Q4 2025 Rush Enterprises Inc Earnings Call [BACKUP]

Rusty Rush: We are beginning to see improved quoting activity, and we are well-positioned to fulfill orders as customers move forward with purchasing decisions. We sold 6,977 used trucks in 2025, down 1.9% compared to 2024. As freight rates improve and pre-buy activity builds ahead of future emissions regulations, we expect the used truck demand to improve in 2026. Our leasing and rental business delivered another solid year. Leasing and rental revenues totaled $369.6 million in 2025, an increase of 4.1% compared to 2024. In the fourth quarter, lease and rental revenue increased 3.6% year-over-year. This business continues to benefit from the strength of our full-service leasing operations, supported by strong customer demand and a younger fleet.

Rusty Rush: From a capital allocation perspective, we remain disciplined and continue to return capital to shareholders. During 2025, we repurchased $193.5 million of our common stock. We also announced a new stock repurchase program, authorizing the company for repurchase up to $150 million of common stock through December 31, 2026. In addition, we returned $58 million to shareholders through our quarterly dividend program, a 5.6% increase compared to 2024. These actions reflect the strength of our balance sheet and our confidence in the long-term outlook for our business. Looking ahead to 2026, we expect market conditions to remain challenging in Q1, but we are optimistic about the remainder of the year.

Rusty Rush: With fleet ages elevated and maintenance needs increasing, we expect both commercial vehicle sales and aftermarket conditions to improve as we move into Q2. While we cannot control the pace of the market recovery, we can control our execution. We believe we are well-positioned to respond quickly and effectively to our customers' needs as conditions improve. Historically, when the cycle turns, demand for both new commercial vehicles and aftermarket parts and service rebounds quickly, and we believe the strategic investments we have made over the past several years will help us serve customers better and gain market share. Finally, I want to thank our employees for their hard work and commitment to 2025. This was a very demanding year, and their focus and execution were critical to our performance. With that, we will open it up for questions.

Operator: Thank you. And as a reminder, to ask a question, you will need to press star one one on your telephone and wait for a name to be announced. To withdraw your question, please press star one one again. Please stand by. We're compiling our Q&A roster. One moment for our first question. Our first question will come from the line of Brady Lierz from Stephens. Your line is open.

Brady Lierz: Hey, great. Thanks. Morning, Rusty. Thanks for taking our questions.

Rusty Rush: Good morning.

Brady Lierz: I wanted to maybe start, unsurprisingly, on Class 8. As you mentioned in your prepared remarks, you know, we've seen an improvement in orders, you know, late in 2025 and here early in 2026. But can you just kinda talk about what you're hearing from your customers? Are you expecting this to be a pretty meaningful pre-buy here in 2026 ahead of the '27 regulations? Just any clarity there would be helpful. Thank you.

Rusty Rush: Sure. Be happy to. The answer would be cautiously, but maybe not even cautiously, but optimistic that, yes, there will be a, you know, a pre-buy before, you know, we get into the 2027 emissions regulations. You know, based upon not just the regulations, right? But you can, you can incorporate regulations all you want. I was around. Well, you were probably still in high school back in 2009 and 2010, when we, when we went to SCR, and we were supposed to have this big, you know, buy in 2009. Obviously, it was the worst year in 40 years, right? We had a little economic problem going on. So what I'm reflecting on is not just the fact of the 2027 emissions, but the fact that their business is improving.

Rusty Rush: I'm not gonna get ahead of myself and say it's like accelerating or ramping up rapidly, but it is improving, especially over the last 90 days. I don't have to tell you, you know, spot rates have been up. If I'd asked six months ago, most people would have thought going into the year, your contract rates were probably gonna be flat. Now, people are hoping to get contract rates up, you know, mid-singles, right? That line between spot and contract has moved nicely, but where spot was so much lower before. So, you know, your business has to be good. So you gotta, and I'm not gonna say it's great, but you at least need to be able to see forward, right? And that's important.

Rusty Rush: We had so much uncertainty last year, with regulations, with, you know, with EPA regulations, with tariffs and everything else. So now you can focus on these regulations and do it while your business is, you know, gradually getting better. It may not be reflected in all the Q1 reports, but I think most customers feel that their business is improving. When you talk about - we're talking about over-the-road customers right now, because that still is the biggest segment, even though we're, we're more diversified than most folks when it comes to vocational and over-the-road. But we still need that over-the-road customer to be solid, right? He's the biggest piece of what you do still. And so combining, you know, most... We don't have full clarity, but we know we're not changing it. We know it's gonna be 35.

Rusty Rush: The government, when I come, I'm talking about NOx and stuff. So we realize that's going to be there. You know, there's a little. They haven't clarified everything, but you pretty much know what the cost is, and, you know, when you're doing something like this. The cost is one thing. It's, you know, it's, you know, some, a little bit new after treatment systems, and I watched in 2010 when every particulate filter was clogged up when we came out of SCR back in '10. So I'm sure there's a lot of people that still remember that, you know, you can have issues when you come out. So I'm just giving you background.

Rusty Rush: So you combine the EPA issue, clarity on tariffs, which has given clarity to pricing throughout this year, which we did not have last year, and their business getting better. So I am optimistic. The issue will be this: the issue will be, we're not gonna run out of time. So, you know, it, it's already... We're what? 8 days away, 9 days, what is there? 10 days away, excuse me, from the end of this month. I apologize. And we'll be into March already. So I do expect order intake to remain what we've seen over the last couple months, in that range, if not, maybe even a little more, because I think people are lining up. So I do believe Class 8 order intake is gonna continue solid. You gotta remember, we had 5- or 6-month run last year.

Rusty Rush: A 6-month run that was close to being less than the last 2 months. 5 months for sure were close to being less than the last 2 months. So, I mean, all that... I know it's a long-winded answer, but you folks are used to my long-winded answers. I try to, I try to give you a full perspective here. Yes, the emission piece is there. Yes, that's important, but it's also important that people can at least see a little further in their business and have clarity, which we didn't have. So the combination of the two, yeah, I think we're going to get... You know, and I, I think your big- you may run into a problem, a supply side problem, with Tier 2 and Tier 3 suppliers. We're not there yet by any stretch, because there was a lot of backlog to fill up.

Rusty Rush: But, it'll be interesting to see where we are 60 days from now. So I mean, a lot of customers are realizing they better... I think some customers, well, I know they are, that they better get on board now and not wait till summer, or we may run out of... It's hard to ramp up for that shorter period of time. You know, Williams will ramp up, but there's only so much you can do when you don't have clarity past, you know, January 1, really. But I, and I, but I don't see, just going further, I don't see 2027 to be a huge drop-off either, because we're gonna get started. It's gonna be a... We're gonna get started light here in Q1, okay? There's no question. Lighter than we were last year in Q1, so you're starting in a hole.

It will be all orders as customers move forward purchasing decisions.

We sold 60 977 used trucks in more than 25.

Down one 9% compared to 2024.

Freight rates improve and pre buy activity builds.

Future emissions regulations, we expect used truck demand to improve in 2026, our leasing and rental business delivered another solid year leasing and rental revenues totaled $369 6 million in 2020, an increase of four 1% compared to 2024.

Rusty Rush: So, I, you know, the year could be similar, maybe slightly up, but it's gonna be, you know, packed into the back three quarters of the year, should you say? So I shut up.

Brady Lierz: No, that's all very helpful color. Maybe we could just talk about parts and service for a second. You know, typically, you see a pretty nice sequential step up in Q1 compared to Q4, but has the severe winter weather we've seen this year impacted that at all? Just wanna get any thoughts there.

In the fourth quarter leasing rental revenue increased three 6% year over year. This business continues to benefit from the strength of our full service leasing operations supported by strong customer demand.

Rusty Rush: Yeah.

Brady Lierz: And then, you know, if you could, just talk about some of your strategic initiatives in parts and service. You know, you've mentioned in the past, growing the technician headcount, mobiles, just how are those initiatives progressing?

From a capital allocation perspective, we remain disciplined and continue to return capital to shareholders.

During 2025, we repurchased $193 5 million of our common stock. We also announced a new stock repurchase program authorized the company broke repurchase up to $150 million of common stock through December 31, 2020 ships.

Rusty Rush: Yeah, well, I, you know, I'm not gonna say, as I mentioned earlier, January was a tough month, when you ask about the freezes. Well, we got shut down for about a week in the Dallas-Fort Worth area and some other areas. We were, you know, down in the South, they don't know how to handle ice and snow. I can tell you, it's not like... You know, it's funny that, you know, weather, cold weather is good for your parts and service business, say, in Chicago. They're used to handling it. They got snowplows. They don't have any snowplows in Dallas. Nothing iced over for five days, okay? We were almost shut. We really were. We were running skeleton crews. It was detrimental, let me tell you, to our southern stores in some areas.

In addition, we returned $58 million to shareholders through our quarterly dividend program of five 6% increase compared to 2024.

These actions reflect the strength of our balance sheet and our confidence in the long term outlook for our business.

Looking ahead to 'twenty six we expect market conditions to remain challenging in the first quarter, but we are optimistic about the remainder of the year with.

