Q1 2026 Rush Enterprises Inc Earnings Call

April 29, 2026

Operator: Good day. Thank you for standing by. Welcome to Rush Enterprises Reports First Quarter 2026 Earnings Conference Call. I would now like to turn the conference over to your speaker for today, Rusty Rush, Chairman, CEO, and President. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one-one on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to turn the conference over to your speaker for today, Rusty Rush, Chairman and CEO and President. Please go ahead.

Speaker #2: Well, good morning and welcome to our first quarter 2026 earnings release call. With me on the call this morning are Steve Keller, Chief Financial Officer; Jody Powler, Chief Operating Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President and General Counsel and Corporate Secretary.

W.M. Rush: Well, good morning, welcome to our Q1 2026 Earnings Release Call. With me on the call this morning are Steven L. Keller, Chief Financial Officer; Jody Pollard, our Chief Operating Officer; Jay Hazelwood, Vice President and Controller; and Michael L. Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before I get started, Steve will say a few words regarding forward-looking statements.

Rusty Rush: Well, good morning, welcome to our Q1 2026 Earnings Release Call. With me on the call this morning are Steve Keller, Chief Financial Officer; Jody Pollard, our Chief Operating Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before I get started, Steve will say a few words regarding forward-looking statements.

Speaker #2: Before I get started, Steve will say a few words regarding forward-looking statements.

Speaker #3: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements.

Steven L. Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risk and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended 31 December 2025 and in our other filings with the Securities and Exchange Commission.

Steve Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risk and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended 31 December 2025 and in our other filings with the Securities and Exchange Commission.

Speaker #3: Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include but are not limited to those discussed in our annual report on Form 10-K for the year ended December 31, 2025, and in our other filings with the Securities and Exchange Commission.

Speaker #2: Thank you, Steve. And thanks, everyone, for joining us today. As we reported yesterday, we generated revenues of $1.68 billion in the first quarter, with net income of $61.5 million, or $77 cents per diluted share.

W.M. Rush: Thank you, Steve, and thanks everyone for joining us today. As we reported yesterday, we generated revenues of $1.68 billion in Q1, with net income of $61.5 million or $0.77 per diluted share. We also declared a quarterly cash dividend of $0.19 per share, which reflects our continued focus on returning value to shareholders. Now, stepping back for a minute, Q1 was still a tough environment for the commercial vehicle market. Industry-wide retail sales for new trucks remained at historically low levels, and we're still working through the effects of the freight recession, excess capacity, and general economic uncertainty. That said, we do believe this quarter represents the trough of the cycle. More importantly, we're starting to see some early signs that things are moving in the right direction.

Rusty Rush: Thank you, Steve, and thanks everyone for joining us today. As we reported yesterday, we generated revenues of $1.68 billion in Q1, with net income of $61.5 million or $0.77 per diluted share. We also declared a quarterly cash dividend of $0.19 per share, which reflects our continued focus on returning value to shareholders. Now, stepping back for a minute, Q1 was still a tough environment for the commercial vehicle market. Industry-wide retail sales for new trucks remained at historically low levels, and we're still working through the effects of the freight recession, excess capacity, and general economic uncertainty. That said, we do believe this quarter represents the trough of the cycle. More importantly, we're starting to see some early signs that things are moving in the right direction.

Speaker #2: We also declared a quarterly cash dividend of $0.19 per share, which reflects our continued focus on returning value to shareholders. Now, stepping back for a minute, the first quarter was still a tough environment for the commercial vehicle market.

Speaker #2: Industry-wide, retail sales for new trucks remained at historically low levels, and we're still working through the effects of the freight recession, excess capacity, and general economic uncertainty.

Speaker #2: That said, we do believe this quarter represents the trough of the cycle. And more importantly, we're starting to see some early signs that things are moving in the right direction.

Speaker #2: Freight rates improved a bit, miles driven began to pick up, and customer sentiment started to feel a little more optimistic. As a result, we saw increased quoting activity and order intake as the quarter progressed.

W.M. Rush: Freight rates improved a bit, miles driven began to pick up, and customer sentiment started to feel a little more optimistic. As a result, we saw increased quoting activity and order intake as the quarter progressed, especially from our large fleet customers. That hasn't translated into sustained strength in truck sales yet, but it's a good leading indicator and gives us confidence that demand is starting to come back. One thing that stood out again this quarter is the strength of our business model. Even with soft truck sales, our aftermarket, leasing, and rental businesses, along with disciplined expense management, helped us stay very profitable and perform well overall. We also stayed focused on growing the business. During the quarter, we signed an agreement to acquire Peterbilt dealerships in Southern Louisiana and Mississippi.

Rusty Rush: Freight rates improved a bit, miles driven began to pick up, and customer sentiment started to feel a little more optimistic. As a result, we saw increased quoting activity and order intake as the quarter progressed, especially from our large fleet customers. That hasn't translated into sustained strength in truck sales yet, but it's a good leading indicator and gives us confidence that demand is starting to come back. One thing that stood out again this quarter is the strength of our business model. Even with soft truck sales, our aftermarket, leasing, and rental businesses, along with disciplined expense management, helped us stay very profitable and perform well overall. We also stayed focused on growing the business. During the quarter, we signed an agreement to acquire Peterbilt dealerships in Southern Louisiana and Mississippi.

Speaker #2: Especially from our large fleet customers. That hasn't translated into sustained strength in truck sales yet, but it's a good leading indicator and gives us confidence that demand is starting to come back.

Speaker #2: One thing that stood out again this quarter is the strength of our business model. Even with soft truck sales, our aftermarket, leasing, and rental businesses along with disciplined expense management helped us stay very profitable and perform well overall.

Speaker #2: We also stayed focused on growing the business. During the quarter, we signed an agreement to acquire Peterborough Dealerships in Southern Louisiana and Mississippi. We expect to close that deal and begin operating those locations as RUSH truck centers in June.

W.M. Rush: We expect to close that deal and begin operating those locations as Rush Truck Centers in June. Even in a down cycle, we continue to invest in the business, expanding into new markets and positioning ourselves for long-term growth. Our aftermarket business continues to be a key strength for us. It made up roughly 66% of our gross profit in the quarter and generated $627 million in revenue, up slightly year over year. Demand was still soft in certain segments, excuse me, especially for some of our over-the-road customers. Overall, we were able to deliver growth, which speaks to the strength of our relationships and our execution. We also starting to see some positive indicators here, more freight activities and more miles being driven, which should translate into stronger parts and service demand as customers begin catching up on deferred maintenance.

Rusty Rush: We expect to close that deal and begin operating those locations as Rush Truck Centers in June. Even in a down cycle, we continue to invest in the business, expanding into new markets and positioning ourselves for long-term growth. Our aftermarket business continues to be a key strength for us. It made up roughly 66% of our gross profit in the quarter and generated $627 million in revenue, up slightly year over year. Demand was still soft in certain segments, excuse me, especially for some of our over-the-road customers. Overall, we were able to deliver growth, which speaks to the strength of our relationships and our execution. We also starting to see some positive indicators here, more freight activities and more miles being driven, which should translate into stronger parts and service demand as customers begin catching up on deferred maintenance.

Speaker #2: So even at a down cycle, we continue to invest in the business. Expanding into new markets and pushing positioning ourselves for long-term growth. Our aftermarket business continues to be a key strength for us.

Speaker #2: It made up roughly 66% of our gross profit in the quarter, and generated $627 million in revenue, up slightly year over year. Demand was still soft in Southern segments, excuse me, especially with some of our over-the-road customers.

Speaker #2: But overall, we were able to deliver growth, which speaks to the strength of our relationships and our execution. We also started seeing to starting to see some positive indicators here, more freight activities, and more miles being driven.

Speaker #2: Which should translate into stronger parts and service demand as customers begin catching up on deferred maintenance. Our aftermarket strategic initiatives are also making a difference.

W.M. Rush: Our aftermarket strategic initiatives are also making a difference. Our inspection processes and parts delivery optimization have gained traction across our network and are delivering incremental revenue, increasing uptime for our customers, and delivering a better experience overall. Looking ahead, it's what we expect the aftermarket to gradually improve as we move through the year and continue to be a key driver for our performance. Turning to truck sales. The market was still very tough in Q1, with Class A industry sales at their lowest level since COVID. Even in that environment, we performed well. We sold 2,964 Class A trucks in the US and captured a 7.2% market share. That really comes down to execution, having the right inventory, and the diversity of our customer base.

Rusty Rush: Our aftermarket strategic initiatives are also making a difference. Our inspection processes and parts delivery optimization have gained traction across our network and are delivering incremental revenue, increasing uptime for our customers, and delivering a better experience overall. Looking ahead, it's what we expect the aftermarket to gradually improve as we move through the year and continue to be a key driver for our performance. Turning to truck sales. The market was still very tough in Q1, with Class A industry sales at their lowest level since COVID. Even in that environment, we performed well. We sold 2,964 Class A trucks in the US and captured a 7.2% market share. That really comes down to execution, having the right inventory, and the diversity of our customer base.

Speaker #2: Our inspection processes and parts delivery optimization have gained traction across our network, and are delivering incremental revenue increasing uptime for our customers and delivering a better experience overall.

Speaker #2: Looking ahead, we expect the aftermarket to gradually improve as we move through the year and continue to be a key driver for our performance.

Speaker #2: Turning to truck sales, the market was still very tough in the first quarter, with Class 8 industry sales at their lowest level since COVID.

Speaker #2: But even in that environment, we performed well. We sold 2,964 Class 8 trucks in the US and captured a $7.2% market share. That really comes down to execution, having the right inventory, and the diversity of our customer base.

Speaker #2: As I mentioned earlier, we saw solid order activity and increased engagement from customers during the quarter. We think that's being driven by improving freight conditions and customers beginning to plan for 2027 engine submissions, emissions regulations.

W.M. Rush: As I mentioned earlier, we saw solid order activity and increased engagement from customers during the quarter. We think that is being driven by improving freight conditions and customers beginning to plan for 2027 engines emissions regulations. Class 4 through 7 truck sales saw the worst demand since 2015. Our results were more about timing than demand. Some large fleet customers pushed deliveries into later in the year. We expect that to benefit us in the coming quarter. Used truck demand improved as we moved through the quarter. We are seeing better conditions tied to improving spot rates and tighter capacity. Overall, while Q1 was slow, we expect sales to improve gradually in Q2 and then pick up more in H2 of the year.

Rusty Rush: As I mentioned earlier, we saw solid order activity and increased engagement from customers during the quarter. We think that is being driven by improving freight conditions and customers beginning to plan for 2027 engines emissions regulations. Class 4 through 7 truck sales saw the worst demand since 2015. Our results were more about timing than demand. Some large fleet customers pushed deliveries into later in the year. We expect that to benefit us in the coming quarter. Used truck demand improved as we moved through the quarter. We are seeing better conditions tied to improving spot rates and tighter capacity. Overall, while Q1 was slow, we expect sales to improve gradually in Q2 and then pick up more in H2 of the year.

Speaker #2: Class 4 through 7 truck sales saw the worst demand since 2015, but our results were more about timing than demand. Some large fleet customers pushed deliveries into later in the year, so we expect that to benefit us in the coming quarter.

Speaker #2: Use truck demand improved as we move through the quarter, and we're seeing better conditions tied to improving spot rates and tighter capacity. So overall, while the first quarter was slow, we expect sales to improve gradually in the second quarter and then pick up in the second, pick up more in the second half of the year.

