Q4 2023 Rush Enterprises Inc Earnings Call

February 14, 2024

After the speaker's presentation, there will be a question and answer session.

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I would now like to hand, the conference over to Rusty Rush, President CEO and chairman of the board Sir you may begin.

Well good morning, and welcome to our fourth quarter year end 2023 earnings release 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 certain statements. We make today are considered forward looking statements as defined in the private.

Securities Litigation Reform Act of 1095, because these statements include risks and uncertainties. Our actual results may differ materially from those expressed or implied by such forward looking statements important factors that could cause actual results to differ materially from those expressed or implied by such forward. Looking statements include but are not limb.

And 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.

As indicated in our news release, we achieved annual revenues of $7 9 billion and net income of $347 million or $4.15 per diluted share in.

[music].

In the fourth quarter, we achieved revenues of $2 billion in net income of $78 million or <unk> 95 cents per diluted share. In addition, we are pleased to declare a cash dividend of <unk> 17 cents per common share.

Throughout 2023, there was pent up demand for new commercial vehicles.

Drug production over the past few years with respect to new class a trucks that pent up demand was largely fulfilled by the end of 2023 with respect to the class four through seven commercial vehicles demand remains solid the manufacturer we represent railroad increase production throughout the year, which led us to significantly.

Uh huh.

Yeah.

Hello, and thank you for standing by.

Welcome to Rush Enterprises, Inc. Reports fourth quarter 2023 earnings results.

The latest is significantly outpacing the industry with respect to new class four through seven commercial vehicle sales.

At this time all participants are in a listen only mode.

Quite a challenging operating environment in 2023 caused by low freight rates and high interest rates, which led to grip general softness in parts and service sales industry wide, we were able to achieve a healthy growth in the aftermarket revenues.

After the speaker's presentation, there will be a question and answer session.

To ask a question. During this session you will need to press star one on your telephone you within your automated message advising your hand is raised to.

The growth was due primarily to our ability to support large fleets and strong demand from the diverse range of market segments, we support including our refuse public sector wholesale and energy customers. In addition, our aftermarket revenues also increased due to the addition of 215 service technicians to our network.

To withdraw your question. Please press star one again.

I would now like to hand, the conference over to Rusty Rush, President CEO and chairman of the board Sir you may begin.

Well good morning, and welcome to our fourth quarter year end 2023 earnings release 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.

Expanding our service technician workforce is a key aspect of it.

Certain of our strategic initiatives overall, we are very proud of both our operational and financial performance in 2023.

Certain statements.

In the aftermarket our annual parts service and body shop revenues were $2 6 billion up 8% over 2022 aftermarket results and our annual absorption rate was $135 three.

<unk> for you to 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.

As I previously mentioned, we added 215 service to technicians to our network last year, which enhanced our ability to execute on certain of our strategic initiatives, including express services contract maintenance and mobile service offerings. We all will also experienced healthy part sales growth from our energy revenues.

Those expressed or implied by such forward looking statements include but are not limited to those discussed in our annual report on Form 10-K for the year ended December 31, 2022, and in our other filings with Securities and Exchange Commission.

Leasing customer.

As indicated in our news release, we achieved annual revenues of $7 9 billion and net income was $347 million or $4.15 per diluted share.

Looking ahead, we expect the challenging break conditions and high interest rates will continue to impact our customers and then aftermarket demand in the first half of 2024 will be similar to the second half of 2023.

In the fourth quarter, we achieved revenues of 2 billion and net income of $78 million or <unk> 95 cents per diluted share. In addition, we are pleased to declare a cash dividend of <unk> 17 cents per common share.

However, we are cautiously optimistic that the current freight recession make begin to ease in summer. In addition, we believe that our diverse customer base, our ability to support large national fleets and our ongoing focus on our strategic aftermarket initiatives will allow us to outpace the aftermarket industry and to achieve flat <unk>.

Throughout 2023, there was pent up demand for new commercial vehicles.

Drug production over the past few years with respect to new class a trucks that pent up demand was largely fulfilled by the end of 2023.

Modest aftermarket growth in 2024.

Respected class four through seven commercial vehicles demand remains solid the manufacturer we revenue.

Turning to truck sales, we sold 17000 board with seven New class eight trucks in 2023 accounting for six 2% of the total U S class eight market and 2% of the class eight market in Canada.

As previously stated we experienced healthy demand from a variety of market segments. However, the pent up demand from the class eight market has been satisfied.

Research forecasts class eight retail sales to be 214300 units in 2044 down roughly 22% from 2023.

Though the industry is expecting new class eight truck sales to be down significantly in 2024 due to challenging economic and industry conditions. We are confident that we'd be able to navigate a down year and outpaced the industry in 2024 due to our strategic decisions. We made in prior years to diversify our customer base and focus on vocational.

Customer.

Our class four through seven new truck sales reached 13644 units in 2023 or five 1% of the U S market.

Excuse me and two 9% of the Canadian market in.

In addition to pent up demand due to limited new medium duty commercial vehicle production over the last few years. The manufacturers that we represent we're able to increase production throughout the year.

Those factors along with our ongoing efforts to diversify our customer base in support of large national accounts allowed us to significantly outperform the industry in 2023.

We are still experiencing noise from truck body countries and these delays impacted liveries during the fourth quarter, which limited our growth somewhat.

No.

Research forecast class four through seven retail sales.

To be 254250 units in 2023 up slightly from 2023 422, as we look at excuse me in 2023.

As we look ahead, we expect they will continue to see improvements in the medium duty commercial vehicle production for the manufacturers, we represent and we expect customer demand to remain strong in both of these things occur we believe our class four through seven commercial vehicle sales.

<unk> strong in 2024.

Our used truck sales reached 70 117 units in 2023 relatively flat compared to 2022.

High interest rates and soft freight rates demand for used trucks was weak and used truck values declined throughout 2023.

In 2024, we expect that demand for used trucks will remain flat, but the rate at which used trucks and depreciate. It will continue to decrease in the used truck values will stabilize somewhat over the course of the year. We are confident our diverse product mix and ability to move inventory throughout our network well Mr continue continue to affect them.

We can navigate the used truck market in 2024.

Excuse me.

Looking ahead, we expect demand for class eight trucks to be soft while demand for class four through seven commercial vehicles remains healthy it should be noted that delays from body companies may continue to impact deliveries of new class four through seven commercial vehicle.

We will continue to monitor freight rates interest rates consumer spending and other economic factors that impact both commercial vehicle sales and aftermarket demand in our industry. Despite challenging market conditions. We are confident that the strategic decisions. We've made in the past several years to diversify our customer base on supporting large national.

