Rush Enterprises, Inc.

Good day, and thank you for standing by, and welcome to the Rush Enterprises, Inc. Reports, the third quarter 2021 earnings result call. At this time, all participants are on a listen-only mode. Please be advised that today's call is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to Mr. Rusty Rush, Chairman, CEO, and President. Thank you.

Well, good morning, and welcome to our third quarter 2021 earnings release conference call. On the call today are Mike McRoberts, Chief Operating Officer, Steve Keller, Chief Financial Officer, Derek Weaver, Executive Vice President, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Vice President, General Counsel, and Corporate Secretary. Now, 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 risk 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, 2020, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release in the third quarter, we achieved revenues of $1.27 billion and record high net income of $69.4 million, or $1.20 per diluted share. We are proud to declare a cash dividend of $0.19 per common share. We continue to see economic recovery and a strong freight environment throughout the country, which has created widespread demand for new and used trucks, as well as aftermarket products and services. Our profitability was largely driven by our diligent, and expense management during the quarter. During 2020, we made it a priority to implement new processes and tools throughout our organization to control expenses throughout the truck cycle. We believe these processes will allow us to effectively control expenses as we continue to implement our strategic growth initiatives and will continue to contribute to higher pre-tax profit margins than we have historically experienced. Looking ahead, though, demand remains healthy. for new trucks and aftermarket parts and services. Component supply chain issues continue to challenge the industry, pushing new truck deliveries into 2022 and impacting the availability of aftermarket parts. These supply constraints, coupled with normal seasonal aftermarket softness in the winter months and the fact that we have five fewer working days in the fourth quarter compared to the third quarter, will negatively impact our earnings in the fourth quarter. However, we believe customer demand will remain robust and supply constraints will subside and that 2022 will be a strong year for the commercial vehicle industry and Rush. In the aftermarket, our parts, service, and body shop revenues were $463 million, and our absorption ratio was 134% in the third quarter. Our aftermarket revenues increased 15.7% year-over-year, which is primarily the result of our continued focus on our strategic initiatives and the limited availability of new trucks, which helps drive demand for parts and services increasingly. parts and service of vehicles that are in operation. Our parts sales are historically high, and we experience healthy activity in most market segments. Service revenues are accelerating gradually, largely due to hiring more technicians and improving the proficiency of our workforce, as well as our enhanced service offerings. We believe demand for aftermarket parts and service is strong, but we expect supply constraints to continue to impact the industry through the middle of 2022. We continue to focus on our strategic aftermarket initiatives and expect our fourth quarter performance to remain strong, though we expect normal seasonal decline over the next couple months. Turning to truck sales, in the second quarter, we sold 2,537 new Class 8 trucks, accounting for 4.7% of the total U.S. Class 8 market. The healthy economy, strong freight rates led to widespread demand for new Class 8 trucks, but our results were naively impacted by my manufacturer's limited production capabilities. ACT Research forecast U.S. retail sales to be 228,500 units in 2021, up 16.8% from 2020. We expect component supply constraints will continue to lay some Class 8 trucks, push some Class 8 trucks sales into next year, which will likely impact our performance in the fourth quarter. However, we believe Class 8 new truck sales will accelerate in 2022, when manufacturers are able to increase production. Our class IV-VII new truck sales reached 2,792 units in the third quarter, accounting for 4.7% of the U.S. market. We experienced healthy activity for many market segments, particularly food service and lease and rental, but the limited production of medium-duty trucks negatively impacted our results. ACT IV research forecast U.S. class IV-VII retail sales to be 251,000 units in 2021. up 8% from 2020. As we look ahead, we believe Class IV through VII truck production will not increase as quickly as Class VIII. We are pleased that Hino is back in production, but we do not expect the other medium-duty manufacturers we represent to significantly ramp up production for some time. That said, demand remains strong, and we believe our fourth quarter Class IV through VII results will be on pace with our third quarter results. Our used truck sales reached 1,712 units in the third quarter, down 16.7% year over year. While our unit sales are down compared to last year, used truck demand and values remain strong, largely due to production limitations of new Class A trucks. We expect used truck demand and values to remain strong in the fourth quarter and begin to normalize when new truck production catches up eventually with customer demand. It is becoming more challenging to maintain a healthy used truck inventory, but we believe our fourth quarter used truck sales will be consistent with our third quarter results. Regarding network growth, this week we acquired an independent parts and services facility in Victorville, California that we will convert into a full-service Peterbilt dealership. We also have plans to acquire a full-service Hino and Isuzu dealership in Elk Grove, Illinois next month. We entered into an agreement with the Summit Truck Group to acquire full-service dealerships in several states, representing International, IC Bus, Ideal Lease, Isuzu, and other manufacturers. We expect that transition to close in December. Additionally, we plan to close our previously announced agreement with Cummins to acquire 50% of interest in momentum fuel technologies later this year. It is important that I thank our employees for for their unwavering commitment to growing our business and supporting our customers. In recognition of their hard work on the front lines during the pandemic, we are happy to issue a one-time discretionary $1,000 bonus to all employees in mid-December. This is one way for us to express our gratitude to our employees for their impressive work over the past year. With that, I'll take your questions.

And thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by as we compile the Q&A roster. And once again, that is star 1 if you'd like to ask a question. And our first question comes from Jamie Cook from Credit Suisse. Your line is now open.

Good morning, Jamie. Good morning.

Jamie, is your line on mute? Could you please unmute your phone?

Sorry. Sorry, I was on mute. Good morning, everyone, and good job on execution as usual. I guess, Rusty, first question, you talked about Class 8 production ramping faster than 4 to 7. If you could just provide some color on that and how you think about production ramping in general in 2022. My second question is, can you sort of address the market's approach to pricing with the incremental costs And then I guess last, just any color you can provide on sort of the acquisitions in the JV that you announced and sort of incremental earnings accretion to 2022. Thanks.

Okay, Jamie, I'll start at the hot top. Well, when you compare Class 4 through 7 versus Class 8, and why did I say that Class 4 through 7 will ramp up slower, is the fact, and it mainly is if there are two large manufacturers, that you will probably see Class 8 because demand is extremely strong on the 8 side, right? And also, it is a more expensive, larger product. And I think, you know, even for us, if you look historically, you know, margins typically tend to be better on the 8 side. So when you're in a supply constraint arena, which you are now, you have to pick and choose, right? Because there's a lot of same, you know, you have a lot of same components, right? So, obviously, the 8 demand, I think, is even stronger than 4 through 7 right now. And given the vehicles themselves, you know, you have to pick and choose. You've got to make decisions because of the supply constraints we've been dealing with. So I think, you know, I tend to favor the Class 8 right now given the demand and also the profitability of the product, if you want to get real. Because it costs twice as much, right? So obviously, it only makes sense that margins tend to be better based on the revenue side of it to begin with.

Do you see any evidence of double booking? Are you worried about that? People are worried about double ordering and that some of this demand is fake.

