管理層發言
Ladies and gentlemen, thank you for being here. I would like to welcome everyone to the Rush Enterprises, Inc. Third Quarter 2025 Earnings Results conference. I will now hand the floor over to Rusty Rush, President, CEO, and Chairman of the Board. You may begin.
Good morning, and welcome to our third quarter 2025 earnings release call. With me this morning are Jason Wilder, Chief Operating Officer; Steve Keller, Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President, General Counsel and Corporate Secretary.
Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended December 31, 2024, and in our other filings with the Securities and Exchange Commission.
As indicated in our news release, we achieved third quarter revenues of $1.9 billion and net income of $66.7 million or $0.83 per diluted share. I am pleased to announce that our Board of Directors approved a $0.19 per share cash dividend. The commercial vehicle industry continued to face challenging operating conditions in the third quarter of 2025. Freight rates remain depressed and overcapacity continues to weigh on the market. In addition, while the industry gained some clarity regarding the tariffs that will be imposed on certain commercial vehicles and parts beginning November 1, economic uncertainty and regulatory ambiguity remains, especially with respect to engine emissions regulations. These factors are impacting our customers' vehicle replacement decisions. Despite these headwinds, I am proud of the financial performance our team delivered in the third quarter. Our employees' commitment to operational discipline and customer service was evident in our ability to maintain strong aftermarket results and manage expenses effectively.
And I'm deeply grateful for their dedication. Our aftermarket operations accounted for approximately 63% of our total gross profit in the third quarter, with parts, service and collision center revenues reaching $642.7 million, an increase of 1.5% compared to the third quarter of 2024, and our absorption ratio was 129.3%. In the third quarter, our aftermarket products and service businesses remained resilient despite ongoing market challenges. Our strategic focus on technician recruiting and retention, expanding our aftermarket sales force and identifying new customer segments helped to offset weak demand. Looking ahead, we anticipate continued challenges in our aftermarket business due to seasonal trends and broader industry headwinds, but we remain confident that our diversified customer base and operational discipline will allow us to successfully navigate the remainder of the year. With respect to truck sales, we sold 3,120 new Class 8 trucks in the U.S. during the third quarter, accounting for 5.8% of the total U.S. market.
While this represents an 11% year-over-year decrease, we outperformed the market primarily due to stable demand from our vocational customers, underscoring the strength of our diversified customer base. Looking forward, economic and regulatory uncertainty continues to dampen customer demand, particularly with respect to new Class 8 trucks. We believe that the weak demand the industry is currently experiencing will negatively impact new Class 8 truck sales for at least the next 2 quarters. That said, if stricter emission laws become effective as planned and if capacity continues to exit the market due to bankruptcies, retail sales being below replacement levels, and continued enforcement of government policies regarding English language proficiency and non-domiciled drivers, Class 8 truck sales may be strong in the second half of 2026. In the medium-duty market, we delivered 2,979 Class 4 through 7 medium-duty commercial vehicles in the U.S. in the third quarter, representing an 8.3% year-over-year decrease and a 5.6% market share.
We also sold 448 Class 5 through 7 commercial vehicles in Canada, which represents 10.7% of the Canadian Class 5 through 7 commercial vehicle market. Despite ongoing industry headwinds, our medium-duty results in the third quarter outpaced the broader market. Our performance was bolstered by a significant increase in bus sales following our acquisition of an IC Bus franchise in Canada, which further diversified our customer base. Looking ahead, we expect medium-duty commercial vehicle sales to remain stable through the remainder of the year. We sold 1,814 used commercial vehicles in the third quarter, essentially flat compared to the same period in 2024. While financing remains a challenge for used truck buyers, we believe our inventory is rightsized and that our used truck sales strategy is on track. Unlike the new truck market, the used truck market is less exposed to tariff concerns and regulatory uncertainty, which may provide customers more confidence and incentive to consider used trucks as part of their fleet mix in the near term.