Counts into add technicians to our workforce has us well positioned to perform in 2024.

As always it is important that I take a moment to thank our employees for their incredible work during 2023, and providing world class service to our customers, while staying focused on our company's long term goals.

With that I'll take your question.

Yeah.

Thank you, ladies and gentlemen, as a reminder to ask a question Thats Star one one.

Please standby, while we compile the Q&A Boston.

First question comes from the line of Justin Long with Stephens. Your line is open.

Thanks, and good morning.

Good morning, Justin.

Good morning, Rusty So I guess Ted.

Start with the parts and service business, you've talked about the divergence in trends between national accounts and the smaller customers I'm curious how those two buckets performed in the fourth quarter and just your general level of confidence on that on a net basis.

Parts and service business has bottomed.

There's a high interest rates and saw freight rates demand for used trucks was weak and used truck values declined throughout 2023.

Well.

Pretty confident like I said in my notes that we expect will remain at least as good as where we are I didn't want to I didn't want to push it up I think I think there's room for growth in parts and services wanting away for as I said, if it works we would just be pacing along where we were in the second half of the year in 2023.

'twenty 'twenty four we expect that demand for used trucks will remain flat, but the rate at which used trucks. We're depreciating will continue to decrease in the used truck values will stabilize somewhat over the course of the year. We are confident our diverse product mix and ability to move inventory throughout our network well Mr continue continue to affect them.

When you look at I always love to do is take it at the parts and pieces right at the end of the day you look at the small accounts right. We talked about this before last for six months last couple of calls the fact that for the year. They were down almost 12% now quarter wise I don't have that in front of me, but I know it started only off about 867% to 8%.

We navigate the used truck market in 2024.

Excuse me.

In Q1 through and ramped up throughout the year. So I've got to believe that Q4 was probably down somewhere in the 13% to 14% range and when we call. Those are unassigned accounts, but what you don't realize that sometimes those those accounts still make up 32% of our business. So when you look at what we did and you're talking about.

We will continue to monitor freight rates interest rates consumer spending and other economic factors that impact both commercial vehicle sales and after market demand in our industry.

Despite challenging market conditions, we are confident that the strategic decisions. We've made in the past several years to diversify our customer base on supporting large national accounts and to add technicians to our workforce has us well positioned to perform in 'twenty 'twenty four.

<unk> down like that really continuing to decline over the year you got to feel good about where you're at like I've said before.

Maybe our margins, where I herself because some of the shift what was the business. We are doing over the more national accounts, which obviously.

Demand a better pricing.

Along with us whether national accounts right. So we were able to make up that.

Turning to the third of our business was down probably like I said I don't have it in the fourth quarter right for them. It was pushing 12 for the year and I know it can decline more zero loss I got to believe into the 14% to 15% range in Q4 right. So you know it's you got to feel good about where we are at the focus that we've had and it's not just <unk>.

With that I'll take your question.

Yeah.

Thank you, ladies and gentlemen, as a reminder to ask a question Thats Star one one.

Please standby, while we compile the Q&A roster.

Over the road customers right with what I talked about the diversity of our customer base I'm very proud of what we've done by putting a focus individually on each of these sectors.

Our first question comes from the line of Justin Long with Stephens. Your line is open.

Thanks, and good morning.

Assigning people at the highest corporate level from the mid level. Two aside we have over 300, plus outside parts and service salespeople and while they focus on some of the local mid size accounts, we have really put to push on.

Good morning, Justin.

Good morning, Rusty so I guess to start with the parts and service business, you've talked about the divergence in the trends between national accounts and the smaller customers I'm curious how those two buckets performed in the fourth quarter and just your general level of confidence on that.

The national accounts and when you do that you've got to.

To form relationships with both the high end of our Corporation all way out to the street level on the individual areas that they have terminals or do they have.

On a net basis.

The parts and service business has bottomed.

Our shop or whatever they have whatever business they ran across the network. So.

Well.

Im pretty confident like I said it in my notes that we expect will remain at least as good as where we are I didn't want to I didn't want to push it up I think I think there's room for growth in parts and service in 2024 as I said if it works we would just be pacing along where we were in the second half of the year in 2023.

With that that allowed us to achieve an 8% growth rate with it being down 12% on a third of your business. So you can see.

You can extrapolate.

What you know how good they are.

After the company right. That's why it was a little softer because.

When you look at it.

I always love to do is take it at the parts and pieces right at the end of the day you look at the small accounts right. We talked about this before the last six months last couple of calls the fact that for the year. They were down almost 12% now quarter wise I don't have that in front of me, but I know it started only off about 867% to 8% in Q1 through.

Unassigned accounts of your small accounts and there are a little higher margin accounts right, but we were able to overcome them with you.

I'd like to say, okay overcome.

Over a third of your business being at all 12% by the focus that we had so.

We don't see that changing so when the small guy does come back.

And ramped up throughout the year. So I've got to believe that Q4 was probably down somewhere in the 13% to 14% range and when we call. Those are unassigned accounts, but what you don't realize that sometimes those those accounts still make up 32% of our business. So when you look at what we did and you talk about being down like that.

You got to feel real good about what you can what are you going to be when that does when that when that pivot.

Pivots back the other direction, which you've got to believe we'd been in a freight recession for what a year and a half two years almost it seems like Oh God brief been doing decently well the freight market as you. All you do is read all the reports it's been under a lot of stress here this last year as well.

Continuing to decline over the year, you got to feel good about where you're at like I've said before.

That's helpful on the National accounts do you have a number on how much they were up for the full year just to compare that to what youre seeing with the unassigned accounts.

Maybe their margins, where I herself because some of the shift what would the business. We are doing over the more national accounts, which obviously.

Demand a better pricing.

Yes, they were up in the high teens to around 20, you know somewhere between 18 and 20 I don't again I don't have the total number of which the stores we're talking about.

Along with us whether they are national accounts right. So we were able to make up that.

Turning to the third of our business was down probably like I said I don't have it in the fourth quarter right in front of me, but it was pushing 12 for the year and I know it can decline more than zero, what else I got to believe into the 14 and 15% range.

They were up somewhere in that I can point, we break it into so many different segments too.

Because we still got a lot of midsized customers too.

Galster, while they're the largest growing thing we have going on we still have a lot of mid global midsize customers.

In Q4, right. So you know it's a you've got to feel good about where we're at the focus that we've had and it's not just over the road customers right. When I talk about the diversity of our customer base I'm very proud of what we've done by putting a focus individually on each of these sectors.

We forget about if they're a piece of it also so you've got roughly 32%.

