Q1 2025 Rush Enterprises Inc Earnings Call - Q&A

May 1, 2025

Operator 2: Thank you for standing by. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rush Enterprises, Inc. Report Q1 2025 Earnings Results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be question and answer session. If you'd like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would like to turn the call over now to Mr. Rusty Rush, Chairman, CEO, and President. Please go ahead.

Operator: Thank you for standing by. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rush Enterprises, Inc. Report Q1 2025 Earnings Results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would like to turn the call over now to Mr. Rusty Rush, Chairman, CEO, and President. Please go ahead.

Thank you for standing by my name is Janice and I will be your conference operator today at this time I would like to welcome everyone to the Rush Enterprises, Inc. Reports first quarter 'twenty to 'twenty five earning results all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be question and answer session.

Speaker Change: If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would like to turn the call over now to Mr. Rusty Rush Chairman CEO and President. Please go ahead.

W.M. "Rusty" Rush: Well, good morning, everyone, and welcome to our Q1 2025 Earnings Call. With me on the call this morning are Jason Wilder, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before we begin, Steve will say a few words regarding forward-looking statements.

Rusty Rush: Well, good morning, everyone, and welcome to our Q1 2025 Earnings Call. With me on the call this morning are Jason Wilder, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before we begin, Steve will say a few words regarding forward-looking statements.

Rusty Rush: Well good morning, everyone and welcome to our first quarter 2025 earnings call with me on the call. This morning, adjacent Wilder Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President Controller, and Michael Goldstone, Senior Vice President General Counsel and corporate Secretary.

Speaker Change: Before we begin 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.

Steven L. Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risk and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended 31 December 2024, and our other filings to the Securities and Exchange Commission.

Steve Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risk and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended 31 December 2024, and our other filings to the Securities and Exchange Commission.

Because these statements include risks and uncertainties. Our actual results may differ materially from those expressed or implied by such forward looking statements important factors that could cause actual results to differ materially from those expressed or implied by such forward. Looking statements include but are not limited to those discussed in our annual report on Form 10-K for the year ended December 31 two.

Speaker Change: 24, and our other filings with the Securities and Exchange Commission.

W.M. "Rusty" Rush: As we stated in our news release yesterday, in Q1, we achieved revenues of $1.85 billion. Net income was $60.3 million, or $0.73 per diluted share. We remain committed to returning value to our shareholders, so I'm proud to announce that our board of directors has again declared a cash dividend of $0.18 per common share for the quarter. The business environment in Q1 was difficult, to say the least. The industry continues to struggle with a freight recession, economic uncertainty, growing concerns around US trade policies and tariffs, and the future of emissions regulations. These factors caused a slowdown in customer activity, particularly in the Class 8 over-the-road segment. Truck sales to Class 8 customers were weaker as we began the year.

Rusty Rush: As we stated in our news release yesterday, in Q1, we achieved revenues of $1.85 billion. Net income was $60.3 million, or $0.73 per diluted share. We remain committed to returning value to our shareholders, so I'm proud to announce that our board of directors has again declared a cash dividend of $0.18 per common share for the quarter. The business environment in Q1 was difficult, to say the least. The industry continues to struggle with a freight recession, economic uncertainty, growing concerns around US trade policies and tariffs, and the future of emissions regulations. These factors caused a slowdown in customer activity, particularly in the Class 8 over-the-road segment. Truck sales to Class 8 customers were weaker as we began the year.

Speaker Change: As we stated in our news release yesterday.

Speaker Change: The first quarter, we achieved revenues of $1 $1 billion in net income was $63 million or 73 cents per diluted share.

Speaker Change: We remain committed to returning value to our shareholders. So I'm proud to announce that our board of directors again declared a cash dividend of <unk> 18 per common share for the quarter.

Speaker Change: The business environment in the first quarter was difficult to say the least the industry continues to struggle with a freight recession economic uncertainty growing concerns around U S trade policies.

Speaker Change: Tariffs and future and the future of emissions regulations. These.

Speaker Change: These factors caused a slowdown in customer activity, particularly in the class eight over the road segment.

Speaker Change: Drug sales to class I customers were weaker as we began the year. However, thanks to our continued focus on strategic initiatives and our diversified customer base, we managed to outperform the broader market in the first quarter, primarily due to strong sales to the vocational and public sector.

W.M. "Rusty" Rush: However, thanks to our continued focus on strategic initiatives and our diversified customer base, we managed to outperform the broader market in Q1, primarily due to strong sales to the vocational and public sector customers. In the medium-duty truck sales market, while the overall market was down, our unique Ready to Roll inventory program was particularly effective, and again, we outperformed the industry with steady Class 4 through 7 sales in the quarter. From a used truck perspective, we saw a typical seasonal pattern, slower sales in January and February, but a good pickup in March, giving us sequential growth from Q4. With respect to our aftermarket results, our parts, service, and body shop revenues were $619 million in the quarter, down 4.6% compared to last year. Our absorption ratio was 128.6 compared to 130.1 in Q1 2024, but still very strong.

Rusty Rush: However, thanks to our continued focus on strategic initiatives and our diversified customer base, we managed to outperform the broader market in Q1, primarily due to strong sales to the vocational and public sector customers. In the medium-duty truck sales market, while the overall market was down, our unique Ready to Roll inventory program was particularly effective, and again, we outperformed the industry with steady Class 4 through 7 sales in the quarter. From a used truck perspective, we saw a typical seasonal pattern, slower sales in January and February, but a good pickup in March, giving us sequential growth from Q4. With respect to our aftermarket results, our parts, service, and body shop revenues were $619 million in the quarter, down 4.6% compared to last year.

Speaker Change: In the medium duty truck sales market, while the overall market was down our unique ready to roll inventory program was particularly effective and again, we outperformed the industry one with steady glass four through seven sales in the quarter.

Speaker Change: From a used truck perspective, we saw a typical seasonal pattern for lower sales in January and February but a good pick up in March giving us sequential growth from the fourth quarter.

Speaker Change: With respect to our aftermarket results, our parts service and body shop revenues were $619 million in the quarter down $4 six compared to last year.

Rusty Rush: Our absorption ratio was 128.6 compared to 130.1 in Q1 2024, but still very strong. Despite tough market conditions, we experienced a slight improvement in aftermarket sales revenues compared to Q4 of last year, with demand from our public sector, vocational, and medium duty leasing customers remaining steady and sales to the energy sector beginning to pick up. We also expanded our aftermarket sales force in Q1, which should help us provide an even higher level of service to our customers going forward. All things considered, operations in Q1. Looking ahead, we expect to see some improvement in aftermarket revenues in Q2. We added service technicians during Q1, which will allow us to decrease customer dwell time going forward.

Speaker Change: Our absorption ratio was $148 six compared to $1 31 in the quarter Q1 of 'twenty 'twenty four.

Speaker Change: Very strong.

W.M. "Rusty" Rush: Despite tough market conditions, we experienced a slight improvement in aftermarket sales revenues compared to Q4 of last year, with demand from our public sector, vocational, and medium duty leasing customers remaining steady and sales to the energy sector beginning to pick up. We also expanded our aftermarket sales force in Q1, which should help us provide an even higher level of service to our customers going forward. All things considered, operations in Q1. Looking ahead, we expect to see some improvement in aftermarket revenues in Q2. We added service technicians during Q1, which will allow us to decrease customer dwell time going forward. We also continue to optimize our parts delivery routes and improve our call center operations, which help us serve more customers efficiently.

Speaker Change: Despite tough market conditions, we experienced a slight improvement in aftermarket sales revenues compared to the four quarter of last year with demand from our public sector vocational medium duty leasing customers remaining steady and sales to the energy sector beginning to pick up.

Speaker Change: We also expanded our aftermarket sales force in the vertical which should help us provide an even higher level of service to our customers going forward.

All things considered operation Walgreens.

Speaker Change: Operations in the first floor.

Speaker Change: Looking ahead, we expect to see some improvement in aftermarket revenues in Q2, we added service technicians during the first quarter, which will allow us to decrease customer dwell time going forward. We also continue to optimize our parts delivery routes and improve our call center operations, which helped us serve more customers efficiently.

Rusty Rush: We also continue to optimize our parts delivery routes and improve our call center operations, which help us serve more customers efficiently. With respect to the H2 of the year, we are actively monitoring the supply chain and the impact that proposed tariffs may have on parts availability and pricing. We believe that we are well-positioned with our parts inventory to mitigate the effects of any potential supply chain disruptions. The Class 8 new truck sales market continues to face challenges. ACT Research says that US and Canadian retail truck sales totaled 57,946 in Q1, down 9% year over year. By comparison, we were down 7.8%, selling 3,222 new Class 8 trucks and accounting for 6.1% of the total US market and 1.1% of the new Class 8 market in Canada.

W.M. "Rusty" Rush: With respect to the H2 of the year, we are actively monitoring the supply chain and the impact that proposed tariffs may have on parts availability and pricing. We believe that we are well-positioned with our parts inventory to mitigate the effects of any potential supply chain disruptions. The Class 8 new truck sales market continues to face challenges. ACT Research says that US and Canadian retail truck sales totaled 57,946 in Q1, down 9% year over year. By comparison, we were down 7.8%, selling 3,222 new Class 8 trucks and accounting for 6.1% of the total US market and 1.1% of the new Class 8 market in Canada. While this was a tough quarter, I'm pleased that we outperformed the market.

Speaker Change: With respect to the second half of the year, we are actively monitoring the supply chain and the <unk>.

Speaker Change: The proposed tariffs.

Speaker Change: Our parts availability and pricing, we believe that we are well positioned with our parts inventory to mitigate the effects of any potential supply chain disruptions.

The class eight new truck sales market continues to face challenges ACG research says U S. Canadian retail drug sales totaled 57946 in the first floor down 9% year over year.

Speaker Change: By comparison, we were down seven 8% Southern 32 to 122, new class a drugs and accounting for six 1% of the total U S market and one 1% of the new class eight market in Canada.

Rusty Rush: While this was a tough quarter, I'm pleased that we outperformed the market. Looking ahead at Q2 and H2, ACT Research revised its US and Canadian Class 8 sales forecast downward to 234,600 units in 2025, a 14.7% decline compared to last year. We do anticipate a slight improvement in Class 8 sales in Q2 due to the timing of some fleet deliveries. At this point, there is too much market uncertainty to predict what demand will look like in H2 for our over-the-road customers. We remain optimistic about demand from our vocational and public sector customers throughout 2025.

Speaker Change: While this was a tough quarter I am pleased that we outperformed the market.

W.M. "Rusty" Rush: Looking ahead at Q2 and H2, ACT Research revised its US and Canadian Class 8 sales forecast downward to 234,600 units in 2025, a 14.7% decline compared to last year. We do anticipate a slight improvement in Class 8 sales in Q2 due to the timing of some fleet deliveries. At this point, there is too much market uncertainty to predict what demand will look like in H2 for our over-the-road customers. We remain optimistic about demand from our vocational and public sector customers throughout 2025.

Speaker Change: Looking ahead of Q2 and the back half of the year ACG research revised its U S. Canadian at class eight sales forecast downward to 234600 units in 2025 up 14, 7% decline compared to last year. However.

Speaker Change: However, we do anticipate a slight improvement in class eight sales in the second quarter due to the timing of some fleet deliveries.

