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RE

RUSH ENTERPRISES INC \TX\ (RUSHA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $2.01B and diluted EPS was $0.91; revenue was flat year-over-year vs $2.03B, while EPS declined from $0.95; sequentially, revenue rose from $1.90B in Q3 and EPS fell modestly from $0.97 .
  • Aftermarket revenue of $606.3M declined 2.1% year-over-year and sequentially, while the absorption ratio improved year-over-year to 133.0% (vs 130.8%), reflecting disciplined expense control and service mix strength .
  • Vehicle mix showed medium-duty strength (new medium-duty revenue up year-over-year to $400.9M) and resilient vocational/public sector sales; heavy-duty and used sales remained pressured by freight recession and credit conditions .
  • Outlook: management expects Class 8 retail sales to remain challenging in H1 2025, improving in H2; monitoring potential tariffs on Canada/Mexico/China and emissions-driven pre-buy dynamics; committed to growing national accounts, mobile service, and technician workforce .
  • Capital return: $0.18 dividend declared for payment on March 18, 2025; new $150M stock repurchase program adopted in December 2024, with $6.5M repurchased in Q4 and $54.9M dividends paid in 2024 .

What Went Well and What Went Wrong

What Went Well

  • Medium-duty outperformance: new Class 4–7 sales rose 5.1% in 2024 and outpaced the market, with Q4 medium-duty revenue up to $400.9M year-over-year. “We are proud of our medium-duty truck sales performance… and significantly outperformed the market” .
  • Service mix resilience: service and body shop revenues were up year-over-year, and absorption ratio improved to 133.0% in Q4 (vs 130.8% last year), highlighting initiatives like mobile service and planned maintenance .
  • Leasing strength and fleet refresh: lease and rental revenue increased 1.3% in Q4; ~1,500 leasing units replaced in H2 2024, reducing age and maintenance costs and positioning for higher revenue with newer fleet .

What Went Wrong

  • Over-the-road Class 8 demand remained weak, pressuring heavy-duty and parts volumes; Q4 new heavy-duty revenue fell to $773.4M from $816.5M year-over-year, and used vehicle revenue fell to $86.2M from $95.2M .
  • Aftermarket headwinds persisted: Q4 parts and service revenue declined year-over-year to $606.3M and sequentially from $633.0M in Q3 due to lower sales to over-the-road and wholesale customers .
  • Profitability compression: Q4 operating income declined year-over-year to $112.2M (from $120.1M) and gross margin moderated vs last year amid competitive pricing and inventory dynamics industry-wide .

Financial Results

Consolidated Performance vs Prior Periods (chronological: oldest → newest)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$2,029.5 $2,027.0 $1,896.1 $2,009.6
Diluted EPS ($)$0.95 $0.97 $0.97 $0.91
Gross Profit ($USD Millions)$386.1 $392.4 $379.0 $370.1
Operating Income ($USD Millions)$120.1 $124.5 $120.8 $112.2
Net Income Attributable ($USD Millions)$78.0 $78.7 $79.1 $74.8
Gross Margin (%)19.0% 19.4% 20.0% 18.4%
Net Income Margin (%)3.85% 3.88% 4.17% 3.72%

Notes: Gross and net margin percentages calculated from cited revenue, gross profit, and net income figures .

Segment Revenue Breakdown

Segment Revenue ($USD Millions)Q2 2024Q3 2024Q4 2024
New & Used Commercial Vehicle Sales$1,300.3 $1,163.3 $1,301.9
Parts & Service$627.4 $633.0 $606.3
Lease & Rental$87.6 $89.1 $90.2
Finance & Insurance$5.9 $5.8 $4.9
Other$5.7 $4.9 $6.2
Total Revenue$2,027.0 $1,896.1 $2,009.6

Vehicle Sales Mix (Quarterly)

Vehicle Sales Revenue ($USD Millions)Q3 2024Q4 2023Q4 2024
New Heavy-Duty$677.9 $816.5 $773.4
New Medium-Duty (incl. bus)$361.8 $359.8 $400.9
New Light-Duty$33.5 $28.2 $32.2
Used Vehicles$81.3 $95.2 $86.2
Other Vehicles$8.8 $10.0 $9.3
Absorption Ratio132.6% 130.8% 133.0%

KPIs

KPIQ2 2024Q3 2024Q4 2024
New Heavy-Duty Units Delivered4,128 3,604 4,239
New Medium-Duty Units Delivered3,691 3,379 3,534
New Light-Duty Units Delivered537 574 538
Used Units Delivered1,723 1,829 1,740
Parts & Service Revenue ($M)$627.4 $633.0 $606.3
Lease & Rental Revenue ($M)$87.6 $89.1 $90.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New Class 8 truck salesQ4 2024→2025Expect Q4 increase vs Q3; sales remain challenging through H1 2025 Challenging H1 2025; acceleration in H2 2025; expect to keep pace with market Maintained cautious near-term; improving back half
Medium-duty salesQ4 2024→2025Demand solid; increase market share; monitoring body delays Market softened slightly but positioned to grow market share; “Ready to Roll” program supports quick delivery Slightly lowered near-term market view; maintain share growth
Aftermarket parts & serviceQ4 2024→Q1 2025Typical seasonal decline in Q4; slow improvement beginning Q1 2025 Weak early 2025; expect improvement and growth as freight recovers; expand mobile technicians Maintained cautious Q1; more explicit growth initiatives
SG&AQ1 2025Not specifiedExpect sequentially higher in Q1 due to seasonal benefits/taxes New disclosure (seasonality)
Emissions/pre-buy2025–2027Pre-buy activity not significant until 2025 Expect some pre-buy later in 2025 related to EPA “Clean Diesel” regs (effective 2027) Shift to more explicit pre-buy expectation
Tariffs risk2025Not specifiedMonitoring proposed tariffs on Canada/Mexico/China; could reduce demand if enacted New risk flag
DividendQ1 2025$0.18 declared for Dec 12, 2024 $0.18 declared for Mar 18, 2025; record Mar 3 Maintained
Stock repurchaseDec 2024–2025Prior $150M program terminated 12/2/24 after $77.5M used New $150M program through 12/31/2025; $6.5M repurchased in Q4 Renewed program; active in Q4

