Q3 2023 Rush Enterprises Inc Earnings Call
Speaker 1: transcript
Speaker 1: Or.
Okay.
Speaker 2: transcript
Speaker 2: Good day and thank you for standing by. Welcome to Rush Enterprises Incorporated Third Quarter, 2023 Erniez Results Conference Call. At this time, all participants are now listen only mode. After the speakers presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised.
Good day, and thank you for standing by and welcome to the Rush Enterprises incorporated third quarter 2023 earnings results Conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is race.
Speaker 2: transcript
Speaker 2: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to you to speak today, Rusty Rush, Chairman, President, and Chief Executive Officer. Please go ahead, sir.
Your question. Please press Star one again, 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, Chairman President and Chief Executive Officer. Please go ahead Sir.
Speaker 3: transcript
Speaker 3: Good morning and welcome to our third quarter, 2020-23 earnings for release conference call. On the call, or Mike McRoberts, Chief Operating Officer, Steve Keller, Chief Finance Officer, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Senior Vice President, General Counsel and Corporate Secretary. Now Steve, we'll say a few-
Good morning, and welcome to our third quarter earnings release Conference call on the call are Mike Mcroberts, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President Controller, and Michael Goldstone Senior Vice President General Counsel and corporate Secretary now Steve will say a few words regarding forward looking statements.
Speaker 4: transcript
Speaker 4: Certain statements we will make today are considered for looking statements as defined in the private securities litigation reform act of 1995 Because these statements include risk and uncertainties or actual results may differ materially from those expressed or implied by such for looking statements
Certain statements we will make today are considered forward looking statements as defined in the private Securities Litigation Reform Act of 1995, because these statements include risks and uncertainties. Our actual results may differ materially from those expressed or implied by such forward looking statements important factors that could cause actual results to differ materially from those express.
Speaker 4: transcript
Speaker 4: important factors that could cause actual results to different materially from those expressed are implied by such foreign looking statements include But are not limited to those discussed in our annual report on form 10k for the year into December 31st 2022 and in our other filings with the Securities and Exchange Commission
Strong applied 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.
Speaker 3: transcript
Speaker 3: As indicated in our news release, we achieved third quarter revenues of $2 billion, and that income of 80.3 million, or 96 cents per diluted share. We're proud to declare a cash dividend of 17 cents per common share.
As indicated in our news release, we achieved third quarter revenues of $2 billion.
Net income of $80 3 million or 96 cents per diluted share.
We're proud to declare a cash dividend of <unk> 17 cents per common share.
Speaker 3: transcript
Speaker 3: In the third quarter, we achieved strong financial results due to revenue growth from our expanded service technician workforce, our support of large national accounts, and ongoing, content demand for new class 8 and class 427 trucks, following the limited new truck production of the past few years.
In the third quarter, we achieved strong financial results due to revenue growth from our expanded service technician workforce, our support of large national accounts and ongoing pent up demand for new class eight and class four through seven trucks borrowing and limited new truck production in the past few years.
Speaker 3: transcript
Speaker 3: Though our largest customer segment, the over-road customers, are being negatively affected by high-interest rates, low freight rates, and other economic...
Though our largest customer segment.
You guys are being negatively affected by high interest rates low freight rates and other recognize.
Speaker 3: transcript
Speaker 3: ongoing focus on our strategic initiatives help us partially offset these challenges and achieve strong financial results in the third quarter. In the African market, our part of service and body shop revenues for 640 to 3.6 million, up 3.5 percent. For our absorption rate was 132.8.
Ongoing focus on our strategic initiatives helped us.
Partially offset these challenges and achieve strong financial results in the third quarter.
In the aftermarket our parts service and body shop revenues were $643 6 billion up three 5% for at our absorption rate was $132 eight.
Speaker 3: transcript
Speaker 3: Our aftermarket revenue has slowed, growth has slowed compared to previous quarters. The diversity of our customer base, our technician workforce, and focus on large national accounts, yield our strong aftermarket results.
Our aftermarket revenue is slow growth has slowed compared to previous quarters, the diversity of our customer base our technician workforce.
Focus on large national accounts fueled our strong aftermarket results this quarter.
Speaker 3: transcript
Speaker 3: Looking ahead, we believe aftermarket growth will continue to moderate to the rest of this year.
Looking ahead, we believe aftermarket growth will continue to moderate through the rest of this year and.
Speaker 3: transcript
Speaker 3: And we are closely monitoring consumers spending in other economic conditions, which could impact parts and service demand.
And we are closely monitoring consumer spending and other economic conditions, which could impact parts and service demand.
Speaker 3: transcript
Speaker 3: In the fourth quarter, we believe customer demand round-to-market services will remain steady. And then our after-market results will be similar to the third quarter. With slight adjustments caused by normal seasonal softness and fewer working days.
In the fourth quarter, we believe customer demand for aftermarket services will remain steady and then our aftermarket results will be similar to the third quarter with slight adjustments caused by normal seasonal softness and fewer working days in the quarter.
Speaker 3: transcript
Speaker 3: Turning to truck sales. We saw 4,326 new class head trucks.
Turning to truck sales, we sold 4300 26, new class eight trucks of the Gore guidance of six 1% of the total U S market and two 1% in the Canadian market.
Speaker 3: transcript
Speaker 3: transcript
Speaker 3: Low freight rates continue to affect smaller operators. But strong, then up demand continues to, continues to deliver into prep reduction over the past few years.
Low freight rates continue to affect smaller operators, but strong pent up demand continues to continues to do a limited production over the past few years, while there is still.
Speaker 3: transcript
Speaker 3: and there's still new truck supplies who's causing us to still be on allocation from our OEMs. New truck production continue to improve in the third quarter, resulting in significantly shorter lead taps for new trucks.
There is still a new truck supply issues, causing us to still be an allocation from our Oems new truck production continued to improve in the third quarter, resulting in a significantly shorter lead times for new drugs.
Speaker 3: transcript
Speaker 3: ACT research, forecast US trucks, nails, classic trucks sales could be 278,000 in 2023, of 7.2% compared to 22. We believe pandemic demand for classic trucks will last through the fourth quarter. And then our fourth quarter classic truck performance will align with our third quarter result.
ACD research forecast U S drug sales class eight truck sales to be 278.
In 2023 up seven 2% compared with what we believe.
For class eight trucks will last through the fourth quarter, and then our fourth quarter class eight truck performance well aligned with our third quarter results.
Speaker 3: transcript
Speaker 3: Our class 4 through 7 new truck sales reached 3244 units in the fourth quarter, guiding for 4.8% of the U.S. market and 2.3% of the Canadian.
Our class four through seven new truck sales reached 3200 44 units in the third quarter guidance of four 8% of the U S market and two 3% of the Canadian market.
Speaker 3: transcript
Speaker 3: Whisper a solid demand from a variety of market segments. And those truck manufacturers voting more resources to be in the trucks, production remains limited and demand in the market remain.
We experienced solid demand from a variety of market segments and the oral drug drug manufacturers devoting more resources to medium duty truck production remains limited and unmet demand in the market remains.
Speaker 3: transcript
Speaker 3: ACT Research 4-Class U.S. Class 427 to retail sales to be 253,000 units in 2023, up 8.5% from 2022. We are closely watching consumers spending and other economic factors, which could impact our new Class 427 vehicles. But continue to send up demand with significant demand. We expect our four-quarter results. We will align with that term.
Research forecasts class U S class four through seven retail sales to be 253000 units in 2023 up eight 5% from 2022, we're closely watching consumer spending and other economic factors, which could impact our new class 47th year, but continued pent up demand.
We're still getting a great brand, we expect our fourth quarter results.
Third quarter results.
Speaker 3: transcript
Speaker 3: Our used truck sales reached 1,797 units in the third quarter, up 1.9% year-over-year.
Our used truck sales reached 797 units in the third quarter up one 9% year over year, new truck production.
Speaker 3: transcript
Speaker 3: Nutrug production, soft freight rates, tight credit conditions, let continue to continue to weak demand in our industry in the third quarter. Use truck values to continue to decline at an accelerated rate. Though the rate of decline is slow and values. The rate of decline is slow and values.
Rates tight credit conditions led continued to continued weak demand in our industry in the third quarter used truck values to continue to decline at an accelerated rate, though the rate of decline has slowed and values.
Appear to be normalizing.
Speaker 3: transcript
Speaker 3: New front production continuing to increase with freight rates not expected to improve signal plan the port port. We expect you front demand will remain low to the end of this year.
With new truck production continuing to increase with freight rates are not expected to improve significantly in the fourth quarter. We expect used truck demand will remain low through the end of this year.
Speaker 3: transcript
Speaker 3: and plan to maintain our inventory at lower than normal levels and believe we are well positioned to navigate these challenging marks.
We plan to maintain our inventory at lower than normal levels and believe we are well positioned to navigate these challenging market conditions.
Speaker 3: transcript
Speaker 3: We expect that our fourth quarter use drug results will be consistent again with our third.
We expect that our fourth quarter used truck results will be consistent again with our third quarter.
Speaker 3: transcript
Speaker 3: As we look ahead, we believe Fintech demand for class eight trucks will substantially be satisfied by the end of the fourth quarter. And the new trucks production has continued to improve. We will continue to monitor our economic factors, which are impacting our customers, especially over the road carriers. While we expect difficult seasonal solvents in the fourth quarter, we believe our financial results will align with our third quarter results, and we will close the year strong.
<unk>.
As we look ahead, we believe that demand for class eight trucks will substantially be satisfied by the end of the fourth quarter and at new trucks production.