Speaker Change: At this point there is too much market uncertainty to predict what demand will look like in the second half for our over the road customers, but we remain optimistic about demand for our vocational and public sector customers throughout 2020.

W.M. "Rusty" Rush: In medium-duty sales, the overall market declined 3.5% in Q1, but our performance remained stable, and we sold 3,329 new Class 4 through 7 trucks, outpacing the market and increasing our market share to 5.6% of the US Class 4 through 7 market and 3.1% of the Canadian Class 5 through 7, excuse me, Canadian market. ACT Research forecasts US and Canadian sales of Class 4 through 7 trucks to be 254,050 in 2025, down 7.2% compared to last year. Going forward, we expect customers to be cautious, replacing vehicles rather than expanding their fleet. Our strategic approach to stocking work-ready vehicles should allow us to meet customer needs when and where they need vehicles, and we expect to continue to outperform the market this year. We sold 1,769 used trucks in Q1, down 2.7% compared to 2024.

Rusty Rush: In medium-duty sales, the overall market declined 3.5% in Q1, but our performance remained stable, and we sold 3,329 new Class 4 through 7 trucks, outpacing the market and increasing our market share to 5.6% of the US Class 4 through 7 market and 3.1% of the Canadian Class 5 through 7, excuse me, Canadian market. ACT Research forecasts US and Canadian sales of Class 4 through 7 trucks to be 254,050 in 2025, down 7.2% compared to last year. Going forward, we expect customers to be cautious, replacing vehicles rather than expanding their fleet. Our strategic approach to stocking work-ready vehicles should allow us to meet customer needs when and where they need vehicles, and we expect to continue to outperform the market this year. We sold 1,769 used trucks in Q1, down 2.7% compared to 2024.

Speaker Change: In medium duty sales the overall market declined three 5% in the first quarter, but our performance remains today and results already 329, new class four to seven drugs outpacing the market and increasing our market share to five 6% of the U S glass or just even mortgage and three 1% of the <unk>.

Speaker Change: And class five through seven Canadian excuse me the Canadian market.

Speaker Change: ACD research forecasts U S and Canadian sales of glass four to seven drugs to be 254000 over 50, and 2020 plan down seven 2% compared to last year.

Speaker Change: Going forward, we expect customers to be cautious, replacing vehicles, rather than expanding our fleet, but our strategic approach to start getting work ready vehicles that allow us to meet customer needs, when and where they need vehicles and we expect to continue to outperform the market this year.

We sold 70 869 used drugs.

Speaker Change: Two 7% compared to 2020.

W.M. "Rusty" Rush: As of now, demand remains soft and tariffs haven't yet affected used truck pricing. We've been proactive in increasing inventories slightly in preparation for the spring and summer selling season, and we believe they're where they need to be to meet customer needs. Our Rush Truck Leasing division delivered solid results again in Q1. Leasing and rental revenue increased 2.3% compared to Q1 of 2024, and totaled $90 million for the quarter. Rental revenue was down just slightly year over year due to lower utilization rates, but full service leasing continues to perform well as we put additional vehicles into service. I'm confident that our leasing and rental business will stay strong throughout the year. While we faced our share of challenges in Q1, I'm proud of how our team has navigated the uncertainty that is currently impacting the commercial vehicle industry.

Rusty Rush: As of now, demand remains soft and tariffs haven't yet affected used truck pricing. We've been proactive in increasing inventories slightly in preparation for the spring and summer selling season, and we believe they're where they need to be to meet customer needs. Our Rush Truck Leasing division delivered solid results again in Q1. Leasing and rental revenue increased 2.3% compared to Q1 of 2024, and totaled $90 million for the quarter. Rental revenue was down just slightly year over year due to lower utilization rates, but full service leasing continues to perform well as we put additional vehicles into service. I'm confident that our leasing and rental business will stay strong throughout the year.

Speaker Change: As of now demand remains soft and tariffs.

Speaker Change: Yes in effect to used truck price.

Speaker Change: But we've been proactive increasing inventories slightly in preparation for the spring and summer selling season and.

Speaker Change: And we believe our stock levels are where they need to be to meet customer needs.

Speaker Change: Our restaurant leasing division delivered solid results again in the first quarter leasing and rental revenue increased two 3% compared to Q1 of 2000.

Speaker Change: One anymore until $90 million for the quarter.

Speaker Change: At 11 revenue was down just slightly year over year due to lower utilization rates, but full service leasing continues to perform well as we put additional deal the original vehicles into service.

Speaker Change: I am confident that our leasing and rental business will stay strong throughout the year.

Rusty Rush: While we faced our share of challenges in Q1, I'm proud of how our team has navigated the uncertainty that is currently impacting the commercial vehicle industry. As I said in the news release, what remains unclear for us, and for the industry as a whole, is how the H2 of the year is going to play out. The ongoing concerns around tariffs, their impact on the economy, and how current emission regulations may be modified, are making some customers hesitant to move forward with vehicle purchasing decisions. That said, I'm confident in our position as we navigate these challenges, and I believe our dealer network, strong relationships with customers and manufacturers, and our broad product offerings will allow us to respond quickly as these policies take shape.

Speaker Change: While we faced our share of challenges in the first quarter I am proud of how our team has navigated the uncertainty that is currently impacting the commercial vehicle industry as I've said in the news release, what remains unclear for us and for the industry.

W.M. "Rusty" Rush: As I said in the news release, what remains unclear for us, and for the industry as a whole, is how the H2 of the year is going to play out. The ongoing concerns around tariffs, their impact on the economy, and how current emission regulations may be modified, are making some customers hesitant to move forward with vehicle purchasing decisions. That said, I'm confident in our position as we navigate these challenges, and I believe our dealer network, strong relationships with customers and manufacturers, and our broad product offerings will allow us to respond quickly as these policies take shape. Before I close, I want to take a moment to thank our employees. The Q1 of 2025 has been tough, but our team has shown incredible resilience.

Now the second half of the year is going to play out.

Speaker Change: The ongoing concerns around tariffs and their impact on the economy.

Speaker Change: Correct emission regulations may be modified or making some customers hesitant to move forward with vehicle purchasing decisions.

Speaker Change: I am confident in our position as we navigate these challenges and I believe our dealer network and strong relationships with customers can manufacturers and our broad product offerings will allow us to respond quickly to these policies take shape.

Rusty Rush: Before I close, I want to take a moment to thank our employees. The Q1 of 2025 has been tough, but our team has shown incredible resilience. They work tirelessly to help customers through these uncertain times while keeping our long-term goals in sight and continuing to manage expenses. Their dedication directly contributed to our performance this quarter, and I am extremely grateful for their efforts. With that, I'll take your questions.

Speaker Change: Before I close I wanted to take a moment to thank our employees in the first quarter of 2025 has been up.

Speaker Change: Jim has shown incredible resilience they've worked tirelessly to help customers through certain through these uncertain times, while keeping our long term goals and site and continuing to manage expenses their dedication directly contributed to our performance this quarter.

W.M. "Rusty" Rush: They work tirelessly to help customers through these uncertain times while keeping our long-term goals in sight and continuing to manage expenses. Their dedication directly contributed to our performance this quarter, and I am extremely grateful for their efforts. With that, I'll take your questions.

Speaker Change: I'm extremely grateful for their efforts.

Speaker Change: And with that I'll take your questions.

Operator 2: Your first question comes from the line of Daniel Imbro with Stephens. Please go ahead.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of Daniel Imbro with Stephens. Please go ahead.

Speaker Change: Our first question comes from the line of Daniel <unk>.

Speaker Change: Please go ahead.

Daniel Imbro: Yeah. Hey, good morning, guys. Thanks for taking the questions.

Speaker Change: Yeah, Hey, good morning, guys. Thanks for taking the questions.

W.M. "Rusty" Rush: Good morning, Daniel.

Rusty Rush: Good morning, Daniel.

Speaker Change: Good morning, Dan.

Daniel Imbro: Rusty, obviously a lot of moving pieces out there.

Speaker Change: Rusty.

Speaker Change: A lot of moving pieces out there maybe we'll just start on the demand backdrop.

W.M. "Rusty" Rush: Right

Rusty Rush: Right

Daniel Imbro: Start on the demand backdrop.

W.M. "Rusty" Rush: To say the least.

Rusty Rush: To say the least.

Daniel Imbro: Exactly. Can you talk about maybe how new unit sales trended through the quarter and maybe here into April? We've seen a lot of the larger fleets lowering their CapEx orders. I know those aren't always your customers, but are your customers behaving in a similar way? What are your customers telling you about their planned expenditures for the rest of the year?

Speaker Change: Exactly can you talk about maybe how new unit sales trended through the quarter and maybe here into April we've seen a lot of the larger fleets lowering their capex orders I know those aren't always your customers, but are your customers behaving in a similar way kind of what are your customers telling you about their planned expenditures for the rest of the year.

W.M. "Rusty" Rush: Well, I think, we're taking the approach that hopefully as we get to H2, it'll be somewhat similar to what Q2 was, right? With these ever-moving tariffs that are going on, besides business being rough, right? You've seen the earnings releases that have come out from all the carriers, right? We do business with those carriers. Not a lot of them, not all of them by any stretch, but they are a component of what we do. The tariff bouncing around has made it very difficult. If you'd come to me 60 days ago, I would've said the same thing about Q2 that I'm telling you about H2. Okay?

Rusty Rush: Well, I think, we're taking the approach that hopefully as we get to H2, it'll be somewhat similar to what Q2 was, right? With these ever-moving tariffs that are going on, besides business being rough, right? You've seen the earnings releases that have come out from all the carriers, right? We do business with those carriers. Not a lot of them, not all of them by any stretch, but they are a component of what we do. The tariff bouncing around has made it very difficult. If you'd come to me 60 days ago, I would've said the same thing about Q2 that I'm telling you about H2. Okay?

Speaker Change: Well I think object, we're taking the approach that hopefully as we get through the back half of the year. It will be somewhat similar to what Q2 was ripe with these ever moving tariffs going on besides business being rough right I mean, you're seeing the earnings releases that have come out from voluntary is right and we do do business with those carriers and a lot of them not all of them.

Speaker Change: Scratch, but they are they are a component of what we do so.

Speaker Change: The tariff bouncing around.

Speaker Change: <unk> made it very difficult.

Speaker Change: <unk> hundred 60 days ago, I would've said the same thing about Q2 that I'm, telling you about the back half of the year, but once we got a little <unk> when I say clarity, we got clarity like 60, 90 days out, but we don't have clarity and throughout the whole year and that's the toughest thing we're dealing with right. So.

W.M. "Rusty" Rush: Once we got a little clarity, when I say clarity, we got clarity like 60, 90 days out, but we don't have clarity throughout the whole year, and that's the toughest thing we're dealing with, right? I would've said, Oh, boy, I'm really concerned about Q2. As I mentioned in there, we expect deliveries to be slightly up, not dramatically, but slightly ahead of what Class 8 deliveries were in Q1. It's just those uncertainties, Daniel. Like you said, a lot of people I know, I'm not going to name names, but I know people that have shut off total buying for the back half of the year. It's understood that it's just really, really difficult. I'm hoping the same thing happens with Q3 and Q4.

