Q3 2021 Rush Enterprises Inc Earnings Call

[music].

Right.

Yes.

Good day, and thank you for standing by and welcome to the Rush Enterprises, Inc. Reports third quarter 2021 earnings results call. At this time, all participants are in a listen only.

Please be advised that todays call is being recorded if you require any further assistance. Please press star zero.

I like to hand, the conference over to Mr.

Rusty Rush, Chairman CEO and president Thank you.

Well good morning, and welcome to our third quarter 2021 earnings release conference call on the golf.

Yeah, Mike Mcroberts, Chief operating Officer, Steve Keller, Chief Financial Officer, Derrek Weaver Executive Vice President, Jay Hazelwood, Vice President Controller, and Michael Goldstone, Vice President General Counsel and corporate Secretary now Steve will say a few words regarding forward looking statements.

Certain statements we will make today are considered forward looking statements as defined.

Today's 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.

And the pros discussed in our annual report on Form 10-K for the year ended December 31, 2020, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release in the third quarter, we achieved revenues $1 $2 7 billion and record high net income of $69 4 million or $1 20 per diluted share.

We are proud to declare a cash dividend <unk> 19 cents per common share we continue to see economic recovery and a strong freight environment throughout the country with screen and widespread demand for new and used trucks as well as aftermarket products and services.

Rebuilt profitability was largely driven by our diligent.

Since management.

To the water during 2020, we made it a priority to implement new processes and tools throughout our organization to control expenses throughout the truck cycle. We believe these processes will allow us to effectively control expenses that we could as we continue to implement our strategic growth initiatives and will contribute well.

Continue to contribute to higher.

Pre tax profit margins than we've historically experienced.

Looking ahead, though demand remains healthy for new trucks, and aftermarket parts and services component supply chain issues continued to challenge the industry, pushing new drug deliveries into 2022 and impacting the availability of aftermarket parts.

These supply constraints, coupled with normal seasonal aftermarket softness in the winter months and the fact that we have five fewer working days in the fourth quarter compared to the third quarter will negatively impact our earnings in the fourth quarter. However, we believe customer demand will remain robust the supply constraints will subside in 2022 will be a strong.

In the commercial vehicle industry in Russia.

In the aftermarket our parts service and body shop revenues were $463 million and our absorption ratio was 134% in the third quarter.

Our aftermarket revenues increased 15, 7% year over year, which is primarily primarily the result of our continued focus on our strategic initiative.

Initiatives and the limited availability of new drugs, which helps drive demand for parts and services parts and service are vehicles that are in operation.

<unk> sales are historically high and we experienced healthy activity in most market segments service revenues are accelerating gradually largely due to hiring more technicians.

And improving the proficiency of our workforce as well as our enhanced service offerings.

We believe demand for aftermarket parts and service is strong, but we expect supply constraints to continue to impact the industry through the middle of 2022, we continue to focus on our strategic aftermarket initiatives and expect our fourth quarter performance.

<unk> seen strong, though we expect normal seasonal decline over the next couple of months.

Turning to truck sales in the second quarter, we sold 2500 37, new class a drugs again from four 7% of the total U S class eight market.

The economy strong freight rates led to widespread demand for new class eight trucks.

Storms were natively impacted.

By manufacturers limited production capabilities.

ICT research forecast U S retail sales to be 228500 units in 2021 up 16, 8% from 2020, we expect component supply constraints will continue to realize some class eight trucks.

I was always kind of some client translate sales into next year, which will likely impact our performance in the fourth quarter. However, we believe class eight new truck sales will accelerate in 2022, when manufacturers are able to increase production.

Our class four through seven new truck sales reached 2700 92 units in the third quarter guiding.

Four 7% in the U S market.

We experienced healthy activity for many market segments, particularly foodservice at least in a little but the limited production of new medium duty trucks negatively impacted our results.

For research forecasts U S class four through seven retail sales with 251000 units.

