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Rush Enterprises (NASDAQ:RUSHA)
Q3 2021 Earnings Call
Oct 21, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by and welcome to the Rush Enterprises, Inc. Reports the Third Quarter 2021 Earnings Results Call. [Operator Instructions]

I would now like to hand the conference over to Mr. Rusty Rush, Chairman, CEO and President. Thank you.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Good morning, and welcome to our third quarter 2021 earnings release conference call. On the call today are Mike McRoberts, Chief Operating Officer; Steve Keller, Chief Financial Officer; Derrek Weaver, Executive Vice President; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Vice President, General Counsel and Corporate Secretary.

Now, Steve will say a few words regarding forward-looking statements.

Steven L. Keller -- Chief Financial Officer and Treasurer

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 31, 2020, and in our other filings with the Securities and Exchange Commission.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

As indicated in our news release, in the third quarter, we achieved revenues of $1.27 billion and record high net income of $69.4 million or $1.20 per diluted share. We are proud to declare a cash dividend of $0.19 per common share. We continue to see economic recovery and a strong freight environment throughout the country, which has created widespread demand for new and used trucks, as well as aftermarket products and services. Our profitability was largely driven by our diligent expense management during the quarter.

During 2020, we made it a priority to implement new processes and tools throughout our organization to control expenses, throughout the truck cycle. We believe these processes will allow us to effectively control expenses that we can -- as we continue to implement our strategic growth initiatives and will contribute -- and will continue to contribute to higher pre-tax profit margins than we have historically experienced.

Looking ahead though, demand remains healthy for new trucks and aftermarket parts and services. Component supply chain [Technical Issues] vehicles that are in operation. Our part sales are historically high, and we experienced healthy activity in most market segments. Service revenues are accelerating gradually, largely due to hiring more technicians and improving the proficiency of our workforce as well as our enhanced service offerings. We believe demand for aftermarket parts and service is strong, but we expect supply constraints to continue to impact the industry through the middle of 2022. We continue to focus on our strategic aftermarket initiatives and expect our fourth quarter performance to remain strong, though we expect normal seasonal decline over the next couple of months.

Turning to truck sales. In the second quarter, we sold 2,537 new Class 8 trucks, accounting for 4.7% of the total U.S. Class 8 market. The healthy economy and strong freight rates led to widespread demand for new Class 8 trucks. But our results were mainly impacted by manufacturers' limited production capabilities. ACT Research forecasts U.S. retail sales to be 228,500 units in 2021, up 16.8% from 2020. We expect component supply issues will continue to delay some Class 8 trucks -- push some Class truck 8 sales into next year, which will likely impact our performance in the fourth quarter. However, we believe Class 8 new truck sales will accelerate in 2022, when manufacturers are able to increase production.

Our Class 4 through 7 new truck sales reached 2,792 units in the third quarter, accounting for 4.7% of the U.S. market. We experienced healthy activity for many market segments, particularly food service and lease and rental, but the limited production of new medium-duty trucks negatively impacted our results. ACT Research forecasts U.S. Class 4 through 7 retail sales to be 251,000 units in 2021, up 8% from 2020. As we look ahead, we believe Class 4 through 7 truck production will not increase as quickly as Class 8. We are pleased that Hino is back in production. But we do not expect the other medium-duty manufacturers we represent to significantly ramp up production for some time. That said, demand remains strong and we believe our fourth quarter Class 4 through 7 results will be on pace with our third quarter results.

Our used truck sales reached 1,712 units in the third quarter, down 16.7% year-over-year. While our unit sales are down compared to last year, used truck demand and values remain strong, largely due to production limitations of new Class 8 trucks. We expect used truck demand and values to remain strong in the fourth quarter and begin to normalize when new truck production catches up, eventually with customer demand. It is becoming more challenging to maintain a healthy used truck inventory, but we believe our fourth quarter used truck sales will be consistent with our third quarter results.

Regarding network growth, this week, we acquired an independent parts and service facility in Victorville, California that we will convert into a full-service Peterbilt dealership. We also have plans to acquire a full-service Hino and Isuzu dealership in Elk Grove, Illinois next month. Further, we entered into an agreement with The Summit Truck Group to acquire full-service dealerships in several states, representing International, IC Bus, Idealease, Isuzu and other manufacturers. We expect that transition to close in December.