Has continued to improve we will continue to monitor.
Alec factors, which are impacting our customers, especially over the road carriers, while we expect typical seasonal softness in the fourth quarter, we believe our financial results.
Third quarter results and we will close the year strong.
Speaker 3: transcript
Speaker 3: As always, it is important for me to thank our employees for their great work every day. And for staying focused on our company's long-term strategic initiatives while providing some very service to our customers.
As always it is important for me to thank our employees for their great work every day and for staying focused on our company's long term strategic initiatives, while providing superior service to our customers with that I'll take your questions.
Speaker 2: transcript
Speaker 2: Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To restore your question, please press star 11 again. Please wait for your name to be announced. One moment while we compile the Q&A roster. Two minutes.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press star one again, please wait for your name to be announced one moment, while we.
Compile the Q&A roster.
Okay.
Okay.
One moment for your first question.
Speaker 5: transcript
Speaker 5: Our first question comes from the line of Andrew Oben with Bank of America. Your line is now open. Hey Rusty, how are you? Rusty Steve team, how are you?
Our first question comes from the line of Andrew <unk> with Bank of America. Your line is now open.
Hey, Rob Hey, how are Ya Rusty Steve team how are you.
Speaker 5: transcript
Speaker 5: So first question is I think Trayton was saying today that they think they're starting to start sales of the new S13 engine.
Good Thank you Andrew.
First question is I think trading was saying today that they think they are starting to start sales of 13 engine.
Speaker 5: transcript
Speaker 5: and expect to ship on quarter-world Navastar units in 24. So does this have any impact on your sort of profitability in the Navastar franchise going forward? And can you also remind us how you positioned on the commons engines outside of your vertical integrated model on PACR? Thank you.
And expect to ship arm portable Navistar units and 24. So does this have any impact on your sort of profitability in the navistar.
Franchise going forward and can you also remind us how you're positioned on the Cummins engines.
Outside of your vertically integrated model on Packer. Thank you.
Speaker 3: transcript
Speaker 3: You bet. Well, you know, the S13, we're excited about it. We know that.
You bet well the ascertain we're excited about it we know that.
Speaker 3: transcript
Speaker 3: and then vote for what I can get us excited about. I didn't have a start, I was excited about it. Well, again, we're gonna start at a little slower than what we anticipated with the engine getting in here. We were hoping to get a few more this year than what we've gotten. But we're excited and we'll be showing up in 2024. That said, when it comes to profitability, remember.
That Volkswagen is excited about it and that restarts excited about well, we're going to started a little.
Slower than what we anticipated with the engine getting here, we were hoping to get a few more this year than what we.
We've got but we're excited and we'll be showing up.
In 2024 that said when it comes to profitability remember typically the most important thing that you derive.
Speaker 3: transcript
Speaker 3: Typically, the most important thing that you derive, we're excited what we believe will be great performance of, but it's the long-term parts profitability goes with it, because it makes, you know, parts become more powerful for the rest of the time. So, we would expect that over time to definitely have an effect in the probability of the overall of an app store, of our app store franchise. And thinking about trying to understand.
We're excited with what we believe will be a great performance over the long term parts profitability that goes with it because if it makes parts become more.
Brian.
We would expect that over time to definitely have an effect.
The profitability of the <unk>.
Overall over the Napster averaged.
For our franchise.
Thinking about trying to understand your comments questions obviously.
Speaker 5: transcript
Speaker 5: Obviously, yeah, just what's happening, what's happening with Cummins, and what's your position, what's your relationship with Cummins, just remind us. Sure. Our Cummins relationship...
Yes.
Happening, what's happening with comments and what's your position what is your relationship with comment just remind us sure comments relationship is great.
Speaker 3: transcript
Speaker 3: From an engine perspective, we're the largest distributor of Cummins engines.
From an engine perspective, we're the largest distributor of Cummins engines.
Speaker 3: transcript
Speaker 3: Considering their two largest customers are pack our and Navistar and we're the largest feet of the leader from the largest Navistar leader, right? So we're probably the largest retail dealer in the world I would guess when he comes to retail deliver.
Centering, our two largest customers pack, our navistar and we're the largest peterbilt dealer, where the largest navistar right. So we're probably their largest retail dealer in the world when it comes to retail delivery.
Speaker 3: transcript
Speaker 3: Um, we also have a very strong relationship across the board, which much deeper than just that. Remember, we've got our JV, our joint venture.
We also have a very strong relationship across the board it's much deeper than just that remember we've got our JV, our joint venture with <unk> has come as clean fuel technologies.
Speaker 3: transcript
Speaker 3: We call it CCFD because it's coming clean fuel technologies as with them on the natural gas fuel systems side because we both believe they bought 50% share in that. Here in January 1-22 and we have accelerated our investments as what we prepare for what we believe and a big opportunity for that market share to increase.
With them on the natural gas fuel systems on.
Because we both believe that about 50% share of that.
January one of 'twenty, two and we have accelerated our investments as we prepare for what we believe.
And a big opportunity for that market share to increase from <unk>.
Speaker 3: transcript
Speaker 3: From what's always stayed around 2%, we think that, you know, over the next two to three years that that share can increase 7, 8, 9%. As the, especially the truckload side, the over the road long haul side has to, you know, wrestle with all the pressures, the environmental pressures.
It's always stayed around 2% we think.
Over the next two to three years that that share gain increased seven to eight 9%.
Especially the truckload side the over the road long haul side has too.
So with all the pressures.
Our metal pressures that we're dealing with.
Speaker 3: transcript
Speaker 3: As you know, right now fuel cells still ways away.
Right now fuel cell still ways away.
Speaker 3: transcript
Speaker 3: Hydrogen is a ways away, and I don't believe electric is a ways away when it comes to meeting the needs of, you know, a four or five hundred mile haul on a daily basis. None of those are set up for that right now. So we believe.
Hydrogen is a ways away.
Electric is a ways away when it comes to meeting the needs.
For a 500 mile haul.
On a daily basis, none of those are set up for that right. Now. So we believe they are bringing over the new 15 liter engine and we do believe that together that partnership is going to do really well for us really as we get into 'twenty five 'twenty six starting to accelerate in 'twenty four but a 20 526 and getting to 2007, we believe we've got a lot of opportunity around that for me.
Speaker 3: transcript
Speaker 3: they're bringing over their new 15 liter engine. And we do believe that together, that partnership's gonna do really well for us. Really, as we get into 25, 26, starting to accelerate to 24, but at 25, 26.
Speaker 3: transcript
Speaker 3: and getting to 27, we believe we got an opportunity around that from a fuel system side. So, you know, as I said, it's a very broad relationship with them.
<unk> fuel systems side so.
As I said, it's a very broad relationship with them.
Speaker 3: transcript
Speaker 3: We're excited to have that relationship with the board to continue to work on more than likely a molest.
We're excited to have that relationship with BARDA continued working with Mike We have always said.
Speaker 5: transcript
Speaker 5: Thank you. Just a follow-up question on sort of you sort of saying that Q4 is roughly gonna be in line with Q3. And you know, sort of I hate to be asking question about next year, but how sustainable is this sort of...
Thank you and then just a follow up question.
On sort of your sort of saying that Q4 is roughly going to be in line with Q3 and sort of I hate to be asking the question about next year, but how sustainable is this sort of quarterly pace right. We know that you're sort of telegraphing that new unit sales.
Speaker 3: transcript
Speaker 3: quarterly pace, right? We know that you're sort of telegraphing that new unit sales are gonna be down, but you have your own dynamic and then the aftermarket. How sustainable is this sort of earnings power? You know, I don't know, let's call it around $0.90 going forward. Thank you. Well, how about if I stay off of a number, Andrew, as always? I'm not gonna change that, but let me talk a little more brother, a little more in depth about what I see in the board quarter and how we view next year. As I said in the release.
Is it going to be down.
But do you have your own dynamic and then the aftermarket.
How sustainable is this sort of earnings power I don't know lets call it around 90 fans.
Going forward. Thank you.
Well, how about if I stay off of a number Andrew as always.
To change that but let me talk more broadly a little more in depth about what I see in the fourth quarter and how we view next year.
As I said in the release in Q4.
Speaker 3: transcript
Speaker 3: You know, we expected to be similar, very similar to Q3. When I say that, there's gonna be puts and takes, right? It's different. There's seasonality involved, but there's puts and there's takes. We think when it all washes out, from a return perspective, what you see, it won't be exactly the same, but the results should end up around.
We expect it to be similar very similar to Q3, when I say that there's going to be puts and takes right. It's different seasonality involved but.
There's puts and takes but we think when it all washes out.
A return perspective, what do you see it won't be exactly the same but the results should end up around the same based on what we've got we're already into October we know how october's run it and fairly.
Speaker 3: transcript
Speaker 3: So, what we've got, you know, for already in October , we know how October's running and, you know, fairly flat, but, you know, sequentially. So, that gives you some outlook, you know, what you should be delivered from a truck sales perspective. So, you know, we, you know, as I said, we said in the release, Q4 would be about the same, but there'll be some puts in takes. Looking in the next year, well, you've got to remember that, you know, ACT's got the class rate market down 22%.
That.
But sequentially. So that gives you some outlook what you should be delivering from a truck sales perspective.
So.
As I said, we said in our release Q4 would be about the same but there'll be some puts and takes.
Looking into next year, where you've got to remember that <unk> got the class eight market.
Down 22%.