No, I don't feel that way about our order board. I don't, you know, I think, look, in my mind, what's happened is demand, look how things ramped up since July of last year. I mean, you know, the country blew up, right, from a freight perspective. Everybody had money. We were buying everything. And so demand was there. So we ended up, when we ran into these supply shortages, you know, starting in really March, April, by the time the year's out, if you ask me, we probably pushed 40,000. or more on the bottom side, 40,000, Class 8 units that should have been built this year that are not going to be built. Well, when you think about it, all you're doing is pressing that demand into 22. 22 is supposed to be a pretty good year. Then you run into 23, right? You run into 23, and you've got CARB and Previ. You know, in those states, those 15 states, if it all goes down that fast in those other states, but for sure in California... because the price of diesel engines is going way up. There's a lot of different numbers as to how much, but they're going way up in 24. So I don't see this thing slowing down until 24, outside of some big economic issue, okay? Because I don't see that we're going to catch up to demand right now. I mean, manufacturers are not meeting demand at the moment, and so it just keeps pushing it out and pushing it out. unless there's some big economic downturn in the country, I don't see that demand going away because you're not really going to be, you're just going to be running the right replacement. I think replacement's in the 220s now. And that's what, this is U.S. retail. So I don't think, you know, and you look last year was under that, obviously, like 190 or something, 192 or something. So, but then you had this huge, you know, increased backup in GDP and freight. And given what we see in 22 and 23, I don't see the double ordering. I mean, I don't believe we have it. I mean, let me give you some data points. When I talk about, you know, what I really care about is what's happening in 22 and 23. You know, our backlog a year ago at this time was about 1.1 billion, okay? In the Q3, excuse me, in the Q2, it was 2.2 and it's 2.7 now. Could there be a little something in there? Of course there can. There's never an order board that's perfectly clean. But I don't see any evidence. based in there that, you know, even if there was a little bit, the backlog's big. So we've got to catch up with what we've missed. So I'll leave that one alone. I mean, is there a little bit?

But with the $2.7 billion in backlog, can you just address how you're approaching sort of pricing then? Like with just, you know, material cost pricing?

I'm being driven a lot by it. Right, you're right. I'm being driven a lot by the OEMs, okay? Okay. We all know what costs have gone up. You know, everybody's been scrambling on the OEM side and the supplier side, and they're paying more. Obviously, prices of trucks are going up. You know, anybody can't see the inflationary pressures that are out there. Sometimes I know people talk about them a little bit, but I see them much larger sometimes just in real life. I for sure see it in our business that, you know, they're out there. When you ask about pricing, you better believe price is up. But, you know, it's trying to keep up from the chain. It's not just the OEMs. They're getting hit for pricing, right? They're getting hit hard on not just supply, but that you can't get supply, but they're getting hit on the pricing at the same time because it's the old supply and demand. It's been like that forever. And so that's really, you know, it just feeds from the bottom of the food chain up to the top. And I think that's what you're seeing out there right now. I don't have exact numbers, but obviously that ends up getting passed on to the end user, right, at the end of the day. Or it either comes out of margin or it gets passed on, one or the other. And, you know, so I would imagine sometimes on the front side, because it accelerates so fast, it's hard to get it passed on. But this didn't just start yesterday. It started, you know, last year or 2018. nine months ago, 10 months ago. So as you clear out, you know, what you should be putting into your backlog in 22 should catch up with the pricing pressures that you've had, because that's the way it's supposed to work. You know, cause you got a backlog. And so that makes it hard to work your way through commitments. So hopefully, uh, most people do. And, uh, and then, you know, and then get new, you know, price it out into the products that you're selling now for the future. The problem is you've got so much that goes down because there's been no supply. I mean, look, we delivered only 2,500-something trucks, Class 8. And, you know, that's why I'm so proud of the quarter is because the quarter was, you know, you look at it from a whole, what everybody used to view our company, we had so many trucks, man, okay? And you look at the performance, and it's just driving to the things we've talked about doing for a long time. And I think you're seeing the fruition of it and the results in these numbers. And you asked, what was your third question, Jamie?

My third question was just I'm just trying to figure out all the M&A that you're doing, like what's incremental.

