RUSH ENTERPRISES INC \TX\

Previous wording

Our Rush Truck Centers are principally located in high traffic areas throughout the United States and Ontario, Canada. Since commencing operations as a Peterbilt heavy-duty truck dealer in 1966, we have grown to operate over 125 franchised Rush Truck Centers in 23 states. We own an 80% equity interest in Rush Truck Centres of Canada Limited (“RTC Canada”). RTC Canada currently owns and operates 12 International dealership locations in Ontario. The operating results of RTC Canada are consolidated in the Consolidated Statements of Operations, the Statements of Comprehensive Income, the Consolidated Balance Sheets and commercial vehicle unit sales data.

Current wording

Our Rush Truck Centers are principally located in high traffic areas throughout the United States and Ontario, Canada. Since commencing operations as a Peterbilt heavy-duty truck dealer in 1966, we have grown to operate over 125 franchised Rush Truck Centers in 23 states. We own an 80% equity interest in Rush Truck Centres of Canada Limited (“RTC Canada”). RTC Canada currently owns and operates 12 International dealership and 2 IC Bus dealership locations in Ontario. RTC Canada also sells IC Busses in Quebec and the Maritimes. The operating results of RTC Canada are consolidated in the Consolidated Statements of Operations, the Statements of Comprehensive Income, the Consolidated Balance Sheets and commercial vehicle unit sales data.

Previous wording

A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and forecasting service provider, currently forecasts new U.S. Class 8 retail truck sales to be 213,300 units in 2025, which would represent a 13.8% decrease compared to 2024. The challenges that have plagued the industry for some time, including the ongoing freight recession and general economic uncertainty, have been exacerbated by increasing concerns related to U.S. trade policy, tariffs, and uncertainty concerning engine emissions regulations, causing many customers, particularly in the over-the-road segment, to delay vehicle purchases. Consequently, new Class 8 truck sales demand has softened significantly. We expect our U.S. market share of new Class 8 truck sales to range between 5.4% and 5.9% in 2025 based on A.C.T. Research’s current forecast. This market share percentage would result in the sale of approximately 11,500 to 12,500 new Class 8 trucks in 2025. We expect to sell approximately 450 new Class 8 trucks in Canada in 2025.

Current wording

A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and forecasting service provider, currently forecasts new U.S. Class 8 retail truck sales to be 221,400 units in 2025, which would represent a 10.5% decrease compared to 2024. The ongoing freight recession and general economic uncertainty in addition to uncertainty with respect to U.S. trade policy and engine emission regulations, continues to weigh on the industry and impact demand for new commercial vehicles. While we expect that new Class 8 truck sales to vocational customers will remain strong through the end of the year, we also expect continued weak demand from our over-the-road customer, our largest customer segment. We expect our U.S. market share of new Class 8 truck sales to range between 5.4% and 5.9% in 2025 based on A.C.T. Research’s current forecast. This market share percentage would result in the sale of approximately 12,000 to 13,000 new Class 8 trucks in 2025. We expect to sell approximately 400 new Class 8 trucks in Canada in 2025.

Previous wording

With respect to new U.S. Class 4 through 7 retail commercial vehicle sales, A.C.T. Research currently forecasts sales to be 213,300 units in 2025, which would represent an 8.5% decrease compared to 2024. We believe that most medium-duty customers will remain cautious in 2025 and will look to replace vehicles rather than expand their fleets. We expect our U.S. market share of new Class 4 through 7 commercial vehicle sales to range between 5.6% and 6.1% in 2025 based on A.C.T. Research’s current forecast. This market share percentage would result in the sale of approximately 12,000 to 13,000 new Class 4 through 7 commercial vehicles in 2025. We expect to sell approximately 500 new Class 5 through 7 commercial vehicles in Canada in 2025.

Current wording

With respect to new U.S. Class 4 through 7 retail commercial vehicle sales, A.C.T. Research currently forecasts sales to be 231,300 units in 2025, which would represent a 10.2% decrease compared to 2024. We believe that demand for medium-duty commercial vehicle will remain solid, at least through the third quarter. We expect our U.S. market share of new Class 4 through 7 commercial vehicle sales to range between 5.8% and 6.3% in 2025 based on A.C.T. Research’s current forecast. This market share percentage would result in the sale of approximately 13,400 to 14,600 new Class 4 through 7 commercial vehicles in 2025. We expect to sell approximately 900 new Class 5 through 7 commercial vehicles in Canada in 2025.

Previous wording

We expect to sell approximately 2,000 light-duty vehicles and approximately 6,500 to 7,500 used commercial vehicles in 2025, and we expect lease and rental revenue to increase approximately 3.0% during 2025, compared to 2024.

Current wording

We expect to sell approximately 2,500 light-duty vehicles and approximately 6,500 to 7,500 used commercial vehicles in 2025, and we expect lease and rental revenue to increase approximately 5.0% during 2025, compared to 2024.

Previous wording

The following discussion and analysis include our historical results of operations for the three months ended March 31, 2025, and 2024.

Current wording

The following discussion and analysis includes our historical results of operations for the three months and six months periods ended June 30, 2025 and 2024.

Previous wording

The following table sets forth the unit sales and revenues for new heavy-duty, new medium-duty, new light-duty and used commercial vehicles and our absorption ratio (revenue in millions):

Current wording

The following table sets forth the unit sales and revenues for new heavy-duty, new medium-duty, new light-duty and used commercial vehicles and the absorption ratio (revenues in millions):

Previous wording

Management uses several performance metrics to evaluate the performance of our commercial vehicle dealerships and considers Rush Truck Centers’ “absorption ratio” to be of critical importance. Our absorption ratio is calculated by dividing the gross profit from our Aftermarket Products and Services departments by the overhead expenses of all of a dealership’s departments, except for the selling expenses of the new and used commercial vehicle departments and carrying costs of new and used commercial vehicle inventory. When 100% absorption is achieved, all of the gross profit from the sale of a commercial vehicle, after sales commissions and inventory carrying costs, directly impacts operating profit. Our commercial vehicle dealerships achieved a 128.6% absorption ratio for the first quarter of 2025, compared to a 130.1% absorption ratio for the first quarter of 2024.