With fleet age is elevated and maintenance. These are crazy, we expect both commercial vehicle sales are aftermarket conditions to improve as we move into the second quarter.

Rusty Rush: So that's why January was a real tough month. We're starting to see life, a little more life. You know, as I've said all my life, if I could just get rid of November through February, but I'm from, you know, we're from the South originally, so we're from Texas. And if I could just get rid of November through February, I would have, except for Christmas and Thanksgiving. But, you know, we're getting to the end of it, and, you know, we're starting to see. You know, it's typical seasonality, I would tell you. It was softer, soft in January, and it was soft in November and December for my. But that's seasonal. That's not something we don't deal with in the past.

While we cannot control the price of the market recovery, we can control our execution execution.

We believe we are well positioned to respond quickly and effectively to our customers' needs as conditions improve.

Historically, when the cycle turns demand for both new commercial vehicles and aftermarket parts and service rebounds quickly and we believe the strategic investments we have made over the past several years will help us serve customers better and gain market share.

Finally, I want to thank our employees for their hard work and commitment through 2020, but this was a very demanding year and their focus and execution are critical to our performance.

Rusty Rush: January was probably softer than it usually was because some of our bigger areas on the Peterbilt side were down, which are further south, got frozen up a little bit. So, some of these places don't operate well on that. But, I think it's just normal. We'll be, we got hurt a little bit, but we should come out of it here as the sun comes out and it heats up there, we get into March and April. I mean, I see no reason we won't. And, we're seeing signs in February that things are better than what they were, which is just typical. From a strategic initiative, you know, our mobile service piece is something, you know, that we're really big on, and we continue.

With that we'll open it up for questions.

Thank you and as a reminder to ask a question you will need to press star one one on your telephone and wait for name to be announced to withdraw. Your question. Please press star one again.

Please standby with our Q&A roster one moment for our first question.

Our first question will come from Ryan Blaney Lear's from Stephens. Your line is open.

Hey, great. Thanks, Good morning, Rusty thanks for taking our questions.

Rusty Rush: Last year was a big year for us from a mobile investment perspective. I mean, I can tell you, we, we took on, like, $4 million more in depreciation in mobile units last year than we had at the end of 2024. So, you know, those are investments that we make that, you know, that payback comes back over the next five or six years, right? As you ramp all that up. If, if you like to think it's all immediate, but it's not always all immediate, you know, so we continue to ramp up that piece of our business. It's a larger piece of our business than it ever has been. It was running around 30, now it's running more like mid-30s or more of our overall business....

I wanted to I wanted I wanted to maybe start unsurprisingly on class eight.

As you mentioned in your prepared remarks, you know we've seen an improvement in orders late in 'twenty five and here early in 2026, but can you just kind of talk about what you're hearing from your customers are you expecting this to be a pretty meaningful pre buy here in 2026 out of the 27 regulations just any clarity there would be a it would be helpful.

Be happy too.

The answer would be Cogs.

Cautiously.

Maybe not even cautiously optimistic that yes, there will be a pre buy before we get into it.

Of the 2027 emissions regulations.

Rusty Rush: So going forward, we continue to believe that's gonna continue to be a big piece of what we do, you know, outside of our shops. I would tell you, that's the most important. We did go backwards a little bit in technicians in Q4, but, you know, I think we were, you know, that was just, I think, I'm not sure exactly why it wasn't. I'm not gonna say it was dramatic, so I'm not gonna make any big deal out of it. But, you know, we are focused on continuing to get back to, you know, adding, especially higher level skilled technicians, as best we can, and are doing our best to train the young ones.

Based upon not just the regulations right with you.

You can incorporate regulations all you want.

It was around well you've Rob was still in high school back in 2009 and 10, when we when we went to.

SCR and we were supposed to have this big buy in nine obviously it was the worst year in 40 years right, let a little economic problem going on.

So what I'm, reflecting on is not just the fact that the 2027 ambitions, but the fact that their business is improving.

I'm not going to get ahead of myself lets say its like accelerating or ramping up rapidly, but it is improving especially over the last 90 days I don't have to tell you you know spot ratchet that up.

Rusty Rush: You'd be amazed that, you know, the turnover usually comes in those first year, second year folks, because, you know, we continue to have programs and work our way through that. But yes, you know, we'll continue to try to grow technicians like we have in the past, while we're still doing it profitably, right? You gotta be careful when you're doing that, because you got to be able to do it profitably, not just do it for the sake of doing it. You know, we've got some great programs from a delivery perspective. We're running pilot projects. I don't want to get into all... I'm not gonna get into all that stuff. How about that? Some of that, I consider proprietary, proprietary stuff.

Sorry to ask six months ago, most people would've thought going into their contract rates were probably going to be flat now people are open to get contract rates up you know mid singles right.

That line between spot and contract has moved nicely with where spot was so much lower before so you know your business has to be good. So you got it and I'm going to say, it's great, but you always need to be able to see forward right.

And that's important with so much uncertainty last year.

Brady Lierz: Yep.

Rusty Rush: but you can rest assured, we're not sitting on our hands. We never have, and we never will. We'll be out there, you know, we'll be out there running hard, running out front, hopefully, because you're always getting chased, so you got to have something going on.

With regulations with EPA regulations with tariffs and everything else. So now you can focus on these regulations and do it while your businesses.

Gradually getting better it may not be reflected in all the first quarter reports, but I think most customers feel that their business is improving when you're talking about route over the road customers right now because there still is the biggest segment, even though we're more diversified than most folks when it comes to vocational over the road, but we still need that over the road.

Brady Lierz: Yeah, absolutely. Well, one final one for me, and then I'll pass it along.

Rusty Rush: Sure.

Brady Lierz: You know, you mentioned quite a few times just throughout this challenging freight market last couple of years, you know, one of your priorities-

Rusty Rush: Mm-hmm

Brady Lierz: has been controlling your expenses, you know, controlling the controllable. You know, you did a nice job of that in 2025, in particular, particularly in Q4. Can you just talk about how we should think about expenses in 2026, given, you know, both your focus on wanting to maintain that cost discipline, but also considering, you know, we are expecting the market to improve here in 2026?

And we're gonna be solid right who's the biggest piece of what you do still and so combining.

You know some most of them, we don't have full clarity, but we know we're not changing it and we're always going to be 35, the government when it come color about Nox and stuff.

Rusty Rush: Right. Well, you know, I mean, let me say this: If we get into, get to really where I believe we're not there yet, if we can get into a growth where we really feel some real growth, I'm not ready to claim, to claim, and I'm talking parts and service growth, not truck sales. Remember, truck sales are when you go, everybody goes SG&A, SG&A. Well, we run it different. S is attached to truck sales, G&A is attached to all the other expenses, right? Because S is a variable commission piece driven by what truck sales are. So, you know, you sort of got, you got to look at them in two separate buckets, right? And that's, that's how we do it. And, you know, I, I would hope that we can maintain our G&A at least close to flat, okay?

So we realize that's going to be there you know, there's a little they haven't clarified everything but you pretty much know what.

But the cost is and you know when you're doing something like this.

The cost is one thing. It's you know it's you know so.

Little bit new after treatment systems and I watched it.

Jim.

What what every particulate filter was logged out when we came out of route SDR backend yeah. So I'm sure. There's a lot of people Theres still remember that you know you can have issues.

When you come out so I'm, just giving your background. So you combine the EPA issue clarity on tariffs, which is giving clarity to pricing throughout this year, which we did not have last year.

Rusty Rush: That's my plan here in, you know, in Q1, would be to do that. Now, as we ramp up, if the parts and service business ramps up, we always talk about the fact that we will spend, you know, half, half of the growth, because we just, it's half of the growth, well, more half of these, the gross profit growth. Now, let me back up a second. Remember this about Q1: Don't comp Q1 to any other quarter. Q1 is always jumps from Q4, okay? We have... You got all your payroll taxes restarting and all our equity costs go out. The majority of our, not all, majority of our equity costs go out in Q1. So if you look at our historical record, it will always show a jump from Q4 to Q1. So don't, don't, don't forget that.

And their business getting better so I am optimistic.

The issue will be this issue will be.

Well, we're not going to run out of time.

You know its already where what.

Eight days well weigh nine days 10 days away excuse me for the end of this month I apologize.

And we'll be in the March already so I do expect order intake to remain what we've seen over the last couple of months.

In that range, if not maybe even a little more because I think people are lining up so I do believe class eight or in Mexico to continue solid and you got to remember we had five or six months last year.

Our six month wrong, it was close to being less in the last two months five months for sure. We're supposed to be lessened in the last two months. So having all of that I know, it's a long winded answer, but you folks who used to my long winded answers I try to I try to give me a full perspective here, yes. The emission pieces there, yes, that's important but it's also important.

Rusty Rush: I would just compare it to last Q1, would be what I would tell you to do, not compare it to Q4, because that's always a jump that we have. You, you start up, you know, a lot of different things in Q1, like, when your payroll taxes run down as the year goes on, et cetera. And really more than anything, the equity costs are all the, the majority, not majority, but half the equity costs in the company run in one quarter, and that would be in Q1. So again, don't compare it to Q4, compare it to last year's Q1. But we would hope to stay, you know, do a good job for now, staying close to that number, last year. But it's possible that it'll ramp up some if our gross profits and parts and service start going up. We can't just...