Additionally, we plan to close our previously announced agreement with Cummins, with Cummins to acquire 50% of interest in Momentum Fuel Technologies later this year. It is important that I thank our employees for their unwavering commitment to growing our business and supporting our customers. In recognition of their hard work on the front lines during the pandemic, we are happy to issue a one-time discretionary of $1,000 bonus to all employees in mid-December. This is one way for us to express our gratitude to our employees for their impressive work over the past year.

With that, I'll take your questions.

Questions and Answers:

Operator

And thank you. [Operator Instructions] And our first question comes from Jamie Cook from Credit Suisse. Your line is now open.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Good morning, Jamie.

Operator

Jamie, is your line on mute? Could you please unmute your phone?

Jamie Cook -- Credit Suisse -- Analyst

Sorry. Sorry, I was on mute. Good morning, everyone and good job on execution as usual. I guess, Rusty, first question, you talked about Class 8 production ramping faster than 4 to 7. If you could just provide some color on that, and how you think about production ramping in general in 2022? My second question is, can you sort of address the market's approach to pricing with the incremental costs. And then I guess last, just any color you can provide on sort of the acquisitions in the JVs that you announced and sort of incremental earnings accretion to 2022? Thanks.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Okay. Jamie. I'll start with the hot up [Phonetic]. Well, when you compare a Class 4 through 7 versus Class 8 and why did I say the Class 4 through 7 will ramp up slower, is the fact -- and it mainly is at the two large manufacturers that you will probably see Class 8, because demand is extremely strong on the 8 side, right? And also, it is a more expensive larger product and I think even for us, if you look historically, our margins typically tend to be better on the 8 side. So when you are in a supply constraint arena, which you are now, you have to pick and choose, right, because a lot of same -- you got a lot of the same components, right?

So, obviously the 8 demand I think is even stronger than 4 through 7, right now. And given the vehicles ourselves [Phonetic] that you have to pick and choose, you got to make decisions, because of the supply constraints we've been dealing with, so, I think tend to favor the Class 8 right now, given the demand and also the profitability of the products you want to get real, because it costs twice as much, right? So obviously -- so it only makes sense that margins tend to be better, but just based on the revenue side, I want to begin with. Pricing wise...

Jamie Cook -- Credit Suisse -- Analyst

Do you [Speech Overlap] the next part. Did you see any evidence that you're looking are you worried about or people are worried about double ordering and some of this [Phonetic] demand sake?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

No, I don't feel -- no, I don't feel that way about our order board. I don't -- I think -- look, in my mind, what's happened is demand -- we kind of think it ramped up since July of last year. I mean it currently blew up, right, from a freight perspective, but we had money, we were buying everything. And so, demand was there. So we ended up -- when we ran into these supply shortages, starting in really March, April, by the time the year is out, you ask me, we probably put 40,000 or more -- on the bottom side 40,000 Class 8 units that should've been built this year, but are not going to be built.

Well, when you think about it, all you're doing is pressing that demand into '22. '22 was supposed to be a pretty good year. Then you run into '23, right? You're running into '23 and you got carbon free- buys [Phonetic] and those states -- it was 15 states [Indecipherable] but for sure in California, because the price of diesel engines is going through -- going way up. I know there is a lot of different numbers as to how much, but if they're going way up in '24. So, I don't see these things slowing down to '24. Top side, there's some big economic issue, OK, because I don't see that we're going to catch up to demand right now. I mean manufacturers are not meeting demand at the moment. And so, it just keeps pushing it out and pushing it out. Unless there's some big economic downturn in the country, I don't see that demand going away, because you're not really going to be -- you're just going to be running right and replace them. And think replacements in the 220s now and that's what -- this is U.S. retail.