Speaker 3: transcript
Speaker 3: Now, we like to believe that we can probably do a little better than that. I'm not gonna get into the exact same way of EPS with you, but we like to believe we can do better than that. We do believe that the Glass-Pake Market for Us will be down. We're hoping, not that dramatically, but what you've got to understand is they just opened up order books in September . You saw the September number.
Right.
Now we like to believe.
We can probably do a little better than that.
I'm not going to get.
<unk> and wave.
EPS.
With you, but we like to believe we can do better we don't we do believe the class eight market for us will be down we're hoping not that dramatically, but what you've got to understand is they just opened up order books in September you saw the September number.
Speaker 3: transcript
Speaker 3: It was like 37,000 units, right? People go, oh my goodness, you know, we've got this big ordering tank. Well, I think you got that little deeper into it. Remember last year, step timber was like 54,000 or so, without a remember correct.
It was like 37000 units right.
Oh My goodness, we've got this big order intake.
A little deeper into it I remember last year September was 54000, or so if I remember correctly.
Speaker 3: transcript
Speaker 3: And what's happened is typically the manufacturers used to open their order books up earlier than you're like, around July or so.
What's.
What's happened is typically the manufacturers used to open their order books up earlier in the year like around July.
Speaker 3: transcript
Speaker 3: Well, when we had all the run-up and inflation from the commodity side a couple years ago, they got burned pretty bad, right? We had all the surcharges and everything else. So what they've done is push out when they open up their books a couple of three months, okay?
Well.
When we had all the run up in inflation from a commodity side a couple years ago. They got burned pretty bad right surcharges and everything else. So what they've done is push out when they open up their books a couple of three months okay.
Speaker 3: transcript
Speaker 3: um i mean they take orders back today i think in June to place an order stuff like that and count
I mean, they take orders by June and placing an order and stuff like that and counted but now.
Speaker 3: transcript
Speaker 3: But now they have pushed that out to September . So what you had was some pent-up demand, I think. Some customers had already ordered for 24, but they were not released by the OEMs because they wanted to get more comfortable with the pricing, with their cost factors, and not get burned like they did a couple years ago, which they got pretty burned, let me tell you. That's why you had to come in with all the surcharges, et cetera.
They have pushed that out to September. So once you add with some pent up demand I think some customers had already ordered for 'twenty four but they were not released by the Oems because they wanted to make we will get more comfortable with the pricing with our cost factors and not get burned like they did a couple of years ago, which they got pretty.
Bert.
That's why you have to complain about surcharges et cetera.
Speaker 3: transcript
Speaker 3: So there really was, it wasn't a September number. It may have been a little bit of a head fake, okay? When I say that because there was some tentative demand that maybe orders had been placed by Gingin and July , but it was just not released by the manufacturer because the plane won't open it up because they were protecting themselves from maybe some sudden, you know.
So there really was it wasn't a September number it may have been a little bit of a head fake.
When I say that because there was some pent up demand maybe orders had been placed back in June and July but we're just not released by the manufacturer, but just want to open it up because they were protecting ourselves from maybe some sudden.
Operator: Good day, and thank you for standing by.
Operator: Welcome to Rush Enterprises Incorporated Third Quarter 2023 Erniez Results Conference Call. At this time, all participants are in a listen-only mode.
Speaker 3: transcript
Speaker 3: quick rise and commodity costs, et cetera. So when that 37,000 really wasn't as big, I think it's people...
Quick rising commodity costs et cetera.
Operator: After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
So when that 37000, it really wasn't as big I think because people.
Speaker 3: transcript
Speaker 3: You know, as people saw. So again, we've really only been working for...
As people saw so again, we've really only been working for.
Speaker 3: transcript
Speaker 3: They want to September four weeks on business for next year. So it's a little bit early to say, but I would have to believe that overall, you know, the market's gonna be down. It's gonna take a breath before, but you're gonna remember though, with the EPA laws coming in in 2020.
They own a September four weeks.
Operator: Please be advised that today's conference is being recorded.
Business for next year, so it's a little bit early to say, but I would have to believe that overall the market is going to be down it's going to take a breath before.
Rusty Rush: I would now like to hand the conference over to your speaker today, Rusty Rush, Chairman, President and Chief Executive Officer. Please go ahead, sir. Good morning and welcome to our third quarter of 2023 Erniez Results 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 Corporal Secretary.
If I could remember, though with the EPA laws coming in in 'twenty.
Speaker 3: transcript
Speaker 3: 6, excuse me, the end of 26 or first of 27. We still expect 25 and 26 to be very robust.
Six excuse me at the end of <unk>.
I would expect 'twenty five 'twenty six to be very robust years at <unk>.
Speaker 3: transcript
Speaker 3: And 24 will be a year that we'll get through it. I don't anticipate us going back where it is far. Why? Because it's a diversity of our customers.
24 will be a year that we will get through it I don't anticipate us going backwards as Bart why because of the diversity of our customer base. If we were tied.
Steve Keller: Now, Steve, we'll 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 1995, because these statements include risk and uncertainties. Our actual results may differ materially from those expressed or implied by such forward-looking statements.
Rusty Rush: Important factors that could cause actual results to differ materially from those expressed are implied by such forward-looking statements include but are not limited to those discussed in our annual report on Form 10K for the year into December 31st 2022 and in our other filings with the Securities and Exchange Commission. As indicated in our news release, we achieve third quarter revenues of two billion dollars and then income of 80.3 million or 96 cents per diluted share.
Speaker 3: transcript
Speaker 3: If we were tied totally to the small carrier, over the road, dry freight, regional freight, that type of stuff, we would be, I would tell you my number would be closer to that or worse. Again, I don't expect it to be the same. I expect it to be down. But given the diversity, because if you remember all the money that's still got to be pumped into the economy on the vocational side, right, from the infrastructure bill.
To the small carrier over the road drive freight refill break that type of stuff.
We would be we would be we'd be.
I would tell you my number will be closer to that or worse again, I don't expect it to be the same I expect to be down.
But given the diversity because if you remember all the money is still going to be pumped into the economy on the vocational side from the infrastructure Bill.
Speaker 3: transcript
Speaker 3: That's still got to be spent. So, and there's a lot of other market segments that we play in that, you know, should maintain a lot better than just, you know. Look, we're in a freight recession. If anybody didn't know that, we've been in a freight recession. Just go check the results, check it all out. We've been in one for a year now. I mean, I was just with a lot of customers, you know, last week at ATA, and it was not all, you know, peaches and cream there.
That's still got to be spent.
And Theres a lot of other market segments that we play in that should maintain a lot better.
Then just.
We are in a freight recession.
Rusty Rush: We're proud to declare a cash dividend of 17 cents per common share. In the third quarter, we achieve front strong financial results due to revenue growth from our expanded service technician workforce, our support of large national accounts, and ongoing pandemic demand for new class 8 and class 427 trucks, following the limited new truck production of the past few years. Though our largest customer segment, the over-road customers, are being negatively affected by high-interest rates, low freight rates, and other economic measures, ongoing focus on our strategic initiatives help us partially offset these challenges and achieve strong financial results in the third quarter.
I know that we've been in a freight recession just go check check the results check it all out with men and one for a year now.
Just with a lot of customers.
Last week at HCA.
It was not.
Peaches and claim everywhere well, we still expect that market hopefully sometime maybe April next year I don't know exactly to that probably are I guess to date before to pick back up but it hasn't yet.
Speaker 3: transcript
Speaker 3: Well, we still expect that market hopefully sometime maybe April next year. I don't know exactly because I probably already missed the date before to pick back up, but it hasn't yet.
Speaker 3: transcript
Speaker 3: It's still bubbling along. I hope it's on the bottom. Let's check out the spot raise the time, raise.
Still bubbling along I hope its on the bottom, let's check out the spot rates that John Brad rates people are anticipating at least not taking that people are still taking hits on their contract rates in that side of the business. The small guys still getting pushed out with the rise in fuel prices.
Speaker 3: transcript
Speaker 3: People are anticipating at least not taking their, people are still taking hits on their contract rates in that side of the business. The small guy is still getting pushed out with the rise in fuel prices that we had over the 90, 120 days there.
Rusty Rush: In the African market, our part of service and body shop revenues were 643.6 billion up 3.5 percent for our absorption rate was 132.8. Though our African market revenue has slowed growth has slowed compared to previous quarters. The diversity of our customer base, our technician workforce, and focus on large national accounts fueled our strong African market results as quarter. Looking ahead, we believe aftermarket growth will continue to moderate through the rest of this year, and we are closely monitoring consumers spending in other economic conditions, which could impact parts in service demand.
90, 120 days there.
Speaker 3: transcript
Speaker 3: There's just a lot there's we've had a little bit too much supply on the long road trucks We just have so we're trying to it's trying to be pushed out which it will get pushed out that always does But then it's still the Lord
Alright.
We've had a little bit too much supply on the long run over the road trucks. We just had so we're driving is trying to be pushed out.
Get pushed out.
But that is still the largest piece.
Speaker 3: transcript
Speaker 3: of the class-aid club business. Okay, so I'll try to reflect, I could go on and on, but I think you can get to just what I'm saying.
Class eight truck business, Okay. So I will try to reflect I could go on and on but I think you can get the gist of what I would say.
Speaker 3: transcript
Speaker 3: of and and and yep parts of the service you asked about that also
Yes parts and service you asked about that also.
Speaker 3: transcript
Speaker 3: As I would look, growth rates will slow down, understand. If you look at where we're at now, and you go, well, you're only three and a half percent. You gotta dive in there a little deeper, to really understand it. We'd be fairly flat for revenue line. Okay.
