Rush Enterprises (RUSHA) 14 Feb 242023 Q4 Earnings call transcript

Hello, and thank you for standing by. Welcome to Rush Enterprises, Inc. reports Fourth Quarter 2023 Earnings Results. [Operator Instructions]

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

and call. our morning, XXXX quarter earnings release welcome good fourth to year-end Well,

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

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

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

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

we common addition, dividend share. pleased cash are per In to $X.XX of a declare

we new commercial throughout industry significantly year, leads will remains with that Class trucks, significant us production respect to new Throughout the With demand solid. past XXXX, X to production vehicle there the which was vehicles, demand respect -- few to manufacturers the pent-up end to commercial The represent, fulfilled commercial vehicles to over by X-X the truck new X-X XXXX. With where which demand to limited was new the due we of for sales. years. Class largely Class respect led outpacing pent-up us increase

was to the growth softness in great which to range challenging XXXX, customers. we and fleets including and operating The in caused in wholesale ability rates energy primarily low demand to sector, freight able interest service to from segments of We sales a and led support, market industry-wide. parts public a aftermarket growth high general were rates healthy our our Despite and diverse environment revenues. refuse, by large due support strong achieve

In both due the financial network. addition, of our strategic technician performance are service to Expanding center and workforce in of our aftermarket our we is our [ revenues our service also operational aspect key to increased initiatives. addition a -- Overall, proud XXXX. of technicians and ] very of XXX

aftermarket, the rate and our body In our over XXXX XXX.X%. aftermarket and absorption annual $X.X parts, shop X% up was results service were revenues billion, annual

added service certain to our I services, [indiscernible] including technicians on As Xpress which previously initiatives, XXX we execute our year, mobile ability enhanced last maintenance contract and network mentioned, offerings. to commercial service

healthy growth also sales customers. from refuse our We energy, leasing parts experienced and

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

However, we summer. to recession current that are begin freight cautiously the may optimistic ease in

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

market Class new for sales. in the sold trucks We X% of XXXX, in X X.X% XX,XXX the U.S. X X Class truck Class Canada. market and of to total Turning accounting

experienced As demand previously stated, market we from a variety healthy of segments.

be due Class Class be from satisfied. X roughly in down However, the new XXXX. sales is XXXX ACT retail sales customer significantly and Research on base able due Class our our to outpace the in on conditions, years vocational XX% industry to market customers. navigate industry a focus confident Though year to XXXX, in and strategic X diversify we expecting been demand the prior to in are be units and the to pent-up challenging XXX,XXX forecasts we'll has X down truck economic to down XXXX decisions industry that we made

market. XX,XXX X-X XXXX Class and truck units of Our new or of the market sales X.X% the reached X.X% in U.S. Canadian

to and In significantly years, commercial industry ] [ the support the addition, the efforts few pent-up manufacturers medium-duty ongoing were demand throughout due allowed outperform that year. last national accounts, with represent our Those the large XXXX. to production to our us factors, customer to able over base limited increase vehicle production we along new diversify in

We fourth XXXX quarter, experiencing up impacted to retail the forecast somewhat. from growth during XXX,XXX truck Class delays are companies, which delays -- -- units body X-X deliveries sales XXXX, Research these XXXX XXXX. still slightly our -- be we ACT in in from look limited and as

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

but rates truck XXXX, Our soft demand In flat weak throughout for was used expect values rate over truck will trucks units truck used relatively declined in somewhat remain we of and XXXX. used sales values will which the will the decrease high X,XXX the compared used freight to are to for and flat, reached the course Due demand interest trucks stabilize used used XXXX. depreciating and to that year. XXXX, continue rates, at trucks

move and mix us used truck product continue the network help navigate diverse effectively inventory market throughout in XXXX. our confident ability to to our will to are We

soft remains of from be continue X-X demand we for to X to impact body Class commercial while delays Class may should Class expect demand deliveries ahead, trucks be companies Looking It vehicles commercial noted that new for X-X healthy. vehicles.