Oh, I'd love to talk about M&A. It's been so long since I've never been able to talk about M&A that I'll talk about it. Well, it gets hard out there, right, to find stuff. But, you know, a little deal we just talked about is a nice independent deal we closed. It's just an add-on. You know, it's about singles. You know, the deal, hopefully, in the Midwest and Elk Grove, that's about single. The Summit deal, though, on the other hand, you know, represents quite a bit of growth for us. When you look at it, it's the second largest international dealer. Okay? It fills in three states. It fills in three states. We're nearly, you know, you're going to get some rusty silliness here. But, you know, if you look at Kansas, you look at Missouri, and you look at Arkansas, we don't have anything there. And Memphis? Yes. And so, you know, I don't know, 17, 18 stores. And, you know, as I tell people, it's like you've been making that puzzle. And the dog took a piece and chewed it up. We can't find it. Well, those three states plug right into our map. I'm looking at my map right next to me on the wall here. And it's a perfect fit. And it would be hard for us to have found something that fits more perfectly from a geographic perspective. Now, you know, it's a good, well-run group. We can run it even better. And we'll mold that group into our overtime. We'll close it in the middle of December. We're excited about that. The Cummins JV, super excited about that. Momentum, we've been in that fuel system business since 14. Remember back in that day, natural gas was going to be 10% of the market by 2017. Never got off of two. But Cummins must believe something about the future, and we do too. We believe that R&G... will be a bridge technology as we get deeper into this decade, okay? And so we're excited, and it's not something that's going to affect, we finally got that, I finally got that business to break even on our own, okay? This last year or so, but there is going to be an opportunity and 25 or 26 or 27 for that to be a bridge technology. And we believe partnering with Cummins, I was looking the other day and I thought they had pretty good brand equity and make a great partner in the fuel system business. They're the only ones building natural gas engine. You may not have seen, but last week they announced they're going to build a 15 liter natural gas engine, which is really going to open up the market. We believe for, you know, mid decade, as I said, so we're, Pretty excited about that, too. So there you go. I tried to answer as best I could.

You did. Thank you so much. Always. I'll let someone else ask a question. Thanks.

And thank you. And our next question comes from Justin Long from Stevens. Your line is now open.

Good morning, and congrats on the quarter. Thanks, Justin. So maybe to just put a bow on the fourth quarter, I know typically you see a seasonal decline. Rusty, you called out five fewer working days, but is there any way you can help us think about the magnitude of the impact from five fewer working days in the fourth quarter?

Sure. You know, it's two things. Look, these are just little bumps. We know about the supply chain issues. We're dealing with them right now. Let me answer your first question, then I'll add to it. and we'll get past this. We're going to have a good fourth quarter. Point being, though, the way it falls out, we've got five less working days. Typically, the fourth quarter is about three, but the way the holidays have worked this year, And, you know, we're pulling a holiday out of 22 and sticking it back in 21 because that's January 1st and we're giving off December 31. It was just the right thing to do on a Friday. So, impactfully, without getting into all that mess, we do, I tell you, we do $2.6 million of gross profit a day in parts and service. So, you know, you can do the math. That's about 13. You know, I think truck gross might be down some. It's just given we have a lot of supply chain issues. But as I said, I'm not worried. It's going to be a good quarter. It won't be the third quarter, but it'll be a great quarter, a really good quarter. But the good part is 22 and 23. So you're talking about, you know, maybe $20 million of gross profit or so. But at the same time, you can extrapolate it from there. Other than that, everything should be running smooth and good. And we just want to... It would be a better fourth quarter than last year. But, you know, third quarter is always typically our best quarter. If you go back historically, not every time, but historically, the third quarter is always our best quarter. So, you know, but listen, 22 and 23 are set up. If you look at the growth we've had in parts and service and look where the black backlog, I talked about it a minute ago. And these acquisitions that we're plugging in, as we get them implemented and integrated into the organization, things look great from that perspective.

Well, and that's where I wanted to go with my next question as we kind of zoom out and look at the next couple of years. You talked earlier about the truck cycle being extended through 2023, but could you maybe expand a little bit more on the parts and service business, how you see that growing the next couple of years, and then incremental margins as well, because I think when you put together the truck cycle with parts and service recovering and incremental margins, it implies that EPS can still grow nicely the next couple of years, but would love to get your thoughts around all of that.