As I would look good.
Rusty Rush: In the fourth quarter, we believe customer demand around-for-market services will remain steady, and that our aftermarket results will be similar to the third quarter, with slight adjustments caused by normal seasonal softness and fewer working days in the quarter. Turning to truck sales, we saw 4,326 new-class aid trucks in the quarter, guiding for 6.1 percent of its OWS market and 2.1 percent of the Canadian market. A low-fright rates continue to affect smaller operators.
Rates will slowdown understand if you look at where we're at now we are only three 5% you got to dive in there a little deeper.
We understand it.
We were fairly flat with the revenue line.
Okay.
Speaker 3: transcript
Speaker 3: 30% of our business roughly is still what we call unassigned.
Yes.
30% of our business roughly is still what we call unassigned accounts, just small folks the ones that you don't have dedicated.
Speaker 3: transcript
Speaker 3: accounts, the small folks, the ones that you don't have dedicated.
Speaker 3: transcript
Speaker 3: You know, under cash customer those type, there's still 30% of them. That business was off almost 10%. That is caused by the freight recession, okay? Those are the, that's the, that's the flex piece inside of everything itself. The big guys are still good.
Account salesman too.
Rusty Rush: But strong, then up-demand continues to continue to deliver into proc production over the past few years. While there are still new truck suppliers who's causing us to still be on allocation from our OEMs, new truck production continue to improve in the third quarter, resulting in significantly shorter lead jobs for new trucks. ACT Research, forecast U.S, truck sales, classic truck sales can be 278,000 in 2023, of 7.2% compared to 20.2%. We believe pandemic demand for classic trucks will last through the fourth quarter, and then our fourth quarter classic truck performance will align with our third quarter results.
The cash customer those factors still 30% of our business that business was off almost 10% that is caused by the freight recession. Okay. Those are the that's.
The flex piece inside of everything that's out there the big guys are still good.
Speaker 3: transcript
Speaker 3: You know, they're not making as much money, but they got great cash positions to ride it out. You know, you're big public carriers. But those folks are also a higher margin piece of our business, right? Okay, so fortunately for us.
Not making as much money, but they are a great cash position is derived.
Your big public carriers, but those folks are also a higher margin piece of our business right. Okay. So <unk>.
Speaker 3: transcript
Speaker 3: You know, we've had some real, done some really nice stuff around going after, you know, dedicated people, going after national account business, and that business is up quite dramatically. So that helps offset, but it's at a cost too. Okay, it's not as high a margin business as that small business, but we've had a lot of success around.
Really for us.
We've had some real good some really nice stuff around going after dedicated people going out for national account business. So that business is up quite dramatically so that helps offset.
Rusty Rush: Our class 4 through 7 new truck sales reached 324 units in the fourth quarter, accounting for 4.8% of the U.S, market, and 2.3% of the Canadian market. We expect solid demand from a variety of market segments, and those truck manufacturers will be voting more resources to meet in beauty trucks, production remains limited, and unmet demand in the market remains. ACT Research, forecast U.S, class 4 through 7 to retail sales to be 253,000 units in 2023, of 8.5% from 2022.
Consider cost too.
That is higher margin business is that small business, but we've got a lot of success around it and we will continue to focus on that because that should be steady each going forward. So we'll just have to see how next year plays out it's a little bit early.
Speaker 3: transcript
Speaker 3: And we'll continue to focus on that because that should be the study.
Speaker 3: transcript
Speaker 3: So we'll just have to see how it makes your place out. It's a little bit early, but we still feel pretty good about our business model.
But we still feel pretty good about our business model.
Speaker 3: transcript
Speaker 3: You know, it's going to be a tougher year. Anybody doesn't think it is, is wrong, okay? But I think what we've done with the company over the last few years, look at the results in the last few years. That's all I got to tell you. And we believe very strongly in the results going forward, even with, you know, 24 not being as good as 23 and probably not as good as 25 or 26. But it's not going to be terrible.
It's going to be a tougher year than you might think it is okay.
But I think that.
What we've done with the company over the last few years, let's look at the results in the last few years, that's all I got.
And we believe very strongly in the results going forward even with.
Rusty Rush: We are closely watching consumers spending and other economic factors, which could impact our new class 4 through 7 years, but continue to fend up demand. We expect our fourth quarter results will align with our third quarter results. Our U.S, truck sales reached 7,897 units in the third quarter, of 1.9% here over here. New truck production, soft freight rates, tight credit conditions, let continued to continue to weak demand in our industry in the third quarter.
24, not being as good as 2003, and probably not as good as 25% to 26, but it's not going to be terrible okay.
Speaker 5: transcript
Speaker 5: So the last question for me, and I think you set it up for me, and I bet you know the question I'm going to ask. You keep delivering earnings well ahead of consensus, even as things are slowing, I think. If you look at the fourth quarter, your message seems to be coming out versus consensus.
So the last question for me and I think you set it up for me and I bet. You know the question I'm going to ask.
You keep delivering earnings well ahead of consensus even if things are slowing I think if you look at the fourth quarter message themed youre coming up coming out versus consensus.
Rusty Rush: Use truck values to continue to decline at an accelerated rate, though the rate of decline is slow, and values appear to be normalizing. With new truck production continuing to increase with freight rates not expected to improve significantly in the fourth quarter, we expect U.S, truck demand will remain low to the end of this year. We plan to maintain our inventory at lower than normal levels, and believe we are well positioned to navigate these challenging market conditions.
Speaker 5: transcript
Speaker 5: uh... you know excellent as jenny control you doing everything you're supposed to do uh... you know you know that the next year is not going to be good you also know what twenty five and twenty six gonna look like you know what the company is going to deliver
Excellent and SG&A control.
Doing everything you're supposed to do.
You know that the next year is not going to be good.
Also know what 25 and 26 kind of looks like you know what the company is going to deliver.
Speaker 5: transcript
Speaker 5: What's the board's thinking about sort of stepping up share buyback in this environment, particularly, you know, in a day like today when stock is down 8% on very solid numbers?
Whats the board thinking about.
<unk> sort of stepping up share buyback in this environment, particularly again on a day like today when the stock is down 8% on very solid numbers.
Rusty Rush: We expect that our fourth quarter use truck results will be consistent again with our third quarter results. As we look ahead, we believe fend up demand for class 8 trucks will substantially be satisfied by the end of the fourth quarter, and that new truck production has continued to improve. We will continue to monitor our economic factors, which are impacting our customers, especially over the road carriers. What we expect is difficult seasonal solvents in the fourth quarter. We believe our financial results will align with our third quarter results, and we will close the year strong.
Speaker 3: transcript
Speaker 3: Good question, right? I just finished a board meeting yesterday afternoon, in fact, and
Good question.
The board meeting.
Yesterday afternoon in fact, Andrew.
Speaker 3: transcript
Speaker 3: Um, you know, we look at it as a great value or we wouldn't have been doing what we've been doing. We stepped it up 50% this year, you know, we're going to return, you know, we've got, you know, we've got a pretty.
We look at it as a great value or we wouldn't be doing what we've been doing we've stepped it up 50% this year.
We're going to return.
We've got we've got a pretty detailed what we wanted to do and we would typically what we've said and stated we wanted returned 35%.
Speaker 3: transcript
Speaker 3: detail what we want to do and we typically want to we've set a state we want to return 35% you know the 40% and shareholder return between a combination of dividend and stock buyback.
The 40% shareholder return between a combination of dividend and stock buyback.
Rusty Rush: As always, it is important for me to thank our employees for their great work every day, and for staying focused on our company's long-term strategic initiatives, while providing a superior service to our customers.
Speaker 3: transcript
Speaker 3: That said, free cash flow, excuse me. That said, we're gonna return 55% this year, okay? I don't see us returning whatever that FCS is next year. I don't see us returning much more than 55%. I think, you know, you like to build in a cushion. I wanna make sure I've got some money in case M&A comes along.
Our free cash flow excuse me.
That said, we're going to return 55%.
This year okay.
Don't see us returning whenever that FCS is next year.
Operator: With that, I'll take your questions. Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To assure you a question, please press star 11 again. Please wait for your name to be announced. One moment while we compile the Q&A roster. One moment for our first question, questions.
I don't see us returning much more than 55% I think you'd like to build in a cushion I want to make sure I've got some money in case of M&A comes along.
Speaker 3: transcript
Speaker 3: You know, I don't have any great M&A right now, but I have a feeling with the downturn, typically some M&A might show up, right? And so we want to be positioned to, you know, be able to do everything. We're not going backwards, okay? We're going to spend the whole 150 million this year, and I would anticipate us a-
Have a great M&A right now, but I have a feeling with the downturn typically some M&A might show up right.
So we want to be positioned to be able to do everything we're not going backwards. Okay. We're going to spend the whole $150 million this year and I would anticipate us up.
Andrew Open: Our first question comes from the line of Andrew Open with Bank of America. Your line is now open. Hey Rusty. How are you Rusty Steve team? How are you? Very good. Thank you Andrew. So first question is I think Trayton was saying today that they think they're starting to start sales of the new S13 engine and expect to ship on quarter of all Navistar units in 24. So does this have any impact on your sort of profitability and the Navistar franchise going forward.
Speaker 3: transcript
Speaker 3: We'll make that decision. We have a call by the November the 28th, Board of Call, if you wanna know the truth, to make that determination is we're getting further further on. Another few weeks never helps. He's trying to look at the crystal ball. So we've got a board call set up just to have no one left for November 28th and out for our December 1st. Because that's when we announce every year, as December 1 is what our five back will be. So stay tuned. How about the-
We will make that decision we have a call.
