Rush Enterprises, Inc. (RUSHA) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Rush Enterprises, Inc. second 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 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Rusty Rush, President, CEO and Chairman of the Board. Please go ahead.

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

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 December 31, 2025 and in our other filings with the Securities and Exchange Commission.

Thank you, Steve, and thanks everyone for joining us today. As we reported yesterday, we generated revenues of $1.9 billion during the second quarter. With net income of $72.8 million or $0.91 per diluted share. In addition, our board declared a three-for-two stock split for both our Class A and Class B common stock. As well as a post-stock-split quarterly cash dividend of $0.14 per share representing a 10.5% increase compared to our prior quarter. Returning capital to our shareholders remains an important part of our long-term capital allocation strategy, and we are pleased to continue increasing our dividend while maintaining a strong balance sheet. As I mentioned on our Q1 call, we believe the first quarter represented the trough. Of the down cycle that the industry has been dealing with for the last few years. During the second quarter, we saw encouraging signs that market conditions are continuing to improve. While the recovery remains in early stages, improving freight rates and customer confidence, increased quoting activity, and significantly stronger new truck order intake all contributed to better business conditions as the quarter progressed. And we feel good about the second half of the year. Given where the industry has been over the last several years, I am proud of how our team performed during the quarter. Our diversified business model once again demonstrated its resilience. And our team's ability to execute allowed us to capitalize on improving market conditions and generate solid financial results. We also continue making progress on our strategic growth initiatives. During the quarter, we completed the acquisition of five Peterbilt dealerships in Louisiana, expanding our Rush Truck Centers network through the Gulf Coast region. We also expanded our Canadian operations through the acquisitions of five commercial dealerships there. In southwestern Ontario. Further strengthening our presence in one of Canada's largest transportation markets. And last week, we announced we signed an agreement to form a 50% owned joint venture with MCT Companies, one of the nation's largest Carrier Transicold dealer groups. Subject to customary closing conditions, we expect the transaction to close during the third quarter. Through our investment in this joint venture, we are looking to establish our presence in the refrigerated transportation market. An adjacent business that we believe complements our core dealership operations and will allow us to expand the solutions we offer our customers. While also creating long-term value for our shareholders. This transaction demonstrates one of our ways of achieving long-term growth, and we will continue to evaluate other opportunities to acquire or invest in businesses that are adjacent to the commercial vehicle industry. Our aftermarket operations improved during the second quarter, accounting for approximately 64% of our total gross profit. Our parts, service, and collision center revenues totaled $605 million, an increase of 1.5% compared to the second quarter of last year, and our absorption rate remains strong at 130.8%. Demand for our aftermarket parts and services improved gradually across much of our business as the quarter progressed. Particularly among over-the-road fleet customers. As freight markets have continued to improve and fleets are driving more miles, we are beginning to see repair activity return after an extended period of customers deferring spend on vehicle maintenance. While the aftermarket recovery is still trailing the improvement we are seeing in commercial vehicle quoting activity and new truck orders. We are encouraged by the momentum we built in the quarter. Looking ahead, we expect our aftermarket business to continue improving as fleet utilization increases and new truck deliveries ramp up. Historically, new truck deliveries create additional opportunities for parts and services as customers upfit those vehicles and prepare trade-ins for resale. We remain focused on improving operational efficiency, growing our managed and national accounts, and continuing to deliver exceptional service to our customers. Turning to truck sales. New Class 8 retail sales remain below normal replacement levels during the second quarter. But despite that environment, we sold 3,170 Class 8 trucks in the United States. Essentially flat with the second