Sure. No, I would agree with that. You have one piece out, and that's M&A. I never gave an answer because I'm going to integrate it, but I can tell you this, it's accretive. We're not doing it to be unaccretive, I can promise you. We'll sort out exactly what the M&A brings to the organization, but it'll be nice. From a margin perspective, we had super high margins all this quarter, but I see nothing that's going to stay in the way. you know, of us continuing on the parts and service side to continue to grow. Now, I can't pronounce 15% growth rates quarter over quarter. Remember last year we were coming out of COVID, et cetera. So, you know, your baseline was there. But it is, we are targeting high single, you know, 8%, 9% growth rates next year, which I do believe the parts and service are doable and very achievable. And I'm not going to talk about any more than that, but I do believe that we will continue to see those type of growth rates in the first half and into next year. I think we can do that. If you look at all the initiatives over the last few years, if you look at some of the other things we're doing now that I don't want to talk about, but some of the things we're doing to go to market. And that's the piece of the business. I mean, we ran 134% absorption. That's a record for us. It's just an operating metric, but it's something we've keyed on pretty quite heavily. So, you know, from a parts and service perspective, it's there. You heard me talk about the backlog from a truck sales perspective. It's there. It's just going to take some execution on our part, and I'll let history speak about whether we can execute or not. So, yeah. We've been able to do it before, and our team only continues to get better. It's not me. It's all the folks throughout the organization. And, you know, just excited about where we're going. And, you know, those are easy things to look at. We do believe margins are sustainable. You know, maybe not all exact where they are, but they're going to be sustainable higher than what they were a couple years ago for sure. You know, we ran pretty high margins in parts and service, probably about as big as we ever have this last quarter. We'll be up in that range. and you add in some, like I said, 9% growth rates or stuff like that next year, which I'm hoping to do better, but if we're going to do that, I believe, you all can extrapolate the numbers from there. With the managed expense piece, don't lose sight of the managed expense piece. G&A sequentially wasn't down, actually. Now, I don't expect that to stay down, but it was actually down a couple points from Q2. So, you know, but I do expect us to be able to manage. I talked about that a couple years ago, if you remember, about when we come out of all this, how we're going to do a better job. Really, last year, we're going to do a better job of managing our expenses as we grow our revenues and our gross profits. So, so far, so good, and we look forward to continuing that into the next couple years. Great. Very helpful. Thanks, Rusty.

You bet.

Thank you, sir.

And thank you. And our next question comes from Andrew Obin from Bank of America. Your line is now open.

Hey, Rusty. How are you? Good. Andrew, how are you today? I'm good. Thank you. So, you know, so just go back to, you know, this comment on expanding margin and expense management. You sort of highlighted expense management statement, you know, early on in your prepared remarks. I think this is sort of a new focus. Can you just expand? It does seem that your approach to cost in this cycle is a little bit different because I think historically when things went up, right, you were very good at sort of keeping costs in control early on in the cycle. But as the cycle sort of got going, costs came back. Can you just go more in depth just to talk about what are you guys doing? What initiatives do you have internally to sort of change your approach to costs this time around? Because execution seems to be superb. Thank you.

Thank you, Andrew. I appreciate that. Well, you know, I'm going to give you as much detail as I can. Training, you know, I think our managers, we have put in some new processes and new controls that as we grow back, we're only going to spend so much money when we grow. If our gross profit goes up X, we're going to spend X, right? And that's what we're going to spend. And we're going to stick to it. We almost, you know, internally we call it a salary cap. It's like in sports sometimes, right? Doesn't mean you can't grow. Because remember, I don't loan money. I don't do this. I work on trucks. I work on parts. We sell parts. We deliver them. We do this. It takes people. But we want to make sure we are staffed. Remember, two-thirds of our costs are people. at the end of the day. So we're going to make sure that we don't get out ahead of our skis and overstaff. That doesn't mean we don't grow, we don't add people, but we do it with some tools that everyone is pretty dialed into. It took a lot of work this year. Now, we've got to continue that in the future, but we're pretty dialed in. to, you know, we're only going to spend X of every dollar we get in the growth spot. So we're not going to get way out over it. And these two layers, this is salary cap, it's this. We can call it, you know, there's other tools, other names we can give to it. But the guys have been very, very focused. All the managers have been very diligent. I'm proud of them. And the teams have too. And this is in spite of just these last few months were tough from a COVID perspective, buddy. I had the second, fourth worst month. in the third quarter that I've ever had with people out, you know, dealing with. So these controls are not leaving the organization and we're still going to continue to invest on the corporate side. We're going to continue to invest, but just at a proper pace, you know, hopefully you learn something as you get a little bit older, you know, it's not that difficult, you know, I say that, but sometimes everybody gets caught up, you know, when you're running and things are growing and, You know, you're just not as diligent as you should be. I think there's some of the lessons that we have learned in the last two years are just going to continue to bode well, and we're focused on it. Expenses will grow, but they will grow in relation to what gross profits grow, and we will end up keeping more of it than we historically have, and I'm very confident in our ability to do that.