And the small you've got about 28%, we would call national accounts, Okay of our business. So the other 40% is really that middle bucket.

Assigning people at the highest corporate level from the mid level. Two aside we have over 300, plus outside parts and service salespeople and while they focus on some of their local mid size accounts, we have really put a push on to.

Which is the largest bucket we touch right.

No.

Diversity.

Of customers is really what's allowed us to navigate what.

Well, it's been a rough rough time for a lot of our customer base and that focus on vocational right. When I talk about revenues being up when I talk about oil and gas being up at our wholesale business still being up but municipal being up all of these other areas are up they're up okay.

The national accounts and when you do that you've got to you have.

The form relationships with both the high end of a corporation all way down to the street level on the individual areas that they have terminals or they have.

Our shop or whatever they have whatever business they ran across the network. So.

Regardless of whether they are national accounts or mid level guests, we break it into a lot of different buckets, but those are the areas that have allowed us to overcome with.

With that that allowed us to achieve an 8% growth rate with it being down 12% on a 30 year business. So you can see.

With 32% of your customers are up 12% and still posted a positive year.

You can extrapolate.

What how good they.

The company right. That's why we're in that was a little softer because we honestly.

Got it and I was wondering too if you could share anything on expectations for the first quarter, maybe truck sales parts and service and Steve I know typically you see an uptick in G&A. So maybe some thoughts there as well.

Unassigned accounts of your small accounts and there are a little higher margin accounts right, but we were able to overcome them with you know I'd like to say to overcome a third of your business being all 12% by the focus that we had so.

Yeah, well first quarter is always G&A.

We don't see that changing so when the small guy does come back.

G&A goes up we Didnt put it in our release this year, we've put in over the last 25 years.

You got to feel real good about what you can what are you going to be when that does when that when that went with it.

Nothing's changed right, all the equity comp and taxes and all of that ramp back up and get Expensed out in the first quarter and that is natural for our business. You can go back and model. It every year. So we definitely expect that from a truck sales perspective.

Pivots back the other direction, which you've got to believe we'd been in a freight recession for what a year and a half two years almost it seems like Oh gosh, it's been doing decently well the freight market as you know all you do is read all the reports it's been under a lot of stress here this last year as well.

We are going to start declining.

There's no question.

Everyone knows we've known them for a couple of years, the 2024 was going to be a little bit soft.

That's helpful on the National accounts do you have a number on how much they were up for the full year just to compare that to what youre seeing with the unassigned accounts.

Due to no unexpected 'twenty three to be as big as it was while the demand the pent up demand, but the key thing and the FERC sales side is this is nothing that we didn't expect but we're not expecting ACD as it added about 22%.

Yes, they were up in the high teens to around 20, and you know somewhere between 18 and 20 I don't again I don't have the total number of which the stores. We're talking about but you know they were up somewhere in that and we break it into so many different segments too.

And I'm going to agree with that I don't expect it to be down 22% in Q1, but I do expect it to be solved and we expect to do better by the way given the diversity of our customer base right I can tell you that the over the road business is going to be.

Because we still got a lot of midsized customers too.

Galster, while they're the largest growing thing we have going on we still have a lot of mid global midsize customers.

More like 30, plus for the whole year I believe but the key thing is we've got 25 and 26, Kevin with EPA regulations, MBA, where one or 2007, there will be.

We forget about them, they're a piece of it also so you've got roughly 32%.

And the small you've got about 28%, we would call national accounts, Okay of our business. So the other 40% is really that middle bucket, which.

I am guessing as we get to the back half of this year folks who are going to wake up and realize that they are probably going to free by the 25 and 26 given.

Which is the largest bucket we touch right. So that's.

Not just in new technology, but.

I won't get into a pricing pricing what the engines are going to cost can go up by January one of 2007 with all the new aftermarket or Africa or excuse me. After treatment systems are going and we're going into play to meet the new EPA regulations. So as that we believe the freight market will go back remember the Illinois business is still the biggest piece of volume out there it's not in Russia.

The diversity.

Of customers is really what's allowed us to navigate what.

Well, it's been a rough rough time for a lot of our customer base and that focus on vocational right. When I talk about revenues being up when I talk about oil and gas being up in our wholesale business still being up but municipal being up all of these other areas are up they're up okay.

We're 50 50 right between vocational on that but in the real market is still the biggest piece. So you know those folks as they can just get them to get their feet underneath them here, it's been a long year and a half or two like I said.

Regardless of whether they are national accounts or mid level guests, we break it into a lot of different buckets, but those are the areas that have allowed us to overcome.

With 32% of your customers are up 12% and still posted a positive year.

They get their feet under I would expect.

On a pre buy to start possibly in the back quarter towards the back half of this year as folks realize what the cost stuff will be around that equipment from an aftermarket perspective, yeah. I said in the first half would be flat and when I went through it a minute ago I have hopes that were up slightly.

Yeah, well first quarter is always.

But I don't want to put that out there I think some of the initiatives we have are still.

G&A goes up.

And put it in our release this year, we've put in over the last 25 years.

Keep rolling them out and we still haven't come to fruition and while the ones that we have rolled out over the last couple of years. So.

Nothing has changed right you know all the equity comp and taxes and all of that ramp back up and getting expensed out in the first quarter and that is natural for our business. You can go back and model. It every year. So we definitely expect that from a truck sales perspective.

I got to believe that we're still really focused on the remember we're also battling less inflation, okay, regardless of their report yesterday overall, obviously replacement is not what it was two years ago or even in the first half of last year.

We are going to start declining okay.

There's no question that everyone knows we've known them for a couple of years. The 'twenty 'twenty four was going to be a little bit soft.

So it'll be real growth it'll be taking share that's what we focus on every day, we get up in the parts and service business is to take share. So I've got to believe that we're going to be like I said.

Due to no unexpected twenty-three to be as big as it was while the demand the pent up demand.

Said flat I have hopes to do way better a little better you know I'd love to say it can be.

But the key thing and the FERC sales side is this is nothing that we didn't expect but we're not expecting ACD as it added about 22%.

Low to mid singles.

And I'm going to agree with that I don't expect it to be down 22% in Q1, but I do expect it to be solved and we expect to do better by the way given the diversity of our customer base right.

For the year, but it's.

So it's not as easy to look at it as it was the last couple of years right.

Day to day hand to hand combat.

Type work.

I can tell you that the over the road business is going to be more like 30, plus for the whole year I believe but the key thing is we've got 25 and 26, Kevin with EPA regulations in January one of 2007, there will be.

But I have all the confidence in the world.

And I think the results bear that out of the organization and our strategic initiatives that we've laid out there and what we're focused on.