Rusty Rush: Once we got a little clarity, when I say clarity, we got clarity like 60, 90 days out, but we don't have clarity throughout the whole year, and that's the toughest thing we're dealing with, right? I would've said, Oh, boy, I'm really concerned about Q2. As I mentioned in there, we expect deliveries to be slightly up, not dramatically, but slightly ahead of what Class 8 deliveries were in Q1. It's just those uncertainties, Daniel. Like you said, a lot of people I know, I'm not going to name names, but I know people that have shut off total buying for the back half of the year. It's understood that it's just really, really difficult. I'm hoping the same thing happens with Q3 and Q4.

Speaker Change: I would have said Oh boy I'm really concerned about you do.

Speaker Change: And as I mentioned in there, we expect deliveries to be slightly up.

Speaker Change: <unk>, but slightly ahead of what class eight deliveries work.

Speaker Change: In Q1, so I mean, it's just those uncertainties.

Speaker Change: I mean, it seemed like you said a lot of <unk>.

Speaker Change: But I don't believe we're going to shut off total buys for the back half of the year.

Speaker Change: And so I understood that.

Speaker Change: It's just really really difficult and I don't want to forgive me.

Speaker Change: So I am hoping the same thing happens with Q3, a few board.

W.M. "Rusty" Rush: You've heard me use this phrase a few times over the last year or so, it's hand-to-mouth, baby. It's not something we're not used to. I would tell you that backlogs, while the OEMs we deal with are not full for Q2 still, there are still slots available in June. As you can see, it's hard to put your arms around where Q3 is going to be when you still got slots available in Q2. Not a whole lot, but there are some slots that are available in Q2. It's very difficult to price right now because tariffs just came up again last week. They're being re-looked at again. We still don't have certainty around the emissions. You saw that the House, maybe yesterday, passed a bill as the Federal Government's going back and forth with CARB out in California.

Rusty Rush: You've heard me use this phrase a few times over the last year or so, it's hand-to-mouth, baby. It's not something we're not used to. I would tell you that backlogs, while the OEMs we deal with are not full for Q2 still, there are still slots available in June. As you can see, it's hard to put your arms around where Q3 is going to be when you still got slots available in Q2. Not a whole lot, but there are some slots that are available in Q2. It's very difficult to price right now because tariffs just came up again last week. They're being re-looked at again. We still don't have certainty around the emissions. You saw that the House, maybe yesterday, passed a bill as the Federal Government's going back and forth with CARB out in California.

Speaker Change: Importantly uses for agency jobs over the last year or so is hand about baby.

Speaker Change: But it's not something we're not used to I would tell you the backlogs while the Oems we deal with are not full probuphine still there are still slots available in June. So as you can see it's hard to put your arms around.

Speaker Change: Our Q3 could be when you still got slots available in Q2, not notable not a whole lot, but there are some hub.

Speaker Change: Slots that are available.

Speaker Change: And it's we won't we don't it's very difficult to price right now.

Speaker Change: Because tariffs.

Speaker Change: Just came up again last week, they are being re looked at again.

Speaker Change: Okay.

Speaker Change: We still don't have certainty around the emissions.

Speaker Change: All of that of the house maybe yesterday.

Speaker Change: <unk>.

Speaker Change: Passed a bill is that the housing business.

Federal governments.

Speaker Change: Going back and forth with Carb, California, and we're going to see how that all plays out as we still have we do not have established emissions and we have them, but they are under siege right now right or wrong.

W.M. "Rusty" Rush: We're going to see how that all plays out. We do not have established emissions. I mean, we have them, but they are under siege right now, right or wrong, for 1 January or 2027, right? I expect those to change. I don't have the detail. I'm not here, I'm not going to project on how it will change. With the current administration that's in it right now, there's no question it's going to change, and it's probably, and it should change. All these uncertainties just create. It's hard to run a business living in an uncertain world like that. It may be this way for a while, okay, until things smooth out, and I can't tell you when that is. On the emissions side, I think we're still 45 days or so away from getting more clarity.

Rusty Rush: We're going to see how that all plays out. We do not have established emissions. I mean, we have them, but they are under siege right now, right or wrong, for 1 January or 2027, right? I expect those to change. I don't have the detail. I'm not here, I'm not going to project on how it will change. With the current administration that's in it right now, there's no question it's going to change, and it's probably, and it should change. All these uncertainties just create. It's hard to run a business living in an uncertain world like that. It may be this way for a while, okay, until things smooth out, and I can't tell you when that is. On the emissions side, I think we're still 45 days or so away from getting more clarity.

Speaker Change: For.

Speaker Change: January 127, so I expect those to change I don't have the detail I'm not here.

Speaker Change: And what that will well I will change, but with the current administration agenda right. Now no question is Huawei next should change, but all these uncertainties just create.

Speaker Change: Hard to run a business living in an uncertain world like that so it might be this way for a while.

Speaker Change: Until things smooth out and I can't tell you when that is I think there's another minor league will get any on the admission side I think were still 45 days or so away from getting more clarity.

W.M. "Rusty" Rush: I know the bill was going to be going to the House. As we try to come up with a solution that makes sense, not the one that's in place currently, which does not make sense. The tariff thing, like I said, they're re-looking at it again as of last week. I think what we're going to see is operating in these short windows. I don't think you're going to see these big backlogs out through the rest of the year. If you do, and if you're counting on backlogs in the Q4 being worth the paper they're written on, good luck, because things change quickly right now. I think there will be some demand, but I'm in line with what ACT said when it comes to. They're off around 15%.

Rusty Rush: I know the bill was going to be going to the House. As we try to come up with a solution that makes sense, not the one that's in place currently, which does not make sense. The tariff thing, like I said, they're re-looking at it again as of last week. I think what we're going to see is operating in these short windows. I don't think you're going to see these big backlogs out through the rest of the year. If you do, and if you're counting on backlogs in the Q4 being worth the paper they're written on, good luck, because things change quickly right now. I think there will be some demand, but I'm in line with what ACT said when it comes to. They're off around 15%.

Speaker Change: Right on the Bill is going to be go into the house.

Speaker Change: As we tried to come up with a solution that makes sense not the one that's in place currently which does not make sense and the tariff thing like I said, we're really looking at it again as of last week. So.

Speaker Change: I mean, I think we're going to see us operating in these short windows.

Speaker Change: I don't think youre going to see these big backlogs out through the rest of the year and if you do if youre counting on backlogs in the fourth quarter being working vapor there Rick Doyle. Good luck because things change quickly right now so I think there will be some demand, but I'm in line with what <unk> said when it comes to thereof.

<unk> I'll take that right now to be honest with you for the year.

W.M. "Rusty" Rush: I'll take that right now, to be honest with you, for the year, as I look out there and see. I'm not trying to be a Debbie Downer here about it, but it's just a reality of what we're dealing with. I think you see that we were still able to put out a pretty good quarter given everything we're dealing with, and I would hope that we'll be able to continue to operate as Look, let's go back. We won't talk about Rush in particular. I know I'm rambling on, but here we go. Let's go back to 2020. Let's go back to COVID. Go look at the performance of the organization, whether we had allocation or five-week lead times. We've been able to perform, and I expect us to continue to perform as we go forward, no matter what the environment is.

Rusty Rush: I'll take that right now, to be honest with you, for the year, as I look out there and see. I'm not trying to be a Debbie Downer here about it, but it's just a reality of what we're dealing with. I think you see that we were still able to put out a pretty good quarter given everything we're dealing with, and I would hope that we'll be able to continue to operate as.

Speaker Change: As I look out there and see it.

Speaker Change: And I'm not trying to be Debbie downer here about it but it's just the reality of what we're dealing with but I think youll see that we were still able to put out a pretty good quarter, given everything we're dealing with and I would hope that we'll be able to continue to operators look at.

Rusty Rush: Look, let's go back. We won't talk about Rush in particular. I know I'm rambling on, but here we go. Let's go back to 2020. Let's go back to COVID. Go look at the performance of the organization, whether we had allocation or five-week lead times. We've been able to perform, and I expect us to continue to perform as we go forward, no matter what the environment is.

Speaker Change: Let's go back we don't know about Russia, or Jay unit, I know I'm rambling on but here. We go let's go back to 2020 right. Let's go back to Covid go into the performance of the organization, whether we add allocation.

Speaker Change: Five week lead times, we've been able to perform an IDE data performed as we go forward no matter what the environment is.

Daniel Imbro: Yeah. Well, if it's handheld, at least you guys have the experience and done this before. Maybe for my follow-up, Rusty, if you could just expand a bit on the parts and service. Obviously, it was softer in Q1. Was that more in any one part of the business, collision, big fleets or small fleets? Then you mentioned you expected an improvement in Q2. Did you mean a return to year-over-year growth or just sequentially higher than the Q1?

Speaker Change: Yeah, well by the tandem out to at least you guys had the experience in those before maybe for my follow up Steve If you could just expand a bit on the parts and service obviously was softer in <unk> was that more in any one part of the business collision Big fleet for small fleets and then you mentioned you expected an improvement in <unk> did you mean, a return to year over year growth, we're just sequentially higher than.

Speaker Change: The first quarter.

W.M. "Rusty" Rush: Sequential. Okay. I'm hoping, but I'm not here to guarantee any year-over-year growth. I think one of the key things is you asked about Q1, we'll start there. It started off slow. Weather in January, I know there's always weather, but we had more store shutdown days this year than we did the prior year. In January, with some of the rough weather that came through. I was very concerned in January. We saw a pickup in February, and we saw a pickup from there into March. I'll be honest, we just looked at April this morning. Obviously, it's the first of May. April was solid. It was choppy, maybe a little off per day average. It looks like our backlog is similar, when I talk about that's work in process, is to what we were at the end of March, very similar within 1 point or so.

Rusty Rush: Sequential. Okay. I'm hoping, but I'm not here to guarantee any year-over-year growth. I think one of the key things is you asked about Q1, we'll start there. It started off slow. Weather in January, I know there's always weather, but we had more store shutdown days this year than we did the prior year. In January, with some of the rough weather that came through. I was very concerned in January. We saw a pickup in February, and we saw a pickup from there into March. I'll be honest, we just looked at April this morning. Obviously, it's the first of May.

Speaker Change: Sequential okay.

Speaker Change: Hoping but I'm not here to guarantee.

Speaker Change: Year over year growth rate I think one of the key things is you asked about Q1, we'll start there.

Speaker Change: You know it started out slow.

Speaker Change: Whether we're at other as always weather, but we had we had.

Speaker Change: More store shutdown days this year than we did prior year.

Speaker Change: In January with some of the rough weather the game through.

Speaker Change: I was very concerned in January we saw a pickup in February and we saw a pick up from there into March.

Speaker Change: Honestly, we just looked at April this morning, obviously as far as demand.

Rusty Rush: April was solid. It was choppy, maybe a little off per day average. It looks like our backlog is similar, when I talk about that's work in process, is to what we were at the end of March, very similar within 1 point or so. It's choppy. Again, the uncertainty is wrapped around Like right now, you go ask anybody, what you're seeing lots and less of is miles driven. Miles driven is not really good. You'll see that customers, especially over-the-road customers, are not putting the miles on their vehicles that they historically have. Obviously, with less miles, probably needs less maintenance and less repair to go with it.

Speaker Change: April was solid it was choppy, maybe a little off per day average.

