Q2 2023 Rush Enterprises Inc Earnings Call

[music].

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Rush Enterprises, Inc. Reports Second Quarter 2023 Earnings Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation. There will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rusty Rush, President, CEO and Chairman of the Board. Please go ahead.

[Operator Instructions] Please be advised that today's conference is being recorded.

Operator: I would now like to hand the conference over to your speaker today, Rusty Rush, President, CEO and Chairman of the Board. Please go ahead.

Rusty Rush: Well, good morning, and welcome to our second quarter 2023 earnings release conference call. On the call are 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.

Multiple: [Rusty Rush]  Now Steve will say a few words regarding forward-looking statements. [Steve Keller]  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.

Steve Keller: 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, 2022 and in our other filings with the Securities and Exchange Commission.

Rusty Rush: As indicated in our news release, we achieved second quarter revenues of $2 billion and net income of $98.3 million or $1.75 per diluted share. We are proud to declare a three-for-two stock split and a post stock split cash dividend of $0.17 per common share, a 21.4% increase from our previous quarterly dividend.

And then they've got $98 3 million or $1 75 per diluted share. We are proud of the great clear a three for two stock split and a post stock cash dividend of <unk> 17 cents per common share a 21, 4% increase from our previous quarterly dividend.

We are proud of the great clear a three for two stock split and a post stock cash dividend of <unk> 17 cents per common share a 21, 4% increase from our previous quarterly dividend.

Rusty Rush: In the second quarter, we achieved strong financial results due to revenue growth from large national accounts, as well as ongoing pent-up demand from new Class 8 and Class 4-7 trucks caused by limited new truck production over the past few years. Our commitment to our strategic aftermarket initiatives and our continued focus on operational excellence were also significant contributors, and we are proud of our results in the second quarter.

Our commitment to our strategic aftermarket initiatives and our continued focus on operational excellence. Were also significant contributors and we are proud of our results in the second quarter.

Were also significant contributors and we are proud of our results in the second quarter.

Rusty Rush: In the aftermarket, our parts, service and body shop revenues were $651 million, up 8.9%. And our absorption ratio was a record 139.7%. In the second quarter, there was healthy demand for parts and sales service, especially from refuse customers and large national accounts.

In the second quarter, there was healthy demand for parts and service, especially from refuse customers and large national accounts.

Rusty Rush: However, over-the-road customers were negatively impacted by several economic factors, including high interest rates, depressed freight volumes and low freight rates. These difficult industry conditions are particularly tough on small over-the-road carriers, and they limited overall aftermarket growth in the commercial vehicle industry.

These difficult industry conditions are particularly tough on small over the road carriers. And they limited overall aftermarket growth in the commercial vehicle industry.

And they limited overall aftermarket growth in the commercial vehicle industry.

Rusty Rush: Though our aftermarket revenue growth slowed compared to prior quarters, the diversity of our customer base helped us to mitigate these tough market conditions, and we significantly outpaced the industry this quarter.

Rusty Rush: Looking ahead, we expect aftermarket growth will continue to moderate throughout the remainder of the year, and we are closely monitoring economic factors which could impact demand for parts and service. However, we continue to add service technicians to our workforce, notably mobile technicians, which is a key element in our long-term strategy. With our continued focus on expanding our aftermarket offerings and supporting national accounts, we believe our aftermarket revenues will remain strong.

With our continued focus on expanding our aftermarket offerings and supporting National accounts, we believe our aftermarket revenues will remain strong.

Rusty Rush: Turning to truck sales. We sold 4,300 Class 8 trucks in the quarter, accounting for 5.7% of the total U.S. market and 1.8% of the Canadian market. The low freight rates are impacting small carriers, but strong widespread demand continues due to limited truck production over the past few years. Although we are still operating within the confines of truck allocation, we are confident we are using our allocation in a way that provides the most long-term benefits for our business and enables us to effectively navigate the current freight recession.

Low freight rates are impacting small carriers, but strong. Excuse me strong widespread demand continues due to limited truck production over the past few years, although we are still operating within the confines of truck allocation work. We are confident we are using our allocation in a way that provides the most long term benefits for our business and enables us to effectively navigate the current freight recession.

Excuse me strong widespread demand continues due to limited truck production over the past few years, although we are still operating within the confines of truck allocation work. We are confident we are using our allocation in a way that provides the most long term benefits for our business and enables us to effectively navigate the current freight recession.

We are confident we are using our allocation in a way that provides the most long term benefits for our business and enables us to effectively navigate the current freight recession.

Rusty Rush: ACT Research forecasts U.S. Class 8 retail sales to be 272,600 in 2023, up 5.1% compared to 2022. New truck production is improving but supply issues still exist that may limit truck deliveries in the third quarter. However, due to pent-up demand and customers beginning to seek new commercial vehicles ahead of emissions regulations and associated price increases, we believe our Class 8 truck sales will remain strong.

Five 1% compared to 2022. New truck production is improving but supply issues still exist that may limit truck deliveries in the third quarter. However, due to pent up demand and customers beginning to seek new commercial vehicles ahead of emissions regulations and the <unk>. Associated price increases, we believe our class eight truck sales will remain strong.

New truck production is improving but supply issues still exist that may limit truck deliveries in the third quarter. However, due to pent up demand and customers beginning to seek new commercial vehicles ahead of emissions regulations and the <unk>. Associated price increases, we believe our class eight truck sales will remain strong.

However, due to pent up demand and customers beginning to seek new commercial vehicles ahead of emissions regulations and the <unk>. Associated price increases, we believe our class eight truck sales will remain strong.

Associated price increases, we believe our class eight truck sales will remain strong.

Rusty Rush: Our Class 4-7 new truck sales reached 3,477 units in the second quarter, an increase of 25% compared to Q2 of 2022, and accounted for 5.2% of the U.S. market and 2.6% of the Canadian market. We experienced strong demand from a variety of market segments. And truck manufacturers that we represent have increased medium-duty truck production, which has enabled us to outperform the market in the first half of the year.

Accounted for five 2% of the U S market and two 6% of the Canadian market. We experienced strong demand from a variety of market segments and truck manufacturers that we represent have increased medium duty truck production, which has enabled us to outperform the market in the first half of the year.

We experienced strong demand from a variety of market segments and truck manufacturers that we represent have increased medium duty truck production, which has enabled us to outperform the market in the first half of the year.

Rusty Rush: ACT Research forecasts Class 4-7 retail sales to be 248,150 units in 2023 up 6.2% from 2022. Demand remains strong for medium-duty trucks. And as customers prepare for previously-noted emission regulations, we believe our third quarter sales will be fairly consistent with our second quarter results and our medium-duty growth will outpace the industry in 2023.

In 2023 up. Six 2% from 2022 demand remains strong for medium duty trucks and as customers prepare for previously noted emission regulations. We believe our third quarter sales will be fairly consistent with our second quarter results. Medium duty growth will outpace the industry in 2023.

Six 2% from 2022 demand remains strong for medium duty trucks and as customers prepare for previously noted emission regulations. We believe our third quarter sales will be fairly consistent with our second quarter results. Medium duty growth will outpace the industry in 2023.

Medium duty growth will outpace the industry in 2023.

Rusty Rush: Our used truck sales reached 1,869 units in the second quarter, up 14.7% year-over-year. Increased new truck production and soft freight rates continue weak demand for used trucks in the second quarter.

Increased new truck production and saw freight rates.

Weak demand for used trucks in the second quarter.

Rusty Rush: Used truck values remain low, though it appears pricing has begun to stabilize. With freight rates not expected to substantially improve this year and with new truck production expected to remain strong, we believe used truck demand and pricing will remain low through 2023. We plan to continue to closely manage inventory levels until demand begins to increase and we are certain that used truck prices have stabilized.

