What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-24 compared with 2024-02-23 · 150 added, 120 removed, 825 unchanged (25% of the section changed)

11 unchanged sentences

We have audited the accompanying consolidated balance sheets of Rush Enterprises, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

16 unchanged sentences

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Used Commercial Vehicle Inventory Reserves

Description of the

At December 31, 2023, the Company’s used commercial vehicle inventory balance is approximately $45 million, which is net of management’s estimate of used commercial vehicle inventory reserves in the amount of approximately $5 million.

Commercial Vehicle Inventory Reserves

Description of the Matter

At December 31, 2024, the Company’s commercial vehicle inventory balance is approximately $1.4 billion, which is net of management’s estimate of commercial vehicle inventory reserves in the amount of approximately $9.8 million.

As described in Note 6 to the consolidated financial statements, management adjusts the value of its inventory to net realizable value to the extent it determines inventory cost cannot be recovered.

Management estimates future demand and sales prices to calculate the used commercial vehicle inventory reserves and to make corresponding adjustments to the carrying value of these inventories to reflect the lower of cost or net realizable value.

Auditing management’s estimate of the used commercial vehicle inventory reserves involved auditor subjective judgment because the estimate is sensitive to changes in management’s assumptions for forecasted product demand and future sales prices.

Addressed the

Matter in Our

We evaluated and tested the design and operating effectiveness of controls over the Company’s processes to estimate the used commercial vehicle inventory reserve, which included management’s review of the underlying significant assumptions.

Management estimates future demand and sales prices to calculate the commercial vehicle inventory reserves and to make corresponding adjustments to the carrying value of these inventories to reflect the lower of cost or net realizable value.

Auditing management’s estimate of the commercial vehicle inventory reserves involved auditor subjective judgment because the estimate is sensitive to changes in management’s assumptions for forecasted product demand and future sales prices.

How We Addressed the Matter in Our Audit

We evaluated and tested the design and operating effectiveness of controls over the Company’s processes to estimate the commercial vehicle inventory reserve, which included management’s review of the underlying significant assumptions.

Our substantive audit procedures included, among others, evaluating the significant assumptions described above, and we tested the completeness and accuracy of underlying data used in the estimation calculations.

We also compared the cost of on-hand used commercial vehicle inventories to customer demand forecasts and historical sales.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the used commercial vehicle inventory reserves that would result from changes in the assumptions.

We also compared the cost of on-hand commercial vehicle inventories to customer demand forecasts and historical sales.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the commercial vehicle inventory reserves that would result from changes in the assumptions.

/s/ Ernst & Young LLP

9 unchanged sentences

Accounts receivable, net

Notes receivable from affiliate

Inventories, net

86 unchanged sentences

(In Thousands)

Comprehensive

Rush Enterprises,

Comprehensive

Shareholders’

1 unchanged sentence

Shareholders’

Class A Class B

Income (Loss)

7 unchanged sentences

Cash dividends declared on Class B common stock

Other comprehensive income

Reclassification of foreign currency translation related to equity method

Foreign currency translation adjustment

Noncontrolling interest equity

Balance, December 31, 2022

4 unchanged sentences

Common stock repurchases

Retirement of treasury shares and par value adjustment

Cash dividends declared on Class A common stock

Cash dividends declared on Class B common stock

Reclassification of foreign currency translation related to equity method

Foreign currency translation adjustment

Noncontrolling interest equity

Balance, December 31, 2023

4 unchanged sentences

Common stock repurchases

Retirement of treasury shares and par value adjustment

Cash dividends declared on Class A common stock

26 unchanged sentences

Proceeds from the sale of property and equipment

Change in notes receivable from affiliate

Business disposition

2 unchanged sentences

Cash flows from financing activities:

Draws on floor plan notes payable – non-trade, net

Draws (payments) on floor plan notes payable – non-trade, net

Proceeds from long-term debt

22 unchanged sentences

(the “Company”) was incorporated in 1965 under the laws of the State of Texas.

The Company operates a network of commercial vehicle dealerships that primarily sell commercial vehicles manufactured by Peterbilt, International, Hino, Ford, Isuzu, IC Bus, Blue Bird or Dennis Eagle.

Through its strategically located network of Rush Truck Centers, the Company provides one-stop service for the needs of its commercial vehicle customers, including retail sales of new and used commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance products.

13 unchanged sentences

The functional currency of the Company’s foreign subsidiary, Rush Truck Centres of Canada Limited (“RTC Canada”), is the local currency, the Canadian dollar.

Results of operations for RTC Canada are translated to USD using the average exchange rate on a monthly basis during each quarter.