quarter of last year. While the overall market declined. That performance increased our U.S. Class 8 market share to 5.8%. Reflecting the strength of our customer relationships. Our diversified customer base, and our disciplined inventory management. Most importantly, customer quoting activity and order intake improve significantly throughout the quarter, reinforcing our belief that the recovery we anticipated earlier this year is beginning to take shape. Looking ahead, we believe the second half of 2026 will be considerably stronger than the first half with respect to Class 8 truck sales. Improving freight markets, strong fleet profitability, and increasing customer confidence are all supporting higher quoting activity. And we are also seeing customers planning equipment purchases ahead of the 2027 emissions regulations, which are expected to be finalized soon. With respect to medium-duty commercial vehicles sales, we sold 3,170 new Class 4 through 7 commercial vehicles in the United States during the quarter, down 12.7% compared to the second quarter of 2025. Similar to our medium-duty results in the first quarter, our year-over-year comparison was impacted by the timing of orders and deliveries to several of our larger fleet customers. As our larger medium-duty customers delayed purchasing decisions into the first half of 2026. Like our heavy-duty truck sales, our medium-duty commercial sales improved steadily as the quarter wore on, particularly in June. ACT Research expects the broader market to remain challenging during 2026, we believe our growing backlog, anticipated deliveries, and available inventory position us to meet anticipated customer demand. We believe that our medium-duty sales will continue to improve as the year progresses and will be roughly in line with our sales during 2025. Used commercial vehicle demand also continued to improve during the quarter. With June being our strongest month of the year so far. Healthier freight market conditions continue to support customer demand, particularly among buyers looking for a cost-effective alternative to new equipment. While financing remains challenging for some we believe higher new truck prices combined with the approaching 2027 federal emissions regulations will continue to make quality used trucks an attractive option. We expect used truck demand to remain healthy throughout the remainder of the year, and we believe our disciplined approach to inventory management and pricing positions us well as the market conditions continue to normalize. Rush Truck Leasing delivered another solid quarter. Generating revenues of $94.8 million, an increase of 1.9% compared to the second quarter of last year. Our leasing and rental business continues to be one of the most consistent contributors to our financial performance. Its stable revenue model helps offset some of the cyclicality we experience in new commercial vehicle sales while continuing to generate healthy returns. Looking ahead, we continue to see healthy demand for leasing and rental services. As fleets replace aging equipment. As new truck demand improves, manufacturers may eventually reach production capacity constraints. And our leasing and rental activity has historically benefited from reduced manufacturing capacity. Combined with improving rental utilization, and continued growth in our contract maintenance business, we believe our leasing and rental operations are well positioned to continue delivering steady growth in the years ahead. To sum it up, I believe our second quarter results demonstrate both the resilience of our diversified business model and our team's ability to execute during a period when commercial vehicle conditions are beginning to improve. While the industry recovery still has a ways to go, we are encouraged by stronger order activity, improving customer sentiment, and healthier freight market fundamentals. All of which support our expectation for a stronger second half of the year. We also remain committed to investing in our future through ongoing strategic initiatives, organic growth opportunities, and acquisitions of commercial vehicle dealerships or acquisitions or investments in businesses that are adjacent to the commercial vehicle industry. While continuing to return capital to our shareholders through dividends and share repurchases. We believe these initiatives, together with our strong balance sheet, and disciplined operating approach position Rush Enterprises and our shareholders for long-term success. Finally, I want to thank all of our employees for their dedication, professionalism, and commitment to serving our customers. I think they are the best in the business. And I know they are the best in the business. And their hard work continues to distinguish Rush Enterprises as an industry leader. With that, I will take your questions.