With freight rates are not expected to stab substantially improved this year and with new truck production expected to remain strong we believe used truck demand and pricing will remain low through 2023. We plan to continue to closely manage inventory levels until demand begins to increase and we are certain that used truck prices have stabilized.

We plan to continue to closely manage inventory levels until demand begins to increase and we are certain that used truck prices have stabilized.

Rusty Rush: As we look ahead, we expect new truck supply will satisfy the pent-up demand for commercial vehicles by the end of the year. We continue to monitor economic factors, which could have an impact on our industry. But due to the diversity of our customer base, combined with our continued focus on operational excellence and supporting large national fleets, we believe our overall financial results will remain strong through the rest of 2023.

We believe our overall financial results will remain strong through the rest of 2023.

Rusty Rush: Before we close, it is important for me to thank our employees for their great work for providing an outstanding experience for our customers while staying focused on our company's long-term strategic initiatives. And with that, I'll take your questions. Okay.

And with that I'll take your questions.

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Jamie Cook from Credit Suisse. Your line is now open.

Okay. Yeah. Our first question comes from the line of Jamie Cook from Credit Suisse. Hey, Your line is now open.

Yeah. Our first question comes from the line of Jamie Cook from Credit Suisse. Hey, Your line is now open.

Our first question comes from the line of Jamie Cook from Credit Suisse. Hey, Your line is now open.

Hey, Your line is now open.

Jamie Cook: Hi, good morning. Nice quarter.

Rusty Rush: Thank you, Jamie. Good morning to you.

Jamie Cook: Good morning. So Rusty, a couple of questions. One, I was interested in your thoughts. You talked about people buying ahead of price increases for 2024 and ahead of emission standards, I'm presuming you're assuming the 2027 emissions. But can you just elaborate on what you're hearing about pricing in 2024 and the ability to get price just because pricing has been so strong? And just your view on the upcoming emission standards, what it means for the cost of the truck, et cetera? And then my second question, your margins for new and used truck sales were exceptional at 10.1%. And if you look at gross profit per truck sold, you're just at sort of record levels. So I'm wondering, how much do you have in backlog of trucks that sort of - this margin level? And how do we think about normalized margins over the next sort of 12 to 18 months? Thank you.

Rusty a couple of questions one. I was interested in your thoughts you talked about people buying ahead of price increases for 2024. Ahead of emissions standards I'm presuming, you're assuming the 2027 emissions, but can you just elaborate on what youre hearing about pricing in 2024, and the ability to get price just because pricing has been so strong. What's your view on the upcoming emission standard what it means for the cost of the truck et cetera, and then my second question Mike.

I was interested in your thoughts you talked about people buying ahead of price increases for 2024. Ahead of emissions standards I'm presuming, you're assuming the 2027 emissions, but can you just elaborate on what youre hearing about pricing in 2024, and the ability to get price just because pricing has been so strong. What's your view on the upcoming emission standard what it means for the cost of the truck et cetera, and then my second question Mike.

Ahead of emissions standards I'm presuming, you're assuming the 2027 emissions, but can you just elaborate on what youre hearing about pricing in 2024, and the ability to get price just because pricing has been so strong. What's your view on the upcoming emission standard what it means for the cost of the truck et cetera, and then my second question Mike.

What's your view on the upcoming emission standard what it means for the cost of the truck et cetera, and then my second question Mike.

And then my second question, your margins for new and used truck sales were exceptional at 10.1%. And if you look at gross profit per truck sold, you're just at sort of record levels. So I'm wondering, how much do you have in backlog of trucks that sort of - this margin level? And how do we think about normalized margins over the next sort of 12 to 18 months? Thank you.

New and used truck sales were exceptional at 10, 1% and if you look at gross profit per truck. Youre just at sort of record level, So I'm wondering. How much do you have in backlog of trucks that sort of. This margin level and how do we think about normalized margins. Over that. Sorry, 12 to 18 months. Thank you.

Youre just at sort of record level, So I'm wondering. How much do you have in backlog of trucks that sort of. This margin level and how do we think about normalized margins. Over that. Sorry, 12 to 18 months. Thank you.

How much do you have in backlog of trucks that sort of. This margin level and how do we think about normalized margins. Over that. Sorry, 12 to 18 months. Thank you.

This margin level and how do we think about normalized margins. Over that. Sorry, 12 to 18 months. Thank you.

Over that. Sorry, 12 to 18 months. Thank you.

Sorry, 12 to 18 months. Thank you.

Rusty Rush: Sure, Jamie. Well, when I talk about truck pricing increasing and I talk about emissions, they sort of go hand-in-hand. Understand that the whole country is not on the same - running down the same highway here. You've got CARB, right, in California. And we happen to have quite a few stores in Southern California. So that's where you really, I think, from a pricing perspective, you're going to see the biggest hits, is in the CARB compliance states as they roll in.Sure, Jamie. Well, when I talk about truck pricing increasing and I talk about emissions, they sort of go hand-in-hand. Understand that the whole country is not on the same - running down the same highway here. You've got CARB, right, in California. And we happen to have quite a few stores in Southern California. So that's where you really, I think, from a pricing perspective, you're going to see the biggest hits, is in the CARB compliance states as they roll in.

Talk about emissions they sort of go hand in hand understand the whole country is not on the same.

Running down the same highway here, you've got car right in California, and we happen to have quite a few stores in southern California. So that's where you really I think from a pricing perspective, youre going to see the biggest hits. Isn't the carb compliant states as they roll in.

So that's where you really I think from a pricing perspective, youre going to see the biggest hits. Isn't the carb compliant states as they roll in.

Isn't the carb compliant states as they roll in.

Rusty Rush: As I look from a pricing perspective across the rest of the country, if they're not running in California or a CARB-effective state, I don't look for it to be anything like it has been. I do think pricing will flatten somewhat, maybe slight increases. But the real increases will be in the CARB-compliant states for now until we get out to 2027.

Across the rest of the country, if they're not running in California, or a carbon second state.

Don't look for it to be anything like it has been.

Pricing flattened somewhat might be slight increases but.

The real increases will be.

Carb compliant states for now.

Until we get out to 2027.

Rusty Rush: And as we all know, we - everybody, ACT, for sure, we look at next year and expect possibly down up to 15% from a Class 8 perspective. But '25 and '26, barring unforeseen overall economic issues in this country, should be - '26 should be the biggest year ever, okay, given with all the new technologies rolling in, the cost of them; the lack, I think, of what - I just don't - I think we're a little ahead of ourselves with some of these loss myself. From a technology perspective, I don't think we're going to be really ready for it. I'm not going to get it all that right now, but from an infrastructure, et cetera, et cetera.

Everybody ACD for sure we look at next year, and expect possibly down to 15% of the class eight perspective, but 25 and 26 barring unforeseen.

Overall economic issues in this country should be.

So it should be the biggest year ever given. With all the new technologies rolling in the cost of them the lack I think of what. I just don't I think we're a little ahead of ourselves with some of these loss myself. From a technology perspective, I don't think we're going to be really ready for it and I'm not going to get it all that right now, but from an infrastructure et cetera et cetera. So I do believe.

With all the new technologies rolling in the cost of them the lack I think of what. I just don't I think we're a little ahead of ourselves with some of these loss myself. From a technology perspective, I don't think we're going to be really ready for it and I'm not going to get it all that right now, but from an infrastructure et cetera et cetera. So I do believe.

I just don't I think we're a little ahead of ourselves with some of these loss myself. From a technology perspective, I don't think we're going to be really ready for it and I'm not going to get it all that right now, but from an infrastructure et cetera et cetera. So I do believe.

From a technology perspective, I don't think we're going to be really ready for it and I'm not going to get it all that right now, but from an infrastructure et cetera et cetera. So I do believe.