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

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

your take I'll questions. that, With

Our Long Instructions] [Operator Stephens. from the question Justin line comes of with first

with in the And the accounts parts just buckets basis your smaller the service that quarter? the about I'm you've divergence I customers. parts trends the a to bottomed? level So fourth guess confidence general start on national service and business curious has business, the X performed and between those of talked and in net how

I confident said didn't didn't want to -- up. that push to in my least pretty I I'm expect where remain we at notes to as good Well, like want I are. we as

think and growth in there's I room services for XXXX. in parts

As were half I the along the where XXXX. of year would second pacing we said, if it just works, in in we be

last were about day, is almost down look calls. you and always The this of At for if right? I small months, accounts, fact We last When XX%. talked that the it of do -- right? end the at the pieces, -- you look couple before, the take at X you the what year, love they parts to -- to

only X% through front me, X% in X% help throughout I of Now I about but the it that ramped have know in -- don't ] to it [ year. quarter-wise, and up started QX

we And those the So what to is make somewhere down I up call got business. what those accounts. realize still But sometimes QX accounts in believe have XX% XX% XX% you that our to range. of unassigned was are probably don't

So year, look you about to really about talk where got and over at. the at down when what like to you feel you that decline you're did we continuing being good

I what some able of I've before, our shift accounts, of a one Like a this over were the along [indiscernible] their right? in -- as And better know the obviously in got because right? I doing to fourth it outside. it XX% were don't probably year national but softer up. X/X are the national XX% margins more down in the have -- to XX% decline accounts, can I was right, the quarter, said, to So of year. make our it's That's believe, business we me, [indiscernible] was pricing I more like were for XX% QX, in said front we of the it demand pushing with to which range business in maybe

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

site. a to mid-level the through level corporate highest the at people Assigning

network. form accounts, the they or high We their and accounts. or put midsized down that, relationships they're they the level while to have to have you corporation have some -- the focus And on over whatever you've all they national the -- XXX-plus do in the areas across business outside the salespeople. of the individual end have, on we to have with And service have push got the way street parts of terminals when really both they you in on to that whatever local shops

[ with an rate XX% your with of it allowed X% X/X being achieve growth that, on that us to business. down So ]

like business But by being overcome a net to little that extrapolate with can good or they're the we higher -- how a had. small right? it I'd focus That's what of -- and say you off margin accounts, that -- X/X accounts, was were see to the your them can company, the you overcome softer able what XX% your we the -- little -- So right? unassigned accounts the because why to

changing. that So we don't see

for that it market, a So company's to real what year what, as reports. when good you back lot freight It know, read that been does decently a to when X.X to about [indiscernible]. got feel where the X in got guy It come last do be the does of direction, -- we've going other stress small almost. here which you -- you're years, you've back, when freight doing like the believe, -- seems been while the the to all the when recession is -- pivots well, got under has all been you years

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

teens. and in but got number XX%. a I I that. -- Yes, XX% Around lot they about, somewhere break stores XX% were total which so different talking in segments were the too they don't the of up somewhere still don't too. have midsized -- we've it into We we're many between up the high because in customers,

have still customers. we they're As we while thing they're of about also. piece we the forget have on, lot a [indiscernible] of it growing a midsized get largest going We

So XX% okay, you've got national you've roughly, got of we've business. what, small and our accounts, about in got XX%, the

is So largest rough, a us rough customers XX% for middle really the is we that took, customer to bases. has of navigate the is the bucket, of what diversity other right? lot been which what's allowed our time a So really bucket

and customers on when focus lot accounts being I or have Regardless your that up business mid-level But up, overcome to oil those allowed are post the talk into talk about off of up, us right? being a of and it up, national positive refuse that XX% vocational, okay? We And are When buckets. with are up, areas being these XX% being other they're still I up. about on a All of areas year. our gas break whether [indiscernible] still different wholesale they're accounts. and

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

some well. there maybe thoughts as So

for put Yes. ramp expensed -- All first changed, get in here. our it and equity it back XX And up. the is is right? over that the always and all last goes the releases Well, years, G&A but business. We comp that up put the didn't quarter. first natural We has quarter nothing out taxes in and

in model year. You the can in go back every

So expect we that. definitely

was are that for sales be but start to in be There's XXXX or it is perspective, the softer. soft to QX, a knows, to we to base, we're business that it question better, bit couple you by going year, for going okay? about due a that little no of the everyone the expecting. we've And XX%. big I a I truck going like the XX-plus noted that of tell From not all But I declining, years in was to I'm this one and side be demand, XX% down whole be customer that. don't pent-up can the -- it ACT demand. expected the as do diversity expect down as sales to we 'XX didn't the And nothing be with more is agree is, truck key thing no way to expect is over-the-road to given going believe. to our right? I do expect with the expect we

key thing guessing with of EPA January up to into just the 'XX the January they year, there 'XX what the given coming we've won't aftermarket going 'XX of as -- into but are are 'XX will folks EP of regulations. the X that up to to 'XX -- and I'm and are mean, we Can by to going are treatment all But with after 'XX, of going get the half back that prebuy new go this probably realize to is got I get to wake going be the new not pricing, play meet engines technology, systems to -- new regulations X I cost?

