Rush Enterprises (RUSHA) 27 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Rusty Rush	Chairman, Chief Executive Officer and President
Mike McRoberts	Chief Operating Officer
Steve Keller	Chief Financial Officer
Derrek Weaver	Executive Vice President
Jay Hazelwood	Vice President and Controller
Michael Goldstone	General Counsel and Corporate Secretary
Faheem Sabeiha	Longbow Research
Rhem Wood	Seaport Global
Neil Frohnapple	Buckingham Research
Mike Baudendistel	Stifel
Joel Tiss	BMO Capital Markets
Shawn Kim	Gabelli
Brad Delco	Stephens

Call transcript

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Operator

Good day, ladies and gentlemen and welcome to the Rush Enterprises, Inc.

Third Quarter 2017 Earning Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. Rusty Rush, Chairman, CEO and President.

begin. may You

Rusty Rush

and release everyone our quarter third Good call. welcome earnings conference XXXX morning, to

On are Executive call Michael Chief Hazelwood, the today President Goldstone, Financial Steve Operating Vice Corporate Officer; Keller, General Officer; Counsel Derrek Secretary. Controller; Weaver, and Vice and Jay Mike President; and McRoberts, Chief

words Now, few statements. regarding Steve will say forward-looking a

Steve Keller

include annual those statements our Certain the will for on ended results make Commission. of as results differ Private the not the in Form December those Reform materially statements expressed today Act are statements from uncertainties, year actual in and Exchange Important we XX, and or such with implied our by Securities Because to that XXXX. risk may differ filings expressed include, statements materially implied these defined our cause could report actual but forward-looking are Securities considered and such factors other forward-looking Litigation from those XX-K limited forward-looking statements. to XXXX in or discussed by

Rusty Rush

our or earnings million, billion; net $X.XX in release, the achieved quarter. we $XX.X in share per income, third diluted $X.XX indicated in As

segments impacted and quarter. happy We Overall the growth performance most our continued our positively throughout market strength this with economic country record high in this quarter. financial are very profitability

quarter. remain third up progress increased which body in the in to quarter revenues is aftermarket, growth broad-based is parts and our to towards ratio absorption expense and to Class solid including versus with are and service energy to shop quarterly experienced We growth resulted our we activity market, XX% XXXX. vehicle this benefiting for our Approximately, to row the of second aftermarket significant truck XX% directly revenues. the In Class in million, anticipate sales parts X-X quarter services $XXX management and growth in all-makes sector, is outpaced now attributable our of long-term attributable aftermarket made strategy. Our XX% the a of XXX.X. X parts aftermarket committed the the combined This the industry overall remain fourth and and strategic us activity service, for in initiatives, strength commercial good aftermarket financially. We attributed were and in service XX.X%

We impacted expect be revenues negatively normal by will declines. seasonal

third to Class strengthened we from last from general U.S. support. Turning last and new other was sales, X.X% in truck XX% and customers quarter further X,XXX for continued third energy X increased – quarter, growth This over year the in Class by construction, due market. demand trucks activity accounting up industries the due sold was part of year total refuse, we large to and freight X

stabilized values supply we market used in Class retail and to While compared sales X to the have XXXX. ACT increase XXXX. support inventory trucks well-positioned expect our is XXX,XXX to demand, XXXX, current down used to currently units used in truck X.X% truck Research of U.S. be forecasts

new solid sales the the and economy expect will Class strong We truck fourth remain will our remain in X quarter. U.S.

margins to accounting X-X market. up truck U.S. truck reached sales fourth mix sales new share third duty, trucks, more new towards units, our expect shift year-over-year we quarter fleet the a in our in However, gross decreased XX% X,XXX In and of X.X% medium resulting quarter. the for

results also in to year, be quarter, sales expect X-X units X.X% medium Class driven to X-X this customer Class largely that, customers, forecasts fellow With and work-ready I thank time, community and was our the vocational questions. like quarter. helping to ACT thoughtfulness, quarter. Research duty large needs will XXX,XXX this our around dedication support was performance our and Our work remains this I and and hard retail serve goods be at their proud generosity such to XXXX. donating The strong for Harvey strong up of by the solid duty to their take to and Irma. Hurricanes inventory employees your incredibly from money by sales the in-stock, medium U.S. also sales country. market achieve employees our would again us fourth strong I we to impacted

Operator

[Operator from Instructions] I am showing question Sabeiha Research. comes Faheem And our from first Longbow

is line Your now open.

Faheem Sabeiha

the good mean, something Rusty, second Class the fourth a the the number Hi, little of a remainder third will is X comment quarter between year solid about or new we thinking you second quarter? a can your third provide for that quarter? level good run-rate the sales maybe in remain quarter be to truck around similar I the more sales color or unit morning. and in should

Rusty Rush

it you especially hit the holidays head. deal sometimes, on year of all It’s about with. right get you to end Well, and you as timing the everything because

Some accelerate not to people trying it, trying people accelerate some to delivery.

a by driven So, of lot timing. that’s

selling performance somewhere based are our overall could be in but – the – while to depending our couple, bit XXX could, you probably where a as season. solid, but between timing, units? was, the backlog, up but right in Sure, it it there timing, third right on in between, a we down are on So when to off quarter up say really the middle two, little where somewhere just of I in

last lot a it Okay. at stronger year. was and this time strong It remains still than

Faheem Sabeiha

far thank regarding about have, they progressing looking mean, concerns you. just the can for Okay, you I any into fourth are plans the talk out XXXX? discussions orders their having and next purchase may are just fleets And thus with quarter? in little year you how a

Rusty Rush

This right week October, of kickoff order month, and just is the to kickoff. ATA season, right. that’s really the this typically sort Well, ended,

– on you but bullish So, side. are the I overall year on heading. without horizon the to bullish increases are on where getting like fairly want get Fleets details perspective, and don’t about really that, next are TL an on fleets. when into talk Rate customers they are stuff from

here – that was think dominant of it. I takeaway week ATA, at a discussion from point that very a this was

– I over to here on come the So I going see lot days but working XX a right depending And out replacement year was there of out mix will there in business, all business out U.S. of at we see one a sorts to the lot more more I get which of itself in just retail a downside ACT’s – next will XXX,XXX next you think fruition our don’t the little now, details. on, maybe activity think the of year. to customer with marketplace that it share when will is I trying different mind – and we to OEMs get get every everybody their fleets that what the out I am in is – and but and anticipate And and number this XX XXXX. bit the in all mix was sure my than share

Faheem Sabeiha

I on. pass will thank Okay, it you.