Rusty Rush: So I do believe outside of any economic - overall general economic issues in the country, you're going to see pull forward like you've probably never seen as people - especially when folks get to watch what goes on in California and the rest of the country because I really don't believe we're prepared for this change quite as quickly. As you know, they just settled, VPA did and just settled with CARB and some time line stuff, and they're going to be aligned. Both of them will be aligned once we get to '27, but they won't be in the interim.

Youre going to see a pull forward like you probably never seen.

As people, especially when folks get to watch what goes on in California, and the rest of the country because I really don't believe we're prepared.

For this change quite as quickly. As you know they just settled. EPA did in June . So with carb on some timeline stuff. To be aligned both of them and we align once we get to 'twenty seven but they won't be at the Antelope. So.

As you know they just settled. EPA did in June . So with carb on some timeline stuff. To be aligned both of them and we align once we get to 'twenty seven but they won't be at the Antelope. So.

EPA did in June . So with carb on some timeline stuff. To be aligned both of them and we align once we get to 'twenty seven but they won't be at the Antelope. So.

So with carb on some timeline stuff. To be aligned both of them and we align once we get to 'twenty seven but they won't be at the Antelope. So.

To be aligned both of them and we align once we get to 'twenty seven but they won't be at the Antelope. So.

Rusty Rush: So, a lot of that comment by me was really around the CARB states, not necessarily around the rest of the country when it comes to pricing, just the ones that have to be clean idle approved, et cetera. I'm not going to - probably too technical for me, but that's where the pricing - the real price increases are going to come in those states more than I do believe the rest - especially next year, with the overall market possibly being down as what most people think, and not bad.

Round.

Carb States. Not necessarily around the rest of the country by comes to price. The ones that have to be clean I'll approved et cetera. Technical for me even. But thats one of the pricing the real price increases are going to come. And those states more than I do believe the rest, especially next year with the overall market, possibly being down is what most people think. Ed.

Not necessarily around the rest of the country by comes to price. The ones that have to be clean I'll approved et cetera. Technical for me even. But thats one of the pricing the real price increases are going to come. And those states more than I do believe the rest, especially next year with the overall market, possibly being down is what most people think. Ed.

The ones that have to be clean I'll approved et cetera. Technical for me even. But thats one of the pricing the real price increases are going to come. And those states more than I do believe the rest, especially next year with the overall market, possibly being down is what most people think. Ed.

Technical for me even. But thats one of the pricing the real price increases are going to come. And those states more than I do believe the rest, especially next year with the overall market, possibly being down is what most people think. Ed.

But thats one of the pricing the real price increases are going to come. And those states more than I do believe the rest, especially next year with the overall market, possibly being down is what most people think. Ed.

And those states more than I do believe the rest, especially next year with the overall market, possibly being down is what most people think. Ed.

Ed.

Rusty Rush: This is no different than what we've talked about for the last two years. But there'll be a little bit of a breather until everybody really gets after it, I think, in replacing - accelerating the repurchases again before we get to the largest increases we've ever seen. And I know you asked me, well, how much. I think it's a little early for me to tell because I'm getting different numbers across the board from people. But upwards of $20,000 or more for a diesel truck when you get out into '26, '27. So - and a lot has to do with where you're at.

For the last two years, but.

There'll be a little bit of a breather until everybody really gets after it I think and replacing accelerating their repurchases again before we get too.

The largest increases we've ever seen I know you asked me what how much. I think it's a little early for me to tell because I'm getting different numbers across the board from people, but. Upwards of $20000 or more for a diesel truck when you get out into 'twenty six 'twenty seven. And a lot has to do with where youre at.

I think it's a little early for me to tell because I'm getting different numbers across the board from people, but. Upwards of $20000 or more for a diesel truck when you get out into 'twenty six 'twenty seven. And a lot has to do with where youre at.

Upwards of $20000 or more for a diesel truck when you get out into 'twenty six 'twenty seven. And a lot has to do with where youre at.

And a lot has to do with where youre at.

Rusty Rush: As far as margins and where we're at, I think you asked me that question, yes, you got to remember, our used truck margins got back in line. Okay? In fact, our used truck margins are pretty good, right? They were 11%. We haven't seen that since Q2 of last year, so as you know, as we had been fighting the used issue. But as you know, if you go back, remember, we got - we attacked these truck market immediately when we saw it go down in Q3 of last year. If you look back then, our margins were 1% that quarter. But as we always do, we make sure we manage our inventory properly market-to-market every quarter, really every day.

Been fighting the used issue, but as you know you go back remember we got we attacked the used truck market immediately when we saw it go down in Q3 of last year. If you look back our margins were 1% that quarter, but we always do we make sure we manage our inventory properly in the market to market.

Every quarter.

Every day.

Rusty Rush: And so we're back in line and keeping up at a better pace with the decline in values. Now the decline in values, as I said, on used is still more than what I would think would be normal depreciation, but it has slowed slightly from the big drops it was taking. Okay? But the demand is not real good either. I mean we had a nice demand quarter, but we wholesale a lot of trucks. We're keeping everything churning, but we were still able to make margin because we have gotten our inventory and keeping it in line and still being able to sell a lot of new trucks, trade for trucks.

Better pace with the decline in value there.

Decline in values as I said on used is still more than what I would think would be normal normal depreciation, but it has slowed slightly from the big drops it was taking okay.

But the demand is not real good eager I mean, we had a nice demand quarter, but we also have a lot of trucks. <unk> been everything journey, but we are still having to make margin. Because we have got in our inventory. Keeping it in line and still being able to sell a lot of new trucks trade for drugs.

<unk> been everything journey, but we are still having to make margin. Because we have got in our inventory. Keeping it in line and still being able to sell a lot of new trucks trade for drugs.

Because we have got in our inventory. Keeping it in line and still being able to sell a lot of new trucks trade for drugs.

Keeping it in line and still being able to sell a lot of new trucks trade for drugs.

Rusty Rush: And so we felt good about that. So I don't - you said, well, how long can you hold it? I mean only time tells. I don't see - even with the market going down next year, I don't see any big decline. Could it decline slightly? You bet. Okay. But I don't see - there's not some 20% decline or anything out there for sure. So that'll be - it'll be a little more - we'll have to go back to selling trucks again for a while, I think, the next year.

All the time tells I don't see even with the market going beyond next year I don't see any big decline could it declined slightly you bet, okay, but I don't see there's not some 20% decline or anybody out there for sure. So that'll be it'd be a little more we'll have to go back to selling trucks again for a while I think there next year.

So that'll be it'd be a little more we'll have to go back to selling trucks again for a while I think there next year.

Rusty Rush: And by the time we get into Q2, Q3, I mentioned that I think most of the pent-up demand will be taken care of but there's other - I mean I'm going to talk a - I ramble a lot. But there's good things on the horizon, right? We haven't spent any of that money. It has not been invested in the - we act in all the infrastructure we build yet. I mean that money is still to be spent. Well, that means there's going to be trucks being bought, too, in different sectors.

I think most of the pent up demand will be taken care of but theres. Other taco out in August I Ramble, a lot. There's good things on the horizon right. We havent. We havent spent any of that money has not been invested in the year. And all of the infrastructure rebuild yet still to be spent one that means there's going to be trucks being bought two in different sectors.

And all of the infrastructure rebuild yet still to be spent one that means there's going to be trucks being bought two in different sectors.

Rusty Rush: As I said, the over-the-road sector has been hammered. Just go read all the public reports. So whenever you read there, you can multiply it. When you talk about small carriers, you don't see. So we'll be back to seven trucks again but may create a little bit more competition out there. But I don't see any big, heavy decline across the board because I don't see used getting - I don't think we're going to go back to a 1% used margin, which blends into all of it anyway.