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Tariffs/macroFocus on freight recession and high rates impacting demand Explicit monitoring of proposed tariffs on Canada/Mexico/China; cost impact could be $30–40K per truck if enacted; skeptical of enactment but preparing New risk highlighted; potential demand pressure if enacted
Emissions/pre-buyNo significant pre-buy until 2025 Expect some pre-buy later in 2025 tied to 2027 diesel regs; warranties/costs under discussion; long-term tech transition paced realistically Growing narrative around pre-buy and regulatory clarity
Aftermarket strategyStrategic initiatives (planned maintenance, Xpress) to outperform; absorption stable Expand national accounts; add mobile techs; aim to reduce dwell time, increase back-counter sales; weak early 2025 then improve Execution focus; near-term softness, improving later
Medium-duty supply chainLead times improving; outperformed market; watch body delays Market softened slightly; ready-to-roll program supports quick delivery; maintain share growth Normalizing supply; sustaining share
SG&A/expense disciplineCut operating expenses responsibly to match revenue softening SG&A to rise seasonally in Q1; intent to hold 40–50% of incremental back-end gross profit in ramp; leverage tech/e-com to cap costs Continued discipline; structural efficiency focus
Leasing & rentalSlight rental utilization decline; fleet refresh lowers costs 1,500 units replaced in H2; expect strong 2025 leasing & rental Positive trajectory

Management Commentary

  • Strategic message: “Despite persistent headwinds… our strength in vocational and public sector… and significantly outpaced the market in medium-duty sales” .
  • Capital return confidence: “Quarterly cash dividend of $.18… and $150 million stock repurchase program… reflects our continued confidence in our ability to generate strong free cash flow…” .
  • Operational focus: “We expect our aftermarket operations to outperform the market in 2025… we are committed to growing our technician workforce, particularly mobile technicians” .
  • Regulatory/tariff stance: “We are currently monitoring proposed tariffs… If such tariffs… significantly increase price… demand… may be negatively impacted in 2025” ; and detailed color on emissions/pre-buy timing and warranty/cost dynamics .

Q&A Highlights

  • Seasonality and cadence: Management sees a ramp from a tougher start in H1 to stronger H2 2025; expects parts/services to move toward mid-single-digit growth in back half as freight recovers .
  • SG&A control: Target to retain ~40–50% of incremental back-end gross profit during ramp, leverage technology/e-commerce to limit expense growth despite necessary staffing .
  • Vocational demand: Vocational remains strong across refuse, municipal, construction; potential oilfield pickup could offset softness elsewhere; backlog normalized vs 2023 .
  • Medium-duty expectations: With supply caught up, expect flat year-over-year for 2025 medium-duty, still strong results and quick delivery capability via Ready-to-Roll .
  • Capital allocation/M&A: M&A is first option for cash use; renewed five-year credit lines; ongoing consistent repurchases under $150M plan, with dividend increases over time .
  • Tariffs and pricing: Broad-based discounting not expected in H1 2025; margins already compressed; demand should keep pricing “pretty flat” absent tariff shocks .

Estimates Context

  • S&P Global Wall Street consensus estimates for Q4 2024 revenue and EPS were unavailable due to data access limits at the time of analysis. As a result, we cannot assess beats/misses versus consensus for this quarter. Values would normally be retrieved from S&P Global; unavailable in this instance.*

Key Takeaways for Investors

  • Mixed quarter with resilient medium-duty and vocational sales offsetting continued over-the-road weakness; aftermarket softness persisted but absorption improved and service mix held up .
  • Sequential revenue growth from Q3 to Q4 suggests stabilization entering 2025; however, profitability compressed year-over-year amid competitive truck pricing and lower parts volumes .
  • H1 2025 likely sluggish for Class 8 and aftermarket; H2 improvement driven by freight rate recovery and potential emissions-related pre-buy; monitor regulatory clarity and warranty cost structures .
  • Tariff risk is a key swing factor; enactment on Canada/Mexico components would materially raise truck costs and pressure demand; management currently views enactment as unlikely but is preparing contingencies .
  • Execution levers: expanding national accounts, mobile technicians, technician workforce growth, and disciplined SG&A should support margin resilience through the cycle .
  • Capital returns remain robust with $0.18 dividend and an active $150M repurchase program; 2024 dividends totaled $54.9M with buybacks resuming under the new authorization .
  • Trading lens: Near-term narrative hinges on macro/tariff headlines and freight data; medium-duty strength and service initiatives provide downside support, while H2 pre-buy/regulatory clarity and leasing fleet refresh offer upside catalysts .

Footnote: *Estimates would normally be retrieved from S&P Global; unavailable at the time of analysis due to access limits.