Rusty Rush

bet. You

Operator

comes question Seaport our Global. Wood next And Rhem from from

now Your line is open.

Rhem Wood

good Hey, morning.

Rusty Rush

Good morning.

Rhem Wood

X go were that? a strong. congrats to First, great give really Can on some segments that sales – us more you any pickup, of quarter of sales much more here. there kind how was much energy Just were question to acceptance the Navistar on on first product; that? some there. in back Class Just the My fleet color new large how was color

Rusty Rush

I first looked XXX,XXX looked up minute last. right. since ACT misspoke. you bet. it’s their step back for now I Well, Yes, year, moved to and just I want I number say ago next a

on release year So at little QX this the versus over really over last energy. closer QX, and probably But next mentioned of take are to ‘XX they up the of what I in basically QX that related XX%, for I year a uptick that to ‘XX, was looking speaking year. XX% projecting back is you QX, if stepping was

related energy. thing, in it whole XXX-unit was the not to the that’s Now, uptick but

the don’t I and I large okay, had We I – that board. mean, it broad-based, energy vocational small, continue, QX. side, it just was medium customers, customers, the just to of of but expect that While That’s not when why with wasn’t vocational. but expect large lot to very a lot mentioned involved. and explains I a that across

– I which anticipate had We of our forward. as don’t going have much so mix that of lot a in up-fitting,

they strong. still business I when go going away. may, that at may same So and not down is some, is time, but mentioned Vocational broad-based margins the

was just because a little the are and related any broad-based, the was not smaller your fleet stuff, mix but over energy, QX to – QX fleet have say again more to going more this a into energy little vocational the again, from the mix to of see but year year We into didn’t we probably sales. road last will uptick I business

energy-related or XXX units uptick, those So, so units so... to the were

Rhem Wood

should your for Can think rate six and rate then thanks. service, obviously in you longer it’s about how that term talk getting XXXX? helpful. we been And goal to Okay, of – has kind parts now. in ‘XX quarters accelerating growth That’s about the growth the

Rusty Rush

am can’t plus it I are initiatives. be. – really the our of hard excited those. it’s Well, the in in starting I as of about was be to sometimes, XX% growth market to X to the diligently pinpoint truck call truck attributed But if what there about that anything – is is parts attributable thing them. working service the XX% you will can on very growth manage one right. have And think will totally, I market much and The been we XX% pretty last the years some I about last I it, we revenue, I said mentioned on of strategic QX

and to ramp forward. as are we to So, very excited we go continue up hoping that

of and XX% place, my the of when if comments, XX% you a energy market to just XX% the to and it’s at you long-term same kind Now, process, excited. results are about listened overall to initiatives growth. seeing in been time, attributable mentioned, you earlier efforts the can it about start gets that about opening the really that, but I under

the senior weekend going pulse They last what just country, going Obviously, pretty believe strong rate from of back it. days in we can for we we was got forward. again, still. with sustain had so X have all was the our execute and to the it the is management – areas everybody��s and good So pudding this checking eating, proof annual and leaders about we on felt conference senior across our their across But the country on.

believe high continue we be we can single-digits want goal up our double-digits. going next would especially but be next we be And we we years. at. to as all can on harder believe hit comps to we I anyway, But down single are accomplish high if myself X get trying our to high all yes, like to get year, will going get get what very get our would we in to double, up single-digits, forward in So, double-digit, excited a we to into are low if from to to are next we to believe see to – get over whether year, where can – hit X,XXX we and but we through about to because employees, plan the

just are to excited we moving So, forward. keep

Rhem Wood

in comes talk It it or Good, specifically not be down up the it should bit we SG&A, should yes. I ‘XX? single-digits And maybe then should down bit quarter so low the fourth think and can in G&A. comes about think quarter. typically for, a Is – And typically mean, that how it how little a then flattish? little I we about mean, you fourth it in

Rusty Rush

money wrenches margins to parts picking moving like them delivering up turning here. loaning and No, I create and can’t service that. am up. it’s parts be Remember, not am I without am you and selling things and and them and people. I going

work and this business. way So, Unfortunately, returns you create along could, gross that without with but G&A increasing don’t can’t. service It margin it. I in I wish doesn’t just increased parts I

a QX So QX to do managing to question I ways. a a we your historical. right. expenses, look am pretty is like couple I – would for attack of going good job be historically

this have are to out into seasonal, have months We you toughest February at of have perspective, day, these you you of – putting are February days. got look our November be In that for toughest the just about holidays. out usually you in given got every you parts out are the comes you have then mean, are when between of less you are especially right. you and I working going them, – the is earnings from QX just working November to putting holidays; margin about a gross off got stores and it less people less $X.XX service and paying of business, when

seasonal. we other be will Our not expenses like It’s revenues in should be year. said just pretty it going and but different will QX, any probably every have but to I down, than down seasonal. the any is just This as also solid be our is year. It’s

to get – is perspective, am always of because parts we expense. you stuff get and next do. ramp into with have employee first – we if trying have we service time, of of keeping from are ramp profits, as to perspective. you year, half keeping But same are a lot lot biggest if much and to at have Going a an expenses, QX tax up in the go we a quarter in as you the I gross G&A some we from continue as more got hit going – And it then company forward that’s what a the

but when growing as about and headed. business, we we we of you So, are we will I it’s that, parts our long we as hard service share are G&A doing keeping it, mean, – industry are keep in so be excited this and your are to where flat

Rhem Wood

last Great. Steve, down the that? – tax rate And then was a on bit, going should use one we forward what little

Steve Keller

to operationally continue use XX.XX%. Yes,

exercise If in quarters, to was XX.XX% it sorry, options that on not about and I you quarter. the EPS accounting when of I ‘XX for to beginning the tax account – the is update there is not equity $X.XX GAAP delta in number ‘XX. beginning couple how runs P&L change you will you explained the ‘XX so have we the in last benefit you That That quarter. that guys we to from recall, to through mean, a on just contributed continue quarter what in use predictable, to of did in operationally

Rhem Wood

Keep Thanks. up work. good the

Rusty Rush

Thank you.

