Rush Enterprises Q3 2025: Contradictions Emerge on Order Intake, Emissions Regulations, and Parts & Service Growth

Date of Call: October 30, 2025

Financials Results

• Revenue: $1.9 billion (Q3 2025)
• EPS: $0.83 per diluted share (Q3 2025)

Guidance:

• Expect continued weakness in new Class 8 demand with negative impact for at least the next two quarters.
• Medium-duty sales expected to remain roughly stable through the remainder of 2025.
• Used truck sales forecasted to be in line with Q3 results in Q4.
• Aftermarket likely to face seasonal headwinds but remains a resilient revenue stream.
• Company will continue capital return: repurchased $9.2M in Q3 and declared $0.19/share dividend.

Business Commentary:

• Revenue and Earnings Performance:
• Rush Enterprises, Inc. reported third quarter revenues of $1.9 billion and net income of $66.7 million, with a diluted share value of $0.83.

• The financial performance was attributed to strong aftermarket results and effective expense management, despite challenging market conditions.

• Aftermarket Operations and Technician Recruitment:

• Aftermarket operations accounted for approximately 63% of total gross profit in Q3, with parts, service, and collision center revenues reaching $642.7 million, an increase of 1.5% year-over-year.

• This growth was driven by strategic focus on technician recruitment and retention, and expanding the aftermarket sales force.

• Truck Sales and Market Share:

• The company sold 3,120 new Class 8 trucks in the U.S., accounting for 5.8% of the total U.S. market.

• Despite a 11% year-over-year decrease, vocational customers provided stable demand, underscoring the strength of the diversified customer base.

• Medium-Duty Market Performance:

• Rush sold 2,979 Class 4 through 7 medium-duty commercial vehicles in the U.S., representing an 8.3% year-over-year decrease and a 5.6% market share.
• Growth in bus sales following an IC Bus franchise acquisition in Canada helped mitigate broader market headwinds.

Sentiment Analysis:

Overall Tone: Neutral

• Management highlighted solid Q3 results ($1.9B revenue, $0.83 EPS) and resilience in aftermarket and leasing, but emphasized persistent industry headwinds: depressed freight rates, tariff/emissions uncertainty, weaker Class 8 orders and near-term weakness for next 1–2 quarters.

Q&A:

• Question from Andrew Obin (BofA Securities): Can you expand on what you're seeing in the cycle, when things might bottom and what will drive sales higher?
  Response: Supply cuts at OEMs plus stricter enforcement of non-domiciled driver rules could remove capacity and right-size fleets, which—along with potential emissions-driven replacement—could support stronger demand in back half of 2026, but near-term weakness will persist.

• Question from Andrew Obin (BofA Securities): What's your read on the macro (better/worse) and main risks?
  Response: Cautious: primary concerns are rising unemployment and inflationary pass-through from tariffs as prebuy inventories drain, which could depress demand.

• Question from Andrew Obin (BofA Securities): How is parts and service trending into year-end—getting better or worse?
  Response: Parts & service was flat to slightly up in Q3, September was softer; management expects a typical 3–4% seasonal dip in Q4/Q1 and aims to be roughly flat year-over-year.

• Question from Brady Lierz (Stephens Inc.): Can you expand on outlook for remainder of 2025 and 1H26, and are customers holding orders due to regulation, tariffs, or both? Any company-specific offsets given vocational resilience?
  Response: Customers have pulled orders due to combined tariff and emissions uncertainty and weak freight; clarity plus ongoing supply reductions are needed to restore demand; vocational customers are more resilient and help offset Class 8 weakness.

• Question from Brady Lierz (Stephens Inc.): What are you seeing in medium-duty into year-end and any preliminary thoughts for 2026?
  Response: Medium-duty is a different, more diversified market—expected to be roughly flat in Q4 and to weather the downturn better than Class 8, though it may not match this year's comps in 2026.

• Question from Brady Lierz (Stephens Inc.): How is used truck pricing trending given the volatile backdrop?
  Response: Used pricing is fairly stable with normalized depreciation; inventory has been intentionally balanced to support sales and used market benefits from certainty (no tariff/emissions exposure).

• Question from Avinatan Jaroslawicz (UBS Investment Bank): What are you doing to pick up more share in parts & service and is that harder in a softer market? Where are opportunities?
  Response: Growth strategy focuses on technology/data, mobile service expansion, technician recruiting and outside parts/ASR growth; aim to outperform market over time (~20% target relative performance), but share gains are harder in a down market and require balancing margin vs share.

Contradiction Point 1

Order Intake and Market Conditions

It reflects differing perspectives on the current order intake and market conditions, which are critical for understanding the company's near-term performance and outlook.