Results of operations for RTC Canada are translated to USD using the average exchange rate monthly during each quarter.

The assets and liabilities of RTC Canada are translated into USD using the exchange rate in effect on the balance sheet date.

21 unchanged sentences

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 and by the first-in, first-out method for tires, parts and accessories.

Cost is determined by specific identification of new and used commercial vehicle inventory.

As the market value of the Company’s inventory typically declines over time, reserves are established based on historical loss experience and market trends.

7 unchanged sentences

Capitalized interest, when incurred, is added to the cost of the underlying assets and is amortized over the estimated useful life of such assets.

In 2023, the Company capitalized $ 0.7 million in interest.

The cost, accumulated depreciation and amortization and estimated useful lives of the Company’s property and equipment are summarized as follows (in thousands):

44 unchanged sentences

Prior to acquiring an additional 30 % equity interest on May 2, 2022, for approximately $ 20.0 million, the Company accounted for the equity interest in RTC Canada using the equity method of accounting.

Subsequent to the Company’s acquisition of the additional 30 % equity interest on May 2, 2022, operations of RTC Canada are included in the accompanying consolidated financial statements.

After the Company’s acquisition of the additional 30 % equity interest on May 2, 2022, operations of RTC Canada were included in the accompanying consolidated financial statements.

Income (loss) related to the 20 % equity owner of RTC Canada is reflected in the accompanying consolidated financial statements as a noncontrolling interest.

20 unchanged sentences

Although the Company believes that the judgments and estimates are reasonable, actual results could differ, and the Company may be exposed to losses or gains that could be material.

An unfavorable tax settlement would generally require use of the Company’s cash and result in an increase in its effective income tax rate in the period of resolution.

An unfavorable tax settlement would require use of the Company’s cash and result in an increase in its effective income tax rate in the period of resolution.

A favorable tax settlement would be recognized as a reduction in the Company’s effective income tax rate in the period of resolution.

12 unchanged sentences

For a complete discussion of accounting for revenue, see Note 17 – Revenue of the Notes to Consolidated Financial Statements.

Rental and Lease Sales

Rental and Lease Revenue

The Company leases commercial vehicles that the Company owns to customers.

Lease and rental revenue is recognized over the period of the related lease or rental agreement.

Lease and rental revenues are recognized over the period of the related lease or rental agreement.

Variable rental revenue is recognized when it is earned.

3 unchanged sentences

For the Company’s service and collision center operations, technician labor cost is the primary component of cost of sales.

For the Company’s rental and leasing operations, cost of sales consists primarily of depreciation and amortization, rent, maintenance costs, license costs and interest expense considered direct and incremental on the lease and rental fleet owned and leased by the Company.

For the Company’s rental and leasing operations, cost of sales consists primarily of depreciation and amortization, rent, maintenance costs, license costs and interest expense on finance leases.

There are no costs of sales associated with the Company’s finance and insurance revenue or other revenue.

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The Company uses the Black-Scholes option-pricing model to estimate the fair value of share-based payment awards on the date of grant.

The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods.

The value of the portion of the award that is expected to vest is recognized as an expense over the requisite service periods.

Compensation expense for all share-based payment awards is recognized using the straight-line single-option method.

25 unchanged sentences

The Company utilizes a captive insurance company to manage its auto and general commercial liability insurance, which the Company supplements with excess insurance coverage at a level management believes is sufficient.

The Company is partially self-insured for a portion of the claims related to its worker’s compensation, medical insurance and vehicle inventory.

The Company is partially self-insured for a portion of the claims related to its worker’s compensation and medical insurance.

The Company uses actuarial information provided from third-party administrators to calculate an accrual for claims incurred, but not reported, and for the remaining portion of claims that have been reported.

The Company is fully self-insured for claims related to its real and personal property (except for its vehicle inventor, as noted above).

The Company is fully self-insured for claims related to its real and personal property, except for its vehicle inventory, which is fully insured.

Fair Value Measurements

8 unchanged sentences

The Company develops these inputs based on the best information available, including its own data.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance related to annual and interim segment disclosures.

The updated accounting guidance, among other things, requires disclosure of certain significant segment expenses.

The Company will adopt the updated accounting guidance in its Annual Report on Form 10-K for the year ended December 31, 2024.

The Company is currently evaluating the impact the adoption of the new accounting guidance will have on its segment disclosures in Note 16.

In December 2023, the FASB issued updated accounting guidance related to income tax disclosures.

The updated accounting guidance, among other things, requires additional disclosure primarily related to the income tax rate reconciliation and income taxes paid.