Okay. Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Brady Lierz of Stephens. Your line is now open.

Hey, thanks. Morning, Rusty. Thanks for taking our questions.

You bet.

I wanted to maybe unsurprisingly start on Class 8 sales if we could. Since we talked last May, we did get some clarity from the EPA around the 2027 emissions. And then, you know, but just yesterday, a large public truckload carrier mentioned doing a strategic pre-buy. Can you just talk about what you are hearing from your customers on both the pre-buy front and kind of what you expect Class 8 sales growth to look like in the back half of the year?

Okay. Well, From the back half of the year, obviously, as I mentioned in the release, we expect to ramp up, fairly well. Our backlog is as big as it is been in a couple years, to be honest with you, where we sit right now. And I will tell you, we are basically sold out. That does not mean we do not still have a few trucks to sell, Brady, because we stock a rather large inventory here. But from a large customer perspective, we are basically sold out in what we sell from the class both our brands on the Class 8 side. We are still squeezing a few in there here or there, but it is very difficult. Given the current, you know, productivity should I say, the build rates that are going on right now. I guess the most exciting thing to me with the EPA coming out with what they have now understanding that we still have a commentary period going on right now. But when they announced, you know, what the regs would be, with the commentary period still out there, they did announce NCPs or nonconformance penalties. Right? Which will most probably at least for some manufacturers, already mentioned, you know, what their what their plans are for 2027,. Which will be utilizing NCPs. I know PACCAR is going to. I know Cummins is going to do a phase-in of their new technology, but they will continue to produce old engines at least through September of next year. So I think that gives you know, a nice platform to really ease into the new regulations. So I it sort of excites me about this year, to be honest with you. As to what next year will look like. Because we are not having a cliff event where everybody's just going to new technology. We will ease in to new technologies if any certain manufacturers choose to. Those are two that I know about. Not everyone has come out and said what their plan is yet. But I do know I do know if I am a customer, and my business is showing the dramatic increases, I think, that we see in all the releases. They are coming out maybe not reflective totally in Q2, but the beats that I have seen and the optimism that I have seen that allows you to further test new technologies while still buying at a decent current, nonconformance penalty, not too not too burdensome, I would say. Given overall cost of vehicles. And that allows you to ease into the new technologies. So with my business getting better, it gives me you know, I personally feel that there may be some upside to 2027. At the moment given, what the EPA has come out with. As we ease into it, almost moves all that to the first of 2028 for some OEMs. At least those two that I mentioned that have already announced. And we will wait to hear what others are doing? But right now, know, business is solid. We are just really that just came out two and a half weeks ago or so. So, really, now we are just getting where we can truly quote into 2027. So we are right in that transitionary phase, but I feel solid about the back half of this year for sure. Without getting into exact numbers, but obviously ramping up in the third quarter and ramping up into the fourth. And remember, we are not in the production side. We are on the retail side. Right? So we, for sure, should run into Q1. With what our backlog is, for sure. I would tell you we have got three quarters of solid backlog probably right now currently. And we will wait and see how customers view and how their business continues. If their business continues to improve. But right now, most big people believe it will. You are talking about double-digit rate increases for some of these guys right now. You know? So with technology, with stabilization of old technology still going to be available, even if it is a little bit higher price without taking on emerging new technology, which may be some possible question marks that always come with new technologies. I feel good about at least the first half of 2027 and probably on through the whole year. Especially based upon the performance of our customers. Our largest sector. Now, obviously, we are big in the vocational business too. But the over-the-road business is still the largest sector in the Class 8 market out there. So you know, I think all of those things I mentioned bode well as we move forward for the foreseeable future.

That is that is very helpful. Thank you. You know, since we last talked in May, also, we have seen a pretty meaningful increase in truckload spot rates. We saw a nice sequential step in your parts and service revenue this quarter. How are you thinking about parts and service revenue growth second half of the year? And just are you seeing any headwind to parts and service revenue just due to the fact that this, you know, improvement in the freight market is supply-driven, and not demand-driven.

No. I think we have seen it. We have seen some headwinds. The parts and service business have been slower recovering than our order intake from a truck perspective on the Class 8 side. It just has. It is been a very, very competitive environment. As people continued to manage their spend. It is like I tell people, it is just like you manage your household spend. Right? When it goes down. But now that we are seeing stabilization, and business performing better from a customer perspective, we expect that spend to get more in line with normal activity what we would consider normal activity, but it is been tough for a while now. On the parts and service side. Right? We have been pretty flat with some margin compression. driven by the competitiveness of the marketplace. But as the quarter progressed, we saw it picking up which bodes well. And as we get into this in the back half of the year, there is no question in my mind, and I am even through so far in July. You know, we have seen you know, continued, not ramping up double-digits, but gradually improving. And feeling really good that it will be a solid improvement throughout the rest of the year. We feel good about that. We really do. Is it are we where we need to be? No. But are we improving? Say, really a lot over the last, oh, 45 to 60 days? Can we feel it? Can we feel it? Can we look at our backlog in our shops? And see that increasing? Yes. We can. So, you know, I think one of the things that is really important is that for the first quarter in a while, Our small customer base. I have talked about it before. Right? Our unassigned accounts. We have been crushed the last three years in that area. I mean, every year we have been down double digits, 10%, 10%, 10%. We have finally seen a trough in that. Which is, you know, a good thing to see. Right? Up slightly, small single digits. But obviously, if we can. That is roughly 30% of our service business. 32% of our service business. So you know, while we have seen growth in national accounts, it is been very competitive pricing, but feeling like we are gonna see the small customer show back up is, you know, usually better for us. It is it is part of our mix that we have really been missing that has been declining for us. I mean, there are many things along with also increased new truck activity. Right? I mentioned in the release, and I mentioned in my earlier comments that, you know, there is upfitting and a lot of things that go on because of our diversified customer base. When you are in the construction and refuse and these other businesses, and even if the over-the-road business is slow, we are installing APUs and doing all kinds of different things. That come off of truck sales. So I mean, I am giving you a few different anecdotes here. As to why I feel good about it, but I believe it will continue to improve throughout the remainder of the year would be what I would tell you. It is not it is not gonna be as a one-month dramatic jump, but I do believe sincerely that it will continue to improve and continue to ramp up with everything. You know? As much as anything, given the health of the overall largest base, we have the over-the-road business continuing to improve.

