RUSH ENTERPRISES INC \TX\

Previous wording

We are a full-service, integrated retailer of commercial vehicles and related services. We operate one segment - the Truck Segment. The Truck Segment operates a network of commercial vehicle dealerships primarily under the name “Rush Truck Centers.” Most Rush Truck Centers are a franchised dealer for commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, Dennis Eagle, Blue Arc, Battle Motors, IC Bus or Blue Bird. Through our strategically located network of Rush Truck Centers, we provide one-stop service for the needs of our commercial vehicle customers. We offer an integrated approach to meeting customer needs by providing service, parts and collision repair (collectively, “Aftermarket Products and Services”) in addition to new and used commercial vehicle sales, leasing, insurance and financial services, vehicle upfitting, CNG fuel systems through our joint venture with Cummins and vehicle telematics products.

Current wording

We are a full-service, integrated retailer of commercial vehicles and related services. We operate one segment - the Truck Segment. The Truck Segment operates a network of commercial vehicle dealerships primarily under the name “Rush Truck Centers.” Most Rush Truck Centers are a franchised dealer for commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, Blue Arc, Battle Motors, IC Bus or Blue Bird. Through our strategically located network of Rush Truck Centers, we provide one-stop service for the needs of our commercial vehicle customers. We offer an integrated approach to meeting customer needs by providing service, parts and collision repairs in addition to new and used commercial vehicle sales, leasing, insurance and financial services, vehicle upfitting, CNG fuel systems through our joint venture with Cummins and vehicle telematics products.

Previous wording

Our Aftermarket Products and Services include a wide range of capabilities and products such as providing parts, service and collision repairs at certain of our Rush Truck Centers, a fleet of mobile service units, technicians who work in our customers’ facilities, a proprietary line of commercial vehicle parts and accessories, vehicle upfitting, a broad range of diagnostic and analysis capabilities, a suite of telematics products and assembly services for specialized bodies and equipment. Aftermarket Products and Services accounted for 60.4% of our total gross profits in 2024.

Current wording

Our Aftermarket Products and Services include a wide range of capabilities and products such as providing parts, service and collision repairs at certain of our Rush Truck Centers, a fleet of mobile service units, technicians who work in our customers’ facilities, a proprietary line of commercial vehicle parts and accessories, vehicle upfitting, a broad range of diagnostic and analysis capabilities, a suite of telematics products and assembly services for specialized bodies and equipment. Aftermarket Products and Services accounted for 63.7% of our total gross profits in 2025.

Previous wording

According to A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and forecasting service provider, new U. S. Class 8 truck retail sales are estimated to total 252,000 truck units in 2025, a 1.9% increase compared to 247,337 units sold in 2024. We expect our U.S. market share of new Class 8 truck sales to range between 5.8% and 6.3% in 2025. This market share percentage would result in the sale of 14,500 to 16,000 new Class 8 trucks in 2025. We expect to sell approximately 500 additional new Class 8 trucks in Canada in 2025.

Current wording

According to A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and forecasting service provider, new U. S. Class 8 truck retail sales are estimated to total 211,300 units in 2026, a 0.6% decrease compared to 212,707 units sold in 2025. We expect our U.S. market share of new Class 8 truck sales to range between 5.8% and 6.3% in 2026. This market share percentage would result in the sale of 12,200 to 13,300 new Class 8 trucks in 2026. We expect to sell approximately 500 additional new Class 8 trucks in Canada in 2026.

Previous wording

According to A.C.T. Research, new U. S. Class 4 through 7 commercial vehicle retail sales are estimated to total 266,300 units in 2025, a 5.7% increase compared to 251,895 units sold in 2024. We expect our U.S. market share of new Class 4 through 7 commercial vehicle sales to range between 5.4% and 5.8% in 2025. This market share percentage would result in the sale of 14,500 to 15,500 new Class 4 through 7 commercial vehicles in 2025. We expect to sell approximately 550 additional new Class 5 through 7 commercial vehicles in Canada in 2025.

Current wording

According to A.C.T. Research, new U. S. Class 4 through 7 commercial vehicle retail sales are estimated to total 218,225 units in 2026, a 0.3% increase compared to 217,412 units sold in 2025. 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 2026. This market share percentage would result in the sale of 12,600 to 13,700 new Class 4 through 7 commercial vehicles in 2026. We expect to sell approximately 900 additional new Class 5 through 7 commercial vehicles in Canada in 2026.