The Company will adopt the updated accounting guidance in its Annual Report on Form 10-K for the year ended December 31, 2025.

The Company is currently evaluating the impact the adoption of the new accounting guidance will have on its income tax disclosures in Note 13.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance related to annual and interim segment disclosures (ASU 2023-07).

The updated accounting guidance, among other things, intends to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

We adopted ASU 2023-07 in the fourth quarter of 2024, by identifying the Chief Operating Decision Maker (“CODM”), identifying and aggregating operating segments, determining reportable segments and including significant segment expenses reviewed by the Company’s CODM.

Refer to Note 16, Segment Reporting, for our updated presentation.

New Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, may be applied prospectively or retrospectively, and allows for early adoption.

These requirements are not expected to have an impact on our financial statements but will impact our income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, requiring more detailed disclosure about specified categories of expenses such as inventory purchases, employee compensation, depreciation and amortization in their financial statements.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, may be applied prospectively or retrospectively, and allows for early adoption.

The Company is currently evaluating the impact, if any, adoption will have on its financial statements.

SUPPLIER CONCENTRATION :

6 unchanged sentences

May 2025 through January 2029

Currently Negotiating

May 2025 through December 2027

Battle Motors

These agreements, as well as agreements with various other Manufacturers, impose a number of restrictions and obligations on the Company, including restrictions on a change in control of the Company and the maintenance of certain required levels of working capital.

4 unchanged sentences

The Company purchases its new and used commercial vehicle inventories with the assistance of floor plan financing programs as described in Note 7 to these Notes to Consolidated Financial Statements.

The Company finances the majority of all new commercial vehicle inventory and the loan value of its used commercial vehicle inventory under the Floor Plan Credit Agreement with BMO Harris.

The Floor Plan Credit Agreement includes an aggregate loan commitment of $ 1.0 billion.

The Company finances its Peterbilt new vehicle inventory under the PFC Floor Plan Credit Agreement with PFC, which has an aggregate loan commitment of $ 800.0 million.

The remainder of the Company’s new vehicle inventory, and all of its used vehicle inventory, is financed under the BMO Floor Plan Credit Agreement with BMO Bank, N.A., which has an aggregate loan commitment of $ 675.0 million.

The Company’s floor plan financing agreements provide that the occurrence of certain events will be considered events of default.

8 unchanged sentences

Pursuant to the terms of the RTC Canada Revolving Credit Agreement, 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 available upon the request of RTC Canada and consent of BMO.

RTC Canada uses the RTC Canada Floor Plan Agreement to finance its new and used vehicle inventory.

RTC Canada uses the RTC Canada Floor Plan Credit Agreement to finance its new and used vehicle inventory.

Pursuant to the terms of the RTC Canada Floor Plan Agreement, 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.

3 unchanged sentences

The Company’s cash, cash equivalents and restricted cash may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit.

The Company controls credit risk through credit approvals and by selling a majority of its trade receivables, other than vehicle accounts receivable, without recourse.

Concentrations of credit risk with respect to trade receivables are reduced because a large number of geographically diverse customers make up the Company’s customer base;

however, substantially all of the Company’s business is concentrated in the United States commercial vehicle markets and related aftermarkets.

The Company generally sells finance contracts it enters into with customers to finance the purchase of commercial vehicles to third parties.

The Company controls credit risk through credit approvals and by selling most of its trade receivables, other than vehicle accounts receivable, without recourse.

Concentrations of credit risk with respect to trade receivables are reduced because of the geographical diversity of the Company’s customer base;

however, all the Company’s business is concentrated in the United States and Ontario, Canada commercial vehicle markets and related aftermarkets.

The Company sells finance contracts it enters into with customers to finance the purchase of commercial vehicles to third parties.

These finance contracts are sold by the Company both with and without recourse.

A majority of the Company’s finance contracts are sold without recourse.

Most of the Company’s finance contracts are sold without recourse.

The Company provides an allowance for doubtful receivables and a reserve for repossession losses related to finance contracts sold with recourse.

8 unchanged sentences

Accounts receivable as of January 1, 2023, was $ 220.7 million.

Notes receivable from the Cummins Clean Fuel Technologies (“CCFT”) joint venture include a $ 15.0 million promissory note bearing interest at the monthly SOFR, plus 1.5 % and maturing on December 31, 2026.

The note arose from a loan provided to the joint venture to fund its working capital needs.

The Company's share of profits from the joint venture is subject to the terms of the partnership agreement and may be impacted by the performance of the joint venture.

