Rush Enterprises (RUSHA) 27 Apr 222022 Q1 Earnings call transcript

Good day. And thank you for standing by and welcome to the Rush Enterprises’ First Quarter 2022 Earnings Results Call. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. Rusty Rush, Chairman, CEO and President. Thank you.

you. thank Maria, Yes, welcome first and release XXXX conference call. to morning, quarter our earnings Good

today McRoberts, President are Steve call General the On Mike Secretary. Corporate Financial Michael Vice Jay Counsel and and Keller, Chief Officer; Hazelwood, Controller; Vice and Goldstone, President, Chief Officer; Operating

Steve a regarding few Now, forward-looking will say words statements.

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

indicated million achieved billion of our income quarter diluted net and revenues of $XX $X.X As release, $X.XX first news share. per or we in

quarter, of We results per common spending from proud to quarter. of in the dividend $X.XX continued are We're driven very the and declare proud share. of largely healthy consumer a cash which first the economy were our strong most of

chain component significantly supply – while sales truck new market. parts remained our new me, due the excuse new truck, much to quarter the of While production capacity Class outperformed limited truck issues, A

on ratio from in service In the our annual demand Summit a for with and quarter, the gain was venture dealership joint and the and sale increased also connection customers. quarter. And acquisition initiatives. our were results $XXX from primarily were large quarter energy fleets of XXXX, driven our our performance some parts the first The for was the contributed locations the Further, absorption strategic service demand of XX to parts, with the and revenues refuse, and aftermarket the Group establishment aftermarket revenues aftermarket our on of support in financial Truck and fourth greatly continued body focus million, Our by and first XX.X%. in XXX.X. widespread parts our Cummins especially service, shop as national In healthy, up positively impacted there our financial

add technicians remain service to focused initiatives. our aftermarket continue and strategic We on workforce to our

year, and We expect remain parts strong. the supply demand parts service will constraints but believe will through continue we

large as expansion With dedicated the to well fleets. with professionals as continued national of technicians aftermarket our workforce

our As newly we our locations market our this the results acquired meaningfully year. into integrate aftermarket network, will we believe outperform

X,XXX U.S. total we accounting Turning to Class for new sales, truck X.X% X X sold trucks of market. Class the

for experienced $XXX,XXX demand While is most our is retail production, limited segments by up over-the-road, still support, And from forecasts the Class industry and we sales construction sales new in truck healthy particularly Class X this Research truck U.S. quarter. are vocational with pleased results XXXX, ACT X customers. to market X.X% be we XXXX. plagued we

the and X in capacities sales outpace will backlog demand ability truck our we our will truck production growth expect meet allocation full Class the market, believe we While of limit XXXX. industry strong, and to remains our

X capacity of increasing duty truck first new X.X% X over sales manufacturers market. heavy some limited Our for accounting U.S. units the Class remains through Class X medium the X production production X,XXX in quarter, with reached Though variety from Research through forecast especially healthy retail duty, municipalities. in of and be we experienced vocational XXX,XXX demand units XXXX. to sales X.X% U.S. market from XXXX segments, ACT up a

trucks on the we align industry will in X through to constraints Looking to ahead XXXX. And X we results continue. believe Class production expect our

demand drug the production capacity manufacturers, in truck year-over-year. on experienced slightly by Used in for used values Based to new used from to XXXX. reached rates the began X,XXX XXXX. production units through we continue high spot truck The Our the in historic sales quarter, levels truck constraints values believe remains first strong. XX.X% retrack offset of demand new healthy slightly those may remainder truck decline the resulting be We of will year. softening up

into we to week, This we of offer allow in further our a cross-border network integrate strengthen more expect Next to Truck the our customers. will fully close on sXX%. increase to deal and XX us investment Centres Limited these Rush additional investment to locations transportation support dealership Canada

economic financial we our long-term our and believe strategic new other results focus goals. work year. their for me our this of is to for Looking factors, for ahead, your take with remain and interest to locations. It important employees which spending we and commitment our consumer strong thank will that, our our their outstanding company questions. inflation, along I'll impact With on with rates our management, And expense closely may with growth industry in are monitoring opportunities continued

you. first from comes Justin with Stephens. Thank Our [Operator Long Instructions] question