As a core as a group so that we can execute on those right I like to believe we've executed in the past and will continue to execute as we go forward regardless of what the truck sales market I can't make a truck market, but I expect to do better I don't want to I'm not going to guarantee but I expect to do better than 22% I can promise you that.

I'm guessing as we get to the back half of this year folks who are going to wake up and realize that they are probably going to free by 'twenty five 'twenty six given.

Not just the new technology, but I.

I won't get into a price at pricing what the engines are going to cost can go up by January one of 2007 with all the new aftermarket perhaps prepare excuse me after treatment systems that are going and we're going into play to meet the new EPA regulations. So as that we believe the freight market will go back remember the Illinois business is still the biggest piece of volume out there it's not right.

But that's going to be.

Working that every day you don't have the lead time, if you don't have allocation like yet that's not out there anymore. So it's not like I've got a year long backlog of trucks. So you know.

I'll still say, yes.

I can still sell your trucks and you also in Q2 I'll get yourself. So that's just where we're at we're back to normal times. Okay. Let's just say that when it comes to truck sales I do think we'll be back on allocation. This time almost next year.

So it's worth it we're 50 50 right between vocational on that but in the real market is still the biggest piece so.

Those folks as they can just get get their feet underneath them here, it's been a long year and a half or two like I said.

I do believe that will come to pass whether it's whether it's February or whether it's April of next year I can't tell you, but there's no doubt in my mind, it would be going back and allocation market.

They get their feet under I would expect some you know a prebiotic start possibly in the back quarter towards the back half of this year as folks realize what the cost stuff will be around that equipment from an aftermarket perspective, yeah. I said in the first half would be flat and when I went through it a minute ago I have hopes that were up slightly.

25.

Got it and last one for me Rusty you've talked about earnings expectations and free cash flow expectations in the trough in 2020 for any change to your outlook there.

But I don't want to put that out there I think some of the initiatives. We have are still with us.

None whatsoever.

Keep rolling them out and we still haven't come to fruition and while the ones that we have rolled out over the last couple of years. So you know I got to believe that we're still greenlee focused.

Take back anything I've said in the last couple of years, Okay and as usual.

Focused on.

I like to over deliver how about that.

Remember, we're also battling less inflation, okay, regardless of their report yesterday overall, obviously replacement is not what it was two years ago or even in the first half of last year.

Yeah.

I like it I'll leave it there thanks for asking.

Thanks, Nick.

Well he's staying back around next question.

So we're it'll be real growth it'll be taking share that's what we focus on every day, we get up in the parts and service business is to take share. So I've got to believe that we're going to be like I said.

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

Hey, how are you good morning.

Well good morning, Mr Rubin.

Are you, calling the bottom of the cycle because that's what you get out and have your call I don't think you've called the bottom of the cycle before it seems like you're basically saying cycle bottomed sometime around this summer.

Flat I have hopes to do way better or a little better you know I'd love to say it can be.

Low to mid singles.

For the year, but you know it's it's it's.

Yeah, I think so I think where you're going to have a little carryover.

It's not as easy to look at it as it was the last couple of years right.

And you know when it comes when we're talking about truck sales, okay, I'm not talking about aftermarket business aftermarket business totally different but when it comes to the class eight truck sales.

Day to day hand to hand combat type work.

But I have all the governance in the world.

And I think the results bear that out of the organization and our strategic initiatives that we've laid out there and what we're focused on as a core group. So that we can execute on those right I like to believe we've executed in the past and will continue to execute as we go forward regardless of what the truck sales market I can't.

Thank you.

The summer is going to be a little more difficult.

And what we have experienced some carryover into Q1.

Anything that you remember were at the end of the frame, we don't manufacture them, we deliver them a lot of times trucks take bodies and things like that and it can be up to 60 to 90 days for those trucks get delivered to our customer base, especially on the vocational side. So yes, I would tell you that.

Make a truck market, but I expect to do better I don't want to I'm not going to guarantee but I expect to do better than 22% I can promise you that but that's going to be working that every day you don't have the lead time, if you don't have allocation like yet that's not out there anymore. So it's not like I've got a year long backlog of trucks. So.

It'll trough for us in class a deliveries would probably be sometime in the summer, but again like I said I do expect.

The freight market cannot continue I don't believe to be as rough as its been the last couple of years. So you know I would expect that to pick up and along with.

You'll say, yes.

Most of it I can still sell your trucks.

Also in Q2 I'll get yourself. So that's just where we're at we're back to normal times. Okay. Let's just say that when it comes to truck sales I do think we'll be back on allocation. This time almost next year that I can be but you know I do believe that will come to pass whether it's whether it's February or whether it's April of next year I can't tell you, but there is no.

PPA emission laws of twenty-seven January I wanted 27, I do firmly believe will be a pre buy.

Without question.

Most people expect to $1 26 to be the biggest year in history.

Decent economic conditions overall in the country right. So yeah, I mean, I would tell you that truck sales will be softer in the second in the summer of into Q2 and Q3.

Doubt in my mind, it would be going back to an allocation market.

<unk> 25.

Got it and last one from me Rusty you've talked about earnings expectations and free cash flow expectations in the trough in 2020 for any change to your outlook there.

Then what we have seen but again.

We believe it when I say, 22% I.

I think the majority of it will be in summer yes.

None whatsoever.

But you know I expect to start bouncing back by the end of the year.

I don't take back anything I've said in the last couple of years ago and as usual.

Excellent and one can.

Can you just remind us what is used pricing bottoming.

We're focused on.

I like to over deliver how about that.

And is it I wish Andrew if I can tell you that humana.

I like it I'll leave it there thanks for asking.

Maybe you can give me a raise okay, which I would gladly take.

Thanks, Nick.

Well he's staying back around next question.

But any finer asking I think is doing fine as it is.

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

[laughter] I would agree with that and probably overplayed.

Hey, Ross how are you good morning.

Did I say that okay.

Good morning, Mr. Roman.

Yeah.

Are you, calling the bottom of the cycle because that's what you get out and have your call I don't think you've called the part of the cycle before it seems like you're basically saying cycle bottomed sometime around this summer.

No.

Andrew I'll tell you I will say this use the decline in used truck pricing has continued.

Wow.

It is not as dramatic.

It was a year and a half ago.

Yeah, I think so I think where you're going to have a little carryover.

It is still declining more than normal I think our average used truck price was like 53000 and I see it.

When it comes when we're talking about truck sales, okay, I'm not talking about aftermarket business aftermarket business totally different but when it comes to class eight truck sales.

And when you look at average and if you go back to.

I think that you know.

