Rush Enterprises, Inc.

And welcome to our first quarter of 2023 earnings release conference call. On the call are Mike McRoberts, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Senior 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, 2022, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved first quarter revenues of $1.9 billion and net income of $90.5 million, or $1.60 per diluted share. We are proud to declare a cash dividend of $0.21 per common share. In the first quarter, we experienced strong demand for new Class 8 and Class 4-7 trucks, largely due to the limited new truck production of the past few years. There was a healthy, widespread demand for aftermarket parts and services as well, and we maintained our focus on strategic initiatives support to large national fleets, and operational excellence. We significantly outpaced the industry in medium duty truck sales, as well as aftermarket sales, and we are proud of our results in the first quarter. In the aftermarket, our parts, service, and body shop revenues were $648 million, up 19.3%, and our absorption ratio was 136.5%. In the first quarter, we expect strong demand for parts and service for most of the customer segments we support. We continue to add service technicians to our workforce, notably mobile technicians, which supports our long-term strategy to expand our mobile presence across the country. Looking ahead, we anticipate the rate of inflation to continue to slow, and the parts revenue growth will moderate throughout the year when compared to our first quarter results. However, with our continued focus on long-term initiatives, including strategically expanding our workforce to support mobile service efforts and national accounts, we believe our aftermarket revenues will remain strong this year. Turning to truck sales, we sold 4,365 new Class 8 trucks, accounting for 6.4% of the total U.S. market and 2.2% of the Canada market. While there's still pent-up demand for new Class 8 trucks, we experienced healthy demand for most market segments, particularly over-the-road, vocational, car hours, energy customers, and large national fleets. ACT research forecast U.S. class retail sales to be 259,000 units in 2023, essentially flat compared to 2022. Our continued truck allocation may limit our growth potential. Our backlog remains strong, and we believe our second quarter Class A truck sales will align with our first quarter results. Overall, we expect our results will be consistent with the industry this year. Our Class 4-7 new truck sales reached 3,038 units in the first quarter, accounting for 5.3% of the U.S. market and 3.2% of the Canadian market. We experienced healthy demand from a variety of market segments. Further, while supply has not yet caught up with the needs of the market, we began to see truck manufacturers shift more resources back to producing medium-duty trucks. ACT research forecast U.S. Class 4-7 retail sales to be 253,600 units in 2023, up 8.6% from 2022. As production continues to improve and as customers prepare for upcoming emission regulations, we believe there will continue to be strong demand for medium-duty commercial vehicles for the remainder of 2023. Our used truck sales reached 1,684 units in the first quarter, down 29.7% year-over-year. Demand for used trucks remained low, largely due to the continuing increase in new truck production. As new truck production continues to improve, We expect further deterioration in used truck pricing, and we plan to carefully manage our used truck inventory levels until demand begins to increase and values stabilize. Our lease and rental revenue was up 21.5% compared to the first quarter of 22. We continue to experience strong demand for leased vehicles, and our rental utilization rates were solid in the first quarter. We expect our lease and rental operations to continue to make significant contributions to our overall profitability for the remainder of 2023. Looking ahead, we will continue to monitor economic factors which may impact our industry, but we believe our overall financial results will remain strong through the rest of 2023. Before closing, I would like to thank our employees for their great work and for their dedication to our company's goals, as well as providing superior service to our customers. With that, I'll take any questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question is from Justin Long with Stevens. Your line is open.

Thanks. Good morning and congrats on the quarter. Oh, yes.

Thanks, Justin.

I'll start with parts and service. Rusty, we'd love to get your thoughts on parts and service growth over the remainder of the year. And obviously, we're going to see some moderation just given what's happening with inflation. But is there anything else that's driving that moderation? Or would you say your parts and service growth going forward kind of ex-inflation is remaining pretty consistent?

