Good day, thank you for standing by. Welcome to the Rush Enterprises Reports fourth quarter and year-end 2022 earnings results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to speaker today, Rusty Rush. Please go ahead. Good morning, welcome to our fourth quarter and year-end 2022 earnings release conference call. On the call are Mike McRoberts, Chief Operating Officer, Steve Keller, Chief Financial Officer, Jay Hazelwood, Vice President and Controller, and Michael Goldstone, Vice President, General Counsel, and Corporate Secretary. Steve will say a few words regarding forward-looking statements. Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our annual report on Form 10-K for the year ended December 31st, 2021, and in our other filings with the Securities and Exchange Commission. As indicated in our news release, we achieved annual revenues of $7.1 billion and net income of $391 million, or $6.85 per diluted share, an increase of 64% compared to 2021. Included in the $6.85 per diluted share was $0.34 per share of earnings related to the sale of Momentum Fuel Technologies and the acquisition of Rush Truck Centres Canada. Excluding these transactions, earnings per share in 2022 would have been $6.51 per diluted share. In the fourth quarter, we achieved revenues of $1.9 billion and net income of $98 million or $1.74 per diluted share. We are also proud to declare a cash dividend of $0.21 per common share in the fourth quarter. Hang on. Got backwards. Steve. In 2022, demand for new vehicles and aftermarket parts and services was strong, primarily due to supply constraints experienced over the last few years and an overall healthy economy. We continue to invest in our strategic initiatives that are focused on maximizing vehicle uptime for all of our customers, increased our large national account business, expanded our technician workforce, and diligently managed expenses to enhance profitability. We are especially pleased with the overall operational execution and financial performance considering the industry backdrop of truck and parts supply constraints, as well as the extensive work required by our employees to integrate the Summit and Tallman acquisitions. In terms of network growth in 2022, we added new locations in Florida and Missouri. We further expanded, excuse me, by adding an International Truck franchise in Kansas. We also acquired an additional 30%, for a total of 80% interest in Rush Truck Centres of Canada Limited. The operating results of RTC Canada are now consolidated into our financial statements. In January 2022, we closed our agreement with Cummins, who has acquired a 50% interest in Momentum Fuel Technologies, now branded Cummins Clean Fuel Technologies. All of these changes strengthen our network and enhance the offerings we provide to our customers. In the aftermarket, our annual parts service and body shop revenues were $2.4 billion, up 32.3%. Our annual absorption rate was 136.6. We added 190 service technicians to our network and expanded our team of aftermarket sales representatives, allowing us to focus on strategic initiatives, including express services, mobile service, and contract maintenance, while continuing to support large fleets and national accounts. With normal seasonal softness, parts growth began to plateau in the fourth quarter, but service revenues remained strong due to the additional technicians in our workforce. Parts availability remained somewhat choppy but has improved significantly, and we believe demand for aftermarket parts and service in the first half of 2023 will align with the second half of 2022. As we continue to add technicians as well as aftermarket sales representatives, we believe our results for our aftermarket parts and service operations will remain strong in 2023. Turning to truck sales. In 2022, we sold 16,778 new Class A trucks, accounting for 6.3% of the total U.S. Class A market. Limited new truck production continued to impact the industry, but we experienced healthy, widespread demand for new Class A trucks. Our results were further strengthened by our focus on national accounts and the timing of some large fleet transactions early in the year, which helped us gain significant market share. We ended the year strong with continued healthy demand from over-the-road and vocational customers in the fourth quarter. ACT Research forecast U.S. Class A retail sales to be 225,000 units in 2023, down slightly from 2022. While we expect we will continue to feel the effects of truck allocation, production has begun to normalize. Our backlog remains strong, and we believe that our Class A truck sales will remain strong through at least the first half of 2023. Our Class 4 through 7 new truck sales reached 11,025 units in 2022, for 4.6% of the U.S. market. Though production remained limited throughout the year, we experienced healthy demand from most market segments we support and were able to outpace the industry in 2023. In the fourth quarter, medium-duty truck sales declined from their peak in the third quarter, largely due to the timing of new truck availability from manufacturers. ACT Research forecasts Class 4 through 7 retail sales to be 