Current wording

Management uses several performance metrics to evaluate the performance of our commercial vehicle dealerships and considers Rush Truck Centers’ “absorption ratio” to be of critical importance. Our absorption ratio is calculated by dividing the gross profit from our Aftermarket Products and Services departments by the overhead expenses of all of a dealership’s departments, except for the selling expenses of the new and used commercial vehicle departments and carrying costs of new and used commercial vehicle inventory. When 100% absorption is achieved, all of the gross profit from the sale of a commercial vehicle, after sales commissions and inventory carrying costs, directly impacts operating profit. Our commercial vehicle dealerships achieved a 135.5% absorption ratio for the second quarter of 2025 compared to a 134.0% absorption ratio for the second quarter of 2024.

Previous wording

Total revenues decreased $21.2 million, or 1.1%, in the first quarter of 2025, compared to the first quarter of 2024. This decrease was primarily the result of decreased Aftermarket Products and Services revenue due to continued weak demand from over-the-road customers.

Current wording

Total revenues decreased $96.3 million, or 4.8%, in the second quarter of 2025, compared to the second quarter of 2024. This decrease was primarily the result of decreased new Class 8 truck sales revenue due to continued weak demand from over-the-road customers.

Previous wording

Commercial vehicle lease and rental revenues increased $2.3 million, or 2.7%, in the first quarter of 2025, compared to the first quarter of 2024. The increase in commercial vehicle lease and rental revenues was primarily due to an increase in the delivery of new leased vehicles, which was partially offset by a slight decrease in rental utilization.

Current wording

Commercial vehicle lease and rental revenues increased $5.5 million, or 6.3%, in the second quarter of 2025, compared to the second quarter of 2024. This increase in commercial vehicle lease and rental revenues was primarily due to the addition of new vehicles to our lease fleet and consistent demand from lease customers.

Previous wording

Gross margins from our Aftermarket Products and Services operations decreased to 35.8% in the first quarter of 2025, from 36.5% in the first quarter of 2024. Gross profit for the Aftermarket Products and Services departments decreased to $221.3 million in the first quarter of 2025, from $236.9 million in the first quarter of 2024. This decrease is primarily related to decreased demand due to difficult economic conditions impacting many of our customers. Historically, gross margins on parts sales range from 28% to 30% and gross margins on service and collision center operations range from 66% to 68%. Gross profits from parts sales represented 58.3% of total gross profit for Aftermarket Products and Services operations in the first quarter of 2025 and 57.5% in the first quarter of 2024. Service and collision center operations represented 41.7% of total gross profit for Aftermarket Products and Services operations in the first quarter of 2025 and 42.5% in the first quarter of 2024. We expect blended gross margins on Aftermarket Products and Services operations to range from 35.5% to 37.5% in 2025.

Current wording

Gross margins from our Aftermarket Products and Services operations increased to 37.6% in the second quarter of 2025, from 37.5% in the second quarter of 2024. Gross profit from our Aftermarket Products and Services operations increased to $239.2 million in the second quarter of 2025, from $235.3 million in the second quarter of 2024. Historically, gross margins on parts sales range from 28% to 30% and gross margins on service and collision center operations range from 66% to 68%. Gross profits from parts sales represented 61.3% of total gross profit from Aftermarket Products and Services operations in the second quarter of 2025 and 58.4% in the second quarter of 2024. Service and collision center operations represented 38.7% of total gross profit from Aftermarket Products and Services operations in the second quarter of 2025 and 38.8% in the second quarter of 2024. We expect blended gross margins on Aftermarket Products and Services operations to range from 36.0% to 37.5% in 2025.

Previous wording

Gross margins on new Class 8 truck sales decreased to 9.0% in the first quarter of 2025, from 9.7% in the first quarter of 2024. In 2025, we expect overall gross margins from new heavy-duty truck sales of approximately 8.5% to 9.5%.

Current wording

Gross margins on new Class 8 commercial vehicle sales decreased to 8.5% in the second quarter of 2025, from 8.6% in the second quarter of 2024. The decrease in new Class 8 truck margins was primarily due to continued weak demand from over-the-road customers and an uncertain regulatory environment. In 2025, we expect overall gross margins from new heavy-duty truck sales of approximately 8.5% to 9.0%.

Previous wording

Gross margins on new Class 4 through 7 commercial vehicle sales decreased to 7.9% in the first quarter of 2025, from 9.3% in the first quarter of 2024. This decrease was primarily due to the mix of purchasers during the first quarter of 2025. For 2025, we expect overall gross margins from new medium-duty commercial vehicle sales of approximately 7.5% to 9.0%, but this will largely depend upon the mix of purchasers and types of vehicles sold.

Current wording

Gross margins on new Class 4 through 7 commercial vehicle sales decreased to 7.5% in the second quarter of 2025, from 8.4% in the second quarter of 2024. This decrease was primarily due to change in the mix of purchasers. For 2025, we expect overall gross margins from new medium-duty commercial vehicle sales of approximately 7.5% to 8.5%, but this will largely depend upon the mix of purchasers and types of vehicles sold.

Previous wording

Gross margins on used commercial vehicle sales decreased to 14.4% in the first quarter of 2025, from 21.6% in the first quarter of 2024. This decrease was primarily due to a change in sales mix between wholesale and retail. We expect margins on used commercial vehicles to range between 12.0% and 17.0% in 2025.

Current wording

Gross margins on used commercial vehicle sales decreased to 16.9% in the second quarter of 2025, from 19.2% in the second quarter of 2024. This decrease was primarily due to the mix of purchasers. We expect margins on used commercial vehicles to range between 12.0% and 17.0% in 2025.

Previous wording

Gross margins from truck lease and rental sales increased to 28.2% in the first quarter of 2025, from 27.5% in the first quarter of 2024. This increase is primarily related to the delivery of new lease vehicles, which have lower operating costs. We expect gross margins from lease and rental sales of approximately 27.0% to 29.0% during 2025. Our policy is to depreciate our lease and rental fleet using a straight-line method over each customer’s contractual lease term. The lease unit is depreciated to a residual value that approximates fair value at the expiration of the lease term. This policy results in us realizing reasonable gross margins while the unit is in service and a corresponding gain or loss on sale when the unit is sold at the end of the lease term.