The summer is going to be a little more difficult.

19 or was that in Quebec, and isn't enough already to high forty's or something like that 47 48. So you got to believe with the inflationary what flux costs now that spread has gotten.

And what we've experienced.

Gary over into Q1 from that.

If you have to remember we're at the end of the frame, we don't manufacture them, we deliver them a lot of that in trucks take bodies and things like that and it could be up to 60 to 90 days for those trucks get delivered to our customer base, especially on the vocational side. So yes, I would tell you that.

There's only so far it can go but the problem is it pricing is one thing demand as the other right and when he got spot markets, which was the main driver of used truck values.

It'll trough for us and class eight deliveries will probably be sometime in the summer, but again like I said I do expect.

Such rough shape and down so much it still.

And it'll happen quick when it happens you watch I can't tell you window. So that means I guess, they don't get my raise but exactly when but I would tell you.

The freight market cannot continue I don't believe to be as rough as its been the last couple of years. So you know I would expect that to pick up and along with what they are.

I got to believe sometime before the year's out, but I don't look for it in the mix.

E P. A emission laws of 27 day, where I wanted 27, I do firmly believe will be a pre buy.

We will continue to decline at a faster rate, but not as fast as it was declining there still trucks being put on the market over of a couple of batches. This week.

Without question.

Most people expect to $1 26 to be the biggest year in history.

In big numbers.

The people, who drive downloads, which puts pressure on it you know puts pressure on the market, but the most important thing is to create demand, which means you got to get the spot market back you've got to have some of these others is over the road business spot market back to really stabilize it and make it to.

Decent economic conditions overall in the country right. So yeah, I mean, I would tell you that truck sales will be softer in the second or in the summer of into Q2 and Q3.

Then what we have seen but again.

We believe it when I say, 22% I.

Can make used truck values go up again.

I think the majority of it will be in summer yes.

Stock, it's still it's still decelerating.

But you know I expect to start bouncing back by the end of the year.

Any faster than what I would say normal percentages are.

Excellent and one can.

Right.

Can you just remind us one is used pricing bottoming.

Just a question in terms of macro and I always I'll I've asked me. This question just because you have great systems.

And is it I wish I think Andrew if I can tell you that I.

Can you just take us around the country cause by region how.

Maybe you can give me a raise okay, which I would gladly take.

As the economy holding up relative to your expectations, maybe six weeks ago, and I know that it's only six weeks, but you do have some of the best systems of antibody I cover just maybe you can take us around the country and tell us what's Rusty rush is a 30000 foot view of the U S economy.

But anytime you're doing fine.

As it is.

[laughter] I would agree with that and probably overplayed.

Did I say that okay.

Yeah.

No.

Andrew I'll tell you I will say this use the decline in used truck pricing has continued.

Well.

Obviously, the biggest concentration we have would be in Texas right.

Wow.

It is not as dramatic.

Texas is doing just fine okay, our Texas stores are still you know what the state is still growing.

It was a year and a half ago.

It is still declining more than normal I think our average used truck price was like 53000 and I see it.

Oh, well highest growing states in the nation.

From both population and a business perspective or business is still coming in here, Florida is doing great.

And when you look at average and if you go back to.

19 or was I think the recognition of 40 high forty's or something like that 47 48. So you got to believe with the inflationary what flux costs now that spread has gotten.

And then where are we going to go out and we're getting through I would tell you a little salt for maybe.

Lately in Ohio, I think and but I think Illinois is decent and doing well.

There's only so far it could go but the problem is it pricing is one thing demand as the other right and when he got spot markets, which was the main driver of used truck values.

Go out West, California is still in good shape I do worry about California, with a new 24 wall Carb loves it came in at about that we get in the back half of the year. They may be suffering on the truck sales side right now they are doing fairly well.

Such rough shape and down so much it still.

Hey.

And it'll happen quick when it happens you watch I can't tell you when though because that means I guess, they don't get my race, but exactly when but I would tell you I got to believe sometime before the years out, but I don't look for it in the mix.

We made sure to have some inventory things like that to carry over into the markets.

Out there.

Oklahoma is still growing strong.

Arizona is decent.

We will continue to decline at a faster rate, but not as fast as it was declining there still trucks being put on the market I've heard of a couple of batches. This week.

So pretty decent across the board like I said, a little softness.

State or so.

And really in Ohio for whatever reason I've noticed there's little softer up there recently, but I don't expect that to hold up I expect that didn't come back.

In big numbers.

The people, who drive downloads, which puts pressure on it you know it puts pressure on the market, but the most important thing is to create demand, which means you got to get the spot market back you've got to have some of these others. There's over the road business spot market back to really stabilize it and make it you know and can make used truck values go up again.

So I hope I can answer them I mean.

Go ahead.

I'd like to look at our markets.

Geographic markets, but the other markets.

Breaking it out of the construction.

He is better that's what we hope will help keep the order board better with the hits that we're seeing on the over the road business both from a large customer and for the small person, which you know are pretty much out right now.

You know where to.

Stock it still it still.

Decelerating faster than what I would say normal percentages are.

Right.

Just a question in terms of macro and I always I I'll have asked me. This question just because you have great systems.

Out of our mix.

But you know refuges really going strong.

Can you just take us around the country cause by region how.

Construction is doing extremely well.

Digital business is holding strong with moderate growth rates as I said earlier and we expect that to continue.

You know just like I said, the hardest thing we've got going is the small customer right. That's why when the small customer does come back in the old real goodness, we're gonna be in really good shape.

Because we're having overcome at one third of our business being up double digits. So.

Well.

Obviously, the biggest concentration we have would be in Texas right.

So that's that will bring back an idle.

Texas is doing just fine okay, our Texas stores are still you know the state still growing.

Spec vocational to continue to be strong given you know the government monies that are out there that are being spent right now so.

So one of the highest growing states in the nation.

Look 24, it's not going to be what 23 was but at the same time.

From both population in our business.

Perspective or business is still coming in here, Florida is doing great.

It's going to be.

I'll stick to my guns as that was asked earlier by Bob.

Hmm.

By just about what I've said in the past as to will still execute.

Where are we going to go out and we're getting through I would tell you a little salt for maybe.

The truck market I can't make truck market, but doggone sure. It can take share and grow in the aftermarket and that's the goal of the organization that size problem, but most probable business we do.

Lately in Ohio, I think and but I think Illinois is decent and doing well.

So if I were to summarize that truck market is bottoming economies solid rush enterprises is executing is that a fair summary.

We go out West in California is still in good shape I do worry about California with a new 24 wall Carb loves it came in at about that we get in the back half of the year.