We expect fourth quarter used truck sales to be in line with the third quarter. Rush Truck Leasing achieved record revenues of $93.3 million in the third quarter, up 4.7% year-over-year. Our full-service leasing revenue increased as we brought new vehicles into service, which also helped lower operating costs and increased profitability. Rental utilization was lower year-over-year, but improved sequentially, and we are confident our leasing and rental performance will be solid for the remainder of the year. On the capital allocation front, we remain focused on returning value to shareholders during the third quarter. We repurchased $9.2 million of our common stock as part of our expanded $200 million repurchase authorization, and we also paid a cash dividend of $14.8 million in the quarter. In summary, despite the aforementioned industry headwinds, I believe we've delivered solid results, and I'm proud of our team's performance in the third quarter. Our employees across the U.S. and Canada continue to demonstrate resilience, and I'm deeply grateful for their dedication. With that, I'll take your questions.
分析師問答
And our first question comes from Andrew Obin from Bank of America.
I'm sure the team works very hard. Just a question, could you just tell us, we've been stuck in this cyclical malaise for a while now. We've been waiting for the turn of the cycle for a while now. Can you just expand and tell us what are you seeing? When do you feel things actually bottom? And what's the path going forward? What gets this thing sort of on court and just lets the sales actually go up eventually?
Right. And I'm guessing, Andrew, that you're speaking about from my customers' perspective. Is that correct?
Yes, correct. Yes.
I recently spent a few days in San Diego at ATA, which is the largest truck convention, where I met with several customers. As I've mentioned, we have been experiencing a freight recession for three years now, which is unusually long compared to typical cycles that last around 12 to 16 months. Supply seems to be stagnating, with demand being more influenced by economic factors like tariffs. Supply has not come back to the market as quickly as expected; after the high rates in 2021 and 2022, freight rates have remained depressed, especially in the truckload segment. It appears that the government is starting to address some issues, such as the enforcement of regulations around non-domiciled drivers. Several carriers suggested that the enforcement has been understated, and now about 15 to 20 states are beginning to enforce these regulations, which could result in the removal of up to 15% of drivers, mainly affecting smaller carriers.
These smaller companies are often more sensitive to changes in freight rates during recessions. Furthermore, despite a slowdown in truck production following allocation, the overall production rates are down by approximately 30% to 40% across all OEMs, which may continue into the first quarter of next year. This reduction in truck production, combined with the attrition of drivers, should lead to a more balanced fleet in alignment with market demand. On another note, there are upcoming changes to emissions regulations, which could significantly impact costs. Currently, the law is set to change the NOx emissions requirement from 200 particulates to 35. While many carriers are advocating for a pause on this change, I believe that if it takes effect, it will further increase costs for an industry already facing challenges. By the end of next year, these regulatory changes and tariff increases will add to the costs of trucks.
However, if we can get a more rightsized fleet and see an increase in freight tonnage, there is potential for a stronger second half of the next year. The uncertainty in the market has made it challenging for businesses this year, but if we can achieve some stability, I see reasons for optimism, particularly in the over-the-road market, which represents a significant segment of the industry. While we have seen low order intakes recently, I am hopeful that with the economy maintaining its strength, we can work toward a more balanced market. That summarizes my current outlook after my trip to San Diego.
And just a follow-up question. I ask it on every call, but what's your read on the macro, just general macro outside of the stuff that feeds into your customer base? Is it getting better? Is it getting worse? What are you excited about? What are you worried about?
No, I'm not an economist, Andrew. What concerns me is unemployment, which would definitely impact consumer demand. That worries me. I don’t believe we have fully felt the impact of tariffs yet. We had a pre-buy before August, but as we deplete those inventories, we need to restock. Many large companies, manufacturers, and customers across various sectors have absorbed a lot of those costs. I don’t think they can sustain this forever, which ultimately gets passed down to consumers. Those are my main worries. I hope we can navigate these issues. However, if tariffs are imposed, we may face a more inflationary environment because people pre-bought ahead of August, but those inventories are being used up. Coupled with increasing unemployment, I have observed some concerning trends that make me cautious. I can’t predict specific outcomes, but I am attentive to what’s happening around me. I'm not an economist, just someone observing from my perspective, but I do have significant insight into various companies and situations. Beyond the major news about large companies like UPS and Amazon laying off employees, that’s what I’m worried about.
I'll take the opportunity to ask one last question. How is your parts and service business performing on a daily basis as we approach the year's end? Is it improving or declining? This is an important indicator and has a significant impact on your financials.