Current wording

Gross margins from truck lease and rental sales increased to 28.7% in the second quarter of 2025, from 28.5% in the second quarter of 2024. This increase was primarily related to decreased maintenance costs due to a lower average age of the leasing fleet. We expect gross margins from lease and rental sales of approximately 27.0% to 29.0% during 2025. Our policy is to depreciate our lease and rental fleet using a straight-line method over each customer’s contractual lease term. The lease unit is depreciated to a residual value that approximates fair value at the expiration of the lease term. This policy results in us realizing reasonable gross margins while the unit is in service and a corresponding gain or loss on sale when the unit is sold at the end of the lease term.

Previous wording

Selling, General and Administrative (“SG&A”) expenses decreased $14.9 million, or 5.6%, in the first quarter of 2025, compared to the first quarter of 2024. This decrease primarily resulted from reductions to our operating expenses that occurred in the first half of 2024. SG&A expenses as a percentage of total revenues decreased to 13.4% in the first quarter of 2025, from 14.1% in the first quarter of 2024. Annual SG&A expenses as a percentage of total revenues have ranged from approximately 12.4% to 14.4% over the last five years. In general, when new and used commercial vehicle revenues increase as a percentage of total revenues, SG&A expenses as a percentage of total revenues will be at the lower end of this range. For 2025, we expect SG&A expenses as a percentage of total revenues to range from 13.0% to 14.0%. For 2025, we expect the selling portion of SG&A expenses to be approximately 25.0% to 30.0% of new and used commercial vehicle gross profit.

Current wording

Selling, General and Administrative (“SG&A”) expenses increased $0.6 million, or 0.2%, in the second quarter of 2025, compared to the second quarter of 2024. SG&A expenses as a percentage of total revenues increased to 13.1% in the second quarter of 2025, from 12.4% in the second quarter of 2024. Annual SG&A expenses as a percentage of total revenues have ranged from approximately 12.4% to 14.4% over the last five years. In general, when new and used commercial vehicle revenues increase as a percentage of total revenues, SG&A expenses as a percentage of total revenues will be at the lower end of this range. For 2025, we expect SG&A expenses as a percentage of total revenues to range from 13.0% to 14.0%. For 2025, we expect the selling portion of SG&A expenses to be approximately 25.0% to 30.0% of new and used commercial vehicle gross profit.

Previous wording

Net interest expense decreased $5.1 million, or 28.4%, in the first quarter of 2025, compared to the first quarter of 2024. This decrease in interest expense is primarily the result of decreased inventory levels and lower interest rates compared to the first quarter of 2024. We expect net interest expense in 2025 to decrease compared to 2024, but the amount of the decrease will depend on inventory levels, interest rate fluctuations and the amount of cash available to make prepayments on our floor plan arrangements.

Current wording

Net interest expense decreased $6.7 million, or 34.6%, in the second quarter of 2025, compared to the second quarter of 2024. This decrease in interest expense is a result of a decrease in our vehicle inventory levels and lower interest rates on our variable rate debt compared to the second quarter of 2024. We expect net interest expense in 2025 to decrease compared to 2024, but the amount of the decrease will depend on inventory levels, interest rate fluctuations and the amount of cash available to make prepayments on our floor plan arrangements.

Previous wording

As a result of the factors described above, income before income taxes decreased $14.2 million, or 15.4%, in the first quarter of 2025, compared to the first quarter of 2024.

Current wording

As a result of the factors described above, income before income taxes decreased $8.0 million, or 7.6%, in the second quarter of 2025, compared to the second quarter of 2024.

Previous wording

Income taxes decreased $3.4 million, or 15.8%, in the first quarter of 2025, compared to the first quarter of 2024. We provided for taxes at a 22.8% effective rate in the first quarter of 2025 and 23.0% in the first quarter of 2024. We expect our effective tax rate to be approximately 23.0% to 24.0% of pretax income in 2025.

Current wording

Income taxes decreased $2.2 million, or 8.2%, in the second quarter of 2025, compared to the second quarter of 2024. We provided for taxes at a 24.8% effective rate in the second quarter of 2025 and 24.5% in the second quarter of 2024. We expect our effective tax rate to be approximately 23.0% to 24.0% of pretax income in 2025.

Previous wording

We sold 470 light-duty vehicles in the first quarter of 2025, a 3.1% increase compared to 456 light-duty vehicles sold in the first quarter of 2024.

Current wording

We sold 1,173 new light-duty vehicles in the first six months of 2025, an 18.1% increase compared to 993 new light-duty vehicles sold in the first six months of 2024.

Previous wording

Our short-term cash requirements are primarily for working capital, inventory financing, the renovation and expansion of existing facilities and the construction or purchase of new facilities. Historically, these cash requirements have been met through the retention of profits, borrowings under our floor plan arrangements and bank financings. As of March 31, 2025, we had working capital of approximately $751.3 million, including $228.7 million in cash, available to fund our operations. We believe that these funds, together with expected cash flows from operations, are sufficient to meet our operating requirements for at least the next twelve months. From time to time, we utilize our excess cash on hand to pay down our outstanding borrowings under various credit agreements.

Current wording

Our short-term cash requirements are primarily for working capital, inventory financing, the renovation and expansion of existing facilities and the construction or purchase of new facilities. Historically, these cash requirements have been met through the retention of profits, borrowings under our floor plan arrangements and bank financings. As of June 30, 2025, we had working capital of approximately $694.8 million, including $211.1 million in cash, available to fund our operations. We believe that these funds, together with expected cash flows from operations, are sufficient to meet our operating requirements for at least the next twelve months. From time to time, we utilize our excess cash on hand to pay down our outstanding borrowings under various credit agreements.

Previous wording

We continually evaluate our liquidity and capital resources based upon: (i) our cash, cash equivalents and restricted cash on hand; (ii) the funds that we expect to generate through future operations; (iii) current and expected borrowing availability under our secured line of credit, working capital lines of credit available under certain of our credit agreements and our floor plan credit agreements; and (iv) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, acquisitions, equity repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements, commitments and contingencies, debt repayments, acquisitions, capital expenditures and any operating requirements for at least the next twelve months.