253,600 units in 2023, up 8.5% from 2022. As we look ahead, we believe there will be continued pent-up demand for medium-duty trucks, especially from construction and leasing customers. Production constraints on medium-duty trucks will likely continue. We expect our Class four through seven results to keep pace with the industry in the first half of 2023. Our used truck sales reached 7,019 units in 2022, down 6.7% year-over-year. 2022 began, there was strong demand. Excuse me, with limited supply of new Class A trucks in the market. In the second and third quarters, demand and values declined significantly as more new trucks became available. In the third quarter, we took swift action to minimize our used truck inventory to historically low levels. In the fourth quarter, low freight rates continued to cause weak demand and used truck values declined further. Looking ahead, we expect used truck values to continue to decline, and we plan to maintain our low inventory levels until conditions begin to normalize. Due to seasonal increases in employee benefits and payroll taxes, we expect our general and administrative expenses to be sequentially higher in the first quarter of 2023 compared to the fourth quarter of 2022. Before I turn the call over for questions, I would like to take a special minute to thank all of our employees of Rush Enterprises, not just for their outstanding work and unending dedication to our customers that led to our record-setting financial results this year, but for their efforts and execution of our strategic goals over the last five years. You see, 2022 was somewhat of a milestone year for our company. In 2017, we developed a strategic plan that was heavily focused on expanding our market share and improving our quality of earnings, and including aggressive financial goals of growing revenue to $7 billion and pre-tax return on sales of 5% by 2022. Thanks to their outstanding work, not only did we achieve our revenue goal and exceed our profitability goal, we were also able to enhance our shareholder return programs through opportunistic share repurchases and by introducing a quarterly dividend that we have been able to consistently increase on an annual basis. Our people have demonstrated their ability to execute on the company's strategic initiatives, they are why I am extremely confident we'll be successful in achieving our strategic goals of $10 billion in revenue with a 6% pre-tax return on sales by 2027. Again, to all of our employees, thank you. With that, I'll take your questions. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment. Our first question comes from the line of Justin Long from Stephens. Your line is open. Thanks. Good morning and congrats on the quarter. Oh, thank you, Justin. Rusty, I wanted to follow up on what you said about the first quarter, just because I know there can be some seasonality with SG&A. Could you help us by quantifying the step up you're expecting in 1Q and anything else in terms of seasonality? It sounds like from a truck sale and parts and service perspective, you're expecting things to be pretty flattish sequentially moving into the first half of the year, but would love to just get your thoughts on first quarter. Yeah. Well, the first quarter, I will say this, we'll start with the expense question. Our first quarter is always heavy in expenses compared to the fourth quarter. We have many more employee benefits and equity opt-in stuff that we expect are expensed in the first quarter. Also, you know, all taxes restart up. You know, it happens every year, it's the same, right? Without getting exact, I think you can look back at historical years and see the step-up in expenses in Q1 and how they hit us compared to Q4. From a overall business perspective, when everyone talks sequentially, say, truck sales, for example. Truck sales, Class A truck sales, a lot of things have to do with timing. I would expect sequentially, we will be a little softer than we were in Q4. At the same time, you know, we'll probably be up year-over-year from Q1 of last year, right? Because things ramped up throughout the year. Now, that being said, that doesn't mean it'll stay at that level as we get into Q2, but a lot of it has to do with timing. As I look at parts and service, what are we? 47 days into the first quarter, it has remained steady. Actually, February is looking, you know, getting back, we look at it from a per day and, you know, what we do volumes per day, average. You know, February looks, steady as it goes from where we were in December. Really October, December, January, all in a range within a couple points of each other. February seems to be getting a little slightly stronger, which is what we typically anticipate as we get into March. You know, our parts and service business, you know, store sweep comes up every year. If I look out into the year from a parts and service perspective, you know, we're looking for probably a high single-digit growth from the same store basis. We feel good about where it is. We're not seeing anything that's showing any signs of weakening at the moment. That being said, we'll just continue to work throughout the year. You