Speaker Change: But it looks like our backlog is similar when I talk about that as work in process is to welcome worthy end of March very similar within a point or so so I'm not.

W.M. "Rusty" Rush: It's choppy. Again, the uncertainty is wrapped around Like right now, you go ask anybody, what you're seeing lots and less of is miles driven. Miles driven is not really good. You'll see that customers, especially over-the-road customers, are not putting the miles on their vehicles that they historically have. Obviously, with less miles, probably needs less maintenance and less repair to go with it. That said, given the dynamics of all the programs that we have out there, I do believe we'll be able to have sequential growth because January and February were softer. We picked up through March, but a little bit choppy and maybe here, I'm just looking at numbers today for April, but we're real close. Typically, these months are better months for us.

Speaker Change: It's just a little bit choppy right.

Speaker Change: Again, the uncertainty is wrapped around.

Speaker Change: Right now you go ask anybody what you are seeing a lot less of it as miles driven miles driven.

Speaker Change: It is not really good youll see.

Speaker Change: Net customers, especially overrode customers are not putting the miles on their vehicles are they historically have.

Speaker Change: Obviously with less miles.

Speaker Change: Their needs less maintenance and less repair to go with that said given the given the dynamics of all of the programs that we have out there I do believe we'll be able to have sequential growth because January and February were softer.

Rusty Rush: That said, given the dynamics of all the programs that we have out there, I do believe we'll be able to have sequential growth because January and February were softer. We picked up through March, but a little bit choppy and maybe here, I'm just looking at numbers today for April, but we're real close. Typically, these months are better months for us.

Speaker Change: Right.

Speaker Change: We picked up through March, but a little bit choppy and maybe here I'm just looking at numbers today for April, but we're real close.

Speaker Change: So and typically these months are better months for us when you get into May and June and July and into summer and your conditioning work picks up and things like that.

W.M. "Rusty" Rush: When you get into May, June, and July, get into summer, your air conditioning work picks up and things like that, around the country because we got a lot of stores in the South. I would look for sequential growth. I'm not here to commit to year-over-year growth. What I have to be able to commit to is if you look at our expense management, year-over-year, we were down in G&A, which is what I really look at. G&A is nothing but a derivative of sales. G&A was off 5.5% year-over-year. That's why you only saw a 1.5% drop, really, in the store operating absorption number. If they're 4.5 down, but you're only 1.5, you made a lot of it up from an expense perspective.

Rusty Rush: When you get into May, June, and July, get into summer, your air conditioning work picks up and things like that, around the country because we got a lot of stores in the South. I would look for sequential growth. I'm not here to commit to year-over-year growth. What I have to be able to commit to is if you look at our expense management, year-over-year, we were down in G&A, which is what I really look at. G&A is nothing but a derivative of sales. G&A was off 5.5% year-over-year. That's why you only saw a 1.5% drop, really, in the store operating absorption number. If they're 4.5 down, but you're only 1.5, you made a lot of it up from an expense perspective.

Speaker Change: Route around the country, because we have a lot of stores in the south.

Speaker Change: So I would look for sequential growth I'm, not going to commit to year over year growth what avnet would commit to is if you look at our expense management.

Speaker Change: Over a year, we were down in G&A, which is what I really look at us is nothing but a derivative so sales, but G&A was up five 5% year over year. That's why we only saw one 5% drop really.

Speaker Change: In our store.

Speaker Change: Operating <unk>.

Speaker Change: <unk> number right. Therefore to have the average only wanted to ask you made a lot of it from the expense perspective.

W.M. "Rusty" Rush: That's the key thing, is we do have more than one lever to hit as we go without tearing it apart. Again, choppy. We're pretty fluid, as I've said. Luckily, we proved that out over the last five years, as a business model. We'll continue to operate in the environment and the hand we're dealt. I'm confident in the company, I'm confident in our folks, and I'm confident in our leadership that we'll make the right decisions to continue to, in my mind, outperform the market. Even though we're the only public truck dealer, really, that's just a truck dealer. I know I got one or two other comps out there. I do expect us to outperform like we usually do in the past.

Rusty Rush: That's the key thing, is we do have more than one lever to hit as we go without tearing it apart. Again, choppy. We're pretty fluid, as I've said. Luckily, we proved that out over the last five years, as a business model. We'll continue to operate in the environment and the hand we're dealt. I'm confident in the company, I'm confident in our folks, and I'm confident in our leadership that we'll make the right decisions to continue to, in my mind, outperform the market. Even though we're the only public truck dealer, really, that's just a truck dealer. I know I got one or two other comps out there. I do expect us to outperform like we usually do in the past.

Speaker Change: That's the key thing is we do have more than one lever to hit as we go without without tear it apart so.

Speaker Change: Again choppy.

Speaker Change: But we're pretty fluid as I've said, we're largely we prove that out over the last five years and the business model and we will continue.

Speaker Change: To operate in the environment and the hand, we're dealt.

Speaker Change: Confident mcgovern governing our folks in our government our leadership that will make the right decisions to continue to abide by and outperformed the market. Even though we are the only global drug dealer related. It's just they tried to meter out of it I guess, one or two other comps out there I do expect us to add more like what have you, which like we usually do in the past.

Daniel Imbro: All super helpful, Culler. I really appreciate it, and best of luck.

Speaker Change: All Super helpful color really appreciate it and best of luck.

W.M. "Rusty" Rush: You bet. Thank you.

Rusty Rush: You bet. Thank you.

Speaker Change: You bet. Thank you.

Operator 2: Your next question comes from the line of Andrew Obin with Bank of America. Please go ahead.

Operator: Your next question comes from the line of Andrew Obin with Bank of America. Please go ahead.

Speaker Change: Your next question comes from the line of Handholding with Bank of America. Please go ahead.

Andrew Obin: Hey, Rusty. How are you?

Speaker Change: <unk> how are you.

W.M. "Rusty" Rush: I'm good, Andrew.

Rusty Rush: I'm good, Andrew.

Andrew: Im good Andrew.

Andrew Obin: Okay. Just as I hear you correct on Q2, sequentially, Class 8 is going to be better, and sequentially, parts and services is going to be better. That's right. Right? I heard that correctly?

Speaker Change: Okay. So.

Speaker Change: I hear you correct on second quarter sequentially class eight is going to be better than sequentially parts and services is going to be about it thats right and I heard that correct.

W.M. "Rusty" Rush: Well, let's ease. Whoa, Andrew. Whoa. Slightly. Okay?

Rusty Rush: Well, let's ease. Whoa, Andrew. Whoa. Slightly. Okay?

Speaker Change: Yes.

Speaker Change: Andrew well, we'll slightly.

Andrew Obin: Slightly. Sequence No, I get it. Yeah.

Speaker Change: Hi.

Speaker Change: No I got it yeah.

W.M. "Rusty" Rush: Slightly. Let's don't get carried away here. The problem is the uncertainty, man. I'd tell you what it was exactly like if I knew. If you hadn't noticed, since we had our first 100 days, every day has been different since 20 January. I'm not being critical there.

Rusty Rush: Slightly. Let's don't get carried away here. The problem is the uncertainty, man. I'd tell you what it was exactly like if I knew. If you hadn't noticed, since we had our first 100 days, every day has been different since 20 January. I'm not being critical there.

Speaker Change: Slightly I'm not let's not get carried away or the problem. The problem is the uncertainty Matt I'd tell you what it exactly like Goodbye boots, but if you had noticed is as we had our first 100 days every day has been difference in January that's why it and I'm not being critical there, but no less exciting.

Andrew Obin: That's exciting.

W.M. "Rusty" Rush: a lot of stuff changes on a daily basis. It makes it very difficult running a business, and for me to give forecasts that are out there. That's why you don't see me going out in H2. Like I told you a minute ago on the call, I couldn't have told you Q2 60 days ago. We were able to put something together when we got some clarity of what pricing was going to be in Q2. Right? Again, they're relooking at tariffs again. H2 is still up in the air. Also dealing with what's going on in the economy right now.

Rusty Rush: a lot of stuff changes on a daily basis. It makes it very difficult running a business, and for me to give forecasts that are out there. That's why you don't see me going out in H2. Like I told you a minute ago on the call, I couldn't have told you Q2 60 days ago. We were able to put something together when we got some clarity of what pricing was going to be in Q2. Right? Again, they're relooking at tariffs again. H2 is still up in the air. Also dealing with what's going on in the economy right now.

Speaker Change: Changes on a daily basis.

It just makes it very difficult running a business.

Speaker Change: And for me to give forecasts that are out there. That's why you don't see that you want to add in the back half of the year.

Speaker Change: Are you on the call are 16, I could indulge in Q2 60 days ago, but we were able to put something together when we got.

Speaker Change: Some clarity on what pricing is going to be in Q2 right but.

Speaker Change: Don't forget that re looking at tariffs again, so the back half of the year is still up in the air.

Speaker Change: And also dealing with what's going on the economy.

Andrew Obin: No.

W.M. "Rusty" Rush: That weighs on things just slightly.

Rusty Rush: That weighs on things just slightly.

Speaker Change: No.

Speaker Change: Slightly.

Andrew Obin: No, I totally appreciate it. Can you just tell us sequentially, I know in April there were some holiday timing issues, parts and services in April, did that get better, or did that stay stable from March, or did that slow down? I know we're getting hyper-granular here, was there a slowdown in April?

Speaker Change: Okay, No I I.

I I totally appreciate it and can you just tell us.

Speaker Change: Sequentially and I know in April there was some holiday timing issues, but parts and services in April did that get better I did that from did that stay stable from March or is it that slowed down and how it does and how it I know, we're getting a high pro granular here, but was there a slowdown in April.

W.M. "Rusty" Rush: Yeah, okay. Slightly less in April per day average.

Rusty Rush: Yeah, okay. Slightly less in April per day average.

Jason: Yes, Jason.

Jason: Slightly less in April per day average, but I attribute it hopefully hopefully I'm right I've attributed to the Easter week OK <unk>, we did not have a very good week I will tell you. This we closed yet.

Andrew Obin: Okay.

W.M. "Rusty" Rush: I attribute it, hopefully I'm right, I would attribute it to the Easter Week. Okay? Easter Week, we did not have a very good week, right? I will tell you this, we closed it. We didn't catch it all up here at the end, but we did close better here over the last week.

Rusty Rush: I attribute it, hopefully I'm right, I would attribute it to the Easter Week. Okay? Easter Week, we did not have a very good week, right? I will tell you this, we closed it. We didn't catch it all up here at the end, but we did close better here over the last week.

Jason: We didn't catch it all up here at the end, but we did close better here over the last week so okay.

Andrew Obin: Okay, fine.

W.M. "Rusty" Rush: I'm hoping maybe we can maintain some of that. By the way, it was still better than January and February, per day average, okay. It wasn't quite to where April was on a per day average. Easter week was a rough week, and if you'd asked me where we ended up today, if you'd asked me a week ago, I would've taken it. Okay. I felt we had a good close to the month. I know we're getting granular, but there's certain pockets in the country that I can attribute. I know you always like to know where around the country where things are, but there are certain pockets that you can attribute some of this, a little bit of softness to be honest with you.