So still biggest the as to there. piece the out of will the back go believe market that business [ ] freight older is volume we

in still ] vocation right on that. the in real [indiscernible] But Rush, [ piece. between we're market, it's So not XX-XX, the

cost those So of and I X.X a years the been in I -- year feet their can be realize a quarter feet expect around folks the possibly It's -- underneath back they back will like would them is X, prebuy long said, some or what half their equipment. get [indiscernible] start stuff to get as they under. the here. folks in that this

it From have I I would to want that the minute through there. an that put aftermarket first be I said perspective, yes, up ago. I slightly, half hopes out a went flat were don't when but

that and we still couple over have last initiatives keep [indiscernible] the are have years. of of we on of ones some we -- think out, a rolled still lot out rolling fruition we I have them the the

got of remember, of that first okay? inflation, X I last Overall, replacement battling focused -- the or is believe the to what it less half So in years still year. not even was we're on ago, extremely also we're report yesterday. obviously, Regardless

share. it'll business So we're and on That's up -- is to share. it taking growth, will be focus what get in real day. every service be We we parts the take

-- But it's to little said as hopes the year. not got be I way that the be we're better in that going was day-to-day, it's as I initiatives out type last as I But focused years, do at -- always to I've confidence easy what right? that love continue strategic to execute past So I better. ] believe organization -- think to have world what can all as like of work. sales flat. forward low in for those, we've a to of compact I'd do, say to [ so the or believe it of the we we've we look truck It's have results the and a we're out I and group a up can is. we'll on our hand-to-hand and to regardless couple there for I go bear as I right? and mid-singles that can the executed in as market on laid the execute the

market, day. to we're I I do than I expect that's guarantee that am but But I working truck better. a I I better make to want that. to can but to be don't do you -- can't every -- promise expect going going XX%. to not

You lead the don't have times.

That's had. allocation have don't anymore. out like You there you

I've like got backlog of not year long trucks. it's a So

I won't and most can it, we of say some. sell trucks give QX, So you in sell still I'll I'll you still

at. So that's We're just to where we're back normal times.

Okay.

Let's to when truck it say that comes sales. just

allocation April whether an do do in it's come I next going no February, allocation -- I time there's to it's year. market back I doubt an in tell in next of year that but mind to my think you, that I we'll back will we to 'XX. be be whether can almost pass, that can't believe this will

one there? expectations XXXX. free Rusty, it. trough Got last expectations the Any in to about And your in you've earnings and flow outlook cash talked for change me,

None okay? -- as anything take the like said I to over-deliver last of focused usual, whatsoever. don't back I couple in years, I've we're that. on And about

Our next question Bank the Obin from comes line of with of Andrew America.

-- think saying out? you that called called before. Are It sometime of I the seems and bottom that's calling have the around basically know -- bottom -- it's don't cycle summer. you're this the of you because you've the will you cycle bottom what cycle

so. think I Yes,

the -- we're is it -- Class business There base. about finishing not carryover different. think we're year. a that to you're XX XX to trucks things bodies I more into up for talking customer Remember, is the going times, carryover. frame. and trucks up truck I'm of get we're X them. have it what sales, little Aftermarket comes little be be to is end lot talking at the days manufacture A to to QX business. our okay? summer a delivered them. from can But it deliver don't truck aftermarket difficult I take have to when that, We we like than comes We sales, of When to think those about totally the experienced. and going some

vocational I So side. on the say

been years. Class do So again, the in tell will last it believe, time part, said, freight [indiscernible] to I of the that be But I as be summer. I expect deliveries -- you as cannot don't some would will X it's it continue, us in Yes, rough for probably couple I like

the do January 'XX. 'XX firmly prebuy in people And Most question. pick be biggest will that expect emissions EPA conditions overall a be So history, -- decent expect believe X, loss I right? the along the country, I to given up. year it of would in with XXXX what to economic without in

So seen. will the But will be of yes. the start But again, yes, truck be into end QX I mean, have I to majority XX%, we you, we than the of bouncing second and when the it I QX sales year. in expect would or by summer believe say I softer think back in tell the -- the I what summer,

pricing just Excellent. bottoming? And used on -- is when remind you can us

Andrew, a I wish Well, is -- gladly any... which give -- you raise, -- me would take you it but better I that, tell I if could

You're doing fine, Rusty.

doing I is. think you're fine it as

overpaid. would probably that. I say Okay. agree I'm with Did I that?