That's what we like to think.

Separately on the truck sales side right now, they're doing fairly well, but we made sure to have some inventory things like that to carry over into the markets.

I guess the proof of it is better than the numbers, but.

We've had a.

Even going back to Covid you arrived in 'twenty and what we did in 'twenty one what we didn't want to what we did 23, we're going to execute really well I believe inside of up to 24 market with a 20 plus percent class a decline.

Out there.

Well.

Oklahoma is still growing strong.

Arizona is decent.

So pretty decent across the board like I said, a little softness in the state or so.

Maybe not so maybe we're better than that I don't want to guarantee anything, but I'd like to see us only be half of that but I can't guarantee that because I'm still can build yourself.

And really a park in Ohio for whatever reason I've noticed is little softer up there recently, but I don't expect that to hold up I expect that didn't come back.

It's still a moving target right we're back to normalized times, we'll get it get out of this allocation world. We live in and so you know everybody's got to sharpen up there sharpen up their tools and go to work and get out there and take some share to the company in a little more competitive environment, but we've always been able to do that.

So I hope I can answer them I mean.

Go ahead.

I like to look at our markets.

Geographic markets, but the other markets.

Breaking it out of the construction.

He is better that's what we hope will help keep the waterborne better with the GOR hits that we're seeing on the over the road business both from a large customer and for the small person, which you know pretty much out right now.

No.

Well get a high quality organization.

Thanks, a lot. Thank you Indra I appreciate it.

Thank you.

Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back over to Rusty for closing remarks.

Out of our mix.

You know refuse is really going strong.

Yes, I want to thank everybody for joining us this morning, and we will see you in mid April at you and your loved ones have a happy Valentine's day. Thank you very much.

Construction is doing extremely well.

Digital business is holding out a strong neuro moderate growth rates as I said earlier and we expect that to continue.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Like I said the hardest thing we've got going is the small customer right. That's why when the small customer does come back in the old Road business, we're gonna be in really good shape.

Because we're having to overcome that one third of our business being up double digits. So that's that will bring back in Idaho.

Vocational to continue to be strong given you know the government monies that are out there that are being spent right now so.

Look 24, it's not going to be with 23 was but at the same time.

It's going to be a I'll I'll stick to my guns as I was asked earlier by by.

By just about what I've said in the past as to will still execute.

The truck market I can't make a truck market, but doggone sure it could take share grow in the aftermarket and that's the goal of the organization. That's the highest probably most probable business we do.

So if I were to summarize that truck market is bottoming economies solid rush enterprises is executing is that a fair summary.

That's what we like to think.

I guess the proof of it is better than the numbers, but.

We've had a.

Maybe not so maybe we're better than that I don't want to guarantee anything, but I'd like to see us only be half of that but I can't guarantee that because I'm still can build yourself and you know it's still a moving target right. We're back to normalized times, we got to get out of this allocation world. We live in and so you know everybody's got to sharpen up there sharpen up.

Their tools and go to work and get out there and take some shares because the company like these little more competitive environment, but we've always been able to do that.

Oh yeah.

We will get a high quality organization.

Thanks, a lot. Thank you Andrew I appreciate everybody.

Thank you.

Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back over to Rusty for closing remarks.

Yes, I want to thank everybody for joining us this morning, and we will see you in mid April at you and your loved ones have a happy Valentine's day. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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Okay.

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Okay.

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Hello, and thank you for spending by welcome to Rush Enterprises, Inc. Reports fourth quarter 2023 earnings results.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

To ask a question. During this session you will need to press star one on your telephone you within your automated message advising yohan just right.

To withdraw your question. Please press star one again.

I would now like to hand, the conference over to Rusty Rush, President CEO and chairman of the board Sir you may begin.

Well good morning, and welcome to our fourth quarter year end 2023 earnings release 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 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.

Factors that could cause actual results to differ materially from those expressed or implied by such forward. Looking statements include but are not limited to those expressed 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.

As indicated in our news release, we achieved annual revenues of $7 9 billion and net income of $347 million or $4.15 per diluted share.

In the fourth quarter, we achieved revenues of 2 billion and net income of $78 million or <unk> 95 cents per diluted share.

In addition, we are pleased to declare a cash dividend of <unk> 17 cents per common share.

Throughout 2023, there was pent up demand for new commercial vehicles.

Limited drug production over the past few years with respect to new class a trucks that pent up demand was largely fulfilled by the end of 2023 with respect to the class four through seven commercial vehicles demand remains solid the manufacturer we represent railroad increase production throughout the year, which led us to significantly.

The latest is significantly outpacing the industry with respect to new class food four through seven commercial vehicle sales.

By the challenging operating environment 2023 caused by low freight rates and high interest rates, which led to grip general softness in parts and service sales industry wide, we were able to achieve a healthy growth for the aftermarket revenues.

Expanding our service technician workforce is a key aspect of <unk>.

Certain of our strategic initiatives overall, we are very proud of both our operational and financial performance in 2023.

In the aftermarket our annual parts service and body shop revenues were $2 6 billion.

Up 8% over 2022 aftermarket results and our annual absorption rate was $135 three.

As I previously mentioned, we added 215 service to technicians to our network last year, which enhanced our ability to execute on certain of our strategic initiatives, including express services contract maintenance and mobile service offerings. We have also experienced healthy part sales growth from our energy revenues.

Leasing customer.

Looking ahead, we expect the challenging break conditions and high interest rates will continue to impact our customers and then aftermarket demand in the first half 2024 will be similar to the second half of 2023. However, we are cautiously optimistic that the current freight recession make begin to ease in summer.

In addition, we believe that our diverse customer base, our ability to support large national fleets and our ongoing focus on our strategic aftermarket initiatives will allow us to outpace the aftermarket industry and to achieve flat to modest aftermarket growth in 2024.

Turning to truck sales, we sold 17000 boarded seven new class eight trucks in 2023 accounting for six 2% of the total U S class eight market and 2% of the class eight market in Canada.

Previously stated we experienced healthy demand from a variety of market segments. However, the pent up demand from the class eight market has been satisfied ACG research forecasts class eight retail sales to be 214300 units in 2044 down roughly 22% from 2023.

Though the industry is expecting new class eight truck sales to be down significantly in 2024.

The challenging economic and industry conditions, we are confident that we'd be able to navigate a down year and outpaced the industry in 2024 due to our strategic decisions. We made in prior years to diversify our customer base and focus on vocational customer.

Our class four through seven new drug sales reached 13624 units in 2023 or five 1% of the U S market.

Excuse me and two 9% of the Canadian market.