W.M. Rush: Rental and leasing continue to be strong and a growing part of our business. Revenue was $92 million in Q1, up a little over 2% year-over-year. Leasing demand remains strong as customers look to replace aging equipment and get ahead of cost increases tied to the upcoming emissions regulations. Rental is below where we'd like it to be, driven by current market conditions, but it did improve as Q1 progressed, and we expect utilization to continue trending up through the year. Overall, Rush Truck Leasing continues to generate consistent reoccurring revenue and remains an important contributor to our performance. To wrap it up, Q1 reflected the ongoing pressure from the freight recession and weak truck demand, but we delivered solid earnings and profitability. That speaks to the strength and balance of our business.

Rusty Rush: Rental and leasing continue to be strong and a growing part of our business. Revenue was $92 million in Q1, up a little over 2% year-over-year. Leasing demand remains strong as customers look to replace aging equipment and get ahead of cost increases tied to the upcoming emissions regulations. Rental is below where we'd like it to be, driven by current market conditions, but it did improve as Q1 progressed, and we expect utilization to continue trending up through the year. Overall, Rush Truck Leasing continues to generate consistent reoccurring revenue and remains an important contributor to our performance. To wrap it up, Q1 reflected the ongoing pressure from the freight recession and weak truck demand, but we delivered solid earnings and profitability. That speaks to the strength and balance of our business.

Speaker #2: Renewal leasing continued to be strong and a growing part of our business. Revenue was $92 million in the quarter, up a little over 2% year over year.

Speaker #2: Leasing demand remained strong. As customers look to replace aging equipment and get ahead of cost increases tied to the upcoming emissions regulations. Rental is below where we'd like it to be, driven by current market conditions.

Speaker #2: But it did improve as the quarter progressed, and we expect the utilization to continue trending up through the year. Overall, RUSH Truck Leasing continues to generate consistent, recurring revenue and remains an important contributor to our performance.

Speaker #2: So to wrap it up, the first quarter reflected the ongoing pressure from the freight recession and weak truck demand, but we delivered solid earnings and profitability.

Speaker #2: That speaks to the strength and balance of our business. We believe we're at the bottom of the cycle, and we're encouraged by early signs we are seeing.

W.M. Rush: We believe we're at the bottom of the cycle, and we're encouraged by early signs we are seeing, whether that's freight, customer activity, or order trends. As conditions continue to improve, we believe we're well-positioned to capture that demand and grow the business. Before I close, I want to thank our employees across the company. Their focus, discipline, and commitment to our customers continue to drive our performance, especially in a very challenging environment like this. With that, I'll take your questions.

Rusty Rush: We believe we're at the bottom of the cycle, and we're encouraged by early signs we are seeing, whether that's freight, customer activity, or order trends. As conditions continue to improve, we believe we're well-positioned to capture that demand and grow the business. Before I close, I want to thank our employees across the company. Their focus, discipline, and commitment to our customers continue to drive our performance, especially in a very challenging environment like this. With that, I'll take your questions.

Speaker #2: Whether that's freight, customer activity, or order trends. As conditions continue to improve, we believe we're well positioned to capture that demand and grow the business.

Speaker #2: Before I close, I want to thank our employees across the company. Their focus, discipline, and commitment to our customers continue to drive our performance.

Speaker #2: Especially in a very challenging environment like this. With that, I'll take your questions.

Speaker #1: Thank you as a reminder. If you'd like to ask a question, please press star on one on your telephone. You'll hear that automated message advising your hand is raised.

Operator: Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone. You'll hear the automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question for the day will be coming from the line of Avinatan Jaroslawicz of UBS.

Speaker #1: We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster.

Speaker #1: Our first question for the day will be coming from the line of Avi, Audrey Lostress of UBS. Your line is open.

Avinatan Jaroslawicz: Hey, good morning, guys.

Speaker #4: Hey, good morning, guys. So glad to see that the year is still on track for improvements sequentially. But just thinking about the second half year, it sounds like there's still a decent amount of uncertainty around the pre-buy for this year on just a number of fronts.

W.M. Rush: Good morning.

Rusty Rush: Good morning.

Avinatan Jaroslawicz: glad to see that the year is still on track for improvement sequentially. you know, just thinking about the H2, it sounds like there's still a decent amount of uncertainty around the pre-buy for this year on just a number of fronts. You know, whether the OEMs are gonna have new re-engines ready and how the rules are gonna be enforced.

Speaker #4: Whether the OEMs are going to have new engines ready, and how the rules are going to be enforced, and the dynamic demand dynamics around that.

W.M. Rush: Yeah

Avinatan Jaroslawicz: ... demand dynamics around that. Can you just give us a rundown on how those different moving parts are shaping your expectations?

Rusty Rush: Yeah.

Avinatan Jaroslawicz: Demand dynamics around that. Can you just give us a rundown on how those different moving parts are shaping your expectations?

Speaker #4: Can you just give us a rundown on how those different moving parts are shaping your expectations?

Speaker #3: Well, that's a good statement there, Avi. It's kind of crazy, isn't it? We're April 30th tomorrow. We got eight months left in the year, and we still don't have definitive regulations printed.

W.M. Rush: Well, that's a good statement there, Avi. It's kinda crazy, isn't it? We're, what are we? We're April 30th tomorrow, we got 8 months left in the year, we still don't have definitive regulations printed, okay? Now, when I'm talking about emissions regulations, they have sent out signals and told people, the EPA has, of what they're going to do, right? They're gonna keep, well, supposedly, 8.35, they have not clarified about credits, et cetera, if there's gonna be NCPs, things like that. We're probably still 60 days away from it. Regardless of that, we do know that there are gonna be new emissions regulations, you know?

Rusty Rush: Well, that's a good statement there, Avi. It's kinda crazy, isn't it? We're, what are we? We're April 30th tomorrow, we got eight months left in the year, we still don't have definitive regulations printed, okay? Now, when I'm talking about emissions regulations, they have sent out signals and told people, the EPA has, of what they're going to do, right? They're gonna keep, well, supposedly, 8.35, they have not clarified about credits, et cetera, if there's gonna be NCPs, things like that. We're probably still 60 days away from it. Regardless of that, we do know that there are gonna be new emissions regulations, you know?

Speaker #3: Okay? Now, when I'm talking about emissions regulations, they have sent out signals and told people to EPA has of what they're going to do, right?

Speaker #3: They're going to keep supposedly at 0.35, but they have not clarified about credits etc. If there's going to be NCPs, things like that. We're probably still 60 days away from it.

Speaker #3: But regardless of that, we do know that there are going to be new emissions regulations. So I think that's spurred customers to go ahead.

W.M. Rush: I think that's spurred customers to go ahead, you know, order activity, as you can see, starting in December, has been up dramatically from where it was the prior 7 or 8 months from an order intake. You know, even with that uncertainty, you know, there is certainty of something going down. Exactly what it is, we're not exactly sure, because it hasn't been posted by the EPA yet. You know, we'll still have to follow that and see. We hope to know within the next 45 to 60 days. If I'd told you that 45 days ago and held my breath, I wouldn't be in very good shape, 'cause I'd have told you I'd known by now. It keeps the can gets kicked down the road a little bit.

Rusty Rush: I think that's spurred customers to go ahead, you know, order activity, as you can see, starting in December, has been up dramatically from where it was the prior 7 or 8 months from an order intake. You know, even with that uncertainty, you know, there is certainty of something going down. Exactly what it is, we're not exactly sure, because it hasn't been posted by the EPA yet. You know, we'll still have to follow that and see. We hope to know within the next 45 to 60 days. If I'd told you that 45 days ago and held my breath, I wouldn't be in very good shape, 'cause I'd have told you I'd known by now. It keeps the can gets kicked down the road a little bit.

Speaker #3: Order activities, you been up dramatically from where it was the prior seven or eight months. From order intake. So even with that uncertainty, there is certainty of something going down exactly what it is, we're not exactly sure.

Speaker #3: Because it hasn't been posted by the EPA yet. So we'll still have to follow that and see. We hope to know within the next 45 to 60 days.

Speaker #3: But if I've been if I've told you that 45 days ago and held my breath, I wouldn't be in very good shape because I told you I'd known by now.

Speaker #3: So it keeps getting the candy is getting kicked down the road a little bit. So I think the most important thing is that customers' business is people are more optimistic.

W.M. Rush: I think the most important thing is that, you know, customers' business is, people are more optimistic. Finally, because of the contraction on the supply side, right, of taking, you know, trucks out, whether it was through non-domicile, whether it was building less trucks in H2 of last year, building less trucks in Q1 of this year. We slowed the intake down, we, you know, the supply side squeezed down. Customers are more optimistic about rates. You know, coming in, if you'd asked me three or four months ago, everybody said, I know this isn't one of your questions, but you know me, I'm gonna ramble on, that, you know, we're gonna be flat to low singles, then it was mid-singles, and now people are looking at maybe high single digit increases. People are optimistic.

Rusty Rush: I think the most important thing is that, you know, customers' business is, people are more optimistic. Finally, because of the contraction on the supply side, right, of taking, you know, trucks out, whether it was through non-domicile, whether it was building less trucks in H2 of last year, building less trucks in Q1 of this year. We slowed the intake down, we, you know, the supply side squeezed down. Customers are more optimistic about rates. You know, coming in, if you'd asked me three or four months ago, everybody said, I know this isn't one of your questions, but you know me, I'm gonna ramble on, that, you know, we're gonna be flat to low singles, then it was mid-singles, and now people are looking at maybe high single digit increases. People are optimistic.

Speaker #3: Finally, because of the contraction on the supply side, right? Of taking trucks out, whether it was through non-domicile, whether it was building fewer trucks in the back half of last year, building fewer trucks in the first quarter of this year.

Speaker #3: We slowed the intake down. So the supply side squeezed down. Customers are more optimistic about rates coming in. If you'd asked me three or four months ago, everybody said I know this is one of your questions, but you know me, I'm going to ramble on.

Speaker #3: That we're going to be flat to low singles. And it was mid-singles. And now people are looking at maybe a high single-digit increases. So people are optimistic.

Speaker #3: At the same time, to your point about emissions, not knowing clearly what it's going to be, what the state is, but we do know it's going to be worse.

W.M. Rush: At the same time, to your point about emissions, not knowing clearly what it's gonna be, what the state is, but we do know it's going to be worse, whether there would be NCPs and the cost would go up dramatically, or the total enforcement of what's out there for EPA 2027. That's about the best thing I can tell you, is there's still uncertainty, but you know something's coming down the tracks, right? You just don't know exactly what.

Rusty Rush: At the same time, to your point about emissions, not knowing clearly what it's gonna be, what the state is, but we do know it's going to be worse, whether there would be NCPs and the cost would go up dramatically, or the total enforcement of what's out there for EPA 2027. That's about the best thing I can tell you, is there's still uncertainty, but you know something's coming down the tracks, right? You just don't know exactly what.

Speaker #3: Whether there would be NCPs and the costs would go up dramatically, or the total enforcement of what's out there for EPA January 27th. So that's about the best thing I can tell you—is there's still uncertainty, but you know something's coming down the tracks, right?

Speaker #3: You just don't know exactly what.

Speaker #4: Got it. Appreciate that, Rusty. And just to follow on a point there, so thinking about the improving conditions within the freight market, as you just noted, really more driven by supply reductions, capacity reductions, that doesn't necessarily help the parts and service side as much as improving freight activity.

Avinatan Jaroslawicz: Got it. Appreciate that, Rusty. Just to follow on a point there, thinking about the improving conditions within the freight market, as you just noted, really more driven by supply reductions, capacity reductions, that doesn't necessarily help the parts and service side as much as improving freight activity. What are you seeing there, and when do you think we might see parts and service volumes inflect positively?

Speaker #4: So what are you seeing there, and when do you think we might see parts and service volumes inflect positively?

Speaker #3: Yeah. It's funny. People theoretically, people believe that when truck sales go down, okay, that you're going to get more parts and service. Well, that's not really actually the case.