Current wording

We continually evaluate our liquidity and capital resources based upon: (i) our cash and cash equivalents on hand; (ii) the funds that we expect to generate through future operations; (iii) current and expected borrowing availability under our secured line of credit, working capital lines of credit available under certain of our credit agreements and our floor plan credit agreements; and (iv) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, acquisitions, equity repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements, commitments and contingencies, debt repayments, acquisitions, capital expenditures and any operating requirements for at least the next twelve months.

Previous wording

We have a secured line of credit that provides for a maximum borrowing of $25.0 million. There were no advances outstanding under this secured line of credit on March 31, 2025, however, $18.8 million was pledged to secure various letters of credit related to self-insurance products, leaving $6.2 million available for future borrowings as of March 31, 2025.

Current wording

We have a secured line of credit that provides for a maximum borrowing of $25.0 million. There were no advances outstanding under this secured line of credit on June 30, 2025, however, $18.7 million was pledged to secure various letters of credit related to self-insurance products, leaving $6.3 million available for our future borrowings as of June 30, 2025.

Previous wording

Our floor plan credit agreements and our credit agreement with Wells Fargo Bank, National Association (“WF”) require us to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio. As of March 31, 2025, we were in compliance with all debt covenants related to debt secured by lease and rental units, our floor plan credit agreements and our credit agreement with WF. We do not anticipate any breach of these covenants in the foreseeable future.

Current wording

Certain of our long-term debt, floor plan financing agreements and our credit agreement with Wells Fargo Bank, National Association the (“WF”) require us to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio, and the fixed charge coverage ratio. As of June 30, 2025, we were in compliance with all debt covenants related to debt secured by lease and rental units, our floor plan credit agreements and the credit agreement with WF. We do not anticipate any breach of these covenants in the foreseeable future.

Previous wording

We expect to purchase or lease commercial vehicles worth approximately $250.0 million to $300.0 million for our leasing operations during 2025, depending on customer demand. We also expect to make capital expenditures for the purchase of recurring items such as computers, shop tools and equipment and company vehicles of approximately $35.0 million to $40.0 million during 2025.

Current wording

We expect to purchase or lease commercial vehicles worth approximately $275.0 million to $325.0 million for our leasing operations during 2025, depending on customer demand. We also expect to make capital expenditures for the purchase of recurring items such as computers, shop tools and equipment and company vehicles of approximately $35.0 million to $40.0 million during 2025.

Previous wording

During the first quarter of 2025, we paid a cash dividend of $14.3 million. Additionally, on April 30, 2025, our Board of Directors declared a cash dividend of $0.18 per share of Class A and Class B common stock, to be paid on June 12, 2025, to all shareholders of record as of May 12, 2025. The total dividend disbursement is estimated at approximately $14.4 million. We expect to continue paying cash dividends on a quarterly basis. However, there is no assurance as to future dividends because the declaration and payment of such dividends is subject to the business judgment of our Board of Directors and will depend on historic and projected earnings, capital requirements, covenant compliance and financial conditions and such other factors as our Board of Directors deem relevant.

Current wording

During the second quarter of 2025, we paid a cash dividend of $14.3 million. Additionally, on July 30, 2025, our Board of Directors declared a cash dividend of $0.19 per share of Class A and Class B common stock, to be paid on September 12, 2025, to all shareholders of record as of August 12, 2025, which represents a 5.6% increase compared to the cash dividend we paid in the first quarter of 2025. We expect to continue paying cash dividends on a quarterly basis. However, there is no assurance as to future dividends because the declaration and payment of such dividends is subject to the business judgment of our Board of Directors and will depend on historic and projected earnings, capital requirements, covenant compliance and financial conditions and such other factors as our Board of Directors deem relevant.

Previous wording

On December 2, 2024, we announced that our Board of Directors approved a new stock repurchase program authorizing management to repurchase, from time to time, up to an aggregate of $150.0 million of our shares of Class A common stock and/or Class B common stock. In connection with the adoption of the new stock repurchase plan, we terminated the prior stock repurchase plan, which was scheduled to expire on December 31, 2024. Repurchases, if any, are made at times and in amounts as we deem appropriate and may be made through open market transactions at prevailing market prices, privately negotiated transactions or by other means in accordance with federal securities laws. The actual timing, number of shares and value of repurchases under the stock repurchase program will be determined by management at its discretion and will depend on a number of factors, including market conditions, stock price and other factors. As of March 31, 2025, we had repurchased $37.4 million of our shares of common stock under the current stock repurchase program, excluding federal excise tax. The current stock repurchase program expires on December 31, 2025, and may be suspended or discontinued at any time.

Current wording

On December 2, 2024, we announced that our Board of Directors approved a new stock repurchase program authorizing management to repurchase, from time to time, up to an aggregate of $150.0 million of our shares of Class A common stock and/or Class B common stock. In connection with the adoption of the new stock repurchase plan, we terminated the prior stock repurchase plan, which was scheduled to expire on December 31, 2024. On May 29, 2025, the Company announced an increase of $50 million to its existing stock repurchase program authorizing the Company to repurchase, from time to time, up to an aggregate of $200 million of its shares of common stock. Repurchases, if any, will be made at times and in amounts as we deem appropriate and may be made through open market transactions at prevailing market prices, privately negotiated transactions or by other means in accordance with federal securities laws. The actual timing, number and value of repurchases under the stock repurchase program will be determined by management at its discretion and will depend on a number of factors, including market conditions, stock price and other factors, including those related to the ownership requirements of our dealership agreements with Peterbilt. As of June 30, 2025, we had repurchased $121.4 million of our shares of common stock under the current stock repurchase program, excluding federal excise tax. The current stock repurchase program expires on December 31, 2025, and may be suspended or discontinued at any time.

Previous wording

We anticipate funding the capital expenditures for the improvement and expansion of existing facilities and recurring expenses through our operating cash flows. We can fund the construction or purchase of new facilities through our operating cash flows or by financing.

Current wording

We anticipate funding the capital expenditures for the improvement and expansion of existing facilities and recurring expenses through our operating cash flows. We have the ability to fund the construction or purchase of new facilities through our operating cash flows or by financing.