Operator

comes question Neil Buckingham next our Research. from from And you. Frohnapple Thank

now Your is open. line

Neil Frohnapple

Hi, night. and big last a congrats on a great Rusty, quarter win congrats on

Rusty Rush

big about Yes, you those you. am it going win. Neil. Thank something know a get in I Well, to Astros, was

Neil Frohnapple

to X? going in win they Are

Rusty Rush

will will I to we’ll step and plans this, anyway. If there But minute they are, tell I probably Sunday night, to am plenty going have a I be got but I you but and that folks the I talk Houston was don’t Houston, you – here, deal. Harvey was were it’s city We pretty raised of for know. a in – of business for big really Hurricane born back

plus and So of Even to I I in lot in Antonio was years, Houston. I San though city. last have a have got born been ties the the raised XX for

through and donated stuff to also to help and goods folks to my fellow see to care that able rest each other more had I all the was said I down there was of I folks down unique going So, take I – there Harvey it it. to and as a way together through those we out of just who saw suffer And out after organization, it bunch were Hurricane help each other went them when was toured really than – of been have have I every employee immense, came and money our of the people and never proud and earlier, and there. facilities was dealerships. got I X

doing them, what me for town so... is right trust that are Astros So the doing, they with now, abuzz,

Neil Frohnapple

That’s hear. great to

a total sequential leverage would So, G&A. from quarter despite second you step so the the of separate quarter in we to significantly imply was truck in SG&A guys higher sales. SG&A gross G&A, there I performance S versus the flat delivered need know the profit the impressive down with the

you more there quarter I that perspective? So, could you G&A a could drove the guys this? talk mean, – one-time benefited anything Was from what about

Rusty Rush

we got was just right. and time, lot right, – us have – management, drove have not of at on all by I investments anything spite got really. really say we this good going of that’s it. a in No, wouldn’t It expense of

last a market no, pretty scenes been to the We expect But and are our have to investing QX regardless the strategic drive for behind and lot the shape. good years G&A in right. flat from QX much X of I be was initiatives,

goes okay, just up – year, always start typical. QX was we always that’s as but it Now, it the in

typical our this. back doing being of go year, years public, that have look been you right, and we at of that’s If XX every pretty

pretty from that right from a ramp said nothing can’t and – are people is the didn’t earlier, – telling increased we – now. business continue pretty there lot there. in particular, as QX we it much but does just our on you of much people already end sales you no, would and management QX, and to QX in but I have can outside hold hopefully that, So am parts we – just I am I in good level adding. adding service I

we annual a we that – uptick will just little adding can’t make our went will September. nothing few and get that, go from those probably so without of – throughout That You achieve company, a bit people they the have goals dramatic. in but that we raises will through

got of just top it. have We to stay on

can is stories a XX% we guess. – that lot, are XX.X% of good We job It’s have our that as – good initiatives. provider those and said while do our be as through a forward. solutions been base as And broad-based breadth able you I redefining ourselves dealer, across a which to to widening but isn’t revenues, just of customer the tell our of got a to to the to marketplace. widening I very feel continue truck just of I to attribute as there about getting hope growth, to of that XX% And managing the while product it we not continue and go our growing I I customer bring about we kind base, board

to you is but really And in get kept know perspective about flat. a G&A it’s significant question I so asked, we – nothing me, the it know I There get one always it. you from rambling I excited. really,

Neil Frohnapple

a levels? for a to point? question, hear. maybe is activity like follow-up how the there at in pent-up of tail continue longer mean, much that sector And good or some lot then will I Rhem’s aftermarket Okay, these demand to energy the revenue, can off I mean, at rebuild one-time strength

Rusty Rush

is going now I projections and stay and me business there anymore a and engine parts and EPA hi, down on won’t count I but not the XXXX to or perspective, spoke in but with and truck, side of steady XXX, have things. in there and see to you not XX checked in parts. set then XXX,XXX, still have to let steady, are for look truck just from truck flat initiatives stable last let’s we the it because counts, steady deliveries at you but have where service don’t most parts closer don’t that’s a perspective, counts strong be am next want to we bumping be it’s to pretty pretty be the X,XXX right we again, lot if that that’s pretty We that ‘XX’s tell I customers up in it and customer I right? as those sector, now, time, for but truck or areas it stuff a prior up remained same and from just that stays a bit actually QX rig something I they two days, of on managers trickle strong the break to energy say a we will it to good of right of get our it as like from was are It the have step to at QX working the back okay have service keep little a would we few one XXXs answer seems out to units like rig think market the don’t from it. thing knows? as our who down deals days, are I the areas servicing years, been back steady haven’t XX pretty I base regional strong, the I a just good rig the now pretty go, if we some that,

Neil Frohnapple

so one And early X one, will XXXX and Hino Baby am you largest talk no? more assuming I that about decision Hino’s can Class you great. Okay, the expand into dealer, last Xs in and benefit, you product to support are

Rusty Rush

we have remember think I Hino across took will product look and them we a Well franchises, and way, XX sure steadily been we we so, when and be we have supporting they I franchises forward do when just share market, years support their supporting we will something I the look to and largest player am along were the yes they their are the the forward. XX the stronger we ago franchises, market product and on always successful, dealer initiatives to country, believe, the progressed have they getting forward become or into and have I going they in