That is all very helpful, Rusty. Thanks so much for the time, and, I will leave it there. Pass along.

You got it.

Thank you. Our next question comes from the line of Cole Couzens. Your line is now open.

Hey, guys. Thanks for taking my question. From a built-in demand perspective, it sounds like the new EPA proposal could be good for Class 8 industry this year and next year. But let's say an OEM wants to sell a current model truck with an NCP next year, how does that impact your pricing and margins in that scenario? If at all?

I think you are you answered the question, if at all. Right? I mean, at the end of the day, an NCP is going to be a known number. Right? It is gonna be hard to mark up a known number driven by the federal government. How about that? Okay? So and to be honest with you, so there would be a pass-through. Now there will be FET on it. I mean, right now, a Class 8 engine is a $6,000 to $8,000 range the way most people are interpreting it. I am as I said, that is and that is for plus FET. Okay? So your 12% federal excise tax on top of that. At the same time, there is a commentary period going on right now. So it is subject to possible change. I do believe there are differing viewpoints on this by different OEMs I am not gonna get into all of it here. You can ask them individually yourself. But I do believe, they have different opinions. Of the NCP, the amount of the NCP, etcetera. Personally, I think it is fairly fair. Okay? It allows for a transition, and I am sure that know, it will be like and this is not known, but my own thoughts, my own opinion is that we will be a one-year type scenario, and then it will ramp up a lot more by the first part of 2028. Which will probably make by that time, I would expect everybody will be in their new technology anyway, and it will not be much difference. Right? So at to me, it is a it makes a little sense from a customer perspective. Right? I mean, look. I know certain OEMs felt certain ways about it. At the same time, if you take a customer sentiment, they are happy about it. Right? This allows it to come off three and a half years of freight recession. Right? Just beat up terribly over the last three and a half years. This allows them to gather themselves, maybe replenish their fleet, with some older technology, known technology as we roll into new technology from an after treatment and even a little bit there is a little more than just the after treatment. That goes into some of these engines depending on who the manufacturer is. So you know, I do not see a lot of downside from a customer perspective. Like I said, different OEMs are gonna have different opinions. But customers will probably be very pretty happy to have an NCP choice and then watch it transition later through the years. But I think you will see for most folks. But it is not a cliff event. Right? It just makes sense for the industry from my perspective. Coming off of a terrible freight recession longer than I have seen, It allows them to get a little healthier without having the risk of technology, you know, the engine in the in their trucks. Without that risk, and they can they can try out more. Right? I would expect customers to do to buy some new technology. And run some new technology from certain OEMs that offer both platforms. And that is what Cummins, I think, mentioned. They are gonna roll in as the year goes on some. And transition in. But, you know, different OEMs have different opinions from a customer perspective. I think it is pretty good. I do not consider this a pre buy year. Brady, you mentioned the word pre-buy. We are gonna end up the year over what the last one0-year average was. I mean, we did 95,000 in U.S. Class 8s in the first half. And we have averaged around 232,000 the last one0 years. Okay? Well, that means there is a 135,000 to roll in. Which is close to a 40% retail upside in the back half of the year compared to the first half of the year. Which gets you right back. You are gonna be very close to what the annual average has been in The US over the last one0 years. I do not consider 2026 a pre-buyer. I could see a 2027 with NCPs. ACT, ACT's already got 2027 higher than 2026. Because of the slow start to 2026. So I could see 2027 You know, you might eventually get to where you call it a pre-buy if there eventually is sort of more of a cliff with technology changes coming forward. By the time we get to the first of 28 a concurrently with customers' health. Better. Than what it was this year. Right? So there is my opinion right there. Okay? It is not set in stone. But I think it is a possibility. I think we just have to let it unfold. But I do believe the NCPs are going to make 2027 a better year without a blip of any kind as we roll into it. You know? Remember, like I said, for us, it is the retail end. We should be rolled with what we have got in the backlog through the first quarter, if not into the second quarter some. And what is in our backlog with NCPs and customer sales getting better, there may not be a blip before my new technology changes go about. People will just pay that extra $7,000 or so and roll right along. Right? Because they are they are getting old technology, proven technology while just paying a little price for it that is not too exorbitant. Just my thoughts.

