Rush Enterprises (RUSHA) investor relations material

Market conditions and industry trends

• Class 8 truck order intake from April to September was the weakest since 2009, with ongoing freight recession impacting the market for three years.

• Over-the-road truckload (TL) segment remains weak, while less-than-truckload (LTL) is stable; vocational business is more resilient, with about half of business in this segment.

• Uncertainty persists due to tariffs and EPA regulations, with potential cost increases of $10,000–$15,000 per truck if NOx standards stay at 0.35.

• Industry forecasts for 2025 vary: ACT projects 167,000 units (lowest since 2010), PACCAR expects flat volumes, and Cummins predicts a 5–7% decline.

• Used truck values have stabilized after previous declines, and late-model used values are expected to rise as new truck prices increase.

Regulatory and operational impacts

• EPA NOx standards and tariffs are creating cost uncertainty, with OEMs and customers awaiting clarity on final rules and warranty requirements.

• If stricter NOx standards remain, OEMs may remove warranties, reducing incremental cost increases but still impacting pricing.

• Enforcement of driver language proficiency rules could remove 5–15% of available drivers, especially affecting small carriers and potentially reducing capacity.

• Bankruptcies and liquidations in the TL sector are expected, with opportunities to acquire used inventory from financial institutions.

Business strategy and diversification

• 80% of truck inventory is pre-sold; 20% comes from stock, with inventory strategy adapting to demand and regulatory changes.

• Vocational markets, especially refuse and construction, remain strong; refuse accounts for about 25% of U.S. garbage truck sales, with robust aftermarket parts and service demand.

• Natural gas remains a niche in refuse, with limited growth due to policy shifts favoring electric vehicles, but partnerships like Cummins Clean Fuel Technologies support a diversified offering.

• Mobile repair and maintenance services are expanding, with a goal of 1,000 mobile techs; currently over 700, including embedded technicians.

• Predictive maintenance and telematics (Geotab on 40,000 trucks) are being developed, but large fleets still prefer in-house maintenance.