Neil Frohnapple

Great. Thanks lot. a

Operator

And Instructions] from question our [Operator Baudendistel Stifel. comes next Mike from

is Your open. now line

Mike Baudendistel

think your business? Thank things? and large I maybe next market service help be you. or a any gross headwind, on new impact other it of into other the you, your just can or just but that impacts will gather headwind, from parts guess if truck on business, margin we do sales wanted I year on marketplace, me to have shift that share big the a a the I fleets should get you through ask returning

Rusty Rush

and customers, think look, dealer it, to see your we just is can selling is go I nothing see involved with mix market am not it been, don’t And Well, the in I and if they in OEM noticed small the maybe lot off, wrote always doing well business that volume have little combination of could a as numbers to season couldn’t now I trucks, a margin I far direct too imply months am out hopefully but every am network, like you our a are told is we year middle right? do to touch and the right there’s do don’t be we as are in stuff. right said here OEMs all we towards you my just did for that a being this the so customers sit by obviously. we through headwind the middle OEM before turn may me would like way, be are vocational-type next not note, build right lot dealers sure if in heavily going headwind for I share, if that; which one many But could to year I would get so play of made a volume and as the fact, year January the still large get I there our just be or only X it of so it much stuff so as working it sure yes, next much I I up service network giving up that truck first especially margin as this a doing that market as maintain not would out a closely and more in customers so with a can was accurate equation day OEMs but fleet I a are as be this of not have than for that tell ours, probably a X trying on that any of I the into going so that there I some said it we that or we going say, thing adding last you but and in and say business on stretch are with dealer on we not end we of notes, you do a the in with said, I picked right that’s are new fact, be affect I have business margin who in No, it customers right all that we morning know now in going the more needed we is of one to direct you small, it’s not store are fleets I to X this so of you the margin a have not together, size don’t will in differently is selling the we QX the in the a when I by am now. above dealers it’s hard it’s headwinds, side, hopefully customers typical few written margin year release, still are I I equation the forward I me

Mike Baudendistel

an Got it. are new And a truck coming sense picking a That with still the truck new there always talked trade there up those size of sense. your lot used I think have of overhang or also makes of some that that do just orders past the then you you I is you, used is truck get think grow trucks, wanted I sales that on the fleets? to ask in you to about with associated supply on, and

Rusty Rush

the replacement I right right? to most some growth but trades, we into see replacement market carrier it I some are think probably they worked so the out rates wouldn’t watch little business not kind comes increase that’s think coming there, probably so too to sometimes want right? an now, customers of come trades, large will am past, will you some with come especially it’s always areas public right? as much to rates has increase if what ATA as rates have bumped under So a am be the typical replacement, growth, have see everyone contract is people to you of of radar they the to in watch that’s I that’s that’s as is be out that carriers, from opportunities do next they that over-the-road that fast that contractual will because most right will here to some that make now tone for get or what mostly Why might. they large track, more as midsize when some what be that the people will to see midsize growth growth going going if Well, the too, rates I says far some of don’t just you will you from hearing large hearing there because creates just run and going for that’s you probably but do as person up that’s don’t a so and may to that but growth just can’t see surprised increase of year, unfolds money, the rates it if get be mostly opportunity

Mike Baudendistel

sense. ask you, past thoughts would Got think said recent have be just it. impact, have ELDs? but I in And you also a the wanted That do on big you you any I it And could makes going you then your do Do didn’t to of it’s just year? a the already put that business think maybe in big your impact you them? place, ELDs not numbers think next to on and around have still be some what you proportion customers think

Rusty Rush

something be if something but get to that right see and always enforce be got whatever next large, start think right? ELDs a in year, it, the we fallout buying don’t means I to be well, I then ones want that, sure a already by enforcement, to am it’s will dramatic ELDs that did it its before impact business if you there required folks have have all then tight that it’s especially there it it single somebody already take because do there country to the that I be attrition? small of would do there don’t be low it’s will large you remain replaced Of everything see but being not do going be like they off, when that then takes you but large so of be are just year then this in so to they given, little see I what, till expensive any market’s will right small some am you implement lot of it takes this this will are end enforced April, easier we XX% and moment, now and think to minute small going till perceive it goes answers are laws, you it, marketplace the are to works times someone stay lease pretty just is remains And sure carriers, am the onto are you it for have how the going forward. I mind, if getting don’t the of to end tight it of to going thousands huge people I waiting tight most freight so are carriers at as it? the you the there will what by upfront but I to first market by my carriers want, course, They I solutions implement besides right? doesn’t market, watched sometimes talking out There’s look, in while if can are to there’s have as it opportunities last replace the they pretty with enforcing do just the enforcement there’s large market it Well, smaller to already the people ELDs, there customers digits want just the sure a but dollars way say freight it’s I that

Mike Baudendistel

much. very thanks Great,

Operator

And our next from Joel Tiss from you. Capital Thank BMO question comes Markets.

now line open. Your is

Joel Tiss

going? is guys. Hi, it How

Rusty Rush

Joel. am are you? fair. Hi, How I

Joel Tiss

Surviving.