So I don't think when you look at last year, it was under that, obviously, I think 190 or something, 192 or something [Phonetic]. So -- but then you a huge increase back up in GDP and freight, risk -- and given what we see in '22 and '23, I don't see the double ordering. I mean, I'm not -- I don't believe we have it. I mean, I can -- let me give you some data points. When I talk about -- what I really care about is what's happened in '22 and '23. Our backlog, a year ago at this time, was about $1.1 billion, OK? In the Q3 -- or excuse me, in the Q2, it was $2.2 billion and it's $2.7 billion now.

Could there be a little something in there? Of course, probably is and there's never an order board that's perfectly clean. But I don't see any evidence based in there that -- even if there was a little bit, still our backlog is big. So we've got to catch up with what we've missed. So I'll try to -- I'll leave that one alone. I mean, these are little bit...

Jamie Cook -- Credit Suisse -- Analyst

And -- but then -- with the $2.7 billion in backlog, can you just address how you're approaching sort of pricing then? Like what's just [Speech Overlap].

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Well, I am sort of being -- I'm being driven a lot -- right, you're right. I'm being driven a lot by the OEMs, OK? And if we all know what costs have gone up, everybody's been scrambling on the OEM side and the supplier side, and they're paying more, obviously, prices of trucks are going up. Anybody can see the inflationary pressures that are out there. I sometimes -- I know people talk about them a little bit, but I see them a much larger sometime just in my -- I for sure see in our business that they're out there. Well, you asked about pricing. You better believe pricing's up.

So -- but -- I mean, honestly it's trying to keep up from the chain. It's not just the OEMs. They are getting hit for pricing, right. They're getting hit hard on not just supply, but if you can't get supply because they're getting hit on the pricing at the same time, because the old supply and demand, it's been like that forever. And so, that's really -- it just feeds from the bottom of the food chain, up to the top. And I think that's what you're seeing out there right now. I don't have exact numbers, but I would say that ends up getting passed on to the end user, right, at the end of the day or -- it either comes out of margin or just passed off, one or the other. And so, I would imagine sometimes on the plus side, because it accelerates so fast, it's hard to get it passed on. But this didn't just start yesterday, it started last year, nine months ago, 10 months ago. So as you clear out, what you should be putting into your backlog in '22 should catch up with the pricing pressures that you had, at least that's the way it's supposed to work out in the real world. So you got a backlog and so that makes it hard to work your way through commitments [Indecipherable] hopefully as most people do. And then, get new price regarding to the products that you're selling now for future. The problem is, I guess the ones [Indecipherable] there's been no supply. I mean, look, we delivered only 2,500 something trucks, Class 8 and that's why I'm so proud of the quarter, is because the quarter was -- you look at it from a whole, what everybody used to view our company, we have so many trucks, OK? And you look at the performance, it's just driving the things we've talked about doing for a long time and I think you'll see in the fruition of it and the results in these numbers.

And you asked -- what was your third question, Jamie?

Jamie Cook -- Credit Suisse -- Analyst

My third question which is, I'm just trying to figure out all the M&A that you're doing, like what's incremental earnings [Speech Overlap].

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Oh, I'd love to talk about M&A. It's been so long since I've been able to talk about M&A, but I'll talk about it. Well, it gets hard out there, right, to find stuff, but a little bit -- we just talked about a nice independent deal we closed. It's just add-ons, [Indecipherable]. The deal is hopefully in the Midwest and that'll grow about single [Phonetic]. The Summit deal though, on the other hand, represents quite a bit of growth for us. When you look at it, it's the second largest international dealer, OK? It fills in three states. We're in LA. You're going to hear some of Rusty's silliness here, but if you look at Kansas, and you look at Missouri, and you look at Arkansas, we know everything there and Memphis. And so -- I don't know. It's 17 stores, 18 stores. I tell people it's like you making that puzzle and the dog took a piece and chewed it up and you can't find it. Well, three states plug right into our map. I'm looking at my map right -- it sits next to me on the wall here and it's a perfect fit. And it would be hard for us to find something that fits more perfectly from a geographic perspective. Now, it's a good well run group. We can run it better and we'll mold that group over time. We will close it in the middle of December. We're excited about that. The Cummins JV, super excited about that. Momentum, we've been at the fuel system business since '14 -- if you remember back in that days, natural gas was going to be 10% of the market by 2017, never got off it to, OK. But Cummins must believe something about the future and we do too. We believe that RNG will be a bridge technology as we get deeper into this decade, OK?