Well, thank you, Rusty. And just to follow up the question, you know, you guys have very good systems. Just a usual question for me. Could you just walk us through what you're seeing by key industry verticals, residential, non-residential, oil and gas, big corporate customers, waste, maybe what you're seeing across the country in terms of macro, because you do have very unique footprints. Thank you.

You bet. You know, I don't want to say everything is good. But because oil and gas is still oil and gas, I don't expect to see the cap expend in it. But we've seen a slight pickup here recently in services that are being asked for. We sure have. As you've seen, the price of oil obviously has gone up. We've seen a slight pickup, but I don't expect companies to be as undisciplined as they were historically or money to flow like it did historically. But I do think there's some upside still there as it's gradually been picking up from its trough. Other industries, the over-the-road business, I mean, you know, it's great, right? I mean, it's really good because... Remember, if we're 40,000 trucks short of what demand was, that means people are running their trucks longer, right? So when you look at the TL side, the LTL side, extremely strong for those customers. The customers we have, we've got a couple, three or four big LTL carriers, and our business with them is good. When you look at housing and construction, still strong. We demand for mixer trucks, demand for... For garbage trucks and the refuse side, very strong. Parts and service, strong in those sectors. I mean, I'm sounding like a broken record repeating myself, but that's what we are truly, rental and leasing customers. I need to point out, our leasing division has had the most outstanding year they've ever had. I mean, it's just been over the top. If you look at our leasing margins and rental margins, I mean, they're just, They're above and beyond what I would thought we could have been able to do. And it's not all driven by gain on sale. They're operating because, you know, rentals utilize strong and leasing strong. Now, I will tell you this, because of lack of product, you're having to extend leases and do things on other trucks that normally you would be taking out of service because you can't get as many trucks as you need. But that still won't inhibit, we believe, them from having an outstanding year in 22. So, Andrew, I know it sounds a little bit, I mean, even municipal hasn't been bad. Buses, school buses have been decent. I mean, there's a lot of, you know, it's been a pretty rosy picture, which always scares you when it looks that rosy out there. But at the same time, it is what you can see now. And right now, I don't see that changing a lot. You know, like I'm not an economist or anything like that. My biggest concern is inflation, I'll be honest with you. Runaway inflation, because I see the inflation out there Sometimes I look at the numbers that are printed and I go, huh, okay. But, you know, other than that, our business as an industry, broadly looking at it across, and that goes from Florida to California. I don't see any region that is, you know, having this bad right now, you know. Some better than others, but broadly speaking, everything looks good, you know.

Like I said. No slowdown on resi as far as, you know, I know because I'm light commercial.

We haven't seen it yet. We haven't seen it yet because there's still, you know, I believe there's something out there lurking, but we have not seen it in some of our areas, especially here in Texas and whatever. I mean, you know, they're putting up subdivisions everywhere around here. You know, this is the state, you know, we're typically, some of the states we're in, like Florida and here, they're still growing. Okay? So, you know, I mean, I'm sure I could pick a residential pocket in some area, but I'm not up to date to pick it by state. But I can tell you here in Florida and a couple other states, it's still blowing up pretty good.