W.M. Rush: Yeah. You know, it's funny. You know, people, theoretically, you know, people believe that when truck sales go down, okay, that you're going to get more parts and service. Well, that's not really actually the case, because people are cutting back their budgets and things, and that's what we've seen, right? That's why we've been fairly flat over the last couple, three quarters, right? Even in spite of inflation, we've remained flat. That's because people have tightened their belts. The best thing I can see is for their business to get better, right? Historically, when, you know, customers feel better about looking forward and are more optimistic, there will be no postponing of any maintenance or any repairs. It's just like anything, you know?

Rusty Rush: Yeah. You know, it's funny. You know, people, theoretically, you know, people believe that when truck sales go down, okay, that you're going to get more parts and service. Well, that's not really actually the case, because people are cutting back their budgets and things, and that's what we've seen, right? That's why we've been fairly flat over the last couple, three quarters, right? Even in spite of inflation, we've remained flat. That's because people have tightened their belts. The best thing I can see is for their business to get better, right? Historically, when, you know, customers feel better about looking forward and are more optimistic, there will be no postponing of any maintenance or any repairs. It's just like anything, you know?

Speaker #3: Because people are cutting back their budgets and things. And that's what we've seen, right? That's why we've been fairly flat over the last couple of three quarters, right?

Speaker #3: Even in spite of inflation, we've remained flat. And that's because people have tightened their belts. The best thing I can see is for their business to get better, right?

Speaker #3: Historically, when customers feel better about looking forward in a more optimistic, there will be no postponing of any maintenance or any repairs. Because it's just like anything.

W.M. Rush: When your income level goes down, you learn how to take your outcome, what you spend down too. It's no different than you as a person, you know, managing your household. That's what customers have done. The most encouraging thing for me is going to be when seeing, hopefully seeing, Q2 and Q3 releases, and listen, and hearing about contract rates going up, that optimism that we see out there, you know, comes to fruition, is the best way I can describe it. We expect to. I would tell you this: we've been going slightly, I'm not happy with it, we have gradually gone, January, February was better than January, March was better than February, April looks like it's gonna be a little bit better than March.

Speaker #3: When your income level goes down, you learn how to take your outgo on what you spend down too. It's no different than you as a person.

Rusty Rush: When your income level goes down, you learn how to take your outcome, what you spend down too. It's no different than you as a person, you know, managing your household. That's what customers have done. The most encouraging thing for me is going to be when seeing, hopefully seeing, Q2 and Q3 releases, and listen, and hearing about contract rates going up, that optimism that we see out there, you know, comes to fruition, is the best way I can describe it. We expect to. I would tell you this: we've been going slightly, I'm not happy with it, we have gradually gone, January, February was better than January, March was better than February, April looks like it's gonna be a little bit better than March.

Speaker #3: Managing your household. So that's what customers have done. The most encouraging thing for me is going to be when seeing, hopefully seeing, a second and third quarter releases and listening and hearing about contract rates going up, so that optimism that we see out there comes to fruition.

Speaker #3: Is the best way I can describe it. We expect to—I would tell you this—we've been going slightly. Now, I'm not happy with it, but we have gradually gone down.

Speaker #3: Well, February was better than January. March was better. Then February. In April, it looks like it's going to be a little bit better. Then March.

Speaker #3: So I think it's conditions improve. Not just truck sales, but obviously parts and service too. We'll improve with that. And that's just a matter because tonnage has gone up.

W.M. Rush: I think as conditions improve, not just truck sales, but obviously parts and service too, will improve with that. That's, it's just a matter, because, you know, tonnage has gone up. Tonnage was up for the first time, I think, in, what, 2 or 3 years, in February, if I'm not mistaken. I'm not sure where it was in March. You know, it is getting a little bit better, not just from the supply side, but I think on the other side of the house. We've got a lot of outliers out there. I don't have to tell you what's going on overseas, fuel, and all this other stuff. The general macro, I think, environment for continued improvement at the customer level is, it's there without any interruptions from outside geopolitics or something like that.

Rusty Rush: I think as conditions improve, not just truck sales, but obviously parts and service too, will improve with that. That's, it's just a matter, because, you know, tonnage has gone up. Tonnage was up for the first time, I think, in, what, 2 or 3 years, in February, if I'm not mistaken. I'm not sure where it was in March. You know, it is getting a little bit better, not just from the supply side, but I think on the other side of the house. We've got a lot of outliers out there. I don't have to tell you what's going on overseas, fuel, and all this other stuff. The general macro, I think, environment for continued improvement at the customer level is, it's there without any interruptions from outside geopolitics or something like that.

Speaker #3: Tonnage was up for the first time, I think, in two or three years. In February, if I'm not mistaken. I'm not sure where it was in March.

Speaker #3: But it is getting a little bit better. Not just from the supply side, but I think on the other side of the house. Now, people are going to, we've got a lot of outliers out there.

Speaker #3: I don't have to tell you what's going on overseas and fuel and all this other stuff. But the general macro, I think, environment for continued improvement at the customer level is it's there.

Speaker #3: Without any interruptions from outside geopolitics or something like that. But so I mean, I just do believe that things are going to be better.

W.M. Rush: I mean, I just do believe that things are going to be better. I don't want people to get. I believe we're gonna be up in some areas. It's gonna build through the year. Because we're on it, and I believe it's not gonna go away at 2027. My personal belief is we're, I see a nice, a pretty good 4-month run anyway. I'm not gonna try to forecast outside of a year, but I feel pretty good about where it is, but it's just going to be a gradual. I just believe it's gonna continue to get better based upon conversations I have with many customers and, you know, people around the industry.

Rusty Rush: I mean, I just do believe that things are going to be better. I don't want people to get. I believe we're gonna be up in some areas. It's gonna build through the year. Because we're on it, and I believe it's not gonna go away at 2027. My personal belief is we're, I see a nice, a pretty good 4-month run anyway. I'm not gonna try to forecast outside of a year, but I feel pretty good about where it is, but it's just going to be a gradual. I just believe it's gonna continue to get better based upon conversations I have with many customers and, you know, people around the industry.

Speaker #3: I don't want people to get I believe we're going to be up in some areas. It's going to build through the year. And because we're on it, and I believe it's not going to go away in 27.

Speaker #3: My personal belief is I see a nice a pretty good four-month run anyway. I'm not going to try to forecast outside of a year, but I feel pretty good about where it is.

Speaker #3: But it's just going to be a gradual I just believe it's going to continue to get better based upon conversations I have with many customers and people around the industry.

Speaker #4: All right. Appreciate that perspective. Thank you, Rusty. I'm going to pass it on.

Avinatan Jaroslawicz: All right. Appreciate that perspective. Thank you, Rusty.

Avinatan Jaroslawicz: All right. Appreciate that perspective. Thank you, Rusty. I'm gonna pass it on.

W.M. Rush: You betcha.

Avinatan Jaroslawicz: I'm gonna pass it on.

Speaker #3: Thank you.

Speaker #1: Thank you. One moment for the next question. And our next question is going to be coming from the line of Bradley Lertz of Stevens.

Operator: Thank you. One moment for the next question. Our next question is gonna be coming from the line of Brady Lierz of Stephens. Your line is open.

Speaker #1: Your line is open.

Speaker #4: Great, thanks. Morning, Rusty. Thanks for taking our questions.

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

W.M. Rush: Sure. Always.

Rusty Rush: Sure. Always.

Speaker #3: Sure.

Speaker #4: You mentioned that you expect overall commercial vehicle sales to improve gradually. Could you just help us break that out between your heavy-duty and your medium light duty?

Brady Lierz: ... you mentioned that you expect overall commercial vehicle sales to improve gradually. Could you just help us break that out between, you know, your heavy duty and your medium light duty? Just because, you know, because of the weakness in the, in the medium duty in the Q1. Like, should we see a more immediate recovery in that versus Class 8? Just any clarity around kind of breaking out those two trends would be helpful.

Brady Lierz: You mentioned that you expect overall commercial vehicle sales to improve gradually. Could you just help us break that out between, you know, your heavy duty and your medium light duty? Just because, you know, because of the weakness in the, in the medium duty in the Q1. Like, should we see a more immediate recovery in that versus Class 8? Just any clarity around kind of breaking out those two trends would be helpful.

Speaker #4: Just because of the weakness in the medium duty in the first quarter, should we see a more immediate recovery in that versus Class 8?

Speaker #4: Just any clarity around kind of breaking out those two trends would be helpful.

Speaker #3: Yeah. Sequentially, yes. Because it was so often Q1, right? Sometimes you got a numerator and denominator, right? So from a percentage basis, yeah, you're going to see medium improve quicker because heavy-duty, obviously, wasn't off as bad as the market.

W.M. Rush: Yeah. Sequentially, yes, because it was so off in Q1, right?

Rusty Rush: Yeah. Sequentially, yes, because it was so off in Q1, right?

Brady Lierz: Right.

W.M. Rush: Sometimes you can get numerator, denominator, right? From a percentage basis, yeah, you're gonna see medium improve quicker because heavy duty obviously wasn't off as bad as the market. We were off, what, 6%. Market was 20% to 21%. We were off, way off in medium, and a lot of it was timing. Yeah, sequentially, medium will pick up quicker because we're starting at a lower base, right, if you wanna talk about sequential. If I was to look out for the year, I expect a better year on the Class 8 side up over the last year. Maybe medium will be closer. It'll catch back up to flat maybe for the year. That, you know, that bodes pretty well for the next few quarters because we started in such a hole on the medium duty side.

Rusty Rush: Sometimes you can get numerator, denominator, right? From a percentage basis, yeah, you're gonna see medium improve quicker because heavy duty obviously wasn't off as bad as the market. We were off, what, 6%. Market was 20% to 21%. We were off, way off in medium, and a lot of it was timing. Yeah, sequentially, medium will pick up quicker because we're starting at a lower base, right, if you wanna talk about sequential. If I was to look out for the year, I expect a better year on the Class 8 side up over the last year. Maybe medium will be closer. It'll catch back up to flat maybe for the year. That, you know, that bodes pretty well for the next few quarters because we started in such a hole on the medium duty side.

Speaker #3: We were off—what—6%? Market was 2021. And we were off—way off—in medium, and a lot of it was timing. Yeah. So, sequentially, medium will pick up quicker because we're starting at a lower base, right?

Speaker #3: If you want to talk about sequential, if I was to look out for the year, I expect a better year on the Class 8 side—up over last year—than I maybe... Medium will be closer, it'll catch back up to flat maybe for the year.

Speaker #3: So that bodes pretty well for the next few quarters. Because we started in such a hole on the medium duty side. But I expect heavy-duty to continue to ramp up, if you want me to throw a number out, say heavy-duty's up 15% in Q2.

W.M. Rush: I expect heavy duty to, you know, continue to ramp up. If you want me to throw a number out, say heavy duty is up 15% in Q2. If things hold together and we get, you know, get through all this emissions clarification and business continues to look better for our customer base, both across the board vocationally and, you know, over-the-road. Over-the-road was what we've talked about mainly. You know, even though we do a lot of vocational business, over-the-road is still the biggest market that's out there, right? You're talking two-thirds of the market. If that continues to get better for that customer base, you know, we will continue to increase quarter by quarter as the year goes, and I believe for sure roll into Q1.

Rusty Rush: I expect heavy duty to, you know, continue to ramp up. If you want me to throw a number out, say heavy duty is up 15% in Q2. If things hold together and we get, you know, get through all this emissions clarification and business continues to look better for our customer base, both across the board vocationally and, you know, over-the-road. Over-the-road was what we've talked about mainly. You know, even though we do a lot of vocational business, over-the-road is still the biggest market that's out there, right? You're talking two-thirds of the market. If that continues to get better for that customer base, you know, we will continue to increase quarter by quarter as the year goes, and I believe for sure roll into Q1.