Previous wording

Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. During the first quarter of 2025, operating activities resulted in net cash provided by operations of $153.5 million. Net cash provided by operating activities primarily consisted of $60.6 million in net income, as well as non-cash adjustments related to depreciation and amortization of $61.5 million, and stock-based compensation of $13.7 million. Cash used by operating activities included an aggregate of $16.6 million net change in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $75.4 million from the increase in accounts payable and $50.3 million from the decrease in accounts receivable, which was offset primarily by cash outflows of $77.0 million from the increase in inventories, $12.6 million from the decrease in customer deposits and $19.6 million from the decrease in accrued expenses. Most of our commercial vehicle inventory is financed through our floor plan credit agreements.

Current wording

Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. During the first six months of 2025, operating activities resulted in net cash provided by operations of $381.2 million. Net cash provided by operating activities primarily consisted of $133.6 million in net income, as well as non-cash adjustments related to depreciation and amortization of $124.5 million, stock-based compensation of $22.0 million and cash inflows for deferred income tax expense of $0.5 million. Cash provided by operating activities included an aggregate of $107.7 million net changes in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $52.9 million from the increase in accounts payable, $40.7 million from the decrease in accounts receivable and $10.2 million from the decrease in inventories, which were offset by cash outflows of $8.1 million from the increase in other assets, $2.6 million from the decrease in customer deposits and $8.6 million from the increase in accrued expenses. Most of our commercial vehicle inventory is financed through our floor plan credit agreements.

Previous wording

During the first quarter of 2024, operating activities resulted in net cash used in operations of $155.1 million. Net cash provided by operating activities primarily consisted of $71.5 million in net income, as well as non-cash adjustments related to depreciation and amortization of $56.8 million, and stock-based compensation of $14.1 million. Cash used by operating activities included an aggregate of $297.4 million net change in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $17.4 million from the increase in accounts payable, which was offset primarily by cash outflows of $215.5 million from the increase in inventories, $49.9 million from the increase in accounts receivable, $17.7 million from the decrease in customer deposits and $26.9 million from the increase in accrued expenses. Most of our commercial vehicle inventory is financed through our floor plan credit agreements.

Current wording

During the first six months of 2024, operating activities resulted in net cash provided by operations of $115.5 million. Net cash provided by operating activities primarily consisted of $150.3 million in net income, as well as non-cash adjustments related to depreciation and amortization of $114.3 million, stock-based compensation of $19.6 million and cash inflows for deferred income tax expense of $1.5 million. Cash provided by operating activities included an aggregate of $169.7 million net change in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $3.9 million from the increase in accounts payable, which were offset by cash outflows of $34.0 million from the increase in accounts receivable, $63.4 million from the increase in inventories, $7.6 million from the increase in other assets, $49.2 million from the decrease in customer deposits and $19.4 million from the increase in accrued expenses. Most of our commercial vehicle inventory is financed through our floor plan credit agreements.

Previous wording

During the first quarter of 2024, cash used in investing activities was $69.2 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $79.1 million during the first three months of 2025 and consisted primarily of purchases of machinery and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $52.1 million for purchases of rental and lease vehicles for our rental and leasing operations.

Current wording

During the first six months of 2025, cash used in investing activities was $232.2 million. Cash flows used in investing activities consisted primarily of cash used for the acquisition of property and equipment and the acquisition of new businesses. See Note 12 of the Notes to Consolidated Financial Statements for a detailed discussion of the business acquisitions. Acquisition of property and equipment totaled $222.3 million during the first six months of 2025 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $182.1 million for purchases of rental and lease vehicles for our rental and leasing operations.

Previous wording

During the first quarter of 2025, cash used in investing activities was $97.2 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $109.1 million during the first three months of 2025 and consisted primarily of purchases of machinery and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $94.0 million for purchases of rental and lease vehicles for our rental and leasing operations.

Current wording

During the first six months of 2024, cash used in investing activities was $161.1 million. Cash flows used in investing activities consisted primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $172.5 million during the first six months of 2024 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $140.1 million for purchases of rental and lease vehicles for our rental and leasing operations.

Previous wording

Cash flows from financing activities include borrowings and repayments of long-term debt and net proceeds of floor plan notes payable, non-trade.** During the first quarter of 2025, financing **activities resulted in net cash used in financing activities of $56.4 million, primarily related to $288.4 million from borrowings of long-term debt and $6.2 million from the issuance of shares related to equity compensation plans. These cash inflows were offset by cash outflows of $0.6 million from net draws on floor plan notes payable, non-trade, $293.2 million used for principal repayments of long-term debt and finance lease obligations, $29.6 million used for repurchases of common stock, $9.4 million for taxes paid related to net share settlement of equity awards and $14.4 million used for payment of cash dividends.

Current wording

Cash flows from financing activities include borrowings and repayments of long-term debt and net proceeds of floor plan notes payable, non-trade. During the first six months of 2025, financing** **activities resulted in net cash used by financing activities of $166.3 million, primarily related to cash inflows of $7.9 million from the issuance of shares related to equity compensation plans and borrowings of $644.4 million of long-term debt. These cash inflows were offset by $642.5 million used for principal repayments of long-term debt and capital lease obligations, $9.7 million for taxes related to net share settlement of equity awards, $117.1 million used for repurchases of common stock, $12.0 million used for net payments on floor plan notes payable and $28.9 million used for payment of cash dividends. The borrowings of long-term debt were primarily related to purchasing units for the rental and leasing operations.

Previous wording

During the first quarter of 2024, financing** **activities resulted in net cash provided by financing activities of $196.5 million, primarily related to $110.2 million from net draws on floor plan notes payable, non-trade, $713.8 million from borrowings of long-term debt and $9.4 million from the issuance of shares related to equity compensation plans. These cash inflows were offset by cash outflows of $607.9 million used for principal repayments of long-term debt and finance lease obligations, $5.6 million used for repurchases of common stock, $9.5 million for taxes paid related to net share settlement of equity awards and $13.9 million used for payment of cash dividends.