know, in the note itself, and what I said, the difference between this year and last year is last year we were under a lot tighter allocation. You know, we're under allocation still, but we were dealing with a lot, you know, a lot more issues when it comes to parts availability, both from our perspective, from a dealer perspective, and also from the OEM perspective, right. You know, as I look at it going forward, I think that's obviously. I think build rates are up. You can tell by what was delivered in December. I haven't seen what was delivered in January, but I'm sure it was extremely strong. I know retail deliveries in December were probably the strongest ever. I don't have the visibility I had. You know, we were pretty much sold out at this time last year. While we're not sold out currently, our backlog is extremely strong and fairly deep, but we are still selling trucks into the back half of the year, right? We feel really good about the first half. The back half is evolving. You know, every day that goes by, I feel a little bit better, I must tell you that. You know, you're always trying to be, you have to be conservative in your outlook. You know, as you get further and further into the year, we'll be able to give you a little bit better guidance on the back half of the year. I guess building on that, you know, at some point, I think it's reasonable to expect, you know, truck sales to come down, whether that's the back half of this year or 2024. Can you talk about your ability at Rush to outperform the market whenever we do see that pullback? Let's say in, you know, 2024, the market's down, Class A truck sales for the industry are down 15%. You know, what do Rush's truck sales look like in that environment, given the market share opportunities you have? I don't plan on going backwards that much in 2024 as we look out there. I think you gotta dig into our... You gotta look at our partnerships. It's not just Rush, even though I think we're pretty good at what we do. You know, it's your manufacturer, your OEM partners that you must look at. When you look at the heavy duty side, you know, I still have always told folks that I think Navistar, you know, are probably the best tailwinds in the organization, or have great tailwinds, right? If you look at their market share now and with the new ownership of the last, oh, year and a half, per se, as they get their, you know, get their feet on the ground and get moving forward with product and stuff, I think that they will be a tailwind force going forward as they gain market share. When I look at the PACCAR side, I have been a PACCAR dealer, a Peterbilt dealer for 55 years, we have been. I have never been more bullish on their ability to increase share. They've always been, at least in the last 10 years or so, you know, between 13.5% and 15%. I believe this is one time that Peterbilt has the opportunity, when I look at their product lines and where they're at, to increase their share by 1 point or so. That would be up, you know, to record highs, historic record highs. Both of my OEMs on the heavy side, I think have good futures in front of them with increasing their market share, right, as we go forward. It just begs to reason that, you know, we're going to participate with them as their market share increases. You know, I hope that would combat some of the cyclicality where everybody's looking for 2024 to be down. Of course, we could always talk about 2025 and 2026 probably being two of the biggest years ever in history. Getting through 2024, I think we've got some good things going with the partnerships we have and also with our people. Our realignment as going to market as one, using that whole network, not just selling trucks, but selling the Rush network. I continue to get better and better at that. I'm not gonna get into all the specifics, but I have many examples of where we've had some conquest accounts that's why it's not just the product, it's also that Rush network that can service, you know, a broader base than any other network in this country, so, in our industry, right? You know, I'd say it's something we've been working very hard on the last couple of years, and that's to go to market as one, not just as a truck sales organization, but as just an overall, you know, commercial supplier of taking care of everyone, right? From cradle to grave. When you look at the medium-duty business, I think, you know, I feel very good about that. The last couple of years, Hino hadn't even been in the game, okay? We used to sell 1,500-2,000, you know, Hinos a year. Guess what? They're back in the game again, right? We basically had 0 sales for over a year. I mean, 100 or so. I mean, very, very little. You know, that's a plus, as they get back in the game here, as they switch to Cummins engines in their product, going forward on the medium-duty side there. I mean, I feel good about the Ford product line. I feel good about the Isuzu product line. I really do. I feel good about our network again. You know, I can, that's how we're gonna combat it. You know, we've got plans for it. I can't sit here and guarantee you anything, but I can, I'll bet you this right now that, we don't