And so we're excited, and it's not something that's going to affect, we finally got that -- I finally got their business to breakeven on our own, OK, this last year. So -- but there is going to be an opportunity in '25 or '26 or '27 for that to be a bridge technology and we believe partnering with Cummins. I was looking the other day. I thought they had pretty good brand equity and make a great partner in the fuel systems business. They're the ones that build a natural gas engine. You may not have seen, but last week, they announced they're going to build a 15-liter natural gas engine, which is really going to open up the market, we believe from mid-decade, as I said. So we're very excited about that too. So, there you go. I'm trying to answer the question as best I could.

Jamie Cook -- Credit Suisse -- Analyst

Okay. You did. Thank you so much.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Always.

Jamie Cook -- Credit Suisse -- Analyst

[Speech Overlap] I'll let someone else ask a question. Thanks.

Operator

And thank you. And our next question comes from Justin Long from Stephens. Your line is now open.

Justin Long -- Stephens, Inc. -- Analyst

Good morning and congrats on the quarter.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Thanks, Justin.

Justin Long -- Stephens, Inc. -- Analyst

So, maybe to just put a bow on the fourth quarter. I know typically you see a seasonal decline, Rusty. You called out five fewer working days, but is there any way you can help us think about the magnitude of the impact from five fewer working days in the fourth quarter?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Sure. It's two things. Look, these are just a little bumps. We know about the supply chain issues. We're dealing with them right now. I'm going to answer your first question, then I'll add to it. And we'll get past this. We are going to have a good fourth quarter. Point being though, the way it falls out, we've got five less working days. Typically the fourth quarter is about three, but the way the holidays have worked this year, we're pulling a holiday out of '22, and sticking it back in '21, because that's January 1 and we're giving off December 31. It was just the right thing to do on a Friday.

So impactfully, without getting into all all that mess, we did $2.6 million of gross profit a day, in parts and service. So, if you can do the math, that's about 13 [Phonetic]. I think truck gross might be down some, just given -- we have a lot of supply chain issues. But as I said, I'm not worried. It's going to be a good quarter, but it won't be the third quarter, but it will be a great quarter, really good quarter. But the good part is '22 and '23, so you're talking about maybe $20 million of gross profit or so. But at the same time, you can extrapolate it from there.

Other than that, everything should be running smooth and good and we just want them be a better fourth quarter than last year and -- but third quarter is always typically our best quarter. If you go back historically, not every time, but historically, the third quarter is always our best quarter. So -- but listen, '22 and '23 are set up, if you look at the growth we've had in parts and service and look what the backlog I talked about a minute ago, I'm so -- I'm very -- and these acquisitions that we're plugging in, as they -- as we get them implemented, integrated into the organization, things look great, so from that perspective.

Justin Long -- Stephens, Inc. -- Analyst

Well, and that's why I wanted to go with my next question, as we kind of zoom out and look at the next couple of years. You've talked earlier about that truck cycle being extended through 2023, but could you maybe expand a little bit more on the parts and service business? How you see that growing in the next couple of years? And then incremental margins as well, because I think when you put together the truck cycle with parts and service recovering and incremental margin, it implies that EPS can still grow nicely the next couple of years, but would love to get your thoughts around all that.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Sure. No, I would agree with that. In U.S., one piece out and that's M&A, right. I never really gave an answer, because I'm going to integrate it, but I can tell you this, it's accretive, OK? We're not doing it to be un-accretive. I can promise you. So we'll sort out exactly what the M&A brings to the organization, but it would be nice. From a margin perspective, we have super high margins always, but I see nothing that's going to stay in the way of us continuing on the parts and service side to continue to grow. I can't pronounce [Phonetic] 15% growth rates quarter-over-quarter, but remember last year we were coming out of COVID etc. So your baseline was there, but it is -- we are targeting high-single, 8%, 9%, growth rates, which I do believe the parts and service are doable and very achievable. And I'm not going to count -- I'm not going to talk about any more than that, but I do believe that we will continue to see those type of growth rates in the first half and into next year. I think we can do that. If you look at all the initiatives over the last two years, if you look at some of the other things we're doing now that I don't want to talk about.