The over the road sector has been hammered just go read all the public reports so whenever you re there you could multiply it when you're talking about small carriers you don't see so. We'll be back to selling drugs again. But yes, it may create a little bit more. Competition out there, but I don't see any big big heavy decline across the board because I don't see us getting I don't think we're going to go back to a 1% used margin, which blends into all of it anyway.

We'll be back to selling drugs again. But yes, it may create a little bit more. Competition out there, but I don't see any big big heavy decline across the board because I don't see us getting I don't think we're going to go back to a 1% used margin, which blends into all of it anyway.

But yes, it may create a little bit more. Competition out there, but I don't see any big big heavy decline across the board because I don't see us getting I don't think we're going to go back to a 1% used margin, which blends into all of it anyway.

Competition out there, but I don't see any big big heavy decline across the board because I don't see us getting I don't think we're going to go back to a 1% used margin, which blends into all of it anyway.

Multiple: [Jamie Cook] Okay. All right. Thank you so much. I appreciate it. Nice quarter. [Marvin Rush]  As always, Jamie. Thank you, Jamie.

Operator: Thank you. Our next question comes from Andrew Obin from Bank of America.

Our next question comes from Andrew Obin from Bank of America.

Andrew Burris Obin: Hi Rusty, Steve. Good morning.

Rusty Rush: Good morning.

Andrew Burris Obin: Just a question. I think in this cycle, you guys have talked how SG&A is a big focus for the company. And as you think about volumes into '24, how do you think about controlling SG&A, right? Because I think your message was that, historically, you guys have done a fantastic job on controlling SG&A right out of the downturn. But in the prior cycles, what's happening is sort of let it go. I know you've changed how you control SG&A in this cycle. What kind of implications does it have going into '24? Thank you.

I think in this cycle you guys have talked how SG&A. Is a big focus for the company and as you think about volumes into <unk>. 24. How do you think about controlling SG&A right because I think our message was that historically you guys have done a fantastic job on controlling SG&A right out of the downturn, but in the prior cycles. We are happy to sort of let it go I know you've changed how you control SG&A in this cycle, what kind of implications does it have going into 'twenty four. Thank you okay sure.

Is a big focus for the company and as you think about volumes into <unk>. 24. How do you think about controlling SG&A right because I think our message was that historically you guys have done a fantastic job on controlling SG&A right out of the downturn, but in the prior cycles. We are happy to sort of let it go I know you've changed how you control SG&A in this cycle, what kind of implications does it have going into 'twenty four. Thank you okay sure.

24. How do you think about controlling SG&A right because I think our message was that historically you guys have done a fantastic job on controlling SG&A right out of the downturn, but in the prior cycles. We are happy to sort of let it go I know you've changed how you control SG&A in this cycle, what kind of implications does it have going into 'twenty four. Thank you okay sure.

How do you think about controlling SG&A right because I think our message was that historically you guys have done a fantastic job on controlling SG&A right out of the downturn, but in the prior cycles. We are happy to sort of let it go I know you've changed how you control SG&A in this cycle, what kind of implications does it have going into 'twenty four. Thank you okay sure.

We are happy to sort of let it go I know you've changed how you control SG&A in this cycle, what kind of implications does it have going into 'twenty four. Thank you okay sure.

Rusty Rush: Okay. Sure Andrew. Well, first off, remember, we break it in two pieces. There's S, and there's G&A. S is nothing more than a derivative directly correlated to truck sales. So as percentages remain pretty constant of what the S percentage is of truck sales. So if truck sales go down, S is going to go down. Okay? If they go up, it's going to go up. So there's a very distinct correlation between those two.

There is nothing more than a derivative of a rapid directly correlated to truck sales. No. Synergies remain pretty constant at what the percentages out product sales. So if truck sales go down ask is going to go down okay. If I go up it's going to go up so. Barry just creates a distinct correlation between those two.

No. Synergies remain pretty constant at what the percentages out product sales. So if truck sales go down ask is going to go down okay. If I go up it's going to go up so. Barry just creates a distinct correlation between those two.

Synergies remain pretty constant at what the percentages out product sales. So if truck sales go down ask is going to go down okay. If I go up it's going to go up so. Barry just creates a distinct correlation between those two.

If I go up it's going to go up so. Barry just creates a distinct correlation between those two.

Barry just creates a distinct correlation between those two.

Rusty Rush: G&A. Well, let's go back, and let's think about this. There's one thing I think we -- a lot of businesses. I know we have. COVID was an interesting time, 2020, right? We learned a lot, and I think we've managed to carry some of -- a lot of that discipline over into the last couple of years, and we believe we'll be able to continue to carry that discipline from an expense perspective.

Well, let's go back and just think about this there is one thing I think a lot of businesses I know we have. Covid was an interesting time 2020, right we learned a lot. I think we've managed to carry some of that. That discipline. Over into the last couple of years, and we believe we will be able to continue to carry that discipline from an expense perspective.

Covid was an interesting time 2020, right we learned a lot. I think we've managed to carry some of that. That discipline. Over into the last couple of years, and we believe we will be able to continue to carry that discipline from an expense perspective.

I think we've managed to carry some of that. That discipline. Over into the last couple of years, and we believe we will be able to continue to carry that discipline from an expense perspective.

That discipline. Over into the last couple of years, and we believe we will be able to continue to carry that discipline from an expense perspective.

Over into the last couple of years, and we believe we will be able to continue to carry that discipline from an expense perspective.

Rusty Rush: We're -- this year would normally be a year where what I would call quality of earnings would be getting worse than what it is. We have become a lot better expense managers, not just here at corporate, but our people in the field have become very - much more disciplined in our approach. And the technologies we have allows us with our systems to really measure and monitor stuff, I believe, unlike and better than anybody else.

Getting worse than what.

What it is we have become a lot better.

Expense managers, not just here at corporate but our people in the field. Big. It's a much more disciplined in our approach. And. The technology, we have allows us with our systems to really measure and monitor stuff I believe unlike and better than anybody else.

Big. It's a much more disciplined in our approach. And. The technology, we have allows us with our systems to really measure and monitor stuff I believe unlike and better than anybody else.

It's a much more disciplined in our approach. And. The technology, we have allows us with our systems to really measure and monitor stuff I believe unlike and better than anybody else.

And. The technology, we have allows us with our systems to really measure and monitor stuff I believe unlike and better than anybody else.

The technology, we have allows us with our systems to really measure and monitor stuff I believe unlike and better than anybody else.

Rusty Rush: As you know, we have our own SAP system that we continually invest in. It gives us all the real-time stuff. And then we - just sort of like some sports teams. We've got a salary cap, okay, and our people know it. And it sometimes can be a little difficult, especially in the heat of summer. But the expense spend is tied directly to the gross profit. So going up, there's a certain percentage we can spend. Going back, there's a certain percentage that needs to be cut.

Just sort of idle some sports teams. We've got a salary cap, okay, and our people know it sometimes can be a little difficult, especially in the heat of summer, but the nellix. Spend is tied directly to the gross profit. So going up. There is a certain percentage we can spend going back there is a certain percentage of it needs to be cut so.

We've got a salary cap, okay, and our people know it sometimes can be a little difficult, especially in the heat of summer, but the nellix. Spend is tied directly to the gross profit. So going up. There is a certain percentage we can spend going back there is a certain percentage of it needs to be cut so.

Spend is tied directly to the gross profit. So going up. There is a certain percentage we can spend going back there is a certain percentage of it needs to be cut so.

So going up. There is a certain percentage we can spend going back there is a certain percentage of it needs to be cut so.

There is a certain percentage we can spend going back there is a certain percentage of it needs to be cut so.