Current wording

During the first six months of 2024, financing** **activities resulted in net cash provided by financing activities of $29.2 million, primarily related to cash inflows of $11.5 million from the issuance of shares related to equity compensation plans, $88.4 million from net draws on floor plan notes payable, non-trade and borrowings of $1.2 billion of long-term debt. These cash inflows were offset by $1.2 billion used for principal repayments of long-term debt and capital lease obligations, $9.5 million for taxes related to net share settlement of equity awards, $9.5 million used for repurchases of common stock and $27.2 million used for payment of cash dividends. The borrowings of long-term debt were primarily related to purchasing units for the rental and leasing operations.

Previous wording

On September 14, 2021, we entered into a credit agreement with WF, with the lenders signatory thereto (“WF Lenders”) and WF as administrative agent (the “Well Fargo Credit Agreement”). Pursuant to the terms of the WF Credit Agreement (as amended), the WF Lenders have agreed to make up to $175.0 million of revolving credit loans for certain of our capital expenditures, including commercial vehicle purchases for our Idealease leasing and rental fleet, and general working capital needs. We expect to use the revolving credit loans available under the WF Credit Agreement primarily for the purpose of purchasing commercial vehicles for our Idealease lease and rental fleet. We may borrow, repay and reborrow amounts pursuant to the WF Credit Agreement from time to time until the maturity date. Borrowings under the WF Credit Agreement bear interest per annum, payable on each interest payment date, as defined in the WF Credit Agreement, at (A) the daily Secured Overnight Financing Rate (“SOFR”) plus (i) 1.25% or (ii) 1.5%, depending on our consolidated leverage ratio or (B) on or after the SOFR transition date, SOFR plus (i) 1.25% or (ii) 1.5%, depending on our consolidated leverage ratio. The WF Credit Agreement expires on September 14, 2026, although, upon the occurrence and during the continuance of an event of default, the agent has the right to, or upon the request of the required lenders must, terminate the commitments and declare all outstanding principal and interest due and payable. We may terminate the commitments at any time. On March 31, 2025, we had approximately $142.4 million outstanding under the WF Credit Agreement.

Current wording

On September 14, 2021, we entered into a credit agreement with WF, with the lenders signatory thereto (“WF Lenders”) and WF as administrative agent (the “Well Fargo Credit Agreement”). Pursuant to the terms of the WF Credit Agreement (as amended), the WF Lenders have agreed to make up to $175.0 million of revolving credit loans for certain of our capital expenditures, including commercial vehicle purchases for our Idealease leasing and rental fleet, and general working capital needs. We expect to use the revolving credit loans available under the WF Credit Agreement primarily for the purpose of purchasing commercial vehicles for our Idealease lease and rental fleet. We may borrow, repay and reborrow amounts pursuant to the WF Credit Agreement from time to time until the maturity date. Borrowings under the WF Credit Agreement bear interest per annum, payable on each interest payment date, as defined in the WF Credit Agreement, at (A) the daily Secured Overnight Financing Rate (“SOFR”) plus (i) 1.25% or (ii) 1.5%, depending on our consolidated leverage ratio or (B) on or after the SOFR transition date, SOFR plus (i) 1.25% or (ii) 1.5%, depending on our consolidated leverage ratio. The WF Credit Agreement expires on September 14, 2026, although, upon the occurrence and during the continuance of an event of default, the agent has the right to, or upon the request of the required lenders must, terminate the commitments and declare all outstanding principal and interest due and payable. We may terminate the commitments at any time. On June 30, 2025, we had approximately $137.3 million outstanding under the WF Credit Agreement.

Previous wording

On May 31, 2022, RTC Canada entered into that certain BMO Revolving Lease and Rental Credit Agreement (“the RTC Canada Revolving Credit Agreement”) with Bank of Montreal (“BMO”). Pursuant to the terms of the RTC Canada Revolving Credit Agreement (as amended), BMO agreed to make up to $120.0 million CAD of revolving credit loans to finance certain of RTC Canada’s capital expenditures, including commercial vehicle purchases and other equipment to be leased or rented through RTC Canada’s Idealease franchise, with an additional $20.0 million CAD available upon the request of RTC Canada and consent of BMO. Borrowings under the RTC Canada Revolving Credit Agreement bear interest per annum payable monthly at Canadian Overnight Repo Rate Average (“CORRA”), plus 1.72%. The RTC Canada Revolving Credit Agreement expires on September 14, 2026. On March 31, 2025, we had approximately $59.4 million CAD outstanding under the RTC Canada Revolving Credit Agreement.

Current wording

On May 31, 2022, RTC Canada entered into that certain BMO Revolving Lease and Rental Credit Agreement (the “RTC Canada Revolving Credit Agreement”) with Bank of Montreal (“BMO”). Pursuant to the terms of the RTC Canada Revolving Credit Agreement (as amended), BMO agreed to make up to $120.0 million CAD of revolving credit loans to finance certain of RTC Canada’s capital expenditures, including commercial vehicle purchases and other equipment to be leased or rented through RTC Canada’s Idealease franchise, with an additional $20.0 million CAD available upon the request of RTC Canada and consent of BMO. Borrowings under the RTC Canada Revolving Credit Agreement bear interest per annum payable monthly at Canadian Overnight Repo Rate Average (“CORRA”), plus 1.72%. The RTC Canada Revolving Credit Agreement expires on September 14, 2026. On June 30, 2025, we had approximately $118.3 million CAD outstanding under the RTC Canada Revolving Credit Agreement.

Previous wording

On September 14, 2021, we entered into the Fifth Amended and Restate Credit Agreement (“the BMO Floor Plan Credit Agreement”) (as amended) with BMO Bank and the lenders signatory thereto. This agreement previously had an aggregate loan commitment of $1.0 billion, which we utilized to finance all of our new and used commercial vehicle inventory in the United States until we entered into the PFC Floor Plan Credit Agreement. On December 12, 2024, we entered into an amendment of the BMO Floor Plan Credit Agreement. Pursuant to the terms of the amendment, the aggregate loan commitment was reduced from $1.0 billion to $675.0 million and the definition of “Inventory” was amended to remove trucks, tractors and chassis manufactured by Peterbilt. We utilize the BMO Floor Plan Credit Agreement to finance all of our new commercial vehicle inventory, except for equipment manufactured by Peterbilt, and all of our used commercial vehicle inventory and for working capital purposes. Borrowings under the BMO Floor Plan Credit Agreement bear interest per annum, payable monthly, at (A) the greater of (i) zero and (ii) Term SOFR (as defined in the agreement), plus (B) 1.20%. Borrowings under the BMO Floor Plan Credit Agreement for the purchase of used inventory are limited to $150.0 million and loans for working capital purposes are limited to $200.0 million. The BMO Floor Plan Credit Agreement expires on December 31, 2029, although BMO Bank has the right to terminate at any time upon 360 days written notice and we may terminate at any time, subject to specified limited exceptions. On March 31, 2025, we had approximately $368.1 million outstanding under the BMO Floor Plan Credit Agreement. We utilize our excess cash on hand to pay down our outstanding borrowings under the BMO Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to our gross interest expense under the BMO Floor Plan Credit Agreement.