INVENTORIES :

26 unchanged sentences

The following table summarizes the changes in the allowance for credit losses (in thousands):

Provision for

Provision for the

Commercial vehicle receivables

2 unchanged sentences

Other receivables

FLOOR PLAN NOTES PAYABLE AND LINES OF CREDIT :

FLOOR PLAN NOTES PAYABLE AND LINE OF CREDIT :

Floor Plan Notes Payable

1 unchanged sentence

These notes are collateralized by the inventory purchased, and accounts receivable arising from the sale thereof.

The Company’s Floor Plan Credit Agreement provides for a loan commitment of up to $ 1.0 billion.

The interest rate under the Company’s Floor Plan Credit Agreement is the one month SOFR plus 1.20 %.

The effective interest rate applicable to the Company’s Floor Plan Credit Agreement was approximately 6.54 % as of December 31, 2023.

The Company utilizes its excess cash on hand to pay down its outstanding borrowings under its Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to the Company’s gross interest expense under the Floor Plan Credit Agreement.

The Company’s RTC Canada Floor Plan Agreement provides for a loan commitment of up to $ 116.7 million CAD Loans to purchase used vehicle inventory are limited to twenty percent ( 20% ) of the credit limit available at such time.

The Company’s BMO Floor Plan Credit Agreement with BMO Bank, N.A.

provides for a loan commitment of up to $ 675.0 million.

The interest rate under the BMO Floor Plan Credit Agreement is the one-month SOFR, plus 1.20 %.

The effective interest rate applicable to the BMO Floor Plan Credit Agreement was approximately 5.69 % as of December 31, 2024.

The Company utilizes its excess cash on hand to pay down its outstanding borrowings under its BMO Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to the Company’s gross interest expense under the BMO Floor Plan Credit Agreement.

The Company’s PFC Floor Plan Credit Agreement with PFC provides for a loan commitment of up to $ 800.0 million.

The interest rate under the PFC Floor Plan Credit Agreement is the prime rate, minus 2.10 %.

The effective interest rate applicable to the PFC Floor Plan Credit Agreement was approximately 5.4 % as of December 31, 2024.

The Company utilizes its excess cash on hand to pay down its outstanding borrowings under the PFC Floor Plan Credit Agreement, and the resulting interest earned is recognized as an offset to the Company’s gross interest expense under the PFC Floor Plan Credit Agreement.

The Company’s RTC Canada Floor Plan Credit Agreement provides for a loan commitment of 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 under the RTC Canada Floor Plan Agreement bear interest per annum, payable on the first business day of each calendar month, at Term SOFR (as defined in the agreement), plus 1.20 %.

The Company finances substantially all of the purchase price of its new commercial vehicle inventory and the loan value of its used commercial vehicle inventory under its Floor Plan Credit Agreement and RTC Canada Floor Plan Agreement, under which BMO Harris and BMO pay the manufacturer directly with respect to new commercial vehicles.

Amounts borrowed under the Company’s Floor Plan Credit Agreement and RTC Canada Floor Plan Agreement are due when the related commercial vehicle inventory (collateral) is sold.

The Company’s Floor Plan Credit Agreement expires September 14, 2026, although BMO Harris has the right to terminate the Floor Plan Credit Agreement at any time upon 360 days written notice and the Company may terminate at any time, subject to specified limited exceptions.

On December 31, 2023, the Company had approximately $ 984.4 million outstanding under its Floor Plan Credit Agreement.

The Company’s RTC Canada Floor Plan Agreement expires September 14, 2026.

Advances under the RTC Canada Floor Plan Credit Agreement bear interest per annum, payable on the first business day of each calendar month, payable monthly, at CORRA, plus 1.27 %.

The Company finances all of the purchase price of its new commercial vehicle inventory and the loan value of its used commercial vehicle inventory under the PFC Floor Plan Credit Agreement, the BMO Floor Plan Credit Agreement and the RTC Canada Floor Plan Agreement, under which BMO Bank, N.A., PFC and BMO pay the manufacturer directly with respect to new commercial vehicles.

Amounts borrowed under the agreements are due when the related commercial vehicle inventory (collateral) is sold.

The BMO Floor Plan Credit Agreement expires December 31, 2029, although BMO Bank, N.A.

has the right to terminate the BMO Floor Plan Credit Agreement at any time upon 360 days written notice and the Company may terminate at any time, subject to specified limited exceptions.

The PFC Floor Plan Credit Agreement expires December 16, 2029, although either party has the right to terminate the PFC Floor Plan Credit Agreement at any time upon 360 days written notice.

On December 31, 2024, we had approximately $ 492.7 million outstanding under the PFC Floor Plan Credit Agreement.

On December 31, 2024, the Company had approximately $ 389.3 million outstanding under its BMO Floor Plan Credit Agreement.