Getting from 'twenty, one up 8% from 2020 as.

As we look ahead, we believe class four to seven.

And we will not increase as quickly as correct class eight we are pleased that Hino is back in production, but we do not expect the other medium duty manufacturers.

Represent to significantly ramp up production for some time.

That said demand remains strong and we believe our fourth quarter class four to seven results will be on pace with our third quarter results.

Our used truck sales reached <unk> hundred 12 units in the third quarter down 16, 7% year over year, our unit sales are down compared to last year used truck demand.

And values remained strong largely due to production limitations of new class eight trucks, we expect used truck demand and values to remains strong in the fourth quarter and begin to normalize when new drug production catches up eventually with customer demand.

It is becoming more challenging to maintain a healthy used truck inventory, but we believe.

Our fourth quarter used truck sales will be consistent with our third quarter results.

Regarding network growth. This week, we acquired an independent parts and services facility in Victorville, California that will convert into a full service Peterbilt dealership. We also have plans to acquire full service Hino and Isuzu dealership in Elk Grove, Illinois next month.

Further.

We entered into an agreement with the summit truck group to acquire full service dealerships in several states representing international IC bus ideal lease zuzu and other manufacturers, we expect that transition to close in December. Additionally, we plan to close our previously announced agreement with Cummins.

Further with Cummins to acquire 50% okay.

Interest and momentum fuel technologies later this year.

It is important that I, thank our employees for their unwavering commitment to growing our business and supporting our customers in recognition of our hard work on the Frontlines. During the pandemic, we are happy to issue a one time discretionary.

What was the dollar bonus to all employees in mid December.

Is one way for us to express our gratitude to our employees for their impressive work over the last year with that I'll take your questions.

Otherwise.

And thank you as a reminder to ask a question you will need to press star one on your telephone.

Phone to withdraw your question please.

Palanquin, please standby, while we compile the Q&A roster and once again that is star one if you'd like to ask a question Ian.

Question comes from Jamie Cook from Credit Suisse.

Your line is now open.

Good morning, Jamie.

Jamie is your line on mute could you. Please mute your phone sorry, sorry, I was on mute good morning, everyone and good job on execution as usual I'm I guess, what the first question you talked about class eight production.

Faster than than four to seven if you could just provide some color on that and how you think about production ramping in general in 2022.

My second question is can you sort of address the market's approach to pricing with the.

The incremental costs and then I guess lastly, just any color you can provide.

Ride on sort of the acquisitions and the JV that you announced sort of incremental earnings accretion to 2022 thanks.

Okay, Jamie I'll start up as well.

When you compare our class four through seven versus classic why did I say towards a.

Several ramp up slower.

Ramping and it mainly is it the large two large manufacturers that you will probably see class eight because demand is extremely strong on the AG side right and also.

More expensive larger product.

I think even for US if you look historically.

Margins typically tend to.

Better on the ate side, so when you're in a supply constraint.

Trina, which you are now you have to pick and choose right.

There's a lot of time.

We're not going to have a lot of the same components right. So obviously the eight demand I think is even stronger than <unk> seven right now and given the vehicles themselves.

You have to pick and choose you got to make decisions because of the supply constraints, we've been dealing with so I think Tim the favorite of the class eight right now given the demand and also the profitability of the products you want to get real.

Because it's not.

Cost twice as much right. So obviously yep.

So it only.

Against that the margins tend to be better, but based on the revenue side of it to begin with can.

Do you price it.

Mark Thank.

Did you see an evidence.

Are you worried about that people are worried about double ordering some of this demand stake.

No I don't feel I know I don't feel that way about.

Our overboard I don't.

I think.

Look in my mind.

Whats happened.

Is demand we looked at things ramped up since July of last year. I mean, you know the country blew up right from a freight perspective add money, we were buying everything and so demand was there. So we ended.

Ended up when we ran into the supplier shortages starting in really March April.