Well, Rusty, thank you. And I'm glad to see that the market today is rewarding your team for all the hard work they've done this quarter. Thanks.

Thank you. And thank you. And ladies and gentlemen, if you have a question, that is star one. Again, if you have a question, that is star one. And our next question comes from Joel Tiske from BMO. Your line is now open.

Hey, guys. How's it going? Going well, Joel. How are you?

All right. That's quite the entourage you have to introduce at the beginning of every call now.

I haven't changed much.

Yeah.

It does? I don't think so. But that's okay. The same one I've been introducing the last couple of years. But it's okay, Joel. I know you're getting up there, Joel. It's okay.

Yeah, I was going to say maybe my hearing aid batteries haven't been updated lately.

Probably not. But if you need help, we're a good place to go get them replaced. Oh, there you go.

Can you talk a little bit about where your parts and service mix might be three years from now, like just sort of the flow of what you're looking at and what you've announced in terms of acquisitions and the growth rates and all that, just trying to give us a little bit of a guidepost?

Well, you know, the growth rates I gave you was on current, you know, same store basis, right? I've got to bring these other stores in. to our organization. I think there's some upside. Look, it's a well-run company, no question. But I think with some of our systems and some of our stuff, I think there's some upside on the acquisition, especially from a technician perspective. You know, you look out there and, you know, I got 500 mobile trucks, they got a couple. I mean, things like that. There'll be some of the things we do, and there's some of our initiatives, which that's one of our biggest is to increase our mobile fleet a lot. Like I said, high single digits for same-store growth, parts and service, parts growth, service growth will probably be more steady and gradual. You know, I don't mind looking back three years ago. We had all those technicians. We did real good the first year. Then the second year, we just added technicians, but they really weren't good technicians. So we had to purge some. which we have, which gets our proficiency back up, now we're actually adding back much more strategically, much more gradually, and our returns or way higher, and we're going to keep it at that pace. We'd like to add a couple hundred technicians over this year to our same store growth next year. Not 500 like we wanted to a few years ago. I don't think it's possible to do that and do it right with the right proficient technicians. You can't add skilled ones all the time. You have to take ones that are level ones and twos and train them up. You're overburdening and you have to carry. They're not producing for themselves. But we think we can continue to gradually add service. I think the parts business will continue to go up. Look, inflation is going to help drive part of itself to begin with from a revenue perspective. When you look at what some of the, you know, the prices that are coming in on the price tapes on parts, you know, they're going up like trucks, like everything you see in the grocery store too right now, as I said. It's one of the things you worry about. But, you know, I think we will still out, we're going to try to outrun the market and take share. You know, we... Had a little hiccup last year, but we feel really good that we're taking share right now and going back, getting back on track. I know we are. Results speak for that of what we want to do. We just want to take share. You know, we want, you know, if the market's up 7%, I want to be up 9%, right? I don't need to take it all one day, but just consistently take share over time. We believe we can do that, especially when you look at, like I said, you plug in this new acquisition, you know, the integration of these stores into our map, Well, it's a differentiator in my mind. It helps continue to allow us to differentiate from a geographic perspective. Now, it's what you do with that geography and how you go to market, and that's what we're trying to do is tie everything together that we have as best we can from a, you know, keep trucks up and running, right? Different when you go to market with us, you get the same price and you get all that from one coast to the other coast. You know, in like 20, I don't know how many states we've been, 27, 28 states, And we'll cover probably 70% or more of all the trucks sold inside our geography. So, you know, we'll continue to press that forward, and hopefully that allows us with our systems and stuff to gain share. That's our goal on the parts side, and then we've got our goal on the other side. As I said, the acquisition. We've got a goal in the next five years, I want to double my mobile service fleet. I know I'm throwing it out there, but that's a new goal we came up with at our last strategic off-site meeting. We believe that the customer base is going to be demanding that. We believe, especially with technology changes that are coming and things like that, you know, you see it in the automotive side, and we've always done it here, but we're going to do a better job of it. Even though we've got the biggest one from any dealership perspective by far, mobile service fleet, we're going to get bigger. So we've got the ability to do it. We've got the expertise, and we obviously get the assets. So those are just different things we've got going to feed it. I know I'm not giving you exact numbers, but I'm trying to tell you that the tools in the toolbox, we believe we've got those tools and we're going to keep pressing forward with them.