Previous wording

We expect lease and rental revenue to increase approximately 6.0% during 2025, compared to 2024.

Current wording

We expect lease and rental revenue to increase approximately 3.0% during 2026, compared to 2025.

Previous wording

In 2025, we expect demand for Aftermarket Products and Services to remain relatively weak through the first few months of 2025 due to the slower than expected freight recovery and continued low fleet utilization from our over-the-road customers. However, we are optimistic that demand will pick up as the year progresses, and we believe that our continued focus on growing our national account customer base and our focus on other aftermarket strategic initiatives will result in aftermarket revenue growth this year.

Current wording

In 2026, we expect demand for Aftermarket Products and Services to remain relatively weak through the first quarter. However, we are optimistic that freight markets will improve in 2026 and that demand will pick up as the year progresses. We believe that an improved freight market, along with our continued focus on growing our national account customer base and our focus on other aftermarket strategic initiatives, will result in aftermarket revenue growth this year.

Previous wording

*Absorption Ratio.*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. 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 132.2% absorption ratio for the year ended December 31, 2024, and 135.3% absorption ratio for the year ended December 31, 2023.

Current wording

*Absorption Ratio.*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. 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 130.7% absorption ratio for the year ended December 31, 2025, and 132.2% absorption ratio for the year ended December 31, 2024.

Previous wording

Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific identification of new and used commercial vehicle inventory. An allowance is provided when it is anticipated that cost will exceed net realizable value.

Current wording

Inventories are stated at the lower of cost or net realizable value. Cost is determined by specific identification of new and used commercial vehicle inventory. The estimated net realizable value of new and used commercial inventory is determined based on an analysis of historical sales trends, the impact of market trends and economic conditions, and forecasts of future demand. Our historical estimates of these costs and the related provisions have not differed materially from actual results. However, unforeseen adverse future economic and market conditions could result in our actual results differing materially from our estimates.

Previous wording

The U.S. retail heavy-duty truck market is affected by a number of factors, including general economic conditions, fuel prices, other methods of transportation, environmental and other government regulations, interest rate fluctuations and customer business cycles. According to data published by A.C.T. Research, total U.S. retail sales of new Class 8 trucks in the last ten years have ranged from a low of approximately 195,687 in 2020 to a high of approximately 281,440 in 2019. Class 8 trucks are defined by the American Automobile Association as trucks with a minimum gross vehicle weight rating above 33,000 pounds.

Current wording

Many of our Rush Truck Centers sell heavy-duty trucks manufactured by Peterbilt, International, Hino or Battle Motors, and provide parts and service for heavy-duty trucks. The U.S. retail heavy-duty truck market is affected by a number of factors, including general economic conditions, fuel prices, other methods of transportation, environmental and other government regulations, interest rate fluctuations and customer business cycles. According to data published by A.C.T. Research, total U.S. retail sales of new Class 8 trucks in the last ten years have ranged from a low of approximately 195,687 in 2020 to a high of approximately 281,440 in 2019. Class 8 trucks are defined by the American Automobile Association as trucks with a minimum gross vehicle weight rating above 33,000 pounds.

Previous wording

A.C.T. Research currently estimates 252,000 new Class 8 trucks will be sold in the United States in 2025, compared to approximately 247,337 new Class 8 trucks sold in 2024. A.C.T. Research currently forecasts sales of new Class 8 trucks in the U.S. to be approximately 291,100 in 2026.

Current wording

A.C.T. Research currently estimates 211,300 new Class 8 commercial vehicles will be sold in the United States in 2026, compared to approximately 212,707 new Class 8 trucks sold in 2025. A.C.T. Research currently forecasts sales of new Class 8 trucks in the U.S. to be approximately 205,900 in 2027.

Previous wording

A.C.T. Research currently forecasts sales of new Class 4 through 7 commercial vehicles in the U.S. to be approximately 266,300 units in 2025, compared to 251,895 units in 2024.

Current wording

A.C.T. Research currently estimates 218,225 new Class 4 through 7 commercial vehicles will be sold in the United States in 2026, compared to approximately 217,412 new Class 4 through 7 trucks sold in 2025. A.C.T. Research currently forecasts sales of new Class 4 through 7 trucks in the U.S. to be approximately 240,700 in 2027.

Previous wording

Our Aftermarket Products and Services revenues decreased $46.1 million, or 1.8%, in 2024, compared to 2023. The decrease in Aftermarket Parts and Services revenues was primarily related to the ongoing freight recession.

