About Rush Enterprises

Rush Enterprises, Inc., through its subsidiaries, operates as a full-service, integrated retailer of commercial vehicles and related services. The Truck Segment includes the company’s operation of a network of commercial vehicle dealerships under the name Rush Truck Centers. Rush Truck Centers primarily sell commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, IC Bus, Blue Bird and Dennis Eagle. Through its strategically located network of Rush Truck Centers, the company provides one-stop service for the needs of its commercial vehicle customers, including retail sales of new and used commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance products. The company’s Rush Truck Centers are principally located in high traffic areas throughout the United States and Ontario, Canada. The company operates over 125 franchised Rush Truck Centers in 23 states. In 2019, the company purchased a 50% equity interest in an entity in Canada, Rush Truck Centres of Canada Limited (RTC Canada) and on May 2, 2022, it purchased an additional 30% equity interest in RTC Canada that increased its equity interest to 80%. RTC Canada owns and operates 14 International dealership locations in Ontario. The company’s business strategy consists of providing solutions to the commercial vehicle industry through its network of commercial vehicle dealerships. The company offers an integrated approach to meeting customer needs by providing service, parts and collision repairs in addition to new and used commercial vehicle sales and leasing, plus financial services, vehicle upfitting, CNG fuel systems through its joint venture with Cummins and vehicle telematics products. The company intends to continue to implement its business strategy, reinforce customer loyalty and remain a market leader by continuing to develop its Rush Truck Centers as it expands its product offerings and extend its dealership network through strategic acquisitions of new locations and opening new dealerships in its existing areas of operation to enable it to better serve its customers. Rush Truck Centers The company’s Rush Truck Centers are located in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, Virginia and Ontario, Canada. Leasing and Rental Services Through certain of its Rush Truck Centers and several stand-alone Rush Truck Leasing locations, the company provides a broad line of product selections for lease or rent, including Class 4 through Class 8 commercial vehicles, heavy-duty cranes and refuse vehicles. The company’s lease and rental fleets are offered to customers on a daily, monthly or long-term basis. Substantially all of the company’s long-term leases also contain a service provision, whereby it agrees to service the vehicle through the life of the lease. In addition to the locations, Rush Truck Leasing provides full-service maintenance on customers’ vehicles at several of the company’s customers’ facilities. Financial and Insurance Products At its Rush Truck Centers, the company offers third-party financing to assist customers in purchasing new and used commercial vehicles. Additionally, the company sells, as agent through its insurance agency, a complete line of property and casualty insurance, including collision and liability insurance on commercial vehicles, cargo insurance and credit life insurance. Other Businesses Perfection Equipment offers installation of equipment, equipment repair, parts installation, and paint and body repair at the company’s location in Oklahoma City. Perfection Equipment specializes in up-fitting trucks used by oilfield service providers and other specialized service providers. Custom Vehicle Solutions operates at locations in Denton, Texas and Greencastle, Pennsylvania. Custom Vehicle Solutions provides new vehicle pre-delivery inspections, truck modifications, natural gas fuel system installations, body and chassis upfitting and component installation. The House of Trucks operates at locations in Dallas, Texas and Chicago, Illinois. The House of Trucks sells used commercial vehicles, new and used trailers and offers third-party financing and insurance products. The company’s World Wide Tires store operates in Houston, Texas. World Wide Tires primarily sells tires for use on commercial vehicles. Business Strategy Through its strategic expansion and acquisition initiatives, the company has grown to operate a large, multistate/international, full-service network of commercial vehicle dealerships. The company intends to continue to grow its business by expanding its product and service offerings through acquisitions in new geographic areas and by opening new locations to enable it to better serve its customers. The key elements of the company’s strategy are to intend to continue to expand its product lines within its existing locations by adding product categories and service capabilities that are both complementary to its existing product lines and well suited to its operating model; plan to continue to expand its dealership network by acquiring existing dealerships or opening new locations in areas where it does not already have locations; and evaluate opportunities to increase its market presence by adding new Rush Truck Centers within its current franchises’ areas of operation. Management of Dealerships Rush Truck Centers The company’s Rush Truck Centers are responsible for sales of new and used commercial vehicles, as well as related Aftermarket Products and Services. Aftermarket Products and Services: Rush Truck Centers