Q1 2023 Rush Enterprises Inc Earnings Call

April 26, 2023

[music].

Okay.

And welcome to our first quarter of 2020 earnings release Conference call.

On the call for Mike, Mike Roberts, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President and controller, and Michael Goldstone Senior Vice President General Counsel and corporate sector now Steve will say a few.

Words regarding forward looking statements.

Certain statements we will make today are considered forward looking statements as defined in the private Securities Litigation Reform Act of matching 95.

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.

For the year ended December 31, 2022, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved first quarter revenues of $1 9 billion and net income of $90 5 million or $1 60 per diluted share.

We are proud to declare a cash dividend I was wondering one per common share.

In the first quarter, we experienced strong demand for new class eight and class four through seven trucks, largely due to limited new truck production over the past few years.

There was a healthy widespread demand for aftermarket parts and services as well and we maintained our focus on strategic initiatives.

Support the large national fleets and operational excellence, we significantly outpaced the industry in medium duty truck sales as well as aftermarket sales and we are proud of our results in the first quarter.

In the aftermarket our parts service and body shop revenues were $648 million up 19, 3% and our absorption ratio was 136, 5% and the <unk>.

First quarter, we experienced strong demand for parts and service for most of the customer segments, we support.

We continue to add service technicians, who are workhorse, notably mobile tech business, which supports our long term strategy to expand our mobile presence across the country.

Looking ahead, we anticipate the rate of inflation to continue to slow and the parts revenue growth will moderate throughout the year when compared to our first quarter results. However was our continued focus on long term initiatives, including strategically expanding our workforce to support mobile service efforts and national accounts.

We believe our after quarter aftermarket revenues will remain strong this year.

Turning to drug sales, we sold 4300 65, new classic.

Accounting for six 4% of the total U S market and two 2% of the Canada market.

While there is still pent up demand for new class eight trucks, we experienced healthy demand for most market segments, particularly over the road vocational.

Energy customers and the large national bleeds.

ACD research forecast U S class retail sales to be 259000 units in 2023.

Essentially flat compared to 2022.

Continued truck allocation may limit our growth potential our backlog remains strong and we believe our second quarter class eight truck sales will align with our first quarter results.

Overall, we expect our results will be consistent with the industry. This year.

Our class four through seven new truck sales reached 3038 units in the first quarter accounting for five 3% of the U S market and three 2% of the Canadian market.

We experienced healthy demand from a variety of market segments.

Further while supply has not yet caught up with the needs of the market. We began to see truck manufacturers shift more resources back to producing medium duty trucks.

ACD research forecasts U S class four seven retail sales to be 253600 units in 2023 eight.

Eight 6% from 2022.

As production continues to improve and as customers prepare for upcoming emission regulations. We believe there will continue to be strong demand for medium duty commercial vehicles for the remainder of 2023.

Excuse me our used truck sales.

<unk> <unk> hundred 84 units in the first quarter down 29, 7% year over year.

Demand for used trucks remained relatively remained low largely due to the continuing inquiries and new threat production.

As new drug interaction continues to improve we expect further deterioration in used truck pricing.

We plan to carefully manage our used truck inventory levels until demand begins to increase in value stabilize.

Lease and rental revenue was up 21, 5% compared to the first quarter of 2002.

We continue to experience strong demand for leased vehicles and our rental utilization rates were solid in the first quarter we.

We expect our lease and rental operations to continue to make significant contributions.

To our overall profitability for the remainder of 2023.

Looking ahead, we will continue to monitor economic factors, which may impact our industry, but we believe our overall financial results will remain strong through the rest of 2023.

Before closing I would like to thank our employees for their great work and for their dedication to our company's goals as well as providing superior service to our customers with that I'll take any questions.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

And our first question is from Justin long with Stephens. Your line is open.

Thanks, Good morning, and congrats on the quarter.

Thanks Joseph.

I'll start with parts and service Rusty would love to get your thoughts on parts and service growth over the remainder of the year and obviously, we're going to see some moderation.

