Rush Enterprises(RUSHA) - 2025 Q3 - Quarterly Report

Sales Forecast - New U.S. Class 8 retail truck sales are forecasted to be 216,300 units in 2025, representing a 12.5% decrease compared to 2024[64] - The company expects to sell approximately 11,700 to 12,800 new Class 8 trucks in 2025, with a market share of 5.4% to 5.9%[64] - New U.S. Class 4 through 7 retail commercial vehicle sales are projected to be 227,225 units in 2025, an 11.8% decrease from 2024[65] - The company anticipates selling approximately 12,500 to 13,600 new Class 4 through 7 commercial vehicles in 2025[65] Revenue Trends - Lease and rental revenue is expected to increase by approximately 4.5% in 2025 compared to 2024[66] - Aftermarket Products and Services revenue showed a slight increase in Q3 2025 compared to Q3 2024, but is expected to remain flat to slightly down in Q4 2025[67] - New heavy-duty vehicle sales decreased by 10.8% in Q3 2025 compared to Q3 2024, with revenues dropping by 12.7%[72] - New light-duty vehicle sales increased by 49.5% in Q3 2025 compared to Q3 2024, with revenues rising by 48.0%[72] - Total new vehicle revenue decreased by 3.5% in Q3 2025 compared to Q3 2024, while used vehicle revenue increased by 17.2%[72] Dealership Performance - The dealership absorption ratio was 129.3% in Q3 2025, down from 132.6% in Q3 2024[72] - The absorption ratio for the commercial vehicle dealerships was 129.3% in Q3 2025, down from 132.6% in Q3 2024[73] Financial Performance - Total revenues decreased by $15.4 million, or 0.8%, in Q3 2025 compared to Q3 2024, primarily due to decreased new Class 8 truck sales[74] - Aftermarket Products and Services revenues increased to $642.7 million in Q3 2025, up 1.5% from Q3 2024, driven by strategic initiatives and higher parts pricing[75] - Sales of new and used commercial vehicles decreased by $28.4 million, or 2.4%, in Q3 2025, attributed to reduced demand and regulatory uncertainty[76] - New Class 8 vehicle sales in the U.S. fell by 10.8% to 3,215 units in Q3 2025 compared to 3,604 units in Q3 2024[77] - Gross profit decreased by $4.3 million, or 1.1%, in Q3 2025, with gross profit as a percentage of sales at 19.9%, down from 20.0% in Q3 2024[82] - SG&A expenses increased by $16.7 million, or 12.6%, in Q3 2025, representing 13.6% of total revenues, up from 12.6% in Q3 2024[88] - Net interest expense decreased by $5.9 million, or 33.7%, in Q3 2025, due to lower inventory levels and interest rates[89] - Income before income taxes decreased by $15.4 million, or 14.9%, in Q3 2025 compared to Q3 2024[90] - The effective tax rate was 22.9% in Q3 2025, slightly down from 23.0% in Q3 2024, with expectations for 2025 to be between 22.5% and 24.0%[91] - Income taxes decreased by $9.2 million in the first nine months of 2025 compared to the same period in 2024, with tax rates at 23.6% and 23.0% respectively[105] Cash Flow and Capital Expenditures - As of September 30, 2025, the company had working capital of approximately $600.8 million, including $242.0 million in cash, sufficient to meet operating requirements for at least the next twelve months[106] - The company expects to purchase or lease commercial vehicles worth approximately $275.0 million to $325.0 million during 2025, depending on customer demand[110] - During the first nine months of 2025, net cash provided by operating activities was $748.9 million, compared to $227.3 million in the same period of 2024[116][118] - Cash used in investing activities during the first nine months of 2025 was $330.2 million, primarily for the acquisition of property and equipment[119] - Financing activities resulted in net cash used of $404.9 million in the first nine months of 2025, primarily due to $997.5 million in principal repayments of long-term debt[121] Stock and Facility Developments - The company repurchased $130.6 million of its common stock under the current stock repurchase program as of September 30, 2025[112] - The company is under contract to construct a new facility in Huntley, IL, with a current budget of $23.8 million[115] - The company anticipates funding capital expenditures through operating cash flows and has sufficient liquidity to meet debt service and working capital requirements for at least the next twelve months[107] Debt and Financing Agreements - As of September 30, 2025, the company had approximately $220.0 million outstanding under the PLC Agreement for financing capital expenditures[124] - The company entered into the PFC Floor Plan Credit Agreement with an aggregate loan commitment of $800.0 million for financing new Peterbilt trucks, with approximately $480.0 million outstanding as of September 30, 2025[127] - The BMO Floor Plan Credit Agreement was amended to reduce the loan commitment from $1.0 billion to $675.0 million, with approximately $317.9 million outstanding as of September 30, 2025[128] - The RTC Canada Floor Plan Credit Agreement was amended to increase the loan commitment to $171.7 million CAD, with approximately $97.3 million CAD outstanding as of September 30, 2025[129] Order Backlog and Market Conditions - The company's backlog of commercial vehicle orders decreased to approximately $647.6 million as of September 30, 2025, down from approximately $1,332.9 million on September 30, 2024, due to challenging industry conditions[130] - The company expects to fill most of its backlog orders during 2025, despite the ongoing freight recession and economic uncertainty[130] Interest Rate Exposure - As of September 30, 2025, the company had total borrowings of $1,120.9 million, with interest rate exposure that could lead to an annual interest expense change of approximately $11.2 million for a 100 basis point shift in rates[142] Regulatory Compliance - The company is subject to various environmental regulations, which may incur capital and operating expenditures, but currently does not believe it has any material environmental liabilities[137] - The company is affected by cyclical variations in unit sales of new commercial vehicles, with historical U.S. retail sales ranging from approximately 197,000 to 281,440 units over the last ten years[132] - The company is preparing for compliance with upcoming emissions regulations, including the EPA 2027 Low NOx rule and the GHG-3 rule, which may impact the production of diesel vehicles[138] - The Clean Truck Partnership was established to comply with CARB's emission requirements, although its future is uncertain due to ongoing legal challenges[140]