Those factors along with our ongoing efforts to diversify our customer base in support of large national accounts allowed us to significantly outperform the industry in 2023.

We are still experiencing delays from truck body countries and these delays impacted deliveries during the fourth quarter, which limited our growth somewhat.

ACD research forecast class four through seven retail sales.

To be 254250 units in 2023 up slightly from 2023 222, as we look to excuse me 2023 as.

As we look ahead, we expect they will continue to see improvements in the medium duty commercial vehicle production for the manufacturers, we represent and we expect customer demand to remain strong.

Both of these things occur we believe our class four through seven commercial vehicle sales.

<unk> remained strong in 2024.

Used truck sales reached 70 117 units in 2023 relatively flat compared to 2022.

Interest rates and a soft freight rates demand for used trucks was weak and used truck values declined throughout 2023 and.

In 2024, we expect that demand for used trucks will remain flat, but the rate at which used trucks depreciated will continue to decrease in the used truck values will stabilize somewhat over the course of the year. We are confident our diverse product mix and ability to move inventory throughout our network well Mr continue continue to affect them.

As we navigate the used truck market in 2024.

Excuse me.

We will continue to monitor freight rates interest rates consumer spending and other economic factors that impact both commercial vehicle sales and after market demand in our industry. Despite challenging market conditions. We are confident that the strategic decisions. We've made in the past several years to diversify our customer base on supporting large national.

Accounts into add technicians to our workforce has us well positioned to perform in 2024.

With that I'll take your question.

Yes.

Thank you, ladies and gentlemen, as a reminder to ask a question Thats Star one one.

Please standby, while we compile the Q&A roster.

First question comes from the line of Justin Long with Stephens. Your line is open.

Thanks, and good morning.

Good morning, Justin.

Good morning, Rusty so I guess to start with the parts and service business, you've talked about the divergence in trends between national accounts and the smaller customers I'm curious how those two buckets performed in the fourth quarter and just your general level of confidence.

On a net basis did the parts and service business has bottomed.

Well.

Pretty confident like I said it in my note, we expect to remain at least as good as where we are I didn't want to I didn't want to push it up I think I think there's room for growth in parts and service in 2024 as I said if it works we would just be pacing along where we were in the second half of the year in 2023.

When you look at it.

And it ramped up throughout the year. So I've got to believe that Q4 was probably down somewhere in the 13% to 14% range and when we call those are unassigned accounts.

What you don't realize that sometimes those those accounts still make up 32% of our business. So when you look at what we did and you talked about being down like that really continuing to decline over the year you got to feel good about where you're at like I've said before.

Maybe our margins, where I herself because some of the shift what would the business. We are doing over the more national accounts, which obviously.

Demand a better pricing.

Along with us whether they are national accounts right. So we were able to make up.

That's 32 to a third of our business was down probably like I said I don't have it in the fourth quarter right for or maybe it was pushing 12 for the year and I know it can decline more zero loss I got to believe it's in the 14% to 15% range.

Q4, right so.

You got to feel good about where we're at the focus that we've had and it's not just over the road customers right. When I talk about the diversity of our customer base I'm very proud of what we've done by putting a focus individually on each of these sectors.

Signing people at the highest corporate level from the mid level. Two aside we have over 300, plus outside parts and service salespeople and while they focus on some of the local mid size accounts, we have really put a push on.

To the national accounts, and when you do that you've got to.

The form relationships with both the high end of our Corporation, all way down to the street level on the individual areas that they have terminals or they have.

Our shop or whatever they have whatever business they ran across the network. So.

With that that allowed us to achieve an 8% growth rate with it being down 12%.

Your business. So you can see.

You can extrapolate.

What how good that what that net to the company right. That's why we're in that was a little softer because we unassigned accounts of your small accounts and they are a little higher margin accounts right, but we were able to overcome them with you know I'd like to say, okay overcome a third of your business being all 12% by the focus that we.

We had so.

We don't see that changing so when the small guy does come back.

You got to feel real good about what you can what are you going to be when that does when that when that pivots.

Pivots back the other direction, which you've got her body, we've been in a freight recession for what a year and a half two years almost it seems like while the country's been doing equally well the freight market. As you. All you do is read all the reports it's been under a lot of stress here this last year as well.

That's helpful on the National accounts do you have a number on how much they were up for the full year just to compare that to what youre seeing with the unassigned accounts.

Yes, they were up in the high teens to around 20 somewhere between 18 and 20 I don't again I.

I don't have the total number which the stores, we're talking about but they were up somewhere in that I could really break it into so many different segments too because.

Because we still got a lot of midsized customers too.

Galster, while they're the largest growing thing we have going on we still have a lot of mid global midsize customers. We forget about the up there a piece of it also so you've got roughly 32%.

And the small you've got about 28%, we would call national accounts, Okay of our business. So the other 40% is really that middle bucket.

Which is the largest bucket we touch right. So.

Diversity.

Of customers is really what has allowed us to navigate what.

Well, it's been a rough rough time for a lot of our customer base and that focus on vocational right. When I talk about revenues being up and I talk about oil and gas being up in our wholesale business still be up but municipal being up all of these other areas up to they're up okay.

Regardless of whether they are national accounts or mid level guests, we break it into a lot of different buckets, but those are the areas that have allowed us to overcome with.

With 32% of your customers are up 12% and still posted a positive year.

Got it and I was wondering if you could share anything on expectations for the first quarter, maybe truck sales parts and service and Steve I know typically you see an uptick in G&A. So maybe some thoughts there as well.

Yes, well first quarter is always G&A.

G&A goes up we Didnt put it in our releases here, we've put in over the last 25 years.

Nothing has changed right.

The equity comp and taxes and all of that ramp back up and get expense out in the first quarter and that is natural for our business. You can go back and model. It every year. So we definitely expect that from a truck sales perspective.

We are going to start declining.

There's no question that everyone knows we've noted for a couple of years. The 2024 was going to be a little bit soft.

And no one expected 'twenty three to be as big as it was while the demand the pent up demand, but the key thing and the <unk> sales side is this is nothing that we didn't expect but we're not expecting ACD as it added about 22%.

And I'm going to agree with that I don't expect it to be down 22% in Q1, but I do expect it to be software and we expect to do better by the way given the diversity of our customer base right.

I can tell you that the over the road business is going to be more like 30, plus for the whole year I believe but the key thing is we've got 25 and 26, Kevin with EPA regulations, MBA, where one or 2007, there will be.

I am guessing as we get to the back half of this year folks who are going to wake up and realize that they are probably going to free by the 25 and 26 given.

Not just the new technology, but.