Given what happen are happening with inflation, but is there anything else, that's driving that moderation or would you say your parts and service growth going forward kind of ex inflation is remaining pretty consistent.

No no I don't see anything out there we continue to execute.

On all the strategic initiatives that we have been implementing rather consistently over the last over the last six or seven years to be honest.

I would tell you while it may moderate somewhat.

Given that plus giving us some pretty large comps coming forward. We still believe we can close the year and so okay I.

I would expect the next few quarters to slightly moderate some of the 19 plus percent understanding that yes.

There were some acquisition stuff in there the Canadian stuff.

But we were still well over 17% from a same store score perspective in Q1, so with that start we are targeting.

High singles and low double.

Later this year, we'll just have to see how it plays out I can get it exactly but we will still see overall growth well outside of in place. So.

We as you know we feel very good again about.

I think I think it's important.

You see that absorption rate number there I believe everybody I hope folks know towards the right number is.

The calculation of parts service and body shop gross profit versus the G&A of the dealership.

What we put out it's a 136 and a half now I think it's important to note that if you take our new acquisitions from last year and that would be the Canadian acquisition, along with our acquisition of summit. They are well below that number if you looked at prior.

Stores that we had prior to those two acquisitions that number would be into the almost mid $1 40.

That number I would've never thought we could ever achieve so.

What that really explains to you is the fact that.

There's plenty of upside in these other stores over last year. We just brought him on for our business system really between March and August was just getting on the system right.

Youre regimented way of going to market to them is not an add water and stir thing. So those numbers for sure have room for growth in the coming years.

As they grow to catch up with the rest of our locations right.

So.

I feel very good about the overall parts and service outlook for us.

Going forward, regardless of where the markets where the market is you've got to understand we go to the market very diversified.

Not just hitting it one segment I always try to.

Explain that to people, we're not just doing over the road business.

We're very many different market segments in the vocational side, so and vocational businesses.

That's pretty good afternoon, right now so I mean I could go on and on adjusted.

<unk>.

The quality of what I've seen the quality of earnings that are out there but.

That's that's hit a.

A little bit a little bit pledging point gross margin services.

Okay got it that's helpful and my next one is probably for Steve but is there anything you can share on the expected trend in SG&A as we move into the second quarter relative to what we saw in the first quarter and then maybe thoughts on interest expense going forward as well given it.

Up a good bit in the last couple of quarters.

Well as you see G&A was sequentially up significantly from Q4, and Thats pretty normal for us in Q1 compared to Q4.

We incur a lot of what.

Categorized as benefit employee type benefit cost weeks, we issue our options payroll taxes kickback in which had fall off as the year goes as people hit earnings amounts.

We typically in Q2 that will stabilize you won't see another sequential jump youll see it pretty flat, maybe even slightly down on the interest.

You will I would expect Q2 to be very similar to Q1 inventory levels are elevated versus last year. I think it was up about whatever eight nine and $10 million versus Q1 last year.

Exactly what you believe it to be it's a product of interest rates on our floor plan and carrying amounts of inventory you got to remember even though we're on allocation. We're turning them quick they sit in inventory, while we bought them up and do things like that so.

But I think the remainder of the year youre going to see the run rate similar to what it is.

Depending on your outlook for interest rates I think maybe there is another core pump I'm not sure. If there is much more than that so.

They're probably going to be very similar to Q1 for the remainder of the year.

Got it that's helpful and maybe I'll close with that high level question for Rusty when I think about the business going forward. It feels like we're going to see higher highs and higher lows and I look at valuation multiples today, and they're still very competitive.

Relative to what we've seen historically, what do you think the market is missing.

Well.

Good a step out a little bit here, Justin but yes.

Yes.

Good question.

When youre sitting in my chair.

Upon our current multiple and where it has been in the last couple of years I do not believe the market fully understands how our strategic execution has improved our quality of earnings the aftermarket growth and the expense management that resulted from executing our strategic initiatives have increased our absorption rates as I mentioned earlier.