Yes, it was flat to slightly up for the third quarter, but September was softer than I would have preferred. We typically experience seasonality, and I often joke that if I could eliminate November, December, January, and February, I would, although I’d keep the holidays for the kids. From a business perspective, being in the south can positively impact many of our stores, but it also creates challenges. We generally see a decrease of about 3% to 4% from Q3 to Q4 and into Q1. I hope to see an uptick by late February or March. September's decline happened a bit earlier, and I’m looking forward to concluding October tomorrow night. I’m aiming to be close to flat with last year's performance, and I believe I will be. However, it's still to be seen. I monitor certain factors that indicate our backlog in parts and service remains steady. I anticipate this is just typical seasonality, and the slight decrease can be attributed to one fewer working day, which does affect our gross profit given the size of our parts and service operations, plus there's the holiday shutdown from Christmas to New Year.
We encounter this every year, so I’m hoping to stay within our usual range. I was a bit let down by September, but we usually turn things around in October. We'll know more by the end of the month, and I expect our numbers to be close to last year's figures. If we achieve that given the current environment, I would be satisfied.
Our next question comes from Brady Lierz from Stephens.
I wanted to begin by discussing the outlook for the remainder of 2025 and the first half of 2026. You’ve mentioned several times during this call that you anticipate a challenging end to 2025 and that this trend will likely continue into the first quarter. Could you elaborate on this? What feedback are you receiving from your customers regarding their reluctance to place orders? Is the hesitation primarily due to regulatory uncertainty, tariff concerns, or a combination of both? Additionally, if more clarity around these issues were provided, do you think we could witness a significant improvement? Also, it seems that your vocational customers are holding up better. Are there specific opportunities within your company that could help counterbalance the current weakness and allow you to outperform the market?
From a delivery perspective, we slightly surpassed the Class 8 decline. The market improved more than that in Q3. Regarding Q4 and potentially part of Q1 or Q2, it’s hard to say. Remember, we’re at the end of the supply chain. Looking at the order intake from April through September, September itself saw 20,000 units, while some months were as low as 7,400 units. These figures are the worst for North America since 2009. Every manufacturer has implemented more downtime since July; no one has avoided it. Everyone maximized production in the first half of the year, and now we are producing fewer trucks due to reduced demand. It's a complex situation involving multiple factors, including business conditions, changing tariffs affecting freight and truck costs, and the impending emissions regulations. If businesses can gain some clarity regarding emissions next year, they might adjust their purchasing plans to order more in the latter half of the year instead of delaying into Q1 or Q2 of 2027.
If the emissions regulations remain stable, it could lead to both short-term challenges for truck sales but ultimately benefit their operations. We need to align supply with freight tonnage to help stabilize contract rates. On the truckload side, companies were fortunate to see a 2% rate increase last year after enduring significant declines in previous years. As operational costs and inflation have risen, many have struggled with lower operational ratios compared to historical averages. The less-than-truckload sector has handled fluctuations better, partly due to fewer competitors after the exit of a major carrier. However, the next few quarters will likely be challenging, as reflected by the current order intake. Fleets aren’t placing orders as they once did, making it hard to provide accurate pricing because of recent tariff updates that manufacturers are still trying to fully understand.
There is ongoing confusion around the tariffs, which only learned some details recently. This environment has complicated pricing strategies, leaving manufacturers in a tough spot with variable quotes. Overall, we need more clarity and reduced uncertainty. I don't foresee a significant uptick in freight right now, but I remain hopeful for some improvement early next year as we continue to limit supply and adjust production. We’ve faced a freight recession while still producing and selling trucks longer than we should have, and now we’re focused on right-sizing alongside governmental driver initiatives. While I have some optimism, it’s not expected in the next six months.
That's very helpful color. And if I could just follow up on medium-duty. Medium-duty has continued to kind of be a stable growth driver for your business. Can you talk about what you're seeing in medium-duty into the end of the year? And just maybe any preliminary thoughts on medium-duty in 2026?