Yep. That all makes sense, and it is super helpful, Rusty. Maybe just also, can you speak to what trends you are seeing so far in July whether it is across commercial vehicle sales or aftermarket and maybe expand a little bit more on the trends you are seeing with small unassigned accounts versus some of your larger national accounts first? Thank you.

Yeah. I touched a little bit of that earlier, but I do not mind being a little bit repetitive. You know, obviously, truck deliveries are gonna continue to increase. Right? We are receiving trucks more than we have received before. But remember, when we receive trucks, it is typically 30 days depending on applications to a hundred and 20 days before we deliver to the end user. I expect July, a, you know, September, and throughout to continue to ramp. It is not gonna double or anything like that. But if you were to ask me about truck, in this quarter, you know, we will be up 15% or something. Because remember, our carry is gonna go into next year. Like I keep saying, the stuff we build in December, will not be delivered in this year. It will get delivered into January and February. Some stuff in November will. So this will ramp for us and continue to ramp as we go forward. Parts and service, I already said I expect it to continue to get better. And I have listed a multitude reasons why I write which the small user being one of them. Right? We saw You wanna know that we saw a 4% sequential increase Q1 to Q2. Not a lot. But we did see that. And while still very depressed from what it was, say, three years ago. At least you feel like you are bottoming. Right? And so hopefully, you are troughing. That from that perspective. And, you know, you have got upside, but that is 30% of our parts and service business that we have been fighting. We have been fighting that really hard the last couple, three years and producing the results we have given the diversification. Whether it is by that customer segment or market segment or whatever. We deal with a lot of markets. I know I have talked a lot about just over-the-road here this morning. But I do not wanna forget about our vocational businesses, whether it be in construction or refuse or whichever vocation it might be in or our medium-duty platform. Right? I mean, those are all things that we work on everything in our shop. You know? The over road business gets the major focus. Because it is a huge. It is the biggest market. Yet at the same time, we supplement it with diversity from geography from a geographic and a market perspective. So, you know, I feel that it is gonna continue to get better. I do not wanna get overexuberant this morning. But I think there is some legs. I do believe that we got some legs on this now. Especially when I talk to customers. When I see what is going on, when I know now I am getting we are not totally done with the EPA. As I said, we are in a commentary period, but we pretty much know that they have cut the warranty. Right? Warranty stays where it is been. Okay? On the after treatment, it does not go to some 10-year warranty that was going to cost it extra. The government said $7,000 to $8,000. That was going to have to be priced in. Right? We have changed the length of or the life expectancy. We have done some things. The government has to soften while still going towards the 0.35 eventually. You know, NOx emissions to begin with. We have also the credit perspective, and then there is a lot of things that go into all that, but I am not gonna get into But there are many-- I can sit here and talk. There are many things that I think are positive. Right? And not all of them will probably come to pass, but there is a lot of, you know, there is a lot of should I say, you know, positive feelings around our industry right at the moment. So, you know, when you are basically sold out for the year, we have not done that in a while. six months out. And rolling into you know, next year. I feel good about us. We have got gonna have inventory to sell to that is not sold So, you know, most a lot of this business has been fleet business. We-- just-- there is just positive things, man. I could go on and on, and, you know, I am a rambler. But I do not wanna get ahead of my skis. I do not wanna get out over my skis either. This still has to come to pass. At the same time, I cannot sit here and give you negative thoughts that I may have in the past but allow it. Do not allow it to come to us, and I think that is what we will see happen. We will continue to see Improvements like we saw from Q1 to Q2. You know? From a result. Even though it was not all top line driven or margin driven, We managed this company from a G&A perspective extremely well in the quarter. So I will be quiet.

Yeah. And last one, I any signs on the small assigned versus the national accounts?