No, no, I don't see anything out there. We continue to execute on all the strategic conditions that we have been implementing rather consistently over the last six or seven years, to be honest. I would tell you, while it may moderate somewhat, plus given some pretty large comps coming forward, We still believe it'll close the year in double digits, okay? You know, I would expect the next few quarters to slightly moderate some off of the 19 plus percent. Understanding that, you know, yeah, there was some acquisition stuff in there, the Canadian stuff, but we were still well over 17% from the same score perspective in Q1. So, you know, with that kind of start, you know, we're talking high singles and low double. uh you know later this year we'll just have to see how it plays out i can't pin it exactly but we will still see overall growth well outside of inflation so you know we uh we just you know we feel very good again about uh you know that i think it i think it's important you know i was you see that absorption rate number there i believe everybody i hope folks know it it's worth a great number you know it's the calculation of parts service and body shop gross profit versus the G&A of a dealership, right? What we put out, you know, it's 136 and a half. Now, I think it's important to note that if you take our new acquisitions from last year, and that would be the Canadian acquisition, along with our acquisition of Summit, they are well below that number. If you looked at prior stores that we had prior to those two acquisitions, that number would be into the almost mid-140s, a number I would have never, ever thought we could ever achieve. So, you know, what that really explains to you is the fact that, you know, there's plenty of upside in these other stores. We, over last year, we just brought them onto our business system, really between March and August. Well, just getting on the system and bringing You know, your regimented way of going to market to them is not an add water and stir thing. So those numbers for sure have room for growth in the coming years, you know, as they grow to catch up with the rest of our locations, right? So, you know, I feel very good about the overall parts and service outlook for us going forward, regardless of where the market is. You've got to understand, we go to the market very diversified. We're not just hitting it one segment. I always try to explain that to people. We're not just doing over-the-road business. We're buried in many different market segments in the vocational side. The vocational business is pretty good out there right now. I can go on and on, Justin, of the quality of what I see, the quality of earnings that are out there, but that's hitting it a little bit.

Okay, got it. That's helpful. And my next one's probably for Steve, but is there anything you can share on the expected trend in SG&A as we move into the second quarter relative to what we saw in the first quarter? And then maybe thoughts on interest expense going forward as well, given it's come up a good bit the last couple of quarters?

Well, as you see, G&A was sequentially up significantly from Q4, and that's pretty normal for us. And Q1 compared to Q4, we incur a lot of what we'll categorize as employee-type benefit costs. We issue our options. Payroll taxes kick back in, which had, you know, fall off as the year goes as people hit earnings amounts. Typically in Q2, that'll stabilize. You won't see another sequential jump. you'll see it pretty flat, maybe even slightly down. On the interest front, I would expect Q2 to be very similar to Q1. Inventory levels are elevated versus last year. I think it was up about whatever, $8, $9, $10 million versus Q1 last year. That's exactly what you believe it to be. It's a product of interest rates on our floor plan and carrying amounts of inventory. You got to remember, even though we're on allocation, we're turning them quick. They sit in them for a while while we body them up and do things like that. So I think, I think the remainder of the year, you're going to see the run rate similar to what it is. You know, depending on your, your outlook for interest rates, I think maybe there's another quarter point bump. I'm not sure if there's much more than that. So that probably can be very similar to Q1 for the remainder of the year.

Got it. That's helpful. And maybe I'll close with a, high-level question for Rusty. When I think about the business going forward, it feels like we're going to see higher highs and higher lows. And I look at valuation multiples today, and they're still very compressed relative to what we've seen historically. What do you think the market is missing?

Well, I'm going to step out a little bit here, Justin. But a good question, right? especially when you're sitting in my chair. Based upon our current multiple and where it has been the last couple of years, I do not believe the market fully understands how our strategic execution has improved our quality of earnings. The aftermarket growth and the expense management that resulted from executing our strategic initiatives have increased our absorption rate, as I mentioned earlier, to 136, but well above that in the old stores combined when you add the acquisitions in. I also believe the market doesn't realize that the normal replacement cycle for Class A in the U.S., when you take the last 10-year average, has increased to over 225,000 units per year. You know, I think if the commercial market performs how we and other industry experts, such as ACT Research expected to, we believe, you know, that we've significantly improved both our trough and pig earnings power since the last down cycle in 2020. From my perspective, if ACT's current forecast for Class 8 is correct, which they've got it at 217,000 units in 24 and a peak of 311,000 units in 26, I've got to believe that our trough earnings would be pretty far north of $4 a share and peak earnings could be north of $8 a share. That's For me, that's stepping out. I usually don't say that. But I don't think people truly understand the company sometimes. When you talk about those multiples, and I've been looking at it for the last couple of years, and it can be a little frustrating from my perspective. So, you know, I think if, you know, someone digs deep into the model and looks at it and lays out the forecast of most industry experts who use ACT, you know, that's what you're going to come up with. So, I mean, I don't know a better way to explain it to you than that.