By the time, the year's out U S. Mi, we probably put 40000 or more on the bottom side 40000 class a units. It should've been built this year that are not going to be doing well.

In fact, all you're doing is presley's that demand into 'twenty. Two 'twenty three was supposed to be a pretty good year. Then you run into 'twenty three right you run into 'twenty three you've got carbon pre buys in those states. Those 15 states or develop gives goes down the cash fast and with other states, but procured in California.

Because the price of diesel engines.

Thank you.

Way up I know, there's a lot of different numbers.

As to how much but if theyre going way up and 20 volt. So I.

I don't see this thing slowing down till 'twenty four outside of some big economic issue, Okay, because I don't see that we're going to catch up to demand.

As Gal.

Manufacturers are not meeting demand at the moment and so it just keeps pushing and pushing it out.

Unless there's some big economic downturn in the country I don't see that demand going away, because you're not really going to be you're just going to be running the right replacement I think replacements in the too Twenty's now.

Right and Thats, what this is U S retail so I don't think.

Look last year it was.

Under that obviously like 190, or something what I need to or something so.

But then you had a huge increase backup in GDP and freight.

Rich.

Given what we see in 'twenty, two and 'twenty three.

Hello.

Yeah.

Don't see double ordering.

I mean, I can let me give you some data points.

I talk about.

What I really care about is what's happening in 'twenty, two and 'twenty three.

Our backlog a year ago at this time was about $1 one.

$1 billion okay.

The Q3 or excuse me into Q2, it was $2 two and its $2 seven now could there be a little something in there of course are probably as there's never an order board this perfectly clean, but I don't see any evidence based in there.

Even if there was a little bit they are still in the backlog.

Great.

So we've got to catch up with what we've missed.

So I'll try to I'll leave that one alone I mean, I am just a little bit.

With the $2 7 billion in backlog can you just address how you're approaching pricing then like with just yeah.

Certainly.

Right.

You are right and being driven a lot by the Oems okay.

No what where costs have gone up.

He has been scrambling on the OEM side on the supplier side.

Paying more but obviously prices of trucks are going up.

Anybody anywhere they can't see the inflationary pressures that are out there I, sometimes I know people talk about.

A little bit.

I see a much larger sometimes just in real life like for sure seeing in our business that.

They are out there when you asked about pricing you better believe price itself.

So it's.

Just trying to keep up with trying to keep up from a change it's not it's not.

Just the Oems theyre getting hit for pricing right.

Getting hit hard on little not just supply, but if you can't give supply where they're getting hit on the pricing at the same time, because the oil supply and demand.

Like that forever.

So thats really just leads for the bottom of the food chain up to the top.

And I think thats, what youre seeing out there.

I don't have exact numbers, but I would say that ends up getting passed onto the end user right.

Good day.

It comes out of margin against past, one or the other.

So I would imagine sometimes on the front side because it accelerate so fast it's hard to get it passed on but this didn't just start.

Yesterday it started.

Last year or nine months ago, two months ago. So as we clear out what you should be putting into your backlog.

'twenty two.

Should catch up with the pricing pressures that you had because that's the way it's supposed to work will work.

But you've got a backlog and so that makes.

It is hard to work your way through commitments.

So both locally.

Most people do.

And then.

And then getting the new price.

Price it out into the products that you're selling now for the future but Bravo.

Yes, so much it was that because you got it there's been no supply I mean look we delivered only 2500.

Brooks class eight.

And that's why I'm, so proud of the quarter is because the quarter was.

Look at it from a whole everybody used to view our company with so many trucks, Okay. And then you look at the.

Performance and it is just driving to the things we've talked about doing for a long time.

Youre seeing the fruition of it.

And the results in these numbers.

You asked what was your third question Jamie My third question, which you can just trying to figure out all the M&A that you're doing like what.

Oh I'm sorry.

It's been so long since I've never been able to talk about M&A.

Got it.

Well it gets hard out there.

So, but you know a little bit we just talked about nice independent deal would close.