Your open. is line

Thanks. on Good And congrats morning. great quarter. a

Thank that. you, We Justin. appreciate

service, way of year, think how with trending? through you're much of how at so pretty rate help there that strong. the growth to and as thinking you about the to look was over service growth the the Is parts organic organic us parts and growth guess was in I start rest and there a

question, we there, good in acquisition the right. had Summit a it's of Right, right. Obviously

So around XX% basis was growth but like same-store rate XX% same-store was year-over-year. it not growth looks all

for XX% right. quite strong, accounting about So of that. Summit

at we Well, we high for go to middle, I the the parts in a to still and better April. that going little because know don't but had maintain looking here increase the historical start, would start. manage we got better the ramp, of single-digits. So continue. I extremely would as Not a hope, we're service end I we'll Well, strong it'll forward And look sit to I such that year, I expect sure going little we year. we I’m as probably QX. rest told great through a you, was we that we and looks the did of as for if in anticipate in,

I low same from would continue harder. you, I tell same-store we double-digit, a number, that somewhere So is that to growth to where going that get maybe are believe like little had comps our around

from as so to up the So we're singles, because even go because through your going go last in growing if right still up be year comps year. the the comps high go it's we

anticipated. at, do where So, we we're got we faster than But we're good feel start about feel we the good in. market little a about

have foreseeable there to let just to see out that's but nothing we there's anyway. we'll that So, change going play it in the future out, that

helpful. That's Okay.

in spot have rates moderate to but here prepared recently. mentioned the started comments, it You

You've out some there. uncertainties got macro

I recession the think potential for XXXX. some are a freight more into concerned about looking

the freight that as service scenario, model you specifically recession? in business, parts would expect you perform and just think the testing with So to about a that how in stress segment

when to of growth sales year, fleet that I the growth recessionary double-digits get got we'll singles, maintain go comps. in hoping environment this type would be now, recessionary to typically slow you environment, that freight does maintain can just down with even going I we’re the up. would would mean in does to of perform this can't rates that. I mid later Because stay same-store, expect XX%, we expect those, to that type have rates, those environment into well say that the we healthy but the age harder this do like same we're still able something that and if

time, So there opportunities same at the are there. out more

of your model with if get our perspective. some recessionary For also replacement gives kind sales environment doesn't environment, type down, those, business service, you us a go fleet ages but the act. do have the of it about one both vast is a obviously both of if that of parts inside keep recessionary, right, some a it great and with truck up does when there’s – from trucks balance so that's balancing you market things And rising freight

So where as still strong, – rates rates quite solid. your where there’s your growth aren’t

shift service in or business asked unique in at the wherever sales. the that’s there. see time we the that’s get no. thing could have you That’s over mean don’t from you business have look top, model, the parts fall in in model. the the And that’s about three our if that ago, why you mind said You you I when years over would’ve XXX% to four I me absorption, my off

absorption which all impact of we ratio, parts the driven more is strengthened the service, the more insulate by recession. and a So overall we freight

how me could that the helpful. That’s on Okay. the trend production, is Rusty, any Last over sequentially rest on year? very thoughts of one OE for

look quarter think XX,XXX. XX,XXX were we side, running U.S. they’ve the to two ACT so you if fourth to Well, retail, Class or X up they’re XXs which I at up got about

So going obviously to up. grow that’s

XX, saying XX. they’re think was I QX, it

what’s lessen. So it they And year-over-year continue as year. you’ve shortages reasons remember same obviously, only in parts case one We at they think got either. think time, I QX told is mean, what’s There’s is already X% started lot QX. in the whole I before in because a tail I I to we said believe go do don’t go or X%, the and what that going the like I delivered that typically be think everybody they have it a to built is away to dog. don’t the this on the X% was will the that of up manufacturers was hopefully of

off So behind already. we X% started XXXX

they will QX, overtake or And somewhat the then probably later the year. it’ll that flat. in pickup in that Now the come they’ll will will be built

so go get banking around short on sequentially, So they’re parts to totally up not away deliveries. somewhat, and XX,XXX QX subside shortages

early to last agree as The okay. ago as from started, not when So right issue year, but September will with time that just It’s August, of it was hasn’t, you say a I’m are really I that at production told ended them. what hopefully – or to was. time was I summer year. rough. it at inclined most manufacturers toughest this right, rough would’ve timeframe their side a September But last fall summer, last end from up the was year supply just

continue trend the rest just of does would that the expect I to ACT So to continue that line through year. as