Rusty Rush: I'm hoping maybe we can maintain some of that. By the way, it was still better than January and February, per day average, okay. It wasn't quite to where April was on a per day average. Easter week was a rough week, and if you'd asked me where we ended up today, if you'd asked me a week ago, I would've taken it. Okay. I felt we had a good close to the month. I know we're getting granular, but there's certain pockets in the country that I can attribute. I know you always like to know where around the country where things are, but there are certain pockets that you can attribute some of this, a little bit of softness to be honest with you.

Jason: We can maintain some of that.

Jason: By the way it was still better than January and February okay.

Per day average so it wasn't quite to where April was on a per day average but.

Jason: Easter week was a rough week.

Jason: If you'd asked me, where we ended up today, if you'd asked me a week ago I would have taken it.

Jason: So I felt we had a good close to the model and I know, we're getting ready or whether there are certain pockets in the country.

Jason: I can't attribute I know you always liked and awareness around the country, where things are but there are certain pockets that you can attribute some of this so logo softness to be honest with you.

Andrew Obin: Okay. As I think, I assume the D&A is just fixed as what it is. As I think relative to 2022, right, as I think about SG&A cost, is that a good baseline for what SG&A can be? Were you so bare bones during COVID that it's not applicable, and I should just assume that there has been some inflation over the past two, three years?

Jason: Okay, and then as I think.

Jason: Just.

Jason: I assume the DNA is fixed is what it is but as I think relative to 'twenty two.

Jason: Right.

Jason: Think about SG&A cost is that a good baseline.

Jason: What SG&A can be or we are so bare bones. During COVID-19, then it's not applicable and I should just assume that there has been some inflation over the past two or three years, yes, no. Let's go back that far dollars no way I'm going to get back down to that number right now are out I'll be cut meat and bone out of the place cost a little bit more money.

W.M. "Rusty" Rush: Yeah, no. Let's not go back that far, Don. There's no way I'm going to get back down to that number right now, or I'll be cutting meat and bone out of the place because it costs a little bit more money. We didn't give back all that inflationary pressures that we took in 2023 and 2022. It's not like we've had deflation. You continue to have inflation. That's why we've maintained pretty flat. Since I made those cuts last year around this time right now a year ago, we've maintained, which is what's allowed us. It's why Q1 was off 5.5% over last year's Q1. We've been able to hold it. Is there more we can do? Possibly. We're continuing to look at that on a rather daily, weekly basis. Again, as I get clarity, I make those decisions.

Rusty Rush: Yeah, no. Let's not go back that far, Don. There's no way I'm going to get back down to that number right now, or I'll be cutting meat and bone out of the place because it costs a little bit more money. We didn't give back all that inflationary pressures that we took in 2023 and 2022. It's not like we've had deflation. You continue to have inflation. That's why we've maintained pretty flat. Since I made those cuts last year around this time right now a year ago, we've maintained, which is what's allowed us. It's why Q1 was off 5.5% over last year's Q1. We've been able to hold it. Is there more we can do? Possibly. We're continuing to look at that on a rather daily, weekly basis. Again, as I get clarity, I make those decisions.

Jason: We didn't get back all the inflationary pressures that we took in 2003 and two.

Jason: It's not like it's not like we've had deflation so.

Jason: They need to have inflation, that's flat we've maintained pretty flat as I made those cuts last year round around this time right now a year ago, we've maintained which is what's allowed us. That's why Q1 was off by one 5% over last year's Q1, we've been able to hold it is there more we can do pasta.

Jason: Blake.

Jason: We're continuing to look at that.

Speaker Change: Rather a daily weekly basis, but again as I get clarity I make those decisions I try as continuing to get clarity in the market on there right.

W.M. "Rusty" Rush: I have to continue to get clarity in the market I'm in, right? I'm going to see how April closes. I'll get the nets on April. I'll look at where we are from a G&A perspective. When I say hand-to-mouth, it's hand-to-mouth in every facet of the business. Is that a bad thing? No, it's just the reality of it, right? I'm very confident in our ability to react. Maybe I can't project as well as I'd like to project for you, but I'm very confident in our ability to react or proactively act, should I say. Given what we see in front of us, the runway is really short. There's a lot of haze, a lot of fog when I rolled off all the things that are going on. That's not just for me. That's for our customers.

Rusty Rush: I have to continue to get clarity in the market I'm in, right? I'm going to see how April closes. I'll get the nets on April. I'll look at where we are from a G&A perspective. When I say hand-to-mouth, it's hand-to-mouth in every facet of the business. Is that a bad thing? No, it's just the reality of it, right? I'm very confident in our ability to react. Maybe I can't project as well as I'd like to project for you, but I'm very confident in our ability to react or proactively act, should I say. Given what we see in front of us, the runway is really short. There's a lot of haze, a lot of fog when I rolled off all the things that are going on. That's not just for me. That's for our customers.

Speaker Change: I'm going to see how April closes I'll get the nets on April will be where we are from a G&A perspective, I mean, when I say had about <unk> and about in every facet of the business.

Speaker Change: I mean is that a bad thing now it's just the reality of it right.

Speaker Change: I don't think anybody.

Speaker Change: Covenant our ability to react.

Speaker Change: Maybe I can't project as well as I'd like to project for you, but I'm very confident in our ability to react proactively act should I say given what we see in front of US is just.

Speaker Change: The runway is really short.

Speaker Change: A lot of hay as a lot of fog and when I roll up all the things that are going up and that's not just for me that's for our customers and they were driven by what customers see okay, what lately and what affects them. It's hard to make a decision if you're a customer to go out and make an acquisition or product.

W.M. "Rusty" Rush: Remember, we're driven by what customers see, okay? What they do, what affects them. It's hard to make a decision if you're a customer, to go out and make an acquisition, a product, if you're not going to see any growth. Even too, once you're running less miles, maybe you don't have to replace it as often, right? There's a lot of things that are not positive. Out there from the macro perspective, the most positive thing is our ability, in my mind, to be able to navigate and make the right decisions given the market that we're handed. Again, though, I'm not projecting doom and gloom in the back half. I'm just giving uncertainty because I don't have clarity for it. As I get it, I'll be happy to tell you. That's why I was a little excited for Q2.

Rusty Rush: Remember, we're driven by what customers see, okay? What they do, what affects them. It's hard to make a decision if you're a customer, to go out and make an acquisition, a product, if you're not going to see any growth. Even too, once you're running less miles, maybe you don't have to replace it as often, right? There's a lot of things that are not positive.

Speaker Change: Going to see any growth, even do would you rather than less miles maybe you don't have to replace in this off right. I mean, there is a lot of things that are not hesitant, but out there from a macro perspective. The most positive desirability of my model to be able to navigate and make the right decisions given the market that we're headed.

Rusty Rush: Out there from the macro perspective, the most positive thing is our ability, in my mind, to be able to navigate and make the right decisions given the market that we're handed. Again, though, I'm not projecting doom and gloom in the back half. I'm just giving uncertainty because I don't have clarity for it. As I get it, I'll be happy to tell you. That's why I was a little excited for Q2.

Speaker Change: No.

Speaker Change: Yes, no I'm not projected.

Speaker Change: Globally, the back App I've just given.

Speaker Change: Certainty because I don't have clarity for it.

Speaker Change: As I get it that will be have been Jay as well.

Speaker Change: <unk>.

Andrew Obin: Yeah. What do you think it would take for OEs to get more clarity on production schedules for H2? Is it clarity on? I appreciate that it is both uncertainty about whether or not we are going into recession, but it is also uncertainty about treatment of their content under the new tariff rules.

Speaker Change: Yes.

Speaker Change: What do you think it would take for OAS.

Speaker Change: To sort of get more clarity on sort of production schedules for the second half is that clarity on you know and I appreciate that it's both uncertainty about whether or not we go into recession, but it's all it's uncertainty about sort of treatment of their content.

Speaker Change: Under the new tariff rules.

W.M. "Rusty" Rush: Yes.

Rusty Rush: Yes.

Andrew Obin: Do they go together hand in hand, or I know that one of the competitors has given pricing, but it doesn't seem to drive demand for trucks. What sort of unclogs this bottleneck?

Speaker Change: Do they go together hand in hand, or I know that one of the competitors has sort of has given pricing, but it doesn't seem to sort of drive demand for trucks.

Speaker Change: What sort of Unclog this bottleneck.

W.M. "Rusty" Rush: Well, one has, but there's some stipulations wrapped around it. Remember, though, sometimes the devil's in the detail. Always remember that. As you look at it, look, Andrew, it's all the above. It's our customer's business. It is the clarity with terms. As I said, they just announced they're going to do a relook last week. That's supposed to happen over the next few weeks. It could change again, just like it did on the automotive side this week, right? Our customer's business is not I think we saw that Q1 GDP results. Go look at the earnings releases of the public carriers. They're not that good. They haven't been. It's no disrespect to them, it's just the facts of the market they're dealing with. Okay.

Rusty Rush: Well, one has, but there's some stipulations wrapped around it. Remember, though, sometimes the devil's in the detail. Always remember that. As you look at it, look, Andrew, it's all the above. It's our customer's business. It is the clarity with terms. As I said, they just announced they're going to do a relook last week. That's supposed to happen over the next few weeks. It could change again, just like it did on the automotive side this week, right? Our customer's business is not I think we saw that Q1 GDP results. Go look at the earnings releases of the public carriers. They're not that good. They haven't been. It's no disrespect to them, it's just the facts of the market they're dealing with. Okay.

Speaker Change: Well what has builders, whereas some stipulations wrapped round it represents the Devil's in the detail always remember that.

Speaker Change: So as you look at it look Andrew it's all the above it's because our customers business.

Speaker Change: Is are the clarity with tariffs as I said, they just announced they're going to do a re look last week, that's supposed to happen over the next few weeks.

Speaker Change: It can change again, just like it did on the automotive side today. This week right I mean, we.

Speaker Change: We don't I mean their business our customers' business is that I think we saw that first quarter GDP results go look at the earnings releases of the public carriers Theyre not that's good they haven't been and has no disrespect to them. It's just a factor of the markets are dealing with.

W.M. "Rusty" Rush: Fortunately, as I've talked about, we've had decent vocational business, decent municipal business that have allowed us to continue to perform. What's going to have to happen is business has to get better. Okay? We can't have contraction in GDP and expect for business to get any better. People are going to have to start running more miles. We got to get clarity on tariffs. We think we have them right now, but as I said, they just announced last week they're going to re-look at it again. We do not know about emissions. Okay? I do believe it's not going to be as stringent in 2021. We were supposed to have this big pre-buy. Right? Big pre-buy, going to start in 2025. That's the end back half of 2025. Nobody even talks about it. Why? We don't even know the regs.

Rusty Rush: Fortunately, as I've talked about, we've had decent vocational business, decent municipal business that have allowed us to continue to perform. What's going to have to happen is business has to get better. Okay? We can't have contraction in GDP and expect for business to get any better. People are going to have to start running more miles. We got to get clarity on tariffs.

Speaker Change: Fortunately as I am.

Speaker Change: Talking about we've had decent vocational business decent.

Speaker Change: Miscible business would have allowed us to continue to perform.

Speaker Change: Whats going to happen to happen as business has to get better.

Speaker Change: We can have contraction in GDP and expect us to for business to get it any better.

Speaker Change: Where people are going to have to start running more miles.

Speaker Change: We're going to.