Speaker #3: And if things hold together and we get through all this emissions clarification and business continues to look better for our customer base, both across the board, vocationally and over the road.

Speaker #3: Over the road was what we've talked about mainly. We do a lot of vocational business. Over the road is still the biggest market that's out there, right?

Speaker #3: You're talking two-thirds of the market. So if that continues to get better, for that customer base, we will continue to increase quarter by quarter as the year goes.

Speaker #3: And I believe for sure roll into Q1 because remember, from an emissions perspective, it's all about when the engine was built and usually I don't want to get in the weeds.

W.M. Rush: Remember, from an emissions perspective, you know, it's all about when the engine was built. I don't wanna get in the weeds. You know, usually those engines will be built maybe halfway through January of next year. Because we are the retailer, and it takes anywhere from 32 days to 5 months, depending on the type of product it is to get there, you know, that bodes well for us all the way through next year in Q1. If the economy is in good shape and the business is still aligned. Look, the number that's gonna come out this year probably is not gonna be anything more than a normal replacement. The deal is, it's gonna be backloaded, right? I mean, 41,000 units was all Class 8. It was COVID, Q2 of 2020, I think it was.

Rusty Rush: Remember, from an emissions perspective, you know, it's all about when the engine was built. I don't wanna get in the weeds. You know, usually those engines will be built maybe halfway through January of next year. Because we are the retailer, and it takes anywhere from 32 days to 5 months, depending on the type of product it is to get there, you know, that bodes well for us all the way through next year in Q1. If the economy is in good shape and the business is still aligned. Look, the number that's gonna come out this year probably is not gonna be anything more than a normal replacement. The deal is, it's gonna be backloaded, right? I mean, 41,000 units was all Class 8. It was COVID, Q2 of 2020, I think it was.

Speaker #3: Usually, those engines will be built maybe halfway through January of next year and because we are the retailer and it takes anywhere from 30 to days to five months depending on the type of product it is to get there.

Speaker #3: That bodes well for us all the way through next year in Q1. And I don't if the economy is in good shape, and the business is still aligned.

Speaker #3: Look, the number that's going to come out this year probably is not going to be anything more than a normal replacement. The deal is it's going to be backloaded, right?

Speaker #3: I mean, 41,000 units was all Class 8. It was COVID, second quarter of 2020. I think it was. Second and third quarter of 2020, that's the lowest in six years.

W.M. Rush: Q2 or Q3 of 2020. That's the lowest in 6 years. Medium was the lowest since 2015. It wasn't just us, even though we were a little worse on the medium side. When you think about it, with that emissions regulations and improving business conditions, economic conditions for our customer base, as long as the geopolitical things stay out of the way, I mean, it's set there to just ramp up slowly. It's not going to be an add water and stir thing just in Q2. You better believe Q2 better be better than Q1, but it's not going to improve dramatically, but it's going to build. I believe that's the case across our whole business model, right? I really do. I feel good. There's not one segment that I can sit here right now and tell you I feel bad about.

Rusty Rush: Q2 or Q3 of 2020. That's the lowest in 6 years. Medium was the lowest since 2015. It wasn't just us, even though we were a little worse on the medium side. When you think about it, with that emissions regulations and improving business conditions, economic conditions for our customer base, as long as the geopolitical things stay out of the way, I mean, it's set there to just ramp up slowly. It's not going to be an add water and stir thing just in Q2. You better believe Q2 better be better than Q1, but it's not going to improve dramatically, but it's going to build. I believe that's the case across our whole business model, right? I really do. I feel good. There's not one segment that I can sit here right now and tell you I feel bad about.

Speaker #3: In medium, it was the lowest since 2015. So it wasn't just us, even though we were a little worse on the medium side. So when you think about it, with that emissions regulations and improving business conditions, economic conditions for our customer base, as long as the geopolitical things stay out of the way.

Speaker #3: I mean, it's set there to just ramp up slowly. It's not going to be an 'add water and stir' thing just in Q2, but you better believe Q2 better be better than Q1.

Speaker #3: But it's not going to be dramatic, but it's going to build. And I believe that's the case across our whole business model, right? I really do.

Speaker #3: I feel good. There's not one segment that I can sit here right now and tell you I feel bad about. I feel good. I'm not going to sit here and feel great.

W.M. Rush: You know, I feel good. I'm not gonna sit here and feel great like that, but I feel good about the whole thing. I wanna watch it continue to evolve. We're still a working business, okay? We really are. We've had really, as I've said, we've had nice order intake, with the majority of it gonna start coming in in Q2. I said maybe up 15% on Class 8 and, I don't know, maybe a little more, maybe a little less, but somewhere in that range. It's, there's timing rules into all these things too. It should build from there through the rest of the year and through Q1 anyway, for sure. Typically, hopefully our parts and service will build. As I told you, it has been slowly building.

Rusty Rush: You know, I feel good. I'm not gonna sit here and feel great like that, but I feel good about the whole thing. I wanna watch it continue to evolve. We're still a working business, okay? We really are. We've had really, as I've said, we've had nice order intake, with the majority of it gonna start coming in in Q2. I said maybe up 15% on Class 8 and, I don't know, maybe a little more, maybe a little less, but somewhere in that range. It's, there's timing rules into all these things too. It should build from there through the rest of the year and through Q1 anyway, for sure. Typically, hopefully our parts and service will build. As I told you, it has been slowly building.

Speaker #3: Like that. But I feel good about the whole thing. I want to watch it continue to evolve. We're still working business, okay? We really are.

Speaker #3: We've had really nice, I've said, we've had nice order intake. With the majority of it, we're going to start coming in in Q2. I said maybe a 15% on Class 8.

Speaker #3: And maybe a little more, maybe a little less, but somewhere in that range. It's timing that rolls into all these things too. But it should build from there, through the rest of the year and through the Q1 anyway, for sure.

Speaker #3: And typically, hopefully, our parts and service will build, as I told you, it has been slowly building. I'm looking forward to seeing it ramp up a little faster, but I don't always have my finger on that trigger.

W.M. Rush: I'm looking forward to seeing it ramp up a little faster, but, you know, I don't always have my finger on that trigger.

Rusty Rush: I'm looking forward to seeing it ramp up a little faster, but, you know, I don't always have my finger on that trigger.

Brady Lierz: Makes sense. Thank you for all that color. Maybe I just for my second question, just wanted to follow up on an earlier one and maybe ask about it from a different angle. You know, just the reduction in capacity in the freight market driving the improvement, how do you think, if at all, that affects new truck sales this cycle? You know, is that a headwind or does the emission regulation offset that? Just any thoughts around this kind of competing dynamics would be helpful.

Speaker #4: That makes sense. Thank you for all that color. Maybe I just, for my second question, just wanted to follow up on an earlier one and maybe ask about it from a different angle.

Speaker #4: Just the reduction in capacity in the freight market driving the improvement. How do you think, if at all, that affects new truck sales this cycle?

Speaker #4: Is that a headwind, or does the emission regulation offset that? Just any thoughts around this kind of competing dynamics would be helpful.

Speaker #3: Okay. Well, the first thing was supply, right? You really want the you really want the environment to be better from a demand perspective, right?

W.M. Rush: Well, you know, the first thing was supply, right? You really want the environment to be better from a demand perspective, right? You got supply and you got demand. To your point about supply has been pulled out for really the last three quarters, okay? If you took the last Q3, Q4, and Q1 and strung them together, it's gonna scare you how low, you know, retail was from a demand perspective, to be honest with you. It would be under 200,000 units in the US, okay, annualized. That has taken the supply out. You need a combination of both, right? It was nice to see that tonnage bumped up in a couple of the months.

Rusty Rush: Well, you know, the first thing was supply, right? You really want the environment to be better from a demand perspective, right? You got supply and you got demand. To your point about supply has been pulled out for really the last three quarters, okay? If you took the last Q3, Q4, and Q1 and strung them together, it's gonna scare you how low, you know, retail was from a demand perspective, to be honest with you. It would be under 200,000 units in the US, okay, annualized. That has taken the supply out. You need a combination of both, right? It was nice to see that tonnage bumped up in a couple of the months.

Speaker #3: You've got supply and you've got demand. Your point about supply—supply has been pulled out for really the last three quarters, okay? If you took the last Q3, Q4, and Q1 and strung them together, it's going to scare you how low retail was.

Speaker #3: From a demand perspective, to be honest with you, it would be under $200,000 units in the US, okay? Annualized. But that has taken the supply out.

Speaker #3: But you need a combination of both, right? So it was nice to see that tonnage had bumped up in a couple of the months.

Speaker #3: I think it was February. I'm not mistaken. If I'm not mistaken. And even though it's not robust, you got both of those. I believe it will continue.

W.M. Rush: I think it was February, I'm not mistaken, if I'm not mistaken. Even though it's not robust, you know, you got both of those, I believe it will continue. Like I said a minute ago, even if they're talking like you have 41,000 in the US. ACT says it'll be 225, right? Well, that means it's gonna have to average 60. That's a 50% bump, up 60 a quarter. It's not gonna be loaded like that. It'll probably be 50 in Q2, that just bumps up Q3 and Q4, right, to even get to that 225, which is really under replacement or right at replacement. It's really under replacement. You know, that is a driver. People have to. 3 years freight recession, man.

Rusty Rush: I think it was February, I'm not mistaken, if I'm not mistaken. Even though it's not robust, you know, you got both of those, I believe it will continue. Like I said a minute ago, even if they're talking like you have 41,000 in the US. ACT says it'll be 225, right? Well, that means it's gonna have to average 60. That's a 50% bump, up 60 a quarter. It's not gonna be loaded like that. It'll probably be 50 in Q2, that just bumps up Q3 and Q4, right, to even get to that 225, which is really under replacement or right at replacement. It's really under replacement. You know, that is a driver. People have to. 3 years freight recession, man.

Speaker #3: And like I said a minute ago, even if we they're talking you have 41,000 in the US. ACT says it'll be 225, right? Well, it means it's going to have to average 60.

Speaker #3: So that's a 50% bump. 60 a quarter, but it's not going to be loaded like that. It'll probably be 50 in Q2 and then so that just bumps up Q3 and Q4, right?

Speaker #3: To even get to that 225, which is really under replacement or right at replacement. It's really under replacement. So that is a driver. But people have to three years freight recession, man.

Speaker #3: That was I've never seen one like that, right? And I felt so sorry for a lot of our customers. I really did. We were fortunate enough with our diversified business model and how we go to market that we don't rely upon one revenue stream.

W.M. Rush: I've never seen one like that, right? I felt so sorry for a lot of our customers. I really did. You know, we were fortunate enough with our diversified business model and how we go to market, that we don't rely upon one revenue stream. We joke, just all freight. No disrespect to my customer base, but we don't. I've had to watch the suffering for the last 3 years. It's, you know, it's just, I feel better. I feel good for them. I'm tired of watching all the suffering of that over-the-road segment of the customer base, whether it be the small buyer or the large buyer, across the board. I believe that if demand will hold, right, I'm an expert on the demand side. You know, there's too many macroeconomic influences on the demand side.

Rusty Rush: I've never seen one like that, right? I felt so sorry for a lot of our customers. I really did. You know, we were fortunate enough with our diversified business model and how we go to market, that we don't rely upon one revenue stream. We joke, just all freight. No disrespect to my customer base, but we don't. I've had to watch the suffering for the last 3 years. It's, you know, it's just, I feel better. I feel good for them. I'm tired of watching all the suffering of that over-the-road segment of the customer base, whether it be the small buyer or the large buyer, across the board. I believe that if demand will hold, right, I'm an expert on the demand side. You know, there's too many macroeconomic influences on the demand side.