To 136, but well above that in the old stores combined when you add the acquisitions.

I also believe the market doesn't realize that the normal replacement cycle for class eight in the U S.

Take the last 10 year average has increased over 225000 units per year.

I think it's a commercial market performance that we and other industry experts such as ACD research expected to we believe we've significantly improved both our trough and peak earnings power since the last down cycle in 2020.

So the ACD from my perspective, <unk> correct forecast for class eight is correct.

Trough, but they've got it at 217000 units in 'twenty, four and a peak of 311000 units 26.

I've got to believe that our trough earnings would be pretty far north of $4 a share and peak earnings can be.

North of $8 a share.

For me, that's stepping out I, usually don't say that but I don't think people truly understand the company, sometimes when you talk about those multiples and I've been looking at for the last couple of years and it could be a little frustrating from my perspective, So I think somewhat digs deep into the model looks at it and lays out the forecast of most industry experts we use ACC.

Yes, thats, what youre going to come up with so I mean, I don't know.

Better way to explain it to you on that.

That makes a lot of sense. Thanks, Kurt Thanks, Rusty I appreciate the time.

You bet.

Thank you one moment for our next question.

And our next question comes from Andrew <unk> with Bank of America. Your line is open.

Hey, Ross.

Andrew Hey, guys, Hey, Hello to the team as well.

Thank you Andrew and the team says Hello back.

So the question for you I think you and I have had this debate for a while you guys are generating more and more cash flow.

You. It seems there is a level of frustration with where the stock is and I know you are buying back stock, but why not get more aggressive on stock buyback in this environment, particularly because a couple of years ago. We were talking about a $4 is your peak earnings number and now it's your trough earnings number if the market is missing so much.

Why not just buy.

Buyback more.

Well Andrew.

So on the table about that I'm not going to get that specific about it right. As you know we are consistent we did continue to buy back stock with Nikola drag of about $26 million or so back in the quarter I would exactly we've got 150 million approved and whereby we bought back about $40 million of that since approval and we plan on continuing that.

Through the end of the year, if not accelerating and I hear you. So.

Everything's on the table as I've said to everybody.

I sit here right here on this call and say this is the we increased our buyback to $150 million over the last few years with a $100 million when we really execute on it but we plan on doing.

Im probably executing pretty close to what we've got out there as far as approval right now I can tell you that.

No.

Can you talk about I guess sort of the <unk>.

Russia of your parts and service business, because I think realm.

Relative to my expectation has been holding up better than expected.

What's driving that what do you expect the exit rate for the year to be particularly as the comps get tougher and what does it say about sort of the underlying economy and.

How much of it we know that you are changing your business model, where now that youre going after larger customers.

We know that in some cases people, who drive your parts and service business out of in large.

New truck customers, a lot of things happening below the surface.

Maybe just sort of unpack this business for us a little bit. Thank you.

Yes.

Big question.

Some of it a little bit earlier.

We feel great about our parts and service business. So it can be.

Renews to grow I mean looking back if you just take the last two or three years and it has been a very consistent.

We've been outperforming our expectations zero over the last couple of years when it comes to growth sometimes.

Even underestimate.

Without getting into numbers, we even underestimate the power of the network. Okay. When you do have a network our size, which is by far the largest commercial network in the United States.

And you represent.

As many manufacturers as we do.

And you are able to also go after other brands some trucks.

For large customer because nobody really runs one brand anymore. Okay and you are equipped to do that I think.

And you take the approach we do by leveraging our network and our people do you have strategic initiatives like we put in.

The last few years, whether it is or what gets too specific because some of them. We believe is proprietary to us.

Round the parts business around the service business you set goals to double your mobile service footprint in the next three four years.

And then you continue to execute on that you get the numbers, we're talking about I mean, when I first knew you Andrew if.

If we just started talking about this as stores. This isn't when you look at the dealership locations running over 140%.