If people get at least see a little further in their business. They have clarity, which we didn't have so the combination of the two yeah I think we're going to get.

And I think you're bigger you may run into a problem of supply side problem with tier two and tier three suppliers, we're not there yet by any stretch because there was a lot of backlog to fill up but.

It'll be interesting to see where we are 60 days from now.

So I mean, most of a lot of customers are realizing they better I think some goes where I know they are they better get them onboard now and not wait until summer or we may run out of you know, it's hard to ramp up for that short a period of time.

Rusty Rush: You know, it takes people to do what we do. People turn wrenches, people drive, deliver parts, people do all these different things. So it's not like I'm loaning money here. I'm handling, you know, hard assets and stuff like that. But I'd love to have that problem, so hopefully, we will continue to see growth. And if we don't, then I'm planning on keeping it as flat as possible, okay? If we stay flat in parts and service, I'm planning on keeping as close as I can with as little inflation as possible, you know, to where we were. But we're hoping to have some growth, and like I said, we're... After getting out of January, we're seeing a little uptick here in February, but it's not enough.

Williams will ramp up but there's only so much you can do when you don't have clarity past you know.

January one really but I don't but I don't see just going further I don't see 27 to be a huge drop off either because we're going to get started and it's going to be we're going to get started.

Like here in Q1, Okay. There's no question lighter than we were last year in Q1, So you start and I'll.

So I you know the year could be similar maybe slightly up but it's going to be you know active into the back three quarters of the year shoes.

I showed up.

Rusty Rush: But, like I said, I'm used to the seasonality of the business, whether I like it or not, and I just have to deal with it, and hopefully, we'll pop out in the spring, like always.

No that's all very helpful color.

Maybe we could just talk about parts and service for a second you know typically you see a pretty nice sequential step up in the first quarter compared to the fourth quarter, but has the severe winter weather. We've seen this year impacted that at all just wanted to get any any thoughts there and then you know if you could just talk about some of your strategic initiatives in parts and service you know you've mentioned.

Brady Lierz: Very helpful. Thanks for all the color as always, Rusty. I'll go ahead and pass it along.

Rusty Rush: You got it. No worries. My pleasure.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Avi Jaroslawicz from UBS. Your line is open.

In the past growing that the technician head count.

Just how are those initiatives progressing.

Avi Jaroslawicz: Hey, good morning, guys.

Rusty Rush: Good morning, sir.

Yeah.

Well I don't you know.

Avi Jaroslawicz: So Rusty, as of where things are standing today, and you kind of discussed it a little bit already just there, but what are your expectations for price cost in the aftermarket business? I think it was somewhat of a tailwind last year, just as you raised prices of inventory to match the cost increases you were seeing. But then there's a lag for when those hit COGS. So how should we be thinking of what, yeah, should that be a headwind here in 2026? And if so, you know, roughly, what are we talking about?

I'm not going to say as I mentioned earlier January was a tough month.

When you ask about the freezes, whether we were going to shut down for about a week in the Dallas Fort worth area.

Some other areas we were.

Yeah.

Down in the South I don't know how to handle the ice and snow I can tell you. It's not like you know it's funny that you know weather cold weather is good.

For your parts and service business say in Chicago, they're used to handle that they've got snowblowers. They don't have any snow plows and balanced nothing iced over five days okay.

We were almost shut we really weren't we were running skeleton crews. There. It was detrimental let me tell you who our southern stores in some areas. So that's why January was a real tough one we're starting to see life a little more what you know as I've said all my life, if I could just get rid of November through February but I'm from.

Rusty Rush: Yeah, you could have a slight headwind, as inflation, you know, with inflation slowing down, okay? But, you know, I don't look at it as to being monumental, okay? There will still be inflation. It may not be quite as much. You know, inflation can be a tailwind to you when you're doing it, if you can maintain. So I would say we'll have a little bit of a headwind, but when you look at it as from a percentage of the whole, it's something that if you've got a growing market, you could overcome without any, you know, without question. So, while we'll have inflation, I don't expect the inflation from that perspective, from a parts perspective, to be as much as last year, from what we're seeing from the suppliers and the OEMs right now.

We're from the South mice.

Texas and if I could just get rid of November through February I would've, except for Christmas and Thanksgiving, but you know we're getting to we're getting to the end of it and you know we're starting to see it.

Typical seasonality I would tell you it was Salford Salford in January and resolved in November and December that seasonal that's not something we don't deal with in the bass Yang where it was probably softer than it usually was because some of our bigger areas of Peter both side or would you further south that frozen up a little bit.

Rusty Rush: But it'll be, it'll be there, it just won't be quite as much. Hopefully, you know, what we're talking about is the market will get better and grow. You know, the overall market was flat. I mean, not just for us, for everybody, or even down, and for some people, for some, whether it's independents or dealer-operated stuff, some of them were negative last year. So, you know, I'm hoping that we get into a more, you know, as our customer base gets healthier, you know, their spend will be more normalized. You know, you got to think about it like this, you know, the way I look at it, you know, these guys were over three years in a freight recession, and I've been around, I hate to say how long, but, I'm young at heart, but, I've seen a lot.

And we don't operate some of these places don't operate well with all of that but.

I think it's just normal will be yeah, we got hurt a little bit, but we should come out of it here as the Sun comes out that eats up there you get into March and April.

I see no reason when you walk in and we're seeing signs in February the things are better.

There was it just typical.

From a strategic initiative, you know our whole service basis something in the world.

Really big Autumn, we continued last year was a big.

Year for us from a mobile and basketball perspective, I mean, I can tell you we.

We took on.

4 million more depreciation.

Rusty Rush: You know, when it gets like that, people don't necessarily spend like they would if their business was normal. When they're not, their business is in a recession. You saw companies losing money that never lost money. Well, guess what? When that's going on, you're gonna put off spend. You're gonna add... You know what I'm doing? I'm adding 5,000mi to the oil change. You know what? I'm not fixing that fender. You know what? I'm not doing this. So the health of the customer is the most important thing out there. And yes, we do a lot of locational stuff, but the over-the-road market is still the biggest piece. And this, even the small... I mean, we've been off double digits from our small customer for the last, each year for the last 3 years.

Mobile units last year than we had at the end of 'twenty four.

So you know.

Those are investments that we make.

Company's book over the next five or six years right as you wrap all that up.

You like to think it's all immediate but it's not always all immediately so we continue to ramp up that piece of our business. It's a larger piece of our business than it ever has been it was running around 30 and now it's growing.

30 or more of our overall business. So going forward. We continue to believe that's going to continue to be a big piece of what we do know them outside of our shops I would tell you that we did have we did go backwards a little bit of designations or fourth quarter, but you know I think we were.

Rusty Rush: So, you know, you go, "That's, that's bad." Well, that may be bad, but right now, I'm gonna say, but I look at it as a positive. I look at it, it can't get much worse, right? It's only one way to go, and that's up. So, you know, I hear you about the little bit of a headwind, but I think the overall market, when I look at the possibilities, a healthier freight market is gonna be way better than a little bit of headwind. And it's not overwhelming headwind either, by the way, but I still think there's gonna be some inflation, there's no question. But other than that, you know, we'll, we'll, we've been able to hold our own. You can see, I think we ran 37 blended parts in service in Q4, so which is in line, probably.

That was just.

I think I'm not sure exactly why it wasn't I'm not going to say it was dramatic.

Any big deal out of it but you know we are focused on continuing to get back to you know, adding especially a higher level of skilled technicians best we can and are doing our best to frame the young ones you'd be amazed.

The turnover it usually comes in those first your second your folks.

And we continue to have programs to work our way through that but yes. You know, we'll continue to try to grow technicians like we have passed.

While we're still doing it profitably right you can get to be careful when you're doing that because you got to be able to do it profitably not just do it for the sake of doing it.

Rusty Rush: You know, if you look when I'm sitting there looking back, it's in line with 37.2, 37.6, 35.8, actually, the last Q1 of 2025. So my point being, 37 is solid. So and I would hope as we can maintain in that same range, blended parts and service margin, regardless of inflation. But, you know, the health of our customer base, especially the largest customer base, the over-the-road carrier, and, you know, once the big carrier gets healthy, guess what? The little carrier follows along, and that is where more of your retail parts and service comes from. A lot, not more, but a chunk of it that has been super depressed. And so, you know, that to me, that's...

You know we've got some great programs from a delivery perspective, we're running pilot broadly I don't want to get it all I'm not going to get into all that stuff how about that some of that sort of proprietary the proprietary stuff.

But you can rest assured we're not shutting all right.

We never have and whenever world will be after you know will be out there right now aren't running upfront hopefully because you're always getting chase. So you've got to have something going on.

Yeah, absolutely well one final one for me and then I'll pass it along.