What is the outlook for the remainder of 2025 and first half of 2026? What are customers citing as reasons for not placing orders? What factors are driving customer order hesitancy: regulatory uncertainty, tariff uncertainty, or both? - Brady Lierz(Stephens Inc.)

2025Q3: We're experiencing low order intake since April, with less truck production due to supply constraints. Clarity on emissions regulations and tariffs could drive orders, but current uncertainty makes it difficult to price trucks. - [W. Rush](CEO)

How are you thinking about the third quarter given the lack of order visibility? What are the current order trends and changes among OEMs? - Daniel Imbro(Stephens Inc.)

2025Q2: Every OEM is taking production down due to uncertainty, especially concerning engine emissions regulations. Order intake in April, May, and June was the lowest since 2009. Production for Q3 is expected to be significantly down as customer demand is at a low point. - [W. Rush](CEO)

Contradiction Point 2

Emissions Regulations and Tariffs Impact

It highlights differing opinions on how emissions regulations and tariffs are affecting the market, which directly impacts the company's outlook and strategic response.

What's your read on the broader macroeconomic environment beyond your customer base? Is it improving or deteriorating? What are your key concerns and opportunities? - Andrew Obin(BofA Securities)

2025Q3: If stricter emissions laws and tariffs are implemented, they will increase costs. But if these regulations are paused or reduced, we could see a stronger market in late 2026. - [W. Rush](CEO)

How has your macroeconomic perspective evolved over the past few months? - Andrew Obin(Stephens Inc.)

2025Q2: The lack of clarity in regulatory and trade policy areas is causing gridlock in truck sales. There has been progress in EPA regulations and trade policy discussions, but stability is needed. - [W. Rush](CEO)

Contradiction Point 3

Parts and Service Growth Strategy

It involves differences in the company's approach and expectations for parts and service growth, which is a significant contributor to their financial performance.

How is your parts and service business trending toward year-end, and how does this trend impact your financials? - Andrew Obin(BofA Securities)

2025Q3: Parts and service business was flat to slightly up in Q3, but September was softer than expected. Seasonal factors typically cause a 3% to 4% downtick in Q4, but we aim for flat year-over-year results. I expect it to be close to flat, which would be acceptable given the environment. - [W. Rush](CEO)

What changes have you made to improve parts and service performance, and what profitability potential could expanding this segment add? - Daniel Imbro(Stephens Inc.)

2025Q2: The traditional marketing approach has been successful in maintaining parts and service growth despite market conditions. The company is focused on strategic initiatives to accelerate growth in aftermarket business. Parts and service revenues contributed 63% to gross profits in Q2, with potential for modest growth in demand from owner-operators and small fleets. - [W. Rush](CEO)

Contradiction Point 4

Emissions Regulations and Market Uncertainty

It highlights differing interpretations of the impact of emissions regulations on market conditions and customer behavior, which could influence strategic decisions and market positioning.

How do you assess the broader macroeconomic environment outside of your customer base? Is it improving or deteriorating? What are your key concerns and areas of optimism? - Andrew Obin(BofA Securities)

2025Q3: If stricter emissions laws and tariffs are implemented, they will increase costs. But if these regulations are paused or reduced, we could see a stronger market in late 2026. - [W. Rush](CEO)

What are your thoughts on pending emissions regulations? - Avi Jaroslawicz(UBS Investment Bank, Research Division)

2025Q1: The company expects regulations to lead to lower emissions standards compared to previous expectations but not as stringent as initially proposed. The details are not yet clear, but the company anticipates these changes will have important implications for pricing and demand. - [Rusty Rush](CEO)

Contradiction Point 5

Parts and Service Segment Performance

It involves differing assessments of the parts and service segment's performance and outlook, which is crucial for understanding the company's operational health and financial stability.

How is your parts and service business trending as year-end approaches? Is it improving or deteriorating, and how does this impact your financials? - Andrew Obin(BofA Securities)

2025Q3: Parts and service business was flat to slightly up in Q3, but September was softer than expected. Seasonal factors typically cause a 3% to 4% downtick in Q4, but we aim for flat year-over-year results. I expect it to be close to flat, which would be acceptable given the environment. - [W. Rush](CEO)

Can you provide details on the parts and service segment results for Q1? - Daniel Imbro(Stephens)

2025Q1: The parts, service, and body shop revenues were down 4.6% compared to last year. However, there was improvement in April compared to January and February. The company expanded its aftermarket sales force and added service technicians, which should help improve customer service and sales. The company expects sequential growth in the second quarter due to these efforts. - [Rusty Rush](CEO)