carry a wide variety of commercial vehicle parts in inventory. Certain Rush Truck Centers also feature fully equipped service and collision center facilities, the combination and configuration of which varies by location, capable of handling a broad range of repairs on most commercial vehicles. Each Rush Truck Center with a service department is a warranty service center for the commercial vehicle manufacturers represented at that location, if any, and most are also authorized service centers for other vehicle component manufacturers, including Cummins, Eaton, Caterpillar and Allison. The company also has mobile service technicians and technicians who staff the company’s customers’ facilities upon request. The company’s service departments perform warranty and non-warranty repairs on commercial vehicles. Additionally, the company provides a wide array of services, including assembly services for specialized commercial vehicle bodies and commercial vehicle mounted equipment. The company also enters into contracts to provide full-service maintenance on certain customers’ vehicles. The company had 3,246 vehicles under contract maintenance as of December 31, 2023. New Commercial Vehicle Sales New commercial vehicle sales represent the largest portion of the company’s revenues. Of this total, new Class 8 heavy-duty truck sales accounted 38.9%, of the company’s total revenues for 2023, and 67.9% of its new commercial vehicle revenues for 2023. The company’s Rush Truck Centers that sell new and used Class 8 heavy-duty trucks manufactured by Peterbilt, International or Dennis Eagle may also sell medium-duty and light-duty commercial vehicles. Certain Rush Truck Centers sell medium-duty commercial vehicles manufactured by Peterbilt, Hino, Isuzu, Ford, International or Dennis Eagle, buses manufactured by Blue Bird, IC Bus or Elkhart and light-duty commercial vehicles manufactured by Ford. A significant portion of the company’s new commercial vehicle sales are to customers with large fleets of commercial vehicles. Because of the size and geographic scope of its Rush Truck Center network, its strong relationships with its fleet customers and its ability to manage large quantities of used commercial vehicle trade-ins, the company is able to successfully market and sell to fleet customers nationwide. The broad range of products and services the company offers to purchasers of commercial vehicles at the time of purchase and post-purchase results in a high level of customer loyalty. Used Commercial Vehicle Sales: Used commercial vehicle sales accounted for approximately 5.2%, of the company’s total revenues for 2023. The company sells used commercial vehicles at most of its Rush Truck Centers and also at its non-franchised used commercial vehicle facilities. The company is well positioned to market used commercial vehicles due to its ability to recondition them for resale utilizing the service and collision center departments of its Rush Truck Centers and its ability to move used commercial vehicles between its dealerships as customer demand warrants. The majority of the company’s used commercial vehicle inventory consists of commercial vehicles taken as trade-ins from new commercial vehicle customers or retired from its lease and rental fleet, but it also supplements its used commercial vehicle inventory by purchasing used commercial vehicles from third parties for resale, as market conditions warrant. Vehicle Leasing and Rental Vehicle leasing and rental revenues accounted for approximately 4.5%, of the company’s total revenues for 2023. At its Rush Truck Leasing locations, the company engages in full-service commercial vehicle leasing and rental through its PacLease and Idealease franchises. As of December 31, 2023, the company had 10,463 commercial vehicles in its lease and rental fleet. Generally, the company sells commercial vehicles that have been retired from its lease and rental fleet through its used commercial vehicles sales operations. Historically, the company has realized gains on the sale of used lease and rental fleet inventory. New and Used Commercial Vehicle Financing and Insurance Many of the company’s Rush Truck Centers have personnel responsible for arranging third-party financing for its product offerings. Generally, commercial vehicle finance contracts involve an installment contract, which is secured by the commercial vehicle financed and requires a down payment, with the remaining balance generally financed over a two-year to seven-year period. Most of these finance contracts are sold to third parties without recourse to the company. The company provides an allowance for repossession losses and early repayment penalties that it may incur under these finance contracts. The company sells, as an agent, a complete line of property and casualty insurance to commercial vehicle owners. The company’s agency, which operates at locations around the United States outside of its Rush Truck Centers, is licensed to sell commercial vehicle liability, collision, workers’ compensation, cargo, and credit life insurance coverage offered by several leading insurance companies. The company’s renewal rate in 2023 was approximately 81%. The company also has licensed insurance agents at several of its Rush Truck Centers. Sales and Marketing The company’s established history of operations in the commercial vehicle business has resulted in a strong customer base that is diverse in terms of geography, industry and scale of operations. The company’s customers include