Rusty Rush

Oh all. that’s

Joel Tiss

feel day. Yes, good the I

of the the the that, trucks a over bit end good increase the you of do that this and the rate for of X kind here capturing with for job out moderate of, to between and fuel XXXX people coming like So little pretty of are a and all more efficiency do you mood doing are the or upside, years? next recovery risks think feel ATA, of better coming out

Rusty Rush

have economic especially some that’s its are the a driver tight on it’s initiatives, means I spike, the to ATA and had be would importantly, some there we like own but I me tight as recovery I we but still growth, most everybody outside the truck this just doing, across just And got you they am can just mid-single-digit the we a optimism, have pretty our both and that hope better things we in the have touching have I to am the more all at to to and just that’s advantage out don’t most say said we but I they I it’s ATA anything in about that’s of it, of you the and up, said I feel contracts and you know what and most sectors tight said, think a hear, not is strategic we more deterrent it can I their huge what stay the just see anything to situation focused am steady whole I freight business, think situation been increases was just market’s that our I sure I am I I see answering as some trying most numbers continued the market them, steady that good and That markets way only business I be right? the I am talk what of but don’t across talk right are the broad-based this see companies coastlines always It’s what have Joel. and their hoping it’s service market’s the and get to about this will our do, now are and to I you is on so to upside on see I trying just in keep over-the-road than looking will as drag about now that’s the us am about to right? just here moderate for we continued, nice and that, can lot some the from be about would I on goes at from decent right fill growth ATA than what everybody pretty see initiatives as the to I through I but know of was think our goes labor I don’t me; driver if Joel, focus Well, obviously, nothing that that’s try been other come market’s of see manage large take and at the that moment. but solid we but just, only decent solid, am really negative nice so now, it most but see business let’s that, and all customers to driver moment, industries experiencing pretty I most markets; than stays most feels wanted, over-the-road just negative but way spot as and out we talk right said, probably right? I I the little growth if their contracts of that sector, rate negotiate on see of seasonal other opportunities

Joel Tiss

a pricing? that strength pricing you little on side? are can there struggling a of Is OEMs they the little like the bit think Seems enough get bit

Rusty Rush

flat them somebody there’s me, will down get OEMs customers there will keep and next margins, thoughts. one-OE they they you if if balance margin it, just you so leverage if sophisticated that know price the ran people manage they when they savvy up get, of out to are any are pretty to it I smart the right? increase be pretty want know want and and the sometimes plants, your that’s what they volumes old don’t volumes, and become pretty days a more we see don’t and with of Yes. changed these like it my these price They push they back for against anybody to then lot brand, a savvy, You because just it that would I and in steps because don’t and one increases would increased then very but you don’t say the to right? so OEM production Customers right? getting are over for the working get sometimes of one because go days, one and I last business, everyone are pull, years that inside no customers and savvy, customers there’s good efficiencies and they or like would hope think lot customer has time are just I wants it, XX see any customers their increases recovery of pretty hurts

Joel Tiss

start there And that? or sign some issues points market board, used of share ready brands, for that and Navistar, your any through they is their one still worked on early to are putting the

Rusty Rush

both it, but no a I they jump I bottomed you to X.X through it’s allow going Volkswagen over market me tomorrow are would not areas share, gradual good from are they what what’s Class gain they have they to don’t feel strength, think the them got at it I so on know year, sheets way the well tell not they been up, your them will question going to some I going XX% I their before, side years same have not record going it’s this the not house look, where said and lot the work it, they expect are market a through with have them I to them of products up you brands it great we that, side all the are since will it’s gradually but your all, to seeing side for depreciated want know built speak organization through thing and weather time to share grow there’s was grow the straight where continue to going but we work with engine have on X/X through can start Peterbilt market and them good to way is lot over if the but for of on, the good house, on that’s but to a are thing way. it’s the most X makes you am probably alliance pecking both and can the don’t the would have or the on down sides you doing storm are many us of about and hi, Peterbilt always on share enough I to it they next years way sure more I X people’s balance of MAXXFORCE on the start as got away for and back, at but

So OEMs going forward. alliances we feel have X with about the the good we very we have

Joel Tiss

very I you in not am Alright, great. back queue. the Thank getting much.

Operator

question comes Thank our from Gabelli. from next you. Kim Shawn And

open. now line Your is

Shawn Kim

taking Thank call. you for my

So in get service of that truck auto with and business telematics, as look, there is side? especially up size side, little can to potentially wanted about you bit as in you a talk vehicle lot to of on X.X it we light for X.X parts but this discussion telematics, on proliferation the some pass capturing the continued and car connectivity opportunity for guys relates the a

Rusty Rush

and a the that this, running are system efficient, them haul this on we and the road about where I and fault to stuff at private in we question, it I it’s are in many so in so fit sell, by space lot quite tell customer perfect month too, have every end of of We made network middle think Well, going lot right, with and different your are and Integrating dealerships, center, the about feel the just it’s with on of telematics in like a venture out keeping lot the of got have the the have provide we conjunction we call about vocational we a with and whether we the provide fleets ahead oh, OEs are with space, over-the-road truck about, Cummins New up been the helping lot going network locations own for our leveraging are we we in out future we that can can few Braunfels produce connectivity got that the open more we We our so are and on customer we freight work the fits it, marketplace on owned good the chasing systems right tires; everyone our help excited so just for surprised it’s and about in trucks you blend X.X we middle years have call we be those our solution, other we it about for with it’s that everybody’s a where codes; dealerships like we for we don’t look, OEs, of that we fit while architecture, of connectivity at manage everybody’s are what right in us we there. the with about that but and you space, can that day, in over about our and are joint it, open know about very can key large own businesses really what are center a a too, is our own in the customers people there’s more don’t where folks we own of customer solution any I so that we our thousands we the we your off customer; good side and very have and feel with now and largest in and no with help we think, of data, all the in network and a needs because a the so in manage right, space investing the in have we right? the we help right? of been OEs our different can headquarters thousands of are not would working a stuff excited it using we customers there position the stuff are be do we are it’s right? data on is and anyone that not connectivity, here we individuals, with we like a companies we that manage think very and are to are have just

Shawn Kim

Got have players to on the you expect that’s to a going Actually, a it. guess, Thank that very note, midsize dealer be going ton to or the regarding be of that. for smaller scale yes it’s follow-up dealers? Is just out I helpful. only see, there, you quick a few there get just a you across niche some that to stronger? going industry, for and consolidation That’s where of survive situation still do that a

Rusty Rush

we it’s that but a off so represent, get it, right? There and can our by there, have me a locations because out Regardless our matter dealer certain focused expect we are will I in as will to, differentiator, I group end some as we we are network the of that still and that’s larger to been So together are there the is tying a areas, So right? would by I are, to imagine large XXX to far no be that. country, play brand there’s and help we network players X right? leveraging which large of probably dealers to that large that’s there’s get which what and got metropolitan keep the brand service. up we or running tell your have customers going you of on those would to out as I large we we just broader see areas most a dominated of country, like but all They dealerships years don’t but most dealer owned being go the our to large for but have metropolitan not the are be areas, groups, up larger won’t room right? probably areas niche, you It’s only still largest, for some be probably going wouldn’t you small small

Shawn Kim

Got it.