November the 28.
Aboard Karl do you want to know the fruit to make that determination as we are getting for low further all another few weeks never helps when you're trying to look into crystal ball. So we've got a board cost Avenue when they left for November 28 ounce for our December 1st because Thats. When we announce every year is December one is what our buyback will be so stay tuned about that.
Andrew Open: And can you also remind us how you positioned on the commons engines? You know outside of your vertical integrated model on PACAR. Thank you. You bet. Well, you know, the S13 we're excited about it. We know that then both like this excited about it. Navistar is excited about it. We're going to start a little slower than what we anticipated with the engine getting in here. We were hoping to get a few more this year than what we've gotten, but we're excited and we'll be showing up in 2024.
Speaker 3: transcript
Speaker 3: Well, you know, you know what I feel about it. Great quarter. Thanks a lot. You bet. I know Andrew. There's about to sing act as I said possibly to them in a much sure I want to make sure I'm prepared. I don't want to take that and I we don't have to. We've got, but we just want to be able to, you know, take care of everything we need to. Well, still we believe it is the best and best we can make. I'm totally agree with you.
Okay.
Well.
What I feel about it great quarter. Thanks, a lot you bet I know Andrew there's a balancing act because I said, possibly some M&A might show up and I want to make sure I'm prepared I don't want to take that and that we don't have to we've got but we just want to be able to.
Take care of everything we need to whilst we believe it is the best investment we can make them.
Are we in agreement with.
Thank you one moment our next question.
Speaker 2: transcript
Speaker 2: As a reminder to ask a question that Star 11 on your telephone.
As a reminder to ask a question Thats star one on your telephone.
Andrew Open: That said, when it comes to profitability, remember typically the most important thing that you've derived. We're excited with what we believe will be great performance of it. It's the long-term parts profitability goes with it because it makes, you know, parts become more. So we would expect that over time to definitely have an effect in the probability of the overall of the Navistar franchise. I'm thinking about trying to understand your comments question.
Speaker 2: transcript
Speaker 2: Our next question comes from the line of Justin Long with Stevens. The line is now open.
Our next question comes from the line of Justin Long with Stephens. Your line is now open.
Thanks, and good morning.
Speaker 6: transcript
Speaker 6: Good morning, Justin. Good morning, Rusty. Well, I wanted to start with a question on customer mix going back to some things you were saying earlier. Do you feel like the small customers that are unassigned? Do you feel like the activity there has bottomed that you know, down 10% this quarter? And then can you share on the other side of the coin how your national accounts are performing right now just so we understand the relative trends?
Well good morning, Justin Good morning, Rusty well I wanted to start with a question on customer mix going back to some things you were saying earlier do you feel like the small customers that are on assigned do you feel like the activity there has bottomed at down 10% this quarter.
And then can you share on the other side of the coin how your national accounts are performing right now just so we understand the relative trend.
Andrew Open: Obviously, what's happening with comments and what's your position, what's your relationship with commons just remind us? Sure, our commons relationship is great. From an engine perspective, we're the largest, you know, distributor of commons engines, considering their two largest customers are PACAR and Navistar and we're the largest feedable dealer from the largest Navistar dealer, right? So we're probably the largest retail dealer in the world, I guess, when he comes to retail delivery.
Speaker 3: transcript
Speaker 3: No, you bad I'll get the numbers like I said down 10%.
Sure Noah.
I will give the numbers like I said down 10%.
Speaker 3: I don't have that answer, but if the cops are going to get easier, so I've got to tell you if you're going to hear over your cops.
I don't have that answer, but the comps are going to get easier. So I got to tell you.
And youre going to year over year comp.
Speaker 3: transcript
Speaker 3: Yes, they're probably right there, okay? Sequentially, I don't know if there might be another couple, three points left in there, buddy. I don't know that we, the market's not totally been cleansed yet, okay? There's still folks out there that are a hawing freight.
Yes.
Robbie right, they're okay with.
Lee I don't know if there might be another couple of three points left in their body.
Don't know that we do.
Andrew Open: We also have a very strong relationship across the board. It's much deeper than just that. Remember, we've got our JV, our joint venture, which is, we call it CCFD because it's commons clean fuel technologies as with them on the natural gas fuel systems side because we both believe they bought 50% share in that. You're January 1 to 22 and we have accelerated our investments is what we prepare for what we believe and a big opportunity for that market share to increase from what's always stayed around 2%.
And it's not totally been cleansed, yet there are still folks out there that are hauling freight.
Speaker 3: for basically barely break even and can pay my fee.
For basically barely breakeven and can pay my fuel.
Speaker 3: Okay, I mean I heard some numbers and people were all afraid for last week when I was up but I met with a lot of customers at ATA and I heard some of the, you know, slashing that was going on out there. So it, you know, it's level to continue for another six months here, okay? So that means you can acute flush and sum out.
I heard some numbers that people were hauling freight for last week, when I was up but I met with a lot of customers are bad.
And I heard some of the.
Slashing that was going on out there so.
It's liable to continue for another six months, okay. So that means you get acute flush itself out.
Speaker 3: transcript
Speaker 3: But I would expect the year over your comps with that market to be around the same. Sequentially it may have a little bit more knowing that it wasn't as bad a Q1 and Q2 last year, right? Okay, so it depends on how you want me to talk about it. But I would suggest that in a state similar on a year over your basis, I guess would be what I would tell you because it got worse this year when all. Um, when it comes to the next-
But I would expect the year over year comps with that market to be around the same sequentially.
Andrew Open: We think that, you know, over the next 2 to 3 years that that share get increased 7, 8, 9% as the, especially the truckload side, the over the road long haul side has to, you know, wrestle with all the pressures, the environmental pressures that we're dealing with. As, you know, right now fuel cell still weighs away. Hydrogens are ways away. And I don't believe electric is a ways away when it comes to meeting the needs of, you know, a four or 500 mile haul on a daily basis.
Sequentially. It may have a little bit more knowing that it wasn't as bad in Q1, and Q2 last year right. So it depends on how you want me to talk about it but I would suggest that it will stay similar on a year over year basis, I guess would be what I would tell you because it got worse as the year went along.
When it comes to the National account business.
Speaker 3: transcript
Speaker 3: We're really proud of the efforts because we put in a lot of dedicated people. It's been some money on that. That's all inside our G&A and focused on it. Because our ability to grow that piece of our piece.
We're really proud of the efforts because we put in a lot of dedicated people have spent some money on that that's all inside our G&A and focused on it because you know our ability to grow that piece of our business is directly tied with the second most valuable pieces of it.
Andrew Open: None of those are set up for that right now. So we believe they're bringing over their new 15 liter engine and we do believe together that partnership is going to do really well for us. Really is we get into 25, 26 targets, accelerate 24, but at 25, 26 and getting to 27, we believe we got an opportunity around that from a fuel system side. So, you know, as I said, it's a very broad relationship with them and, you know, we're excited to have that relationship with board to continue to work with them like we have always. Thank you.
Speaker 3: transcript
Speaker 3: is directly tied with the second most valuable piece of this company. My people are always first and foremost. But the second piece is my map. My map is bigger, our map is bigger than anybody else's map. And when you can provide consistency of service, I can take you to interview many people. Many large companies that we can do that with. When you can provide that consistency.
This company my people are always first first and foremost, but the second piece is my math My map is bigger our map is bigger than anybody else's map and when you can provide consistency of service, but I could take you to interview many people. Many large companies that we can do that with when you can provide that.
Speaker 3: transcript
Speaker 3: your opportunities to me are endless. I mean, you know, I mean, they're not endless, but I sure feel like it for us. We've got plenty of conquests out there that we don't do business with or large national counts. As consolidation has continued around this industry.
Just to see your opportunities familiar analysts I mean.
Rusty Rush: And just a follow-up question on sort of you sort of saying that Q4 is roughly going to be in line with Q3 and you know sort of I hate to be asking question about next year, but how sustainable is this sort of quarterly pace, right? We know that you sort of telegraphing that new unit sales are going to be down, but you have your own dynamic and then the aftermarket. How sustainable is this sort of earnings power? You know, I don't know, let's call it around 90 cents going forward. Thank you.
They're not analysts, but I sure feel like it for US we've got plenty of conquest.
But we don't do business with our large national accounts as consolidation has continued around this industry for years and will continue and that ability to go out and capture some folks I'm not really going into naming names on an earnings call.
Speaker 3: transcript
Speaker 3: and Wilkins continue. And that ability to go out and capture some folks, and I'm not gonna get any name and names on the learning.
Speaker 3: transcript
Speaker 3: But we know there's still plenty of opportunity. I sat in meetings with folks last week. Almost begging us to come over to do business with them to somewhat. Regardless of whether business is up or down, I can't change the environment. But what I can do is provide a different, you know, solution, understanding your competition and differentiating yourself is what it's all about.
But we know there's still plenty of opportunity I've sat in meetings with folks last week, almost begging us to come over to new business with somewhat regardless of where their business is up or down I can't change the environment, but what I can do is provide a different.
Rusty Rush: Well, how about if I stay off of a number and as always, I'm not going to change that, but let me talk a little more broadly, a little more in depth about what I see in the fourth quarter and how we view next year. As I said in the release in Q4, you know, we expect it to be similar, very similar to Q3. When I say that, there's going to be puts in takes, right?
Solution understanding your competition and differentiating yourself is what it's all about.