The small well, you know, the small guys, if they missed out from a truck sales perspective, tell them I might have some inventory they can buy. Okay. From a parts and service perspective, And by the way, they are gonna be able to buy next year with not that big of NCP. You know? $7,000 is not that bad. In reality, when you are talking about vehicle, $100,000 vehicles here, okay, you are not talking about some 10% or 15% price increase here. Right? You just maybe a little longer to get it as their business improves. That is what is driving used to be better, right, is lack of availability of new and, you know, so that is what is gonna make the used market stay solid. So it is really on the parts and service I just spoke about. I think I said we were 44% sequentially. In my mind, just call it flat. We were troughed. We have been gone through three years of year-over-year double digit decreases So that means there is the health of even the smaller carrier in spite of all these fuel issues. Right? In spite of all the geopolitical stuff that is going on. It I have been fairly amazed at the resilience. Of the market. Of course, that has to do with the business model and the pass through of fleet, you know, to the shippers that we that gone into place for the last 30 years. But at the same time, you know, I feel good about it. I think the small I think the small the small carrier is if he survived this far, he is gonna make it. Okay? If they have made it this far, though, that is good ones, and they are the ones that are gonna make it, and they will go they will get their spending habits back more in line with what they would be normalized spending at mean they are gonna spend but they are gonna get back to more normalized maintenance and repair. And that just bodes well for us. There is more miles being driven. I mean, you are talking about supply being driven down that drives the miles up on the ones that are driving. I mean, you do not want me to I could go on, but things just continue to look for solid sequential improvement, not double or anything like that, but solid sequential improvement, which is good. I think, for a longer period of time. You know, most people believe that this rate recovery should have 24 months on it. or so. We have all been around long enough to know this thing's cyclical. But should have some legs on it for a while. You know, but driven by supply coming out. Now we are getting some growth on the other side of the coin, too. So if that continues to improve from a tonnage and mileage, you know, from a load perspective, then yeah, you have a couple of years of legs on this. Okay.

Helpful, Rusty. Thank you. I will turn it back.

You bet.

Thank you. Our next question comes from the line of Avi Jaroslawicz of UBS. Your line is now open.

Thank you. Good morning, guys.

Good morning. Yeah.

I know you have already spent a lot of time talking about it, but just sticking on, you know, the dynamics of pre-buying this year versus next year, would you say that you do not really think you have seen or you are seeing pre-buy demand this year, or is it really more about just how much the OEMs can produce? Because I mean, thinking about you know, $6,000 to $7,000 NCPs before the FET. It is not it is not nothing for next year.

That is right.

Would not there still be some incentive to pre-buy this year?

Well, there would be-- it is the problem is it is production. Right? I think we are fairly sold out. Mean, there is a little left out there, but it is not a lot And I am sure it might get a little pricey. You know how it is. But I would tell you, we are fairly sold out. Most OEMs are. They may not say they are, but they have in what they do have left. And by the way, that does not mean they cannot figure out how to produce more. Okay? Based upon current build rates, Now you could see some build rate increases that will produce a little bit more capacity. Right? But they have gotta get in place pretty quick here. Because it is not that easy to ramp up. I do not expect people to be putting on extra shifts. I expect people to be maximizing, you know, from pro-- if I am-- look, I am speaking for the OEMs themselves. And I do not like doing that. But I would imagine they will tweak as best they can to make sure they are working weekends and doing everything they can. But I would tell you what is gonna happen typically happens right now as you are asking the second and third tier to suppliers to ramp up. Okay? That is not that is fairly difficult. For some of these guys to do. Not necessarily OEM. It is not necessarily OEM constrained. It is constrained with the second and third tier suppliers. So-- but they manage that part of it. I realized $6,000 to $7,000 is something, but at the same time, with improving business conditions, and then with unknown technology that is a proven technology without any changes, that is why I feel the rollover will just roll into 2027. And, yeah, it is a little money, but at the same time, it is not the end of the world given these vehicles cost nowadays. I mean, the trucks have gone up in the last 6 years, like, 35%, man. And by the time we get to next year, it is crazy. But so I you know, it is a production problem. But at the same time, I go back when you said, yeah, I hate this word pre-buy. It is still going to be around the average total. That is all I can tell you. You know? If we deliver it delivery wise. Now the production side might be higher, but it will roll in the Q1. But again, I go back to with the EPA saying what they said, giving closely if these numbers stick, definitive numbers on an NCP, and customer's business getting better. I just think this rolls over and continues into 2027. I could be wrong. It is just my opinion without much of a blip. Customers' businesses from the overall perspective, ramped up quite dramatically here the last four, five, six months. So and I see a lot of positive out there. And that was after last year, it was under. And the first half of this year was way under what replacement was. So you know, I see replacement catching back up. I still do not think that right now that we are just catching replacement. We will have to see if anybody tries to grow. They usually do. And that creates a cycle, right, eventually. So but hey. I you know, like I said, we are pretty much production constrained. Outside of any, you know, any other any OEM increases. And I know they are trying, but I am gonna let you talk to them about what they are able to do.