Appreciate Thanks, time. Rusty. Okay. the

Thank you. You bet.

you. Thank

comes next Jamie Cook with Our question Suisse. from Credit

Your open. is line

sort that Nice that is? understanding. very of in then could from that the do on Class after think on the X have follow-up But in used. That a obviously a that. and good side truck I market a then where Rusty, share One, guess of sustainability probably quarter. the the you your coming Hi, morning. margins lot you was And question just couple sustainable was industry just how you that, the strength saw to questions. And the the on that. strength shares follow-up elaborate were strong on I

don’t I when I comes market. – if rises, number I to know know you numbers, that six, six X.X we the Yes, market the if don’t maintain Class six, two. Jamie. over was the we were time, same-store Sure, it I but we maintain gave about X

Okay.

which better. our up other faster to picks think and year the their was should I think. really as I that goes actually is others would should number The sustainable, would the They the sure be little they I do there we top Summit pace side that safety as for it up acquisition, manufacturer but think a production you tell some expect that. than forward, is I absolute some there’s the

Okay. Remember, we’re We okay. getting, know we’re allocation. on what

that the to that late number, but had which market. But think to first push maintain we do – going a upside same got in we’ve absolute the I such some into you really I question we do no a tell it. would we quarter I least flowed had believe I there’s strong believe believe at to we’ll we’re while end, compared first quarter year So

pretty allocation, out we’ve see Given we far just got we’re on coming. can what

and year, we your bit quicker. road a things get the product end of you hopefully user, finishes feel of little solid to to the Sometimes a some timing into sixes about comes stuff the get to to year it’s stuff and XX because bodies days days mix just sometimes vocation XXX take when like in this do better. get good and the to delivered over that, matter and But when being

that. about So the me And ask question? good you was about last we feel what

margin. The

slightly Margins. margins used down, good. were Yes. used On were used about margins, new volume margins – were was especially, sequentially flat,

absolute were strong. dollars So

going used and new time, pressure is picks it As put At production same the margins. to you’ve truck that’s gradual. believe on got volumes the up, to

like I going to happen. offset think an there’s

Okay.

year at as we’re been think, believe, we know, look do do least a you doing said, for I you whole, as at to what the as I deliveries. X I a quarter back whole, of not Class like the four, going half have but

– QX. I the start don’t truck Used will QX, offset trending the the dramatically seen that should drop have said, is that and as to down do months, we’ll for look right the good they down deliveries or used XX over came new did in I as probably think we them into but I retail what better of marketplace from than margins go we used as used some demand. last now,

a falling I – forward. see the away Not at But probably margins it used used still see I that I don’t gradual do So going begin see with. clipping don’t moment. right to typically, typically percentages that we But that all do. decline XX% above we’re

going lot do, spot see we think the lot’s pretty down it markets we’ll that. in more confident year in it’s I’m strong have truck increase it more down Because bit out in for new than a obviously and use, bit I effects. down was the sure. to remain with QX play a as a to a is. a it’ll typically still much let little market to the and pretty first how quarter than have And typically spot just little little deliveries, watch typically

So a and that direct a between that’s lot times a the used of – there’s market. correlation that