Speaker 3: transcript
Speaker 3: And we know that that kind of growth, we grew 19%.
We know that.
That kind of growth we grew 19%.
Speaker 3: transcript
Speaker 3: All right, I'm talking about being down 10. But it's a little, you know, it's your lower margin, but it's still really good business, right? And the other piece you've got to keep into account is in our service business. We expect...
You talked about it being down.
It's at a lower margin.
Still really good business right.
And then the other piece you got to keep into account is our service business, we expect our service business.
Rusty Rush: It's different. There's seasonality involved, but there's puts and there's takes. But we think when it all washes out from a return perspective, what you see, it won't be exactly the same, but the results shouldn't end up around the same. So what we've got, for already in October, we know how October's running and fairly flat, but sequentially. So that gives you some outlook, what you should be delivered from a truck sales perspective.
Speaker 3: transcript
Speaker 3: you know, up next year. We may take a hit in some parts business, but we expect our service business to grow. Why? Because we've grown 150 technicians this year. Many of them mobile. We have a goal to get to, the last month, if you ask me a year ago, we were 500 and something worth 650 now. We got a goal to get to a thousand. Okay. And then those kind of demand for that type of thing is out there. Plus, you know, it's just providing an array of services.
Up next year, we may take some parts business, but we expect our services grow why because we brought 150 technicians. This year many of them mobile we have a goal to get to that one could.
If you'd asked me a year ago, we were 500 or 650 now we've got a goal to get to a thousand okay and those kind of the demand for that type of thing is out there plus.
It is just providing an array of services.
Rusty Rush: So as I said, we said in the release Q4 would be about the same, but there'll be some puts and takes. Looking in the next year, well, you've got to remember that, you know, ACT's got the class 8 market down 22%. Now, we like to believe that we can probably do a little better than that. I'm not going to get, you know, into execs in the way of EPS with you, but we like to believe we can do better than that.
Speaker 3: transcript
Speaker 3: on a consistent basis that on a larger map. That doesn't mean our accomplishes great. It's a role less than right now, but at the same time, they'll listen to the replay. And that's good, but there's, you know, we try to differentiate by having a larger map and being able to tie it all together, regardless of brand. There's still a lot of non-proprietory. It's not all vertical, it's not all proprietary. So, and we're able to take care of folks. So that's really the best I can. Definition. I.
On a consistent basis.
On our larger math that doesn't mean.
Competition is greater or less than right now, but at the same they'll listen to the replay and thats good but there is.
We try to differentiate by having a larger map and being able to tie it altogether, regardless of the brand.
A lot of non proprietary smart all vertical it's not all proprietary so and we're able to take care of folks. So that's really the best definition I can give you that.
Rusty Rush: We don't, we do believe that the class 8 market for us will be down. We're hoping, not that dramatically, but what you've got to understand is they just opened up order books in September. You saw the September number. It was like 37,000 units, right? People go, oh my goodness, you know, we've got this big order intake. Well, I think you got that little deeper into it. Remember last year, September was like 54,000 or so without a remember parental.
Speaker 3: transcript
Speaker 3: You know, we got a lot of runway left in there. Whether the market goes up or the market goes down, we think we can grow it consistently. On a year-over-year quarterly basis, we don't look for that to change either. Okay, as we go forward.
We have a lot of runway left to know where the market goes up when the market goes down we think we could grow it consistently on a year over year quarterly basis, we don't look for that to change either okay. As we go forward.
Speaker 6: transcript
Speaker 6: Got it, that's helpful. And you mentioned earlier, the act numbers for next year have continued to trend lower. And now they're expecting a 22% decline in class eight truck sales. If that plays out, if reality's pretty close to that, how should we think about your ability to grow parts and service? Do you feel like you can still grow it? And if so, any thoughts on the order of magnitude?
Got it.
Paul You mentioned earlier the act numbers for next year.
Continued to trend lower and now they are expecting at 22% decline in class eight truck sales if that plays out if reality is pretty close to that.
Rusty Rush: And what's happened is typically the manufacturers used to open their order books up earlier in the year, like, around July or so, right? Well, when we had all the run-up and inflation from the commodity side a couple years ago, they got burned pretty bad, right? You know, the surcharges and everything else. So what they've done is push out when they open up their books a couple of three months, okay? I mean, they take orders back in the day.
How should we think about your ability to grow parts and service do you feel like you can still grow it and if so any thoughts on the order of magnitude.
Rusty Rush: I can June the place in order of stuff like that, and count it. But now they have pushed that out to September. So what you had was some pent up demand. I think some customers had already ordered for 24, but they were not released by the OEMs because they wanted to make more get more comfortable with the pricing, with their cost factors, and not get burned like they did a couple years ago, which they got pretty burned.
Speaker 3: transcript
Speaker 3: Sure, you know that I think you know our year over year comps will start to get a little better because we when we get into Q2 and Q3 because it's flattened out some issue right. Remember
Sure.
Thanks.
Year over year comps will start to get.
A little better because when we get into Q2 and Q3, because it has flattened out some this year right remember.
Speaker 3: transcript
Speaker 3: When I was speaking earlier, that shift in the small guy that's got more margin in him towards that national account. Yeah, you know, that made it a little tougher. You can see it, you know, you can see it in the numbers and parts of the service profit. We expected that we, you expect it to be a little better than a squarer, we think Q3 was like a trough we hope. But, you know, I would,
When I was speaking earlier.
Shifting in the small guy that's got more margin and aimed towards that national accounts, yes.
That made it a little tougher and you can see it you can see it in the numbers in parts and service profit, we expected, but we do expect it to be a little better next quarter. We think Q3 was like a trough.
But.
I would tell you.
Rusty Rush: Let me tell you, and that's why I had to come in with all the surcharges, etc. So there really was, it wasn't a step tempered number. It may have been a little bit of a head fake, okay? When I say that because there was some pent up demand that maybe orders had been places back in June and July, but we're just not released by the manufacturer because the planes want to open it up because they were protecting themselves from maybe some sudden, you know, quick rise and commodity costs, etc.
Speaker 3: transcript
Speaker 3: It would have some effect. There's no question, but we think we can overcome that or at least maintain, you know, we're not gonna have like like first quarter this year, we have 17% growth rate. We're not gonna do that next year. We were three and a half in Q3. We're not gonna do that next year.
It would have some effect there is no question, but we think we can overcome that.
Or at least maintain we're not going to have like light first quarter. This year, we had 17% growth rate, we're not going to do that next year, we were three and a half in Q3.
And we're probably going to bobble around adding borgwarner.
Speaker 3: transcript
Speaker 3: I would expect that probably to continue to chew one with the same dynamics that we're dealing right now. Q3 will probably have the same type of dynamics. I do not see.
I would expect that probably to continue Q1 with the same dynamics that we're dealing right. Now Q3 will probably have the same type of dynamics I do not see.
Rusty Rush: You know? So when that 37,000 really wasn't as big, I think it's people, you know, as people saw. So again, we've really only been working for or September four weeks on business for next year. So it's a little bit early to say, but I would have to believe that overall, you know, the market's going to be down. It's going to take a breath before, but what you're going to remember, though, with the EPA laws coming in in 26 or, excuse me, in the end of 26 or first of 27, we still expect 25 or 26 to be very robust years.
Speaker 3: transcript
Speaker 3: hoping I do not have a brand. And I'm not, I don't think you're indeed a future, because it's a, you can be 40 miles over times out there, but I don't see us, you know, any big huge market decline based on what I'm watching right.
Hoping I don't know, Brian, but I'm, not I don't I can't guarantee the future.
Pretty volatile at times, but I don't see any big huge market decline based on what I'm watching right now.
Speaker 3: transcript
Speaker 3: You know, we think we can overcome.
We think we can overcome what obstacles are out there.
Speaker 3: transcript
Speaker 3: what obstacles are out there with less trucks, they'll get a little less internal work, got it. But we really believe in our gross strategy around our service arena and around our dedication to the larger customers. We'll have an effect, yeah, but we think we can keep it where we've got it by picking up another areas that are available to us, I think. So, you know, I mean, is it somewhat of a headwind, of course?
Less drug sales get a little less internal work got it but we really believe in our in our growth strategy.
Around our service arena and around our dedication to the larger and larger.
Rusty Rush: And 24 will be a year that we'll get through it. I don't anticipate us going backwards as far. Why? Because it's a diversity of our customer base. If we were tied totally to the small carrier over the road, drive freight, we could freight that type of stuff, we would be, we would be, and I would, I would tell you, my number would be closer to that or worse. Again, I don't expect it to be the same.
Having an effect yet, but we think we can keep it where we've got it by picking up in other areas.
They are available to us I think so.
Is it somewhat of a headwind of course it is against it here.
Speaker 3: transcript
Speaker 3: I can't sit here and lie to you day and night. It's great, we can settle that truck. Because you know, you know, we do a lot of internal work to on trucks getting ready. But we believe that probably I'm thinking Q3 was indicative outside of truck sales. But I'm thinking, you know, that parts of service side will keep pounding it out, even if we're having to shift into a little, you know, some up, some down, puts in take.
It's great to go sell less trucks.
We do a lot of internal work on.
On trucks getting it ready, but we believe that probably in Q3 was indicative outside of truck sales, but I'm thinking that parts and service side, we'll keep we'll keep adding to that.
Rusty Rush: I expect to be down. But given the diversity, because if you remember, all the money is still going to be pumped into the economy on the vocational side, right? From the infrastructure bill. That's still being spent. So, and there's a lot of other market segments that we plan that, you know, should maintain a lot better than just, you know, we're like, we're in a freight recession. I didn't know that we've been in a freight recession, just go check the results, check it all out.