And quite a few times just throughout this challenging frame market last couple of years you know one of your priorities has been controlling your expenses you know controlling the controllable you you did a nice job of that in 2020 five in particular, particularly in the fourth quarter can you just talk about how we should think about expenses in 2026 given.

Rusty Rush: I'm not—it's not there yet, but I've seen these cycles before, and I don't want to get too bullish or anything, but, you know, if things go according to historical, then I think, you know, we should be in, you know, fairly good shape to capitalize on that.

You know both your focus on wanting to maintain that cost discipline, but also considering you know we are expecting the market to improve here in 2026.

Avi Jaroslawicz: That makes sense. Appreciate that. And then on the Medium-Duty side of the business, so saw a pretty sharp drop-off in sales there in Q4. Still better than the industry, but a sharper deceleration than the industry in the quarter.

Right well you know what I mean.

Let me say this if we get into get to really what I believe we're not there yet if we can get into a growth.

Where we really feel some real growth I'm not ready to claim the claim and I'm probably in parts of service gross not process remember truck sales.

Rusty Rush: Yeah.

When you go everybody goes SG&A SG&A, when we run it ever.

Avi Jaroslawicz: So, you know, how are you thinking about the shape of the medium-duty demand here in 2026? You think it's gonna be fairly similar to what we see in heavy-duty or?

Yes.

As you can truck sales G&A is attraction to all the other expenses right. Because this is a variable commission fees driven by what truck sales are so you know you sort out you've got to look at it in two separate buckets right.

Rusty Rush: I don't, I don't know. You know, I, I have some concerns around it, to be honest with you, but, you know, I haven't seen the acceleration in it over the last 60, 90 days that I've seen in the heavy-duty side. But a lot of times, you know, this, you know, the medium-duty business is, you know, a lot of leasing and a lot of, a lot of different customer base, right? And it's tied more to the general economic activity of things going on locally in a lot of ways, because it's a lot more diversified type of products. Not just... I realize leasing in box trucks and stuff, there's a lot of other medium-duty segments that we play into. So I-- we're seeing more quoting activity right now.

And that's that's how we do it.

And you know I would hope that we can maintain our G&A at least close to flat.

Okay. That's my plan here and you know.

And Q1 would be to do that now.

Now as we ramp up if the parts and service business ramps up we always talk about the fact that we will spend you know.

Half half of the growth.

Because we had just.

Half of the growth will have to be split of the gross profit growth now why not let me back up a second remember this about Q1 don't comp Q1, any other quarter Q1 is always jumped from Q4. Okay. We have you got all your payroll taxes, and restarting and all our equity cost well the majority of it.

Rusty Rush: It hasn't come to fulfillment as much as the heavy has, but a lot of times, you know, it'll be springtime, as we get around here, going up with NTEA and some things like that, it's a big conference that comes up, big convention, things like that, where some of these things happen. So I am sure that it will line up, historical. You know, I can't sit here and tell you that we're gonna sell lots and lots more. I would imagine some maybe based on ACT going at pretty flat, to be honest with you. We would stay in line with the percentage of the market we're at now. But, you know, I can't tell you I've booked it all already, that's for sure. But I can also tell you I'm not afraid.

Got all majority of our equity costs go out in Q1. So if you look at our historical record. It will always show a jump from Q4 to Q1. So don't don't don't forget that Guy, which just compared to last Q1 would be what I would tell you to do not compared to Q4, because that's always a job that we have with you your startup.

You know a lot of different things in Q1 payroll taxes run down as the year goes on et cetera, and really more than anything the equity cost for all but the majority of jewelry, but has the equity cost to the company run in one quarter and that would be in Q1. So again don't convert in Q4 compared to last year's Q1, but we would hope to stay.

Rusty Rush: So, you know, we've got a pretty good sales force out there, and, yeah, we'll represent many brands and, you know, we feel good. If it will come, it just hasn't really happened yet for us, to be honest. But the quoting activity's picked up. You got to quote before you can build. You got to quote before you can order, and you got to get it ordered and get it built and get it delivered. So, I'm confident that we'll execute in the lines of where we have historically here. If not grow it, you know, I've got some stuff going on that I'd like to see happen. It might allow us to even grow it, but I don't want to get out and hit my skis on it.

Do a good job for now staying close to that number.

Last year, but it is possible that it will ramp up some if our gross profits in parts and service truck lineup. We can't just you know it takes people to do what we do people turn wrenches people move drive for growth deliver parts people do all these different things so it's.

Not like alone and money here I'm handling you know hard assets and stuff like that but I'd love to have that problem. So Oh boy. We know we'll continue to see hub growth and if we know that I'm planning on keeping it as flat as possible. Okay. If we stayed flat and barks in servers and plan on keeping as close as I can with it.

Avi Jaroslawicz: All right, appreciate that, that color, and thanks for the time.

Rusty Rush: Got you. My pleasure.

Little inflation as possible.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Andrew Obin from Bank of America. Your line is open.

To where we were but we're open to have some growth like I said, we're ever getting out of the day, we're seeing a little uptick here in February, but it's not enough, but like I said I'm used to the seasonality of the business, whether I like it or not.

Andrew Obin: Rusty, Steve, good morning.

Rusty Rush: Well, good morning, Andrew.

And I guess, you have to deal with it and nobody will pop out the spring like always.

Andrew Obin: Just a question, just going back to something you said. I think you guys were fairly skeptical, and there was a big industry debate about ACT orders last month and were they a one-time in nature. It sounds like you're sort of warming up to the fact that, you know, orders could actually improve faster. Could you just, you know, unpack this for us? Just what do you think happening with industry orders over the next three to six months, how that's gonna play out? Thank you.

Yeah.

Very helpful. Thanks for all the color as always Rusty I'll go ahead and pass it along.

You got nowhere, it's my pleasure.

One moment for our next question.

Our next question comes from the line of Army General slowing from UBS. Your line is open.

Hey, good morning, guys.

Good morning, Sir.

So rusty I, that's where things are standing today, and you kind of discussed it a little bit already just there.

Rusty Rush: Sure. And I may be a little repetitive here, Andrew, but I thought I tried to answer, but we believe that, you know, about 90... Once we got clarity, remember, clarity started on November 1. Let's get that right. 232, the, when they changed the tariff rules, took effect the first of November. Then we got some clarity a little later after that about, well, we're gonna hold on and keep the 2027, rules in place from the emissions perspective, except for we're gonna loosen up a few things here. We're probably, and they, it hasn't come out yet, but the feds have said, "We're not gonna keep all the warranties." Now, it hasn't been officially done, but they have communicated to, customers and alike, that we're gonna cut the warranties back. Well, that was more than half the cost.

What are your expectations for price cost in the aftermarket business I think it was somewhat of a tailwind last year just as you raised the prices of inventory to match. The cost increases you were seeing them, but then there is a lag for when those hit Cogs. So.

How should we be thinking of Oh, what.

Should that be a headwind here in 2026, and if so roughly what are we talking about.

Yeah, you could have a slight headwind.

As inflation with inflation slowing down.

Okay.

But you know I don't look at it and you shouldn't be monumental okay. There will still be inflation. It may not be quite as much inflation can be a tailwind to you when you're doing that you can maintain so I I would tell you we'll have a little bit of a headwind, but when you look at it is from a percentage of the.

Rusty Rush: We're gonna be a little flexible on credits, and how you do that, and I'm not the, I'm not the technical expert. So you had all that go down. So that gave clarity, right? So then you started, customers started looking out next year. I keep talking to them. They knew they really wanted... They, they pulled back on purchases last year, in the second half. And, you know, you can't do that for too long, or you're gonna, you're gonna bottle back up, your maintenance is gonna go through the roof, and age, as your age, your fleet goes up on these big fleets.

So it's something that if you've got a growing market you could overcome without any without question. So.

Well, we will have inflation I don't expect the inflation from that perspective from a parts perspective to be as much as last year.

From what we're seeing from the.

And the Oems right now, but it'll be it'll be there just won't be quite as much hopefully.

You know what we're talking about as the market gets better and grow the overall market was flat I mean, not just for us where everybody or even down for some payables or something whether its independence or dealer operated stuff.

Rusty Rush: So people really started talking, I would tell you, in November, and, you know, November, I don't remember what it was, 18 to 20,000 units, I can't remember, but, it was picking up, and then we had the big December, 30 to 40,000, I think, and then it was 30,000 last month. Well, at the same time, as I said earlier, people's businesses, they started being able to see your tender acceptance rates came down from 98% acceptance to the low 90s, which started, and even in the high 80s, which started to drive, you know, your spot market up. And it wasn't just weather that did it here recently. And people felt better about where they were at from, you know, in contracts going forward. You can just... There's been a little bit of tightening, right?

Some of them were negative last year. So you know I'm, hoping that we'd get into a more you know as our customer base gets healthier.

Their spend will be more normalized you know you've got or if they get back like this you know the way I look at it.

Rover free years are afraid recession and I've been around.

I'd say all.

But.

That'll be [laughter] young young at heart.

But <unk> seen a lot you know when it gets like that people don't necessarily spend like they would if their business was normal weather locker business sitting in a recession you saw companies, losing money it never lost money well guess, what when that's going on you're going to put all yoga yoga.