Never ever believe we could do that but.

What we do and we continue to find what we continue to attract more customers again.

Given how we go to market our facilities, our people everything and what customers are wanting.

No.

A bunch of hodgepodge mixed up.

Alright.

Performance from their service networks wondering one consistent consolidated enhance.

And I do believe that we provide the best in the marketplace.

Yeah.

That's all I can I.

I can get into the numbers, but we're going to consistently continue to grow it we feel very good about that and even like I said the world is evolving.

I don't know what.

Going to customers that's why we're paying on this mobile thing.

Reaching out and going to customers, providing more better service.

Big cities continue to get more Cogs, the part the point of taking a truck driving into a dealership dropping at all having to pick it up again those are all inhibitors person taken and producing revenue so.

That's why the mobile the mobile thing makes a lot of sense and I can't get into all of the drivers Andrew but the performance speaks for itself from the last few years and I don't see anything that's going to change that.

I mean, those are just without getting into numbers. This much growth here I already did that.

Yes.

Those are the things that we believe set us apart when it comes to taking care of customers and at the end of the day is the point every one of our employees carry says the customer is the boss.

And just the last question can you just walk.

As usual the question can you just walk us from a macro standpoint to your point do you have a lot of exposure.

So you are in Florida, and Texas and California.

Planning.

The Midwest can you just tell us in terms of the economy.

What are you seeing because you really have uniquely informed.

View of the economy. Thank you.

We have been doing.

I would tell you, let's start on the East Coast, Florida still.

And that was just in Florida two weeks ago.

That's about our largest mobile group those folks at what where 60 mobile technicians working throughout the state of Florida.

Lower end lower Alabama, so their business continues to be strong and we expect a year if not.

Greater than last year out of Florida, you move up even further in the southeast Georgia.

<unk> going to grow in strong also I'm really not going to give you any bad rewards I would tell you, Florida is extremely strong I would say that south Texas is extremely strong, but Houston market is growing Colorado seems to be doing a little bit better.

Southern California, I don't want to Miss anybody I'm, telling you it's broad based our interest and it goes back to Andrew It goes back.

Two our customer mix to our market segment mix I say it all the time.

Talks on Blue in the face, but we don't just over one market segment.

It's interesting that if you say I can tell you subdivide those to try to.

Geographically everything's solid some better than others. The mountain West is doing really well right now when I say that is Utah and Idaho.

But there are no weak spots that I can see on the map correctly. There are some that are a little stronger than others, but.

The best thing to say when I talk about the power of the company and the or whatever it is.

Two of the three largest customers on the international side of our business.

From parts and service don't even buy trucks from me on international side, and I'm not going to get into name specific names, but that tells you that we're able to take our customer and leverage across our whole network, whether she buys trucks for one side or the other whether they buy trucks from us at all.

We have many large customers that don't even buy trucks rubbers, but we serviced by leveraging of that network.

<unk>.

Getting a little blob.

Exactly.

Awesome.

Yeah.

Absolutely.

In the Midwest.

We're still well in the Chicago area.

No.

Again.

I can rattle off forever as you know Andrew about the business because I am very proud of what our people, but it will.

Alright, thanks, so much for us to really appreciate it look forward to updates on the buyback.

Got it thanks.

Keep that in mind.

Thank you and I'm showing no further questions at this time I would like to turn it back over to Rusty rush for closing remarks.

Well we appreciate.

It was a big earnings day today.

I think every one of them all of the analysts were loaded with companies reporting today, but for those who participated and we thank you and we will talk to you again in July .

Yes.

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

[music].

Okay.

[music].

Yes.

Sure.

[music].

No.

Okay.

[music].

Yes.

[music].

Okay.

Yes.

Sure.

[music].

Okay.

Yes.

[music].

Okay.

[music].

Yes.

Okay.

[music].

Yes.

Uh huh.

Okay.

Yes.

[music].

Yes.

Okay.

Yes.

[music].

Okay.

[music].

Yes.