That makes a lot of sense. Thanks, Rusty. Appreciate the time.

You bet. Thank you. One moment for our next question. And our next question comes from Andrew Obin with Bank of America. Your line is open.

Hey, Rusty. It's Andrew Obin. Hey, guys. Hello to the team as well.

Thank you, Andrew. And the team says hello back. I'll speak for you.

So the question for you, and I think you and I have had this debate for a while, you know, you guys are generating more and more cash flow. You know, it seems there's a level of frustration with where the stock is. And I know you are buying back stock, but why not get more aggressive on stock buyback in this environment? Particularly because, you know, a couple of years ago, we were talking about a $4 as your peak earnings number, and now it's your trough earnings number. If the market is missing so much, why not just buy back more?

Well, Andrew, everything's on the table. How about that? I'm not going to get that specific about it right here. As you know, we are consistent. We did continue to buy back stock in the quarter. We bought 26 million or so back in the quarter. We got 150 million approved, and we bought back about 40 million of that since approval. And we plan on continuing that pace through the end of the year. if not accelerating it, I hear you. So, you know, everything's on the table, as I said to you, buddy. I'm not going to sit here right here on this call and say, but, you know, this is the, we increased our buyback to $150 million from the last few years to $100 million when we really didn't even execute on it. But we plan on doing, I don't know, probably executing pretty close to what we've got out there as far as approval right now, I can tell you that.

No, I appreciate that. Can you talk about just sort of the progression of your parts and service business? Because I think relative to my expectation, it has been holding up better than expected. You know, what's driving that? What do you expect the exit rate for the year to be particular as the comps get tougher? And what does it say about sort of the underlying economy? And, you know, how much of it, you know, we know that you're changing your business model. We know that you're going after larger customers. We know that in some cases, people who drive your parts and service business are not even your large new truck customers. A lot of things happening below the surface. Let's maybe just sort of unpack this business for us a little bit. Thank you.

Yeah, that's a big question. I think I touched on some of it a little bit earlier. We feel great about our parts and service business. It continues to grow. I mean, look back, if you just take the last two, three years, And it has been a very consistent, we've been outperforming our expectations over the last couple of years when it comes to growth. And I sometimes, we even underestimate, I mean, without getting into numbers, we even underestimate the power of the network, okay? When you do have a network our size, which is by far the largest commercial network in the United States, and you represent as many manufacturers as we do, And you're able to also go after other brands of trucks and do it for a large customer because nobody really runs one brand anymore. Okay. And you're equipped to do that. I think, you know, and you take the approach we do by leveraging off that network and our people. You have strategic initiatives like we put in the last few years, whether it's too specific because some of it we believe is proprietary to us. you know, around the parts business, around the service business. You set goals to double your mobile service footprint in the next three to four years, you know, and then you continue to execute on that. You get the numbers we're talking about. I mean, when I first knew you, Andrew, if we had started talking about, now this is stores, this isn't, you know, when you look at dealership locations running over 140%, I would have never, ever believed we could do that. But we do. And we continue to find, we continue to attract more customers, again, given how we go to market, our facilities, our people, everything, and what customers are wanting. They're not only a bunch of hodgepodge mixed up performance from their service networks. They're wanting one consistent, consolidated answer. And I do believe that we provide the best in the marketplace and you know i it's all i can i can get into the numbers but we're going to consistently continue to grow it we feel very good about that and even like i said the world is evolving i don't know what you know how you know going to customers that's why we're big on this mobile thing you know reaching out and going to customers providing more better service and you know big cities continue to get more clogged up the part the point of taking a truck driving into a dealership dropping it off having to pick it up again those are all inhibitors to a person taking truck and producing revenue so you know uh that's why the mobile the mobile thing makes a lot of sense and i can't get into all the drivers andrew but the performance speaks for itself from the last few years and i don't see anything that's going to change that So, I mean, those are just, without getting into numbers and telling you this much growth here, I already did that. Those are the things that we believe set us apart when it comes to taking care of customers. And at the end of the day, as the coin every one of our employees carries says, the customer is the boss.

And just the last question. Can you just walk, you know, that's my usual question. Can you just walk us from a macro standpoint to your point? You have a lot of exposure here. you're in Florida, you're in Texas, you're in California, you're in Mid-Atlantic, you're in Upper Midwest. Can you just tell us, in terms of the economy, what are you seeing? Because you really have a uniquely informed view of the economy.