Rusty Rush: So that gives you and I and people worry, is this sustainable, right? The first 30 days, and now I'm going out on a limb, maybe I'm gonna be wrong. Maybe it's not sustainable. I have a feeling that after 3.5 years, it's gotta be somewhat sustainable, if not gradual, right? But sustainable, whether it's, it's not some spike, but a gradual sustainable improvement in their business. You tie that in with now you've got clarity, you know what it's gonna be at the end of 2027. You may have slowed down on some purchases, on some companies that did in 2025. Well, you know, that's where I think you're gonna see a good order intake this month. Also, I'm just guessing, it's a short month, but it'll be solid.

To put all spend youre going to add you know what I'm doing I'm back 5000 policies at all changed you know what I'm not fix for that center.

Not doing this so the health of our customers. The most important thing out there and yes, we do a lot of vocational stuff, but the over the road market is still the biggest piece and the scheme in the small I mean, we've been all double digits from our small customer for the last each year for the last three years. So you know I can't go.

The best Bad well that may be bad, but right now in the state, but I look at it as a positive I look at it it can't get much worse right.

Rusty Rush: I do believe it's a short month because we know February, but I would expect it still to be solid. And from people I've talked to, some people I've talked to. So you know, I... And I think what's gonna happen is if the backlogs fill, and I don't know for everybody, because I've even heard of one OEM that had some shutdown weeks here in Q1 now. Not, you know, not anybody I'm dealing with, I don't believe, but I've heard of one OEM that has, and I'm not here to... I don't want to get into all that. But my point being, I know for people that, that I'm—they're filling up, okay? Not filling up, but you're getting orders, right? You gotta, so all of a sudden, the backlog is increasing. Okay?

One way to go with that so up so you know I hear you about the little bit of a glib, but I think the overall market when I look at the possibilities are.

Healthier freight market.

Is gonna be way better than a little bit of a headwind.

It's not overwhelming headwind either by the way, but I still think there's going to be some inflation, but other than that you know well.

Well, we have been able to hold on.

You'll see I think we ran 37 blended parts and service in Q4.

So which is in line and probably you know if you look where I'm sitting here looking back. It's in line with 37 to 37 635, eight actually last Q1 of 25. So my point being 37 solid so and I would hope as we can maintain at that same age blend in parts and service margin regardless of inflation.

Rusty Rush: Well, then people look at it here as we get into the springtime and say: Wait a minute, you know, I don't want to get left behind in the fourth quarter, because some people, you know, when you see these orders, remember, they're not all built immediately, but they are building a backlog. Most of them spread over time. So I just believe, I could be wrong. I mean, I'm just, it's just my gut, you know, and maybe in touch with the market, that, yes, it will continue because people are feeling, oh, their business isn't great, but they don't feel in the dumps. You know, sometimes when you've been living in the swamp, or in the dumps, it doesn't have to get a whole lot better to make you feel better, right?

But you know the health of our customer base, especially the largest us basically over the road carriers.

And you know of course, the big carrier yourself against what the little carrier follows a wall.

And that is where more of your retail parts and service comes from a whole lot more but a chunk of it that it's been super depressed and so that to me that's I'm not trying to get I'm not it's not there yet, but I've seen these cycles before and I don't want to get too bullish or anything but you know.

If things go according to historical.

Rusty Rush: It's been three years of prolonged freight recession, but at least now you gotta believe. You know, because remember, the first thing that happened is capacity is coming out, right? When everybody reads about non-CDL driver or non-drivers, or, you know, that have been taken out here and there, and they have. But that's not an add water and stir thing. But as that goes on, you have less intake of trucks. Remember, we built a whole lot less trucks in the back half of 2025 than what we did in the first half.

Then I think you know we should be a fairly good shape to capitalize on that.

That makes sense appreciate that.

And then on the on the medium duty side of the business. So a pretty sharp drop off in sales there in Q4 still better than the industry, but a sharper deceleration in industry and in the quarter yeah. So.

So you know how are you thinking about the shape of medium duty demand here in 2020 six do you think it's going to be.

Fairly similar to what we see in heavy duty or I.

Rusty Rush: So you, you know, you slow that spigot down, you start taking some of those non-compliant CDL drivers out, and you start squeezing the capacity piece, then all of a sudden their business starts getting a little better, the economy looks a little better, the ISM stuff looks better, right? There's a lot of things that tend to make me believe, along with, you know, emission regulations coming in January 2027, we're gonna have a pretty good last three quarters of the year, right? Now, and I'm not predicting doom and gloom after that, but that's a little far out for me to understand right now. I'm just dealing with what I got in the present and over the mid rest of this year, and we'll talk about 2027 as we get halfway through, a little further through the year this year.

I don't I don't know if I have some concerns around it to be honest with you, but you know I haven't seen the acceleration in it over the last 60 90 days that I've seen in the heavy duty side, but a lot of time as you know.

Medium duty businesses, a lot of leasing and a lot of a lot of different customer base right and it's tied more to the general economic activity of things going on local you know a lot of ways.

It's not more diversified type of products, not just that otherwise leasing and box trucks and stuff. There's a lot of other medium duty segments that we play in too so.

Rusty Rush: But I feel good that it is sustainable and will lead to maybe even a better year. The problem is, you start off... So, so remember, Q1 is gonna be off, so you're starting a hole to begin with, so you gotta climb back out and then catch back up, which you should do for sure in the back half of the year, deliver more trucks than we did last year, for sure.

Hi, we're seeing more quoting activity right now it hasn't come to fulfillment is what is the heavy ends.

But lot of times, you know it'll be springtime as we'd get around here going up with the MTA and some things like what's the big golfers, who comes up the convention things like that or some of these things happened. So I am sure that it will line up.

Andrew Obin: Great. Rusty, and just to follow up, I mean, it clearly seems that you're highlighting the improvement over the road, finally driving your optimism for the rest of 2026. You've alluded to other parts of the economy getting better. Can you just talk about off-highway, which has been such a moneymaker for you over the past year, sort of got you through the drought? But maybe, you know, if we could talk about, you know, sort of these corporate fleets, if we could talk about construction, if we can talk about waste. What are you seeing in those markets? Because those tend to be economically sensitive as well. But as I said, it seems to us that your message is very clear on finally starting to see green shoots on over-the-road recovery.

Historical you know I I can't sit here and tell you that.

So lots and lots more.

I would imagine.

Some may be based on AC Chico on it pretty flat to be honest with you.

Would you stay in line with the percentage of the market, where we're at now but you know I can't tell you have booked it all right. That's for sure but I can also tell you I'm not afraid [laughter]. So you.

We've got pretty good sales force out there.

He got will represent many brands.

So we feel good.

Will come it's just hasnt really happened yet for us to be honest.

But the quoting activity has picked up you've got to quote before he can do what you Gotta quote before you can order and you Gotta get an order and get it built and get it delivered so I'm confident that we'll execute in the lines of where we have historically or if not grow it.

Rusty Rush: Yeah, very well put, Andrew. Yes, we're seeing it on that side of the market. Yes, you know, we love the, we love the diversity of our customer base, you know that. I would tell you the vocational pieces, I don't see the pickup that I see across, but I can see fairly flat to where we have been, right? Because we've been pretty solid in it, I gotta be honest with you. So as you said, it's helped us a whole lot over the last, you know, couple of years, you know, when there's over-the-road freight recession, you know, we've been really solid around that area. So I, I think that, let's say, I don't want to get into specifics.

I've got some stuff going on with I'd like to see happen that might allow us to even grow it but I don't want to get out over my skis on that.

Yes.

Alright.

The color and thanks for the time.

Got you.

It was.

Thank you one moment for our next question.

Our next question comes from the line of Andrew Open from Bank of America. Your line is open.

Rusty Steve good morning.

Well good morning, Andrew.

Rusty Rush: We might be a little softer in one segment and up a little in another segment, but when you look at vocational as a whole, I'm gonna say we're gonna be probably flat with where we have been. I don't see any huge decrease or anything, you know? We may. You know, because some of them, we were still catching up from COVID the last couple of years, you know, when you couldn't get trucks 3 years ago. So we have fulfilled maybe some of that, the pent-up demand, so now it's more like business as usual. But I don't see any big downtick. It's more back to business as usual. Some of the people we do business with were playing catch up, 2024 and 2025 from not getting as much product in 2022 and 2023, to be honest with you.

Just a question just going back to something you said I think you guys were fairly skeptical and there was a big industry debate about it.

T orders last month, and where they're onetime in nature.

It sounds like you're sort of warming up to the fact that you know orders could actually.

Improve faster could you just you know unpack those for US just what anything happening was industry waters over the next three to six months, how that's going to play out. Thank you.

Sure.

Maybe a little repetitive here, Andrew but I thought I tried to answer but we believe that.

You know about 90 once we got clarity remember we're already started on November one.

Get that right $2 32.

When they changed the tariffs.