So about single you know the deal hopefully in the Midwest.

Alcohol is above single the summit deal, though on the other hand, you know represents quite a bit of growth.

For us when you look at it is the second largest international dealer.

Okay.

It feels you restate it feels in three states we're doing.

Some are rusty silliness here, but if you look at Kansas, Missouri, and you look at Arkansas, We don't have anything there and Memphis.

So you know I don't know 17 18 stores and.

Yeah.

And people are making that puzzle.

The dog Cook recent Judy you can't find it most restage plug right into our map I'm looking at my map right next to me on the wall here and it's a perfect fit.

Hard for us to bounce up but get fits more appropriately from a geographic perspective now.

It's a good well run group, we can run it even better.

We will move that group into our overtime.

We'll close it in the middle of December we're excited about that the Cummins JV Super excited about that momentum we have been in that fuel system business since <unk>.

<unk> you remember back in that day as natural gas is going.

It would be 10% of the market by 2017 never got off to.

Okay.

Companies must believe something about the future and we do too we believe that R&D will be a bridge technology as we get deeper into this decade okay.

And so we're excited and that's not something that's going to affect we finally.

Okay.

[laughter] I finally get their business to break even on our own. Okay. This last year or so, but there is going to be an opportunity and 25% to 26 or 27, two for that to be a bridge technology and we believe partnering with Cummins I was looking the other day I felt pretty.

Finally got equity.

And make a great partner in the fuel system business literally all ones building natural gas engine, you may not have seen but last week, they announced they're going to build a 15 liter natural gas engine, which is really going to open up the market. We believe for mid decade as I said, so we're pretty excited about that too.

So.

There you go again I tried.

To answer the best.

If I could.

Thank you so much.

Well I'll, let someone else ask a question.

Thank you.

Our next question comes from Justin Long from Stephens. Your line is now open.

Good.

Morning, and congrats on the quarter.

Thanks Joseph.

So maybe to just put a bow on that on the fourth quarter. I know typically you see a seasonal decline Rusty you called out five fewer working days, but is there any way you can help us think about the magnitude of the impact from fewer working.

Days in the fourth quarter.

Sure.

Two things look these are just a little bump we know about the supply chain issues, we're dealing with them right now.

I'm going to let me answer your first question and then I'll add to it and we will get past this for what we're going to have a good fourth quarter.

Being though the way it falls out with fireworks.

Working days typically in the four quarters about three but the way the holidays at work this year.

We're pulling on holiday out of 'twenty, two and sticking it back in 'twenty, one because it's January one and we're giving all of December 31 was just the right thing to do on a Friday, so impactful without getting into all of that we do today with the two six.

Millions of dollars of gross profit a day and parts and service.

You can do the math, it's about 13.

Gross might be down some just given.

Why chain issues, but as I said, I'm, not where it's going to be a good quarter wont be the third quarter, we had a great quarter really.

This quarter, but the good part of it is 'twenty, two and 'twenty, you're talking about maybe 20 million of gross profit or so but at the same time you can just graduated from there.

When that everything should be running smooth and good.

One of them.

Better fourth quarter than last year, but third quarter is always typically our best quarter.

If you go back historically on every time, but historically the third quarter is always our best quarter. So.

But listen 22, and 'twenty three are set up and you look at the growth we've had in parts and service and look where the black backlog I talked about it a minute ago.

So I'm very calm these acquisitions that we're plugging.

They're going in.

Hey.

We get them implemented.

<unk> integrated into the organization.

Things look great so from that perspective.

Well, that's why I wanted to go with my next question as we kind of zoom out and look at the next couple of years he talked earlier about that.

The truck cycle being extended through 2023, but could you maybe expand a little bit more on the parts and service business. How you see that growing in the next couple of years, and then incremental margins as well because I think when you put together the truck cycle with parts and service recovering and incremental margin.

<unk>.

PFS can still grow nicely in the next couple of years, but would love to get your thoughts around on that.