Thank you. I would tell you, let's start on the East Coast, right? Florida, still strong. I was just in Florida two weeks ago. In fact, that's about our largest mobile group. Those folks have over 60 mobile technicians working throughout the state of Florida and lower Alabama. But their business continues to be strong, and we expect a year no less, if not greater, than last year out of Florida. You move up in further to the southeast in Georgia, continuing to grow and strong also. I'm really not going to give you any bad reports. I would tell you Florida is extremely strong. I would tell you that South Texas is extremely strong. The Houston market is growing. Colorado seems to be doing a little bit better. Southern California, I don't want to miss anybody. I'm telling you, it's broad-based. And it goes back to, Andrew, it goes back to our customer mix, to our market segment mix. I say it all the time, but I don't have... Talks on blue in the face, but we don't just go to one market segment, you know, it's It's interesting that if you say I could tell you something like this to try to Geographically everything solid some better than others the Mountain West is doing really well right now when I say that that's Utah and Idaho Yeah But there are no weak spots that I can see on the map currently there are some that are a little stronger than others but The best thing to say when I talk about the power of the company and the power of whatever is two of the three largest customers on the international side of my business from parts and service don't even buy trucks from me on the international side. And I'm not going to get into names, specific names, but that tells you how we're able to take a customer and leverage across our whole network, whether he buys trucks from one side or the other, or whether they buy trucks from us at all. We have many large customers that don't even buy trucks from us, but we service by leveraging off that network. So, you know, I'm getting a little lost. The Midwest was still, you know, we're doing so well in the Chicago area. So, again, I can ramble on forever, as you know, Andrew, about the business stuff. because I'm very proud of what our people have been able to accomplish.

All right. Thanks so much, Rusty. Really appreciate it. Look forward to updates on the buyback.

You got it. Thank you. I'll keep that in mind, Andrea.

Thank you. And I'm showing no further questions at this time. I would like to turn it back over to Rusty Rush for closing remarks.

Well, we appreciate who I was. I know it was a big earnings day today, so I said, Loaded with companies reporting today. But for those who participated, we thank you, and we will talk to you again in July. See you.

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

Thank you. Thank you.

and welcome to our first quarter of 2023 earnings release conference call. On the call are Mike McRoberts, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Senior 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, 2022, and in our other filings with the Securities and Exchange Commission.

As indicated in our news release, we achieved first quarter revenues of $1.9 billion and an income of $90.5 million, or $1.60 per diluted share. We are proud to declare a cash dividend of $0.21 per common share. In the first quarter, we experienced strong demand for new Class 8 and Class 4-7 trucks, largely due to the limited new truck production of the past few years. There was a healthy widespread demand for aftermarket parts and services as well, and we maintained our focus on strategic initiatives support to large national fleets, and operational excellence. We significantly outpaced the industry in medium-duty truck sales as well as aftermarket sales, and we are proud of our results in the first quarter. In the aftermarket, our parts service and body shop revenues were $648 million, up 19.3%, and our absorption ratio was 136.5%. In the first quarter, we expect strong demand for parts and service for most of the customer segments we support. We continue to add service technicians to our workforce, notably mobile technicians, which supports our long-term strategy to expand our mobile presence across the country. Looking ahead, we anticipate the rate of inflation to continue to slow, and the parts revenue growth will moderate throughout the year when compared to our first quarter results. However, with our continued focus on long-term initiatives, including strategically expanding our workforce to support mobile service efforts and national accounts, we believe our aftermarket revenues will remain strong this year. Turning to truck sales, we sold 4,365 new Class 8 trucks, accounting for 6.4% of the total U.S. market and 2.2% of the Canada market. While there's still pent-up demand for new Class 8 trucks, we experienced healthy demand for most market segments, particularly over-the-road, vocational, car haulers, energy customers, and large national fleets. ACT research forecast U.S. class retail sales to be 259,000 units in 2023, essentially flat compared to 2022. Our continued truck allocation may limit our growth potential. Our backlog remains strong, and we believe our second quarter Class A truck sales will align with our first quarter results. Overall, we expect our results will be consistent with the industry this year. Our Class 4-7 new truck sales reached 3,038 units in the first quarter, accounting for 5.3% of the U.S. market and 3.2% of the Canadian market. We experienced healthy demand from a variety of market segments. Further, while supply has not yet caught up with the needs of the market, we began to see truck manufacturers shift more resources back to producing medium-duty trucks. ACT research forecast U.S. Class 4-7 retail sales to be 253,600 units in 2023, up 8.6% from 2022. As production continues to improve and as customers prepare for upcoming emission regulations, we believe there will continue to be strong demand for medium-duty commercial vehicles. for the remainder of 2023. Our used truck sales reached 1,684 units in the first quarter, down 29.7% year-over-year. Demand for used trucks remained low, largely due to the continuing increase in new truck production. As new truck production continues to improve, we expect further deterioration in used truck pricing, and we plan to carefully manage our used truck inventory levels until demand begins to increase and value stabilize. Our lease and rental revenue was up 21.5% compared to the first quarter of 22. We continue to experience strong demand for lease vehicles and our rental utilization rates were solid in the first quarter. We expect our lease and rental operations to continue to make significant contributions to our overall profitability for the remainder of 2023. Looking ahead, we will continue to monitor economic factors which may impact our industry, but we believe our overall financial results will remain strong through the rest of 2023. Before closing, I would like to thank our employees for their great work and for their dedication to our company's goals, as well as providing superior service to our customers. With that, I'll take any questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question is from Justin Long with Stevens. Your line is open.

