $1.63 | $1.84 | -11.4% | Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $381,162 | $115,525 | | Net cash used in investing activities | ($232,220) | ($161,128) | | Net cash provided by (used in) financing activities | ($166,254) | $29,180 | | Net decrease in cash | ($17,312) | ($16,423) | Notes to Consolidated Financial Statements - The company operates with one reportable business segment, the Truck Segment, which includes a network of commercial vehicle dealerships[36] - On June 16, 2025, the company acquired 100% of the shares of Leeds Transit, Inc for approximately $25.6 million, expanding its dealership locations[54] - A subsequent event note discusses the enactment of the "One Big Beautiful Bill Act" ("OBBBA") on July 4, 2025, which will require the company to re-evaluate its deferred tax balances[55] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes decreased revenues and profits to weaker Class 8 truck demand from a freight recession, a lower backlog, and discusses liquidity and capital allocation Outlook - A.C.T. Research forecasts a 10.5% decrease in U.S. Class 8 retail truck sales and a 10.2% decrease in Class 4-7 sales for 2025[63][64] - The company expects continued weak demand from over-the-road customers but anticipates strong demand from vocational customers will persist[63] - Aftermarket Products and Services revenues are expected to remain flat in Q3 with potential for modest growth[66] Results of Operations Q2 2025 vs Q2 2024 Revenue and Unit Sales Changes | Metric | Q2 2025 vs Q2 2024 Change | | :--- | :--- | | Total Revenues | -4.8% | | New & Used Vehicle Revenues | -8.4% | | Aftermarket Products & Services Revenues | +1.4% | | New Heavy-Duty (Class 8) Unit Sales | -21.1% | | New Medium-Duty (Class 4-7) Unit Sales | +3.0% | - The dealership absorption ratio, a key performance indicator, improved to 135.5% in Q2 2025 from 134.0% in Q2 2024[71][72] - Gross profit as a percentage of sales increased to 19.7% in Q2 2025, driven by a favorable sales mix with more higher-margin Aftermarket revenues[81] Liquidity and Capital Resources - As of June 30, 2025, the company had working capital of approximately $694.8 million, including $211.1 million in cash, deemed sufficient for at least the next twelve months[106] - The stock repurchase program was increased to $200 million, with $121.4 million repurchased as of June 30, 2025[112] - The company declared a cash dividend of $0.19 per share on July 30, 2025, a 5.6% increase from the Q1 2025 dividend[111] Backlog - The backlog of commercial vehicle orders decreased significantly to approximately $967.0 million as of June 30, 2025, from $1,812.1 million a year prior[130] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuation on its variable-rate debt, with a 100 basis point change impacting annual interest expense by $13.3 million - The company is exposed to interest rate risk through its floor plan financing and credit agreements based on variable rates like SOFR and CORRA[142] - As of June 30, 2025, a 100 basis point change in rates would impact annual interest expense by approximately $13.3 million on its $1,335.1 million in variable-rate borrowings[142] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls during the quarter - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[143] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[144] PART II. OTHER INFORMATION Legal Proceedings Management believes no pending litigation arising from the ordinary course of business is likely to have a material adverse effect on the company's financial position - The company is subject to litigation in the ordinary course of business and management does not expect any pending claims to have a material adverse effect on its financial condition[145] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There has been no material change in the company's risk factors as disclosed in its 2024 Annual Report on Form 10-K[147] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 1,636,638 shares during Q2 2025 under its publicly announced plan and made no unregistered sales of equity securities Q2 2025 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 1,482,555 | $51.40 | | May 2025 | 148,477 | $50.07 | | June 2025 | 5,606 | $48.96 | | Total | 1,636,638 | | - On May 29, 2025, the company increased its stock repurchase program authorization by $50.0 million, bringing the total to $200.0 million[150] Other Information No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025[151] Exhibits This section lists exhibits filed with the Form 10-Q, including credit agreement amendments and required CEO/CFO certifications - The report includes a list of filed exhibits, such as amendments to financing agreements and required CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[152]