Speaker Change: And when we got to get clarity on tariffs, but we think we have the buyback, but as I said, they just announced last week too good of a re look at it again, so and we do not know about emissions. Okay. I do believe it's not going to be as stringent in 'twenty. One we were supposed to have this big pre buy right <unk> got to start in 'twenty.

Rusty Rush: We think we have them right now, but as I said, they just announced last week they're going to re-look at it again. We do not know about emissions. Okay? I do believe it's not going to be as stringent in 2021. We were supposed to have this big pre-buy. Right? Big pre-buy, going to start in 2025. That's the end back half of 2025. Nobody even talks about it. Why? We don't even know the regs.

Speaker Change: Back half of 'twenty five now nobody talks about it why because we don't even know the rigs the rigs are not there's probably 45 days the house passed yesterday.

W.M. "Rusty" Rush: The regs are not done. It's probably 45 days. The House passed yesterday, some stuff around it. The Senate's got to take it on. Again, that's clarity, right? Are we going to need it, so price is going to go up X? Are we going to require these super long extended warranties? What are the milligrams going to be in the nice stuff? We're pushing out GHGs really out into 2030, but there's no solid answer on all of that. You throw all these things in, along with a tough economy and not miles being driven, and I don't have an answer. All I can tell you is, I'm not predicting it's doom and gloom, I'm just saying it's a short window. I cannot see out that far, and I don't think anybody can really right now.

Rusty Rush: The regs are not done. It's probably 45 days. The House passed yesterday, some stuff around it. The Senate's got to take it on. Again, that's clarity, right? Are we going to need it, so price is going to go up X? Are we going to require these super long extended warranties? What are the milligrams going to be in the nice stuff? We're pushing out GHGs really out into 2030, but there's no solid answer on all of that. You throw all these things in, along with a tough economy and not miles being driven, and I don't have an answer. All I can tell you is, I'm not predicting it's doom and gloom, I'm just saying it's a short window. I cannot see out that far, and I don't think anybody can really right now.

Speaker Change: Stuff around it and it's got to take it on but.

Speaker Change: So again, that's clarity right, we're going to need a surprise going to go up X or we got required. These super long extended warranties what is what's the what are the.

Speaker Change: The program is going to be one of the nice stuff I mean already lignin, we're pushing <unk> out into 2030.

Speaker Change: As you know there's no solid answer on all of that and throw all these things are always a tough economy.

Speaker Change: Less.

Speaker Change: Not miles being driven and rod to answer.

Speaker Change: I can tell you is.

Speaker Change: As a matter of days as well.

Speaker Change: That is very good.

Speaker Change: Short window I cannot see out that far and I don't think anybody can really right now.

Andrew Obin: Okay.

W.M. "Rusty" Rush: We need some stability around.

Rusty Rush: We need some stability around.

Speaker Change: And ability.

Andrew Obin: Just the last question from me. What's been access to credit? Are people still willing to finance customers? Are people who provide credit to the industry, are they pulling on credit, or they're providing incentives? What's happening in terms of liquidity in the market and ability for you and your customers to access credit? Easy or hard or the same? Thank you.

Speaker Change: And just the last question for me.

Speaker Change: What's been access to credit are people still willing to finance customers are sort of people who provide credit to the industry are they providing you know are they pulling on credit or they're providing incentives.

Speaker Change: What's happening in terms of sort of liquidity in the market and the ability for you and your customers to access credit easier harder the same credit Scott I don't see any issues or credit.

W.M. "Rusty" Rush: About the same. I don't see any issues with credit at the moment. There's not a lot of people running around taking subprime credit. Other than that, if you've got a good balance sheet and you're a good customer, no, there's still availability of money out there for you. That's not an issue. When you say incentives, I don't know if you're talking about vehicles or not. There really is nothing like that going on because we're just pricing out a few months right now. Most of the manufacturers are. As I keep saying, our manufacturers stepped up. Devil's in the details. Understand sometimes. Since they announced last week that they're re-looking, I would be very concerned. I understand why manufacturers have not been able to stretch out.

Rusty Rush: About the same. I don't see any issues with credit at the moment. There's not a lot of people running around taking subprime credit. Other than that, if you've got a good balance sheet and you're a good customer, no, there's still availability of money out there for you. That's not an issue. When you say incentives, I don't know if you're talking about vehicles or not. There really is nothing like that going on because we're just pricing out a few months right now. Most of the manufacturers are. As I keep saying, our manufacturers stepped up. Devil's in the details. Understand sometimes. Since they announced last week that they're re-looking, I would be very concerned. I understand why manufacturers have not been able to stretch out.

Speaker Change: At the moment.

Speaker Change: Theres not a lot of people running around.

Speaker Change: Prime credit, but other than that you've got.

Speaker Change: We've got a good balance sheet.

Speaker Change: No.

Speaker Change: Still availability of money out there that's not an issue and when you say incentives I don't know if you talked about vehicles or not.

Speaker Change: There really is nothing like that going on because we're just pricing.

Speaker Change: Few months right now most of the manufacturers.

Speaker Change: I keep saying our manufacturing step out Devils in the details.

Speaker Change: I understand some volumes.

Speaker Change: And that could be under.

Speaker Change: They announced last week that they're re looking I would be very.

Speaker Change: Concerned about I understand why manufacturers have not been able to stretch out I don't like it needed to customers.

W.M. "Rusty" Rush: I don't like it neither do customers. You're living in an environment that changes. It was changing February to March to April. Now we're doing another re-look. It's just difficult. All I can tell you is, I'm very confident in us. Our track record speaks for itself. We're nimble. We will sell trucks, we will work on trucks, and we will continue to produce solid results. We have many levers to pull. We don't just sell trucks. We don't just sell parts. We don't just sell service. We sell a lot of different things. We have diverse lines to work with. We have many different levers to outperform the market, regardless of the hand we're dealt. Okay? That's all I can tell you about it.

Rusty Rush: I don't like it neither do customers. You're living in an environment that changes. It was changing February to March to April. Now we're doing another re-look. It's just difficult. All I can tell you is, I'm very confident in us. Our track record speaks for itself. We're nimble. We will sell trucks, we will work on trucks, and we will continue to produce solid results. We have many levers to pull.

Speaker Change: You are living in an environment that changes.

Speaker Change: It didn't change in February to March to April and now we're going to another railroad.

Speaker Change: It's just.

Speaker Change: It's just difficult all I can tell you as you know I'm very confident in US track record speaks words, where example, we will make we will sell drugs. We will work on drugs and we will continue to produce solid results. We have many levers to pull and Scott is we don't just sell drugs we don't.

Rusty Rush: We don't just sell trucks. We don't just sell parts. We don't just sell service. We sell a lot of different things. We have diverse lines to work with. We have many different levers to outperform the market, regardless of the hand we're dealt. Okay? That's all I can tell you about it. I don't have the answers as to what the H2's going to look like, but I can tell you, as soon as I know, I'll let you know if you want to know.

Speaker Change: Just work sell parts, we don't just sell service we saw a lot of their brands, we're able to dispense labs to work with we have many different levers to outperform the market regardless of the hand, we're dealt.

Speaker Change: All I can tell you about it I don't have the answers as to what the bank asking to look like but I can tell you as soon as I know I'll, let you know if you want to know.

W.M. "Rusty" Rush: I don't have the answers as to what the H2's going to look like, but I can tell you, as soon as I know, I'll let you know if you want to know.

Andrew Obin: I'll take it. Thanks so much, Rusty.

Rusty Rush: I'll take it thanks, so much rusty.

W.M. "Rusty" Rush: You bet you.

Rusty Rush: You bet you.

Rusty Rush: You betcha.

Operator 2: Your next question comes from the line of Avinatan Jaroslawicz of UBS. Please go ahead.

Operator: Your next question comes from the line of Avinatan Jaroslawicz of UBS. Please go ahead.

Operator: The next question comes from the line of Andy Yang.

Rusty Rush: Yes.

Speaker Change: <unk> of UBS. Please go ahead.

Avinatan Jaroslawicz: Hi, good morning, guys.

Avi Jaroslawicz: Hi, good morning, guys.

Rusty Rush: Hi, good morning, guys.

W.M. "Rusty" Rush: Good morning.

Rusty Rush: Good morning.

Speaker Change: Good morning.

Avinatan Jaroslawicz: I know it's got to be hard to parse this out, but in the hesitancy that you are seeing from customers, would you say it's more from the uncertainty to the prices or more just the uncertainty on the macro impacts that would affect their revenues or profitability?

Rusty Rush: So I know, it's I know, it's got to be hard to parse this out but.

Avi Jaroslawicz: I know it's got to be hard to parse this out, but in the hesitancy that you are seeing from customers, would you say it's more from the uncertainty to the prices or more just the uncertainty on the macro impacts that would affect their revenues or profitability?

Speaker Change: And the hesitancy that you are seeing from customers.

Would you say, it's more from the uncertainty to the prices are more the uncertainty on the macro impacts that would affect their revenues and profitability.

W.M. "Rusty" Rush: I would say first and foremost, their business. I'm not going to say 60/40 or 55/45. It's both. The first thing that needs to happen for someone to get confidence is your own business has to be solid. Right? I think if you read some of these reports, they've been really difficult, right? People can stretch out lives on vehicles. It's also very difficult when I can't price them and tell them what I'm going to sell them a truck for in October or November, or any of those things. You do it with, here, your price is this with a caveat, unless somebody decides to change the tariff rules. Customers understand that. They don't like it. We don't like it. For me to say which is more, it's both. Okay?

Rusty Rush: I would say first and foremost, their business. I'm not going to say 60/40 or 55/45. It's both. The first thing that needs to happen for someone to get confidence is your own business has to be solid. Right? I think if you read some of these reports, they've been really difficult, right? People can stretch out lives on vehicles. It's also very difficult when I can't price them and tell them what I'm going to sell them a truck for in October or November, or any of those things. You do it with, here, your price is this with a caveat, unless somebody decides to change the tariff rules. Customers understand that. They don't like it. We don't like it. For me to say which is more, it's both. Okay?

Speaker Change: I would say first and foremost.

Speaker Change: Their business.

Speaker Change: I mean, I don't know that I get and I'm not going to say 60, 40 or 50 545 is bose.

Speaker Change: The first thing it needs to happen for someone to get governance is your own business.

Speaker Change: Has to be solid right and I vaguely reached several of these reports.

Speaker Change: They've been really difficult right. So.

Speaker Change: People going to stretch out lives on.

Speaker Change: But it's also very difficult.

Speaker Change: And I cant price them and tell them, what I'm going to sell them, a truck, Florida October or November or any of those things. So.

Speaker Change: You do hear your price exist with a caveat unless somebody decides to change the tariff laws and rules.

Speaker Change: Customers understand that they don't like it.

Speaker Change: All right.

Speaker Change: But.

Speaker Change: Yes.

Speaker Change: For me to say, which is more since both okay. I know, it's kind of a lame answer, but it's the truth and Thats all I will tell so extra drove his bow, but first year business has to be good why my first of all no one's growing their fleet is getting real good they always be able to have more.