Rusty Rush: So I think we're -- I know we are in better shape to manage any cyclicality that comes at us in a softer market. And I think the most important thing is not just the G&A piece, but I said it in the call or on the press release is the diversity of our customer base. And I know I'm going to jump off G&A here. But when you look at how -- just read all the carriers' reports. All right? They're getting hammered. Okay? Their contract spot rate is down 20-plus percent. Well, that's the used truck guy, that's the low, small carrier, the owner-operator. Those guys have been getting crushed, and even the big truckload guys and the big LTL guys.

I know we are in better shape. Manage any cyclicality that comes at us. In a softer market and I think the most important thing is not just the G&A piece, but I said it in the. In the call around the press releases the diversity of our customer base. And I know I'm not going to jump off G&A here, but when you look at just $3 carrier's reports. We're getting hammered okay. Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

Manage any cyclicality that comes at us. In a softer market and I think the most important thing is not just the G&A piece, but I said it in the. In the call around the press releases the diversity of our customer base. And I know I'm not going to jump off G&A here, but when you look at just $3 carrier's reports. We're getting hammered okay. Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

In a softer market and I think the most important thing is not just the G&A piece, but I said it in the. In the call around the press releases the diversity of our customer base. And I know I'm not going to jump off G&A here, but when you look at just $3 carrier's reports. We're getting hammered okay. Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

In the call around the press releases the diversity of our customer base. And I know I'm not going to jump off G&A here, but when you look at just $3 carrier's reports. We're getting hammered okay. Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

And I know I'm not going to jump off G&A here, but when you look at just $3 carrier's reports. We're getting hammered okay. Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

We're getting hammered okay. Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

Got it bright spot rates down 20, plus percent well, that's the used truck Guy thats the. Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

Small carrier of the owner operator, those guys have been getting crushed and even the big truckload guys in a big LPL.

Rusty Rush: I was reading reports this morning. They've had a - and it didn't start three months ago. This has been going on for a year. We're hoping - and that's still the biggest sector. Do realize that the small carriers are still almost one-third of our business, the unforeseen thing. So that's why I was especially proud of the results that we made. We were slightly back in G&A in Q2 from Q1. So obviously, we made some adjustments, and I would expect us to continue to make those adjustments as dictated by the market.

And then exist start three months ago. This has been going on for a year. Hope and Thats still the biggest sector did utilize at the small carriers are still almost a third of our business. The unforeseen thing. So that's why I was especially proud of the results. We made. We were slightly back in G&A in Q2 from Q1. So obviously, we made some investments and I would expect us to continue to make the adjustments. As dictated by the market.

Hope and Thats still the biggest sector did utilize at the small carriers are still almost a third of our business. The unforeseen thing. So that's why I was especially proud of the results. We made. We were slightly back in G&A in Q2 from Q1. So obviously, we made some investments and I would expect us to continue to make the adjustments. As dictated by the market.

We made. We were slightly back in G&A in Q2 from Q1. So obviously, we made some investments and I would expect us to continue to make the adjustments. As dictated by the market.

We were slightly back in G&A in Q2 from Q1. So obviously, we made some investments and I would expect us to continue to make the adjustments. As dictated by the market.

As dictated by the market.

Rusty Rush: So -- but that diversity of customer base, I'm telling you, there is -- and our continued focus. And you say when you talk about big fleets, I've talked about national accounts. Okay, let's just call it national accounts. Our continued drive of national accounts while leveraging off the largest map of any dealer group in the country and going to market as one is going to carry us through whatever happens. We can't make a market, but we do know for sure manage better than we ever have historically.

Continued focus when you said when you talk about <unk> I'm talking about national accounts, Okay, Let's just call it national accounts I continue. Drive of National accounts, while leveraging off the largest map of any dealer group in the country. And going to market as one is going to carry us through whatever happens. We can't make a market, but <unk> sure manage better than we ever have historically.

Drive of National accounts, while leveraging off the largest map of any dealer group in the country. And going to market as one is going to carry us through whatever happens. We can't make a market, but <unk> sure manage better than we ever have historically.

And going to market as one is going to carry us through whatever happens. We can't make a market, but <unk> sure manage better than we ever have historically.

We can't make a market, but <unk> sure manage better than we ever have historically.

Andrew Burris Obin: Excellent. Just maybe a follow-up question that I usually ask. You talked about over-the-road fleets. But can you just talk about -- you always have fantastic fleets in the economy. Maybe what are you seeing in off-road, vocational? What are you seeing construction in California, Texas, Florida, Midwest? What are you seeing on waste? What are you seeing from guys like FedEx, UPS? Just would love to get your take on what's happening in the underlying economy.

Over the road. Fleets, but can you just talk about you always have fantastic reason the economy. Maybe what are you seeing. In off road vocational what are you seeing construction, California, Texas, Florida Midwest. What are you seeing on waste what are you seeing from guys like Fedex <unk>, just would love to get your take on what's happening in the underlying economy.

Fleets, but can you just talk about you always have fantastic reason the economy. Maybe what are you seeing. In off road vocational what are you seeing construction, California, Texas, Florida Midwest. What are you seeing on waste what are you seeing from guys like Fedex <unk>, just would love to get your take on what's happening in the underlying economy.

Maybe what are you seeing. In off road vocational what are you seeing construction, California, Texas, Florida Midwest. What are you seeing on waste what are you seeing from guys like Fedex <unk>, just would love to get your take on what's happening in the underlying economy.

In off road vocational what are you seeing construction, California, Texas, Florida Midwest. What are you seeing on waste what are you seeing from guys like Fedex <unk>, just would love to get your take on what's happening in the underlying economy.

Rusty Rush: Sure. Well, freight is down. I mean if you really -- but I don't -- the recession we've seen in freight, I don't think is fully indicative. It's really painted ruin of what's going on that I see across the board. I think it's still pretty strong in a lot of areas we are. It's just the over the road got really crossed because inventory levels got too high. We couldn't get inventory. Then everybody just took too much inventory in '22 on the retail -- from retail, right, and so -- and then the supply and demand around trucks. And so that's why all the rates have come down for all the carriers, as you can read. And they've had to slug it out through there.

Well brace down.

Really but I don't.

I don't.

The recession, we've seen in freight.

I don't think its fully indicative as really good group of what's gone on that I see across the board.

I think.

Still.

<unk> strong and a lot of areas. We are it's just the over the road got really crushed because inventory levels got too high.

We couldnt get inventory than everybody just took too much inventory in 'twenty two on the retail from retail right and so. And then the supply and demand around the trucks and so while the rates have come down for all the carriers as you can read and they've had to slug it out through there.

And then the supply and demand around the trucks and so while the rates have come down for all the carriers as you can read and they've had to slug it out through there.

Rusty Rush: I don't think it's terrible to them. The small guy has been terrible, too. But the larger guys with the stronger balance sheets have been able to manage through the interest rates and contract rate -- interest rates up, contract rates down, et cetera, et cetera. But the overall local economy, I think, is hanging in there. At least, that's what we see. Okay. We see that. It's just that -- but inventory levels, I think, are coming down.

Contract rate interest rates up godrej rigs down et cetera et cetera. But the overall local economy, so I think. As is. Is hanging in there at least that's what we see okay, we see that assisted. Inventory levels I think are coming down.

But the overall local economy, so I think. As is. Is hanging in there at least that's what we see okay, we see that assisted. Inventory levels I think are coming down.

As is. Is hanging in there at least that's what we see okay, we see that assisted. Inventory levels I think are coming down.

Is hanging in there at least that's what we see okay, we see that assisted. Inventory levels I think are coming down.

Inventory levels I think are coming down.

