Press release·02/24/2025 20:31:54

Overview of the Company’s Financial Performance

Rush Enterprises, Inc. is a leading commercial vehicle dealer in the United States. The company reported mixed financial results in 2024, with decreases in revenue and profitability compared to the prior year.

Total revenues declined by 1.5% in 2024 to $7.8 billion, down from $7.9 billion in 2023. This was primarily due to a 1.8% decrease in Aftermarket Products and Services revenues and a 1.4% decline in new and used commercial vehicle sales. The company sold 15,465 new Class 8 trucks in 2024, an 11.4% decrease from 2023, as demand was impacted by the ongoing freight recession and high interest rates. However, sales of new medium-duty commercial vehicles increased by 5.1% to 13,935 units.

Gross profit decreased by 3.9% to $1.5 billion in 2024, with gross margins declining to 19.6% from 20.1% in the prior year. This was primarily due to pricing pressure and a shift in the sales mix towards lower-margin commercial vehicle sales. Gross margins on new Class 8 truck sales decreased to 8.9% from 9.7% in 2023, while margins on new medium-duty vehicles increased slightly to 9.2%.

Selling, general and administrative (SG&A) expenses decreased by 2.6% in 2024, but remained high at 12.8% of total revenues. The company was able to reduce operating costs through various initiatives. Net income attributable to Rush Enterprises, Inc. declined by 13.6% to $305.0 million, with earnings per share decreasing to $5.41 from $6.26 in 2023.

Revenue and Profit Trends

The company’s revenues are primarily driven by sales of new and used commercial vehicles, as well as its Aftermarket Products and Services business. In 2024, new and used commercial vehicle sales accounted for 62.6% of total revenues, while Aftermarket Products and Services made up 32.3%.

New commercial vehicle sales, which include heavy-duty, medium-duty and light-duty trucks, decreased by 0.3% in 2024 to $4.5 billion. This was due to an 11.4% decline in new heavy-duty truck sales, partially offset by a 5.1% increase in medium-duty truck sales and a 13.9% rise in light-duty vehicle sales. Used commercial vehicle sales declined by 19.0% to $335.8 million.

The company’s Aftermarket Products and Services business, which includes parts, service and collision repair, saw revenues decrease by 1.8% to $2.5 billion in 2024. Gross margins in this segment decreased to 36.7% from 37.2% in the prior year, primarily due to the freight recession.

Lease and rental revenues increased slightly by 0.3% to $351.5 million, while finance and insurance revenues declined by 9.4% to $22.2 million. Other revenues, which include gains on the disposition of lease and rental units, decreased by 14.5% to $23.0 million.

Overall, the company’s profitability was impacted by the decline in revenues, lower gross margins, and an increase in interest expense. Net income attributable to Rush Enterprises, Inc. decreased by 13.6% to $305.0 million, with a net profit margin of 3.8% compared to 4.4% in 2023.

Strengths and Weaknesses

One of Rush Enterprises’ key strengths is its diversified business model, with revenue streams from new and used commercial vehicle sales, Aftermarket Products and Services, and lease and rental operations. This helps to mitigate the cyclical nature of the commercial vehicle industry.

The company’s extensive network of 130 dealership locations across 22 states also provides a competitive advantage, allowing it to serve a broad customer base and offer a wide range of services. Rush Enterprises’ focus on providing comprehensive support, including parts, service, financing and leasing, differentiates it from competitors.

However, the company’s financial performance remains heavily dependent on the health of the overall commercial vehicle market. The 11.4% decline in new heavy-duty truck sales in 2024 demonstrates the impact that macroeconomic conditions can have on the business. Additionally, the company faces ongoing pricing pressure and competition in its Aftermarket Products and Services segment.

Another potential weakness is the company’s reliance on floor plan financing and other debt to fund its commercial vehicle inventory and lease/rental fleet. Rising interest rates have increased the company’s borrowing costs, which negatively impacted profitability in 2024.

Outlook and Future Prospects

Looking ahead, the outlook for Rush Enterprises is cautiously optimistic. Industry forecasts predict that sales of new Class 8 trucks in the U.S. will increase to 252,000 units in 2025, up from an estimated 247,337 in 2024. This suggests that demand for heavy-duty trucks may start to recover from the current freight recession.

In the medium-duty segment, A.C.T. Research forecasts sales of 266,300 units in 2025, up from 251,895 in 2024, indicating continued strength in this part of the market. The company’s focus on growing its medium-duty and light-duty vehicle sales should help offset any further weakness in the heavy-duty truck market.

The Aftermarket Products and Services business is expected to remain an important contributor to the company’s profitability, with management forecasting gross margins in the 35-38% range for 2025. However, the ongoing freight recession may continue to put pressure on this segment.

To improve profitability, the company is focused on reducing operating expenses through various cost-cutting initiatives. Additionally, the new $150 million stock repurchase program announced in late 2024 demonstrates management’s confidence in the long-term prospects of the business.

Overall, while Rush Enterprises faces near-term challenges due to macroeconomic conditions, the company’s diversified business model, strong market position, and focus on operational efficiency should position it well for the future. The outlook for the commercial vehicle industry appears to be improving, which could lead to a recovery in the company’s financial performance in the coming years.