But some of the things we're doing to go to market and that's the piece of the business. I mean, we ran a 134% absorption, that's a record for us. And that was just an operating metric, but it's something we key on pretty -- quite heavily. So, from a parts and service perspective, it's there. You heard me talk about the backlog from a truck sales perspective, it's there. It's just going to take some execution on our part and I'll let history speak about whether we can execute or not. So, we've been able to do it before, and I don't -- and our team only continues to get better. It's not me. It's all the folks throughout the organization. I'm just excited about where we're going. Those are easy things to look at. We do believe margins are sustainable, and maybe not all exactly where they are, but they're going to be sustainable higher than what they were a couple of years ago, for sure. We ran pretty high margins in parts and service, probably as big as we ever had this last quarter. Perhaps, that will be up in that range. And you add in some -- like I said, 9% growth rates and stuff like that next year, which I'm hoping to do better, but if we're going to do that, I'll believe.

You can -- you all can extrapolate the numbers from there. With the managed expense piece -- don't lose sight of the managed expense piece. G&A sequentially was down actually. Now, I don't expect that to stay down, but it was actually down a couple of points from Q2. So -- but I do expect us to be able to manage. I talked about that a couple of years ago, if you remember, about when we come out of all this, how we're going to do a better job -- really last year, we're going to do a better job of managing our expenses as we grow our revenues and our gross profits. So, so far, so good, and we look forward to continuing that into the next couple of years.

Justin Long -- Stephens, Inc. -- Analyst

Great. Very helpful. Thanks, Rusty.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

You bet. Thank you, sir.

Operator

And thank you. And our next question comes from Andrew Obin from Bank of America. Your line is now open.

Andrew Obin -- Bank of America -- Analyst

Hi. Hey, Rusty. How are you?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Good, Andrew. How are you today?

Andrew Obin -- Bank of America -- Analyst

I'm good. Thank you. So just go back to this comment on expanding margin and expense management. You sort of highlighted expense management statement early on in your prepared remarks. I think this is sort of a new focus. Can you just expand. It does seem that your approach to costs in the cycle, a little bit different, because I think historically once things went up, right, you were very good at sort of keeping costs in control early on in the cycle, so as the cycle sort of got going, costs came back. Can we just go more in depth, just to talk about what are you guys doing, what initiatives do you have internally? Just sort of change your approach to costs this time around because execution seems to be superb. Thank you.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Thank you, Andrew. I appreciate it. Well, without getting -- I will give you as much detail as I can. Training, I think our managers, we have put in some new processes and new controls that as we grow back, we're only going to spend so much money of what we grow. If our gross profit goes up X, we're going to spend X, right, and that's what we're going to spend. And we're going to stick to it. We're almost -- internally we call it a salary cap, just like sports sometimes, right. That means you can't grow, because remember, we're not -- I don't loan money, I don't think do this. I work on trucks, I work on parts, we sell parts, we deliver them, we do this. It takes people, but we want to make sure we are staffed. Remember, two-thirds of our costs are people, at the end of the day. So we will make sure that we don't get [Indecipherable] and overstaffed, that doesn't mean we don't grow, we don't add people. But we do it with some tools that everyone is pretty dialed into it. It took a lot of work this year.

Now, we've got to continue that in the future, but we're pretty dialed in to -- we're only going to spend X of every dollar we get into gross box. So we're not going to get way out over it and these tools -- so this is a salary cap, it's this, we can call it these other tools, other names we can give to it, but the guys have been very, very focused. All the managers have been very diligent. I'm proud of them and the teams is now too. And this is in spite of this -- these last few months were tough from a COVID perspective, but we had the second and fourth worst month in the third quarter, that I've ever had with people out dealing with.