Rusty Rush: I like to think that the over-the-road business is bobbling along the bottom. And then I still, as I mentioned, believe the vocational markets will remain strong. With the Infrastructure Act, they haven't spent that money yet. Okay. That money is still to be ported to the economy. And so with all that going on in front of us, I've got to believe that the overall underlying piece will -- overall underlying economy will be okay. You'll have issues like they had with too much inventory, freights down and go about, but I think they're bobbling along fairly well. It's just -- as I said, it's been really incongruent for the over-the-road guys that normally that follows an economic recession. Okay?

I see. As I mentioned. Believe the vocational markets will remain strong with the restructure act. They haven't spent that money yet okay that money is still to be ported to the economy.

As I mentioned. Believe the vocational markets will remain strong with the restructure act. They haven't spent that money yet okay that money is still to be ported to the economy.

Believe the vocational markets will remain strong with the restructure act. They haven't spent that money yet okay that money is still to be ported to the economy.

And so with all that going on. Front of Us I've got to believe that the overall underlying. Pes will. While underlying economy will be okay, you'll have issues like they had with too much inventory breaks out and go back, but I would make there Bob was wrong.

Front of Us I've got to believe that the overall underlying. Pes will. While underlying economy will be okay, you'll have issues like they had with too much inventory breaks out and go back, but I would make there Bob was wrong.

Pes will. While underlying economy will be okay, you'll have issues like they had with too much inventory breaks out and go back, but I would make there Bob was wrong.

While underlying economy will be okay, you'll have issues like they had with too much inventory breaks out and go back, but I would make there Bob was wrong.

You know fairly well, it's just as I said, it's been really integral for the over the road guys.

Normally it follows an economic recession.

Rusty Rush: You see the freight recession tagging with an economic recession, but we really haven't had that. And as everyone knows, we've been predicting it for a year ahead but really didn't have it. They've had it in the freight market, but I do think we're on the bottom. But I can't tell you we're coming out next month, next quarter or whatever. But I've got to believe, I am 65 years old, doesn't necessarily make me smarter, but I live through enough of us, that we're going to get into -- it's got to start picking back up somewhat in the next year.

As everyone knows we've been predicting it for a year. But it really didn't have equipped <unk> had at the rate market, but I do think roundabout.

But it really didn't have equipped <unk> had at the rate market, but I do think roundabout. But I can't tell you, we're coming out next month next quarter or whatever but I've got to believe. I am 65 years old. Smarter, but I've lived through enough of us. We're going to get into. It's got to start picking back up somewhat in the next year.

But I can't tell you, we're coming out next month next quarter or whatever but I've got to believe. I am 65 years old. Smarter, but I've lived through enough of us. We're going to get into. It's got to start picking back up somewhat in the next year.

I am 65 years old. Smarter, but I've lived through enough of us. We're going to get into. It's got to start picking back up somewhat in the next year.

Smarter, but I've lived through enough of us. We're going to get into. It's got to start picking back up somewhat in the next year.

We're going to get into. It's got to start picking back up somewhat in the next year.

It's got to start picking back up somewhat in the next year.

Rusty Rush: And then as I said, then you get into all the -- what we'll have to deal with as an industry with all of the technology and stuff. Unlike automobiles, trucks are not as far along on the technology path, I hate to tell you. But we're going to be driven to do stuff that I think we're a little ahead of schedule on, which is going to create opportunities in my mind for us as we go forward. But I guess I know it's a long-winded answer. But you know me, I got high opinion. Yes.

We'll have to deal with.

As a as an industry with all competitive technology and stuff.

Unlike automobiles. Rocks are not as far along on the technology path I hate to tell you, but we're going to be driven to do stuff, but I think we're a little ahead of schedule. Which is going to create. Opportunities in my mind for us. As we go forward, but like I said. It's a long winded answer.

Rocks are not as far along on the technology path I hate to tell you, but we're going to be driven to do stuff, but I think we're a little ahead of schedule. Which is going to create. Opportunities in my mind for us. As we go forward, but like I said. It's a long winded answer.

Which is going to create. Opportunities in my mind for us. As we go forward, but like I said. It's a long winded answer.

Opportunities in my mind for us. As we go forward, but like I said. It's a long winded answer.

As we go forward, but like I said. It's a long winded answer.

It's a long winded answer.

Andrew Burris Obin: I guess I'll just squeeze one more. You guys have been one of the early adopters of SAP, I guess, what, 20 years ago. I think [indiscernible] software, very, very extensively in your parts and service operation, right? I mean, I think digital is one of your sort of strength. Anybody's pitching AI solutions to you? Have you looked at anything that's sort of applicable in real world? Or it's way too early? Sure.

You guys have been one of the early adopters of <unk>. I guess were 20 years ago, I think yellow software very very extensively. Parts and service operation right I mean, I think digital is one of your sort of strength. Antibodies pitching AI solutions to have you looked at anything that's sort of applicable in real world, It's way too early.

I guess were 20 years ago, I think yellow software very very extensively. Parts and service operation right I mean, I think digital is one of your sort of strength. Antibodies pitching AI solutions to have you looked at anything that's sort of applicable in real world, It's way too early.

Parts and service operation right I mean, I think digital is one of your sort of strength. Antibodies pitching AI solutions to have you looked at anything that's sort of applicable in real world, It's way too early.

Antibodies pitching AI solutions to have you looked at anything that's sort of applicable in real world, It's way too early.

Rusty Rush: Well, we're getting patient. Fix that. I could ask my CIO to talk more about it than I do and how it fits with us, and we are looking into it. I don't have anything definitive, obviously, to talk to you about right now. But obviously, it's not like it's one sector or whatever. It will affect everything, and I'm sure we -- something I can talk more offline or they can. They're a little more -- they're better than I am at it. I've got 125 people in my department down there and counting out everything we do. But we have used it in other -- we already use it in some ways, but I'm going to tell you that's proprietary. I'm not going to get into it. It's not sort of dancing on. Okay? So you just have to trust in us. It's all I can tell you. We're usually -- I've said all my life I want to be on the leading edge, not the bleeding edge, and I think we do a pretty good job of that around here with our -- look, I put my system up against anybody, okay, our business system and all the stuff that we've got in at least from an industry perspective.

I guess, one sector or it will affect everything.

And I am sure. I can talk more offline or they can literally. I am at it. 125 people in my Department down there. We are carrying out everything we do but we have used it in other way we are ready to use it in some ways. Im going to tell you that's proprietary I'm not going to get into it and that's why I'm sort of dancing going okay.

I can talk more offline or they can literally. I am at it. 125 people in my Department down there. We are carrying out everything we do but we have used it in other way we are ready to use it in some ways. Im going to tell you that's proprietary I'm not going to get into it and that's why I'm sort of dancing going okay.

I am at it. 125 people in my Department down there. We are carrying out everything we do but we have used it in other way we are ready to use it in some ways. Im going to tell you that's proprietary I'm not going to get into it and that's why I'm sort of dancing going okay.

125 people in my Department down there. We are carrying out everything we do but we have used it in other way we are ready to use it in some ways. Im going to tell you that's proprietary I'm not going to get into it and that's why I'm sort of dancing going okay.

We are carrying out everything we do but we have used it in other way we are ready to use it in some ways. Im going to tell you that's proprietary I'm not going to get into it and that's why I'm sort of dancing going okay.

Im going to tell you that's proprietary I'm not going to get into it and that's why I'm sort of dancing going okay.

It's all I can tell you. We're usually -- I've said all my life I want to be on the leading edge, not the bleeding edge, and I think we do a pretty good job of that around here with our -- look, I put my system up against anybody, okay, our business system and all the stuff that we've got in at least from an industry perspective.

I've said all my life. I don't want I want to be on the leading edge not the bleeding edge and I think we do a pretty good job of that route here. Look I put my system up against anybody's, Okay, our business system and all the stuff that we've got it at least from an industry perspective.