And any unusual opportunities from all these trucking businesses being separated from their kind of conglomerate parents?

Trucking businesses, I'm trying to follow you.

So like Aveco getting spun out and the Freightliner business coming out of Daimler.

No, I don't see anything for us right now. You know, I don't see anything. Look, my two Class 8 OEMs are pretty set, okay? I've got two. I'm not going to be able to be with the others, okay? They're not going to allow me. Remember, there are state laws and things, franchise things inside of agreements, okay? You know, I'm going to, you know, I'm a PACCAR Peterbilt and an avistar when it comes to class A person. There could be, I think there might be other opportunities. Now, my OEMs with new technologies coming, it's going to breed a little confusion in the marketplace. Not yet. Everybody talks about it all right now. Just wait for a couple, three years and see. I believe our OEMs will be leading the pack in that, but there are other independent people out there with other technologies that it's going to be interesting to watch. We'll have our eyes out there, but I do believe in our OEMs and their capabilities to meet the changing technologies that are going to be demanded by government and by the governments. I do believe we might be pushing it a little too far. I think that some of the demand electric and hydrogen and fuel cell and all the other good stuff, the government's better be careful pressing it too hard because we've got to catch up to what we want. I know we've got to clean things up, but those types of things will be where opportunities might come that I can't see right now. But I'm very comfortable with the OEMs I have participating in that transition. This is a transitionary decade like never seen. Transition creates a little bit of confusion, which creates opportunity. Trust me, we're poised.

And just last, and maybe you kind of already answered it, that it's too far away, but do you feel any need to get into, like, EV charging business or anything like that, like things that you're thinking about kind of a couple years out, or it's just way too early?

No, I know it's not way too early. We're looking at a lot of stuff. By this time next year, every store in California will be solar and have all their charging stuff in, okay? Obviously, we've got to meet the needs first. California's the leader in it, right? So we'll be there a year from now. That'll be where we're learning, right? We're learning with customers. We have trucks we've sold. We have electric trucks we've sold in different marketplaces. I'm not going to get into specifics. And we look forward to doing more around that space. But, you know, again, I believe, I'm not here, y'all don't want to listen to me talk. You've probably already heard enough. But I believe it's going to be market segment driven as to what technologies went out. You know, obviously in class 6, 7, by the time we get to the end of this decade, I'm not sure it will be 50% or more electric. It's not going to be that way on heavy. You're not going to see that on the TL side. You'll get it in certain applications and certain market segments, but, you know, that's not going to, I believe, work for just pure TL over the road, at least not now. It could be in 20 years or so, but I don't think we're there with that. But, you know, you've got folks that I know hydrogen. Some people go, no. Some people go, oh, yeah. There's a lot of things going on, and that's what's going to create some confusion as things transition over the next decade, driven by we all have to deal with ESG, and it's real, and the environmental piece. But I think, as I said, technologies will be driven by market segments will adapt to whatever makes sense. Diesel will be phased out over time. It needs to be. But it's not going away right now. We're going to be multi-pronged and working with whatever technology is out there. But always try to be on the leading, not bleeding edge.

Okay. That's awesome. Thank you so much.

Thank you, Joe. See you soon.

And thank you. And I'm showing no further questions. I would now like to turn the call back to Mr. Rusty Rush, Chairman and President, for closing remarks.

Thank you. Well, I appreciate everybody's time. Obviously, it will be a little longer time period until we talk in February. So I want to wish everyone a happy holidays in between. Enjoy your families and enjoy the time that you get to spend with them. And we will talk to you in February. Thank you very much.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.