Sure No I would agree with that.

You have one piece out and that's M&A.

M&A right I never really gave an answer because I'm going to integrate it but I can tell you. This it is accretive okay. We're not doing it to be an accretive I can promise you. So we will sort.

Exactly what the M&A brings to the organization, but it would be nice.

From a margin perspective with Super high margins always quarter, but I've seen nothing that's going to stay in the way.

Now of US continuing on the parts and service side to continue to grow now I cant pronounce 15% growth rates coral.

Quarter over quarter remember last year, we were coming out of Covid et cetera. So your baseline was there but it is we are targeting high single.

Eight 9% growth rates next year, which I do believe the parts and service are doable and very achievable and I'm not going to count I'm not going to.

<unk> talked about it anymore.

But I do believe that we will continue to see those type of growth rates.

In the first half and into next year I think we can do that if you look at all the initiatives over the last few years. If you look at some of the other things we're doing now but I don't.

I want to talk about but some of the things we're doing to go to market and that's the.

Piece of the business I mean, we ran 134% absorption that's a record for us assistant operating metric, but it is something that with key on Purdue pretty.

Quite heavily so.

From a parts and service perspective.

You heard me talk about the backlog from a truck sales perspective, it's there it just going to take some execution.

On our part and I'll, let him speak about whether we can execute or not so we've been able to do it before and I don't want our team only continues to get better. It's not me, it's all the folks throughout the organization.

No.

Just excited about where we're going and those are easy things to look at it we do believe margins.

And is this sustainable and.

Maybe not all of them exactly where they are but they're going to be sustainable higher than what they were a couple of years ago for sure.

We ran a pretty high margins in parts and service probably the biggest ever out this last quarter.

I'll be up in that range, and you're adding some like I said, 9% growth rates and stuff like that.

Next.

Next year.

I'm, hoping to do better, but we're going to do that out belief.

You can extrapolate the numbers from there with the managed expense piece don't lose sight of the managed expense G&A sequentially was it down actually and I would expect that to stay down but it was actually down a couple of points from Q2. So.

But I do expect us to be able to manage I talked about that a couple of years ago. If you remember about when we come out of all of US how we're going to do a better job really last year, we're going to do a better job.

Of managing our expenses as we grow or as we grow our revenues and our gross profits. So so far so good.

No.

We look forward to continuing that into the next couple of years.

Great very helpful. Thanks for asking.

You bet. Thank you Sir.

And thank you.

And our next question comes from Andrew <unk> from Bank of America.

Line is now open.

I hate Rusty how are you.

Andrew how are you.

Today I'm good. Thank you. So so just go back to this comment on expanding margin and expense management, you sort of highlighted expense management statement.

Early on in your prepared remarks, I think this is sort of a new focus can you just expand.

It does seem that your approach to cost and the cycle a little bit different because I think historically.

Things went up right you were very good at sort of keeping costs from control early on in the cycle, but as the cycle sort of got going cost came back just go more in depth just to talk about what are you guys doing what initiatives.

Initiatives do you have internally to sort of change your approach to costs.

Time around because execution seems to be superb. Thank you.

Thank you Andrew I appreciate it well.

I won't give you as much detail as I can training.

Our managers we have put.

New processes and new controls that as we grow but we're only going to spend so much money, what we when we grow <unk>.

Gross profit goes up X, we're going to spend X right and that's what we're going to spend and we're going to stick to it we almost internally we call it a salary cap.

In some mix, sometimes right doesn't mean, you can't grow because remember we're not I don't loan money I don't do this I work on trucks are worked on parts of our deliberate we sell parts, we deliver them. We do this it takes people, but we want to make sure. We are staff remember two thirds of our cost of people at the end of the day. So we don't make sure that we don't get out ahead of our skis and overstaffed.

This morning, we don't grow we don't add people, but we do it with some tools that everyone is pretty dialed into it took a lot of work. This year now we've got to continue that in the future, but we're pretty dialed in to we're only going to spend X of every dollar we get and the gross but so we're not going to get way out over.