I don't want I want to be on the leading edge not the bleeding edge and I think we do a pretty good job of that route here. Look I put my system up against anybody's, Okay, our business system and all the stuff that we've got it at least from an industry perspective.

Look I put my system up against anybody's, Okay, our business system and all the stuff that we've got it at least from an industry perspective.

Multiple: [Andrew Obin] That's exactly why I'm asking that question. That's right.  [Marvin Rush] Yes. Well, I understand, but there's things I don't want to talk about. Okay. You got to respect that. But yes, you better believe it. Okay? You see me dancing around here, and I'm not a good dancer. So there are certain things we're working on and doing that are proprietary to us. And so I'm just going to keep -- leave it like that, Andrew.

But yes, you better believe it okay.

Sami dancing around here and I'm not a good dance. So. There are certain things, we're working on and doing that are proprietary to us and so I'm just going to keep leave it like that Andrew.

So. There are certain things, we're working on and doing that are proprietary to us and so I'm just going to keep leave it like that Andrew.

There are certain things, we're working on and doing that are proprietary to us and so I'm just going to keep leave it like that Andrew.

Andrew Burris Obin: Thanks, so much.

Rusty Rush: You bet.

Operator: Thank you. [Operator Instructions] Our next question comes from Justin Long from Stephens.

One moment, while we poll and the next speaker. Our next question comes from Justin long from Stephens.

Our next question comes from Justin long from Stephens.

Justin Trennon Long: Thanks, and good morning.

Rusty Rush: Good morning, Jason.

Justin Trennon Long: So I wanted to start with the question on parts and service. I think you mentioned that your performance significantly outpaced the market. I was curious if you could give a little bit more context around that comment and how you think the market performed relative to the 9% growth you saw in parts and service.

Parts and service.

Rusty Rush: Yes, I would tell you that the overall market most probably look the information that we get on this to be not as good as truck information, where you can license vehicles et cetera, but we are extremely confident. We probably doubled the growth rate or better. Flat when you think about what I talked about customers right, you're thinking about folks that are tied to certain regions that are just side over the road business.

We probably doubled the growth rate or better. Flat when you think about what I talked about customers right, you're thinking about folks that are tied to certain regions that are just side over the road business.

Flat when you think about what I talked about customers right, you're thinking about folks that are tied to certain regions that are just side over the road business.

Rusty Rush: The reason we're able -- we're confident that's safe and as effective is diversity of our customer base. Go back six years ago, everybody thought we were an oil company, right? That's no longer the case. We still do a lot of business. We do a lot of business in the mixer and construction business. We do a lot of business, obviously, in the revenue side. We do -- we still do a lot of over-the-road business. I would tell you that our small carrier business, currently, when you look at, say, that, what was at 8.9% growth, realize that a small carrier business, which is, I think, one-third of our business, it was off 6% or 7%. So I got to get to about 6% or 7% back on that one-third before I ever start trying to grow an 8.9% on the whole. So to me, that's just tells you exactly some of the real hard work that's going on with the field over the years to make sure that we are not tied to one thing. We do all of those things and more, right?

Go back six years ago, but we weren't. Oil company right, that's no longer the case, we still do a lot of business will go a lot of business in the mixer and construction business. We do a lot of business. Obviously in the revenue side, we do we still do a lot of over the road business I would tell you that our small carrier business. Currently when you look at say what was it eight 9% growth.

Oil company right, that's no longer the case, we still do a lot of business will go a lot of business in the mixer and construction business. We do a lot of business. Obviously in the revenue side, we do we still do a lot of over the road business I would tell you that our small carrier business. Currently when you look at say what was it eight 9% growth.

realize that a small carrier business, which is, I think, one-third of our business, it was off 6% or 7%. So I got to get to about 6% or 7% back on that one-third before I ever start trying to grow an 8.9% on the whole. So to me, that's just tells you exactly some of the real hard work that's going on with the field over the years to make sure that we are not tied to one thing. We do all of those things and more, right?

Realize the small carrier business, which is 30 heads for example, I think a third of our business. It was all six or 7%. So I got to get to that six or seven back on that third before abstract trying to go with $8 nine on the hall so to me that just.

Tells you exactly.

Some of the real hard work that's gone on with the field over the years to make sure that we are not tied to one thing we do all of those things and more right.

Rusty Rush: So with the information we have, we're pretty confident that low singles was what everybody else did to flat, to be honest with you. So as I said, that's what -- it ties back to how we go to market. I think everyone will be somewhat flattening. Remember this, inflation is out of everything, right? Inflation is way off from where it was a year ago, too. So inflation was a part of some of those huge growth rates for a lot of companies. So we're back to really taking share here is what we're talking about. And that's how we do it, is we going to take share. So when you grow something yes, you're going to grow with a natural economy. But the way you do, the way you perform, outperform everyone else is to take share, and that's the goal of 8,400 people every day we get up.

With the information we have we're pretty confident. Low singles was what everybody else did to flat to be honest with you. So as I said that's it. It ties back to how we go to market.

Low singles was what everybody else did to flat to be honest with you. So as I said that's it. It ties back to how we go to market.

So as I said that's it. It ties back to how we go to market.

It ties back to how we go to market.

I think everyone will be somewhat flattening remember this inflations out of everything right Inflations way off from where it was a year ago too so.

Inflation was a part of some of those huge growth rates. There are a lot of companies. So. <unk>. Taking share here is what we're talking about. And Thats, how we do it so we can take share. So when you gross up that you're going to grow with naturally quiet economy, but the way you do the way you perform outperform everyone else is to take share and that's the goal of 8400 people every day, we get up.

<unk>. Taking share here is what we're talking about. And Thats, how we do it so we can take share. So when you gross up that you're going to grow with naturally quiet economy, but the way you do the way you perform outperform everyone else is to take share and that's the goal of 8400 people every day, we get up.

Taking share here is what we're talking about. And Thats, how we do it so we can take share. So when you gross up that you're going to grow with naturally quiet economy, but the way you do the way you perform outperform everyone else is to take share and that's the goal of 8400 people every day, we get up.

And Thats, how we do it so we can take share. So when you gross up that you're going to grow with naturally quiet economy, but the way you do the way you perform outperform everyone else is to take share and that's the goal of 8400 people every day, we get up.

So when you gross up that you're going to grow with naturally quiet economy, but the way you do the way you perform outperform everyone else is to take share and that's the goal of 8400 people every day, we get up.

Justin Trennon Long: And when you look at parts and service revenue in the second quarter, it was pretty stable with what you saw in the first quarter. Are you assuming that on a sequential basis, third quarter looks similar to the second as well? And maybe any update you can provide on quarter-to-date trends there?

On quarter to date trends there.

Rusty Rush: Sure. That's what we're hoping for. There could be slight deterioration because these -- they tell the road guys are getting to have it. We're supplementing it with all the diversification in our portfolio of what we do. I don't look for sequential, big growth rates for sure. You've had temporary inflation. But remember, as Andrew talked about a minute ago, we have a couple of ways. There's called management of G&A at the same time, right?

That's what we're hoping for.

There could be slight deterioration because these big. Guys. We're supplementing it with all the diversification in our portfolio of what we do I don't look for sequential big growth rates for sure. Tempered inflation, but remember as Andrew talked about a minute ago. We have a couple of ways. There is golf management of G&A at the same time right.

Guys. We're supplementing it with all the diversification in our portfolio of what we do I don't look for sequential big growth rates for sure. Tempered inflation, but remember as Andrew talked about a minute ago. We have a couple of ways. There is golf management of G&A at the same time right.

We're supplementing it with all the diversification in our portfolio of what we do I don't look for sequential big growth rates for sure. Tempered inflation, but remember as Andrew talked about a minute ago. We have a couple of ways. There is golf management of G&A at the same time right.