I So anything. not I I said, – as mean, I’m run don’t from

We will perspective. inventory monitor terms because are our really that, good continue our from to

keep job. the it of watching a So I’m we’ll just done team. real They’ve used and proud truck great

the the months. As been organization, last get But side that the over sometimes have the leasing XX deserve. used side just they parts of don’t outstanding the and accolades sometimes

take anyway, So you next. I’ll

or I there about place Yes. And for you and better out point orders you had. given a books there’s Thanks. open start allocation OE some particular when you follow And I’m macro but do than said XXXX? for XXXX, indicators get I wondering order wanting at concerning, up in you’re obviously, just underserved you know what like the you the market. think to if are up, some to customers on visibility usually that we’ve would’ve telling the are

got OEMs it opened all, from but don’t I And told. most to right. couple expect get opened access really most bet. I up have that’s You them not not here to across the – summer. a you them think pretty I board automaker. what up of of mean, have have I as up. we think I their I’m XXXX open not into it I as

through vision the this and We’re better have cost, right. going your better, you to be should halfway to year a

You conservative Some been manufacturers are we’ve they’re year, over opening, slightly being in after looking last not of right they’re been all to the back to because that through but I have robust – have manufacturing other. this now people and pains margins what what going think – for the going chip environment, the issues right? to a were know through been be cost the stuff, the the

the June, they're should where – all going in with time from July probably a time, be might line. by cost dealt be OEMs with this customers By in be I to their being open I have to XXXX. know back it, to have perspective some hopefully Because margins surcharges care, just OEMs, be year, all I most get get everybody. cautious people we full that trying so spent and don't insight few to it they're a they of enough So, orders, expect but taking to have

that Surcharges customer in they so, manufacturer really don't as middle dealer. And a through fun me for to again. want a go or or a the not are

that. delivered price what off we So it's product price. environment do the really and at has that do allowed to But better of not historically

that on some all sides. sometimes angst So creates

that. say just Let's

you. Thank Great Okay. job.

bet. You Jamie. Thanks,

Andrew question of a Bank from have with Obin We Instructions] [Operator America. you. Thank

line open. is Your

Rusty. morning, Good

Mr. good Obin. Well, morning,

morning. nice from So this hear to you

I So question. a have

much year, to So to given money tends are your figure historically quarters then fairly make out from and weakest relatively it's how the you in flat QX any there. be flat,

get by $X a start multiply $X.XX four made that of easily. plus, we to So, out, so we that if number north you

Andrew, we’re...

I'll no, no, No, finish.

morning. job this Great

fact – unsustainable mix. new margins, I because probably truck think new long-term the the probably used highlighted margins, Jamie, that truck margins of So and gross

to volume sort inflation recession, of flat. and service then said labor growth you don't I probably your and lowering those volume say were down even would historically. stepped And yourself single a rates let's year. relatively your you you streamline this continuing in see experience where state digits still tough can on So that freight and And mid year between in shortages parts of high next efficiencies, business labor they probably it, has I could and that SG&A been SG&A top imagine because probably

good – run north and all well, about that new Rush. run just the as of earnings earnings rate sort earnings of rate? a And right number improved the put $X. with is is Because I for So I up I'm asking, What's power the come what it thinking normalized way is together, for Rush. of for long-term of

way I to you Andrew, danced love get it. all the around

You guidance. and know, macro of not company. guidance fine you're give going I the you will give a direct you earnings I'm to follower

Well, I'm for bit more average, little make efficient. to not your not just of sort business I continue year can you if asking, will I'm I'm SG&A asking sure your right, want to not a I'm make volumes above saying. grow, this guidance. probably service But asking.

that what we is Let's above but lower, that – I'm be half should year average. all say structurally they be seems this normalized not should asking not off. – But that is far earnings it of

in question. say. okay? a have people No The some what take XX months XX know shape we if get that would way trough, there’s No to troughs, company’s months, better recession question. no number a question. be. get trough, don’t historically in into No, I been as into Andrew, they overall than to We

weathering better. We’re

of don’t running I was [ph]. that. the pretty I’m $X.XX I’m doing X good x Your – of proud year. for from any math you, this not

you I do do just going The business. acquisition is up properly. starting to that the this of the some nothing As accretive. have you’re You strong, And an forever, we a multi year to we read able integrate types and deal the especially weather But the so different the always from basket, into come been be We last troughs in can good shape goes company, I revenues, that is in we’re add you said, speak along expect never in how going to right? to have I think people those it’s of know into remain We yes, any that thing with. value to of that year want. downs weather the straight – it. better some earnings types power you’ve of at themselves. company for numbers to and ups ever mean,

which and perspective, I good is country, for obviously, margins We good will for, is you is if right? stuff or service, of – which and but don’t that in obviously, there, good some, people to, maybe going overall parts gets even maintain going got whole back more think, inflation reporting the offset any and the if from you’ve was well, not in percentages. used And new, for