And these tools. So this is a salary cap. It's this we can call. It theres other tools other than AMG, we can give to it but with the guys have been very very focused all the managers have been very diligent and I'm proud of them.

And the teams out to and this is in spite of this.

These last few months were tough from a COVID-19 perspective, but.

The second and fourth worst month in the third quarter that I've ever had with people out.

Now dealing with so these controls are not leaving the organization and we're still going to continue to invest on the corporate side, we're going to continue to invest but just.

Proper pace.

Hopefully you learn something.

So a bit older.

Not that difficult.

But sometimes everybody gets caught up we're running and things are growing and you're just not as diligent as you should be I think there is some of the lessons that we have learned.

And the last two years.

I was just going to continue to bode well and we're focused on.

In it we will expenses will grow but they will grow in relation to our gross profit growth and we will end up keeping more of it than we historically have and I'm very confident in our ability to do that.

Thank you Rusty and then just a follow up question you guys have very good systems.

Just the usual question for me could you just walk.

As you go through what you are seeing.

Key industry verticals residential nonresidential oil and gas.

Of course, our customers ways maybe.

Or maybe what youre seeing across the country in terms of macro because you do have very unique footprint. Thank you.

Got it.

Andrew.

Walk us I want to say everything is good but because oil and gas is still oil and gas I don't expect to see the capex spend in it but we've seen a slight pick up here recently.

The services that are being asked for we sure as you've seen the price of oil obviously has gone up we've seen a slight pickup but I don't think people.

I don't expect companies to be as disciplined as they were historically or money to flow like it did historically, but I do think there's some upside still there as it has gradually been picking up from its trough.

Other industries the over the road business.

Is great right I mean, it's really good.

People do because remember if we're 40000 trucks short to what demand was that means people are running their trucks longer right.

So when you look at the TL side, the <unk> side extremely strong for those customers as customers. We have we've got a couple three or four big LPL carriers and our business with them is good when you.

Good housing construction still strong.

<unk> for mixture trucks demand.

For garbage trucks, and the revenue side very strong parts and service strong in those sectors I mean, I'm sounding like a broken record repeating myself, but that's what we are truly original.

Look at leasing customers.

Look it.

I need to point out our leasing division has had the most of the outstanding year they've ever had I mean, it's just been over the top if you look at our leasing margins and rental margins I mean, they're just above.

Above and beyond what I would probably could've been able to do and it's not all driven by gain on.

There are operating because rentals utilized strong and leasing strong now I will tell you this because of the lack of product.

To extend leases and do things on other trucks that normally you would be taking out of service because you cant get trucks is you can't get as many trucks as you need but that's still won't inhibit.

We believe them from having an outstanding year in 2000.

So Andrew I know, it's a little bit I mean, even municipal as finfet.

Buses school buses.

I mean, it's.

Yes.

There's a lot of it's been a pretty rosy picture, which always scares you when it looks at Rosie out there, but at the same time. It is what you can.

To know right now I don't see that changing a lot.

I'm not an economist or anything like that in my biggest concerns inflation I'll be honest with you.

Runaway inflation, because I've seen inflation out there sometimes I look at the numbers that are printed in Oklahoma.

But.

Other than that our business.

C industry.

Broadly looking at it across and that goes from Florida to California.

Don't see any reason that as you know.

Having as bad right now some better than others, but broadly speaking everything looks.

Good.

No.

Any slowdown on <unk> as far as I know because unlike commercial ones.

Well, we haven't seen it yet we haven't seen it yet because they're still.

I believe there's something out there Andrew lurking.

We have not seen it in some of our areas, especially here in Texas and whatever I mean.

We're putting up.

Now lets everywhere around here.

Sure.

Stay well.

Some of the states we're in like Florida here, there is still growing.

So I mean, I'm sure I could pick a residential pocket in some areas that add up to date to begin by state, but I can tell you here in Florida and other.

