RUSH ENTERPRISES INC \TX\ Q1 FY2025 earnings call

• Achieved revenues of $1.85 billion and net income of $60.3 million in the first quarter, and declared a cash dividend of $0.18 per common share.
• The business environment was difficult with the industry struggling with freight recession, economic uncertainty, U.S. trade policies and tariffs, and emissions regulations.
• In Class 8 over the road segment, truck sales to Class 8 customers were weaker initially but outperformed the market with strong sales to vocational and public sector customers.
• In medium duty truck sales, the unique ready to roll inventory program was effective with steady Class 4 through 7 sales despite the overall market decline.
• Used trucks had a typical seasonal pattern with slower sales in January and February but a pickup in March.
• Aftermarket revenues were down 4.6% year - over - year but saw a slight improvement compared to the fourth quarter of last year, with demand from certain customers remaining steady and sales to the energy sector beginning to pick up, and expanded the aftermarket sales force in the first quarter.

Rush Enterprises, Inc. achieved revenues of $1.85 billion in the first quarter. Net income was $60.3 million or $0.73 per diluted share.

• New Truck Sales: For Class 8 over the road segment, truck sales to Class 8 customers were weaker at the start of the year, but strong sales to vocational and public sector customers helped outperform the broader market. In the medium duty truck sales market, while the overall market was down, the unique ready to roll inventory program was effective, with steady Class 4 through 7 sales. Class 8 new truck sales: sold 3,222 units in Q1, down 7.8% year - over - year, accounting for 6.1% of the total U.S. market and 1.1% of the new Class 8 market in Canada. Medium duty Class 4 through 7 new truck sales: sold 3,329 units in Q1, down 3.5% year - over - year, increasing market share to 5.6% of the U.S. Class 4 through 7 market and 3.1% of the Canadian market. Expect Class 8 sales to improve slightly in Q2 and medium duty trucks to continue outperforming the market.
• Used Trucks: Sold 1,769 used trucks in Q1, down 2.7% compared to 2021. Demand remains soft, tariffs haven't affected used truck pricing yet, but has proactively increased inventories slightly for the spring and summer selling season.
• Aftermarket: Parts, service, and body shop revenues were $619 million in the quarter, down 4.6% compared to last year. Absorption ratio was 128.6% compared to 130.1% in Q1 2024. Demand from public sector, vocational, and medium duty leasing customers remained steady, sales to energy sector began to pick up. Expanded aftermarket sales force in Q1 and expects improvement in aftermarket revenues in Q2.
• Leasing: Leasing and rental revenue increased 2.3% compared to Q1 2024, totaling $90 million for the quarter. Rental revenue was down slightly year - over - year due to lower utilization rates, but full service leasing performed well, and confident leasing and rental business will stay strong throughout the year.

• Expect improvement in aftermarket revenues in Q2.
• Anticipate a slight improvement in Class 8 sales in the second quarter, but market uncertainty remains for the second half of the year.
• Expect medium duty trucks to continue to outperform the market this year as customers are cautious about replacing vehicles rather than expanding fleets, and the strategic approach to stocking work - ready vehicles will help meet customer needs.
• Leasing and rental business is expected to stay strong throughout the year.
• Been proactive in slightly increasing inventories of used trucks in preparation for the spring and summer selling season and believes stock levels are appropriate to meet customer needs.

• Faced challenges from the freight recession, economic uncertainty, U.S. trade policies and tariffs, and emissions regulations.
• Class 8 new truck sales market continues to face challenges.
• Aftermarket revenues were affected by tough market conditions.
• Demand for used trucks remains soft.
• Uncertainty around tariffs and emissions regulations may impact business.

Q: Talk about how new unit sales trended through the quarter and customers' planned expenditures for the rest of the year.

A: The business is affected by uncertainties like tariffs, emissions regulations. Q2 is expected to be slightly better than Q1, but the second half is uncertain. OEMs we deal with still have slots available in Q2. Tariffs and emissions regulations are not certain. Backlogs are not full through Q2.

Q: Expand on parts and service. Was it softer in 1Q in any one part of the business and what does expected improvement in 2Q mean?

A: Q1 started slow due to weather and Easter week. Expect sequential improvement in 2Q, not guaranteeing year - over - year growth. Q1 was affected by weather and store shutdown days, but April was solid though choppy. G&A costs haven't gone back to COVID - level due to inflation.

Q: Hesitancy from customers, more from price uncertainty or macro impacts on revenues/profitability?

A: It's both. First, customers' own business needs to be solid. Also, uncertainty in tariffs and emissions regulations makes it hard to price. Your own business being good is the first thing, and then there are uncertainties in tariffs and regulations.