RUSHA - NASDAQ

Good day, and thank you for standing by. Welcome to the Rush Enterprises, Inc. reports fourth quarter and year-end earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, we will open up for questions. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11. Please be advised that today’s call is being recorded. I would now like to hand it over to your speaker today, W. Marvin Rush, CEO, President and Chairman of the Board. Please go ahead.

Good morning, and welcome to Rush Enterprises, Inc.’s fourth quarter and full year 2025 earnings conference call. With me on the call today are Jason Wilder, Chief Operating Officer; Steven L. Keller, Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before we begin, Steve will provide some forward-looking statements disclaimer.

Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended 12/31/2024, and in our other filings with the Securities and Exchange Commission.

Thanks, Steve. As we reported in our earnings release for 2025, we generated revenues of $7.4 billion and net income of $263.8 million, or $3.27 per diluted share. In the 2025, revenues were $1.8 billion and net income was $64.3 million, or $0.81 per diluted share. I am also pleased to announce that our Board of Directors approved a cash dividend of $0.19 per share. 2025 was another challenging year for the commercial vehicle industry. Freight rates remained under pressure. Excess capacity continued to be a factor, and customers faced uncertainty around trade policy and emissions regulation. All these factors negatively impacted demand, particularly for new trucks in the over-the-road segment, and also created a more difficult aftermarket environment. Despite these conditions, I am proud of how our team performed. We remained disciplined, generated strong cash flow, managed expenses effectively, and continued investing in the long-term growth of our business. Toward the end of the fourth quarter, we began to see improvement in new Class 8 truck demand. Quoting activity and order intake both increased, and that momentum has carried into the first quarter. We believe a key driver of this improvement has been increased clarity, particularly around tariffs and the EPA’s anticipated confirmation of the 2027 NOx standard. With some of that uncertainty behind them, fleets are beginning to plan for future vehicle replacement cycles again. We also continued to expand our network in 2025. We acquired IC Bus dealerships in Ontario, Canada, with an area of responsibility that includes the provinces of Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island. In addition, we added a full-service Peterbilt dealership in Tennessee with Trucks Plug Centers Nashville Central. These strategic additions strengthen our footprint and enhance our ability to support customers over the long term. During the year, aftermarket parts and service and collision center revenues totaled $2.5 billion, essentially flat compared to 2024, and our annual absorption ratio was 130.7% compared to 132.2% in 2024. In the fourth quarter, aftermarket revenues were $625.2 million, up from $606.3 million in 2024. Absorption was 129.3% compared to 133% in the prior-year period. While aftermarket conditions were challenging in 2025, we continued to see strength in key customer segments such as the public sector and medium-duty leasing. Our focus on operational efficiency, reducing dwell time, improving parts delivery, and strengthening service execution also supported our performance. Demand remained soft in January, but we are beginning to see signs of improvement. As fleet utilization increases and customers address deferred maintenance and aging equipment, we expect parts and service demand to strengthen. Looking at vehicle sales, we sold 12,432 new Class 8 trucks in 2025, representing 5.8% of the U.S. market. In Canada, we sold 338 new Class 8 trucks, representing 1.4% of the Canadian market. As I mentioned earlier, demand was soft for much of the year, particularly among over-the-road fleets. However, demand from our vocational and public sector customers remained relatively stable, helping offset some of the weakness in the over-the-road segment and highlighting the benefit of our diversified customer base. ACT is forecasting new U.S. Class 8 retail sales of 111,300 units in 2026. We believe the first quarter will represent the trough for Class 8 retail sales, and we are encouraged by recent improvement in order intake. Fleet ages remain elevated by historical standards, and we expect replacement demand to increase as the year progresses. With respect to medium-duty commercial vehicles, new U.S. Class 4 through 7 retail sales totaled 217,412 units in 2025, down 15.6% compared to 2024. Despite that decline, we sold 12,285 new Class 4 through 7 commercial vehicles in the U.S., down 8.5%, significantly outperforming the market and increasing our market share to 5.7%. In Canada, we sold 993 new Class 5 through 7 commercial vehicles, representing 6.3% of the Canadian market. We continue to be pleased with our medium-duty performance. We believe our diverse customer mix and Ready to Roll strategy continue to differentiate us from our competitors. ACT is forecasting U.S. Class 4 through 7 retail sales of 218,225 units in 2026, up slightly compared to 2025. While we remain cautious given weak order intake over the past several months and broader economic uncertainty, we are beginning to see improved quoting activity. We are well positioned to fulfill orders as customers move forward with purchasing decisions. We sold 6,977 used trucks in 2025, down 1.9% compared to 2024. As freight rates improve and prebuy activity builds ahead of future emissions regulations, we expect used truck demand to improve in 2026. Our leasing and rental business delivered another solid year. Leasing and rental revenues totaled $369.6 million in 2025, an increase of 4.1% compared to 2024. In the fourth quarter, lease and rental revenue increased 3.6% year over year. This business continues to benefit from the strength of our full-service leasing operations, supported by strong customer demand and a younger fleet. From a capital allocation perspective, we remain disciplined and continue to return capital to shareholders. During 2025, we repurchased $193.5 million of our common stock. We also announced a new stock repurchase program authorizing the company to repurchase up to $150 million of common stock through 12/31/2026. In addition, we returned $58 million to shareholders through our quarterly dividend program, a 5.6% increase compared to 2024. These actions reflect the strength of our balance sheet and our confidence in the long-term outlook for our business. Looking ahead to 2026, we expect market conditions to remain challenging in the first quarter, but we are optimistic about the remainder of the year. With fleet ages elevated and maintenance needs increasing, we expect both commercial vehicle sales and aftermarket conditions to improve as we move into the second quarter. While we cannot control the pace of the market recovery, we can control our execution. We believe we are well positioned to respond quickly and effectively to our customers’ needs as conditions improve. Historically, when the cycle turns, demand for both new commercial vehicles and aftermarket parts and service rebounds quickly, and we believe the strategic investments we have made over the past several years will help us serve customers better and gain market share. Finally, I want to thank our employees for their hard work and commitment through 2025. This was a very demanding year, and their focus and execution were critical to our performance. With that, we will open it up for questions.