It's still still going up pretty good.

Thank you.

I have to say that the market today is rewarding your team for all the hard work they've done this quarter.

Thank you.

Thank you.

Ladies and gentlemen, if you have a question that is star one again, if you have a question that is star.

<unk>, one and our next question comes from Joel.

From BMO.

Line is now open.

Okay.

Hey, guys.

Got all going well, Joe how are you.

That's quite the entourage you have to.

Introduced at the beginning of every call now.

Changed much.

Yeah.

Yes.

Yeah.

It does I don't think so but that's okay. St want him introduce the last couple of years.

But you also get into I don't know Youre getting youre getting up there Joel it's okay.

Yes, I was going to say maybe my hearing.

Batteries haven't been updated lately.

Probably not.

What do you need help I'll get you give them good places you'll get it replaced.

Oh, there you go.

Can you talk about.

Can you talk a little about where your parts and service mix might might be three years from now like just sort of the.

Flow of what Youre looking at and what you've announced in terms of acquisitions and the growth rates and all that just trying to give us a little bit of a guidepost.

Well you know the growth rates I gave you was on correct same same.

Same store basis, right I've got to bring these other stores.

And to our organization I think there's some upside there.

Look it's a well run company no question, but I think with some of our systems and some of our stuff I mean, theres some upside on the acquisitions, especially from a technician perspective, you know when you look out there.

I've got 500 model trucks, they've got a couple.

I mean things like that there'll be some of the things we do and there is some of our initiatives. So it's actually one of our big initiatives next couple of years.

To increase our mobile fleet a lot.

Like I said high single digits.

For same store growth parts and service.

Parks growth.

Service growth will probably be more steady and gradual.

I don't mind looking back three years ago.

And all of those technicians, we did real good the first year in the second year, we just added technicians, but they really weren't good technicians. So we had to purge, so which we have which gives our proficiency backup now adding back much more strategically.

More gradual and our returns are way higher and we're going to keep it at that pace you know, we'd like to add a couple of hundred technicians over this year to our same store growth next year not 500 like we wanted to few years ago. So I don't think it's possible to do that and do it right with the right proficient technicians, because you cant add skilled ones.

<unk>.

Take one of their level ones and twos and train them up.

Your overburdening and you'll have to carry they are not producing for themselves, but we think we can continue to gradually add service I think the parks business will continue to go up look inflation is going to help drive part of itself to begin with when it goes from a revenue perspective.

When you look at what.

As always some of the prices that are coming in on the price tags on parts.

Going up light trucks like everything you see in the grocery store right now as I said, it's one of the things you're worried about but.

I think we will still out we're going to try to outrun the market and take share.

We had a little hiccup last year.

But we feel really good that we're taking share right now and going back and getting back on track when we our results speak to that.

What we want to do we just wanted to make sure.

We want the markets up 7% and I wanted to be up 9% right I don't need to take it all one day, but just consistently take share over time, we believe we can do that.

Especially when you look at like I said, you can plug in this new acquisition.

The integration of these stores into our math.

Well, it's a differentiator in my mind. It helps continue to allow us to differentiate from a geographic perspective now is what you do with that geography, and how your go to market.

That's what we're trying.

It does tie everything together that we have as best we can from a deep trucks up and running right.

Different when you go to market with US if you have the same price you can get all of that from one coast to the other coast.

20 states within 27, 28 and <unk>.

We will cover probably 70% or more of all the trucks sold inside.

Trying to geography.

We will continue to press that forward and hopefully that allows us with our systems and stuff to gain share that's our goal on the part side.

On the other side as I said the acquisition, we've got a goal in the next five years or double my mobile service fleet and on throwing it out there, but that's a Google we came up with at our last.

Strategic Offsite meeting, we believe that the customer base is going to be demanding that we believe especially with technology changes that are coming and things like that.

The automotive side and we've always done it here, but we're going to do a better job of it.