Rusty Rush: So, you know, where they may be off a little, it's not off because they're off; it's off because they played a little catch up and, you know, we were able to capitalize on that. So when I look at those businesses, they're doing well, but they've caught back up to their normal replacement cycles. They got left out a little bit. Some of those groups got left out back in 2022 and 2023, and then we, you know, we picked them back up in 2024 and 2025. So just because someone maybe, you know, bought 900 from me or something, they're buying 750, 800, doesn't mean their business is bad; it just means they've caught back up, right? So, you know, you gotta reply... But I think overall we'll be somewhat flat, the vocational pieces.

In fact first of November.

Then we got some clarity a little later after that.

About well, we're going to hold on and keep the 2027.

Rules in place from the emissions perspective, except for.

We're going to loosen up a few things here were prevalent in Manhattan.

Hasn't come out yet.

But the Feds have said, we're not going to keep all the warranties.

No it hasnt been officially done but they have communicated.

Our customers and alike.

But we're going to cut the warranties back, but that was more than half the cost.

That'd be a little flexible on credits.

And how you do that and I'm not I'm not the JAK nickel expert.

Andrew Obin: Thank you, Rusty. It's been a while since you've been constructive about, over-the-road. Good to hear. Thanks so much.

So you had all that go down well that gave clarity right. So then your story customers started to look at that next year.

Rusty Rush: Well, it's, it's nice to feel, even though it's, you know, it's a big piece and, you know, but it's all, for us, vocational is big, as you know. So thank goodness, it's nice to feel that you got an opportunity to maybe, you know, and hope it... When I talk over the road, I'm hoping our small customer base comes back. I've been, been a little bit, I'm a little, I'm optimistic there, man. I don't want to get overly anything. Wait till I talk to you in April, and I'll have a whole lot better feel for what's going on, right? The sustainability of what we're seeing.

They knew they really wanted.

Pulling back on purchases last year.

Second half.

You know you can't do that for too long.

You got a bottleneck up your maintenance is going to go through the roof.

Age of your fleet goes up on this.

Big fleets.

So people really started talking I would tell you in November.

And you know in November I don't remember what it was 18 to 20000 units I can't remember, but.

It was picking up and we had a big December and $40000 40000 run rate and then it was 30000 last month and at the same time as I said earlier.

Rusty Rush: I'm not, I don't want to get over. I keep trying, but, you know, like you said, it's been a while since we've been able to talk optimistically about the over-the-road business, and I just am looking forward, I think. You know, I think things are, you know, gonna be better, right? So you add that with everything else we got; it's out here in Q1, because as we're just taking all the. Remember, people get excited because all these orders taken in. Orders taken in do not mean Rush is delivered in yet. We are the tail of the dog, right? A lot of times, there's, you know, we got to do a lot of upfitting and things like this to trucks when we get them. So that's why when you hear me talk about, well, he took orders for us.

People's businesses, they started being able to see your tender acceptance rates came down from 98% acceptance.

Low nineties, we started and even in the high eighties, which started to drive.

Spot market and it wasn't just weather.

Recently and people felt better.

Where they were at from you know in contracts going forward you can use there's been a little bit of tightening right. So that gives you.

Rusty Rush: Well, that doesn't mean I'm gonna add water to the furnace and deliver them 30 days later. It could take 3, 4 months to get them out there and get them delivered because of what has to be done, because we are the end user. We are the, you know, we're the last guy that touches the end user. So, you know, even though they're manufactured, doesn't mean we don't have, you know, you know, we have upfitting places around the country where we make sure to, you know, do all the things that customers need. You know, one-stop shop is where we like to be.

People, where it is at a sustainable right. It's the first 30 days and now I'm going out on oil maybe I'm gonna be wrong, maybe it's not sustainable.

I have a feeling that after three and a half years, it's got to be somewhat sustainable if not gradual.

But sustainable whether it's it's not something spike, but a gradual sustainable improvement in their business you tie that in with how you've got clarity you know what it's going to be at the end of 'twenty seven you may have slowed down some.

Brady Lierz: Thank you.

Rusty Rush: You bet.

Got it.

Operator: Thank you. Another reminder to ask a question, that's star one one, star one one. One moment for our next question. Our next question comes from the line of Cole Cousins from Wolfe Research. Your line is open.

25.

Well you know, that's where I think youre going to see a good order intake. This month also I'm guessing is a short month, but it will be solid I do believe it's a short booking window February but I would expect it still to be solid.

Cole Cousins: Hey, guys, thanks for taking my questions. From a Class 8 pricing perspective, can you talk to what you're seeing across the market at this point? Are OEMs raising prices yet, or does it remain pretty competitive as OEMs look to protect or gain share? And maybe how do you see this progressing through the year with EPA 2027 on the horizon?

And some people I've talked to some people I've talked to.

So you know and I think what's going to happen.

Hence the backlogs.

And I don't know for everybody because I've, even heard of one OEM that had some shutdown of weeks here in the first quarter now not you don't have anybody I'm dealing with I don't believe but.

Rusty Rush: Yeah, well, you probably didn't do real well asking that question to the OEMs, did you? Okay. So you're asking me, putting me on the spot. I would tell you right now, we're still building backlogs. I would say, you know, I have where, you know, let's say there's no big discounting going on compared to where we were, but there's no huge raises. Now, because that's one of the things, as we get later in the year, I wouldn't be surprised to see, you know, if supply and demand, you know, if demand exceeds supply, you've been around long enough to know what that means. I won't even try to tell you. Everybody knows what that means, okay? And so we're not there yet. Backlogs need to be, you know, backlogs need to be built up.

I've heard of one OEM that has.

And I'm not here I don't want to get it all that but my point being I know for people that they are filling up okay, not filling up but you're getting orders right. You've got to you just all of a sudden the backlog is accretion.

Okay, well then people look at it here as we get into the spring time and say wait a minute.

I don't want to get left behind kind of fourth quarter cause somebody where you see these orders remember they're not immediately but they are building a backlog most of them spread over time.

So I just believe it would be wrong I mean, I'm just my gut you know them.

And maybe touch with the market that yes. It will continue because people were feeling out.

Their business isn't great, but they don't feel in the dumps, yeah, sometimes when you've been living in the swamp.

Rusty Rush: They've been drained down pretty good, man, and people were building trucks in four weeks for you if you wanted it. So, you know, once backlogs get built up and, you know, we'll just let the OEMs decide, and we'll be the poor guy in the middle, trying to, you know, get deals done. But right now, I would say right now, we're in the, you know, most OEMs are still in the process of, you know, getting their backlogs more healthy. So, you know, I'm not gonna say it's just total cutthroat out there right now, because it's not. But, I mean, it's not... It, it's balanced at the moment. But we continue.

Hey, Doug.

It doesn't have to get a whole lot better to make you feel better right and it's been three years of prolong freight recession, but at least now you got to believe.

Because remember.

First thing that happened is capacities coming out right.

Body reads about non CDL driver.

Drivers you know they've been taken out here and there and they have and but that's not an add water and stir thing, but its that goes on.

You have less intake shrugs remember, we built a lot less trucks in the back half of 'twenty five and what we do.

Rusty Rush: You start popping some 40,000, you know, if you start popping two or three more, 35,000, 40,000 months in, which are not necessarily typical of these months coming up in March and April, February, a good month, and March and April, you're probably gonna see demand exceed, outpace supply, and I'll let you take it from there. Okay.

Did it affirms that first absolutely you know you're slow aspect. It down you start taking some of those noncompliant CDL drivers out.

You start squeezing the capacity piece and all of a sudden their business starts to get a little better economy looks a little better the highest himself.

There's a lot of things.

It tends to make me believe along with you now.

Cole Cousins: Yeah. No, no, that makes a ton of sense. And maybe just... I know we've asked a lot of questions about this, but to follow up on Brady and Andrew's questions, maybe to put a finer point on it, how much of what you saw in December and January do you think was replacement CapEx versus growth CapEx versus some degree of pre-buy activity? And if it was some degree of pre-buy activity, can you maybe talk to the risk of potential order cancellations late in the year if things maybe aren't as good as they seem, and people are, customers are trying to get in line ahead of EPA 2027 as backlogs start to build again?

New emission regulations governing January 27, we're going to have a pretty good last three quarters of the year right now and I'm not predicting doom and gloom after that that's a little far out for me to understand right now I'm just dealing with what I got in the present over the rest of this year and we'll talk about 'twenty seven as we get that with a little further through the year this year.

But I feel good that it is sustainable.

That will lead to maybe even a better year. The problem is you start off.

Remember the first quarter is going to be off so you're starting to hold to begin with she got climb back out and catch back up what you should do it for sure in the back half of the year deliver more trucks than we did last year for sure.

Rusty Rush: I feel very good about how solid what we took was. How about that? Without, you know, I mean, I see nobody out there trying to put placeholders, okay? The business we took, it would take a, you know, a recession or something for these folks not to take what they ordered, okay? That's how solid I feel about it, okay? It's not people putting placeholders. You know, you've seen ramp-ups before, where people put placeholders out there just so they can hold slots. That's not what's going on at the moment. I see none of that, to be honest with you. I see people being proactive, understanding what I just went through on the last question. They don't want to get caught in that demand, out-of-whack demand supply piece, right? You know what that means, right?