Okay.

[music].

Yes.

Okay.

[music].

Yes.

[music].

Sure.

Okay.

Sure.

Tom.

[music].

Yes.

Sure.

Thanks.

Yes.

[music].

Yes.

[music].

Yes.

[music].

Yes.

[music].

Yes.

[music].

Okay.

[music].

Okay.

Sure.

Yes.

Okay.

[music].

Yes.

Okay.

[music].

Yes.

[music].

Yes.

Okay.

Sure.

Yes.

Okay.

[music].

Yes.

Sure.

Yes.

Sure.

Yes.

[music].

Yes.

Sure.

Okay.

Great.

Okay.

Sure.

Thanks.

Okay.

Yes.

Okay.

Got it.

[music].

Yes.

Okay.

Yes.

Thank you.

Okay.

Sure.

Okay.

Sure.

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

Thank you.

Okay.

Yes.

Thanks.

[music].

Yes.

Okay.

Yes.

Okay.

[music].

Yes.

Okay.

[music].

Yes.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

[music].

Okay.

[music].

Yes.

Okay.

Yes.

[music].

Sure.

Okay.

Thanks.

Yes.

Okay.

[music].

Okay.

[music].

Yes.

And welcome to our first quarter of 2020 earnings release conference call on the call for Mike Mcroberts, 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 now Steve will say a few words regarding forward looking statements.

Certain statements we will make today are considered forward looking statements as defined in the private Securities Litigation Reform Act of 995.

At December 31, 2022, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved first quarter revenues of $1 9 billion and net income of $90 5 million or $1 60 per diluted share.

We're proud to declare a cash dividend of 21 per common share.

In the first quarter, we experienced strong demand for new class eight and class four to seven drugs largely due to limited new drug production of the past few years.

There was a healthy widespread demand for aftermarket parts and services as well and we maintained our focus on strategic initiatives.

Support the large national police in operational excellence, we significantly outpaced the industry in medium duty truck sales as well as aftermarket sales and we are proud of our results in the first quarter.

In the aftermarket our parts service and body shop revenues were $648 million up 19, 3%.

<unk> ratio was 136, 5%.

In the first quarter, we experienced strong demand for parts and service for most of the customer segments, we support.

We continue to add service technicians to our workforce, notably mobile Tech business, which supports our long term strategy to expand our mobile presence across the country.

Looking ahead, we anticipate the rate of inflation to continue to slow and the parts revenue growth will moderate throughout the year when compared to our first quarter results. However, with our continued focus on long term initiatives, including strategically expanding our workforce to support mobile service efforts and national account.

We believe our after quarter aftermarket revenues will remain strong.

Turning to drug sales, we sold 4300 65 NUPLAZID.

<unk> grew six 4% from total U S market and two 2% of the Canada market.

While there is still pent up demand for new class eight trucks, we experienced healthy demand for most market segments, particularly over the road locational car hours energy customers and large national Blue ACD.

ACG research forecast U S class retail sales to be 259000 units in 2023, essentially flat compared to 2022.

And we'll continue to truck allocation may limit our growth potential our backlog remains strong and we believe our second quarter class eight truck sales will align with our first quarter results.

Overall, we expect our results will be consistent with the industry. This year.

Our class four through seven new truck sales reached 3038 units in the first quarter accounting for five 3% of the U S market and three 2% of the Canadian Margaret.

We experienced healthy demand from a variety of market segments.

Further while supply has not yet caught up with the needs of the market. We began to see truck manufacturers shift more resources back to producing medium duty trucks.

ACD research forecasts U S class four seven retail sales to be 253600 units in 2023.

Eight 6% from 2022.

Excuse me our used truck sales.

<unk> hundred 84 units in the first quarter down 29, 7% year over year.

Demand for used trucks remain relevant remained low largely due to the continuing increase in new production.

As new drugs and continues to improve we expect further deterioration in used truck pricing and we plan to carefully manage our used truck inventory levels until demand begins to increase in value stabilize.

