Justin Long: Got it. And I was wondering, too, if you could share anything on expectations for the first quarter, maybe truck sales, parts and service, and Steve, I know typically you see an uptick in G&A? So maybe some thoughts there as well.
Rusty Rush: Yeah. Well, first quarter is always G&A goes up. We didn’t put it in the releases here. We put it for the last 25 years, but nothing’s changed, right? All the equity comp and taxes and all that ramp back up and get expensed out in the first quarter. And that is natural for our business. You can go back and model it every year. So we definitely expect that from a truck sales perspective. We are going to start declining. Okay. There’s no question. Everyone knows we’ve known it for a couple of years, the 2024 was going to be a little bit soft. And no one expected 2023 to be as big as it was with all the demand, the pent-up demand. But the key thing in the truck sales side is, this is nothing that we didn’t expect, but we’re not expecting ACT as it down about 22%.
And I’m going to agree with that. I don’t expect it to be down 22% in Q1, but I do expect it to be softer. And we expect to do better, by the way, given the diversity our customer base, right? I can tell you that the over-the-road business is going to be down more like 30%-plus for the whole year, I believe. But the key thing is we’ve got 2025 and 2026 coming, with EPA regulations of January 1 of 2027. There will be, I’m guessing as we get to the back half of this year, folks are going to wake up and realize that they are probably going to pre-buy at the 2025 and 2026 given, not just a new technology, but I mean, I won’t get into pricing, what the engines are going to cost and go up by January 1 of 2027 with all the new aftermarket – after treatment systems are going, we’re going into play to meet the new EPA regulations.
So as that we believe the freight market will come back. The over-the-road business is still the biggest piece of volume out there. It’s not in Rush, it’s 50-50, right, between vocation on that. But in the real market, it’s still demanded piece. So, those folks as they can get their feet underneath them here. It’s been a long year-and-a-half or two, like I said, they get their feet under. I would expect some pre-buy to start possibly in the back quarter, from the back half of this year, is folks realize what the cost and stuff will be around that equipment. From an aftermarket perspective, yeah, I said the first half would be flat and what I went through a minute ago. I have hopes that we’re up slightly, but I don’t want to put that out there.
I think some of the initiatives we have are still – we keep rolling them out and we still haven’t to come to fruition on a lot of the ones that we have rolled out over the last couple of years. So, I got to believe that we’re still extremely focused on – remember, we’re also battling less inflation, okay, regardless of the report yesterday. Overall, obviously, the replacing is not what it was 2 years ago or even the first half of last year. So, it’ll be real growth, it’ll be taking share. That’s what we focus on every day. We get up at the parts and service business has to take share. So, I’ve got to believe that we’re going to be like I said flat. I have hopes to do way better or a little better. I’d love to say I can be – low- to-mid-singles up for the year.
But, it’s not as easy to look at as it was the last couple of years, right? It’s a day to day, hand to hand combat type work. But I have all the confidence in the world as I always do. And I think the results bear that out for the organization. And our strategic initiatives that we’ve laid out there and what we’re focused on as a group, so that we can execute on those, right? I like to believe we’ve executed in the past and will continue to execute as we go forward, regardless of what the truck sales market is. I can’t make a truck market, but I expect to do better. I don’t want to – I’m not going to guarantee, but I expect to do better than 22%. I can promise you that. But that’s going to be – we’re working that every day.
You don’t have the leaps time. You don’t have allocation like you had. That’s not out there anymore. So it’s not like I’ve got a yearlong backlog of trucks. So, I’ll still sell you – most of them, I can still sell you trucks and you won’t sell in Q2, I’ll get you some. So, that’s just where we’re at. We’re back to normal times. Okay. Let’s just say that when it comes to truck sales, I do think we’ll be back on allocation this time almost next year. I do believe that will come to pass, whether it’s February, whether it’s April, next year, I can’t tell you, but there’s no doubt in my mind. that we’ll be going back to an allocation market in 2025.
Justin Long: Got it. And last one for me, Rusty, you’ve talked about earnings expectations and free cash flow expectations and the trough in 2024. Any change to your outlook there?
Rusty Rush: None whatsoever. I don’t take back anything I’ve said in the last couple of years. Okay. And as usual, we’re focused on, I’d like to over deliver, how about that?
Justin Long: I like it. I’ll leave it there. Thanks, Rusty. Thanks, Steve.
Operator: Please stand by for our next question. Our next question comes from the line of Andrew Obin with Bank of America. Your line is open.
Andrew Obin: Hey, Rusty. How are you? Good morning.
Rusty Rush: Well, good morning, Mr. Obin.