The Company’s RTC Canada Floor Plan Credit Agreement expires September 14, 2026.

On December 31, 2024, the Company had approximately $ 78.2 million CAD outstanding under the RTC Canada Floor Plan Agreement.

4 unchanged sentences

Floor plan notes payable related to vehicles

Lines of Credit

Line of Credit

The Company has 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, 2023;

however, $ 17.9 million was pledged to secure various letters of credit related to self-insurance products, leaving $ 2.1 million available for future borrowings as of December 31, 2023.

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.

LONG-TERM DEBT :

2 unchanged sentences

As of December 31, 2024, long-term debt maturities were as follows (in thousands):

On September 14, 2021, the Company entered into the WF Credit Agreement with the WF Lenders and the WF Agent.

On September 14, 2021, the Company entered the WF Credit Agreement with the WF Lenders and the WF Agent.

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 the Company’s capital expenditures, including commercial vehicle purchases for the Company’s Idealease lease and rental fleet, and general working capital needs.

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) SOFR plus (i) 1.25 % or (ii) 1.5 %, depending on the Company’s consolidated leverage ratio or (B) on or after the term SOFR transition date, the term SOFR plus (i) 1.25 % or (ii) 1.5 %, depending on the Company’s consolidated leverage ratio.

Borrowings under the WF Credit Agreement bear interest per annum, payable on each interest payment date, at (A) SOFR plus (i) 1.25 % or (ii) 1.5 %, depending on the Company’s consolidated leverage ratio or (B) on or after the term SOFR transition date, the term SOFR plus (i) 1.25 % or (ii) 1.5 %, depending on the Company’s 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 WF 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.

1 unchanged sentence

The Company expects to use the revolving credit loans available under the WF Credit Agreement primarily for the purpose of purchasing commercial vehicles for the Company’s Idealease lease and rental fleet.

On November 1, 2023, the Company entered into the PLC Agreement.

Pursuant to the terms of the PLC Agreement, PLC agreed to make up to $ 300.0 million of revolving credit loans to finance certain of the Company’s capital expenditures, including commercial vehicle purchases and other equipment to be leased or rented through the Company’s PacLease franchises.

Advances under the PLC Agreement bear interest per annum, payable on the fifth day of the following month, at the Company’s option, at either (A) the prime rate, minus 1.55 %, provided that the floating rate of interest is subject to a floor of 0 %, or (B) a fixed rate, to be determined between the Company and PLC in each instance of borrowing at a fixed rate.

On November 1, 2023, the Company entered into the PLC Agreement with PFC.

Pursuant to the terms of the PLC Agreement (as amended), PLC agreed to make up to $ 500.0 million of revolving credit loans to finance certain of the Company’s capital expenditures, including commercial vehicle purchases and other equipment to be leased or rented through its PacLease franchises.

The Company may borrow, repay and reborrow amounts pursuant to the PLC Agreement from time to time until the maturity date, provided, however, that the outstanding principal amount on any date shall not exceed the borrowing base.

In addition, the Company must maintain a minimum balance of $ 220.0 million.

Advances under the PLC Agreement bear interest per annum, payable on the fifth day of the following month, at the Company’s option, at either (A) the prime rate, minus 2.10 %, provided that the floating rate of interest is subject to a floor of 0 %, or (B) a fixed rate, to be determined between us and PLC in each instance of borrowing at a fixed rate.

The PLC Agreement expires on December 16, 2029, although either party has the right to terminate the PLC Agreement at any time upon 360 days written notice.

On May 31, 2022, RTC Canada entered into the RTC Canada Revolving Credit Agreement.

Advances under the RTC Canada Revolving Credit Agreement bear interest per annum, payable on the first business day of each calendar month, at CDOR, plus 1.35 %.

On May 31, 2022, RTC Canada entered into the RTC Canada Revolving Credit Agreement with BMO.

Pursuant to the terms of the RTC Canada Revolving Credit Agreement, 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 Revolving Credit Agreement bear interest per annum payable monthly at CORRA, plus 1.72 %.

The RTC Canada Revolving Credit Agreement expires September 14, 2026.

The interest associated with the WF Credit Agreement, the PLC Agreement and the RTC Canada Revolving Credit Agreement is recorded in interest expense on the Consolidated Statement of Income.

The interest associated with the WF Credit Agreement, PLC Agreement and RTC Canada Revolving Credit Agreement is recorded in interest expense on the Consolidated Statement of Income.

