• Annual Revenue: $7.8 billion for 2024.
• Quarterly Revenue: $2 billion for the fourth quarter.
• Annual Net Income: $304.2 million for 2024.
• Quarterly Net Income: $74.7 million for the fourth quarter.
• Earnings Per Share (EPS): $3.72 per diluted share annually; $0.91 per diluted share for the fourth quarter.
• Cash Dividend: $0.18 per common share.
• Aftermarket Revenue: $2.5 billion, down 1.8% from 2023.
• Absorption Ratio: 132.2% compared to 135.3% in 2023.
• New Class A Truck Sales: 15,465 units in 2024, down 11.4% year over year.
• New Class 4 to 7 Truck Sales: 13,935 units in 2024, up 5.1% year over year.
• Used Truck Sales: 7,110 units in 2024, flat year over year.
• Leasing and Rental Revenue: $354.9 million, flat compared to 2023.

• Warning! GuruFocus has detected 10 Warning Signs with CHCT.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rush Enterprises Inc (NASDAQ:RUSHA) reported $7.8 billion in annual revenues for 2024, with a net income of $304.2 million.
• The company announced a cash dividend of $0.18 per common share, reflecting a commitment to returning value to shareholders.
• Strong performance in Class 4 to 7 truck sales, with a 5.1% year-over-year increase, outperforming the market.
• Despite a challenging market, Rush Enterprises Inc (NASDAQ:RUSHA) managed to grow its market share in the aftermarket segment by expanding its national account sales force.
• The leasing division continues to be a key contributor to overall performance, with leasing revenue increasing as the company replaced 1,500 units in its fleet.

Negative Points

• The company faced a challenging year due to the ongoing freight recession, high interest rates, and economic uncertainty, impacting demand for new Class A trucks.
• Aftermarket revenue was down 1.8% from 2023, with an absorption ratio decrease from 135.3% to 132.2%.
• New Class A truck sales were down 11.4% year-over-year, with high inventory levels and competitive pricing affecting performance.
• The used truck market was challenging due to declining values and tight credit conditions.
• Potential tariffs on vehicles and component parts manufactured in Canada, Mexico, or China could significantly increase the aggregate price of new commercial vehicles or parts, potentially decreasing demand in 2025.

Q & A Highlights

Q: Rusty, your commentary about second half recovery, how should we think about earning seasonality in 2025 versus a normal seasonal pattern? And specifically, when does parts and service turn positive again? A: The first half of 2025 will still feel the effects of the freight recession, but signs of activity are emerging. We expect a ramp-up throughout the year, with a stronger second half. Parts and service should see growth in the mid-single digits in the latter half of the year. We aim to maintain a conservative outlook while focusing on strategic initiatives to drive growth. W. M. Rush, CEO

Q: How should we think about SG&A control as you ramp into the next cycle? Will it look similar to the prior cycle or are there any incremental savings as you get efficiency? A: SG&A is directly tied to truck sales, and we aim to keep it around 25% of gross profit. We managed to reduce G&A expenses by nearly 5% year-over-year in Q4. As we ramp up, we aim to retain 40-50% of gross profit from parts and service. E-commerce evolution may help reduce costs, but we continue to focus on efficiency improvements. W. M. Rush, CEO

Q: How are you thinking about the vocational side of the business in 2025? A: We expect the vocational market to remain strong in 2025, with demand in construction, refuse, and potentially oil fields. While backlogs aren't as deep as before, demand remains robust. We anticipate the ability to build trucks within 60 days, with factories not running at full capacity, allowing for quick ramp-up if needed. W. M. Rush, CEO

Q: Can you talk about what's driving the strength in medium duty and what you're expecting in 2025? A: Medium duty had a strong year due to pent-up demand from previous supply issues. With supply now caught up, we expect medium duty sales to be flat in 2025. While demand remains, the backlog isn't as significant as before. We anticipate a consistent performance throughout the year. W. M. Rush, CEO

Q: What are the latest conversations with customers regarding emissions regulations and pre-buy activity? A: There's uncertainty due to potential changes in emissions regulations. The EPA is challenging previous clean truck rules, which could delay electric vehicle requirements. We expect diesel regulations to proceed, possibly with some adjustments. Pre-buy activity is anticipated, but the extent depends on regulatory clarity. W. M. Rush, CEO

Q: How are you managing inventory in light of potential tariffs on vehicles and components from Canada, Mexico, or China? A: The proposed tariffs could significantly increase truck costs, but we believe it's part of negotiation tactics. If enacted, it could add $30,000-$40,000 to truck prices. We are monitoring the situation closely and have contingency plans, but we hope for a resolution that avoids such tariffs. W. M. Rush, CEO

Q: Should we expect discounting on new truck pricing in the first half of 2025? A: We expect pricing to remain flat with slight increases. Broad-based discounting isn't anticipated, as margins were already compressed last year. Demand should keep pricing stable, and we aim to maintain a blended margin of over 9%. W. M. Rush, CEO

Q: Can you discuss the uses of cash and any M&A activity planned for 2025? A: M&A is our first option for cash use, and we aim to return 35-40% to shareholders. We are always exploring opportunities, though nothing imminent. We continue to repurchase stock and raise dividends, reflecting our confidence in the company's value and future prospects. W. M. Rush, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.