Medium-duty operates in a different market than Class 8, and we anticipate it will remain relatively stable in Q4 compared to Q3. The primary declines will definitely come from Class 8. We are going to see fewer truck deliveries due to lower order intake over the past six months. There's a significant amount of leasing in the medium-duty space, along with our Ready-to-Roll inventory. The overall economy and housing have significant impacts here. We're exploring some opportunities that give me cautious optimism for the upcoming year, but I expect medium-duty will face some challenges, albeit not as severe as heavy-duty. Overall, while medium-duty should be more resilient due to the diverse markets it serves, it will still experience some downturn. It's a competitive environment right now; if customers want a truck, there are plenty of available slots for all manufacturers. As we approach November, many manufacturers will begin shutting down for the last part of December, and they are still not fully booked, which is why they're taking extra shutdown days. Medium-duty is likely to fare better than other segments because of its broader economic ties, although it will certainly experience some impact.
That's super helpful. Maybe just a final quick follow-up. Could you share what you're seeing in the used truck market, particularly how is used truck pricing trending just given this, like you said, volatile backdrop to say the least?
I believe the situation has been relatively stable. In the past, I would have indicated that depreciation was much higher and affecting us significantly. Now, depreciation aligns more with typical expectations. Although the winter season presents challenges for the used truck market, I am proud of how we have managed our inventories and supported our customers throughout the year. We’ve intentionally increased our inventory a bit in recent quarters to facilitate better movement. Currently, our inventory levels are balanced compared to where we used to keep them, as turnover is essential for used vehicles. Although our turnover rates may not be as tight as they once were, it’s crucial to maintain sufficient inventory for production. Used trucks come with the advantage of not being impacted by tariffs or emissions regulations, which simplifies the buying process for customers. Overall, this year has been strong, and we anticipate continued stability.
The challenge lies in offsetting declines in heavy-duty sales, but it’s important to recognize that we have multiple revenue streams to support us. Our leasing operations and parts and services are highly profitable, and while truck sales are significant, parts and service provide more stability than the Class 8 truck sales market. Thankfully, our diverse revenue streams help us navigate difficult environments. While we may not achieve our best results ever, we expect solid performance moving forward, significantly better than what many of our customers have faced in the past three years. I hope to continue seeing good results in the used truck market in the upcoming quarters.
Our next question comes from Avi Jaroslawicz from UBS.
So I know parts and service business is a pretty big focus area for you guys in trying to grow that. Can you just remind us what you're doing to pick up more share in that part of the business? And is that more challenging to pick up more share in a softer market like that, like what we're seeing now? And also, where are you still seeing opportunity within that space?
It is definitely more challenging because the overall market is down. However, I believe we are managing to hold our ground this year. We haven't made as much progress as we would have liked, as this environment has become more competitive, particularly due to the inflation we're experiencing in the parts sector. Some companies are focused on quick cash flow, which can often overshadow margins. Thus, we have to find a balance between gaining market share and maintaining margin and results simultaneously. This balancing act is particularly difficult in a stagnant market; overall, we’ve stayed relatively flat this year. I think we are performing on par, maybe slightly better than the overall market when comparing dealers and independents. While independents can be highly competitive, I feel confident in our position among dealers. However, I prefer to look at our performance over a longer time frame rather than quarterly.
Ideally, if the market increases by 5%, we aim to increase by 6%, indicating we are capturing market share. Historically, we have achieved that and even exceeded it some years with mergers and acquisitions. This year might not be as strong, but I believe we've made some progress—not as much as I would prefer. Our goal is to be 20% better since gradually increasing our market share takes time; it's not a quick process. Our technology and data capabilities are very strong, and we continually work on projects that drive growth. We focus on enhancing our services to make it easier for our customers to do business with us. The industry is somewhat slower to adopt changes, which can be challenging, as we need to keep up with customer expectations. Nonetheless, technology is increasingly becoming a significant part of our strategy. Though I hesitate to share specifics due to proprietary reasons, we are also investing in personnel and expanding our mobile service fleet, aiming to bolster our outside parts and service operations.
Despite the tight market, we still see plenty of potential and will continue to pursue our goal of achieving around 20% growth. If the market grows by 5%, we seek to grow by 6%. I don’t expect drastic increases and won't compromise our strategy by giving away profits. That's not the right approach for us.
That concludes the question-and-answer session. I would like to turn the call back over to Rusty Rush, President, CEO and Chairman of the Board, for closing remarks.
Well, everyone, this is the longest gap between earnings calls. We won't be talking to everybody until February. So in the meantime, I wish everyone a happy holidays and safe holidays, and we'll talk to you in February. God bless you all. Thank you.
This concludes today's conference call. You may now disconnect.