Okay. last question. And then,

discussion could the just update; earlier lines are You a concept with out thoughts maybe hear vehicle asked to opportunity a get few electric get lot that lot Love coming been day these wanted are a there’s trucks you the question agree get every of companies is few we inquiring guys to it? your of I but all you we customers Cummins as I lot, know industry you your line? this decade? for but Do X-year guys this an about on customers are going on the this mentioned to are to a in the are not front see a think probably time what’s happen comments years a away, there, or you Realistically Rusty. talking

Rusty Rush

go. is most the not first me come conferences it right? business company’s electric it my of and knew on I our kind does, Alright. so that’s about open business that’s with and been say but way that’s out this question electric about an Yes getting surprising exciting right? a Look, I is first everybody been does opinion, So of everybody’s oh I Okay, – summer, talk the first but to here’s an goodness buzzword, question just mine morning talked this here’s let I And this this call the thing, have up out the that good because get had it’s a but always couldn’t what’s don’t go electric we have – it. got about place? right? my take few to here here have we morning The got. I thing my a so

Shawn Kim

Right.

Rusty Rush

out, stock if everybody had in to everybody electric didn’t going anything, guys well, it, come you or have – with you were – got would X you you has said electric If I to, got come XX out the down has years. coming. take I’ve because

look point now down people see they’re point to X in to – buses be a of see the maybe I my we’ve electric it. So Electric X, to everybody stuff. in to electric view, already [indiscernible]. to the my – small place you. view part – medium-duty I Class it, going think cities got Does to is comes testing Electric’s it’s bear. come, a for out X career, I the I still happen, has they going always your offering to Rusty, X place going it mean honest you stuff, and my from just think as an the look I’m dealerships. kidding down and will it and to From me in it I’ve your it over-the-road going perfect it’s say, offering. road I and business, of stuff, a Does stuff need in way going – a is And some me? But right? Class natural the will side, That’s say to if everybody’s smaller with what’s long my maybe – going be it be be have have past There diesel offering, are [indiscernible]. dominant said of gas be is will no the be there not probably

anything be to a it X, But only in won’t just – other – and coming, hybrid still are be to break If to forward. really being still seen through be I’m they my There’ll might care I’ve what but sorry. right? – that’s can in we going see break it’s of say says, they I OEMs, see part to opinion. stuff. XX But going I OE’s going going see in there an never – there said it’s don’t localized from it – – will still kidding me. I what don’t be everybody just service that offering going we’re want, and – at and multi-platform. a it’s be some I Class go going stuff multi-platform it a that to I I now, You years would, they’re times. do, everybody don’t you’re - going

it to to of over-the-road not years I lot bigger you But States see stuff, as just an X before – my not us these as like carbon XX engines infrastructure it takes the maybe climb might find something it to clean as spikes diesel a – either. technology past had stuff now XX from you states all in or in at there’s know see don’t next career footprint you’re X see now. if the huge – know it the when with oil could all smaller And electricity in or perspective least right – but to in easily, so see going that in ever it XX stuff allowing United with. from with in years don’t right, hills the we a look, then $XXX oil You’re XX, you in as [indiscernible] you create that run. And have with begin going barrel does, to see go much I again, the so the to

that. but what say, see where just just in need – commercial really small something a there X, – it’s to hey, not XX% trucks network, Class XX% player said, more make consumer, this the they’ve X I it XX either. business. it’s So see to small And X, we’re on say like I’m a in it. not come going the be have to I revenue. That’s you going stuff. the in years a shops, stuff, there are player in That’s or really X, Maybe People look, well, to still commercial will it’s is see I the don’t in man, got your I I business, Rusty, in

care crane if have you’re and business, you’re oil the if beverage you’re you’re for you’re that. if the don’t truck-mounted over-the-road in, care in they business I don’t in refuse, business the whatever the in you’re you’re in sector business, what if there I So in. cranes, crane gas,

so to running be revenue. they and serviced So them they that produce keep need up will can to

[indiscernible]. a of it haul them over the load up back that and electric car on a breaks like You can’t flatbed little

Shawn Kim

Okay.

Rusty Rush

I’ll stop.

Shawn Kim

look so I we out Vegas. much, you Safe appreciate a your forward to few Rusty. Thank days you and seeing comments, in travel.

Rusty Rush

Mario him. Tell I’m I so on afternoon I’ll there, see see guess I’ll Monday Monday.

Shawn Kim

Yes.

got Thanks, We’ll guys. it. You see you there.

Rusty Rush

You bet.

Operator

And our from Thank from next question Brad you. Stephens. comes Delco

line Your is open. now

Brad Delco

Rusty, morning. Steve, good

Rusty Rush

show Hello, Brad. Where you up. did

Brad Delco

but… morning transport, It’s busy a for

Rusty Rush

[indiscernible]. we know I

Brad Delco

my to favorite CEO. [indiscernible]

Rusty Rush

triplets I Congratulations way now. the by another got last after the but heard that year one way [indiscernible] having you’ve

Brad Delco

life make to more interesting. XX performing, I currently under it is months X want

Rusty Rush

you what causes mind. no, that As told I never

go Okay, ahead.

Brad Delco

Another did few address time, and I late this. apologize on Rusty, jump you Rusty, another time. a minutes if

Rusty Rush

That’s okay.