I won't get into a price it pricing what the engines are going to cost to go up by January one of 2007 with all the new aftermarket, perhaps or excuse me after treatment systems that are going and where youre running into play to meet the new EPA regulations. So as that we believe the freight market will go back remember the Illinois business is still the biggest piece of volume out there so not erotic sorry.

With the birth rate, we're 50 50 right between vocational on that but in the real market is still the biggest piece.

No.

Those folks as they can just get get their feet underneath them here, it's been a long year and a half or two like I said.

To get their feet under.

Would expect some a prebiotic start possibly in the back quarter toward the back half of this year as folks realize what the cost will be around that equipment from an aftermarket perspective, yeah. I said in the first half would be flat and when I went through it a minute ago I have hopes that were up slightly.

I don't want to put that out there I think some of the initiatives we have are still.

Keep rolling them out and we still haven't come to fruition and while the ones that we have rolled out over the last couple of years. So.

I got to believe that we're still extremely focused on.

Remember, we're also battling less inflation, okay, regardless of the report yesterday overall, obviously replacement is not what it was two years ago or even in the first half of last year.

Said flat I have hopes to do way better or a little better.

I'd love to say it can be.

Low to mid singles.

For the year, but.

Yes.

It's not as easy to look at it as it was the last couple of years right.

Day to day hand to hand combat type work.

But I have all the confidence in the world as I always do and I think the results bear that out of the organization and our strategic initiatives that we've laid out there and what we're focused on.

As a coal as a group so that we can execute on those right I like to believe we've executed in the past and will continue to execute as we go forward regardless of what the truck sales market I can't make a drug market, but I expect to do better I don't want to I'm not going to guarantee but I expect to do better than 22% I can promise you that.

But that's going to be.

Working that every day you don't have the lead side. If you don't have allocation like yet that's not out there anymore. So it's not like I've got a year long backlog of trucks. So.

I'll still say, yes.

Most of it I can still sell your proxy and you also in Q2 I'll get yourself.

That's just where we're at we're back to normal times, Okay, Let's just say that when it comes to truck sales I do think we will be back on allocation. This time almost next year that I can be but I do believe that will come to pass whether it's whether it's February or whether it's April.

April of next year I can't tell you, but there is no doubt in my mind, it would be going back to an allocation market.

25.

Got it and last one from me Rusty you've talked about earnings expectations and free cash flow expectations in the trough in 2020 for any change to your outlook there.

None whatsoever.

Take back anything I've said, the last couple of years, Okay and as usual.

Focused on.

I would like to over deliver how about that.

Yes.

I like it I'll leave it there thanks Rusty.

Thanks, Nick.

Ladies Sandbaek around next question.

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

Hey, Ross how are you good morning.

Good morning, Mr. Roman.

Yes, I think so I think where you're going to have a little carryover.

When it comes we will draw back truck sales, so again I'm not talking about aftermarket business aftermarket business totally different but when it comes to class eight truck sales.

I think the Lasalle.

The summer is going to be.

A little more difficult.

And what we have experienced some carryover into Q1 from.

Finishing up the year remember we're at the end of the frame, we don't manufacturer and we deliver a lot of that drug stake bodies and things like that and it could be up to 60 to 90 days for those trucks get delivered to our customer base, especially on the vocational side. So yes, I would tell you that.

It'll trough for us and class eight deliveries will probably be sometime in the summer, but again like I said I do expect.

The freight market cannot continue I don't believe to be as rough as it has been in the last couple of years. So.

I would expect that to pick up and along with what they have.

<unk> emission laws of twenty-seven January one of 'twenty seven.

Currently I believe will be a pre buy.

Without question.

Most people expect the $1 26 to be the biggest year in history.

Decent economic conditions overall in the country right. So yeah, I mean, I would tell you that gross sales will be the software and the second on the summer.

In the Q2 and Q3.

Then what we have seen but again.

We believe I'd say, 22%.

I think the majority of it will be in summer yes.

Okay.

To start bouncing back by the end of the year.

Excellent and can you just remind us what is used pricing bottoming.

And is it I wish Andrew if I could tell you that.

Maybe you can give me a raise okay.

Gladly take.

But any.

Hi, Ross I think a very fine as it is.

I would agree with that that probably overplayed.

Did I say that okay.

Got it.

[laughter] no.

And Ralph I will say this use the decline in used truck pricing has continued.

Wow.

It is not as dramatic.

It was a year and a half ago.

It is still declining more than normal I think our average used truck price was like 53000 IC.

When you look at average and if you go back to.

19, or was adding direct gives enough or the high forties or something like that 47 48. So you got to believe with the inflationary what flux costs now that spread has gotten.

I was only so far it can go but the problem is it pricing is one thing demand as the other right and when you've got spot markets, which is the main driver of used truck values.

Such rough shape and down so much it's still.

It'll happen quick when it happens you watch I can't tell you window. So.

That means I guess, they don't give my raise but exactly when but I would tell you.

Got to believe sometime before the year's out, but I don't look forward in the next.

We will continue to decline at a faster rate, but not as fast as it was declining there.

Trucks being put on the market over of a couple batches. This week.

Big numbers.

People will drive downloads, which puts pressure on it puts pressure on the market, but the most important thing is to create demand, which means you got to get the spot market back you've got to have some of these others is over the road business spot market back to really stabilize it and make it.

Can make used truck values go up again.

Stock, it's still it's still decelerating.

Decelerating faster than what I would say normal percentages are.

Right.

Just a question in terms of macro and I always I'll I've asked me. This question just because you have great systems.

Can you just take us around the country because by region how.

As the economy holding up relative to your expectations, maybe six weeks ago, and I know that it's only six weeks, but you do have some of the best systems of antibody I cover just maybe you can take us around the country and tell us what Rusty rush is a 30000 foot view of the U S economy.

Well.

Obviously, our biggest concentration we have would be indexes right.

Texas is doing just fine okay, our Texas stores are still the states still growing.

Oh, well highest growing states in the nation.

From both population in our business.

Perspective for business is still coming in here.

Florida is doing great.

Where are we going to go up.

We're getting through I would tell you a little softer maybe.

Lately in Ohio, I think.

But I think Illinois is decent and doing well.

We go out West, California is still in good shape I do worry about California with a new 24 wall Carb loves it came in at about that we'll get in the back half of the year. There may be suffering on the truck sales side right now they are doing fairly well, but we made sure to have some inventory and things like that to carry over into the markets.

Out there.

Okay.

Oklahoma is still growing strong.

Arizona is decent.

So pretty decent across the board like I said, a little softness in the state or so.

And really a policy in Ohio for whatever reason have notices or softer up there recently, but I don't expect that.

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