Speaker #3: We just all freight. No disrespect to my customer base, but we don't. So I've had to watch the suffering for the last three years.

Speaker #3: So it's just I feel better. I feel good for them. I'm tired of watching all the suffering of that over-the-road segment of the customer base, whether it be the small buyer or the large buyer.

Speaker #3: Across the board. But I believe that if demand will hold right—or, I can't, I'm not an expert on the demand side. There's too many—know that the average age of fleets is probably a little over a half a year or so more than where it should be, where most people like it.

W.M. Rush: I do know that the average age of fleets is probably a little over a half a year or so more than where it should be, where they, most people like it. I mean, I can tell you all these little bitty anecdotes that I've got that make me feel good about it. Like I said, even if we have a big ramp up and do 60,000 average, 180,000+ in the last three quarters, we're still only gonna be at, you know, replacement cycle. That's not a huge, big pre-buy that should scare you going forward, from my perspective. Which means we should roll through 2026 and there won't be this big drop in 2027. At least that's my viewpoint on the whole thing as I look at it. I know.

Rusty Rush: I do know that the average age of fleets is probably a little over a half a year or so more than where it should be, where they, most people like it. I mean, I can tell you all these little bitty anecdotes that I've got that make me feel good about it. Like I said, even if we have a big ramp up and do 60,000 average, 180,000+ in the last three quarters, we're still only gonna be at, you know, replacement cycle. That's not a huge, big pre-buy that should scare you going forward, from my perspective. Which means we should roll through 2026 and there won't be this big drop in 2027. At least that's my viewpoint on the whole thing as I look at it. I know.

Speaker #3: I mean, I can tell you all these little bitty anecdotes that I've got that make me feel good about it. And like I said, even if we have a big ramp-up and there's 60,000 average, 180-plus thousand in the last three quarters, we're still only going to be at replacement cycle.

Speaker #3: So that's not a huge, big rebuy that should scare you going forward from my perspective, which means we should roll through '26 and there won't be this big drop in '27.

Speaker #3: At least that's my viewpoint. On the whole thing, as I look at it. I know if I don't know if I answered your question because sometimes I just answer my own.

W.M. Rush: I don't know if I answered your question because sometimes I know I just answer my own.

Rusty Rush: I don't know if I answered your question because sometimes I know I just answer my own.

Brady Lierz: No, I think, I think you did. I appreciate it. Thank you so much.

Speaker #4: No, I think you did. And I appreciate it. Thanks so much.

W.M. Rush: I think we're in good shape. The supply thing's really good because.

Speaker #3: It's we're in good shape. The supply thing's really good. Because non-domicile drivers, when they crack that it was a bunch of different anecdotes that have helped try to line that up and get it in line.

Rusty Rush: I think we're in good shape. The supply thing's really good because.

Brady Lierz: Yep

W.M. Rush: non-domiciled drivers, let me crack that. It was a bunch of different, you know, anecdotes that have helped try to line that up and get it in line. Now it's time not. Just because we're gonna have a little pre-buy, I don't want it. It won't be huge, so it won't get out of balance again. We may have some, maybe a couple, three years of nice, you know, growth across that segment. Okay?

Rusty Rush: non-domiciled drivers, let me crack that. It was a bunch of different, you know, anecdotes that have helped try to line that up and get it in line. Now it's time not. Just because we're gonna have a little pre-buy, I don't want it. It won't be huge, so it won't get out of balance again. We may have some, maybe a couple, three years of nice, you know, growth across that segment. Okay?

Speaker #3: And now it's time not and just because we're going to have a little freebuy, I don't want to it won't be huge so it won't get out of balance again.

Speaker #3: We may have maybe a couple of three years of nice growth across that segment. Okay?

Speaker #4: Thanks so much for the time this morning, Rusty. I'll pass it along.

Brady Lierz: Thanks so much for the time this morning, Rusty. I'll pass it along.

Speaker #3: You bet. Thank you.

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

Rusty Rush: You bet. Thank you.

Speaker #1: Thank you. One moment for the next question. And the next question is going to be coming from the line of Andrew Obin of Bank of America. Please go ahead.

Operator: Thank you. One moment for the next question. The next question will be coming from the line of Andrew Obin of Bank of America. Please go ahead.

Speaker #5: Hey, good morning, Rusty. How are you? Good morning, Steve.

Andrew Obin: Hey, good morning, Rusty. How are you? Good morning, Steve.

W.M. Rush: Mr. Obin, how are you today?

Rusty Rush: Mr. Obin, how are you today?

Speaker #3: Mr. Obin, how are you today?

Andrew Obin: I'm doing well. Maybe we can talk a little bit about, you sort of talked about parts and services, you know, clearly a focus for the OEM yesterday as well. You know, you have this big initiative with large corporate customers. Can you just talk as to how that initiative is progressing? Do you think you are outgrowing the industry on parts and services? What levers do you have to keep outgrowing the industry? Thank you.

Speaker #5: I'm doing well. Maybe we can talk a little bit about you sort of talked about parts and services, clearly a focus for the OEM yesterday as well.

Speaker #5: You had this big initiative with large corporate customers can you just talk as to how that initiative is progressing? Are you do you think you are outgrowing the industry on parts and services?

Speaker #5: And what levers do you have to keep outgrowing the industry? Thank you.

Speaker #3: Yeah. I would tell you the first quarter, we were probably close to in line. Everything that is crazy to me what I saw across the first quarter.

W.M. Rush: Yeah. I would tell you Q1, you know, we were probably close to in line. It's crazy to me what I saw across Q1. I've got pretty good statistics on other dealer groups, okay? We can get it through our manufacturers. Probably the hardest hit piece was service. Service was back for us in Q1, and that's why maybe our margin mix was down a little bit, because it comes into a mix. As you know, your margin's much higher on service than parts. You know, and I was nervous. What are we doing wrong, right? I don't want to ride in the same boat with everybody else, so don't ever expect that.

Rusty Rush: Yeah. I would tell you Q1, you know, we were probably close to in line. It's crazy to me what I saw across Q1. I've got pretty good statistics on other dealer groups, okay? We can get it through our manufacturers. Probably the hardest hit piece was service. Service was back for us in Q1, and that's why maybe our margin mix was down a little bit, because it comes into a mix. As you know, your margin's much higher on service than parts. You know, and I was nervous. What are we doing wrong, right? I don't want to ride in the same boat with everybody else, so don't ever expect that.

Speaker #3: I'm not talking—I've got pretty good statistics on other dealer groups, okay? But we can get through our manufacturers. And probably the hardest-hit piece was service.

Speaker #3: Service was back for us in Q1. And that's why maybe our margin mix was down a little bit because it comes into a mix, as you know.

Speaker #3: Your margin's much higher on service than parts. But I was nervous. What are we doing wrong, right? But not that it makes you I don't want to ride in the same boat with everybody else.

Speaker #3: So, don't ever think that. But at least I do know that, across what I've been able to track—across pretty much a large group of dealers—with that, I was able to get their retail environment.

W.M. Rush: At least I do know that across what I've been able to track across pretty much a large group of dealers with, you know, that I was able to get their retail environment, service was off across the board 3% to 4%. It was off 4% across a bad group of 200 and some odd dealers. How about that? I have that information, so I'm not. Doesn't make me feel any better. We were off a little less than that. It still was interesting that customer spend was off in Q1. It's just the ending of, as I said, tightening your belt, right? People have just tightened their belt the last couple, 3 quarters. When you asked about the initiative, yeah, our initiatives are still there, for sure.

Rusty Rush: At least I do know that across what I've been able to track across pretty much a large group of dealers with, you know, that I was able to get their retail environment, service was off across the board 3% to 4%. It was off 4% across a bad group of 200 and some odd dealers. How about that? I have that information, so I'm not. Doesn't make me feel any better. We were off a little less than that. It still was interesting that customer spend was off in Q1. It's just the ending of, as I said, tightening your belt, right? People have just tightened their belt the last couple, 3 quarters. When you asked about the initiative, yeah, our initiatives are still there, for sure.

Speaker #3: Service was off across the board 3 to 4 percent. It was off 4% across a group of they have a group of 200 and some odd dealers.

Speaker #3: How about that? I have that information, so it doesn't make me feel any better. We were off a little less than that, but it still was interesting that the customer spend was off in Q1.

Speaker #3: And it's just the ending of that I said tightening your belt, right? People have just tightened their belt the last couple of three quarters.

Speaker #3: When you asked about the initiative—yeah, our initiatives are still there, for sure. Now, we grew our national account business, okay? But at the same time, that was on the parts side.

W.M. Rush: We grew our national account business, okay? At the same time, that was on the parts side. I think people really tightened up on the service piece a lot. When I say that, you know, you can extend maintenance, you know, intervals. There's many things you can do. You don't have to fix every oil leak, okay? You don't have to, you know, you can extend your oil change maybe or interval 5,000 miles or something. As I said earlier, when things are tight, that's what people do. That's why when their business gets better, people get back into a normalized, you know, cycle, part of the cycle. What they do normally, right? They're not squeezing in here and there. I think that's what we saw in Q1 because service was, for us, was down too.

Rusty Rush: We grew our national account business, okay? At the same time, that was on the parts side. I think people really tightened up on the service piece a lot. When I say that, you know, you can extend maintenance, you know, intervals. There's many things you can do. You don't have to fix every oil leak, okay? You don't have to, you know, you can extend your oil change maybe or interval 5,000 miles or something. As I said earlier, when things are tight, that's what people do. That's why when their business gets better, people get back into a normalized, you know, cycle, part of the cycle. What they do normally, right? They're not squeezing in here and there. I think that's what we saw in Q1 because service was, for us, was down too.

Speaker #3: I think people really tightened up on the service piece a lot when I say that. You can extend maintenance intervals. There's many things you can do.

Speaker #3: You don't have to fix every oil leak, okay? You don't have to. You can extend your oil change maintenance or interval 5,000 miles or something.

Speaker #3: As I said earlier, when things are tight, that's what people do. And that's why when their business gets better, people get back into a more normalized site part of the cycle.

Speaker #3: What they do normally, right? They're not squeezing it here and there. So I think that's what we saw in Q1 because service was for us was down too.

W.M. Rush: Parts was up, but our service wasn't down is what I, the numbers I pulled from some other folks, but it was close. You know, it was just. As people, as their business gets better, they'll get back to more normalized spending cycle. That's what I expect to happen because that's what I think is people's. You know, the spot market, folks, was up 25%, 30%, okay, year over year. That's a good thing, right? The, the balance between spot and contract got way back, way better, right? Because spot was so cheap for so long that people that had contracts weren't using that. They were using the spot market, right, where they could take advantage, and it just, you know, spiraled down all the rates over the last 3 years.

Speaker #3: Parts was up. But our service wasn't down is what the numbers I pulled from some other folks. But it was close. So it was just but as people is their business gets better, they'll get back to more normalized spending cycle.

Rusty Rush: Parts was up, but our service wasn't down is what I, the numbers I pulled from some other folks, but it was close. You know, it was just. As people, as their business gets better, they'll get back to more normalized spending cycle. That's what I expect to happen because that's what I think is people's. You know, the spot market, folks, was up 25%, 30%, okay, year over year. That's a good thing, right? The, the balance between spot and contract got way back, way better, right? Because spot was so cheap for so long that people that had contracts weren't using that. They were using the spot market, right, where they could take advantage, and it just, you know, spiraled down all the rates over the last 3 years.

Speaker #3: And that's what I expect to happen because that's what I think is people's the spot market folks was up 25, 30 percent. Okay? Year over year.

Speaker #3: So that's a good thing, right? The balance between spot and contract got way better, right? Because spot was so cheap for so long that people that had contracts weren't using that.