Thank you. And as a reminder, to ask a question, you need to press 11 on your telephone and wait for a name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Brady Lierz from Stephens. Your line is open.

Hey, great. Thanks. Good morning, Rusty. Thanks for taking our questions. I want to maybe start, unsurprisingly, on Class 8.

As you mentioned in your prepared remarks, we have seen an improvement in orders late in 2025 and here early in 2026. Can you just talk about what you are hearing from your customers? Are you expecting this to be a pretty meaningful prebuy here in 2026 ahead of the 2027 regulations? Just any clarity there would be helpful. Thank you.

Be happy to. The answer would be cautiously, but maybe not even cautiously, but optimistic that yes, there will be a prebuy before we get into the 2027 emissions regulations. You know, based upon not just the regulations, right, but you can incorporate regulations all you want. I was around—well, you were probably still in high school back in 2010—when we went to SCR. We were supposed to have this big, you know, buy and buy. Obviously, it was the worst year in forty years. Right? We had a little economic problem going on, which—so what I am reflecting on is not just the fact that the 2027 emissions, but the fact that their business is improving. And I am not going to get ahead of myself and say it is, like, accelerating or ramping up rapidly, but it is improving, especially over the last ninety days. I do not have to tell you. You know, spot rates have been up. Five to six months ago, most people would have thought going into their contract rates were probably going to be flat. Now people are hoping to get contract rates up, you know, mid-singles. Right? That line between spot and contract has moved nicely with where spot was so much lower before. So, you know, your business has to be good. And I am not going to say it is great, but you at least need to be able to see forward. Right? And that is important. We had so much uncertainty last year with regulations, with EPA regulations, with tariffs, and everything else. So now you can focus on these regulations and do it while your business is, you know, gradually getting better. It may not be reflected in all the first quarter reports, but I think most customers feel that their business is improving. When you talk about—we are talking about over-the-road customers right now because that still is the biggest segment, even though we are more diversified than most folks when it comes to vocational and over the road. But we still need that over-the-road customer to be solid. Right? It is the biggest piece of what you do still. And so combining, you know, some—most—we do not have full clarity, but we know we are not changing it. We know it is going to be 35. The government—when I am talking about NOx and stuff—so we realize that is going to be there. You know, they have not clarified everything, but you pretty much know what the cost is. And, you know, when you are doing something like this, the cost is one thing. It is, you know, a little bit new aftertreatment systems, and I watched 2010 when every particulate filter was clogged up when we came out of SCR back in ’10. I am sure there are a lot of people that still remember that. You know, you can have issues when you come out. So I am just giving you background. So you combine the EPA issue, clarity on tariffs, which has given clarity to pricing throughout this year, which we did not have last year, and their business getting better. So I am optimistic. The issue will be this. The issue will be we are going to run out of time. So, you know, it is already—we are, what, eight days away, nine days—what is it? Ten days away, excuse me, from the end of this month. I apologize. And we will be into March already. So I do expect order intake to remain what we have seen over the last couple months in that range, if not maybe even a little more because I think people are lining up. So I do believe Class 8 order intake is going to continue solid. You have to remember, we had a five or six month run last year, a six month run that was close to being less than the last two months. Five months for sure were close to being less than the last two months. So, I mean, all that—I know it is a long-winded answer, but you folks are used to my long-winded answers. I try to give you a full perspective here. Yes, the emissions piece is there. Yes, that is important. But it is also important that people can at least see a little further in their business and have clarity, which we did not have. So the combination of the two—yeah, I think we are going to get—you know, and I think you may run into a problem with supply side, problem with tier-two and tier-three suppliers. We are not there yet by any stretch because there was a lot of backlog to fill up. But it will be interesting to see where we are sixty days from now. So, I mean, a lot of customers are realizing they better—I think some go—well, I know they are—that they better get it on board now and not wait till summer, or we may run out of—it is hard to ramp up for that shorter period of time. You know, OEMs will ramp up. There is only so much you can do when you do not have clarity past, you know, January 1, really. But I do not see—just going further—I do not see ’27 to be a huge drop off either because we are going to get started. It is going to be—we are going to get started light here in Q1. Okay? There is no question. Lighter than we were last year in Q1. So you start in a hole. So, you know, the year could be similar, maybe slightly up. It is going to be, you know, packed into the back three quarters of the year, should you say?