Current wording

Our Aftermarket Products and Services revenues increased $7.2 million, or 0.3%, in 2025, compared to 2024. The slight increase in Aftermarket Parts and Services revenues was primarily related to increased parts pricing.

Previous wording

Our revenues from sales of new and used commercial vehicles decreased $69.1 million, or 1.4%, in 2024, compared to 2023. The decrease in new and used commercial vehicle revenues was primarily a result of weak demand for Class 8 trucks caused by the ongoing freight recession and high interest rates, which was partially offset by strong demand for Class 4 through 7 medium-duty commercial vehicles.

Current wording

Our revenues from sales of new and used commercial vehicles decreased $385.3 million, or 7.9%, in 2025, compared to 2024. The decrease in new and used commercial vehicle revenues was primarily a result of weak demand for Class 8 trucks caused by the freight recession and uncertainty with respect to U.S. trade policy and engine emissions regulations.

Previous wording

We sold 15,465 new Class 8 trucks in 2024, a 11.4% decrease compared to 17,457 new heavy-duty trucks in 2023. Our share of the new U.S. Class 8 commercial vehicle sales market decreased to approximately 6.1% in 2024, from 6.2% in 2023. Our share of the new Canada Class 8 truck market was approximately 1.7% in 2024. The decrease in new commercial vehicle revenues was primarily a result of the ongoing freight recession and high interest rates.

Current wording

We sold 12,770 new Class 8 trucks in 2025, a 17.4% decrease compared to 15,465 new heavy-duty trucks in 2024. Our share of the new U.S. Class 8 commercial vehicle sales market decreased to approximately 5.8% in 2025, from 6.1% in 2024. Our share of the new Canada Class 8 truck market was approximately 1.4% in 2025. The decrease in new commercial vehicle revenues was primarily a result of the freight recession and uncertainty with respect to U.S. trade policy and engine emissions regulations.

Previous wording

We sold 13,935 new medium-duty commercial vehicles, including 1,230 buses, in 2024, a 5.1% increase compared to 13,264 new medium-duty commercial vehicles, including 1,564 buses, in 2023. In 2024, we achieved a 5.3% share of the Class 4 through 7 commercial vehicle market in the U.S., compared to 5.1% in 2023. Our share of the Canada medium-duty commercial vehicles market was approximately 3.1% in 2024. The increase in our Class 4 through 7 commercial vehicle sales in 2024 was primarily a result of strong demand and increased production of commercial vehicles from the manufacturers we represent.

Current wording

We sold 13,278 new medium-duty commercial vehicles, including 1,681 buses, in 2025, a 4.7% decrease compared to 13,935 new medium-duty commercial vehicles, including 1,230 buses, in 2024. The decrease in our Class 4 through 7 commercial vehicle sales in 2025 was primarily a result of challenging market conditions and regulatory uncertainty. In 2025, we achieved a 5.7% share of the Class 4 through 7 commercial vehicle market in the U.S., compared to 5.3% in 2024. Our share of the Canada medium-duty commercial vehicles market was approximately 6.3% in 2025.

Previous wording

We sold 2,105 new light-duty vehicles in 2024, a 13.9% increase compared to 1,848 new light-duty vehicles in 2023.

Current wording

We sold 3,007 new light-duty vehicles in 2025, a 42.9% increase compared to 2,105 new light-duty vehicles in 2024.

Previous wording

Commercial vehicle lease and rental revenues increased $1.2 million, or 0.3%, in 2024, compared to 2023. This increase in commercial vehicle lease and rental revenues was primarily a result of steady demand for lease commercial vehicles, which was partially offset by decreased rental utilization.

Current wording

Commercial vehicle lease and rental revenues increased $14.6 million, or 4.1%, in 2025, compared to 2024. This increase in commercial vehicle lease and rental revenues was primarily a result of growth in our full-service lease portfolio, supported by strong customer demand and a modernized fleet, which was partially offset by decreased rental utilization.

Previous wording

Finance and insurance revenues decreased $2.3 million, or 9.4%, in 2024, compared to 2023. This decrease is primarily due to the mix of purchasers of commercial vehicles. We are more likely provide financing to owner-operators and smaller fleets, which comprised a smaller percentage of commercial vehicle sales during 2024. Finance and insurance revenues have limited direct costs and, therefore, contribute a disproportionate share of our operating profits.