I'll you, I -- will Andrew, No, pricing truck this the continued. say tell has in decline used

say, it is ago. was, still not it what as normal. is It more than While X.X dramatic as years declining

something I think back you when [ to ], at if ] truck is look or like average and was like that 'XX the in XXs XX,XXX our or that, ]. price you used [ high average go [indiscernible] and was [ XX,XXX XX,XXX [indiscernible]

year I tell got when tell still exactly you don't the it happen down the believe right? got is get but is main shape that when, of but thing. -- of far and look I But before spread could believe forward it go. raise, my driver And So you, the it trucks which one you markets, the when, so that I I Demand to values with guess what but much, problem used quick would don't the has now, in when to means is other, out, pricing rough such next. got they so it's gotten I inflationary can't you is the though. That only to sometime happens, truck spot cost are will you've watch.

on create which market got not pressure that back. people in on put you loads, on batches It but are means week a fast as at the market numbers are will as trucks to put the it. of spot this to the to But most which driving continue market. pressure the There was decline It faster over rate, thing on big puts couple get it to still being declining. is important a demand,

to go have these of stabilize decelerating faster up are, business I these it again and -- market normal use say really still percentages spot other make back You've what truck it's than values got right? to would some over-the-road --

Just a question.

just country weeks asking the just have In macro, terms is I question economy great the weeks, you holding X up expectations it's how anybody us this around always relative you best just cover. by only some and And that I -- systems. take X ago? know love because of I do to region, the Can your you have but I systems maybe of of

what U.S. the [indiscernible] Just us can around us maybe you economy. country of view tell Rush's, Rusty the take and

Well, Texas, biggest in we would concentration the right? And just obviously, is doing be have Texas fine.

decent. I the may we still the be well, we're year ] a -- decent the think what in growing going perspective hours the I inventory, markets have there. going and is is things -- is there's is you, in the I we business for are -- still The softer Florida got like California back with states I into growing by sure California little car in suffering that doing but maybe lately we out great. the that good Texas business getting both fairly the do over through, still on but the think truck Illinois to strong. came Our [ Right half I sales on they're of the and state to -- Arizona carry and doing they would to doing make stores, is highest West here. We population get worry from -- XX and is still well. side. some to in is coming that tell new still time in about [indiscernible] -- Ohio, now, nation -- a shape. Oklahoma

Like there then to reason, and up. expect in expect little really decent so that Ohio said, up hold to I've state don't softness a Board. it's pretty the little that a noticed whatever come across for back. probably in softer I I but So recently, or a I

go you gives I hope I some -- -- it ahead. mean So

the hits right Construction out road -- both pretty better. our the is now But of other markets really know seeing like large markets. person, the which small and better that out on [indiscernible] for good the customer refuse it is much order keep mix. we business, hope at will looking breaking strong. one. how, the But what markets [indiscernible] the we're in help That's for I going geographic we with

small customer Construction with is be going shape doing extremely holding rates, That's X/X expect I a come growth well. said good overcome I in the right? we're [indiscernible] It's customer, hardest the off strong is why going and the Municipal we're near being our that really double like business continue. in said, does the digits. moderate back when business small business, in to earlier, as that of to because we got is thing we've having

I that And continue back. So that that's right be -- are given don't expect vocational being strong, to now. are bring out -- government will I there spent monies to the that

we I we'll [indiscernible] the said I'll be at -- my to time, was. guns is highest to by still going 'XX I'll past, that's was business do. profitable and about earlier grow of take same to a the aftermarket, go market, But the That's not is share asked the the I've organization. 'XX to and what it's what execute in can't stick -- the in look, most the So I going goal make Justin in truck be market, right? as truck

Enterprises fair that that I a solid, Is bottoming, executing. were is summary? is economy market summarize to is So truck if Rush

well, back I in had we've we guarantee us like we decline, build moving back numbers, but in I see we're only did times. but we're still think. don't that, still the we right, the in I of what COVID did allocation to think did because I in going maybe but believe, in the be to a normalized been to 'XX, that guess market of you That's it of get maybe to of to like and I what inside XX-plus better 'XX execute target, that. than out even It's going proof 'XX what can percent in. -- with We're really anything, world something. us what not 'XX, a what right? we X a I is we year, guarantee 'XX, Class can't We this to by half I live want so

And there the -- share in always sharpen that their been and able more do up and competitive a so we've some company the everybody's tools little environment. go is to got to that. take But work to and to

You know my view, you organization. a guys had high-quality built

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

morning, Thank very joining want us a in will have Yes. to ones, and I thank everybody for this love and much. we Happy Day. your And see you you mid-April. Valentine's you

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

You may now disconnect.