Even if revenue shift into some up some down puts and takes but giving us.
Speaker 3: But giving the member, our diversification is not just the over the road I talk about. Remember, we're so embedded in so many other markets, that...
Our diversification is not just the open road I talk about remember we are so embedded in so many other market segments.
Speaker 3: transcript
Speaker 3: that we're committed to and that's the look. If we were just, I'd be getting crushed like, like a lot of my customers are, if I was just in the over the road business, and we were just tied to that, we'd look just like them when it comes to cops.
We're committed to and Thats.
If we were just getting crushed right.
Rusty Rush: We've been in one for a year now. I mean, I was just with a lot of customers, you know, last week at ATA. And it was not all, you know, peaches and clean everywhere. Well, we still expect that market hopefully sometime maybe April, next year. I don't know exactly because I probably already missed the date before to pick back up, but it hasn't yet. It's still bubbling along. I hope it's on the bottom.
So a lot of my customers are if I was just in the over the road business and we were just tied to that we'd look just like that when it comes to comps year over year from 22 to 23, but were not in our numbers speak for themselves.
Speaker 3: transcript
Speaker 3: 22 to 23, but we're not, and I'll never speak for themselves. Because we are diversified into so many other
We are diversified into so many other markets.
Speaker 6: transcript
Speaker 6: Got it. And my last question for me is on the use truck market. You talked about that a little bit earlier, but I was wondering if you could give a little bit more color in terms of what you're expecting for the trend and use truck pricing as we move into year end and early 2024.
Okay.
Got it and last question for me is on the used truck market you talked about that a little bit earlier, but I was wondering if you could give a little bit more color in terms of what you're expecting for the trend in used truck pricing as we move into year end and early 2024.
Rusty Rush: Let's check out the spot rates, the time rates. People are anticipating at least not taking their skill. People are still taking hits on their contract rates and that's side of the business. The small guy is still getting pushed out with the rise and fuel prices. Then we had, you know, the 920 days there. There's just a lot, there's, we've had a little bit too much supply on the long road trucks we just have.
Speaker 3: transcript
Speaker 3: Sure. Well, we probably come down.
Sure.
We've probably come down.
Speaker 3: transcript
Speaker 3: same like for like four, five year old trucks, year over year, September , October , let's say, and jeez, around that time frame, 35% in value.
Same like for like four or five year old trucks.
Rusty Rush: So, we're trying to, it's trying to be pushed out, which it will get pushed out. It always does. But then it's still the largest piece of the classic truck business, okay? So, I'll try to reflect, I could go on and on, but I think you can get the gist of what I'm saying. And yeah, parts and service, you asked about that also. As I said, I would look, you know, road rates will slow down, understand.
Year over year.
September October lets say in and around that timeframe, 35% and value there.
Speaker 3: transcript
Speaker 3: There may be another 10% to take out or so, I'm guessing. I don't. It'd be hard for me to see it go much more. Because what happens is that spread between new and used.
Maybe another 10% to take out or so im guessing.
Hard for me to see Youre much more because what happens is that spread between new and used gifts.
Speaker 3: transcript
Speaker 3: real tooth, you know, it's too large. It's all sudden, you know, you can go buy three late model trucks for the price of one. So, you know, then eventually, you know, I say that it just, whatever that spread creates a value proposition on use when it gets so low. The problem is
Yes, too large and so all of a sudden you.
Rusty Rush: If you look at where we're at now and you go, we're only three and a half percent. Well, you got to dive in there a little deeper to really understand it. We were fairly flat for revenue line, okay? Well, the problem is 30% of our business roughly is still what we call unassigned accounts. The small folks, the ones that you don't have dedicated account salesman to, you know, or the cash customer, those type, there's still 30% of our business.
You can go back three late model drugs for the price of one so.
Then eventually when I say that yes, but whatever that spread creates.
Our value proposition our unused when it gets so low the problem is.
Speaker 3: transcript
Speaker 3: is that the use drug buyers typically, you know, the small person, right? Well, they're getting crushed. So you gotta have demand too, okay? You can take prices, cheekies, want. Now, let's spread that spread. It's really, you know, it's really enticing.
Is that the used truck buyers typically.
The small person right, while they're getting price. So you got to have demand to okay. You can take prices from that spread was really.
Rusty Rush: That business was off almost 10%. That is caused by the freight recession, okay? Those are the, that's the, that's the flex piece inside of everything that's out there. The big guys are still good. You know, they're not making as much money, but they have great cash business to ride now. You know, your big public curious. But those folks are also a higher margin piece of our business, right? Okay. So, fortunately for us, you know, we've had some real, done some really nice stuff around going after, you know, dedicated people going out for national account businesses, that business is quite dramatically.
It looks really enticing.
Speaker 3: transcript
Speaker 3: But if you don't have demand because you don't have any market, you know, to go lease the truck on some place, it makes it difficult. So eventually,
But if you don't have demand because you don't have any market.
You know to go lease the truck on some place it.
It makes it difficult so eventually.
Speaker 3: transcript
Speaker 3: It just takes time. So right now, it's a little higher, you know, like I said, depreciation is accelerating, not as dramatically as it was, but it's still over what I would call.
It just takes time so right now we're.
Little higher depreciation is accelerating not as dramatically as it was but it's still over what I would call.
Speaker 3: transcript
Speaker 3: You know, typical depreciation by percentage on a monthly basis. So, you know.
Typical depreciation by percentage on a monthly basis so.
Speaker 3: transcript
Speaker 3: Typically you don't see it like you know, historically we're not there yet. It's still a little accelerated
<unk>.
Typically you don't see it.
Rusty Rush: So that helps offset, but it's it, it's hitter cost too. Okay. It's not as high a margin business as that small business, but we've had a lot of success around it and we'll continue to focus on that because that should be the state of East going forward.
Historically, we're not there yet it's still a little accelerated.
Speaker 3: transcript
Speaker 3: It's that demand piece that we're gonna have to get back. So I just, you know, I don't see anything changing around that till we get maybe, you know, so we saw out in the spring. And hopefully we'll do it. Seasonally, we always do a little better than once we get through wintertime. So that's, you know, I would hope that we would, by the time we get through, that we would be on a normal, depreciation cycle and say.
If that demand piece that we're going to have to get back so I'll just add.
Don't see anything changing around that till we get maybe <unk>.
What we saw out in the spring and hopefully we will do it seasonally we always do a little better than.
Rusty Rush: So, we'll just have to see how next year plays out. It's a little bit early. But we still feel pretty good about our business model, but you know, it's going to be a tough year. You might think it is small. Okay. But I think to check what we've done with the company over the last few years, look, look at the results in the last few years. That's all I'm going to tell you.
Once we get through winter time so.
That's I would hope that we would have by the time, we get through that we would be on a normal depreciation cycle and sage.
Speaker 3: transcript
Speaker 3: four or six months, six months from now, so I'm like that. That's what I'm hoping because it's been so accelerated before. But the reason was so excited, it got way too high when you couldn't get new trucks, right? The money people were paying for used trucks a year and a half and two years ago was crazy. And so we've had to take all that back out as we continue to now we're meeting the demand would do. So used demand is down and used values go down. And so we've had to take all that back out as we continue to now we're meeting the demand would do.
Six months six months from now something like that that's what I'm, hoping because it's been so accelerated before but the reason was.
Rusty Rush: And we believe very strongly in the results going forward. Even with, you know, 24 not being as good as 23 and probably not as good as 25 or 26. So, but it's not going to be terrible. Okay.
Got way too high when you couldn't get the trucks right. The money people were paying for used trucks, a year and a half two years ago was crazy and so we take all of that back out as we continue to now we're meeting demand would do so used demand is down it used values go down.
Andrew Open: So the last question for me and I think you set it up for me and I bet you know the question I'm going to ask you know you keep delivering earnings well ahead of consensus even as things are slowing I think if you look at the fourth quarter you know your message seems you're coming up coming out versus consensus you know excellent as Jane a control you're doing everything you're supposed to do you know you know that the next year is not going to be good you also know what 25 and 26 going to look like you know what the company is going to deliver what's the boards thinking about sort of stepping up share buy back in this environment particularly you know in a day like today when stock is down 8% on very solid numbers. Good question right I just finished the board meeting yesterday afternoon in fact Andrew you know we look at it as a great value we would have been doing what we've been doing we stepped it up 50% this year you know we're going to return you know we've got you know we've got a pretty detail what we want to do and we would typically want we've said stated we want to return 35% you know the 40% and shareholder return between a combination of dividend and stock buy back that said a free cash flow excuse me that said we're going to return 55% this year okay I don't see us returning whatever the FCS is next year I don't see us returning much more than 55% I think you know you like to build in a cushion I want to make sure I've got some money in case of M&A comes along you know I don't have a great M&A right now but I have a feeling with the downturn typically some M&A might show up right and so we want to be positioned to you know be able to do everything we're not going backwards okay we're going to spend the whole 150 million this year and I would anticipate us we'll we'll make that decision we have a call by the November the 28th Board of Call if you want to know the truth to make that determination as we get for a little further all you know another a few weeks never helps he's trying to look at the crystal ball so we've got a board call set up guess they haven't knew when they left for November 28th and out for our December 1st because that's when we announce every year is December 1 is what our buyback will be so stated about that well you know we're you know what I feel about a great quarter thanks a lot you bet I know Andrew there's about to see actors I said possibly some M&A might show up and I want to make sure I'm prepared I don't want to take that and I we don't have to we've got but we just want to be able to you know take care of everything we need to watch that we believe it is best and that we can make I'm totally in agreement with you thank you one moment for our next question as reminder to ask a question that star 1 1 on your telephone our next question comes from the line of Justin Long with Stevens the line is now open thanks and good morning well good morning Justin good morning Rusty well I wanted to start with a question on customer mix going back to some things you were saying earlier do you feel like the small customers that are assigned do you feel like the activity there has bottom that you know down 10% this quarter and then can you share on the other side of the coin how your national accounts are performing right now just so we understand the relative trends.