Scattered a past it It’s So, very trough than downstream this, finish what, will in come up, has – we when I’m not of piece, that the anybody other environments, we max I’m now, than compete things we confident this of provide even prove have from all confident out out over I for to is company our going perspective. and or that that what way dealerships one cycles. this get to can at throughout – a a am look XXX we’re network we to Canada, different numbers, else. is at model and of every, understand but we national the with been slowing down and No and so. think like numbers I mean, us platform XX% years we’re good okay? inflationary I these different feel going to do nevertheless, When anybody

going systems. money. know their and I things people the to the share organization some we’ve think we’re to know of but well, on there. of and on that. Navistar I’m And acquisition, the with excited products dramatically that in Navistar they’re back. and put take and ownership surface get the share The especially are and mean stuff we’re tailwinds They We on still the about do everything quite need – we exact sides numbers that both that off seeing them we’re I’m were to rolling in I our things on next great to best. fairly mean, side and too. our by house the side all And I still are the I market the there the – outside Canadian there so side, Summit many new of still years obviously, has can acquisition, still results performed got upside and you, both, to capital haven’t of will that just spending forward be it over getting There five going with up the stuff. in three their way, are are I years. the we’re even market of like the into these So, and you’re and know. scratching

better. all what be, good Andrew, lot those to right lot anyway, a a model better The troughs they than now says our used things. are So are

really let were doing just it on you we’ll play year. And out. math good So, this the

And try. another then question. I No,

buyback Do forward? lot shape? do bigger, of looking How and in the things the think capital plan the get more given a sort being on the weaker Given about next do allocation, that what’s buyback? in allocation trough, is Board more If perhaps of more the it balance sheet is and fantastic aggressive could is game you terms you that terms Rush think does of capital in service model share seem model aggressive in stable. be

Right.

you so, already we last repurchase. up that in XX% out spent and on and authorized year, this tell it only Obviously only to make X. of they by are return five to million Well million $XXX going shareholders share we've back we're the come last you million said another years already for Xst ways, of XXX other We for dividend May or I know XX%. have two to December I've As at right, $XX $XX December spent and and we million example, can year. we

are somewhat. repurchases our – we we So have accelerated

continue – end we the second look we the in typically the quarter as meeting quarter our we'll don't obviously. the We do at at the do again our too really we'll We'll that quarter will do in We of re-look quarter; situation to more second get at and dividend shareholder prior to this every at end May year, look second of that in meeting. again. the quarter, end second

if and means be, debt to we That be I a want yes, I'll of have paid end in bank, year, mean, by But little my So crazy nothing especially plan. going million Andrew, fleet cash anything. owe to else, everything for than free I the we're other plus $XXX goal the is leasing floor with the probably. – won't

controllable. rate rising whether of Floor interest plan set we're to is shape good kind So any environment. pretty

You turn four it times to three year. a

another We extremely don't have that be So a lot than we on. which projects Other in our still I cash find should the flow maybe rules good. anything major love, have going acquisition, moment. don't of

look think, hit. would pour you question would no to more There's will the takes we repurchase, a especially if market back We I that know.

undervalued we're right think I now.