Thanks. Good morning and congrats on the quarter. Oh, yes. Thank you, Justin.

I'll start with parts and service. Rusty, would love to get your thoughts on parts and service growth over the remainder of the year. And obviously, we're going to see some moderation just given what's happening with inflation. But is there anything else that's driving that moderation? Or would you say your parts and service growth going forward kind of ex-inflation is remaining pretty consistent?

No, I don't see anything out there. We continue to execute on all the strategic conditions that we have been implementing rather consistently over the last six or seven years, to be honest. I would tell you, while it may moderate somewhat, plus given some pretty large comps coming forward, We still believe it'll close the year in double digits, okay? You know, I would expect the next few quarters to slightly moderate some off of the 19 plus percent. Understanding that, you know, yeah, there was some acquisition stuff in there, the Canadian stuff, but we were still well over 17% from the same score perspective in Q1. So, you know, with that kind of start, you know, we're talking high singles and low double. uh you know later this year we'll just have to see how it plays out i can't pin it exactly but we will still see overall growth well outside of inflation so you know we uh we just you know we feel very good again about uh you know that i think i think it's important you know i was you see that absorption rate number there i believe everybody i hope folks know it towards the right number you know it's the calculation of parts service and body shop gross profit versus the G&A of a dealership, right? What we put out, you know, it's 136 and a half. Now, I think it's important to note that if you take our new acquisitions from last year, and that would be the Canadian acquisition, along with our acquisition of Summit, they are well below that number. If you looked at prior stores that we had prior to those two acquisitions, that number would be into the almost mid-140s, a number I would have never, ever thought we could ever achieve. So, you know, what that really explains to you is the fact that, you know, there's plenty of upside in these other stores. We, over last year, we just brought them onto our business system, really between March and August. Well, just getting on the system and bringing, you know, your regimented way of going to market to them is not an add water and stir thing. So those numbers for sure have room for growth in the coming years, you know, as they grow to catch up with the rest of our locations, right? So, you know, I feel very good about the overall parts and service outlook for us going forward, regardless of where the markets, you know, where the market is. You got to understand, we go to the market very diversified. We're not just hitting it one segment. I always try to, Explain that to people. We're not just doing over-the-road business. We're buried in many different market segments in the vocational side. The vocational business is pretty good out there right now. I can go on and on, Justin, of the quality of what I see, the quality of earnings that are out there, but that's hitting a little bit touching on it from a parts and services perspective there.

okay got it that's helpful and my next one's probably for steve but is there anything you can share on the expected trend in sgna as we move into the second quarter relative to what we saw in the first quarter and then maybe thoughts on interest expense going forward as well given it's come up a good bit the last couple of quarters well as you see gna was sequentially up significantly from q4 and that's pretty normal for us and q1

compared to Q4, we incur a lot of what we'll categorize as employee-type benefit costs. We issue our options, payroll taxes kick back in, which had fall off as the year goes as people hit earnings amounts. Typically in Q2, that'll stabilize. You won't see another sequential jump. You'll see it pretty flat, maybe even slightly down. On the interest front, you'll i would expect q2 to be very similar to q1 inventory levels are you know elevated versus last year i think it was up about you know whatever eight nine ten million dollars versus q1 last year that's that's exactly what you believe it to be it's a product of interest rates on our floor plan and and um carrying amounts of inventory you gotta remember um even though we're on allocation we're turning them quick they sit in inventory a while while we body them up and do things like that so um i think I think the remainder of the year, you're going to see the run rate similar to what it is. Depending on your outlook for interest rates, I think maybe there's another quarter point bump. I'm not sure if there's much more than that. That's probably going to be very similar to Q1 for the remainder of the year.