Speaker 3: transcript
Speaker 3: It's a little bit of a vicious cycle, but it should straighten itself out. Sometimes, you know, I don't know, second quarter next year, late first, second quarter next year to be safe and serviceably. But we're in good shape. We've got as low a use for a humanitarian. Without the upside force, it's probably a little less because we're carrying less embers away. But the downside is okay, we're trying to get our turns. It's always about turns. And your turns have to be in line with what demeans.
It's a little bit of a vicious cycle.
But it should straighten itself out sometime.
Second quarter next year Lake for a second and second quarter next year say conservatively, but we're in good shape.
Lower used truck inventory that would be upside for us is probably a little less because we're carrying less inventory, but the downside is okay. We're trying to get our turns it's always about terms and your turns out to be in line with what demand is.
Speaker 3: transcript
Speaker 3: And we feel like we've pretty much got our use truck the inventory, what we know we do. Our margins were back to typical margins in Q2 and Q3, you know? So...
And we feel like we've pretty much got our used truck inventory, where we know we do our margins were back to typical margins in Q2 and Q3.
No.
Speaker 3: transcript
Speaker 3: You know, we're just gonna stay on top of it and be cognizant of, you know, the man that's out there and we're still afraid for trucks every day. It's just we just have to make sure that we can turn and pass it up because, you know, they're not like fine wine, they don't get better with it.
No.
We're just going to stay on top of it and be cognizant of the demand that's out there.
Trade for trucks every day.
We just have to make sure that we can turn them fast enough because they are not like fine wine, they don't get better with age so, but we're doing we're doing a good job.
Speaker 3: transcript
Speaker 3: So, but we're doing a good job dealing with it right now, but it comes with tighter controlled inventory because demand is not, you know, sometimes we would have inventory so far as a 2500 units.
Dealing with it right now, but it comes with.
Tighter control of inventory because demand is not <unk>.
Sometimes we would have inventories upwards of 2500 units.
Speaker 7: transcript
Speaker 7: Well, I got inventory is 13 to 1500 right now, because I don't have the demand to turn a 2500 unit inventory fast enough just out there. So, but that allows us to still maintain a decent margin and we'll monitor the market closely. And as it gets to start picking up, we'll try to increase our usage truck inventory. But again, it goes back to, I just, I just price it. I just, what valuations it goes back to demand. Makes sense.
Got inventories from 13% to 1500 right now because I don't have the demand to turn a 2500 unit inventory faster.
Just out there so but that allows us to still maintain a decent margin and we will monitor the market closely and as it was to start picking up we will increase our used truck inventory, but again it goes back to just pricing.
Valuations it goes back to demand.
Makes sense I'll leave it there thanks for the time.
Thank you for your questions.
Speaker 2: transcript
Speaker 2: I would now like to turn the conference back to Mr. Rush for closing remarks.
I would now like to turn the conference back to Mr. <unk> for closing remarks.
Speaker 3: transcript
Speaker 3: Both we appreciate it. Thank you very much. I'd like to wish everyone a very happy holidays and we will speak to you early to mid-February with our Q4 results. So again, thank you very much.
Folks we appreciate it. Thank you very much I would like to wish everyone happy holidays, and we will speak to you early to mid February with our Q4 results. So again, thank you very much.
Speaker 2: transcript
Speaker 2: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
Okay.
Okay.
[music].
Okay.
[music].
Andrew Open: [inaudible] Inc. Enterprises Inc. [inaudible] Enterprises Inc. Enterprises Inc. You can see it in the numbers and parts of service profit. We expected to be a little better than a squirt or we think Q3 was like a trough we hope. But, you know, I would tell you it would have some effect. There's no question. But we think we can overcome that. Or at least maintain, you know, we're not going to have like, like, the first quarter this year, we had 17% growth rate.
Andrew Open: We're not going to do that next year. We were three and a half in Q3. And we're probably going to bobble around that. And I would expect that probably to continue to you want with the same dynamics that we're dealing right now. Q3 will probably have the same type of dynamics. I do not see. I'm hoping I did not have my brain. And I'm not. I can't guarantee the future because it's a pretty volatile times out there.
Andrew Open: But I don't see us, you know, any big huge market decline based on what I'm watching right now. You know, we think we can overcome what obstacles are out there with, you know, less, you know, less trucks. I don't get a little less internal work. Got it. But we really believe in our in our gross strategy. Around our service arena and around our dedication to, you know, the larger, the larger customers will have an effect.
Andrew Open: Yeah, but we think we could keep it where we've got it by picking up in other areas that are available to us, I think. So, you know, I mean, is it somewhat of a headwind? Of course it is. I can't sit here and lie to you. You know, it's great for you to sell less trucks. Because you know, you know, we do a lot of internal work to on trucks getting ready.
Andrew Open: But we believe that probably I'm thinking Q3 was indicative outside of truck sales. But I'm thinking, you know, that parts of service side. We'll keep, we'll keep pounding it out. Even if we're having to shift into the little, you know, some up, some down puts and takes. But giving the member, our diversification is not just the over the road I talk about. Remember, we're so embedded in so many other market segments that we're committed to and that's.
Andrew Open: Look, if we were just, I'd be getting crushed like a lot of my customers are if I was just in the over the road business. If we were just tied to that, we'd look just like them when it comes to cops year over year from 22 to 23. But we're not our numbers speak for themselves. Because we are diversified into so many other, is on the use truck market.
Justin Long: You talked about that a little bit earlier but I was wondering if you could give a little bit more color in terms of what you're expecting for the trend and use truck pricing as we move into year end and early 2024. Sure. Well, we've probably come down same like for like four or five year old trucks, year over year, September, October, let's say around that time frame 35% in value. There may be another 10% to take out or so.
Justin Long: I'm guessing I don't. It'd be hard for me to see it go much more because what happens is that spread between new and used gets real tooth, you know, it's too large. It's all sudden, you know, you can go buy three late model trucks for the price of one. So, you know, then eventually I say that it just whatever that spread creates a value proposition on use when it gets so low.
Justin Long: The problem is is that the use truck buyers typically, you know, the small person, right. Well, they're getting crushed. So you got to have demand too. Okay. You can take prices cheap. You want now let's spread that spread. It's really, you know, it's really enticing, but if you don't have demand because you don't have any market, you know, to go lease the truck on some place, it makes it difficult. So, eventually, it just takes time.
Justin Long: So right now, word, it's a little higher, you know, like I said, depreciation is accelerating not as dramatically as it was, but it's still over what I would call, you know, typical depreciation by percentage on a monthly basis. So, you know, typically you don't see it like, you know, historically, we're not there yet. It's still a little accelerated. It's that demand piece that we're going to have to get back. So I just, you know, I don't see anything changing around that till we get maybe, you know, so we thought out in the spring.
Justin Long: And hopefully we'll do what seasonally, we always do a little better than once we get through winter time. So that's, you know, I would hope that we would have, by the time we get through that we would be on a normal depreciation cycle and say four or six months, six months from now, so I'm like that, that's what I'm hoping because it's been so accelerated before. But the reason was, sorry, it got way too high when you couldn't get new trucks, right?
Justin Long: The money people were paying for used trucks a year and a half and two years ago was crazy. And so we've had to take all that back out as we continue to now we're meeting the demand would use demand is down and use values go down. It's just it, it's a little bit of a vicious cycle. But it should straighten itself out sometimes, you know, second quarter next year, late first, second quarter next year to be safe and service, but we're in good shape.
Justin Long: We've got as low use for inventory without the upside force is probably a little less because we're carrying less inventory. Downside is okay. We're trying to get our turns. It's always about turns and your turns have to be in line with what damage. Antis and we feel like we've pretty much got our use truck inventory what we know we do our margins were back to typical margins in Q2 and Q3, you know, so, you know, we're just going to stay on top of it and be cognizant of, you know, the demand is out there and we're still afraid for trucks every day.
Justin Long: It's just we just have to make sure that we can turn them fast enough because, you know, they're not like fine wine, they don't get better with age. So, but we're doing, we're doing a good job of dealing with it right now, but it comes with, you know, tighter controlled inventory because demand is not, you know, sometimes we would have inventory upwards of 2500 units. Well, I got inventory is 13 to 1500 right now because I don't have the demand to turn a 2500 unit inventory fast enough just out there.
Justin Long: So, but that allows us to still maintain a decent margin and we'll monitor the market closely and as it gives us to start picking up, we'll try to increase our use truck inventory. But again, it goes back to not just pricing, not just what valuations it goes back to demand. Makes sense. I'll leave it there. Thanks for the time. Thank you for your questions.
Rusty Rush: I would now like to turn the conference back to Mr. Rush for closing remarks. Folks, we appreciate it. Thank you very much. I'd like to wish everyone a very happy holidays and we will speak to you early to mid February with our Q4 results. Again, thank you very much. This concludes today's conference call. Thank you for your participation. You may now disconnect everyone. Have a wonderful day.