I'm – a undervalued, business. but just I numbers. the Just run community. We're I'm way the investment look not at not

looking it. looking I'm it's board it, the me, will of at out trust be sure front I'm it's So all and all at and me, there in

go my So forward. will team whole with

continue you $XXX something we it'd in be have million, underway, like no looking, do if cash believe got over $XXX got path I've down be year more all we we'll where if the million in believe if I'll better and to but been especially market So take better returning have, any, debt we returning a – and happen those was you it. the we

seeing and I your and market? the appreciate. market? a in are U.S. give but gas, Midwest What markets are? construction, in asked a you inflation what have us energy, the can markets waste construction oil I – lot know business these fantastic and sense outside the of infrastructure, your just trucking you're you you Because a But is you markets people freight, economy", I "real of commercial appreciated, seeing are in look, have about sort what ton could us freight Florida, it's of vocational trucks, last experience, Texas, question where California, seeing on Rusty, biggest always comments – outside the are could you. like as not you Thank of and the said of in just three real tell you're but

Texas too. once never be It oil People on in people strong. much is talk; I the it'll oil what gas, and geopolitical Sure. be Happy right let's gas more Obviously and not matter going disciplined was. it no remains are what's going know say, area are more to now, let's much disciplined.

we all. the People haven't Yes. spend It a from perspective on increases and capital capital seen at Now just working on has their up are dramatic has, our service it. business using stuff expenditure somewhat? but pick started old expenditure

mean, from but that so up bit don't it's arena I little And a of. think a around we've got service not perspective. huge

because we the income all tax mean, No have people population you mean, an Texas are in long go move to direction and big that time still forward Northeast I those nice, housing markets. I for strong. continuing. housing right? construction driven out Florida, mean, aging the I Florida. a anywhere do I So Texas remains, or or look remains backwards highway that's Florida in keep for Overall, in it. a don't in state out

the that around economy mean, just here. So I bolsters

in many in to there, is many, Antonio. California got here here economy that the having I there. Well, it's up diverse. what projects okay? mean, strong, the doing remains eat. not these know opening and in the Navistar, areas. when it or right? for in I got Antonio, So different. Dallas Austin much anymore, days this remember is Houston, people they is plant just still a XX-plus basin the We out is other in me or much all all Austin more million San San remains strong, example, mean, extremely vessel out like And I oil-driven, the

whole And to right – California. in of still area too, on There's construction so strong. a remains now. remain there's strong, that around there lot Arizona continues going

mean, we're broad before, We I stores driven well, – I they, different look It you're the mean, backlog Navistar next increase Illinois be at is the have little lot So they're down maintain based. our seems But now, bit and because share there. goal And a to some see Ohio. going too. to a still to grow their are economies there say that's even to it's going to again, I – – market of than stores we're But their those and doing tailwinds here the are when – is doing pretty try you I the I best of know And too. be few Preto. right years. well doing Midwest, I over good. said stores, I those think mean, know them like able up

Arkansas I in three, I So four feel and been Kansas, the manufacturers don't for good know I've supporting Missouri about I've months. now What me. – got else, only

over talk those are those big about countries, freight that, So big countries ask but I'm you freight road areas. not the – not are to

we extremely a And network. the here believe the our nicely feel expect time table in covers and be of to We'd can't we bring good all on been We're contributed water that. year. that thing. up our even this the Utah's I increase add But as that the go So states. doing and mean, we pretty well quarter, there. about we bring real much and something while. strong I over that, do that power stir over continue the to we They an and first systems stuff with

– again, in things we've area that's future. the got another and us, I that for think Navistar tailwinds

sitting I'm same in mean, roses business. things are. painting the they every this they just troughs don't the in of true you to organization picture set. I sun we all are, here the But never better see is know set get the up who that and care these navigate So day I at the are I time, you

segment market it from just you – at feel and feel good as an balanced a perspective – So a perspective. when overall do income an we that we very look my stream from overall

deliver that these your worked team Well, extremely I results. to hard know

goes So the credit to them.

all has team we the the board, partnerships and with is suppliers it. across made and the for us. There's it all difference brands no many. job The represent the But an outstanding people about Andrew. the that you, that and across Thank all done people the question the all

like Thank turn you. And the in queue. Rusty for questions showing closing to I'd I'm no Rush back comments. further call to the

you we Have speaking with Okay. a quarter Well, to our you summer everyone July you call. to much, second good to Thank look Steve. the start very up. thank and release coming earnings guys. in with forward

today's you conference concludes call. This Thank for participating.

now You may Everyone, have disconnect. great day. a