national and regional truck fleets, corporations, local and state governments and owner-operators. The company generally promotes its products and related services through direct customer contact by its sales personnel and advertising. Competition The company’s dealerships compete with dealerships representing other manufacturers, including commercial vehicles manufactured by Mack, Freightliner, Kenworth and Volvo. Dealership Agreements Peterbilt: The company has entered into nonexclusive dealership agreements with Peterbilt that authorize it to act as a dealer of Peterbilt heavy- and medium-duty trucks. The company’s Peterbilt areas of responsibility encompass areas in the states of Alabama, Arizona, California, Colorado, Florida, Kentucky, Nevada, New Mexico, Oklahoma, Tennessee and Texas. These dealership agreements have terms expiring in July 2024. The company’s dealership agreements with Peterbilt may be terminated by Peterbilt in the event that the aggregate voting power of W.M. Rusty Rush, and certain current and former executives of the company decreases below 22%. Sales of new Peterbilt commercial vehicles accounted for approximately 29.1% of its total revenues for 2023. International: The company has entered into nonexclusive dealership agreements with Navistar that authorize it to act as a dealer of International heavy- and medium-duty trucks and, in certain markets, IC buses. The company’s Navistar areas of responsibility encompass areas in the states of Arkansas, Georgia, Idaho, Illinois, Indiana, Kansas, Missouri, North Carolina, Ohio, Tennessee, Utah and Virginia. These dealership agreements have terms expiring between May 2025 and January 2029. Sales of new International commercial vehicles accounted for approximately 16.4% of the company’s total revenues for 2023. Other Commercial Vehicle Suppliers: In addition to the company’s dealership agreements with Peterbilt and Navistar, various Rush Truck Centers have entered into dealership agreements with other commercial vehicle manufacturers, including Blue Bird, and Micro Bird, which have terms expiring between March 2024 and May 2029 and Ford, Hino, Isuzu and Dennis Eagle which have perpetual terms. Sales of new non-Peterbilt and non-International commercial vehicles accounted for approximately 8.5% of the company’s total revenues for 2023. The company’s dealership agreements impose certain operational obligations and financial requirements upon it and the relevant dealerships. In addition, each of its dealership agreements requires the consent of the relevant manufacturer for the sale or transfer of a franchise. Any termination or nonrenewal of the company’s dealership agreements must follow certain guidelines established by both state and federal legislation designed to protect motor vehicle dealers from arbitrary termination or nonrenewal of franchise agreements. The federal Automobile Dealers Day in Court Act and certain other similar state laws generally provide that the termination or nonrenewal of a motor vehicle dealership agreement must be done in “good faith” and upon a showing of “good cause” by the manufacturer for such termination or nonrenewal, as such terms have been defined by statute and interpreted in case law. Recent Acquisitions On December 4, 2023, the company acquired certain assets of Freeway Ford Truck Sales, Inc., which included real estate and a Ford commercial vehicle franchise in Chicago, Illinois, along with commercial vehicle and parts inventory. Floor Plan Financing Most of the company’s commercial vehicle purchases are made on terms requiring payment to the manufacturer within 15 to 60 days or less from the date the commercial vehicles are invoiced from the factory. Navistar Financial Corporation and Peterbilt offer trade terms that provide an interest-free inventory stocking period for certain new commercial vehicles. Environmental Standards and Other Governmental Regulations The company’s operations involving the use, handling, storage and disposal of hazardous and nonhazardous materials are subject to the requirements of the federal Resource Conservation and Recovery Act, or RCRA, and comparable state statutes. Pursuant to these laws, federal and state environmental agencies have established approved methods for handling, storage, treatment, transportation and disposal of regulated substances with which the company must comply. Trademarks The company holds registered trademarks from the U.S. Patent and Trademark Office for names, including Rush Enterprises and Rush Truck Center. Seasonality The company’s Truck Segment is moderately seasonal. Seasonal effects on new commercial vehicle sales related to the seasonal purchasing patterns of any single customer type are mitigated by the diverse geographic locations of the company’s dealerships and its diverse customer base, including regional and national fleets, local and state governments, corporations and owner-operators. However, Aftermarket Products and Services operations historically have experienced higher sales volumes in the second and third quarters (year ended December 31, 2023). Environmental Standards and Other Governmental Regulations The company’s operations involving the use, handling, storage and disposal of hazardous and nonhazardous materials are subject to the requirements of the federal Resource Conservation and Recovery Act (RCRA), and comparable state statutes. History Rush Enterprises, Inc. was founded in 1965. The company was incorporated in 1965 under the laws of the state of Texas.