Right. Okay. Okay. I understand that. And so one of the things you mentioned there was potential to see some pre-buying next year ahead of the engine changeover in 2028. How, yeah, how are you thinking about those dynamics? If $6,000 to $7,000 increase for next year is you know, manageable enough broadly speaking. The incremental cost increase in 2028 would not be you know, in that ballpark even though seems to be a little less than that, and there is more time to get these engines tested and work out the bugs in them. So why would you expect a pre-buy potentially next year?

Because it is proven technology. Okay? Because it is proven technology. I have been around a long time. I have seen technology changes before. I have never seen one without a blip. That does not mean it is the end of the world, but I have never seen one. I go back to 2010, when we switched to DEF. There was more clogged particulate filters around this country that you could shake a stick at. Okay? Our shops were full. Anybody with a memory knows that-- you know, there is-- it is never as smooth as you anticipate. Maybe I am wrong, but typically and this one, not everybody's using the same technology. Right? Not everybody's going to DEF. And so like, it was at that time. Everybody's you know, got different you know, like, I am not an expert on all, but different after treatments. Not exactly the same as how they go to market. So you know, I have to believe that you know, if I am a customer, I am willing and wanting to have more of what is proven and be the last one to join the new. Even though you are gonna you know, people will say, we will get better fuel mileage and things like that. I know the uptime. Is the most important thing I have going for me. And proven technology allows you to understand where your what your uptime is, you know, and your reliability is. And so that is that is my opinion. Okay? It is just an opinion, but it is mine. But, you know, customers would prefer to go with proven technology. There will still be a little bit of an increase you know, even for the new technology. You know, I realized, you know, a little bit it may not maybe it is $4,000 or $5,000. You know, when we get to 2028. And I am not here to tell, You know, I mean, there are some other things, behind the scenes you have gotta remember that have gone on over the last year that make this a, an interesting time. There has been tariffs and things like that affect different OEMs different ways. I will just say that. So, you know, we will have to wait and see what that pricing will be the first of 2028. Neither of the two OEMs I rep have priced new technology. How about that? Okay. So how am I to know what it will be? I know what I know what I am roughly told, but it has not been priced. Okay.

Yeah. That is fair enough and definitely interesting times.

Yep. There are a lot of variables. There are a lot of variables out there right now. It really is. More variables than I have you know? And you throw in all the tariff stuff the last year, and you throw in the EPA stuff. There have been more variables in this whatever, 12-month window, that I have seen in a long time. I have a 16-month window go back to last May of 2025 with tariffs starting up and now roll into the EPA variables that we are dealing with. Now. And there is just a lot of variables out there for manufacturers. There really is.

Right. Yeah. No. That makes sense.

I just wanna switch topics maybe from talking about the cycle to some of what you guys are doing. Would love to hear more thoughts about the MCT deal and the entry into the refrigerated trailer market. You know, how you are thinking about that as a strategic move and the long-term vision here. You know, how are you thinking about continuing to grow within that space? And, really, is this a launching off point, or is this more of a one-off type of deal?