So these controls are not leaving the organization and we're still going to continue to invest on the corporate side. We're going to continue to invest, but just at a proper pace. Hopefully you learn something as you get a little bit older, it's not that difficult. I say that, but sometimes everybody gets caught up. We are running new things are growing and you're just not as diligent as you should be. I think there are some of the lessons that we have learned in the last two years are just going to continue to bode well and we're focused on it. We will -- expenses will grow with it, but we'll grow in relation to our gross profits growth. And we'll end up keeping more of it than we historically have and I'm very confident in our ability to do that.

Andrew Obin -- Bank of America -- Analyst

Well, thank you, Rusty. And just to follow-up the question, you guys have very good systems, just the usual question for me. Could you just walk us through what you're seeing by key industry verticals, residential and nonresidential, oil and gas, the corporate customer's ways, maybe what you're seeing across the country in terms of macro, because you do have very unique footprint. Thank you.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

You bet. I don't want to say everything is good, but because oil and gas is still oil and gas, I don't expect to see the gap expand in it. But we see a slight pick up here recently and the services that are being asked for. We sure have as you've seen the price of oil obviously has gone up. We've seen a slight pick up, but I don't think people to -- I don't expect companies to be as undisciplined as they were historically or money to flow like it did historically. But I do think there is some upside still there as it's gradually been picking up from this trial.

Other industries, the over-the-road business, I mean it's great, right. I mean it's really good, because remember, if we're 40,000 trucks short of what demand was, that means people are running their trucks longer, right? So, when you look at the TL side, the LTL side, extremely strong for those customers, the customers we have. We got a couple, three or four big LTL carriers, and our business with them is good. When you look at housing and construction, still strong. Demand for mixer trucks, demand for garbage trucks in the refuse side, very strong. Parts and service, strong in those sectors. I mean I'm sounding like a broken record, repeating myself, but that's what we are truly -- rental and leasing customers, they're -- I need to point out. Our leasing division has had the most outstanding year they've ever had.

I mean it's just been over the top. If you look at our leasing margins and rental margins, I mean they're just above and beyond what I would have thought we could have been able to do, and it's not all driven by gain on sale. They're operating because rentals utilize strong and leasing strong. Now, I will tell you this, because of lack of product, you're having to extend leases and do things on other trucks that normally you would be taking out of service, because you can't get trucks -- you can't get as many trucks as you need. But that still won't inhibit, we believe then from having a outstanding year in '22.

So Andrew, I know it sounds a little bit. I mean even municipal hasn't been fed. Buses -- school buses is a bit decent. I mean it's -- there is a lot of -- it's been a pretty rosy picture, which always scares you when it looks that rosy out there, but at the same time, it is what you can see now. And right now, I don't see that changing a lot, like, I'm not an economist or anything like that. My biggest concern is inflation, I'll be honest with you, runaway inflation, because I've seen inflation out there as sometimes I look at the numbers that are printed and I go "Huh? OK."

But other than that, our business as in the industry, broadly looking at it across and that goes from Florida to California. I don't see any reason that it's having -- it's bad right now. Some better than others, but broadly speaking, everything looks good.

Andrew Obin -- Bank of America -- Analyst

I mean, no slowdown on resi as far as I know, because on light commercial once...

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

We haven't seen it yet, because there is still -- I believe there is something out there, Andrew, lurking, but we have not seen it in some of our areas, especially here in Texas and whatever. I mean they're putting up stuff, it's everywhere around here. The state -- we're typically -- some of the states we're in like Florida, here they're still growing, OK? So -- I mean I'm sure I can pick a residential pocket in some area, but I'm not up to date to pick it by state. But I can tell you here in Florida and a couple of states, it's still blowing up pretty good.

Andrew Obin -- Bank of America -- Analyst

Well, Rusty. Thank you and nice to see that the market today is rewarding your team for all the hard work they've done this quarter. Thanks.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Thank you.

Operator

And thank you. [Operator Instructions] And our next question comes from Joel Tiss from BMO. Your line is now open.

Joel Tiss -- BMO Capital Markets -- Analyst

Hi, guys. How is it going?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Joel, going well, Joel. How are you?

Joel Tiss -- BMO Capital Markets -- Analyst

All right. That's quite the entourage you have to introduce at the beginning of every call now?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

I hadn't changed much.

