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Operator: Good day, and thank you for standing by. Welcome to Rush Enterprises, Inc. First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker for today, Rusty Rush, Chairman, CEO, and President. Please go ahead.

Rusty Rush: Well, good morning. Welcome to our first quarter 2026 earnings release call. With me on the call this morning are Steven L. Keller, chief financial officer; Jody Pollard, chief operating officer; Jay Hazelwood, vice president and controller; and Michael Goldstone, senior vice president, general counsel, and corporate secretary. Before I get started, Steven will say a few words regarding forward-looking statements.

Steven L. Keller: 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 12/31/2025, and in our other filings with the Securities and Exchange Commission.

Rusty Rush: Thank you, Steven, and thanks everyone for joining us today. As we reported yesterday, we generated revenues of $1.68 billion in the first quarter, with net income of $61.5 million, or $0.77 per diluted share. We also declared a quarterly cash dividend of $0.19 per share, which reflects our continued focus on returning value to shareholders. Now stepping back for a minute, the first quarter was still a tough environment for the commercial vehicle market. Industry-wide retail sales for new trucks remained at historically low levels, and we are still working through the effects of the freight recession, excess capacity, and general economic uncertainty. That said, we do believe this quarter represents the trough of the cycle, and more importantly, we are starting to see some early signs that things are moving in the right direction.

Freight rates improved a bit, miles driven began to pick up, and customer sentiment started to feel a little more optimistic. As a result, we saw increased quoting activity and order intake as the quarter progressed, especially from our large fleet customers. That has not translated into sustained strength in truck sales yet, but it is a good leading indicator and gives us confidence that demand is starting to come back. One thing that stood out again this quarter is the strength of our business model. Even with soft truck sales, our aftermarket, leasing, and rental businesses, along with disciplined expense management, helped us stay very profitable and performed well overall. We also stayed focused on growing the business. During the quarter, we signed an agreement to acquire Peterbilt dealerships in Southern Louisiana and Mississippi.

We expect to close that deal and begin operating those locations as Rush Truck Centers in June. So even in a down cycle, we continue to invest in the business, expand into new markets, and position ourselves for long-term growth. Our aftermarket business continues to be a key strength for us. It made up roughly 66% of our gross profit in the quarter and generated $627 million in revenue, up slightly year over year. Demand was still soft in subsegments, especially for some of our over-the-road customers, but overall we were able to deliver growth, which speaks to the strength of our relationships and our execution. We also started to see some positive indicators here: more freight activity and more miles being driven, which should translate into stronger parts and service demand as customers begin catching up on deferred maintenance.

Our aftermarket strategic initiatives are also making a difference. Our inspection processes and parts delivery optimization have gained traction across our network and are delivering incremental revenue, increasing uptime for our customers, and delivering a better experience overall. Looking ahead, we expect the aftermarket to gradually improve as we move through the year and continue to be a key driver for our performance. Turning to truck sales, the market was still very tough in the first quarter, with Class 8 industry sales at their lowest level since COVID. But even in that environment, we performed well, sold 2,964 Class 8 trucks in the U.S., and captured a 7.2% market share. That really comes down to execution, having the right inventory, and the diversity of our customer base.

As I mentioned earlier, we saw solid order activity and increased engagement from customers during the quarter. We think that is being driven by improving freight conditions and customers beginning to plan for 2027 emissions regulations. Class 4 through 7 truck sales saw the worst demand since 2015, but our results were more about timing than demand. Some large fleet customers pushed deliveries into later in the year, so we expect that to benefit us in the coming quarter. Used truck demand improved as we moved through the quarter, and we are seeing better conditions tied to improving spot rates and tighter capacity. So overall, while the first quarter was slow, we expect sales to improve gradually in the second quarter and then pick up more in the second half of the year.

Rental and leasing continue to be strong and a growing part of our business. Revenue was $92 million in the quarter, up a little over 2% year over year. Leasing demand remained strong as customers look to replace aging equipment and get ahead of cost increases tied to the upcoming emissions regulations. Rental is below where we would like it to be, driven by current market conditions, but it did improve as the quarter progressed, and we expect utilization to continue trending up through the year. Overall, Rush Truck Leasing continues to generate consistent, recurring revenue and remains an important contributor to our performance. So to wrap it up, the first quarter reflected the ongoing pressure from the freight recession and weak truck demand, but we delivered solid earnings and profitability.

That speaks to the strength and balance of our business. We believe we are at the bottom of the cycle, and we are encouraged by early signs we are seeing, whether that is freight, customer activity, or order trends. As conditions continue to improve, we believe we are well positioned to capture that demand and grow the business. Before I close, I want to thank our employees across the company. Their focus, discipline, and commitment to our customers continue to drive our performance, especially in a very challenging environment like this. With that, I will take your questions.