The WF Credit Agreement, PLC Agreement and RTC Canada Revolving Credit Agreement are general borrowing facilities, whereas prior to these credit agreements, interest expense associated with the Company’s lease and rental fleet was recorded in cost of sales as the borrowings were directly related to each lease and rental vehicle.

The Company’s floor plan financing agreements and the WF Credit Agreement require the Company to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio.

As of December 31, 2023, the Company was in compliance with all debt covenants related to its floor plan credit agreements and the WF Credit Agreement.

The BMO Floor Plan Credit Agreement and the WF Credit Agreement require the Company 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, the Company was in compliance with all debt covenants related to the BMO Floor Plan Credit Agreement and the WF Credit Agreement.

The Company does not anticipate any breach of the covenants in the foreseeable future.

10 unchanged sentences

The carrying amount approximates fair value.

In February 2016, the FASB issued ASU No.

2016-02, “ Leases ( “ Topic 842 ” ), ” which was intended to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

The Company’s accounting policy with respect to leases complies with ASU 842, Leases .

The standard requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than twelve months.

3 unchanged sentences

The lease provides the lessee an option to purchase the underlying asset, and that option is reasonably certain to be exercised.

The lease term is for the major part of the remaining economic life of the underlying asset.

The present value of the lease payments equals or exceeds substantially all of the fair value of the underlying asset.

The lease term is for a major part of the remaining economic life of the underlying asset.

The present value of the lease payments equals or exceeds the fair value of the underlying asset.

The underlying asset is of such a specialized nature that only the lessee can use it without major modifications.

1 unchanged sentence

The Company applied the practical expedients permitted under Topic 842, which among other things, allowed it to retain its existing assessment of whether an arrangement is, or contains, a lease and whether such lease is classified as an operating or finance lease.

The Company made an accounting policy election that keeps leases with an initial term of twelve months or less off of the balance sheet and results in recognizing those lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term.

The Company made an accounting policy election that keeps leases with an initial term of twelve months or less off the balance sheet and results in recognizing those lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term.

The Company leases certain commercial vehicles and real estate under finance and operating leases.

9 unchanged sentences

The lease terms vary from one year to ten years.

Commercial vehicle finance leases have always been reported on the Consolidated Balance Sheet, while operating leases were added to the Consolidated Balance Sheet in 2019 with the adoption of Topic 842.

These vehicles are then subleased or rented by the Company to customers under various agreements.

67 unchanged sentences

provided however, that directors may elect to receive up to 40 % of the value of such grant in cash.

In 2023, three non-employee directors each received a grant of 4,116 shares of the Company’s Class A common stock, two non-employee directors each received a grant of 2,469 shares of the Company’s Class A common stock and $ 58,000 cash and one non-employee director received a grant of 2,880 shares of the Company’s Class A common stock and $ 43,500 cash, for total compensation equivalent to $ 145,000 each.

One director who was appointed to the Company’s Board of Directors in October of 2023 received 1,501 shares of the Company’s Class A common stock, for total compensation equivalent to $ 72,500 .

In 2024, three non-employee directors each received a grant of 3,230 shares of the Company’s Class A common stock, three non-employee directors each received a grant of 1,938 shares of the Company’s Class A common stock and $ 58,000 cash and one non-employee director received a grant of 2,261 shares of the Company’s Class A common stock and $ 43,499 cash, for total compensation equivalent to $ 145,000 each.

One director who was appointed to the Company’s Board of Directors in October of 2024 received 1,501 shares of the Company’s Class A common stock at the time of appointment, for total compensation equivalent to $ 72,500 .

Under the Director Plan, there are approximately 162,533 shares remaining for issuance of the 1,125,000 shares of the Company’s Class A common stock that were reserved for issuance.

7 unchanged sentences

The aggregate number of shares of common stock subject to stock options or SARs that may be granted to any one participant in any year under the 2007 Incentive Plan is 150,000 shares of Class A common stock or 150,000 shares of Class B common stock.

Each option granted pursuant to the 2007 Incentive Plan has a 150,000 -year term from the grant date and vests in three equal annual installments beginning on the third anniversary of the grant date.

The Company has three shares of Class A common stock and 9,000,000 shares of Class B common stock reserved for issuance under the Company’s 2007 Incentive Plan.

Each option granted pursuant to the 2007 Incentive Plan has a ten -year term from the grant date and vests in three equal annual installments beginning on the third anniversary of the grant date.

The Company has 21,600,000 shares of Class A common stock and 9,000,000 shares of Class B common stock reserved for issuance under the Company’s 2007 Incentive Plan.

As of December 31, 2024, approximately 3,189,695 shares of Class A common stock and 2,283,175 shares of Class B common stock are available for issuance under the Company’s 2007 Incentive Plan.

