RUSH ENTERPRISES INC TX Q2 FY26 Results

We remain dedicated to returning capital to our shareholders, and we are pleased to announce a post-stock split cash dividend of $0.14 per share. After the stock split, this represents a 10.5% increase in the quarterly cash dividend paid to our shareholders compared to the prior quarterly dividend and is our tenth increase since we announced our intent to begin paying a quarterly cash dividend in July 2018 as part of our capital allocation strategy. I am proud of the results our team delivered during the second quarter. As I mentioned at the end of April, we believe the first quarter represented the trough of the extended industry downcycle, and during the second quarter we continued to see signs of gradual improvement in market conditions. While the recovery remains in its early stages, improving freight rates, improving customer sentiment, increased commercial vehicle quoting activity and significantly higher order intake all contributed to better business conditions as the quarter progressed. Our diversified business model once again demonstrated its resilience while our team's ability to execute allowed us to capitalize on improving market conditions, meet our customers’ growing demand and deliver solid financial results. Orders for new commercial vehicles increased significantly as the quarter progressed and used truck sales remained strong. Although we expect the recovery to be gradual, we are encouraged by increased order activity, strengthening market fundamentals and improved customer confidence, all of which we believe position Rush Enterprises for a strong second half of the year. We will continue to focus on our long-term strategic initiatives and disciplined expense management while also delivering exceptional service to our customers. We continue to search for and invest in opportunities that strengthen Rush Enterprises and advance our long-term growth strategy. Completing our Louisiana acquisition, expanding our presence in Canada and announcing our planned joint venture with MCT Companies represent important steps in our strategy. Together, these initiatives broaden our geographic reach, expand the range of solutions we provide our customers and demonstrate our ability to execute on our strategy of enhancing our growth opportunities by acquiring or investing in businesses that are adjacent to the commercial vehicle industry, positioning us to deliver greater value to both customers and shareholders over the long term. Demand for parts and services improved gradually as the quarter progressed, particularly among over-the-road fleets, reflecting healthier freight markets, improving fleet sentiment and the gradual return of maintenance activity as more miles are driven. While the aftermarket recovery is trailing the improvement we are seeing in commercial vehicle sales and quoting activity, we are encouraged by the positive momentum in our aftermarket business and believe those trends signal continued improvement throughout the remainder of the year. Looking ahead, we expect our aftermarket business to continue improving as fleet utilization increases and new commercial vehicle deliveries accelerate, which historically has generated additional service and parts opportunities as customers upfit new vehicles and prepare to sell the commercial vehicles they are replacing. We remain focused on operational efficiency, increasing our managed and national accounts, and delivering exceptional service to our customers. We believe our aftermarket business is well positioned to benefit as commercial vehicle market conditions continue to strengthen. Industry-wide retail sales of new Class 8 trucks remained below normal replacement levels during the second quarter, but we were pleased with our performance given the challenging business environment. Our ability to maintain essentially flat Class 8 truck sales while the broader market declined compared to the second quarter of 2025 allowed us to increase market share. We believe our performance reflects the strength of our customer relationships, our diversified customer base and our disciplined approach to inventory management. More importantly, customer quoting activity and order intake improved significantly as the quarter progressed, reinforcing our belief that the recovery we anticipated earlier this year is beginning to take shape. Looking ahead, we believe the second half of 2026 will be considerably stronger than the first half of the year with respect to Class 8 truck sales. Improving freight rates, stronger fleet profitability and increasing customer confidence are supporting higher quoting activity and order intake, and we continue to see customers planning equipment purchases ahead of the 2027 emissions regulations. While we expect the industry's overall recovery to remain gradual, we believe Rush Enterprises is well positioned to capitalize on improving Class 8 demand throughout the remainder of the year. Our medium-duty business continued to improve during the second quarter, although our year-over-year sales comparison was impacted by the timing of both orders and deliveries to several of our larger fleet customers. Sales strengthened considerably as the quarter progressed, particularly in June, and our Ready-to-Roll inventory program continues to differentiate us in the marketplace as demand for medium-duty trucks increases. While ACT Research expects the broader medium-duty market to remain challenging in 2026, we believe our growing backlog, anticipated deliveries and available inventory position us well as customer demand continues to improve throughout the remainder of the year. Used truck demand continued to improve during the second quarter, with activity strengthening as the quarter progressed and June representing our strongest month of the year. Improving freight rates and healthier market conditions are supporting customer demand, particularly among buyers seeking a cost-effective alternative to new equipment, and we believe our disciplined approach to used truck inventory and pricing continues to serve us well as market conditions normalize. While financing remains a challenge for some customers, we believe the combination of higher new truck prices and the approaching 2027 federal emissions regulations will continue to make quality used trucks an attractive option. As a result, we expect demand for used trucks to remain healthy throughout the remainder of the year. Our leasing and rental business delivered another quarter of steady growth, reflecting the continued strength of our full-service leasing operations. Leasing and rental remains one of the most consistent contributors to our financial performance, and its stable revenue model helps offset some of the cyclicality we experience in new commercial vehicle sales. Looking ahead, we continue to see healthy demand for our leasing and rental services as fleets replace aging equipment. As new commercial vehicle orders increase across the industry, manufacturers may eventually reach capacity constraints, which historically supports leasing and rental activity. Combined with improving rental utilization and continued growth in our contract maintenance business, we believe that our leasing and rental business is well positioned to continue to deliver stable growth and make a meaningful contribution to our overall financial performance in the years ahead. We are proud of our ability to generate solid earnings and return value to our shareholders, while maintaining a strong cash position and balance sheet despite difficult industry conditions over the past few years. Further, we believe our continued focus on operational excellence and growth opportunities has helped us improve our quality of earnings and invest in our future. Our second quarter results reflect the strength of Rush Enterprises' diversified business model and our team's disciplined execution during a period when commercial vehicle market conditions began to improve. We remain committed to creating long-term value for our shareholders through disciplined capital allocation, including strategic investments in our business, returning capital through dividends and share repurchases, and maintaining a strong balance sheet. Finally, I want to thank our employees for their unwavering commitment to our customers and to one another. Their professionalism, dedication and focus on operational excellence continue to distinguish Rush Enterprises throughout the industry. On behalf of our Board of Directors and leadership team, I sincerely appreciate their hard work and the important role they play in delivering value for our customers, shareholders and the communities we serve.