Got it. That's helpful. Maybe I'll close with a high-level question for Rusty. When I think about the business going forward, it feels like we're going to see higher highs and higher lows. And I look at valuation multiples today and they're still very compressed relative to what we've seen historically. What do you think the market is missing?

Well, I'm going to step out a little bit here, Justin, but a good question, right? Especially when you're sitting in my chair. Based upon our current multiple and where it has been the last couple of years, I do not believe the market fully understands how our strategic execution has improved our quality of earnings. The aftermarket growth and the expense management that resulted from executing our strategic initiatives have increased our absorption rate, as I mentioned earlier, to 136, but well above that in the old stores combined when you add the acquisitions in. I also believe the market doesn't realize that the normal replacement cycle for Class A in the U.S., when you take the last 10-year average, has increased to over 225,000 units per year. You know, I think if the commercial market performs how we and other industry experts, such as ACT Research expected to, we believe, you know, that we've significantly improved both our trough and peak earnings power since the last down cycle in 2020. So if ACT, from my perspective, if ACT's current forecast for Class A is correct, which, you know, trough, but they've got it at 217,000 units in 24, and a peak of 311,000 units in 26. You know, I've got to believe that our trough earnings would be pretty far north of $4 a share, and peak earnings could be, you know, north of $8 a share. For me, that's stepping out. I usually don't say that. But I don't think people truly understand the company sometimes. When you talk about those multiples, and I've been looking at it for the last couple of years, and it can be a little frustrating from my perspective. So I think if someone digs deep into the model and looks at it and lays out the forecast of most industry experts who use ACT, that's what you're going to come up with. So, I mean, I don't know a better way to explain it to you than that.

That makes a lot of sense. Thanks, Rusty. Appreciate the time.

You bet. Thank you. One moment for our next question. And our next question comes from Andrew Obin with Bank of America. Your line is open.

Hey, Rusty. It's Andrew Obin. Hey, guys. Hello to the team as well.

Thank you, Andrew. And the team says hello back.

I'll speak. So the question for you, and I think you and I have had this debate for a while, you know, you guys are generating more and more cash flow. You know, it seems there's a level of frustration with where the stock is. And I know you are buying back stock, but why not get more aggressive on stock buyback in this environment? Particularly because, you know, a couple of years ago, we were talking about a $4 as your peak earnings number, and now it's your trough earnings number. If the market is missing so much, why not just, you know, buy back more?

Well, Andrew, everything's on the table. How about that? I'm not going to get that specific about it right here. As you know, we are consistent. We did continue to buy back stock in the quarter. I think we bought 26 million or so back in the quarter. I don't know exactly. We got 150 million approved, and we bought back about 40 million of that since approval. And we plan on continuing that pace through the end of the year, if not accelerating it. I hear you. So, you know, everything's on the table, as I said to you, buddy. I'm not going our buyback to $150 million from the last few years to $100 million when we really didn't even execute on it. But we plan on probably executing pretty close to what we've got out there as far as approval right now, I can tell you that.

I appreciate that. Can you talk about just sort of the progression of your parts and service business? Because I think relative to my expectation, it has been holding up better than expected. You know, what's driving that? What do you expect the exit rate for the year to be particular as the comps get tougher? And what does it say about sort of the underlying economy? And, you know, how much of it, you know, we know that you're changing your business model. We know that you're going after larger customers, right? We know that in some cases people who drive your parts and service business are not even your large new truck customers. A lot of things happening below the surface. but maybe just sort of unpack this business for us a little bit. Thank you.