I shut up. No. That is all very helpful

color. If we could just talk about parts and service for a second. You know, typically, you see a pretty nice sequential step up in the first quarter compared to the fourth quarter. But has the severe winter weather we have seen this year impacted that at all? Just want to get any thoughts there. And then, you know, if you could just talk about some of your strategic initiatives in parts and service. You know, you have mentioned in the past growing the technician headcount. Just how are those initiatives progressing?

Yeah. Well, I do not—I am not going to say, as I mentioned earlier, January was a tough month. When you ask about the freezes—well, we were shut down for about a week in the Dallas–Fort Worth area, and some other areas, we were—you know, down in the South, they do not know how to handle ice and snow. I can tell you it is not like—you know, it is funny that, you know, cold weather is good for your parts and service business, say, in Chicago. They are used to handling it. They have got snowplows. They do not have any snowplows in Dallas. Nothing iced over five days. Okay? We were almost shut. We really were. We were running skeleton crews. It was detrimental, let me tell you, to our southern stores in some areas. So that is why January was a real tough one. We are starting to see life, a little more life. You know, as I have said all my life, if I could just get rid of November through February—but I am from—you know, we are from the South. We were raised here. We are from Texas. And if I could just get rid of November through February, I would have, except for Christmas and Thanksgiving. But, you know, we are getting to the end of it, and, you know, we are starting to see, you know—it is typical seasonality, I would tell you. It was soft in January. It was soft in November and December, but that is seasonal. That is not something we do not deal with in the past. January was probably softer than it usually was because some of our bigger areas on the Peterbilt side were down, which are further south, got frozen up a little bit. And we do not operate—some of these places do not operate well in that. But I think it is just normal. We got hurt a little bit, but we should come out of it here as the sun comes out and heats up, as we get into March and April. I see no reason we will not, and we are seeing signs in February that things are better than what they were, which is just typical. From a strategic initiative, you know, our mobile service piece is something that we are really big on, and we continue. Last year was a big year for us from a mobile investment perspective. I can tell you we took on, like, $4 million more depreciation in mobile units last year than we had in 2024. So those are investments that we make where the payback comes back over the next five or six years as you ramp all that up. You would like to think it is all immediate, but it is not always all immediate. So we continue to ramp up that piece of our business. It is a larger piece of our business than it ever has been. It was running around 30%. Now it is running, like, mid-thirties or more of our overall business. So, going forward, we continue to believe that is going to be a big piece of what we do outside of our shops. I would say that is the most important. We did go backwards a little bit in technicians in the fourth quarter. But, you know, I think we were—you know, I am not sure exactly why. I am not going to say it was dramatic, so I am not going to make any big deal of it. But, you know, we are focused on continuing to get back to adding especially higher-level skilled technicians as best we can and are doing our best to train the young ones. You would be amazed that, you know, the turnover usually comes in those first-year, second-year folks. And we continue to have programs to work our way through that. But, yes, we will continue to try to grow technicians like we have in the past while we are still doing it profitably. You have to be careful when you are doing that because you have to be able to do it profitably, not just do it for the sake of doing it. You know, we have got some great programs from a delivery perspective. We are running pilot projects. I do not want to get into all that stuff. Some of that is what I consider proprietary. But you can rest assured we are not sitting on our hands. We never have and we never will. We will be out there running out front, hopefully. These are always getting chased, so you have to have something going on.