Even though we've got the biggest one for many dealership perspective by far most.

Service fleet, we're going to get bigger.

No.

We've got the ability to do it and we've got the expertise.

Obviously against the assets. So those are just different things, we've got going to feed it I know I'm not giving you exact numbers, but I'm trying to tell you.

The tools in the toolbox, we believe we've got those tools and we're going to keep pressing forward with them.

And any unusual opportunities from all these trucking business as being separated from their kind of conglomerate parents.

Trucking businesses I'm trying to follow.

Vacco getting spun out and.

Credit line of business are running out of dialer and.

No I don't believe anything for US right now you know I don't see any look I'm. My two class eight Oems are pretty set okay, I've got to I'm, not going to be able to be with the others. Okay.

We're not gonna Wyoming, Okay remember their state laws lens franchise.

Franchise things.

Inside of agreements.

I'm going to you know I'm, a pack of our peterbilt and Navistar when it comes to class eight person there could be I think there might be other opportunities no matter, who wins with new.

Technology is coming it's going to breathe a little confusion in the marketplace not yet everybody talks about it all right that just wait for a couple of three years and see.

I believe our Oems, who will be leading the back in that but there are other independent people out there with other technologies that is going to be interesting to watch.

And we'll have our eyes out there, but I do believe and are Oems and their capabilities to meet the changing technologies.

They're going to be demanded.

By government.

Governments.

But I didn't believe we might be pushing it a little too far.

I think that some of the demands.

When we talk about electric and hydrogen and fuel cell and all the other good stuff.

<unk> better be careful pressing it too hard because we got to get.

We had a catch up to what we want I know, we've got a clean.

But those those types of things will be where opportunities might come but I can't see right now, but I'm very comfortable with the Oems I have participating in that transition is this is a transitioning a decade like never seen transition creates a little bit of confusion, which creates opportunity Trust me we're poised.

And just last.

[laughter] things and maybe youre kind of already answered that that's too far away but.

Do you feel any need to to get into like EV charging business or anything like that like things that you're thinking about kind of couple of years out or its just way we are selling.

Last one store in California will be solar and have all their charging stuff here. Okay. Obviously, we've got to meet the needs of California as the leader in it right. So we will be there a year from now that will be where we're learning we're learning with customers. We have approximately so we have electric trucks, we sold in different marketplaces, I'm not going to give the specifics.

<unk> and <unk>.

We look forward to doing more around that space.

But again.

I believe I'm not here you don't want us when we talk you probably already heard enough, but I believe is going to be market segment, driven as to what technologies went up.

A lot obviously in class six seven.

Every time, we get to the end of this decade, I'm not sure it will be 50% or more.

Electric.

That way.

You'll see that on the <unk>.

Scott, you'll get it in certain applications and certain market segments, but you know.

That's not going to I believe work for just pure TL over the road.

At least not now it could be in 20 years or so but I don't think we're there with that which you know you've got folks that.

I know hydrogen is something we will know something bigger Oems.

There's a lot of things going on and that's what's going to create some confusion.

As things transition.

Over.

It's a decade driven by we all have to deal with ESG.

And it's real.

The environmental piece.

But I think as I said technologies will be driven just by market segments will adapt to whatever makes sense. This was not diesel will be phased out over time.

Over the next to be but it's not going away right now.

We're going to be multi pronged.

Working with whatever technologies out there, but always trying to be on the leading not bleeding edge.

Okay. That's awesome. Thank you so much.

Thank you Joe CFO.

Sure.

[laughter].

Yes.

Thank you and I'm showing no further questions I would now like to turn the call back to Mr. Rusty Rush Chairman.

Is it even for closing remarks.

Thank you well I appreciate everybody's time, obviously there'll be a little longer time period can we talk in February so I want to wish everyone a happy holidays inventory.

Enjoy your families enjoy the time that you get to spend with them and we will talk to you in February. Thank you very much.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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Inventory.

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