Well, first off, no. It is not a one-off deal. We are committed to the space. We have studied the space for a while now. For well over a year. And we think we found the right partner as the launching off point. Okay? A sizable deal inside of a market. That is obviously not as large as the truck business. But at the same time, a very similar business model. Right? It is you know, it is refrigeration units. I have been through their shops, a couple of shops with Bill, the gentleman we are doing the JV with, and that is a solid organization we are with. And I do believe it is a solid manufacturer. That we will be able to grow with, I am not gonna put numbers on that growth. Right? We have not closed the first JV or the first deal, but that JV will be looking for growth. As we go forward. It is not it is not a one-off for sure. And we have had these discussions with you know, we have had these discussions, and we feel good that we are going to be able to bring, you know, even a stronger balance sheet and partner well with the organization that we are doing we are doing the JV with. And you know, over time, those opportunities that we believe will be there for us to for further growth. And that is what we are we are not getting into it for a one-off. That is for sure. And it aligns perfectly with what we do. There is so much overlap in customer base. We believe that relationships that we have will be able to bring to the table and, leverage up relationships that this organization has. I think it is a win for both the for MCT, for Carrier, and for Rush. Now proof of the pudding is in the eating. So we got work to do. Right? So but I am I am extremely you know, excited about it. Should get it closed by the end of August, I think, is the timing for it right now. That is what we have got target, I think, August 31. So, you know, we will roll it in later this quarter. And you add that to the acquisitions we did during the earlier during this quarter, while they may not be hugely accretive to begin with, they just those ten dots, those are ten more dots on the map for Rush. That allows us to service a customer base better than anyone else from a service perspective. No one has as many dealerships as we do. Scattered across the U.S. and Canada. And so we leverage off of every regardless of where we represent, it is Rush Truck Center first and foremost. And when it comes to how we interface with customers. So with that ability, do not worry. They will be accretive, but we have gotta get our systems and our things into place. But it is great to have the state of Louisiana represented on the Peterbilt side and on the International side, what we did up in Canada, I guess, is 20 locations in Canada. And just further increases our customer touch, both areas. Louisiana further across Interstate 10. We almost got it. We do not have it all covered. We got most of it all covered, you know, across the United States, I-10, which is obviously a large corridor from the South. From an over-the-road highway perspective. And even for large you know, vocational customers where they have operations. You know? When we do one of these deals, I will tell you something that interests me. I just went over and visited the stores, and I told the stores in Louisiana where we visited three of the five. And I told them, I said, look. one thing I can promise you is that a year from now, you are not going to know 50% of the customers in your shop? Why? Because when we take on an acquisition, we bring a huge customer base with us, and especially from the national account perspective. Right? So now we have to, you know, grow the salesforce, grow our parts and service sales forces, get out there, and use our standard operating procedures and get in there and do it and that is exciting. It is not an add-water-and-stir thing, but I can guarantee it will be you know, a couple years from now, it will it will look a whole lot different than it does now. For both of those acquisitions. Because of how we go to market, and we are looking forward to growing the other end. I am telling you this. We will continue as I mentioned if you heard me in the script. We will continue to look at other adjacencies that make sense around the core expertise of Rush Enterprises. Which is taking care of selling, servicing, and taking care of commercial customers. Both large and small, transportation customers. It will be something around that core expertise, and there are other adjacencies that I do believe that we will continue to look at while growing the one we just entered. And continue to look for growth across our dealership network at the same time.

Sounds good. Appreciate the thoughts and the time. Thank you.

You bet.

Thank you. Our next question comes from the line of Andrew Obin with Bank of America. Andrew, your line is now open.

Hey. How are you? Good morning, Rusty.

Morning.

Good morning. Just a question. You know, more deals in Canada, just how much room do you have in Canada, and is it gonna be PACCAR? Is it you know, is there room to grow Navistar network? If you can chat about that. Thank you.

Yeah. The Canadian business is only on the International side, Andrew. And that is-- without getting specific, do I have room for growth? Yes. Okay. But, you know, that is a combination of working with our manufacturer. Both of these acquisitions were not done just on some, you know, us running off. They were working with the manufacturer, getting their blessings around it. And I would tell you that there are other opportunities up there. I do not want to get, obviously, I cannot get in more details. We do believe there are other opportunities. And we do believe we have room for growth. Given the framework of our agreements with them in Canada. So I am not gonna get any more specific. If you remember last year, we acquired a bus dealership in Canada last summer that has been very-- which is very successful for us. School bus business with International. So we will continue to look at those opportunities, Andrew. I mean, I do not you know, I have-- just remember, that is a JV for me. We did that back in 2019. At that time, it was 50-50. We currently have it at 80-20, obviously, 80% us. And very pleased with that joint venture and looking to grow it, I will be honest. But there is room. I just really cannot get into the specifics. It would always involve other people's businesses, proprietary businesses, so I do not want to talk about it. But, yes, we have room in our agreement with the OEM. Now we do it lockstep, hand in hand with them, but there is room for sure.

Thank you very much.

You bet.

Okay. My apologies. This concludes the question-and-answer session. I would now like to turn it back to Rusty Rush for closing remarks. Rusty, back to you.

Sure. We appreciate everybody's attendance this morning. And, look forward to a solid Q3. Have a call in October, late October. We will see you then. Everybody have a great close to this summer.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.