Current wording

On September 14, 2021, we entered into the Fifth Amended and Restate Credit Agreement (the “BMO Floor Plan Credit Agreement”) (as amended) with BMO Bank and the lenders signatory thereto. This agreement previously had an aggregate loan commitment of $1.0 billion, which we utilized to finance all of our new and used commercial vehicle inventory in the United States until we entered into the PFC Floor Plan Credit Agreement. On December 12, 2024, we entered into an amendment of the BMO Floor Plan Credit Agreement. Pursuant to the terms of the amendment, the aggregate loan commitment was reduced from $1.0 billion to $675.0 million and the definition of “Inventory” was amended to remove trucks, tractors and chassis manufactured by Peterbilt. We utilize the BMO Floor Plan Credit Agreement to finance all of our new commercial vehicle inventory, except for equipment manufactured by Peterbilt, and all of our used commercial vehicle inventory and for working capital purposes. Borrowings under the BMO Floor Plan Credit Agreement bear interest per annum, payable monthly, at (A) the greater of (i) zero and (ii) Term SOFR (as defined in the agreement), plus (B) 1.20%. Borrowings under the BMO Floor Plan Credit Agreement for the purchase of used inventory are limited to $150.0 million and loans for working capital purposes are limited to $200.0 million. The BMO Floor Plan Credit Agreement expires on December 31, 2029, although BMO Bank has the right to terminate at any time upon 360 days written notice and we may terminate at any time, subject to specified limited exceptions. On June 30, 2025, we had approximately $359.0 million outstanding under the BMO Floor Plan Credit Agreement. We utilize our excess cash on hand to pay down our outstanding borrowings under the BMO Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to our gross interest expense under the BMO Floor Plan Credit Agreement.

Previous wording

On July 15, 2022, RTC Canada entered into that certain Amended and Restated BMO Wholesale Financing and Security Agreement (“the RTC Canada Floor Plan Credit Agreement”) with BMO. Pursuant to the terms of the RTC Canada Floor Plan Credit Agreement (as amended), BMO agreed to make up to $116.7 million CAD of revolving credit loans to finance RTC Canada’s purchase of new and used vehicle inventory. Loans to purchase used vehicle inventory are limited to twenty percent (20%) of the credit limit available at such time. RTC Canada may borrow, repay and reborrow loans from time to time until the maturity date, provided, however, that the outstanding principal amount on any date shall not exceed the credit limits set forth above with respect to new and used vehicles. Advances required to be made in CAD dollars under the RTC Canada Floor Plan Credit Agreement bear interest per annum, payable monthly, at CORRA, plus 1.27%. Advances required to be made in USD dollars bear interest per annum, payable monthly, at SOFR, plus 1.20%. The RTC Canada Floor Plan Credit Agreement expires on September 14, 2026. On March 31, 2025, we had approximately $85.0 million CAD outstanding under the RTC Canada Floor Plan Credit Agreement. We utilize our excess cash on hand to pay down our outstanding borrowings under the RTC Canada Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to our gross interest expense under the RTC Canada Floor Plan Credit Agreement.

Current wording

On July 15, 2022, RTC Canada entered into that certain Amended and Restated BMO Wholesale Financing and Security Agreement (the “RTC Canada Floor Plan Credit Agreement”) with BMO. Pursuant to the terms of the RTC Canada Floor Plan Credit Agreement (as amended), BMO originally agreed to make up to $116.7 million CAD of revolving credit loans to finance RTC Canada’s purchase of new and used vehicle inventory. On June 13, 2025, the RTC Canada Floor Plan Credit Agreement was amended to increase the loan commitment to $171.7 million CAD. Loans to purchase used vehicle inventory are limited to twenty percent (20%) of the credit limit available at such time. RTC Canada may borrow, repay and reborrow loans from time to time until the maturity date, provided, however, that the outstanding principal amount on any date shall not exceed the credit limits set forth above with respect to new and used vehicles. Advances required to be made in CAD dollars under the RTC Canada Floor Plan Credit Agreement bear interest per annum, payable monthly, at CORRA, plus 1.27%. Advances required to be made in USD dollars bear interest per annum, payable monthly, at SOFR, plus 1.20%. The RTC Canada Floor Plan Credit Agreement expires on September 14, 2026. On June 30, 2025, we had approximately $113.1 million CAD outstanding under the RTC Canada Floor Plan Credit Agreement. We utilize our excess cash on hand to pay down our outstanding borrowings under the RTC Canada Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to our gross interest expense under the RTC Canada Floor Plan Credit Agreement.

Previous wording

On March 31, 2025, our backlog of commercial vehicle orders was approximately $1,401.3 million, compared to a backlog of commercial vehicle orders of approximately $2,047.1 million on March 31, 2024. Given the current uncertainty regarding tariffs, we believe that certain commercial vehicle orders currently reflected in our backlog could be cancelled in the event that such tariffs are enacted and significantly increase the aggregate price that our customers will have to pay for such vehicles. Our backlog is determined quarterly by multiplying the number of new commercial vehicles for each type of commercial vehicle ordered by a customer at our Rush Truck Centers by the recent average selling price for that type of commercial vehicle. We include only confirmed orders in our backlog. However, such orders are subject to cancellation. In the event of order cancellation, we have no contractual right to the total revenues reflected in our backlog. The delivery time for a custom-ordered commercial vehicle varies depending on the truck specifications and demand for the model ordered. We sell most of our new heavy-duty commercial vehicles by customer special order, and we sell the majority of our medium- and light-duty commercial vehicles out of inventory. Orders from several of our major fleet customers are included in our backlog as of March 31, 2025, and we expect to fill most of our backlog orders during 2025, assuming that the manufacturers we represent can meet their current production schedule.