Yep. Absolutely. Well, one final one for me, and then I will pass it along. You know, you have mentioned quite a few times just throughout this challenging freight market the last couple of years, one of your priorities has been controlling your expenses—controlling the controllable. You did a nice job of that in 2025, particularly in the fourth quarter. Can you just talk about how we should think about expenses in 2026 given both your focus on wanting to maintain that cost discipline, but also considering we are expecting the market to improve here in 2026.

Right. Well, let me say this. If we get into really—well, I believe we are not there yet—if we can get a growth where we really feel some real growth, I am not ready to declare the claim. And I am talking parts and service growth, not truck sales. Remember, truck sales are—when you go, everybody goes SG&A, SG&A. Well, we run it different. S is attached to truck sales. G&A is attached to all the other expenses. Right? Because S is a variable commission piece driven by what truck sales are. So you sort of have to look at them in two separate buckets. Right? And that is how we do it. And, you know, I would hope that we can maintain our G&A at least close to flat. Okay? That is my plan here. Would be to do that. Now,

half

of the growth—if the parts and service business ramps up, we always talk about the fact that we will spend half of the gross profit growth. Now let me back up a second. Remember this about Q1. Do not comp Q1 to any other quarter. Q1 always jumps from Q4. Okay? You have got all your payroll taxes restarting, and the majority of our equity costs go out—half the equity costs in the company run in one quarter, and that would be in Q1. So if you look at our historical record, it will always show a jump from Q4 to Q1. So do not forget that. I would just compare it to last Q1 because that is always a jump that we have. That is what I would tell you to do, not compare it to Q4. You know, a lot of different things in Q1, like your payroll tax runs down as the year goes on, etcetera. And really, more than anything, the equity costs—the majority, not majority, but half the equity cost in the company—run in one quarter, and that would be in Q1. So, again, do not compare it to Q4; compare it to last year’s Q1. But we would hope to do a good job for now staying close to that number last year. But it is possible that it will ramp up some if our gross profits in parts and service start going up. We cannot just—you know, it takes people to do what we do. People turn wrenches. People drive and deliver parts. People do all these different things. And it is not like I am loaning money here. I am handling hard assets and stuff like that. But I would love to have that problem. So, hopefully, we will continue to see growth. And if we do not, I am planning on keeping it as flat as possible. If we stay flat in parts and service, I am planning on keeping as close as I can, with as little inflation as possible, to where we were. But we are hoping to have some growth. And, like I said, after getting out of January, seeing a little uptick here in February, which started up. But I am used to the seasonality of the business, whether I like it or not. And I just have to deal with it, and, hopefully, we will pop out in the spring like always.

Very helpful. Thanks for all the color, as always, Rusty. I will go ahead and pass it along.

You got it. No worries. My pleasure.

Thank you. One moment for our next question. Our next question will come from the line of Avi Jaroslawicz from UBS. Line is open.

Hey. Good morning, guys.

Yeah. Good morning, sir.

So, Rusty, as of where things are standing today—and

kinda discussed it a little bit already, just there—but what are your expectations for price/cost in the aftermarket business? I think it was somewhat of a tailwind last year, just as you raised prices of inventory to match the cost increases you were seeing. But then there is a lag for when those hit COGS. So how should we be thinking of what—yeah. Should that be a headwind here in 2026? And if so, roughly, what are we talking about?

Yeah. You could have a slight headwind as inflation—you know, with inflation slowing down. Okay? But I do not look at it as it would be monumental. There will still be inflation. It may not be quite as much. You know, inflation can be a tailwind to you when you are doing it if you can maintain. So I would tell you—what, a little bit of a headwind—but when you look at it as a percentage of the whole, it is something that, if you have a growing market, you could overcome without any—without question. So while we will have inflation, I do not expect the inflation from that perspective, from a parts perspective, to be as much as last year from what we are seeing from the suppliers and the OEMs right now. But it will be there. It just will not be quite as much. Hopefully, you know, what we are talking about is the market will get better and grow. You know, the overall market was flat—not just for us, for everybody—or even down. And for some people, whether it is independents or dealer-operated stuff, some of them were negative last year. So, you know, I am hoping that we get into a more—of, you know, as our customer base gets healthier, their spend will be more normalized. You know, you have to think about it like this, the way I look at it. These guys were over three years in a freight recession. And I have been around—I hate to say how long—but I am young. Young at heart. But I have seen a lot. You know, when it gets like that, people do not necessarily spend like they would if their business was normal, when they are in a recession. You saw companies lose money that never lost money. Well, guess what? When that is going on, you are going to put off spend. You are going to add—you know what I am doing? I am adding 5,000 miles to the oil change. You know what? I am not fixing that fender. You know what? I am not doing this. So the health of a customer is the most important thing out there. And, yes, we do a lot of vocational stuff. The over-the-road market is still the biggest piece. And this—even the small—I mean, we have been off double digits from our small customer for the last—each year for the last three years. So, you know, I—and you go, that is bad. Well, that may be bad, but right now, I am going to say, I look at it as a positive. I look at it—it cannot get much worse. Right? It is only one way to go, and that is up. So, you know, I hear you about the little bit of headwind, but I think the overall market, when I look at the possibilities, a healthier freight market is going to be way better than a little bit of headwind. And it is not overwhelming headwind either, by the way. But I still think there is going to be some inflation. There is no question. But other than that, we will be able to hold our earnings. You can see, I think we ran 37% blended parts and service in Q4, which is in line—looking back—with 37.2%, 37.6%, 35.8% actually, the last ’25. So my point being, 37% is solid. And I would hope we could maintain in that same range—blended parts and service margin—regardless of inflation. But, you know, the health of our customer base, especially the largest customer base, the over-the-road carrier—and once the big carrier gets healthy, guess what? The little carrier follows along. And that is where more of your retail parts and service comes from. Not more, but a chunk of it that has been super depressed. And so, to me, I am not trying to get—it is not there yet, but I have seen these cycles before, and I do not want to get too bullish or anything, but if things go according to historical, then I think we should be in fairly good shape to capitalize on that.