Right Rusty and just a follow up I mean, it clearly seems that you're highlighting the improvement over the road finally, driving your optimism for the rest of our 26, you've alluded to other parts of the economy getting better can.

Can you just talk about the off highway which has been such a money maker for you over the past year is sort of got to go through the drought.

But maybe you know if we could talk about.

You know sort of these corporate fleets.

We could talk about construction.

We can talk about waste.

Are you seeing in those markets because those tend to be economically sensitive as well, but as I said it seems to us that your message was very clear on finally, starting to see green shoots on over the road recovery.

Rusty Rush: We already know what that means. So, you know, they're trying to be proactive, not just to the emissions, but also to knowing this year is probably gonna back up and whether you can get that second- or third-tier supplier, yeah, you know, and that, that's what I'm—I hate to say it, but you know what happens when demand outpaces supply, where price goes, right? Let's get real. So I think, you know, people are catching up. They probably didn't purchase as much in the back half of last year, because they didn't. And, you know, I mean, I don't... Really, that's about, best way I can tell you is, it's solid, right? Yeah, I go back to remember what I kept telling you, their business is better. I think I've said that three or four times also, right? So it's not just the emissions.

Very well put Andrew.

Yes, we're seeing them at all on that side of the market yes.

We love it we love the diversity of our customer base you know that.

I would tell you the vocational pieces.

I don't see the pick up that I see across where I can see barely flat to where we have been right because we've been pretty solid and I got to be honest with you.

So as you said.

It helped us a lot over the last couple of years.

You know when there's over the road freight recession, we've been really solid around that area. So I think it's.

Let's say I don't want to get into specifics when might be a little softer in one segment and up a little or other segment, but when you look at vocational as a whole I'm going to say, we're going to be probably flat with where we have that I don't see any huge decrease or anything.

Rusty Rush: Remember, I long-winded this earlier. It's not just the emissions. Like you said, you're gonna go on top of their two questions, and I answered the same way. Their business is better, you've got our emissions coming. You feel better, like I said, you've been in the dumps so long. Maybe it's not a straight V, but it's a gradual climb up. You feel good about where you're at. You're trying to plan for your future. You know you're gonna be in business for a long time, and you need to do the right thing. And you just put that together, and I think that's what you're gonna see. And that's what you're seeing, and I don't believe that activity level is going to go away.

No.

We made because some of them we were still catch you got from Covid in the last couple of years when he couldn't get drugs three years ago. So we have fulfilled maybe some of that.

The pent up demand. So it has more like business as usual, but I don't see any big downtick is for back to business as usual some of the people we do business with we're playing catch up.

Rusty Rush: It may not, it may not be 35, 40 thousand every month, but we—some people that aren't participating are gonna wake up here in 60 days if we have a couple, three more months of more anything like this go, whoa! And that's what you asked about price. That's when we're gonna see how things move along then with that. So I would tell you that the folks that are on top of their game and feel well enough about what's going on are doing the right things to... for their business plan, and not waiting till the last minute to do that, knowing that there still is plenty of back—there's back, backlog out there to still to be built.

24 to 25 from not getting as much product in 'twenty, two 'twenty three to be honest with you.

So you know where they may be off a little of a start up because they're off itself because they played a little catch up.

We were able to capitalize on that so when I look at those businesses are doing well, but they've caught back up to their normal replacement cycles.

They got left out a little bit.

Some of those groups.

Back in 'twenty, two and 'twenty three.

You know we picked them back up in 'twenty four 'twenty five.

So just because someone may be.

Rusty Rush: You better not wait till July, would be my comment, or you might get caught, because ramping up production, I mean, these OEMs are having to make decisions right now in the next 30 to 60 days, what they're gonna do in the back half of the year. You got to remember, that's more labor, that's more this, and it's the second- and third-tier suppliers that have been down in the last half of last year, that if you ask them to ramp up, they're gonna go, "Well, how long for?" Right? And that's where you run into a problem, and that's what could happen. So, you know, if I'm, if I'm planning on being in business and around a long time, and I'm a smart player, then I'm out working it right now, okay? That's what I'm doing. Because, you know, that could be an issue.

Bob I don't know.

From me or somewhere nearby 750 800 deadweight.

And it just means they've caught back up right. So you know you got to report, but I think overall will be somewhat flat the vocational pieces.

Thank you Ross, it's been awhile since you've been constructive about our over the road good to hear thanks, So much that it's nice to feel even though it's you know it's a big piece and you know.

But it's all for us where Gainesville as big a you don't so thank goodness, it's nice to feel that you've got an opportunity.

To maybe you know and I hope it when I saw go over the road I'm, hoping our small customer base coming back.

Then a little bit.

I'm a little I'm on.

Optimistic there a man I don't want to get overly anything when I talk to you in April and I don't have a whole lot better feel for what's going on like the sustainability of what we're seeing.

Rusty Rush: It's not an issue now, but you better be looking out, and you better not be living just in the moment. You better be looking out a little ways, would be my comment to anybody. I'm not trying to play scare tactics. I'm just telling you, you know, that, that they run, you run into issues with that, right? Well, just, you know, I think, if I'm not mistaken, anyone, when the engine's built, is the 2027-

And I'm not I don't want to get over I keep trying but like you said, it's been a while since we're able to drop the optimistically about the over the road business and I just am looking forward I think you know I think things are.

It's got to be better right, so you'd add that with everything else, we got Scott here and do you want.

Cole Cousins: Mm-hmm.

Rusty Rush: Not model year and stuff, but engine.

We're just taking always remember people get excited because he always always orders taken at older saying it did not meet rushed just deliver them yet we are at the tail of the dog right. A lot of the answers you know we've got to do a lot of outfitting and things like this to trucks when we get them. So that's why when you hear me talk about worries at all because they took orders wrestling well that doesn't mean I'm.

Cole Cousins: Yeah.

Rusty Rush: What you got to remember, so when you get towards the end of this year, it's about the engine, right? You know, the engines all have to be built by the end of 2026 before you go into the 2027. So it, it could be interesting back half, let's just say that. How about that?

Cole Cousins: Well, that's a good color. I appreciate it, Rusty. Maybe if I could squeeze one last question in.

Gonna add water.

And deliver them 30 days later, it can take three or four months to get them out there and get them deliver because of what has to be done because we are we are you know over the last guy that touches the unused so you know.

Rusty Rush: Of course, you can. You know I hate to talk.

Cole Cousins: I heard you on the small accounts being down double digits for the past couple of years. It sounds like that hasn't really come back yet, but maybe there's some hope that it will through the year.

Even though they're manufactured doesn't mean, we don't have you know what.

City places around the country, where we make sure that.

Rusty Rush: Yeah.

Cole Cousins: But maybe can you talk to what you've seen from the national account level and maybe from a higher level, talk to some of the initiatives you guys are pursuing to grow national account mix going forward?

Got it.

All of those things that customers need.

One stop shop is what we'd like to be.

Thank you.

You bet.

Thank you and as a reminder to ask a question Thats Star One one star 111 moment for our next question.

Rusty Rush: Yeah. Well, you bet we are. We always... Well, you know, national accounts is easier, more effective, and more controllable. I can't. It's hard to control what we call the unassigned accounts. That's still 30% of our business, roughly, and that's the little folks, right? So we just want that to come back because that's gonna be a higher margin, right? When you do national account business, understand, they're national for a reason. They're not paying retail, okay? So, you know, while it can be a little hard on your margins, it's still more solid, you know, sustainable, repetitive business, should I say, right? So you're looking for that foundation, right? You know, you know, the cherry... The cream and the cherry on top comes when you get the smaller retail guy back in the game. The guy was not listening to me on the phone right now, okay?

Our next question comes from line of coal cousins from Wolfe Research. Your line is open.

Hey, guys. Thanks for taking my questions.

From a class eight pricing perspective can you talk to what you're seeing across the market at this point.

Our Oems raising prices, yet or does it remain pretty competitive as Oems look to protect or gained share and maybe how do you see this progressing through the year with U P. A 27 on the horizon.

[laughter] well.

How about you probably didn't do real well asking that question to the Oems.

Okay.

With me on the spot I would tell you right now we're still building backlogs.

Rusty Rush: Those folks, but they're still a part of what we do. You know, so but, I mean, we, our national account business was up, not as much as we had been up, but it was up. You know, some sides of the house, not so much. But, you know, on, on some areas, it was for last year. We will continue to focus on that. Yeah, and so, but we were up, not as much as we had. We were up by, like, overall blended, all OEMs were above 6%, okay? So we will continue to grow that, understanding that, you know, you're blending revenue, you're blending margin, you're doing all that. We love that piece. We're gonna continue to focus on that piece. It's the sustainable piece, more sustainable. It doesn't have the volatility of the small customer out there, right?

I would say you know I have where you know there, let's say, there's no big discounting going on compared to where we were.

Perfect.

No huge.

Raises now because that's one of the things as we get later in the year.

I wouldn't be surprised to see you know.