Operator: We will now open the call for questions.

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Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. You will hear the automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. Our first question for the day will be coming from the line of Avinatan Jaroslawicz of UBS. Your line is open.

Avinatan Jaroslawicz: Good morning. Glad to see the year is still on track for improvements sequentially. Thinking about the second half, it sounds like there is still a decent amount of uncertainty around the pre-buy this year on a number of fronts — whether the OEMs are going to have new reg engines ready, how the rules are going to be enforced, and the demand dynamics around that. Can you give us a rundown on how those moving parts are shaping your expectations?

Rusty Rush: That is a good statement there, Avi. It is kind of crazy, is it not? We are April 30 tomorrow, we have eight months left in the year, and we still do not have definitive regulations printed. When I am talking about emissions regulations, the EPA has sent out signals and told people what they are going to do — supposedly keep it at 0.35 — but they have not clarified about credits, whether there are going to be NCPs, things like that. We are probably still 60 days away from it. Regardless, we do know there are going to be new emissions regulations, and I think that has spurred customers to order. Order activity, starting in December, has been up dramatically from where it was the prior seven or eight months. Even with that uncertainty, there is certainty that something is going to happen; exactly what it is, we are not sure because it has not been posted by the EPA yet.

We hope to know within the next 45 to 60 days, though that timeline keeps getting kicked down the road. The most important thing is customers are more optimistic, finally, because of contraction on the supply side — taking trucks out, whether through nondomicile, building fewer trucks in the back half of last year and in the first quarter of this year. On the supply side, things have squeezed down. Customers are more optimistic about rates. If you had asked me three or four months ago, everyone said flat to low single digits; then it was mid-single digits; and now people are looking at maybe high single-digit increases. So people are optimistic. At the same time, to your point about emissions, we do not know clearly what it is going to be, but we do know it is going to be stricter, whether there will be NCPs and costs go up dramatically, or total enforcement of what is out there for EPA in 2027.

That is about the best I can tell you — there is still uncertainty, but something is coming down the tracks; we just do not know exactly what.

Avinatan Jaroslawicz: Understood. As a follow-up, thinking about improving conditions in the freight market driven by capacity reductions — that does not necessarily help parts and service as much as improving freight activity. What are you seeing there, and when might parts and service volumes inflect positively?

Rusty Rush: Theoretically, people believe that when truck sales go down you get more parts and service, but that is not really the case because people cut back their budgets. That is what we have seen — we have remained fairly flat over the last couple of quarters. In spite of inflation, we have remained flat because people have tightened their belts. The best thing is for their business to get better. Historically, when customers feel better and are more optimistic, there will be no postponing of maintenance or repairs. When income goes down, you take what you spend down too — no different than managing your household. The most encouraging thing will be seeing second- and third-quarter releases and hearing about contract rates going up so that optimism comes to fruition.

We have gradually improved: February was better than January, March was better than February, and April looks a little better than March. As conditions improve, parts and service will improve as well. Tonnage was up for the first time in two or three years in February, if I am not mistaken. It is getting a little better not just from the supply side but also demand. There are outliers — overseas events, fuel — but the general macro environment for continued improvement at the customer level is there without interruptions from geopolitics. I believe it is going to be a gradual, continued improvement based on conversations with many customers and people around the industry.

Avinatan Jaroslawicz: Appreciate the perspective, Rusty.

Rusty Rush: I am going to pass it on.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Brady Lierz of Stephens. Your line is open.

Brady Lierz: Thanks, and good morning, Rusty. You mentioned you expect overall commercial vehicle sales to improve gradually. Can you help break that out between heavy duty and medium/light duty? Given the weakness in medium duty in the first quarter, should we see a more immediate recovery there versus Class 8?

Rusty Rush: Sequentially, yes, because medium duty was so off in Q1. From a percentage basis, you are going to see medium improve quicker because heavy duty was not off as badly as the market — we were off about 6%, the market was down 20% to 21% — and we were way off in medium, and a lot of it was timing. Sequentially, medium will pick up quicker because we are starting at a lower base. Looking at the year, I expect a better year on the Class 8 side than medium; medium will be closer to flat for the year, catching back up, which bodes well for the next few quarters because we started in such a hole on medium duty. I expect heavy duty to continue to ramp up. If you want a number, say Class 8 up 15% in Q2 if things hold together, we get some emissions clarification, and business continues to look better for our customer base, across vocational and over-the-road.