go backwards as far as the market does. Very helpful. maybe one last one, and this one's probably for Steve, anything you can share on free cash flow expectations for 2023? You know, this year we were, I think if you look in the back of the release, our free cash flow was about $375 million. You know. We're probably $3-$350 this year, is where we think it'll be right now. The business continues to generate good cash. We don't see that changing. Okay, great. I'll leave it there. Thanks for the time. Thank you. Once again, that's star one one for questions. One moment for our next question. Our next question comes from the line of Jamie Cook from Credit Suisse. Your line is open. Hi, this is Tatevik Gukasyan on for Jamie. Thanks so much for taking my question. I wanted to ask, medium duty has a better growth outlook versus heavy duty this year, but what are you seeing from OEMs in terms of ramping medium duty production? Does it have any mix implications on your margins, if any? Okay. Medium-duty production is ramping up. You know, medium duty, there's no question about it. As I mentioned a minute ago, obviously, Hino's back in the game, right? They were out of the game for us for the last year or two, but they're back in the game as they've integrated the Cummins engine into their product. I have seen medium-duty build rates increased at basically all medium-duty brands that we have. That only, you know, bodes well. We look for our medium duty to be up substantially more. The market may say 8.5% for the total market, but I look for us on medium duty to be up more than that as the year... Given the things that I was taught, I've seen medium-duty increases at all our OEMs. You know, when it comes to build, understanding that medium duty got hit pretty hard because, especially for the two suppliers, Navistar and Peterbilt, when we were under supply constraints, you know, a lot of times you had choices, heavy or medium. Heavy won out, okay? Obviously, it's a bigger ticket item, and they probably make a little more money selling those at that time. Everybody's, you know, that supply shortage, you know, getting taken, you know, passing away, getting more normalized. There's still a little bit there, but not as bad as it was by any stretch. You know, medium duty is gonna get more focus. When you... What was the second part about? Was it about mix? Margin? Yeah. Yeah. If it has any implications. Yeah. I would tell you our margins, while I think our volumes are gonna be pretty good, we'll probably have a little bit of margin compression. You know, inflation, I do believe, will slow down as we get into the year. At the same time, they'll still be way above historical margins, okay? The possible some squeeze on margins as we work our way through the year. Again, I don't wanna give up on it. I'm just being my typical honest self. You know, it's unfolding in front of us. You know, every day, as I said, we go into the year further. You know, we get more and more confidence in the back half of the year. I'm pretty confident in the front half. I'm getting a lot more confident in the back half of the year as, you know, as the year unfolds. Slight margin compression, at the same time, still way above historical margins. Okay, great. Thank you. Yeah, you're obviously telling us that you feel better about the second half now versus before, and you have really strong backlog and good visibility. I was just wondering, in terms of supply chain, do you think it's maybe healing quicker than you would have thought a quarter ago? When do you think that truck production can fully normalize? If you have any sense, that would be great. Thanks. Well, I think we're pretty close, okay, to normalized truck production. There's still some room for a couple tweaks. I don't know every manufacturer, every OEM, where they're at. I do know the OEMs that I'm with. You know, I would tell you supply has not been the. A lot of the question's been around labor, okay? There's been a lot of labor issues to deal with here. You know, I feel pretty good about where they're at. As you saw, ACT saying pretty close, just a little bit short, a couple Percentage less than last year on Class 8. You know, I know Jamie today is in an analyst day, I do believe, for PACCAR. Tell her I asked Preston where he's at. Anyhow, I, you know, I will tell you know, we're close to, you know, we're 90%, 85%-90% recovered from the parts shortages that we dealt with. That's not to say we just still don't have things that pop up with the manufacturer. You asked how I felt now compared to where I say I felt a year ago, a whole lot better. Did it recover quicker in the back half of the year than I expected? Yes, it did. I think you can tell that by the delivery numbers we're posting. Okay, that's great. Thank you so much. You're welcome. Thank you. I'm not showing any further questions in the queue. I would now like to turn the conference back to Rusty for any closing remarks. Well, we thank everybody for their participation, and we will talk to you again in April. I'm sure with hopefully great results again as usual. Thank you. Bye-bye. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.