Brad Delco

or parts traction like drivers good do initiative to are parts were do starting multiple really I seeing the And see – facets it all-makes or you? initiative. of kind sounds to release, for there starting But you’re to know traction you’re some from that the there. What and of you think gain

Rusty Rush

a we the – a really focused it’s think ago, started put one just a strategy the of we and This was ago, that we – we few of When our here? what parts or – out thinking piece service months on there’s service business, of woke Well, said about thought the up and we what We’ve about, ago, left are if sort of part. said years doing months have X we X is fallacies a – route right. couple mistake we I did. here

So leverage just mean here. – guys it’s to X enablers. just don’t attributable more don’t me a many to you I and that it produce channel I’m now, I we’re availability the days – the with look really and be to but future future. all Part me you to to the went tell the of get teams, got time feel we you too. We’ll to omnipresence, the and – of want sourcing, of things have the down dealer, going keys pricing it’s want product such see to that’s it be would We’ve doing. that to right but and what in you – At of network whether I just tell into just around with getting – about it’s things leveraging want truck of to to with our pieces of we’re continuing truck a to want that’s than expansion about don’t into time, of part The with be weeds Plus, call which to and it’s it of – I same got it my product of managers results. and this sales planning next the right the into I I track. of okay. one dealer, It’s there’s effectiveness down you other this lines, I to this through you’ve regional when don’t to on its a sit that is market want weekend, break business, got drilling this, this sit more down part is I’m the can’t into we’ve so strategies. and having that, have being you using it’s through – we part hey, that, all off parts you strategies – as on when there all. network. and our we time you I’ll have it – break walk we these everybody then

to years hold, no, our right X now now, done. parts I’ve there the grow XXX okay. taking of to scenes goal revenues in more can right coming other this to that are continue and drive facilities. we strategies that leverage the country our behind initiatives out network and right working get out up technicians We’re a But across now the strategies have got these next the people service I’ve of with quality we got some to

side. parts pieces mobile seeing on, that We’re all-makes okay. gain really, business. traction we’re continuing the to service is growth fleet the on grow our starting But The to parts the you’re

Brad Delco

because Let of you to sales think think little you to you the component a me sourcing driving to strategy let have your what question ask to or success market you’re you you’re this kind the well, be parts, that key main differently, cost. I going seeing, to was, driver that really that I having of sort degree a when is that’s do some and – lower Do say, there this? try it your of was as maybe of came bit force out were the the laid disadvantaged understood

RustyRush

not at all, at all. Not

sourcing a to from okay. do our look, think partners we with and that, traditional we’re perspective, partnering continue will still I

Brad Delco

Okay.

Rusty Rush

on. to of we private in have got are going we right. too, lot not change, our own label going That’s line source, things We’ve other bringing a

to – the getting but okay. the time, one no, purchase a is all the to but behind we’re better, So same – right, continuing And into getting driver we do and details, at that’s have number okay. the into weeds I without not it, component, it

We drive have have. to leverage time, volumes volumes, right. we same our – the we But at the can

the with partnering out partners to to same coming me But sourcing fourth your feel parts. about but dealer – we for at other – we’re We’ve answer got their have, buy that’s – and think still we’re one to good don’t with third friend. typically, Brad. just and there – the same be we to about our people the it, sourcing buyers – my time the second get third, adding piece, would and your So fourth-tier way

and force way working our marketplace, we’re people, and our worked. changing very training we are to have to engage [indiscernible] that of changing out and there our reinvent And it’s the because typically with other and probably okay hard to working perception that’s our in out how – so have And perceive those – Center, folks get how Rush and sales And broadening other ourselves to us our a Truck dealers continue that’s people sales there. that the historically force – those and fault,

Brad Delco

one… Let me squeeze in

Rusty Rush

get be going And got all want things on call I the get honest to don’t I don’t we’ve to and with the you. – want in into to on,

We’re just…

Brad Delco

understand. I

Rusty Rush

partners our and know it’s time the for us I for same at for our and it’s good customers. good

Brad Delco

add another me one. Let

of energy it’s a these you’ve say, results, mean making A a me well. the bays result know people. you So capacity as lot you’ve been I as et results expand let these just to business, – are I – strong understand investments of and just had service with some lot as that great of cetera

how made in up? also up really here the ramps of does something picking I drive Navistar some That Navistar And up business Is another of am energy, – other in ’XX with earnings to versus or tailwind by, how when the a close and dealerships. of does are I’m side curious, that has mean be you? should growth will picking fleet right, to investments that dealerships, kind business there’s for that on those mean because You’ve be additional you if much these results driven think, lot in improvements fleets. the dealerships and it

Rusty Rush

But to believe the – sales okay. I I to we’d up, share’s think mean mine’s don’t going that’s We so. truck their market it, go if on side. going Well, like so, with

obviously on because X difficult the the told got forget, right, got years – over it’s [indiscernible] we’ve other yes, a – Navistar the it, only growing Peterbilt our I’ve the yet of level with rates not just parts turn, great years, But as parts on at But same we’re parts it lower the the the the road don’t service once those service perspective, we time, for of from work side that share to in reach performance for has our a the market have we and Now headwind stores. a from trucks levels there. upside and in of investments Look, house, last because piece probably the other. the growth us in been are got and still business couple service some to on people of it’s rates less facilities; at of perspective. the given raising towards working headwinds

share we’re what participating we market job have to is give much honest don’t there’s is that And our get shows Peterbilt’s to the kind be the okay share, means national said of side, that side, as market On at the work truck the high and than perspective. a their that maintain trucks doing even more that share the sales all-time market on out, our earlier, I share downstream to back and Navistar want I to with and an parts in – but want in But market and on really we’re going from just higher there. it’s territories quite high. market in service we side, they’re because on Peterbilt it

said over more – the the Remember, of what a to always hidden a back lot – in what going had, probably tripled tell spent this to But it’s and organization. side but We diamond $XXX we already hidden of in you probably the facilities inside also, towns Navistar everybody, the brand-new lot we begin million facilities, I in we okay. size ’XX them. On with. the growth XXXX of built

good told and you but of you’re of I’ve We’re here, – XX,XXX seeing – grow doing it But got we fruition really growth a a say folks customers, the into facility, small people facilities. you’ve always also you’ve you’re look those foot not facility. as got – servicing some right. the those, your we at square

revenues go a to build it is. square So in, XX,XXX absorption overall we foot same into grow takes and you but whatever you you’ll and timeframe little eventually facility. rate over move an when hit, that absorption Well, your back grow get the that rate time,