Current wording

Finance and insurance revenues decreased $0.8 million, or 3.9%, in 2025, compared to 2024. This decrease was primarily due to decreased new and used vehicle sales. Finance and insurance revenues have limited direct costs and, therefore, contribute a disproportionate share of our operating profits.

Previous wording

Other revenues decreased $3.9 million, or 14.5% in 2024, compared to 2023. Other revenues consist primarily of the gains related to the disposition of our lease and rental fleet and document fees related to commercial vehicle sales.

Current wording

Other revenues decreased $6.2 million, or 27.0% in 2025, compared to 2024. Other revenues consist primarily of the gains related to the disposition of our lease and rental fleet and document fees related to commercial vehicle sales.

Previous wording

Gross profit decreased $61.7 million, or 3.9%, compared to 2023. Gross profit as a percentage of sales decreased to 19.6% in 2024, from 20.1% in 2023. This decrease in gross profit as a percentage of sales was a result of a change in our customer sales mix and pricing pressure due to the ongoing freight recession. Commercial vehicle sales, a lower margin revenue item, was 62.6% of total revenues in both 2024 and 2023. Aftermarket Products and Services revenues, a higher margin revenue item, decreased slightly as a percentage of total revenues to 32.2% in 2024, from 32.3% in 2023.

Current wording

Gross profit decreased $70.8 million, or 4.6%, compared to 2024. Gross profit as a percentage of sales remained flat at 19.6% in 2025 and 2024.

Previous wording

Gross margins from our Aftermarket Products and Services operations decreased to 36.7% in 2024, from 37.2% in 2023. Gross profit for Aftermarket Products and Services decreased to $924.5 million in 2024, from $952.8 million in 2023. This decrease is primarily related to the ongoing freight recession. Historically, parts operations’ gross margins range from 28% to 30% and service and collision center operations range from 66% to 68%. Gross profits from parts sales represented 58.0% of total gross profit for Aftermarket Products and Services operations in 2024 and 59.5% in 2023. Service and collision center operations represented 42.0% of total gross profit for Aftermarket Products and Services operations in 2024 and 40.5% 2023. We expect blended gross margins on Aftermarket Products and Services operations to range from 35.0% to 38.0% in 2025.

Current wording

Gross margins from our Aftermarket Products and Services operations increased to 36.9% in 2025, from 36.7% in 2024. Gross profit for Aftermarket Products and Services increased to $930.5 million in 2025, from $924.5 million in 2024. This increase was primarily related to increased parts pricing and rebates received from manufacturers. Historically, parts operations’ gross margins range from 28% to 30% and service and collision center operations range from 66% to 68%. Gross profits from parts sales represented 58.8% of total gross profit for Aftermarket Products and Services operations in 2025 and 59.5% in 2024. Service and collision center operations represented 41.2% of total gross profit for Aftermarket Products and Services operations in 2025 and 40.5% 2024. We expect blended gross margins on Aftermarket Products and Services operations to range from 36.0% to 38.0% in 2026.

Previous wording

Gross margins on new Class 8 truck sales decreased to 8.9% in 2024, from 9.7% in 2023. 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 truck sales decreased to 8.6% in 2025, from 9.7% in 2024. The decrease in gross margins was primarily due to the freight recession and a more competitive sales environment. In 2026, we expect overall gross margins from new heavy-duty truck sales of approximately 8.5% to 9.5%.

Previous wording

Gross margins on new Class 4 through 7 commercial vehicle sales increased to 9.2% in 2024, from 9.0% in 2023. This increase was primarily due to the mix of purchasers during 2024. For 2025, we expect overall gross margins from new medium-duty commercial vehicle sales of approximately 8.0% to 10.0%, 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 7.8% in 2025, from 9.7% in 2024. This decrease was primarily due to challenging industry conditions and a shift in the mix of customers during 2025. For 2026, we expect overall gross margins from new medium-duty commercial vehicle sales of approximately 7.0% to 9.0%, but this will largely depend upon the mix of purchasers and types of vehicles sold.

Previous wording

Gross margins on used commercial vehicle sales increased to 18.9% in 2024, from 12.4% in 2023. This increase was primarily due to the successful execution of our used commercial vehicle sales strategy. We expect margins on used commercial vehicles to range between 13.0% and 18.0% in 2025.

Current wording

Gross margins on used commercial vehicle sales decreased to 13.6% in 2025, from 18.9% in 2024. This decrease was primarily due to a shift in customer mix between wholesale and retail. We expect margins on used commercial vehicles to range between 11.0% and 16.0% in 2026.