W.M. "Rusty" Rush: I know that's kind of a lame answer, but it's the truth, and that's all I will tell. It's the truth, it's both. First, your business has to be good. First off, no one's growing their fleet. Let's get real. Okay. You're just trying to get replacement, but people can slow replacement down, too. Products are not what they were 30 years ago. They're much better. You can put more miles on product. By the way, if you're not running as many miles, I can run it longer to keep appreciating what I got. Mileage, as I said earlier, mentioned a couple times, miles being run on vehicles. I'm not getting the ton miles, I'm getting the vehicles themselves are down. I can probably stretch it out a little bit. Again, we just need some certainty around all of this, by the way.

Rusty Rush: I know that's kind of a lame answer, but it's the truth, and that's all I will tell. It's the truth, it's both. First, your business has to be good. First off, no one's growing their fleet. Let's get real. Okay. You're just trying to get replacement, but people can slow replacement down, too. Products are not what they were 30 years ago. They're much better. You can put more miles on product. By the way, if you're not running as many miles, I can run it longer to keep appreciating what I got. Mileage, as I said earlier, mentioned a couple times, miles being run on vehicles. I'm not getting the ton miles, I'm getting the vehicles themselves are down. I can probably stretch it out a little bit.

Speaker Change: You just try to get replaced but they will get slower place for Dow two products are not what they were 30 years ago, they're much better you're going to put more miles on products and by the way, we're not running as many miles I can run it longer scale.

Speaker Change: Key differentiating what I got.

Speaker Change: Mileage as I've said earlier mentioned, a couple times miles being run on vehicles that might get into ton miles are getting the vehicles themselves.

Speaker Change: Or not preload out.

Speaker Change: I can probably stretch it out a little bit again.

Rusty Rush: Again, we just need some certainty around all of this, by the way. Want to tell me what it's going to cost for a vehicle in January 2027? I don't know. We know it's going to be less than what it was projected to be a year ago. We just don't know how those regs come out and how that affects the OEMs and the engine manufacturer, and what it's going to take from a cost perspective, from their perspective, especially on the warranty piece. Their business first and then tariffs next. I can price you for 60 days, but I really can't price you six months out without a caveat. Again, we just don't know.

Speaker Change: We yesterday some certainty around all of this by the way.

W.M. "Rusty" Rush: Want to tell me what it's going to cost for a vehicle in January 2027? I don't know. We know it's going to be less than what it was projected to be a year ago. We just don't know how those regs come out and how that affects the OEMs and the engine manufacturer, and what it's going to take from a cost perspective, from their perspective, especially on the warranty piece. Their business first and then tariffs next. I can price you for 60 days, but I really can't price you six months out without a caveat. Again, we just don't know.

Speaker Change: Tell me, what it's going to cost per vehicle on January 20 <unk>.

Speaker Change: I don't know, we know it's going to be less than what it was projected to be a year ago. We just don't know how those regs come out how that effects, the Oems and the engine manufacturer.

Speaker Change: And how it affects their you know what is going to take from us.

Speaker Change: From a cost perspective from their perspective, especially on the warranties.

Speaker Change: So.

Speaker Change: Their business first in terms of mix, but we can I can price for 60 days, but I brought by really get prices six months out without a caveat.

Speaker Change: Yes.

Speaker Change: Alright.

Avinatan Jaroslawicz: That definitely makes sense. I guess part of what I'm trying to understand is just, if the economy does end up holding up okay, what kind of demand destruction we could see just from the higher prices? I don't know if you have a view on that. Would be curious.

Avi Jaroslawicz: That definitely makes sense. I guess part of what I'm trying to understand is just, if the economy does end up holding up okay, what kind of demand destruction we could see just from the higher prices? I don't know if you have a view on that. Would be curious.

Speaker Change: That definitely makes sense I guess part of what I'm trying to understand is this.

Speaker Change: The economy does end up holding up okay.

Speaker Change: What kind of demand destruction, we can see just from the higher prices and I don't know if you have it.

Speaker Change: On that.

W.M. "Rusty" Rush: Well, I think we'll see. If the economy would hold up and just, this is what it's going to be. It's something I've always told everybody. You tell me the rules, I'll figure out how to play the game. Problem is they keep changing the rules, man. That's made it a little bit difficult, not just for me, but for my customer base. The cost is what the cost is. Unfortunately, prices of trucks have gone up dramatically, as we all know. It's crazy to me, I think, how much they've accelerated over the last few years, especially the last couple, three. Your business has to be better. Why? You can push those costs through, that has not been the case. We had an oversupply of trucks for a couple years, remember?

Rusty Rush: Well, I think we'll see. If the economy would hold up and just, this is what it's going to be. It's something I've always told everybody. You tell me the rules, I'll figure out how to play the game. Problem is they keep changing the rules, man. That's made it a little bit difficult, not just for me, but for my customer base. The cost is what the cost is. Unfortunately, prices of trucks have gone up dramatically, as we all know. It's crazy to me, I think, how much they've accelerated over the last few years, especially the last couple, three. Your business has to be better. Why? You can push those costs through, that has not been the case. We had an oversupply of trucks for a couple years, remember?

Speaker Change: Be curious well I think I think we will see if we can the economy would hold up.

Speaker Change: This is what is going to be.

Speaker Change: I said in my wallet totally but you tell me the rules that I forgot I play the game problem is they keep changing the rules that and so that's made it a little bit difficult for me, but for my customer base. So.

Speaker Change: The cost saves what the cost is.

Speaker Change: Unfortunately prices of trucks have gone up dramatically as we all know it's crazy to me.

Patrick: Hey, Patrick.

Patrick: But they have accelerated over the last few years, especially the last couple of three.

Patrick: <unk>.

Patrick: But I think your business has to be better why so you can push those costs through.

And that has not been the case, we had an oversupply of trucks from a couple of years remember we sold all of those trucks and really.

W.M. "Rusty" Rush: We sold all those trucks really in 2022 and 2023, and we still had a pretty big year in 2024, more than we were anticipating when we went into it. There's been an oversupply of trucks for the freight that's out there. It's just been I've never seen a freight recession last this long, right? It's been quite unique. It's on the negative side of uniqueness, by the way. I mean, I'm hoping that we can get some stability in the overall economy and continue to, I'm not sure where we're at in the last couple of months, taking trucks out of the marketplace because we had to get a balance between supply and demand so that customers. We thought, remember, 6 months ago, we thought we saw it turning, right?

Rusty Rush: We sold all those trucks really in 2022 and 2023, and we still had a pretty big year in 2024, more than we were anticipating when we went into it. There's been an oversupply of trucks for the freight that's out there. It's just been I've never seen a freight recession last this long, right? It's been quite unique. It's on the negative side of uniqueness, by the way. I mean, I'm hoping that we can get some stability in the overall economy and continue to, I'm not sure where we're at in the last couple of months, taking trucks out of the marketplace because we had to get a balance between supply and demand so that customers. We thought, remember, 6 months ago, we thought we saw it turning, right?

Patrick: Brilliant in 'twenty, two and 'twenty three.

Patrick: <unk> Big Big year 'twenty for more than we were anticipating when we went into it.

Patrick: No.

There has been an oversupply of trucks, where the freight is out there.

Patrick: And it's just been a I've.

Patrick: I've never seen a freight recession last this long right.

And why do you need from a negative side of uniqueness by the way.

Patrick: So I mean.

I know.

Patrick: I'm, hoping that we can get some stability.

Patrick: And the overall economy.

Patrick: And continue I'm not sure where we're at in the last couple of months, taking trucks out of the marketplace will be able to get a balance between supply and demand.

Patrick: So the customers what we thought remember six months ago, we thought was solid target.

W.M. "Rusty" Rush: We're going to get it turning, and right now, they're going to get rate increases. If they are, they're really slight. You've seen the reports that are out there. They're not what we were anticipating getting on contracts six months ago, but who would have anticipated all this upheaval with tariffs and everything else? You look at what's going on, going to be going on at the ports. We haven't seen all the effects of it yet either. Those effects are still coming downstream. Again, I'm not being a Debbie Downer, I'm just a realist. I have concern for my stuff in California. Those ports with all that Chinese stuff that comes in, and how much flows through the Port of LA and the Port of Long Beach. Now, we'll navigate it, but it's still not good for business overall.

Rusty Rush: We're going to get it turning, and right now, they're going to get rate increases. If they are, they're really slight. You've seen the reports that are out there. They're not what we were anticipating getting on contracts six months ago, but who would have anticipated all this upheaval with tariffs and everything else? You look at what's going on, going to be going on at the ports. We haven't seen all the effects of it yet either. Those effects are still coming downstream. Again, I'm not being a Debbie Downer, I'm just a realist. I have concern for my stuff in California. Those ports with all that Chinese stuff that comes in, and how much flows through the Port of LA and the Port of Long Beach. Now, we'll navigate it, but it's still not good for business overall.

Patrick: We're going to get it turned a buyer right now.

Patrick: We're going to get rate increases.

Patrick: They are really slight.

Patrick: <unk> seen the reports that are out there.

Patrick: Not what we were anticipating giving on contracts.

Patrick: Six months ago, but.

Patrick: <unk> dollars upheaval with.

Patrick: Tariffs and everything else.

Patrick: You look at what's going on here. We go are the ports, we haven't seen all the effects of that yet either.

Patrick: Those effects are still coming downstream again.

Patrick: I have just a realist.

Patrick: Our concern is doesn't California.

Patrick: Sports with all our Chinese JV.

Patrick: But it comes in how much flows through the board with the Port of long Beach that will navigate it but it's still not good for business overall.

W.M. "Rusty" Rush: Because what we're doing is more of a longer term, all these tariffs to drive manufacturing back to our country. You don't just add water and stir or flip a light switch, and we open up new manufacturing plants. That takes time. Well, there's an interim of pain. Even our president said that. There's going to be some pain, and that's what we're dealing with, and I think that's what we will continue to deal with for the near-term future. Because we haven't gotten to all of it yet by any stretch, okay? I can tell you that. It keeps changing, so it's just hard.

Rusty Rush: Because what we're doing is more of a longer term, all these tariffs to drive manufacturing back to our country. You don't just add water and stir or flip a light switch, and we open up new manufacturing plants. That takes time. Well, there's an interim of pain. Even our president said that. There's going to be some pain, and that's what we're dealing with, and I think that's what we will continue to deal with for the near-term future. Because we haven't gotten to all of it yet by any stretch, okay? I can tell you that. It keeps changing, so it's just hard.

Patrick: Because what we're doing is more of a longer term always turns to drive manufacturing back to our country I'll, just add water and stir or flip a light switch and we spoke about we're up at new manufacturing plants that takes time when there is an interim of pain.

Speaker Change: President and CEO.

Patrick: Theres going to be some pain.

Patrick: That's what we're dealing with.

Patrick: That's what we will continue to deal with for the near term future.

Patrick: Because it's just we haven't we haven't got all over it yet by any stretch. Okay. Now I can tell you that.

Patrick: It keeps changing.

Patrick: It's just hard.

Avinatan Jaroslawicz: Yeah, definitely understand that. Just want to circle back to the regulations quickly. Last quarter, you felt pretty confident that we would still see the low NOx regulations take place with or without the warranty. You still think that's the case, or just no confidence that you're going to have a breakthrough?

Avi Jaroslawicz: Yeah, definitely understand that. Just want to circle back to the regulations quickly. Last quarter, you felt pretty confident that we would still see the low NOx regulations take place with or without the warranty. You still think that's the case, or just no confidence that you're going to have a breakthrough?

Patrick: Yeah definitely understand that.