Joel Tiss -- BMO Capital Markets -- Analyst

Yeah.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

You just [Speech Overlap]. It does? I don't think so. But that's OK. The same one I've introduced last couple of years, but you are also OK, Joel. I know you're getting -- you're getting up there, Joel, it's OK.

Joel Tiss -- BMO Capital Markets -- Analyst

Yeah, I was going to say maybe my hearing aid batteries haven't been updated lately.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Probably not. If you need help, I'll get you a good place to go get them replaced.

Joel Tiss -- BMO Capital Markets -- Analyst

There you go. Can you talk a little about where your parts and service mix might be three years from now, like, just sort of the flow of what you're looking at? And what you've announced in terms of acquisitions and the growth rates and all that? Just trying to give us a little bit of a guidepost?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Well, the growth rates I gave you was on current same-store basis, right. I've got to bring these other stores in to our organization. I think there's some upside. Look, it's well-run company, no question. But I think with some of our systems and some of our stuff, I think there's some upside on the acquisition, especially from a technician perspective. When you look out there, I got 500 mobile trucks, they got a couple. I mean, things like that. There'll be some of the things we do and there's some of our initiatives, well, that's one of our big initiatives in the next couple of the year is to increase our mobile fleet a lot.

Like I said, high single digits for same-store growth, parts and service. Parts growth -- service growth will probably be more steady and gradual. I don't mind looking back three years ago. We added all those technicians. We did real good the first year. Then the second year, we just added technicians, but they really were good technicians. So we had deferred some, which we have, which gets our proficiency back up. Now, we're actually adding back much more strategically, much more gradual. And our returns are way higher and we're going to keep it at that pace. We'd like to add a couple of hundred technicians over this year to our same-store growth, next year, not 500, like we wanted to few years ago, it's not -- I don't think it's possible to do that and do it right with a right proficient technicians because you can't add skilled ones all the time. You got to take ones that are level 1s and 2s and train them up, it's just you're over burdening and you have to carry -- they're not producing for themselves. But we think we can continue to gradually add service. I think the parts business will continue to go up.

Look, inflation is going to help drive part of itself to begin with -- from a revenue perspective, when you look at what some of the prices that are coming in on the price takes on parts, they're going up like trucks, like everything you see in the growth [Indecipherable] right now, as I said. It's one of the things to worry about. But I think we will still out -- we're going to try to outrun the market and take share. We had a little hiccup last year, but we feel really good that we're taking share right now and going back, getting back on track. Well, I know we are. Our results speak for that, of what we want to do. We just want to take share. We want -- if the market's up 7%, I want to be up 9%, right? I don't need to take it all one day, but just consistently take share over time and we believe we can do that, especially when you look at -- like I said, when you plug in this new acquisition, the integration of these stores into our map -- well, it's a differentiator in my mind, it helps continue to allow us to differentiate from a geographic perspective.

Now, it's what you do with that geography and how you go to market and that's what we're trying to do is tie everything together that we have as best we can from a -- keep trucks up and running right. Different -- when you go to market with us, you get the same pricing, you get all that from one coast to the other coast, unlike 20 -- how many states we have 27, 28 and we'll cover probably 70% or more of all the trucks sold inside our geography. So, we'll continue to press that forward and hopefully that allows us with our systems and start to gain share. That's our goal on the part side, and our goal on the other side, as I said, in the acquisition, we've got a goal -- in the next five years, I want to double my mobile service fleet. I know I'm throwing it out there, but that's a new goal we came up with our last strategic off-site meeting.

We believe that the customer base is going to be demanding that. We believe, especially with technology changes that are coming and things like that you see in the automotive side and we've always done it here, but we're going to do a better job of it, even -- we've got the biggest one for a dealership perspective by far, mobile service feel, we're going to get bigger. So we've got the ability to do it, we've got the expertise, and we obviously got the assets. So those are just different things we've got going to feed it. I know I am not giving you exact numbers, but I'm trying to tell you the tools in the toolbox, we believe we've got those tools and we're going to keep pressing forward with them.

Joel Tiss -- BMO Capital Markets -- Analyst

Any unusual opportunities from all these trucking businesses being separated from their kind of conglomerate parents?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Trucking businesses, what -- I'm trying to follow you, Joel.