Over-the-road is still the biggest market — about two-thirds — so if that continues to get better, we will continue to increase quarter by quarter as the year goes and roll into Q1 next year. From an emissions perspective, it is all about when the engine was built; those engines are usually built maybe halfway through January, and because we are the retailer, it takes anywhere from 32 days to five months depending on the product to reach the customer. That bodes well for us all the way through next year in Q1. The number that comes out this year probably is not more than a normal replacement, but it will be backloaded. Q1 Class 8 retail of about 41,000 units was the lowest in years, and medium was the lowest since 2015. So with emissions regulations and improving economic conditions for our customer base — as long as geopolitics stay out of the way — it is set to ramp up slowly.

Q2 should be better than Q1, not dramatically, and build from there through the rest of the year and through Q1 next year. Typically, parts and service should build as well; it has been slowly building, and I am looking forward to seeing it ramp up a little faster.

Brady Lierz: Thanks for the color. As a follow-up, the reduction in capacity is driving improvement in freight. How do you think that affects new truck sales this cycle? Is that a headwind, or does the emissions regulation offset it?

Rusty Rush: The first thing was supply — it has been pulled out for the last three quarters. If you took Q3, Q4, and Q1 and strung them together, retail demand would annualize under 200,000 units in the U.S. That has taken supply out, but you need both supply contraction and demand improvement. It was nice to see tonnage bump up in February. Even if it is not robust, having both helps. ACT says the U.S. Class 8 market will be about 225,000 this year. That implies it needs to average around 60,000 a quarter for the last three quarters, a 50% bump from Q1, and it will not be evenly loaded — maybe 50,000 in Q2, then higher in Q3 and Q4 — which is at or slightly under replacement. We just went through a three-year freight recession — I have never seen one like that — and I felt for a lot of our customers.

We were fortunate with our diversified business model that we do not rely on one revenue stream. The average fleet age is probably a little over half a year older than where most want it. Even if we have a big ramp up and average 60,000 in the last three quarters, we are still only at replacement. That is not a huge pre-buy that would cause a big drop in 2027. I think we should roll through 2026 and not see a big drop in 2027, at least from my viewpoint.

Brady Lierz: Thanks so much for the time this morning, Rusty. I will pass it along.

Rusty Rush: You bet. Thank you.

Operator: Thank you. One moment for the next question. The next question will be coming from the line of Andrew Obin of Bank of America. Please go ahead.

Andrew Obin: Good morning, Rusty. Maybe we can talk about parts and services. You have a big initiative with large corporate customers. How is that initiative progressing? Do you think you are outgrowing the industry on parts and services, and what levers do you have to keep outgrowing the industry?

Rusty Rush: In the first quarter, we were probably close to in line. Across the quarter, the hardest-hit piece was service. Service was back for us in Q1, and that is why our margin mix was down a little — service margins are much higher than parts. I was nervous, asking what we were doing wrong, but through our manufacturers I have statistics on other dealer groups. Service was off across a large group of about 200-plus dealers around 3% to 4%. We were off a little less than that. Customer spend was off in Q1 — belt-tightening. On the initiative, yes, our initiatives are still in place. We grew our national account business on the parts side, but people really tightened up on service. You can extend maintenance intervals; you do not have to fix every oil leak; you can extend oil change intervals by 5,000 miles — when things are tight, that is what people do.

As their business gets better, they get back to a more normalized spending cycle. Parts was up; service was down, similar to what I saw from others. As business improves, spending normalizes. Spot market rates were up 25% to 30% year over year; the balance between spot and contract got way better. That allows folks to be more optimistic, and when they are optimistic, people spend money. We love our business model — leasing, parts, service, sales — multiple revenue streams that allow us to balance through cycles. Our parts and service initiatives are ongoing; parts was slightly up and will get better through that initiative and others we are not discussing publicly. You have always got to have something going.

Andrew Obin: You have a footprint across the country and sometimes share macro views. What are you seeing overall and in key verticals? You have a big off-road presence — what are you seeing there? Any impact in oil and gas from higher commodity prices? And on-road as well.

Rusty Rush: Geographically and by vertical, we were up slightly in refuse and construction in the first quarter; most other areas were flat. Our national accounts were pretty flat in Q1 — they were up last year — and we are not keeping up with plan in the first quarter. The most notable softness is in our unmanaged accounts — small customers — which still make up a little over 30% of our business. That segment is down almost another 10% in the first quarter, on top of a weak last year, but we managed to make up revenues in different sectors, particularly vocational — refuse, construction, and other vocational businesses — from a parts and service perspective. Geographically, Florida continues to be strong. On oil and gas, we have not seen a big bump yet; we do expect to possibly see something, but it has not come to fruition yet.