Speaker #3: They were using the spot market, right? Where they could take advantage. And it just spiraled down all the rates over the last three years.

Speaker #3: But getting a better balance across that right now is allowing folks to be more optimistic and when they're optimistic, people spend money. Okay? That's just the way it works.

W.M. Rush: You know, getting a better balance across that right now is allowing folks to be more optimistic. When they're optimistic, people spend money, okay? That's just the way it works. You know, when your business gets better, you don't worry about doing things that are out of the norm for you. You know what the right thing is to do. When things are tough, you squeeze. It's the same thing we do with our business. No different. You know, as I've said many times, I just, you know, I love our business model. Whether it's through our leasing, our parts, our service, or our sales, we have many different revenue streams that allow us to balance our way through this last three years.

Rusty Rush: You know, getting a better balance across that right now is allowing folks to be more optimistic. When they're optimistic, people spend money, okay? That's just the way it works. You know, when your business gets better, you don't worry about doing things that are out of the norm for you. You know what the right thing is to do. When things are tough, you squeeze. It's the same thing we do with our business. No different. You know, as I've said many times, I just, you know, I love our business model. Whether it's through our leasing, our parts, our service, or our sales, we have many different revenue streams that allow us to balance our way through this last three years.

Speaker #3: When your business gets better, you don't worry about doing things that are out of the norm for you. You know what the right things to do.

Speaker #3: But when things are tough, you squeeze. And it's the same thing we do with our business. No different. I just as I said many times, I just I love our business model.

Speaker #3: Whether it's through our leasing, or our parts, or our service, or our sales, we have many different revenue streams that allow us to balance our way through this last three years, or two-thirds of the trucks on the road or over the road.

W.M. Rush: Two-thirds of the trucks on the road are over the road, and we managed to, you know, produce decent earnings, right? You know, Andrew, I expect parts and service, all of that initiative is still ongoing. As I said, it was up last year on the parts side. The service side has been my most concerning piece, to be honest with you. Parts was slightly up, and it will get even better through that initiative and many other initiatives that I'm not gonna talk about, by the way, that we always have ongoing. That's. You've always gotta have something going, I can tell you that. We try.

Rusty Rush: Two-thirds of the trucks on the road are over the road, and we managed to, you know, produce decent earnings, right? You know, Andrew, I expect parts and service, all of that initiative is still ongoing. As I said, it was up last year on the parts side. The service side has been my most concerning piece, to be honest with you. Parts was slightly up, and it will get even better through that initiative and many other initiatives that I'm not gonna talk about, by the way, that we always have ongoing. That's. You've always gotta have something going, I can tell you that. We try.

Speaker #3: And we managed to produce decent earnings, right? So Andrew, I expect parts and service all of that initiative is still ongoing. As I said, it was up last year on the parts side.

Speaker #3: The service side has been my most concerning piece, to be honest with you. Parts was slightly up. And it will get even better. Through that initiative and many other initiatives that I'm not going to talk about, by the way.

Speaker #3: That we always have ongoing. That’s—you’ve always got to have something going, I can tell you that. So we try.

Andrew Obin: Maybe Rusty, you know, you have a footprint across the country. You know, you sometimes share with us what you're seeing in terms of macro. Can you just go and just, A, what are you seeing in terms of macro overall, and just maybe sort of go on key verticals, right? You clearly have big off-road presence, so what are we seeing in key off-road verticals? Then, you know, are you seeing any impact in your oil and gas business from higher commodity prices? Clearly, I think we talked of on road, but just maybe just give us an overview of what you're seeing from a macro perspective in some of your key verticals.

Speaker #5: And maybe Rusty, you have footprint across the country. You sometimes share with us what you're seeing in terms of macro. Can you just go and just, A, what are you seeing in terms of macro overall?

Speaker #5: And just maybe sort of go on key verticals? Right? You clearly have big off-road presence. So what are we seeing in key off-road verticals?

Speaker #5: And then are you seeing any impact in your oil and gas business from higher commodity prices? And clearly, I think we talked of on-road, but just maybe just give us an overview of what you're seeing from a macro perspective in some of your key verticals.

W.M. Rush: Sure. Well, geographically, you know, I mean, you know, from a spend perspective, I would tell you that, you know, we're up slightly in Q1, saying refuse and construction, right? Most of the other is still, you know, is not, is flat, to be honest with you. We haven't seen that. You know, our national accounts were pretty flat in Q1. Now, they were up last year, we're not keeping up with, should I say with our plan. Our plan was to already in Q1. It's been. There's not one huge terrible area, Andrew. We still suffer on our unmanaged accounts. That would probably be the one thing. You remember what I've told you about unmanaged accounts before.

Rusty Rush: Sure. Well, geographically, you know, I mean, you know, from a spend perspective, I would tell you that, you know, we're up slightly in Q1, saying refuse and construction, right? Most of the other is still, you know, is not, is flat, to be honest with you. We haven't seen that. You know, our national accounts were pretty flat in Q1. Now, they were up last year, we're not keeping up with, should I say with our plan. Our plan was to already in Q1. It's been. There's not one huge terrible area, Andrew. We still suffer on our unmanaged accounts. That would probably be the one thing. You remember what I've told you about unmanaged accounts before.

Speaker #3: Sure. Well, geographically, from a spend perspective, I would tell you that we're up slightly in the first quarter—say, in refuse and construction, right?

Speaker #3: Most of the other is still—it's flat, to be honest with you. We haven't seen that. Our national accounts were pretty flat in Q1.

Speaker #3: Now, they were up last year. And we're not catch-keeping up with, should I say, with our plan. Our plan was to already in the first quarter.

Speaker #3: It's been that there's not one huge, terrible area, Andrew. I expect we still suffer on our unmanaged accounts. That would probably be the one thing. You remember what I've told you about unmanaged accounts before.

Speaker #3: That's the small customer, which still makes up 30% or so of our business. And I'm going to tell you, 30% a little over 30.

W.M. Rush: That's the small customer, which still makes up 30% or so of our business. I've got to tell you, it is a little over 30. Even though it was bad last year, it's down almost another 10%, the Q1 of this year. We've managed to make it up. You know, we've managed to make our revenues up, with, you know, in different sectors. Like I said, really vocational has been probably the biggest thing that we've managed to keep from a parts and service perspective. When I say that, we're talking about refuse, construction, all the vocational businesses from that perspective. Geographically, I would tell you we've seen, you know, Florida continues to be strong. I didn't touch on oil and gas.

Rusty Rush: That's the small customer, which still makes up 30% or so of our business. I've got to tell you, it is a little over 30. Even though it was bad last year, it's down almost another 10%, the Q1 of this year. We've managed to make it up. You know, we've managed to make our revenues up, with, you know, in different sectors. Like I said, really vocational has been probably the biggest thing that we've managed to keep from a parts and service perspective. When I say that, we're talking about refuse, construction, all the vocational businesses from that perspective. Geographically, I would tell you we've seen, you know, Florida continues to be strong. I didn't touch on oil and gas.

Speaker #3: Even though it was bad last year, it's down almost another 10% in the first quarter of this year. But we've managed to make it up.

Speaker #3: We've managed to make our revenues up within different sectors, like I said, and really, vocational has been probably the biggest thing that we've had to keep from a parts and service perspective.

Speaker #3: When I say that, we're talking about refuse, construction, all the vocational businesses from that perspective. Geographically, I would tell you we've seen Florida continues to be strong.

Speaker #3: I didn't touch on oil and gas, but we haven't seen that big a bump from oil and gas yet, right? We do expect to possibly see something, but it has not come to fruition yet.

W.M. Rush: We haven't seen that big a bump from oil and gas yet, right? We do expect to may possibly see something. It has not come to fruition yet. You know, I don't want to go through all the regions, but Texas is always, you know, one of the strongest areas we have, along with Florida. I, if I remember right, we were doing fairly well in the Chicago region this year, up in the, you know, Northern Illinois region too also. I don't want to go through 23 states, but I would tell you that, again, I feel good about all of them, that we're going to continue to get gradual improvement without any of this geopolitical stuff getting in the way.

Rusty Rush: We haven't seen that big a bump from oil and gas yet, right? We do expect to may possibly see something. It has not come to fruition yet. You know, I don't want to go through all the regions, but Texas is always, you know, one of the strongest areas we have, along with Florida. I, if I remember right, we were doing fairly well in the Chicago region this year, up in the, you know, Northern Illinois region too also. I don't want to go through 23 states, but I would tell you that, again, I feel good about all of them, that we're going to continue to get gradual improvement without any of this geopolitical stuff getting in the way.

Speaker #3: I don't want to go through all the regions, but probably—Texas is always one of the strongest areas we have, along with Florida.

Speaker #3: And if I remember right, we were doing fairly well in the Chicago region this year. Up in the northern Illinois region too also. But I don't want to go through 23 states, but I would tell you that again, I feel good about all of them that we're going to continue to get gradual improvement without any of this geopolitical stuff getting in the way.

Speaker #3: I think we're lined up for continued solid, which is actually better than having some huge free buy, right? It goes on from a sales perspective or everything else.

W.M. Rush: I think, you know, we're lined up for, you know, continued solid, which is actually better than having some huge pre-buy, right? It goes on from a sales perspective or everything else. I just want to see consistent, solid growth and taking share, because taking share is what it's about. Maybe we didn't take as much share as I wanted in Q1. We were slightly better than what I've seen from other boards, slightly is not good enough. We're focused on continuing to do what we've done in the past. We've got some other initiatives we're rolling out, and, you know, all I can say is we're ready, willing, and able, and excited to what I believe is going to be a better environment as I continue to say, without any interruption from something outside the industry itself.

Rusty Rush: I think, you know, we're lined up for, you know, continued solid, which is actually better than having some huge pre-buy, right? It goes on from a sales perspective or everything else. I just want to see consistent, solid growth and taking share, because taking share is what it's about. Maybe we didn't take as much share as I wanted in Q1. We were slightly better than what I've seen from other boards, slightly is not good enough. We're focused on continuing to do what we've done in the past. We've got some other initiatives we're rolling out, and, you know, all I can say is we're ready, willing, and able, and excited to what I believe is going to be a better environment as I continue to say, without any interruption from something outside the industry itself.

Speaker #3: I just want to see a consistent, solid growth and taking share. Just taking share is what it's about. And maybe we didn't take as much share as I wanted in Q1.

Speaker #3: We were slightly better than what I've seen from other boards. But slightly is not good enough. So we're focused on continuing to do what we've done in the past.

Speaker #3: We've got some other initiatives we're rolling out. And all I can say is we're ready. We're ready, willing, and able and excited to what I believe is going to be a better environment as I continue to say without any interruption from something outside the industry itself.

Speaker #5: Thank you, Rusty.

Andrew Obin: Thank you, W.M. Rush.

Andrew Obin: Thank you, Rusty.

Speaker #3: You bet.

W.M. Rush: You bet.

Rusty Rush: You bet.

Speaker #1: Thank you, as a reminder, if you would like to ask a question, please press star on one on your telephone. One moment for the next question.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star or one on your telephone. One moment for the next question. Our next question will be coming from the line of Cole Couzens of Wolfe Research. Please go ahead.

Speaker #1: And our next question will be coming from the line of coal cousins of Wolf Research. Please go ahead.

Speaker #6: Hey, guys. Yesterday, Packard suggested that recent order strength is perhaps a little misleading. And that build rates and retail sales remain more muted. And thus, the pricing backdrop remains more competitive right now.

Cole Couzens: Hey, guys. Yesterday PACCAR suggested that recent order strength is perhaps a little misleading and that build rates and retail sales remain more muted and thus the pricing backdrop remains more competitive right now. What do you think is driving recent order strengths and how sustainable are current order rates in the coming months?