Lease and rental revenue was up 21, 5% compared to the first quarter of 2002.

We continue to experience strong demand for leased vehicles and our rental utilization rates were solid in the first quarter we.

We expect our lease and rental operations to continue to make significant contributions.

To our overall profitability for the remainder of 2023.

Looking ahead, we will continue to monitor economic factors, which may impact our industry, but we believe our overall financial results will remain strong through the rest of 2023.

And our first question is from Justin long with Stephens. Your line is open.

Thanks, Good morning, and congrats on the quarter.

Thanks Jessica.

I'll start with parts and service Rusty would love to get your thoughts on parts and service growth over the remainder of the year and obviously, we're going to see some moderation.

Given what's happened and are happening with inflation, but is there anything else, that's driving that moderation or would you say your parts and service growth going forward kind of ex inflation is remaining pretty consistent.

No no I don't see anything out there we continue to execute.

On all of the strategic initiatives that we have been implementing rather consistently over the last over the last six or seven years to be honest.

I would tell you while it may moderate somewhat.

Plus given us.

Pretty large comps coming forward, we still believe we can close the year ago. Okay.

I would expect the next few quarters to slightly moderate some of the 19 plus percent understanding that yes there.

There were some acquisition stuff in there the Canadian stuff, but we were still well over 17% from the same towards score perspective in Q1.

So with that Guy to start we're talking.

High singles and low double.

Later this year, we'll just have to see how it plays out I can read it exactly but we will still see overall growth well outside of in place. So.

We we use we feel very good again about.

I think it's important.

Youll see that absorption rate number there I believe everybody I hope folks know, it's where it was the right number is.

The calculation of parts service and body shop gross profit versus the G&A of the dealership.

Well, we put out it's a 136 and a half now I think it's important to note that if you take our new acquisitions from last year and that would be the Canadian acquisition, along with our acquisition of summit. They are well below that number if you look at prior.

Stores that we had prior to those two acquisitions that number would be into the almost mid $1 <unk>.

That number I would've never thought we could ever achieve so.

What that really explains to you is the fact that.

There's plenty of upside in these other stores we over last year. We just brought him on for our business system really between March and August was just getting on the system right.

Youre regimented way of going to market to them is not an add water and stir thing. So those numbers for sure have room for growth in the coming years.

As they grow to catch up with the rest of our locations right.

So.

I feel very good about the overall parts and service outlook for us.

Going forward, regardless of where the markets where the market is you've got to understand we go to the market very diversified.

Not just hitting it one segment I always try to.

Explain that to people, we're not just doing over the road business.

We're very many different market segments, and the litigation side, so and vocational businesses.

Pretty good afternoon, right now so I mean, I could go on and on adjusted.

<unk>.

The quality of what I see the quality of earnings that are out there but.

That's.

Yes.

A little bit pledging point gross margin services.

A couple of quarters.

Well as you see G&A was sequentially up significantly from Q4, and Thats pretty normal for us in Q1 compared to Q4, we we incur a lot of what we'll categorize as benefit employee type benefit cost week, we issue our options payroll taxes kick back in which had.

Fall off as the year goes as people hit earnings amounts.

We typically in Q2 that will stabilize you won't see another sequential drop you will see it pretty flat, maybe even slightly down on the interest.

You will I would expect Q2 to be very similar to Q1 inventory levels are elevated versus last year. I think it was up about whatever eight nine and $10 million versus Q1 last year.

Exactly what you believe it to be it's a product of interest rates on our floor plan and carrying amounts of inventory you got to remember even though we're on allocation. We're turning them quick they sit in inventory a while while we bought them up and do things like that so.

I think I think the remainder of the year youre going to see the run rate similar to what it is.

Depending on your outlook for interest rates I think maybe there is another core pump I'm not sure. If there is much more than that so.

That's probably going to be very similar to Q1 for the remainder of the year.

Got it that's helpful and maybe I'll close with that high level question for Rusty when I think about the business.