That makes sense. Appreciate that. And then on the medium-duty side of the business, saw a pretty sharp drop off in sales there in Q4. Still better than the industry, but a sharper deceleration than the industry in the quarter. So, you know, how are you thinking about the shape of the medium-duty demand here in 2026? Do you think it is going to be fairly similar to what we see in heavy duty? Or

I do not know. You know, I have some concerns around it, to be honest with you, but I have not seen the acceleration in it over the last sixty, ninety days that I have seen in the heavy-duty side. But a lot of times, you know, the medium-duty business is a lot of leasing and a lot of different customer base. Right? And tied more to the general economic activity of things going on locally in a lot of ways because it is more diversified-type products. Otherwise, leasing and box trucks and stuff—there are a lot of other medium-duty segments that we play into. So we are seeing more quoting activity right now. It has not come to fulfillment as much as the heavy has, but a lot of times, you know, it will be springtime. As we get around here going up with the NTEA and some things like—it is a big conference that comes up, the convention—things like that, where some of these things happen. So I am sure that it will line up historical. You know, I cannot sit here and tell you that we are going to sell lots and lots more. I would imagine we would be maybe based on ACT calling it pretty flat, to be honest with you. We would stay in line with the percentage of the market we are at now. But, you know, I cannot tell you I have booked it all already. That is for sure. But I can also tell you I am not afraid. We have got a pretty good salesforce out there. We represent many brands,

and

you know, we feel good. It will come. It just has not really yet for us, to be honest. But the quoting activity has picked up. You have to quote before you can order, and you have to get it ordered and get it built and get it delivered. So I am confident that we will execute in the lines of where we have historically, if not grow it. You know? I have got some stuff going on that I would like to see happen. It might allow us to even grow it, but I do not want to get out and put my skis on.

Alright. Appreciate that color. And thanks for the time.

I got you. My pleasure.

Thank you. One moment for our next question. Our next question will come from the line of Andrew Obin from Bank of America. Your line is open.

Russ, this is Steve. Good morning. Well, good morning, Andrew.

Just a question. Just going back to something you said. I think you guys were fairly

skeptical, and there was a big industry debate about ACT orders last month and were they one-time in nature. It sounds like you are sort of warming up to the fact that, you know, orders could actually improve faster. Could you just unpack this for us? Just what are you seeing happening with industry orders over the three to six months? How that is going to play out? Thank you.