Speaker #6: What do you think is driving recent order strength? And how sustainable are current order rates in the coming months?

Speaker #3: Good question, right? Because I believe that well, not as robust as, say, what we saw in February, which was what was that? 46,000 or something like 7th or 8th best month ever.

W.M. Rush: Good question, right? I believe that while not as robust as, say, what we saw in February, which was, you know, what was that 46,000 or something like seventh or eighth best month ever, that's happened. I think that was a little overstated, driven by one OEM. I do believe there's strength in the order intake. I do believe as long as, you know, I keep bringing up this overseas stuff. As long as that doesn't interfere, I believe there's going to be sustainability, to continued solid order intake. Now, is that 30,000 a month or something right now? I consider that a pretty good month myself. I, you know, I don't know.

Rusty Rush: Good question, right? I believe that while not as robust as, say, what we saw in February, which was, you know, what was that 46,000 or something like seventh or eighth best month ever, that's happened. I think that was a little overstated, driven by one OEM. I do believe there's strength in the order intake. I do believe as long as, you know, I keep bringing up this overseas stuff. As long as that doesn't interfere, I believe there's going to be sustainability, to continued solid order intake. Now, is that 30,000 a month or something right now? I consider that a pretty good month myself. I, you know, I don't know.

Speaker #3: That's happened. I think that was a little overstated, driven by 1 OEM. I do believe there's strength in the order intake. And I do believe as long as we can I keep bringing up this overseas stuff.

Speaker #3: As long as that doesn't interfere I believe there's going to be sustainability to continued solid order intake. Now, is that 30,000 a month or something right now?

Speaker #3: I consider that a pretty good month myself. So I don't know. From our perspective, I can only speak about from I can speak for more than that.

W.M. Rush: From our perspective, I can only speak about from, you know, I can't speak for more than that, but I know what our order intake is, and it continues to remain solid, you know, with a backlog, right? You know, you don't just wake up one morning and somebody orders a truck from you. There's a process you go through, right? From a quoting and a, you know, a competitive drop, you know, drop back. People are still adjusting to all the tariffs, the OEMs, the customers, ourselves, that, you know, now become part of everyday life. At least we've got, you know, at least we know what they are. Now our manufacturers understand from their own personal perspective what they are. So I believe we're gonna see continued.

Rusty Rush: From our perspective, I can only speak about from, you know, I can't speak for more than that, but I know what our order intake is, and it continues to remain solid, you know, with a backlog, right? You know, you don't just wake up one morning and somebody orders a truck from you. There's a process you go through, right? From a quoting and a, you know, a competitive drop, you know, drop back. People are still adjusting to all the tariffs, the OEMs, the customers, ourselves, that, you know, now become part of everyday life. At least we've got, you know, at least we know what they are. Now our manufacturers understand from their own personal perspective what they are. So I believe we're gonna see continued.

Speaker #3: But I know that what our order intake is, and it continues to remain solid. With a backlog, right? You don't just wake up one morning and somebody orders a truck from you.

Speaker #3: There's a process you go through, right? From a quoting and a competitive drop back. And people are still adjusting to all the tariffs—the OEMs, the customers, ourselves.

Speaker #3: That now becomes part of everyday life. At least we've got—at least we know what they are. All our manufacturers understand, from their own personal perspective, what they are.

Speaker #3: And so I believe we're going to see continued I can't sit here and tell you it's going to stay over 35,000 a month or this, that, the other.

W.M. Rush: I can't sit here and tell you it's gonna stay over $35,000 a month or this, that, and the other, but if it continues at $25,000 to $30,000, we didn't have a month like that for like seven in a row, and we continue that. We started from a low base as far as backlog, but I still believe there's going to be continued strength. Maybe not as strong as a couple of the months we've seen, but continued order strength. I think once we continue to get more clarity around emissions and customers' businesses. Look, we didn't deliver many trucks the last 3 quarters, right? You know, people, I know some customers have got off a trade cycle last year, right? That did not buy as much, right? What was it last year? 200 and...

Rusty Rush: I can't sit here and tell you it's gonna stay over $35,000 a month or this, that, and the other, but if it continues at $25,000 to $30,000, we didn't have a month like that for like seven in a row, and we continue that. We started from a low base as far as backlog, but I still believe there's going to be continued strength. Maybe not as strong as a couple of the months we've seen, but continued order strength. I think once we continue to get more clarity around emissions and customers' businesses. Look, we didn't deliver many trucks the last 3 quarters, right? You know, people, I know some customers have got off a trade cycle last year, right? That did not buy as much, right? What was it last year? 200 and US was 216 or something like that. Well, that's under by 20 some odd thousand what replacement is, and it's continued to be under replacement into Q1. Even without all the outside activity, you know, people have to get back to replacing trucks.

Speaker #3: But if it continues at 25 to 30 thousand, we didn't have a month like that for like seven in a row. And we continued back.

Speaker #3: So we started from a low basis as far as backlog. But I still believe there's going to be continued strength. Maybe not as strong as a couple of the months we've seen.

Speaker #3: But continued order strength. And I think once we continue to get more clarity around emissions, and customers, businesses, look, we didn't deliver many trucks.

Speaker #3: Last three quarters, right? So people are I know some customers that got off a trade cycle last year, right? That did not buy as much, right?

Speaker #3: What was last year? 200 US was 216 or something like that. Well, that's under by 20-some-odd thousand what replacement is. And it's continued to be under replacement into Q1.

W.M. Rush: US was 216 or something like that. Well, that's under by 20 some odd thousand what replacement is, and it's continued to be under replacement into Q1. Even without all the outside activity, you know, people have to get back to replacing trucks. You know, it's funny to, you think about it, probably, I know people thought, Am I even gonna be in business? Because that 3-year freight recession. Well, all of a sudden you wake up, you're getting more optimistic because you think you're gonna get better rates. They're not going backwards. The troughs are coming back up. You see the spot environment. You go, Well, I am gonna still be in business and I do need to buy trucks, right?

Speaker #3: And so even without all the outside activity, people have to get back replacing trucks. It's funny that you think about it. Probably I know people thought, "Am I even going to be in business?" Because that three-year freight recession.

Rusty Rush: You know, it's funny to, you think about it, probably, I know people thought, Am I even gonna be in business? Because that 3-year freight recession. Well, all of a sudden you wake up, you're getting more optimistic because you think you're gonna get better rates. They're not going backwards. The troughs are coming back up. You see the spot environment. You go, Well, I am gonna still be in business and I do need to buy trucks, right?

Speaker #3: Well, all of a sudden, you wake up, you're getting more optimistic because you think you're going to get better rates. They're not going backwards.

Speaker #3: They've troughed. They're coming back up. You see the spot environment. You go, "Well, I am going to still be in business. And I do need to buy trucks," right?

W.M. Rush: I can't be running old trucks all the time with my maintenance charts through to the roof. I believe there's some natural sustainability to it. You add in the emissions and other stuff that's coming forward on 1 January, and I just believe it's gonna continue to be good. I don't, you know, I don't know. I don't think there's gonna be this huge pre-buy as I said earlier, but you would consider it a pre-buy based upon what the Q1 was, how bad the Q1 retail was and how, well, really Q4, how bad Q4 was, right. You have to get somewhat back in line. The good part is, I don't think it's gonna just be crazy.

Speaker #3: I can't be running old trucks all the time with my maintenance trucks used to the roof. So I believe there's some natural sustainability to it.

Rusty Rush: I can't be running old trucks all the time with my maintenance charts through to the roof. I believe there's some natural sustainability to it. You add in the emissions and other stuff that's coming forward on 1 January, and I just believe it's gonna continue to be good. I don't, you know, I don't know. I don't think there's gonna be this huge pre-buy as I said earlier, but you would consider it a pre-buy based upon what the Q1 was, how bad the Q1 retail was and how, well, really Q4, how bad Q4 was, right. You have to get somewhat back in line. The good part is, I don't think it's gonna just be crazy.

Speaker #3: And you add in the emissions and other stuff that's coming forward on January 1. And I just believe it's going to continue to be good.

Speaker #3: I don't know. I don't think there's going to be this huge free buy. As I said earlier. But you would consider a free buy based upon what the first quarter was.

Speaker #3: How bad the first quarter retail was. And how really Q4, how bad Q4 was, right? So you have to get somewhat back in line.

Speaker #3: And the good part is I don't think it's going to just be crazy, right? I think it's just going to be solid continued order growth.

W.M. Rush: I think it's just gonna be solid, continued order growth because customers' businesses are getting better. Then the other outside influence of the emissions, which we, like I said, we'll hopefully know more, but we know whatever it is, it's coming. I mean, I hope that helps answer the question. You know, I feel good about it, and I've said that 100 times, I think already. I think it's sustainable for a while myself.

Rusty Rush: I think it's just gonna be solid, continued order growth because customers' businesses are getting better. Then the other outside influence of the emissions, which we, like I said, we'll hopefully know more, but we know whatever it is, it's coming. I mean, I hope that helps answer the question. You know, I feel good about it, and I've said that 100 times, I think already. I think it's sustainable for a while myself.

Speaker #3: Because people's business is getting customers' businesses are getting better. And then the other outside influence of the emissions, which we, like I said, will hopefully know more.

Speaker #3: But we know whatever it is, it's coming. So I mean, I hope that helps answer the question. That I feel good about it. And I've said that 100 times, I think, already.

Speaker #3: I'm not, and I think it's sustainable for a while myself.

Speaker #5: Yep. That's helpful, Rusty. And maybe just another question. Just in the context of an improving demand backdrop and visibility to higher truck prices next year, when do you think we can start to see truck pricing move higher this year?

Cole Couzens: Yep. That's helpful, Rusty. Maybe just another question. Just in the context of an improving demand backdrop and visibility to higher truck prices next year, when do you think we can start to see truck pricing move higher this year? Is there a gross margin opportunity ahead of the EPA transition to sell older trucks you might have in inventory towards the end of the year or into early 2027?

Speaker #5: And is there a gross margin opportunity ahead of the EPA transition to sell older trucks you might have in inventory towards the end of the year or into early 2027?

Speaker #3: Well, when you talk about that, you think about—trust me, we've thought about what inventories are we going to carry, right? End of the first quarter of next year.

W.M. Rush: Well, you know, when you talk about that, you think about, and trust me, we thought about what inventory are we gonna carry, right, into the Q1 of next year. Just because as long as it's built, as long as that engine stamp rates 31 December are back. And we'll make those determinations. For us, you know, I mean, as far as the back part of the year, there's still build slots. I think a lot of OEMs are protecting some of their Q4 build slots because they're trying to push them forward because you can't just go to the suppliers and say, Okay, I need 3 or 4 months right now. You know? They need to give them a better run rate of that. I know, I know that build rates have moved up at an OEM or two.

Rusty Rush: Well, you know, when you talk about that, you think about, and trust me, we thought about what inventory are we gonna carry, right, into the Q1 of next year. Just because as long as it's built, as long as that engine stamp rates 31st December are back. And we'll make those determinations. For us, you know, I mean, as far as the back part of the year, there's still build slots. I think a lot of OEMs are protecting some of their Q4 build slots because they're trying to push them forward because you can't just go to the suppliers and say, Okay, I need 3 or 4 months right now. You know? They need to give them a better run rate of that. I know, I know that build rates have moved up at an OEM or two.

Speaker #3: Just because as long as it's built, as long as that engine stamp dates, December 31 or back. And we'll make those determinations for us.

Speaker #3: I mean, as far as the back part of the year, there's still build slots. So I think a lot of OEMs are protecting. Some of their Q4 build slots because they're trying to push them forward.

Speaker #3: Because you can't just go to the suppliers and say, 'Okay, I need three or four months right now.' They need to give them a better run rate of that.