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Basic earnings per share (“EPS”) were computed by dividing income from continuing operations by the weighted average number of shares of common stock outstanding during the period.

Diluted EPS differs from basic EPS due to the assumed conversions of potentially dilutive options, restricted shares awards and restricted stock unit awards that were outstanding during the period.

Diluted EPS differs from basic EPS due to the assumed conversions of potentially dilutive options and restricted stock awards that were outstanding during the period.

Each share of Class A common stock ranks equal to each share of Class B common stock with respect to receipt of any dividends or distributions declared on shares of common stock and the right to receive proceeds on liquidation or dissolution of the Company after payment of its indebtedness and liquidation preference payments to holders of any preferred shares.

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The following is a reconciliation of the numerators and the denominators of the basic and diluted per share computations for income from continuing operations (in thousands, except per share amounts):

Numerator for basic and diluted earnings per share − Net income available to common shareholders

Numerator for basic and diluted earnings per share −

Net income available to common shareholders

Denominator for basic earnings per share – weighted average shares outstanding

Effect of dilutive securities − Employee and director stock options and restricted share awards

Effect of dilutive securities−

Employee and director stock options and restricted share awards

Denominator for diluted earnings per share − adjusted weighted average shares outstanding and assumed conversions

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As of December 31, 2024, the Company had approximately $ 39.2 million in state net operating loss carry forwards that expire from 2030 to 2043, which result in a deferred tax asset of approximately $ 1.7 million.

The Company has concluded that its state net operating losses are more likely than not to be realized and has not recorded a valuation allowance against them.

The Company has evaluated whether its state net operating losses are realizable and has not recorded a valuation allowance against them.

The valuation allowance did not change over the prior year ending December 31, 2023.

The Company had unrecognized income tax benefits totaling $ 8.0 million as a component of accrued liabilities as of December 31, 2024, and $ 6.7 million as of December 31, 2023, the total of which, if recognized, would impact the Company’s effective tax rate.

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ACQUISITIONS:

All of the following acquisitions, unless otherwise noted, were considered business combinations accounted for under ASC 805 “Business Combinations.” Pro forma information is not included in accordance with ASC 805 since no acquisitions were considered material individually or in the aggregate.

The following acquisitions, unless otherwise noted, were considered business combinations accounted for under ASC 805 “Business Combinations.” Pro forma information is not included in accordance with ASC 805 since no acquisitions were considered material individually or in the aggregate.

On July 15, 2024, the Company acquired certain assets of Nebraska Peterbilt, which included real estate and a Peterbilt commercial vehicle franchise in Grand Island and North Platte, Nebraska, along with commercial vehicle and parts inventory.

The transaction was valued at approximately $ 16.5 million, with the purchase price paid in cash.

On December 4, 2023, the Company acquired certain assets of Freeway Ford Truck Sales, Inc., which included real estate and a Ford commercial vehicle franchise in Chicago, Illinois, along with commercial vehicle and parts inventory.

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Prior to May 2, 2022, the Company accounted for its 50 % equity interest in RTC Canada as an equity-method investment.

Subsequent to the Company’s acquisition of the additional 50% equity interest on May 2, 2022, operations of RTC Canada are included in the accompanying consolidated financial statements.

The Company currently has one reportable business segment - the Truck Segment.

The Truck Segment includes the Company’s operation of a nationwide network of commercial vehicle dealerships that provide an integrated one-stop source for the commercial vehicle needs of its customers, including retail sales of new and used commercial vehicles;

After the Company’s acquisition of the additional 30 % equity interest on May 2, 2022, operations of RTC Canada are included in the accompanying consolidated financial statements.

The Company reports information based on operating segments identified in accordance with how the chief operating decision maker (“CODM”) evaluates business performance and allocates resources.

As of the reporting period, the Company operates with one CODM:

“Rusty” Rush, the Chief Executive Officer, President and Chairman of the Board.

As of the reporting period, T he Company currently has one reportable business segment - the Truck Segment.

The Truck Segment includes the Company’s operation of a network of commercial vehicle dealerships in the United States and Ontario, Canada that provide an integrated one-stop source for the commercial vehicle needs of its customers, including retail sales of new and used commercial vehicles;

aftermarket parts sales, service and collision center facilities;

and financial services, including the financing of new and used commercial vehicle purchases, insurance products and truck leasing and rentals.

vehicle upfitting and financial services, including the financing of new and used commercial vehicle purchases, insurance products and truck leasing and rentals.

The commercial vehicle dealerships are deemed a single reporting unit because they have similar economic characteristics.