Joel Tiss -- BMO Capital Markets -- Analyst

So like a Iveco getting spun out and the Freightliner business coming out Daimler...

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

No, I don't see anything for us right now. I don't see anything. Look I'm -- my two Class 8 OEMs are pretty set, OK? I've got two. I'm not going to be able to be with the others, OK. They're not going to allow me, OK. Remember, their state laws and things -- franchise things inside of agreements. I'm going to -- I'm a PACCAR Peterbilt and a Navistar returns to Class 8 person. There could be -- I think there might be other opportunities. Now, my OEMs, with new technologies coming, it's going to breathe a little confusion in the marketplace, not yet. Everybody talks about it at all right now, just wait for a couple -- three years and see. But I believe our OEMs will be leading the pack in that, but there are other independent people out there, other technologies that is going to be interesting to watch.

And we'll have our eyes out there, but I do believe in our OEMs and their capabilities to meet the changing technologies that are going to be demanded by the governments, but I do believe we might be pushing a little too far. I think that some of the demands when we talk about electric and hydrogen and fuel cell and all the other good stuff, the governments better be careful pressing it too hard because we got to catch up to what we want. I know we've got to clean things up, but those types of things will be where opportunities might come that I can't see right now, but I am very comfortable with the OEMs I have, participating in that transition. This is a transitionary decade like never seen. Transition creates a little bit confusion, which creates opportunity, trust me, we're poised.

Joel Tiss -- BMO Capital Markets -- Analyst

And just last, and maybe you're kind of already answered it that it's too far away. But any -- do you feel any need to get into like EV charging business or anything like that, like things that you're thinking about kind of a couple of years out or it's just very too early?

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

No, I know it's not very too early. We're looking at a lot of stuff. By this time next year, every store in California will be solar and have all the charging stuff, OK? Obviously, we've got to meet the needs of the -- California is the leader in it, right? So we'll be there a year from now. That will be -- we're learning, right. We're learning with customers. We have trucks we sold. We have electric trucks we sold in different marketplaces. I'm not going to get into the specifics. And we look forward to doing more around that space, but again, I believe, I'm not here -- you all don't want to listen to me talk. You've probably heard enough, but I believe it's going to market segment driven as to what technologies went up. Obviously in Class 6, 7, we get to the end of this decade, but I'm sure we will be 50% or more.

Electric, it's not going to be that way on heavy. We're going see that on the TL side. You'll get it in certain applications and certain market segments, but that's not going to, I believe, work for just pure TL over the road, at least not now. It could be in 20 years or so, but I don't think we're there with that, but you've got folks that -- I know hydrogen is something we will go "Oh yeah" There's a lot of things going on, and that's what going to create some confusion as things transition over the next decade, driven by -- we all have to deal with ESG and it's real, the environmental piece, but I think as I said, technologies will be driven just by market segments, we'll adapt to whatever makes sense.

Diesel was not -- diesel will be phased out over time, it needs to be, but it's not going away right now, OK? We're going to be multi-pronged and working with whatever technologies out there, but always trying to be on the leading, not bleeding edge.

Joel Tiss -- BMO Capital Markets -- Analyst

Okay. That's awesome. Thank you so much.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Thank you, Joel. See you soon.

Operator

And thank you. And I'm showing no further questions. I would now like to turn the call back to Mr. Rusty Rush, Chairman, CEO and President, for closing remarks.

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Thank you. Well, I appreciate everybody's time. Obviously, it will be a long time period till we talk in February. So I want to wish everyone happy holidays to you. Enjoy your families, and enjoy the time that you get to spend with them. And we will talk to you in February. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 43 minutes

Call participants:

W.M. Rusty Rush -- Chairman of the Board, Chief Executive Office and President

Steven L. Keller -- Chief Financial Officer and Treasurer

Jamie Cook -- Credit Suisse -- Analyst

Justin Long -- Stephens, Inc. -- Analyst

Andrew Obin -- Bank of America -- Analyst

Joel Tiss -- BMO Capital Markets -- Analyst

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