Current wording

On June 30, 2025, our backlog of commercial vehicle orders was approximately $967.0 million, as compared to a backlog of commercial vehicle orders of approximately $1,812.1 million on June 30, 2024. The decrease in our backlog primarily reflects the difficult industry conditions caused by the ongoing freight recession and general economic uncertainty, in addition to uncertainty with respect to U.S. trade policy and engine emissions regulations, which are negatively impacting demand for new commercial vehicles. Our backlog is determined quarterly by multiplying the number of new commercial vehicles for each particular type of commercial vehicle ordered by a customer at our Rush Truck Centers by the recent average selling price for that type of commercial vehicle. We include only confirmed orders in our backlog. However, such orders are subject to cancellation. In the event of order cancellation, we have no contractual right to the total revenues reflected in our backlog. The delivery time for a custom-ordered commercial vehicle varies depending on the truck specifications and demand for the model ordered. We sell the majority of our new heavy-duty commercial vehicles by customer special order and we sell the majority of our medium- and light-duty commercial vehicles out of inventory. Orders from several of our major fleet customers are included in our backlog as of June 30, 2025, and we expect to fill most of our backlog orders during 2025.

Previous wording

Our 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 we must comply. Our business also involves the operation and use of aboveground and underground storage tanks. These storage tanks are subject to periodic testing, containment, upgrading and removal under RCRA and comparable state statutes. Furthermore, investigation or remediation may be necessary in the event of leaks or other discharges from current or former underground or aboveground storage tanks.

Current wording

Our 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 and provincial statutes. Pursuant to these laws, federal state and provincial environmental agencies have established approved methods for handling, storage, treatment, transportation, and disposal of regulated substances with which we must comply. Our business also involves the operation and use of aboveground and underground storage tanks. These storage tanks are subject to periodic testing, containment, upgrading and removal under RCRA and comparable state statutes. Furthermore, investigation or remediation may be necessary in the event of leaks or other discharges from current or former underground or aboveground storage tanks.

Previous wording

We are also subject to federal and state laws and regulations governing the commercial vehicle engine emissions. The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration on behalf of the U.S. Department of Transportation, have issued rules associated with reducing greenhouse gas (“GHG”) and Nitrogen Oxide (“NOx”) emissions and improving the fuel efficiency of medium and heavy-duty trucks and buses. One of these rules, referred to herein as the “EPA 2027 Low NOx” rule, will require commercial vehicle engines to emit significantly less NOx than such engines do today, beginning in model year 2027. The EPA 2027 Low NOx rule also would increase the useful life of each vehicle and would require that manufacturers extend the warranty term of each vehicle to ensure that commercial vehicles remain compliant with the EPA’s emission standards as such vehicles age. In March 2024, the EPA issued an additional rule associated with reducing GHG emissions from heavy-duty trucks and buses for model years 2027 through 2032 (the “GHG-3” rule). While the GHG-3 rule claims to be technology neutral, in order to comply with the rule, commercial vehicle engine manufacturers would be required to manufacture an increasing percentage of “zero-emission” vehicles over time, which would likely reduce the number of diesel internal combustion engines (“ICE”) vehicles that could be manufactured over that time period. Similarly, the California Air Resources Board (“CARB”) has adopted rules and regulations that are intended to reduce NOx emissions (the “HD Omnibus” rule), phase out the sale of ICE commercial vehicles over time by requiring a certain percentage of each manufacturer’s commercial vehicles sold within the state to be “zero-emission vehicles” (the “Advanced Clean Trucks” rule) and require fleets to purchase a certain number of “zero-emission vehicles” (the “Advanced Clean Fleet” rule). The EPA granted waivers to CARB with respect to the HD Omnibus and Advanced Clean Truck rules, each of which became effective in January 2024. CARB withdrew its request for a waiver from the EPA with respect to the Advanced Clean Fleet rule in January 2025, and thus, it is unlikely that this rule will become effective in the near future. In addition, the EPA asked Congress to review the previously granted waivers that CARB received with respect to the HD Omnibus and Advanced Clean Truck rules, and the U.S. House of Representatives recently passed resolutions to rescind such waivers pursuant to the Congressional Review Act. The U.S. Senate must now vote on the resolutions. However, if the U.S. Senate votes to approve the resolutions, it is expected that there will be multiple legal challenges regarding Congress’s authority to revoke the waivers. In addition, in March 2025, the EPA announced that it was reconsidering various previously approved engine emissions regulations, including the EPA 2027 Low NOx rule and the GHG-3 rule. With respect to the…

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Current wording

We are also subject to federal and state laws and regulations governing commercial vehicle engine emissions. The Environmental Protection Agency (“EPA”) and the National Highway Traffic Safety Administration on behalf of the U.S. Department of Transportation, previously issued rules associated with reducing greenhouse gas (“GHG”) and Nitrogen Oxide (“NOx”) emissions and improving the fuel efficiency of medium and heavy-duty trucks and buses. One of these rules, referred to herein as the “EPA 2027 Low NOx” rule, requires commercial vehicle engines to emit significantly less NOx than most such engines do today, beginning in model year 2027. In March 2024, the EPA issued an additional rule associated with reducing GHG emissions from heavy-duty trucks and buses for model years 2027 through 2032 (the “GHG-3” rule). While the GHG-3 rule claims to be technology neutral, in order to comply with the rule, commercial vehicle engine manufacturers would be required to manufacture an increasing percentage of “zero-emission” vehicles over time, which would likely reduce the number of diesel internal combustion engines (“ICE”) vehicles that could be manufactured over that time period. Similarly, the California Air Resources Board (“CARB”) has adopted rules and regulations that are intended to reduce NOx emissions (the “HD Omnibus” rule), phase out the sale of ICE commercial vehicles over time by requiring a certain percentage of each manufacturer’s commercial vehicles sold within the state to be “zero-emission vehicles” (the “Advanced Clean Trucks” rule) and require fleets to purchase a certain number of “zero-emission vehicles” (the “Advanced Clean Fleet” rule).