Tempered inflation, but remember as Andrew talked about a minute ago. We have a couple of ways. There is golf management of G&A at the same time right.

Rusty Rush: That's what -- that's the part. That's where -- that's the difference, right? That's where the difference factors, how you manage, how you go to market, how you take share, then how you manage when growth slows. And I think we've proven in the past and we'll continue to prove we're pretty decent at it. But I don't see -- we're not going to see -- I don't see double-figure growth rates sequentially by any stretch. Mid-singles, if that, somewhere in those -- in that single. I don't want to -- it's a little bit early in the quarter. This July was an interesting month because you put July 4 on a Tuesday, which I love to have it on Monday, I'd love to have it on a Friday, I don't like it in the middle of the week. It kind of -- it not just messes us, but I think we have a strong closing month, but it made a rough start to July. But I am confident that we will continue -- we have throughout the month to accelerate back more to normal. That first week was -- well, it's not -- I think you've asked a lot of companies. It's not a good form having it on a Tuesday. So but we're still solid. We still expect great results, just maybe not to the levels of all those double-figure mid to high. Though 17% in the first quarter, which we were still finishing up with tagging a little inflation in there, et cetera, et cetera. But that's come out of the mix a lot. So along with -- but we are taking share. That's why we were able to at least maintain some growth at 8.9%, and we'll just have to see on a year-over-year perspective. Probably, it would be okay. Sequentially, it's going to flatten a little bit, as I said. I said a bottom rate, and that's what we expect going into the back half of the year. But still very strong results, as I said. There's more than one lever.

Difference right, that's where the difference makers. Manage how you go to market, how you take share and how you manage gross flows. I think we've proven in the past and will continue to prove we're pretty decent at it. But I don't see we're not going to see I don't see double figure growth rate sequentially by any stretch. Mid singles is that.

Manage how you go to market, how you take share and how you manage gross flows. I think we've proven in the past and will continue to prove we're pretty decent at it. But I don't see we're not going to see I don't see double figure growth rate sequentially by any stretch. Mid singles is that.

I think we've proven in the past and will continue to prove we're pretty decent at it. But I don't see we're not going to see I don't see double figure growth rate sequentially by any stretch. Mid singles is that.

But I don't see we're not going to see I don't see double figure growth rate sequentially by any stretch. Mid singles is that.

Mid singles is that.

somewhere in those -- in that single. I don't want to -- it's a little bit early in the quarter. This July was an interesting month because you put July 4 on a Tuesday, which I love to have it on Monday, I'd love to have it on a Friday, I don't like it in the middle of the week. It kind of -- it not just messes us, but I think we have a strong closing month, but it made a rough start to July. But I am confident that we will continue -- we have throughout the month to accelerate back more to normal. That first week was -- well, it's not -- I think you've asked a lot of companies. It's not a good form having it on a Tuesday. So but we're still solid. We still expect great results,

Not just message but. But I think we have a strong closing spot.

But I think we have a strong closing spot.

But it made a rough start to July but I am confident that we will continue as we have throughout the month to accelerate back more to normal that first week.

What was that.

So a lot of companies was not good for them, having it on a Tuesday, so, but we'd still solid we still expect great results.

just maybe not to the levels of all those double-figure mid to high. Though 17% in the first quarter,

which we were still finishing up with tagging a little inflation in there, et cetera, et cetera. But that's come out of the mix a lot. So along with - but we are taking share. That's why we were able to at least maintain some growth at 8.9%, and we'll just have to see on a year-over-year perspective. Probably, it would be okay. Sequentially, it's going to flatten a little bit, as I said. I said a bottom rate, and that's what we expect going into the back half of the year. But still very strong results, as I said. There's more than one lever.

We'll just have to see. Year over year perspective, probably okay sequentially flat. Flatten a little bit as I said, I said, it would moderate and Thats, what we expect going into the back half of the year, but still very strong results. More than one lever.

Year over year perspective, probably okay sequentially flat. Flatten a little bit as I said, I said, it would moderate and Thats, what we expect going into the back half of the year, but still very strong results. More than one lever.

Flatten a little bit as I said, I said, it would moderate and Thats, what we expect going into the back half of the year, but still very strong results. More than one lever.

More than one lever.

Justin Trennon Long: Got it. That's helpful. And I guess last question from me. When you put together all the puzzle pieces, any thoughts on third quarter EPS relative to what you just put up in the second quarter? It sounds like a lot of the top line trends are pretty stable. Maybe we see a bit of margin pressure, but I would love to just get some high-level thoughts.

You just get some high level thoughts.

Rusty Rush: Boy, Justin, you know I don't do that.

Justin Trennon Long: Have to try. You were talking about dancing earlier, so I thought maybe I could sneak this one in.

This one in.

Rusty Rush: I don't dance well, but I can read music. So I would tell you that no comment, Justin. You can read the press release. I don't give -- EPS guidance I told you all is when it gets to be a big trough. If you remember, I said I'll keep it over four. And if what they've got projected for 2026 plays out, then we're going to get it over eight, and I'm going to keep looking to add to the pipe. I don't have anything right now add to the company as we go forward. So we'll continue to -- and I think the track record speaks for itself, and we don't expect to do anything but to continue to operate with excellence and outside the competition, whatever the market owns.

I would tell you that. No comments US then you can read the press release. Our EPS guidance <unk> jaws, when it gets to be a big trough. If you remember I said I'll keep it over for <unk>. They've got projected for 2026 plays out, but we're going to get it over eight and I'm going to keep looking to add to the Bible I don't have anything right now that the company as we go forward. So.

No comments US then you can read the press release. Our EPS guidance <unk> jaws, when it gets to be a big trough. If you remember I said I'll keep it over for <unk>. They've got projected for 2026 plays out, but we're going to get it over eight and I'm going to keep looking to add to the Bible I don't have anything right now that the company as we go forward. So.

Our EPS guidance <unk> jaws, when it gets to be a big trough. If you remember I said I'll keep it over for <unk>. They've got projected for 2026 plays out, but we're going to get it over eight and I'm going to keep looking to add to the Bible I don't have anything right now that the company as we go forward. So.

They've got projected for 2026 plays out, but we're going to get it over eight and I'm going to keep looking to add to the Bible I don't have anything right now that the company as we go forward. So.

We will continue. Track record speaks for itself, but we don't expect to do anything but to continue to operate with excellence and outshine the competition whatever the market holds.

Track record speaks for itself, but we don't expect to do anything but to continue to operate with excellence and outshine the competition whatever the market holds.

Justin Trennon Long: Understood. Thanks for the time and congrats on the quarter.

Rusty Rush: Thank you. No, we were also - we were happy to be able to raise the dividend 21% during the quarter, as I said. So we - that's that. Is that it? It looks like on the board, I think.

We were happy to be able to raise the dividend 21% during the quarter as I said so. Anyway, that's that. That it looks like on the board I think.

Anyway, that's that. That it looks like on the board I think.

That it looks like on the board I think.

Operator: Thank you. At this time, we concluded the question-and-answer session. I would like to turn it back to Rusty Rush for closing remarks.

Rusty Rush: Well, I'd just thank everyone for joining us this morning and look forward to getting back with you in October. If you have any other questions, feel free to call Steve or myself. Thank you, guys.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Okay. [music]. Yes. Okay. [music]. Okay. [music]. Okay. [music]. Dan. [music]. Okay.

[music].

Yes. Okay. [music]. Okay. [music]. Okay.

Okay.

[music]. Okay. [music]. Okay.

Okay.

[music]. Okay.

Okay.

[music]. Dan. [music]. Okay.

Dan.

[music]. Okay.

Okay.