Going forward it feels like we're going to see higher highs and higher lows and I look at valuation multiples today and Theyre still very compressed relative to what we've seen historically what do you think the market is missing.

Well.

Good a step out a little bit here, Justin but absolutely.

Yes.

Good question right.

We just had been much here.

To a 136, but well above that in the old stores combined we add the acquisitions in it.

I also believe the market doesn't realize that the normal replacement cycle for class eight in the U S. When.

When you take the last 10 year average has increased over 225000 units per year.

I think if the commercial market performance that we and other industry experts such as ACD research expected too.

We believe that we've significantly improved both our trough and peak earnings.

Since the last down cycle in 2020.

So the ACD from multiple perspective, basically is correct forecast for class eight is correct.

<unk> added.

217000 units in 'twenty, four and a peak of 311000 units 2006.

I've got to believe that our trough earnings would be pretty far north of $4 a share and peak earnings can be.

North of $8 a share.

For me Thats stepping out I, usually don't say that but I don't think people truly understand the company sometimes.

When you talk about those multiples and I've been looking at for the last couple of years and it could be a little frustrating from my perspective, So I think somewhat digs deep into the model looks at it and lays out the forecast of most industry experts we use ACC.

Thats, what youre going to come up with so I mean, I don't know a better way to explain it to you on that.

That makes a lot of sense. Thanks, Kurt Thanks, Christy I appreciate the time.

You bet.

Thank you one moment for our next question.

And our next question comes from Andrew <unk> with Bank of America. Your line is open.

Hey, Rusty.

Andrew Hey, guys, Hey, Hello to the team as well.

Thank you Andrew and the team says Hello back space.

So the question for you.

Thank you and I have had this debate for a while you guys are generating more and more cash flow.

You. It seems there is a level of frustration with where the stock is and I know you are buying back stock, but why not get more aggressive on stock buyback in this environment.

Because a couple of years ago, we were talking about a $4 is your peak earnings number and now it's your trough earnings number if the market is missing so much why not just <unk>.

Buyback more.

Well Andrew.

So on the table about that I'm not going to get that specific about it right. As you know we are consistent we did continue to buy back stock and the Golar drag of about 26 million or so back in the quarter I would exactly we got 150 million approved and whereby we bought back about $40 million of that sits approval and we plan on continuing that.

Through the end of the year, if not accelerating and I hear you.

So.

Everything's on the table as I've said to everybody.

As I sit here right here on this call and say this is the we increased our buyback to $150 million over the last few years of $100 million. When we really had any execute on it but we plan on doing.

Probably executing pretty close to what we've got out there as far as approval right now I can tell you that.

No.

I appreciate that can you talk about sort of the <unk>.

And of your parts and service business, because I think.

Relative to my expectation has been holding up better than expected.

What's driving that what do you expect the exit rate for the year to be a particularly as the comps get tougher and what does it say about sort of the underlying economy and.

How much of it we know that if you're changing your business model, where now that youre going after larger customers.

We know that in some cases people, who will drive your parts and service business out of them large.

New truck customers, a lot of things happening below the surface.

Just sort of unpack this business for us a little bit. Thank you.

That's a big question I think I touched on some of it a little bit earlier.

We feel great about our parts and service business. So good at it.

Continues to grow I mean look back if you just take the last two to three years and it has been a very consistent.

We've been outperforming our expectations zero over the last couple of years when it comes to growth sometimes.

We even underestimate I mean without getting into numbers, we even underestimate the power of the network. Okay. When you do have a network our size, which is by far the largest commercial network in the United States.

And you represent.

As many manufacturers as we do.

And you were able to also go after other brands some trucks.

For large customer because nobody really runs one brand anymore. Okay and you are equipped to do that I think.

And you take the approach, we do by leveraging off that network.

People do you have strategic initiatives like we put in.

For the last few years, whether it's somewhat gets too specific because of what we believe is proprietary to us.