Yeah, that's a big question. I think I touched on some of it a little bit earlier. You know, we, we feel great about our parts and service business. Okay. It continues to grow. I mean, look back and you just take the last two, three years and it has been a very consistent, uh, we've been outperforming our expectations over the last couple of years when it comes to growth. And I, sometimes I, we even underestimate, I mean, I'm, without getting into numbers. We even underestimate the power of the network. When you do have a network our size, which is by far the largest commercial network in the United States, and you represent as many manufacturers as we do, and you're able to also go after other brands of trucks for a large customer, because nobody really runs one brand anymore. and you're equipped to do that, I think, you know, and you take the approach we do by leveraging off that network and our people, and you have strategic initiatives like we've put in the last few years, whether it's too specific, because some of it we believe is proprietary to us, you know, around the parts business, around the service business. You set goals to double your mobile service footprint in the next three to four years, you know, and then you continue to execute on that. You get the numbers we're talking about. I mean, when I first knew you, Andrew, if we just started talking about, now this is stores. This isn't, you know, when you look at dealership locations running over 140%, I would have never, ever believed we could do that. But we do. And we continue to find, we continue to attract more customers. Again, given, you know, given how we go to market, our facilities, our people, everything and what customers are wanting, you know, not only a bunch of hodgepodge mixed up, you know, or, you know, performance from their service networks, they're wanting one consistent, consolidated answer. And I do believe that we provide the best in the marketplace. And, you know, it's all I can get into the numbers, but we're going to consistently continue to grow it. We feel very good about that. And even like I said, The world is evolving. I don't know what, you know, going to customers. That's why we're big on this mobile thing. You know, reaching out and going to customers, providing better service. And, you know, big cities continue to get more clogged up. The point of taking a truck, driving it to a dealership, dropping it off, having to pick it up again. Those are all inhibitors to a person taking a truck and producing revenue. So, you know, That's why the mobile thing makes a lot of sense. And I can't get into all the drivers, Andrew, but the performance speaks for itself from the last few years. And I don't see anything that's going to change that. So, I mean, those are just, without getting into numbers and telling you this much growth here, I already did that earlier. Those are the things that we believe set us apart when it comes to taking care of customers. And at the end of the day, as the coin, every one of our employees carries says, The customer is the boss.

And just the last question. Can you just walk, you know, that's my usual question. Can you just walk us from a macro standpoint to your point? You have a lot of exposure. Vacational, you're in Florida, you're in Texas, you're in California, you're in the Atlantic, you're in upper Midwest. Can you just tell us in terms of the economy, what are you seeing? Because you really have, you know, uniquely informed view of the economy. Thank you.

I would tell you, let's start on the East Coast, right? Florida, still strong. I was just in Florida two weeks ago. In fact, that's about our largest mobile group. Those folks have over 60 mobile technicians working throughout the state of Florida and lower Alabama. But their business continues to be strong, and we expect a year no less, if not greater, than last year out of Florida. You move up in further into the southeast, you know, in Georgia, continuing to grow and strong also. I'm really not going to give you any bad reports. I would tell you Florida is extremely strong. I would tell you that South Texas is extremely strong. The Houston market is growing. Colorado seems to be doing a little bit better. Southern California, I don't want to miss anybody. I'm telling you, it's broad-based. And it goes back to, Andrew, it goes back to our customer mix. to our market segment mix. I say it all the time, but I don't have, I mean, I talk on blue in the face, but we don't just go to one market segment. You know, it's interesting that if you say, I could tell you something like this to try to, geographically, everything's solid, some better than others. The Mountain West is doing really well right now. When I say that, that's Utah and Idaho. I mean, I, but there are no weak spots that I can see on the map currently. There are some that are a little stronger than others. But the best thing to say when I talk about the power of the company and the power of whatever is two of the three largest customers on the international side of my business from parts and service don't even buy trucks from me on the international side. And I'm not going to get into names, specific names, but that tells you how we're able to take a customer and leverage across our whole network whether he buys trucks from one side or the other, or whether they buy trucks from us at all. We have many large customers that don't even buy trucks from us, but we service by leveraging off that network. So, you know, I'm getting a little . We're doing so well in the Chicago area. Again, I can ramble on forever, as you know, Andrew, about the business, because I'm very proud of what our people have been able to accomplish.

All right. Thanks so much, Rusty. Really appreciate it. Look forward to updates on the buyback.

You got it. Thank you. Keep that in mind, Andrew.

Thank you. And I'm showing no further questions at this time. I would like to turn it back over to Rusty Rush for closing remarks. Sure.

Well, we appreciate it. I know it's a big earnings day today, so I think all the analysts were loaded with companies reporting today. But for those who participated, we thank you, and we will talk to you again in July. See you.

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