Patrick: Just wanted to circle back to the regulations quickly last last quarter you are.

Patrick: So pretty confident that we would still see the low Nox regulations.

Patrick: Take place with or without the warranty.

Patrick: Still I think that's the case or just no.

W.M. "Rusty" Rush: Well, I don't want to get in where I shouldn't be. I think you're going to have something lower, yeah. It may not be as low as what they had, okay? That's being debated right now by people above my pay grade. I would tell you that sure, it's going to be lower than what it currently is, but it may not be as low as what was originally said or originally put out there. That's going on as we speak. That debate is going on as we speak. Giving insight into that would probably be a little out of my. I don't think I should. I don't know. Let's see if someone's going to do it. Yeah. We'll know in this quarter. That's why I said earlier, we'll know about in 45 days or so. We'll know where we're at.

Rusty Rush: Well, I don't want to get in where I shouldn't be. I think you're going to have something lower, yeah. It may not be as low as what they had, okay? That's being debated right now by people above my pay grade. I would tell you that sure, it's going to be lower than what it currently is, but it may not be as low as what was originally said or originally put out there. That's going on as we speak. That debate is going on as we speak. Giving insight into that would probably be a little out of my. I don't think I should. I don't know. Let's see if someone's going to do it. Yeah.

Patrick: You can have it there.

Patrick: I don't want to.

Patrick: I don't want to get in where I should be I think you can install user I have something lower yeah.

Patrick: But.

Patrick: Not being as low as what they had an okay. That's being that's being debated neuroma right now by people above my pay grade so.

Patrick: I would tell you that.

Patrick: Insurance is going to be lower than what it currently is but it may not be as low as well.

Patrick: What was originally said originally.

Patrick: Put out there, so but thats going on as we speak.

Patrick: Uh huh.

That debate is going on as we speak.

I don't.

Patrick: Im giving insight into that would probably be a little out of my eye.

Patrick: Sure. So I don't know see somewhere around there.

Rusty Rush: We'll know in this quarter. That's why I said earlier, we'll know about in 45 days or so. We'll know where we're at. By the time this quarter's over with, we'll have the answers. I'm going to just let it play out and stay out of it. It's going to be a good thing, okay? There's nothing wrong. What we were trying to do was just not right. This country, in no way, was prepared to flip a switch and everything go electric and all of a sudden. We don't have the grid, the infrastructure. That's a long-term equation, and we had people running with it like it's just easy, like add water and stir.

Patrick: Yes, well, we'll know, but we'll know in this quarter, that's why I said earlier logos.

Patrick: 45 days or so we will know where we're at by the time. This quarter is over with we'll have the answers. Some we'll just let it play out.

W.M. "Rusty" Rush: By the time this quarter's over with, we'll have the answers. I'm going to just let it play out and stay out of it. It's going to be a good thing, okay? There's nothing wrong. What we were trying to do was just not right. This country, in no way, was prepared to flip a switch and everything go electric and all of a sudden. We don't have the grid, the infrastructure. That's a long-term equation, and we had people running with it like it's just easy, like add water and stir. Well, there's 120 years of infrastructure investment in internal combustion, and you're not going to change it in five or six years. That was asinine to believe you could do that. It's a good thing.

Patrick: Stay out of it but.

Patrick: It's going to be a good day okay.

Patrick: And Theres nothing wrong, what we were trying to do.

Patrick: Yes.

Patrick: It's just not right.

Patrick: But we're in no way was prepared flip a switch and everything go electric at all.

Patrick: We don't have a grid infrastructure that's a lot.

Patrick: Long term equation, and we had people running with it.

Patrick: It is easy like add water stirrup wells are 120 years of infrastructure and assessment of internal combustion and youre not going to change it in five or six years that was asinine to.

Rusty Rush: Well, there's 120 years of infrastructure investment in internal combustion, and you're not going to change it in five or six years. That was asinine to believe you could do that. It's a good thing. How it works itself out as to what the levels are, that's for smarter people than me to figure out, but it's going to be the right thing. It is the right thing to do. That's all I can tell you. What that does is it probably doesn't drive as big a pre-buy. Especially with the tough overall economic situation that we're suddenly we're liable to see caused by tariffs and caused not just by tariffs, but just everything that's going on right now.

Patrick: I believe you can do that so it's a good thing how it works itself out as to what the levels are.

W.M. "Rusty" Rush: How it works itself out as to what the levels are, that's for smarter people than me to figure out, but it's going to be the right thing. It is the right thing to do. That's all I can tell you. What that does is it probably doesn't drive as big a pre-buy. Especially with the tough overall economic situation that we're suddenly we're liable to see caused by tariffs and caused not just by tariffs, but just everything that's going on right now. I'm not closing the door to a pre-buy in 2026 by any stretch, but every day that goes by, 1 January 2027 gets closer. You're condensing it. You're condensing that time frame, and you're fighting an uphill battle when you've got news, all the reports, how rough it is on customers anyway.

Smarter people than me to figure out, but it's going to be the right rate right that is the right thing to do so that's all I can tell you what that does is it probably doesn't drive as big a pre bought bright, especially with a tough overall economic situation that we're suddenly we're liable to see caused by tariffs and all that and adjust.

Patrick: <unk> produced everything that's going on right now so.

Rusty Rush: I'm not closing the door to a pre-buy in 2026 by any stretch, but every day that goes by, 1 January 2027 gets closer. You're condensing it. You're condensing that time frame, and you're fighting an uphill battle when you've got news, all the reports, how rough it is on customers anyway. Regardless, I got to have business, regardless of the price of a truck, regardless of the technology. I've got to have my business fairly straight so I can go buy something. Those are some headwinds. I would expect a pre-buy of some kind. I just don't think you can clearly say what it'll be, given the unknowns of regulations, first off, and the unknowns around the tariffs. Really, when you talk about the federally unknown regulations, those regulations will have a lot to say.

Patrick: Well I'm not I'm not closing the door to a pre buy 26 by any stretch, but every day that goes by that.

Patrick: 100007 gets closer so youre convincing and drive at convincing that timeframe.

Patrick: You are fighting an uphill battle when <unk> got all the reports through our carrier how rough it is on customers anyway.

W.M. "Rusty" Rush: Regardless, I got to have business, regardless of the price of a truck, regardless of the technology. I've got to have my business fairly straight so I can go buy something. Those are some headwinds. I would expect a pre-buy of some kind. I just don't think you can clearly say what it'll be, given the unknowns of regulations, first off, and the unknowns around the tariffs. Really, when you talk about the federally unknown regulations, those regulations will have a lot to say. Then their business. Remember, first and foremost, it's your own business. I could take you back. I remember in 2010, when we switched to SCR, okay? We were going to have this big year at 2009. Well, remember 2008 and 2009? Well, the economy kind of rode over all that, didn't it? You can go look at the numbers.

Patrick: Regardless I gotta have business, regardless of the price of a drug regardless of the technology I'd, rather have my business fairly straight. So I can go buy something right. So those are some headwinds.

Patrick: We would expect a pre buy of sub debt I. Just don't think it's you can clearly say what it will be given we are known as the regulations were first of all.

Patrick: The unknowns around the tariffs, but really when you're talking about the February it unknown of regulations.

Patrick: Those regulations will have a lot to say and then their business remember first and foremost ensure owners.

Rusty Rush: Then their business. Remember, first and foremost, it's your own business. I could take you back. I remember in 2010, when we switched to SCR, okay? We were going to have this big year at 2009. Well, remember 2008 and 2009? Well, the economy kind of rode over all that, didn't it? You can go look at the numbers. 2009 never made the pre-buy it was supposed to.

Patrick: I could take you back.

Patrick: I remember in 2010, when we switch to SCR.

Patrick: We were going to add there's been a big here at Orion a member get member away no nine while the economy kind of road overall that business and you can go look at the numbers <unk> never made it <unk>. It was supposed to so again hopefully we can get the heck out of his great opening weakening.

W.M. "Rusty" Rush: 2009 never made the pre-buy it was supposed to. Again, hopefully, we can get the economy straight. Hopefully, we can settle down some of this uncertainty that's out there, that's been created in this last 100 days, and get back on where we can see a window, see a path in front of us to where, okay, I can make that investment. I can do this. I know where my business is going. That's the key thing. All these things getting flushed out and giving us some direction. That's the most important thing I can tell you for someone like myself, I know, running my business. I'll say it one last time, is the fact that I am very confident in Rush Enterprises being able to make adjustments and navigate the uncertainties of the world we're in and give performance above and beyond any of our peers.

Rusty Rush: Again, hopefully, we can get the economy straight. Hopefully, we can settle down some of this uncertainty that's out there, that's been created in this last 100 days, and get back on where we can see a window, see a path in front of us to where, okay, I can make that investment. I can do this. I know where my business is going. That's the key thing. All these things getting flushed out and giving us some direction. That's the most important thing I can tell you for someone like myself, I know, running my business. I'll say it one last time, is the fact that I am very confident in Rush Enterprises being able to make adjustments and navigate the uncertainties of the world we're in and give performance above and beyond any of our peers.

Patrick: Nonetheless.

Patrick: Settle down some of this uncertainty that's out there that's been created.

Patrick: And this last 100 days and get background on where we can see.

Patrick: See a window seat a path in front of us to where okay. I can make that investment I could do this.

Patrick: No where my business is going that's the key thing always things getting flushed out given us some direction. That's the most important thing I can tell you for someone like myself I know running my business, but I will say one last time is the fact that I am very confident and rush enterprises being able to make adjustments.

Patrick: [laughter] and navigate the uncertainties of the world, where it had good performance above and beyond the end of our peers.

Avinatan Jaroslawicz: All makes sense to me. All right. Appreciate the perspective. Best of luck.

Avi Jaroslawicz: All makes sense to me. All right. Appreciate the perspective. Best of luck.

Patrick: All makes sense to me alright, I appreciate the perspective.

W.M. "Rusty" Rush: You bet.

Rusty Rush: You bet.

Patrick: You bet.

Operator 2: I will now turn the call back over to Mr. Rusty Rush, Chairman, CEO, and President, for the closing remarks. Please go ahead.

Operator: I will now turn the call back over to Mr. Rusty Rush, Chairman, CEO, and President, for the closing remarks. Please go ahead.

Speaker Change: I will now turn the call back over to Mr. Rusty Rush, Chairman CEO and President for closing remarks. Please go ahead Sir.

W.M. "Rusty" Rush: Sure. Well, I appreciate everyone's attendance this morning, and I look forward to talking to you sometime in late July, hopefully, with some more certainty and clarity. Maybe I can give you a 6-month window instead of a 3-month window, okay? Anyway, everybody have a great day. Thank you very much.

Rusty Rush: Sure. Well, I appreciate everyone's attendance this morning, and I look forward to talking to you sometime in late July, hopefully, with some more certainty and clarity. Maybe I can give you a 6-month window instead of a 3-month window, okay? Anyway, everybody have a great day. Thank you very much.

Speaker Change: Well I appreciate everyone's attendance this morning, and I look forward to talking to you sometime in late July hopefully public with some more certainty and clarity I can give you a six month window instead of a three month window. Okay anyway, everybody have a great day. Thank you very much.

Operator 2: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Speaker Change: [music].

Q1 2025 Rush Enterprises Inc Earnings Call - Q&A

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