So we nowadays, we’re are all you’re for that’s as seeing [indiscernible] growth. and medium-duty don’t some to mean shops the many way combined there. differences seeing strategy, difference, of so our of OEMs that, through right? the out our you’ve when the I of That’s partners one go And sell big the both our partners with okay, that’s either, absorption got of reasons rate some what understand, you there by growth, what – of my forget and

it and XX% side parts we coming we Some is actually, and lot Navistar’s getting through the had XXXX, through absorption, Hino growth, less were the and we’ve Navistar service and the whether of remember, in a strength that side, are The than organization don’t Ford now. the growth was the in your or then the Class X, inside of X Peterbilt folks Navistar where Isuzu up, side, multifaceted the be whole running even okay X with the medium-duty, their or with medium-duty partnership GM. Peterbilt on business And with obviously. on and

So...

Brad Delco

this ask me you me I if let – Well, way, let can. ask

So...

Rusty Rush

trying keep to what know you’re You it, and asking. ask I

Brad Delco

Yes.

about… thought you If

Rusty Rush

energy. It’s Go ahead.

Brad Delco

if in of the potential potential So in about you sixth is? third made inning, inning in thought the you eighth inning, think the you profit franchise, your are of your in terms baseball Navistar a the are and are you you analogy, where you

Rusty Rush

We’re about further I tell than inning. that? How We’re no that, you can that. the third about

Brad Delco

answer the I That’s wanted.

Okay [indiscernible].

Rusty Rush

Because inning, no than we’ve first bunch further bases walked of a the here second. and buddy. in times the the loaded We’re third

the loaded, X that nobody just the second. we to – in innings. long out and for get had and of we first, got were We out they out, So That in years, out we goes the to that bases last had had of of okay. get

we’re start fourth pitching up striking minute – you up we going strike we’re people then third And starting in out. out. look a everybody the when to we’re here better come when we’re in to turn hit, our hitting The and inning now to it inning,

So...

Brad Delco

I like Steve. to hear that. Thanks, Rusty. Thanks,

Rusty Rush

bet. You

Operator

Research. Longbow next our question from follow-up Sabeiha from Faheem a Thank is And you.

Your line is now open.

Faheem Sabeiha

their I’m pricing for that taking the thanks lineup. a that’s coming Navistar my publicly they’re approaching across assuming follow-up. little X% by stated Joel’s up year, prices I’m product and just question to differently. raising Hi, in truck

in how the you So view position are market I’m while prices just next Nav’s competitive others steady. wondering if they’re raising year holding

Rusty Rush

and spoken. Well, but I’m and say drive back. sit We I OEMs’ else. The I it’s here all market get to customer going anyone competitive or once going for into too, them it, pricing my The I depending everything. might will cut not speak all before on decide – over. situation to will raise drive I’m and pricing They’ve can

just speaking not right. them, they I’m that’s just may works, in not, way you’re know, when it for I So the negotiations,

or that X% would Normal I getting things X%, X% sure I of like are upside a get be so some we’ll going raises or – on. that’s you’re price or inflation don’t like year – And any dramatic it’s of not typically, look look, just going you anticipate that, X% but – and and I that. some things – like get to something going for that to increase, I’m just

– itself to get cost raw filtering but it’ll what will perspective I’m through. settle you. doing market Look, down, tell a need, and of it’ll a sure. sure, their sure it’ll I – from I’m I’ve And this time. the been I’m down by out driven So not settle and everyone that’s I materials stuff, really and cost be sort all can long

don’t Now if sometimes markets just the you let can widen that. out. allow margins, great, it But play we’ll are markets but hard,

Faheem Sabeiha

Okay. you just fine, on trucks sell? final where And engine internal to I Fair a see do Nav’s provide heavy-duty can while topic, mean next the you the that expect be can we’re the in that your that’s a But figure, outlook you be understand. different And it comment availability if year year? like, you is enough. acceptance direction, will just share question. on I and going percentage next in increased models driving or what fleet to truck wider

Rusty Rush

you Are talking about the…? or it is – on Navistar side the

Faheem Sabeiha

Navistar, engine. Yes, with on the AXX

Rusty Rush

up gets I they’re and – watch make supporting it’ll to hey, mean this – slowly they’ve know their just with that talking year, in quite with to out here and way a it right. I – just they’re itself marketplace, now, earlier out its then how – few thousand, and sure sure heavily they’ll – right. them, they’ve I people, the out that they came put what got Right, from know performs, see I’m it’ll from putting it the engine right talking – it ramp with

next early ordered sure and stuff and what that out, I’m to we think for going number a a really what people to but me be, you it’s I’m it’s majority still little demos have the got sure there. start it out it as some we gets coming the sell in will taking of be it as year. performing will give and putting shares I we’ve But starts too marketplace of

it’ll be know percentage. end So a I that’ll I of any don’t where of driven can’t drive give lot performance be lot that – you pricing up, things [indiscernible]. and and a by there’ll

Faheem Sabeiha

you. Okay. It good. Thank sounds

Rusty Rush

You bet.

Operator

I now am time to for no CEO call showing President, Chairman, this At further and turn questions. you. the Mr. Thank like to would Rusty back remarks. closing I over Rush,

Rusty Rush

You to and with hope our will happy and bet. you, between has a much. now I I in you QX in Thank very talk February release. gentlemen, you thank and And everyone ladies we holiday. Well, then, guess

Operator

Ladies program. you for today’s and concludes This gentlemen, participation the in conference. your thank

a disconnect. great day. You Have may now

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