Sure. I may be a little repetitive here, Andrew, but I thought I tried to answer. But we believe that, you know, once we got clarity—remember, it started on November 1. Let us get that right. When they changed the tariff rules, took effect November 1. Then we got some clarity a little later after that about, well, we are going to hold on and keep the 2027 rules in place from the emissions perspective, except for we are going to loosen up a few things here. We are going to—probably, and it has not come out yet—but the feds have said we are not going to keep all the warranties. Now, it has not been officially done, but they have communicated to customers and the like that we are going to cut the warranties back. Well, that was more than half the cost. We are going to be a little flexible on credits and how you do that. And I am not the technical expert. So you had all that go down. So that gave clarity. Right? So then customers started looking out next year. They knew they really wanted—they pulled back on purchases last year in the second half. And you cannot do that for too long, or you are going to—you have to bottle that up. Your maintenance is going to go through the roof. Age—your fleet age goes up on these big fleets. So people really started talking, I would tell you, in November. And, you know, in November, I do not remember what it was. It was 18,000–20,000 units. I cannot remember. But it was picking up, and we had a big December—38,000–40,000, I think—and then it was 30,000 last month. Well, at the same time, as I said earlier, people’s businesses—they started being able to see your tender acceptance rates came down from 98% acceptance to low 90s—even in the high 80s—which started to drive, you know, your spot market up. And it is not just weather that did it here recently. And people felt better about where they were at from, you know, in contracts going forward. There has been a little bit of tightening. Right? So that gives you—and people worry, is it sustainable? Right? The first thirty days. And now I am going out on a limb. Maybe I am going to be wrong. Maybe it is not sustained. I have a feeling that after three and a half years, it has got to be somewhat sustainable, if not gradual. Right? But sustainable, whether it is not some spike but a gradual sustainable improvement in their business. You tie that in with now you have got clarity. You know where it is going to be at the end of ’27. You may have slowed down on some purchases—some companies did—in ’25. Well, you know, that is why I think you are going to see some good order intake this month. Also, I am just guessing—it is a short month—but it will be solid. I do believe it. It is a short month because we know February, but I would expect it still to be solid, from people I have talked to. So, you know, I think what is going to happen is, as the backlogs fill—and I do not know for everybody because I have heard of one OEM that has shut down weeks here in the first quarter. Not anybody I am dealing with, I do not believe, but I have heard of one OEM that has, and I do not want to get into all that. But my point being, I know for people that I am dealing with, they are filling up. Not filling up, but you are getting orders. You are building a backlog. Most of them spread over time. So I just believe—I could be wrong—it is just my gut and maybe touch with the market, that yes, it will continue because people are feeling their business is not great, but they do not feel in the dumps. Sometimes when you have been living in the swamp—in the dumps—it does not have to get a whole lot better to make you feel better. And it has been three years of prolonged freight recession, but at least now you have to believe, you know—because remember, the first thing that happened is capacity is coming out. Everybody reads about non-CDL, or noncompliant drivers—there has been taken out here and there. And they have. But that is not an add-water-and-stir thing. But as that goes on, you take—you have less intake of trucks. Remember, we built a whole lot less trucks in the back half of ’25 than what we did in the first half. So you slow that spigot down. You start taking some of those noncompliant CDL drivers out, and you start squeezing the capacity piece. Then, all of a sudden, business starts getting a little better. Economically, it looks a little better. The ISM stuff looks better. I mean, there are a lot of things

that

tend to make me believe, along with emission regulations coming January ’27, we are going to have a pretty good last three quarters of the year. And I am not predicting doom and gloom after that, but it is a little far out for me to understand right now. I am just dealing with what I have got in the present over the rest of this year. We will talk about ’27 as we get halfway through or a little further through the year. But I feel good that it is sustainable and will lead to maybe even a better year. The problem is you start off—remember, the first quarter is going to be off. So you are starting in a hole to begin with. So you have to climb back out and then catch back up, which you should do for sure in the back half of the year—deliver more trucks than we did last year. For sure.

Great. Rusty, and just a follow-up. I mean, it clearly seems that the improvement over the road is finally driving your optimism for the rest of 2026. You have alluded to other parts of the economy getting better. Can you just talk about off-highway, which has been such a moneymaker for you over the past year—sort of got you through the drought? But maybe, you know, if we could talk about, you know, sort of these corporate fleets, if we could talk about construction, if we can talk about waste. What are you seeing in those markets? Because those tend to be economically sensitive as well. But, as I said, it seems to us that your message is very clear on finally starting to see green shoots on over-the-road recovery.

Yep. Very well put, Andrew. Yes. Seeing them on that side of the margin.

Yes.

You know, we love the diversity of our customer base. You know that. I would tell you the vocational pieces—I do not see the pickup that I see across, but I can see fairly flat to where we have been. Because we have been pretty solid in it. I have to be honest with you. So, as you said, it has helped us a whole lot over the last couple years. When there is an over-the-road freight recession, we have been really solid around that area. So I think that—let us say, I do not want to get into specifics. We might be a little softer in one segment, up a little in another segment. But when you look at vocational as a whole, I am going to say we are going to be probably flat with where we have been. I do not see any huge decrease or any—you know, we may—because some of them, we were still catching up from COVID the last couple of years, when you could not get trucks three years ago. So we have fulfilled maybe some of that or the pent-up demand. So now it is more like business as usual. But I do not see any big downtick. It is more back to business as usual. Some of the people we do business with were playing catch-up in ’24 and ’25 from not getting as much product in prior years, to be honest with you. So, you know, where they may be off a little, it is not off because they are off. It is off because they played a little catch-up, and we were able to capitalize on that. So when I look at those businesses, they are doing well, but they have caught back up to their normal replacement cycles. They got left out a little bit—some of those groups got left out back in ’22 and ’23—and then we picked them back up in ’24 and ’25. So just because someone may have bought 900 from me or something, and they are buying 750–800, that does not mean business is bad. It just means they have caught back up. Right? So you have to report. But I think, overall, we will be somewhat flat in the vocational pieces.