The Company’s chief operating decision maker considers the entire Truck Segment, not individual dealerships or departments within its dealerships, when making decisions about resources to be allocated to the segment and assessing its performance.

The Company also has revenues attributable to three other operating segments.

These segments include a retail tire company, an insurance agency and a guest ranch operation and are included in the All Other column below.

None of these segments has ever met any of the quantitative thresholds for determining reportable segments.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The Company evaluates performance based on operating income.

There were no material intersegment sales during the years ended December 31, 2023, 2022 or 2021.

The following table contains summarized information about reportable segment revenue, segment income or loss from continuing operations and segment assets for the periods ended December 31, 2023, 2022 and 2021 (in thousands):

The Company’s CODM considers the entire Truck Segment, not individual dealerships or departments within its dealerships, when making decisions about resources to be allocated to the segment and assessing its performance.

In addition to the Truck Segment, the Company generates revenue from two additional operating segments:

Retail Tire Sales and Insurance Services.

These operating segments do not meet the quantitative thresholds for separate reporting as specified under the guidance of ASU 2023-07.

Therefore, they are consolidated under the “All Other” category in the segment disclosures below.

These segments share accounting policies consistent with the summary of significant accounting policies.

There were no material intersegment sales for the years ended December 31, 2024, 2023, or 2022.

Revenues from external customers

Cost of products sold

Controllable expenses

Allocated expenses

Segment operating income (loss)

Interest income

Interest expense

Depreciation and amortization

Segment operating income

Segment income from continuing operations before taxes

Net income (loss)

Segment assets

Expenditures for segment assets

Capital expenditures

Depreciation and amortization

Revenues from external customers

Cost of products sold

Controllable expenses

Allocated expenses

Segment operating income (loss)

Interest income

Interest expense

Depreciation and amortization

Segment operating income

Segment income from continuing operations before taxes

Net income (loss)

Segment assets

Expenditures for segment assets

Capital expenditures

Depreciation and amortization

Revenues from external customers

Cost of products sold

Controllable expenses

Allocated expenses

Segment operating income (loss)

Interest income

Interest expense

Depreciation and amortization

Segment operating income

Segment income from continuing operations before taxes

Net income (loss)

Segment assets

Expenditures for segment assets

Capital expenditures

Depreciation and amortization

The Company’s revenues are primarily generated from the sale of finished products to customers.

Those sales predominantly contain a single delivery element and revenue from such sales is recognized when the customer obtains control, which is typically when the finished product is delivered to the customer.

Those sales contain a single delivery element and revenue from such sales is recognized when the customer obtains control, which is typically when the finished product is delivered to the customer.

The Company’s material revenue streams have been identified as the following:

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Other revenue

All of the Company's performance obligations are generally transferred to customers at a point in time.

The Company’s performance obligations are transferred to customers at a point in time.

The Company did not have any material contract assets or contract liabilities on the balance sheet as of December 31, 2024, or December 31, 2023.

Revenues related to commercial vehicle sales, parts sales, commercial vehicle repair service, finance and the majority of other revenues are related to the Truck Segment.

Revenues related to commercial vehicle sales, parts sales, commercial vehicle repair service, finance and most other revenues are related to the Truck Segment.

For the sale of new and used commercial vehicles, revenue is recognized at a point in time when control is transferred to the customer, which is when delivery of the commercial vehicle occurs.

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When control is transferred to the customer, the Company has an unconditional right to payment and a receivable is recorded for any consideration not received.

The Company controls the commercial vehicle before it is transferred to the customer and it obtains all of the remaining benefits from the commercial vehicle relating to the sale, ability to pledge the asset or hold the asset.

The Company controls the commercial vehicle before it is transferred to the customer and it obtains all the remaining benefits from the commercial vehicle relating to the sale, ability to pledge the asset or hold the asset.

The Company is a principal in all commercial vehicle transactions.

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Any remaining performance obligations represent service orders for which work has not been completed.

The Company’s service contracts are predominantly short-term in nature with a contract term of one month or less.

The Company’s service contracts are predominately short-term in nature with a contract term of one month or less.

For those contracts, the Company has utilized the practical expedient in Topic 606 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

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Balance as of December 31, 2022

Reclassification of currency translation related to equity

Foreign currency translation adjustment

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The functional currency of the Company’s foreign subsidiary, RTC Canada, is its local currency.

Results of operations of RTC Canada are translated in USD using the average exchange rates on a monthly basis during the year.

Results of operations of RTC Canada are translated in USD using the average exchange rates monthly during the year.

The assets and liabilities of RTC Canada are translated into USD using the exchange rates in effect on the balance sheet date.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data