Speaker #3: I know the build rates have moved up. An OEM or two. I've been at least I've been told that. So I mean, from our perspective, we're trying to make sure we're properly inventoried.

W.M. Rush: at least I've been told that. You know, I mean, from our perspective, you know, we're trying to make sure we're properly inventoried. You know, you gotta make sure that you gotta have demand for it, you know, we would like to be properly inventoried going into next year. I'm still trying to sell into this year too. Don't get me wrong. We've done a nice job, we've still got room to sell in the back half of this year, we still have activity out there, right? We continue to have activity. When you talk about older trucks, I'm not sure exactly what you mean. If you're talking about carrying trucks into next year with these engines, we'll carry some stuff over. It won't be.

Rusty Rush: At least I've been told that. You know, I mean, from our perspective, you know, we're trying to make sure we're properly inventoried. You know, you gotta make sure that you gotta have demand for it, you know, we would like to be properly inventoried going into next year. I'm still trying to sell into this year too. Don't get me wrong. We've done a nice job, we've still got room to sell in the back half of this year, we still have activity out there, right? We continue to have activity. When you talk about older trucks, I'm not sure exactly what you mean. If you're talking about carrying trucks into next year with these engines, we'll carry some stuff over. It won't be.

Speaker #3: You’ve got to make sure you’ve got a demand for it. But we would like to be properly inventoried going into next year. But I’m still trying to sell into this year too.

Speaker #3: Don't get me wrong, we've done a nice job, but we've still got room to sell in the back half of this year. But we still have activity out there, right?

Speaker #3: We continue to have activity. When you talk about older trucks, I'm not sure exactly what you mean if you're talking about carrying trucks into next year with these engines.

Speaker #3: We'll carry some stuff over. It won't be I can't tell you what that'll be. But we're always carrying inventory. So it might ramp. We might carry a little bit more into next year.

W.M. Rush: I can't tell you what that'll be, we're always carrying inventory. You know, it might ramp. We might carry a little bit more into next year. We'll just have to wait to see how the year plays out because there's still room to build them, right? You know, I hope that answers your question.

Rusty Rush: I can't tell you what that'll be, we're always carrying inventory. You know, it might ramp. We might carry a little bit more into next year. We'll just have to wait to see how the year plays out because there's still room to build them, right? You know, I hope that answers your question.

Speaker #3: We'll just have to wait and see, and see how the year plays out. Because I've still got room to build them, right? So I hope that answers your question.

Speaker #5: Yep. No, that's helpful. And maybe if I could squeeze one last question.

Cole Couzens: Yeah, no, that's helpful. Maybe if I could squeeze one last, question in.

W.M. Rush: Sure, go for it.

Rusty Rush: Sure, go for it. I'm coming back to your conference for the first time in a while.

Speaker #3: Sure. Go for it. Hey. I'm coming back to your conference for the first time in a while.

Cole Couzens: Um.

W.M. Rush: I'm coming back to your conference for the first time in a while.

Cole Couzens: We're looking forward to it, Rusty. On SG&A expense, it only increased 2% sequentially in Q1. That's a lot better than historical trends in Q1. Can you maybe talk about the measures you're taking to kind of drive this cost management?

Speaker #5: We're looking forward to it, Rusty. But on SG&A expense, it only increased 2% sequentially in the first quarter. That's a lot better than historical trends in one Q.

Speaker #5: Can you maybe talk about the measures you're taking to kind of drive this cost management?

Speaker #3: Yeah. Well, a lot like our customers. Our new Q1 was going to be a trough. And this is a credit to the entire organization.

W.M. Rush: Well, a lot like our customers, I knew Q1 was going to be a trough, and this is a credit to the entire organization, you know, from my management staff down to every technician and everyone in the organization. It doesn't matter what you do. It was tough, right? We had to squeeze down, and we did. You know, you know, and it was, you know, and it had to be contributed by a lot of folks, and those are never easy steps to make, right? Normally, you're right. I mean, we were down year over year, what, 2.5, I think. What, see, I'm looking at just G&A. Remember, I know you haven't followed us for long, but I separate S over here because S is always just a derivative from, you know, truck sales, right?

Rusty Rush: Well, a lot like our customers, I knew Q1 was going to be a trough, and this is a credit to the entire organization, you know, from my management staff down to every technician and everyone in the organization. It doesn't matter what you do. It was tough, right? We had to squeeze down, and we did. You know, you know, and it was, you know, and it had to be contributed by a lot of folks, and those are never easy steps to make, right? Normally, you're right. I mean, we were down year over year, what, 2.5, I think. What, see, I'm looking at just G&A. Remember, I know you haven't followed us for long, but I separate S over here because S is always just a derivative from, you know, truck sales, right?

Speaker #3: From my management staff down to every technician. And every one of the organizations. It doesn't matter what you do. It was tough, right? We had to squeeze down.

Speaker #3: And we did. And it was and it had to be contributed by a lot of folks. And those are never easy steps to make, right?

Speaker #3: Because normally, you're right. I mean, we were down year over year, what, two and a half, I think. And see, I'm looking at just G&A.

Speaker #3: Remember, I know you haven't followed us for long. But I separate S over here. Because S is always just a derivative from truck sales, right?

Speaker #3: That's the commission piece off of truck sales. The G&A piece is what we were focused on. And G&A by itself was off two and a half percent in spite of inflation, in spite of normal rates last year, in spite of everything else.

W.M. Rush: That's the commission piece off of truck sales. The G&A piece is what we were focused. G&A by itself was off 2.5% in spite of inflation, in spite of normal raises last year, in spite of everything else. That's the contributions by everybody. You know? It's business. You know, we're gonna try to maintain that discipline. That's always the hardest part, right, is maintaining it if you get into a growing environment. We're not in a growing environment yet, I could talk about it all day. I can see it coming, okay? We gotta get that parts and service business back because that's really what I drive it off of, not so much truck sales. Truck sales are truck sales. That G&A is driven by what we do in the parts and service part of the business.

Rusty Rush: That's the commission piece off of truck sales. The G&A piece is what we were focused. G&A by itself was off 2.5% in spite of inflation, in spite of normal raises last year, in spite of everything else. That's the contributions by everybody. You know? It's business. You know, we're gonna try to maintain that discipline. That's always the hardest part, right, is maintaining it if you get into a growing environment. We're not in a growing environment yet, I could talk about it all day. I can see it coming, okay? We gotta get that parts and service business back because that's really what I drive it off of, not so much truck sales. Truck sales are truck sales. That G&A is driven by what we do in the parts and service part of the business.

Speaker #3: But that took contributions by everybody. As business, we're going to try to maintain that discipline. That's always the hardest part, right? Is maintaining it.

Speaker #3: If you get into a growing environment—we're not in a growing environment yet, but I talk about it all day—I can see it coming.

Speaker #3: Okay? We’ve got to get that parts and service business back, because that’s really what I drive it off of—not so much truck sales.

Speaker #3: Truck sales are truck sales. That G&A is driven by what we do in the parts and service business. So I appreciate everyone's efforts and giving in that first quarter and what we had to do.

W.M. Rush: I appreciate from everyone's efforts in giving in that Q1 and what we had to do. Made it tougher. We had to cut backs. You know, we did them. We executed, and we've done it before, and it's just part of being in a somewhat cyclical business. Sometimes you have to make those tough decisions, right, and squeeze it back. Hopefully, our parts and service will continue to go up and, you know, we'd love that. We'd love to be able to, you know, hire back some stuff again, and that parts and service business continues to go up. We wanna keep the gross we get, mind you, but there's a cost to doing it, right?

Rusty Rush: I appreciate from everyone's efforts in giving in that Q1 and what we had to do. Made it tougher. We had to cut backs. You know, we did them. We executed, and we've done it before, and it's just part of being in a somewhat cyclical business. Sometimes you have to make those tough decisions, right, and squeeze it back. Hopefully, our parts and service will continue to go up and, you know, we'd love that. We'd love to be able to, you know, hire back some stuff again, and that parts and service business continues to go up. We wanna keep the gross we get, mind you, but there's a cost to doing it, right?

Speaker #3: Made it tougher. We had to do some cutbacks. But we did them. We executed. And we've done it before. And it's just part of being in somewhat cyclical business.

Speaker #3: Sometimes you have to make those tough decisions, right? And squeeze it back. So hopefully, our parts and service will continue to go up. And we'd love that.

Speaker #3: We'd love to be able to hire back some stuff again. And if that parts and service business continues to go up, we want to keep the gross we get, mind you.

Speaker #3: But it takes there's a cost to doing it, right? We always tell everybody, "We're trying to keep at least 40, 50 percent of every gross profit dollar of parts and service." But it takes people to make it happen.

W.M. Rush: We always tell everybody, you know, we're trying to keep at least, you know, 40%, 50% of every gross profit dollar of parts and service. It takes people to make it happen. If and when that starts to grow, we'll be able to maybe add some folks to help us. You know, it's a chicken and egg thing. It was a great job by our team to do that. It wasn't me or anything that I did. It was just an overall effort throughout the organization, realizing how tough the quarter was going to be going into it. I'm just extremely proud of the entire organization and their execution. I look forward to hopefully a little more breathing room as we go downstream, you know, without having to be quite so hard and tight on everybody.

Rusty Rush: We always tell everybody, you know, we're trying to keep at least, you know, 40%, 50% of every gross profit dollar of parts and service. It takes people to make it happen. If and when that starts to grow, we'll be able to maybe add some folks to help us. You know, it's a chicken and egg thing. It was a great job by our team to do that. It wasn't me or anything that I did. It was just an overall effort throughout the organization, realizing how tough the quarter was going to be going into it. I'm just extremely proud of the entire organization and their execution. I look forward to hopefully a little more breathing room as we go downstream, you know, without having to be quite so hard and tight on everybody.

Speaker #3: So when that starts to grow, we'll be able to maybe add some folks to help us. It's a chicken-and-egg thing. But it was a great job by our team to do that.

Speaker #3: It wasn't me or anything that I did. It was just an overall effort throughout the organization. Realizing how tough the quarter was going to be going into it.

Speaker #3: So I'm just extremely proud of the entire organization. And their execution. And I look forward to hopefully a little more breathing room as we go downstream without having to be quite so hard and tight on everybody.

Cole Couzens: Super helpful. I'll turn it back. Thanks, Rusty.

Speaker #5: Super helpful. I'll turn it back. Thanks, Rusty.

Speaker #3: Yeah. Look forward to seeing you folks in a couple of three weeks.

W.M. Rush: Yeah. Look forward to seeing you folks in a couple of weeks.

Rusty Rush: Yeah. Look forward to seeing you folks in a couple of weeks.

Cole Couzens: You too.

Speaker #5: You too.

Speaker #1: Thank you. That does conclude today's Q&A session. I would like to turn the call back over to Rusty for closing remarks. Go ahead, please.

Operator: Thank you. That does conclude today's Q&A session. I would like to turn the call back over to Rusty for closing remarks. Go ahead, please.

Speaker #3: Yes. Well, I just want to appreciate everybody joining us this morning. And we will look forward to speaking to everybody in July. And we'll discuss Q2 to see if everything's still the outlook is the same.

W.M. Rush: Yes. Well, I just want to appreciate everybody joining this morning. We will look forward to speaking to everybody in July. We'll discuss the Q2 to see if everything's still, the outlook is the same. I'm banking on it. See you. Thank you. Bye-bye.

Rusty Rush: Yes. Well, I just want to appreciate everybody joining this morning. We will look forward to speaking to everybody in July. We'll discuss the Q2 to see if everything's still, the outlook is the same. I'm banking on it. See you. Thank you. Bye-bye.

Speaker #3: I'm banking on it. See you. Thank you. Bye-bye.

Operator: Thank you for joining today's program. You may now disconnect.

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