Round the parts business around the service business you set goals to double your mobile service footprint in the next three four years.

And then you continue to execute on that you get the numbers, we're talking about I mean, when I first knew you Andrew if.

If we just started talking about this as stores. This isn't when you look at dealership locations running over a 140%.

Never ever believe we could do that but.

What we do and we continue to find what we continue to attract more customers again.

Given how we go to market our facilities our people everything of what customers are wanting.

Now when a bunch of hodgepodge mixed up.

Alright.

Performance from their service networks, I'm wondering one consistent consolidated Nance and I do believe that we provide the best in the marketplace.

Yeah.

That's all I can I can get into the numbers, but we're going to consistently continue to grow it we feel very good about that and even like I said the world is evolving.

I don't know what.

Going to customers that's why we're paying on this mobile thing.

Reaching out and going to customers, providing more better service.

The big cities continue to get more clogged up the part the point of taking a truck driving into a dealership dropping at all having to pick it up again those are all inhibitors, a person taken and producing revenue.

<unk>.

That's why the mobile the mobile thing makes a lot of sense.

Can't get into all of the drivers Andrew but the performance speaks for itself from the last few years and I don't see anything.

Going to change that.

So I mean, those are just without getting into numbers $1 billion. This much growth year I already did that.

Sure.

Those are the things that we believe set us apart when it comes to taking care of customers and at the end of the day is the coin every one of our boys Jerry says the customer is the boss.

And just the last question can you just walk that's my usual question can you just walk us from a macro standpoint to your point you have a lot of exposure.

So youre in Florida, and Texas and California.

The planning.

Our permit.

Just tell us in terms of the economy. What are you seeing because you really have uniquely informed.

Our view of the economy. Thank you.

No we haven't.

I would tell you let's start on the East Coast right, Florida still strong that was just in Florida two weeks ago.

That's about our largest mobile group those folks have over 60 mobile technicians working throughout the state of Florida.

Lower end lower Alabama, so their business continues to be strong and we expect a year.

And then last year out of Florida, you move up even further in the southeast.

Georgia continuing to grow in strong also.

I'm not going to give you any bad rewards I would tell you, Florida is extremely strong I would say that south Texas is extremely strong, but Houston market is growing Colorado seems to be doing a little bit better.

Southern California, I don't want to Miss anybody I'm, telling you it's broad based our interest and it goes back to Andrew.

<unk> back.

Two our customer mix to our market segment mix I say it all the time.

Yes.

Thoughts on below the pace, but we don't just over one market segment.

It's interesting that if you say I can tell you something like this to try to geographically everything solid some better than others. The mountain West is doing really well right now when I say that is Utah and Idaho.

But there are no weak spots that I can see on the math correctly.

Some of that or a little stronger than others, but.

The best thing to say, what I talked about the <unk>.

The company and the power.

Or whatever it is.

Two of the three largest customers on the international side or by business.

From parts and service don't even buy trucks from the international side and I'm not going to get into name specific names, but that tells you that we're able to take our customer and leverage across our whole network.

Whether she buys trucks for one side or the other whether they buy trucks from us at all we have many large customers that don't even buy trucks rubber, but we serviced by leveraging of that network.

So.

Getting a little.

Exactly.

Awesome.

Fort Knox.

Yes.

Still hanging in there the Midwest steel legs.

So wells Chicago area, So again.

I can rattle off forever as you know Andrew about the business because I am very proud of what our people, but it will.

Alright, thanks, so much for us to really appreciate it look forward to updates on the buyback.

Got it thanks Keith.

Keep that in mind.

Yes.

Thank you and I'm showing no further questions at this time I would like to turn it back over to Rusty rush for closing remarks.

Well we appreciate.

It was a big earnings day today.

I think every one of them all analysts were loaded with companies reporting today, but for those who participated and we thank you and we will talk to you again in July .

Yes.

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

Q1 2023 Rush Enterprises Inc Earnings Call

Request a DemoDemo

RUS

Rush Enterprises

Earnings