Texas is always one of our strongest areas, along with Florida, and we are doing fairly well in the Chicago/Northern Illinois region this year too. Overall, I feel good that we will continue to see gradual improvement without geopolitical interruptions. I prefer consistent, solid growth and taking share rather than a huge pre-buy. Maybe we did not take as much share as I wanted in Q1 — we were slightly better than others, but slightly is not good enough — so we are focused on continuing to execute and rolling out other initiatives. We are ready, willing, and able, and excited for what I believe will be a better environment without outside interruptions.

Andrew Obin: Thank you, Rusty.

Rusty Rush: You bet.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. One moment for the next question. Our next question will be coming from the line of Cole Cousins of Wolfe Research. Please go ahead.

Cole Cousins: Yesterday, PACCAR suggested that recent order strength is perhaps a little misleading and that build rates and retail sales remain more muted, and thus the pricing backdrop remains more competitive right now. What do you think is driving recent order strength, and how sustainable are current order rates in the coming months?

Rusty Rush: Good question. I believe that while it is not as robust as what we saw in February — about 46,000, one of the seven or eight best months ever — that was a little overstated, driven by one OEM. I do believe there is strength in order intake, and as long as overseas issues do not interfere, there will be sustainability to continued solid order intake. If it is 25,000 to 30,000 a month, I consider that a pretty good month. From our perspective, our order intake continues to remain solid, with a backlog. There is a process — quoting, competitive dynamics — and people are still adjusting to tariffs. OEMs, customers, and ourselves are incorporating that into everyday life; at least we know what they are now. I cannot say it will stay over 35,000 a month, but continued order strength in the 25,000 to 30,000 range would be solid, and we went seven months without a month like that.

We started from a low backlog base. As we get more clarity around emissions and as customers’ businesses improve — remember, we did not deliver many trucks the last three quarters — people need to get back to replacing trucks. Some fleets got off their trade cycle last year. U.S. Class 8 was about 216,000 last year, under replacement by 20,000-plus, and it continued to be under replacement into Q1. Even without outside activity, people have to replace trucks; maintenance costs on older trucks go through the roof. I do not think it will be a huge pre-buy, but relative to how bad Q4 and Q1 retail were, you should expect getting back in line. I think it will be solid, continued order growth as customers’ businesses get better, plus the emissions factor we know is coming.

Cole Cousins: In the context of an improving demand backdrop and visibility to higher truck prices next year, when do you think we can start to see truck pricing move higher this year? And is there a gross margin opportunity ahead of the EPA transition to sell older trucks you might have in inventory toward the end of the year or into early 2027?

Rusty Rush: We have certainly thought about what inventories we are going to carry into the first quarter of next year; as long as the engine stamp date is December 31 or earlier, we can carry them. We will make those determinations. There are still build slots in the back half, and I think a lot of OEMs are protecting some of their Q4 build slots and trying to push them forward because you cannot just go to suppliers and ask for three or four months of sudden ramp — they need a steady run rate. I know build rates have moved up at an OEM or two. From our perspective, we are trying to be properly inventoried going into next year, while still selling into this year — we have done a nice job, but there is still room to sell in the back half.

We continue to have activity. On carrying older (pre-2027) engines into next year, we will carry some inventory over as we always do; we might carry a little more into next year depending on how the year plays out and demand, but we will have to wait and see.

Cole Cousins: On SG&A, it only increased 2% sequentially in the first quarter — better than historical trends. Can you talk about measures you are taking to drive this cost management?

Rusty Rush: A lot like our customers, we knew Q1 was going to be the trough, and this is a credit to the entire organization. It was tough — we had to squeeze down, and we did. SG&A was down year over year about 2.5% on the G&A piece, in spite of inflation and normal raises. That is contributions from everyone. We will try to maintain that discipline — the hardest part is maintaining it if we move into a growing environment. We are not in a growing environment yet, but I can see it coming. We need to get the parts and service business back — that is what drives G&A, not so much truck sales. We had to do some cutbacks; we executed, and it is part of being in a cyclical business. As parts and service go up, we would love to hire back where appropriate; there is a cost to growth.

We try to keep at least 40% to 50% of every gross profit dollar in parts and service, but it takes people to make it happen. It was a great job by our team, and I look forward to a little more breathing room as we go downstream without having to be quite so tight.

Rusty Rush: Look forward to seeing you folks in a couple of weeks.

Operator: That does conclude today’s Q&A session. I would like to turn the call back over to Rusty for closing remarks. Go ahead, please.

Rusty Rush: I appreciate everybody joining us this morning, and we look forward to speaking to everyone in July. We will discuss Q2 to see if everything still looks the same — I am banking on it. Thank you. Bye-bye.

Operator: Thank you for joining today’s program. You may now disconnect.

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