Previous wording

Gross margins from commercial vehicle lease and rental sales decreased to 28.0% in 2024, from 29.9% in 2023. This decrease is primarily related to a decrease in rental utilization rates. 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 commercial vehicle lease and rental sales decreased to 27.8% in 2025, from 28.0% in 2024. This decrease is primarily related to a decrease in rental utilization rates. We expect gross margins from lease and rental sales of approximately 27.0% to 29.0% during 2026.

Previous wording

SG&A expenses decreased $26.1 million, or 2.6%, in 2024, compared to 2023. This decrease primarily resulted from company initiatives to reduce operating expenses. SG&A expenses as a percentage of total revenues decreased to 12.8% in 2024, from 12.9% in 2023. Annual SG&A expenses as a percentage of total revenues have ranged from 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 11.5% to 13.5%. For 2025, we expect the selling portion of SG&A expenses to be 25.0% to 30.0% of new and used commercial vehicle gross profit.

Current wording

SG&A expenses increased $0.6 million, or 0.1%, in 2025, compared to 2024. SG&A expenses as a percentage of total revenues increased to 13.4% in 2025, from 12.8% in 2024. Annual SG&A expenses as a percentage of total revenues have ranged from 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 2026, we expect SG&A expenses as a percentage of total revenues to range from 12.5% to 13.5%. For 2026, we expect the selling portion of SG&A expenses to be 25.0% to 30.0% of new and used commercial vehicle gross profit.

Previous wording

Depreciation and amortization expense increased $8.7 million, or 14.6%, in 2024, compared to 2023.

Current wording

Depreciation and amortization expense increased $2.6 million, or 3.8%, in 2025, compared to 2024.

Previous wording

Net interest expense increased $17.9 million, or 33.9%, in 2024, compared to 2023. This increase in interest expense is a result of the increase in inventory levels and rising interest rates on our variable rate debt compared to 2023. We expect net interest expense in 2025 to decrease compared to 2024 due to decreased commercial vehicle inventory levels and lower interest rates.

Current wording

Net interest expense decreased $24.6 million, or 34.7%, in 2025, compared to 2024. This decrease in interest expense was primarily the result of decreased inventory levels and lower interest rates on our variable rate debt compared to 2024. We expect net interest expense to decrease in 2026 compared to 2025 due to decreased commercial vehicle inventory levels, lower interest rates and how we choose to finance our vehicle inventory.

Previous wording

Income before income taxes decreased $64.2 million, or 13.9%, in 2024, compared to 2023, as a result of the factors described above.

Current wording

Income before income taxes decreased $52.0 million, or 13.1%, in 2025, compared to 2024, as a result of the factors described above.

Previous wording

Income tax expense decreased $21.2 million, or 18.6%, in 2024, compared to 2023, as a result of the factors described above. We provided for taxes at a 23.3% effective rate in 2024 and 24.7% in 2023. We expect our effective tax rate to be approximately 23.0% to 25.0% of pretax income in 2025.

Current wording

Income tax expense decreased $13.0 million, or 14.0%, in 2025, compared to 2024, as a result of the factors described above. We provided for taxes at a 23.1% effective rate in 2025 and 23.3% in 2024. We expect our effective tax rate to be approximately 23.0% to 24.0% of pretax income in 2026.

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 and borrowings under our floor plan arrangements and other credit agreements. As of December 31, 2024, we had working capital of approximately $736.1 million, including $228.1 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 our various credit agreements. The resulting interest earned is recognized as an offset to our interest expense.

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 and borrowings under our floor plan arrangements and other credit agreements. As of December 31, 2025, we had working capital of approximately $569.4 million, including $212.6 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 our various credit agreements. The resulting interest earned is recognized as an offset to our interest expense.

Previous 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 both our Peterbilt and BMO 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 RTC Canada, PFC and BMO 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 line of credit that provides for a maximum borrowing of $25.0 million. There were no advances outstanding under this secured line of credit as of December 31, 2024, 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 December 31, 2024.

Current wording

We have a line of credit that provides for a maximum borrowing of $25.0 million. There were no advances outstanding under this secured line of credit as of December 31, 2025, however, $18.7 million was pledged to secure various letters of credit related to self-insurance products, leaving $6.3 million available for future borrowings as of December 31, 2025.