<unk> demand you know if demand exceeds supply you've been around long enough to know what that means I won't even try to tell you everybody.

What that means okay.

And so we're not there yet backlogs need to be you know backlogs needed to be built up they've been drained down pretty good man.

People were building trucks and four weeks for you. If you wanted it. So you know once backlogs get built up.

And you know, we'll just let the Oems decide will be the poor guy in the middle.

Rusty Rush: You know, so, but that's why I'm hoping, you know, the one... But you got to get those guys. The national accounts have to feel better, which they do. They'll buy all the time. They just may not buy quite as much sometimes. We were up six years before, we were up double digits in it, right? Again, like I said, you know, it's if you're growing the revenue, the margin's not as high as the other. We want the blended margins, but I think everybody understands that, right? And we're fine with that. We'll manage that piece. It's much more manageable than the unassigned accounts because they're not assigned, and you really don't, you know, but you don't know who they are, right? It's a small place.

Trying to you know.

[laughter] get deals done, but right now I would say right now we're in the most Oems are still in the process.

Getting their backlogs were healthy so.

No.

I'm not going to say, it's just total.

Throw it out there right now because it's not but I mean, it's not if it's balanced at the moment, but we continue as you start popping some 40000.

Now when you start button three two or three more 35 40000.

I wont share, which are not necessarily typical of these months coming up in March and April.

Rusty Rush: But, you know, hopefully later this year, as the big guys get healthy, the little guys usually follow, but then they get growth. Then what happens is they get too good, they get too big, and we go back in the cycle again a couple of years from now. But for right now, I would tell you, I'm hoping that, you know, some capacity still comes out, which is the small guy, but the ones left will be a healthier customer, okay? And we will see some pickup in that later this year, too. You know, as rates go up, it helps everybody, not just the big guy, it helps the little guy, too. And so I don't know.

February March and April you're probably gonna see demand.

C outpaced supply.

I'll, let you take it from there okay.

No no that makes a ton of sense.

Maybe just I know we've asked a lot of questions about this but to follow up on breeding Andrews questions, maybe to put a finer point on it how much of what you saw in December and January do you think was replacement capex versus growth Capex versus some degree of pre buy activity and if it was some degree of pre buy activity.

Rusty Rush: It's a long-winded answer there, but I hope some of that, I gave you some, some points there that you can grab hold of that makes some sense to you. So-

Can you maybe talk to the risk of potential order cancellations late in the year, if things maybe aren't as good as they seem and people are customers are trying to get in line ahead of you play 27 as backlogs start to build again.

Cole Cousins: Yep.

Rusty Rush: Okay.

Cole Cousins: Yep, that's helpful. Good to hear from you guys. I'll, I'll turn it back.

Rusty Rush: Thank you.

Operator: Thank you. I'm not showing any further questions in the queue. I would now like to turn it back over to Rusty for any closing remarks.

I feel very good about how solid what we took was how about that possible without you know I mean, I I see nobody out there and try to put placeholders, okay. The business we took.

Rusty Rush: Hey, we appreciate everybody's participation this morning, and short time before we talk again. We'll talk in February, only a couple of months away, so look forward to. Excuse me, I mean, not maybe it's February. I was looking down at my... April, my bad. Two months from February to April. We'll talk in April, so thank you.

Would it would take a huge recession or something for these folks got to take what they were okay. That's how solid I feel about it okay.

It's not people putting placeholders in you know you've seen wrap ups before it will be.

But placeholders out there I guess when they get old slots, that's not what's going on.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Hey at the moment I've seen none of that to be honest with you I see people being proactive.

Understanding what I just went through on the last question.

They don't want to get caught in that demand out of whack demand supply piece like you know what that means right. We already know what that means.

You know they are trying to be proactive.

Not just to the emissions, but also knowing this year is probably going to back up and what have you can get that second or third tier supplier yeah.

That's what I I hate to say it but you know what happens when demand outpaces supply where price goes right, let's get real. So I think you know people are catching up they probably didn't purchase as much in the back half of last year because they didn't.

And you know I mean, I don't really that's about it.

The best way I can tell you it is his solid right.

Yeah, I go back to remember when I get to all your their businesses better.

Three or four times also right. So it's not just the emissions memories are long winded. This earlier I addressed here, but it seems like you said you're going to go on top of their two questions. When I answered the same way.

Their business is better you got ambitions coming.

Feel better like I said, you've been in the dump so maybe it's not.

It's not a straight V, but its a gradual climb up you feel good about where you're at you're trying to plan for your future you know you're going to be in business for a long time and you need to do the right thing. He just to put that together and I think thats, what youre going to see.

What you're seeing and I don't believe that activity level is going to ship.

To go.

Go away it may not it may not be 35 to 40000 every month, but we have some people that are participating going to wake up here in 60 days, if we have a couple.

Couple of three more months of war rybnik like they're still low and that's what you asked about price that's what we're going to see how things move along them with that so I would tell you that the folks that are on top of their game shouldn't feel well enough about what's going on are doing the right things.

To further business plan not waiting till the last minute.

To do that knowing that there still is plenty of that.

Backlog out there still to be built.

Wait till July would be my comment are you might get caught.

Because ramping up production I think these.

Oh, we are having to make decisions right now and then.

Next 30 to 60 days, what theyre going to do in the back half of the year you got to remember that's more labor that's for this and it's the second and third tier suppliers.

That had been down in the lab.

Have them last year.

You asked them to ramp up I Gotta go what how long for right and that's where you run into a problem and that's what could have happened so far.

Yeah, Hey, Bob.

Our banking business and around a long time.

Spark player when I'm not working it right now okay. That's what I'm doing because you know that could be an issue as you know, but you better be looking out you better not be living in the moment looking out a little ways would be my comment to anybody and I'm not trying to scare tactics.

Telling you.

They run you run into issues with that right.

Well just thank you.

If I'm not mistaken isn't it when you're doing when the engine is built as the twenty-seven.

Martin Amaya and fun.

Jim when you got to remember so when you get towards the end of this year, it's about the India right.

And you all have been built out in the 26 before you go on a 27.

Could be interesting back half, let's just say that.

[laughter] Oh that makes that's it that's good color I appreciate it Rusty and maybe if I could squeeze one last question of course, you can you know I can talk.

I heard you on the small accounts being down double digits for the past couple of years. It sounds like that hasn't really come back yet, but maybe theres. Some hope that it will come through the year, but maybe can you talk to what you've seen from the national account level and maybe from a higher level talk through some of the initiatives you guys are pursuing to grow national.

Mix going forward.

Yeah, you bet. We are we always when we go national accounts, you get easier and more effective and more controllable I can't it's hard to control what we call. The unassigned accounts, that's still 30% of our business thoughtfully and that's in a little book right. So.

We just want to have to come back because that's gonna be a higher margin right. When you do national gas business I understand.

Theyre Nashville for a reason.

They're not paying retail okay. So.

You know while it can be a little more on your margins are still more solid.

Sustainable repetitive business should I say right. So youre looking for that foundation right.

You know the chair of the agreement a cherry on top comes when you get to smaller retail got back in the game, regardless not listened to me on the phone right now okay.

Folks.

There are still a part of what we do.

You know, so but I mean.

We are REIT, our national account business was up not as much as we had been.

But it was up some sides of the house in Knoxville, much but you know on.

In some areas. It was for last year, and we will continue to focus on that.

Yeah, and so but we were up not as much as we had we were up buying like overall blended.

The Oems were up 6%, okay. So we will continue to grow that.

Understanding that you know.

You're blending revenue you're blending margin youre doing all of that we'd love that piece, we're going to get you to focus on that beach is the sustainable peace more sustainable it doesn't have the volatility of the small customer out there right now.

So, but that's why I'm open at all but you Gotta get those got the national accounts have to feel better which they have to they'll buy all the time, but I guess, maybe not by quite as much. Sometimes we were up six years before we were up double digit it right again like I said.

You know, it's going to grow on the revenue margin is not as high as the other way the blended margins, but I think everybody understands that right. So and we're fine with it we'll manage that piece, which is much more manageable Sydney unassigned accounts, because they're not a sign that you really don't you know, but you don't know who they are Reits and small bars, but you know.

Hopefully later this year as the big guys get healthy the little guys usually follow but then they get growth then what happens is they get to good they get too big and we go back and recycle again, a couple of years right now.

Good day.

I'm, hoping that you know some capacity still comes out which is the small guy, but the ones left will be a healthier customer.

And we will see some pickup in that later this year too.

If rates go up it helps everybody not just the big Guy that helps a little guy too.

So.

So long winded answer there, but some of that I gave you some points there the junior a grab hold of that makes some sense.

So yep Yep. That's helpful. Good to hear from you guys I'll I'll turn it back.

Thank you.

Thank you I'm not showing any further questions in the queue I would now like turn it back over to Rusty for any closing remarks.

Hey, we appreciate everybody's participation.

Participating this morning.

And short term when we talk again, we will talk in February when we a couple of months away. So they look for good excuse me I said, what I was looking back at my April My bad too much from February to April will talk in April so thank.

Thank you.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect everyone have a great day.

Ooh.