Thank you, Rusty. It has been a while since you have been constructive about over the road. Good to hear. Thanks so much.

Yeah. Well, it is nice to feel—even though it is the big piece, you know? But for us, vocational is big as well. So thank goodness. It is nice to feel that you have got an opportunity to maybe—you know, and I hope when I say over the road, I am hoping our small base comes back. I am a little

a little

optimistic there. I do not want to get overly anything. Wait till I talk to you in April, and I will have a whole lot better feel for what is going on—the sustainability of what we are seeing. And I am not trying to overwork it. But, like you said, it has been a while since we have been able to talk optimistically about the over-the-road business. And I am just looking forward—I think things are going to be better. So you add that with everything else we have got. In Q1, this is—we are just taking out—people get excited because they always say orders taken. Orders taken does not mean trucks delivered yet. We are the tail of the dog. A lot of times, we have to do a lot of upfitting and things like this to trucks when we get them. So that is why, when you hear me talk about, well, he took orders for us—well, that does not mean I am going to add water to the furnace and deliver them thirty days later. It could take three, four months to get them out there and get them delivered because of what has to be done, because we are the last guy that touches the end user. So, even though they are manufactured, we have upfitting places around the country where we make sure that we do all those things that customers need. A one-stop shop. That is where we like to be.

Thank you.

You bet.

Thank you. And as a reminder, to ask a question at star 11, star 11. One moment for our next question. Our next question comes from the line of Cole Cousins from Wolfe Research. Your line is open.

Hey, guys. Thanks for taking my questions.

From a Class 8

pricing perspective, can you talk to what you are seeing across the market at this point? Are OEMs raising

prices yet, or does it remain pretty competitive

as OEMs look to protect or gain share, and maybe how do you see this progressing through the year with EPA ’27 on the horizon?

Yeah. You probably did not do real well asking that question to the OEMs, did you? Okay. So you are asking me. You put me on the spot. I would tell you right now, we are still building backlogs. I would say, you know, there is no big discounting going on compared to where we were, but there are no huge raises now because that is one of the things. As we get later in the year, I would not be surprised to see—if supply and demand—if demand exceeds supply, you have been around long enough to know what that means. I will not even try to tell you. Everybody knows what that means. Okay? And so we are not there yet. Backlogs need to be built up. They have been drained down pretty good. People were building trucks in four weeks for you if you wanted it. So, you know, once backlogs get built up, we will let the OEMs decide, and we will be the poor guy in the middle trying to get deals done. But right now, I would say we are in the—OEMs are still in the process of getting their backlogs more healthy. So I am not going to say it is total cutthroat out there right now because it is not. But it is balanced at the moment. But if you start popping two or three more 35,000–40,000 months—which are not necessarily typical of these months coming up; in March and April, you are probably going to see demand obviously outpace supply, and I will let you take it from there.

Okay. Yep. That makes a ton of sense. And just—I know we have asked a lot of questions about this—but to follow up on Brady and Andrew’s questions, maybe to put a finer point on it, how much of what you saw in December and January do you think was replacement CapEx versus growth CapEx versus some degree of prebuy activity? And if it was some degree of prebuy activity, can you maybe talk to the risk of potential order cancellations late in the year if things maybe are not as good as they seem and customers are trying to get in line ahead of EPA ’27 as backlogs start to build again?

I feel very good about how solid what we took was. How about that? I see nobody out there trying to put placeholders. The business we took—it would take a recession or something for these folks not to take what they ordered. That is how solid I feel about it. It is not people putting placeholders. You have seen ramp-ups before where people put placeholders out there just so they can hold slots. That is not what is going on at the moment. I see none of that, to be honest with you. I see people being proactive, understanding what I just went through on the last question. They do not want to get caught in that demand-out-of-whack demand-supply piece. You know what that means. We already know what that means. So they are trying to be proactive, not just to the emissions, but also knowing that it is probably going to back up—whether you can get that second- or third-tier supplier. And that is what—I hate to say it, but you know what happens when demand outpaces supply—where price goes. Let us get real. So I think people are catching up. They probably did not purchase as much in the back half of last year because they did not. And, you know, the best way I can tell you is it is solid. I go back to—remember what I kept telling you—their business is better. I have said that three or four times also. It is not just emissions. Not just the emissions. You asked about price. I will answer it the same way. Their business is better. You have got emissions coming. You feel better. Like I said, you have been in the dumps so long—it is not a straight V, but it is a gradual climb up. You feel good about where you are at. You are trying to plan for your future. You know you are going to be in business for a long time, and you need to do the right thing. And you just put that together, and I think that is what you are going to see. That is what you are seeing, and I do not believe that activity level is going to