Previous wording

The BMO Floor Plan Credit Agreement and the WF Credit Agreement require us to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio. As of December 31, 2024, we were in compliance with all debt covenants related to debt secured by lease and rental units, the BMO Floor Plan Credit Agreement and the WF Credit Agreement. We do not anticipate any breach of the covenants in the foreseeable future.

Current wording

The BMO Floor Plan Credit Agreement and the WF Credit Agreement require us to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio. As of December 31, 2025, we were in compliance with all debt covenants related to debt secured by the BMO Floor Plan Credit Agreement and the WF Credit Agreement. We do not anticipate any breach of the covenants in the foreseeable future.

Previous wording

We expect to purchase or lease commercial vehicles worth approximately $200.0 million to $250.0 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 $300.0 million to $350.0 million for our leasing operations during 2026, 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 $37.0 million to $42.0 million during 2026.

Previous wording

During the fourth quarter of 2024, we paid a cash dividend of $14.3 million. Additionally, on February 17, 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 March 18, 2025, to all shareholders of record as of March 3, 2025. The total dividend disbursement is estimated to be approximately $14.3 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 and will depend on historic and projected earnings, capital requirements, covenant compliance and financial conditions and such other factors as our Board deems relevant.

Current wording

During the fourth quarter of 2025, we paid a cash dividend of $14.6 million. Additionally, on February 17, 2026, 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 March 18, 2026, to all shareholders of record as of March 3, 2026. The total dividend disbursement is estimated to be approximately $14.6 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 and will depend on historic and projected earnings, capital requirements, covenant compliance and financial conditions and such other factors as our Board deems relevant.

Previous wording

On December 2, 2024, we announced that our Board 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, 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 December 31, 2024, we had repurchased $6.5 million of our shares of common stock under the current stock repurchase program. The current stock repurchase program expires on December 31, 2025, and may be suspended or discontinued at any time.

Current wording

On December 3, 2025, we announced that our Board 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, 2025. 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 December 31, 2025, we have not repurchased any of our shares of common stock under the current stock repurchase program. The current stock repurchase program expires on December 31, 2026, 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 have the ability to fund the construction or purchase of new facilities through our operating cash flows or by financing.

Current wording

We anticipate funding 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

We have no other material commitments for capital expenditures as of December 31, 2024. However, we will continue to purchase vehicles for our lease and rental operations and authorize capital expenditures for the improvement or expansion of our existing dealership facilities and construction or purchase of new facilities based on market opportunities.

Current wording

We are currently under contract to build a new facility on the land adjacent to our current location in Huntley, Illinois with a current budget of $23.6 million and a new facility in Conroe, Texas with a budget of $20.0 million. We will continue to purchase vehicles for our lease and rental operations and authorize capital expenditures for the improvement or expansion of our existing dealership facilities and construction or purchase of new facilities based on market opportunities.

Previous wording

Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. During 2024, operating activities resulted in net cash provided by operations of $619.6 million. Net cash provided by operating activities primarily consisted of $305.0 million in net income, as well as non-cash adjustments related to depreciation and amortization of $236.1 million, provision for deferred income tax of $19.8 million and stock-based compensation of $30.4 million. Cash used in operating activities included an aggregate of $23.5 million net change in operating assets and liabilities. Net change in operating assets and liabilities were primarily the result of $34.8 million from the decrease in customer deposits and $12.2 million from the decrease in accrued liabilities, which were offset primarily by cash outflows of $91.7 million from an increase in accounts receivable, $81.9 million from the decrease in accounts payable and $85.1 million from an increase in inventory. The majority 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 2025, operating activities resulted in net cash provided by operations of $861.8 million. Net cash provided by operating activities primarily consisted of $266.0 million in net income, as well as non-cash adjustments related to depreciation and amortization of $252.8 million, provision for deferred income tax of $28.8 million and stock-based compensation of $31.7 million. Cash provided by operating activities included an aggregate of $397.5 million net change in operating assets and liabilities. Net change in operating assets and liabilities were primarily the result of $1.8 million from the decrease in customer deposits, $15.8 million from the decrease in accrued liabilities, $73.2 from the decrease in accounts receivable and $354.9 from the decrease in inventory which were offset primarily by cash outflows of $112.6 million from the decrease in floor plan financing from our manufacturers, $13.7 million from the decrease in accounts payable and $34.8 million from the decrease in current assets. The majority of our commercial vehicle inventory is financed through our floor plan credit agreements.