to

go away. It may not be 35,000–40,000 every month, but some people that are not participating are going to wake up here in sixty days if we have a couple, three more months of order intake like this and go, whoa. And that is what—you asked about price. That is when we are going to see how things move along then with that. So I would tell you that the folks that are on top of their game, feel well enough about what is going on, are doing the right things for their business plan and not waiting till the last minute to do that, knowing that there still is plenty of backlog out there still to be built. You better not wait till July would be my comment, or you might get caught, because ramping up production—I mean,

these

OEMs are having to make decisions right now, in the next thirty to sixty days, what they are going to do in the back half of the year. You have to remember that is more labor. That is more this. And it is the second- and third-tier supply chain that has been down in the last half of last year that you ask them to ramp up. They are going to go, well, how long for? And that is where you run into a problem. And that is what could happen. So, you know, if I am planning on being in business around a long time, and I am a smart player, then I am out working it right now. Okay? That is what I am doing. Because, you know, that could be an issue. It is not an issue now, but you better be looking out. You better not be living just in the moment. You better be looking out a little ways would be my comment to anybody. And I am not trying to play scare tactics. I am just telling you that you run into issues with that. And we will just—I think, if I am not mistaken, the engine’s build is the ’27 mark—not model year, but—one thing you have to remember: when you get towards the end of this year, it is about the engine. The engines all have to be built by the end of 2026 before you go into 2027. So it could be an interesting back half. Let us just say that. How about that?

That makes—that is good color. I appreciate it, Rusty. And maybe if I could squeeze one last question in—

Of course you can. You know I hate to talk.

I heard you on the small accounts being down double digits for the past couple of years. It sounds like that has not really come back yet, but maybe there is some hope that it will through the year. But maybe can you talk to what you have seen from the national account level and, from a higher level, talk to some of the initiatives you guys are pursuing to grow national account mix going forward?

Yeah. You bet we are. We always were. You know, national accounts—it is easier, more effective, and more controllable. It is hard to control what we call the unassigned accounts. That is still 30% of our business, roughly, and that is the little folks. Right? So we just want that to come back because that is going to be a higher margin. When you do national account business, understand they are national for a reason. They are not paying retail. So, while it can be a little hard on your margins, it is still more solid, sustainable, repetitive business, should I say. So you are looking for that foundation. The cream and the cherry on top comes when you get the small retail guy back in the game—the guy that is not listening to me on the phone right now. Those folks. They are still a part of what we do. But our national account business was up—not as much as we had been up, but it was up in some sides of the house—not so much in others—but overall, for last year. We will continue to focus on that. And we were up—not as much as we had. We were up by, like, overall blended, all OEMs were above 6%. So we will continue to grow that, understanding that you are blending revenue, you are blending margin, you are doing all that. We love that piece. We are going to continue to focus on that piece. It is the sustainable piece—more sustainable. It does not have the volatility of the small customer out there. So—but that is why I am hoping. But you have to get those guys—the national accounts—have to feel better, which they do. They will buy all the time. They just may not buy quite as much sometimes. We were up six years before—we were up double digits. Again, like I said, you are growing the revenue. Margin is not as high as the other. We work the blended margin. But I think everybody understands that. And we are fine with that. We will manage that piece. It is much more manageable for me than unassigned accounts because they are not assigned. You really do not know who they are. Small firms. But, hopefully, later this year, as the big guys get healthy, the little guys usually follow. But then they get growth. Then what happens is they get too good. They get too big, and we go back in the cycle again a couple years from now. So, right now, I would tell you, I am hoping that some capacity still comes out, which hits the small guy, but the ones left will be our healthier customers. And we will see some pickup in that later this year too. As rates go up, it helps everybody. Not just the big guy. It helps the little guy too. I know it is a long-winded answer there, but I hope I gave you some points there that you are going to grab hold of that make some sense to you.

Yep. Okay. Yep. That is helpful. Good to hear from you guys. I will turn it back.

Thank you.

Thank you. I am not showing any further questions in the queue. I would now like to turn it back over to Rusty for any closing remarks.

Hey. We appreciate everybody’s participation this morning. It is a short time before we talk again. We will talk in April. So, thank you.