Market Overview

Rush Enterprises, Inc. Reports Third Quarter 2017 Results

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  • Revenues of $1.257 billion, net income of $29.8 million
  • Earnings per diluted share of $0.72, a record high
  • Solid activity in most market segments drove new truck sales and aftermarket performance
  • Absorption ratio of 120.9%

SAN ANTONIO, Texas, Oct. 25, 2017 (GLOBE NEWSWIRE) -- Rush Enterprises, Inc. (NASDAQ:RUSHA) (NASDAQ:RUSHB), which operates the largest network of commercial vehicle dealerships in North America, today announced that for the quarter ended September 30, 2017, the Company achieved revenues of $1.257 billion and net income of $29.8 million, or $0.72 per diluted share, compared with revenues of $1.096 billion and net income of $14.9 million, or $0.37 per diluted share, in the quarter ended September 30, 2016. 

"Continued broad-based strength in the U.S. economy and most of the customer segments we support helped us achieve record-high profitability in the third quarter," said W.M. "Rusty" Rush, Chairman, Chief Executive Officer and President of Rush Enterprises, Inc. "Further, we continued to advance our strategic initiatives, particularly in the areas of all-makes parts and service, which also contributed to our strong performance this quarter," he said.

"In the third quarter, many of our employees were impacted by Hurricanes Harvey and Irma.  Employees nationwide rallied to support them, donating money, time and valuable goods to help not just their fellow employees in need, but also the affected communities as well.  I am sincerely grateful for our employees for not only their hard work and extraordinary results this quarter, but also for their generosity and dedication to each other and their communities, which I greatly admire," Rush said.

Operations

Aftermarket Solutions
Aftermarket products and services accounted for approximately 62.9% of the Company's total gross profits in the third quarter, with parts, service and body shop revenues up 11.7% as compared to the same timeframe in 2016.  This contributed to a quarterly absorption ratio of 120.9%.

"The growth in our aftermarket revenues in the third quarter was driven by continued activity in the energy and construction sectors, as well as increasing activity from over-the-road fleet customers, and by the successful execution of certain strategic initiatives designed to increase aftermarket sales and gross profits, " Rush said.  "Looking ahead, we expect customer demand for aftermarket products and services to remain solid, however we expect our aftermarket revenues to be negatively impacted by the seasonal decline we typically experience during the fourth quarter," Rush explained.

"We remain focused on our long-term plans and are now benefiting financially from our strategic initiatives, which include our all-makes parts and service business," said Rush.  "It is also important to note our mobile service business is growing and positively impacted our aftermarket revenues in the third quarter," Rush said.  "Though the alternative fuel market is relatively flat, our Momentum Fuel Systems product line is beginning to gain market share," he added.

Truck Sales
U.S. Class 8 retail sales were 51,574 units in the third quarter, up 11% over the same time period last year, according to ACT Research.  Rush's Class 8 sales outpaced the industry in the third quarter, increasing 20.6% as compared to the third quarter of 2016 and accounting for 7.1% of the U.S. Class 8 truck market.  ACT Research forecasts U.S. retail sales for Class 8 vehicles to be 190,000 units in 2017, a 3.5% decrease compared to 2016, but considerably higher than their original 2017 forecast of 154,000 units.   

"The increase in our Class 8 new truck sales compared to the third quarter of 2016 is attributable in large part to increased activity from energy customers," said Rush. "Additionally, vehicle sales activity remains solid in construction, refuse, general freight and the majority of the other industries we support around the country.  We believe our Class 8 new truck sales in the fourth quarter will remain solid, due to this general economic strength," he explained.

"Used truck valuations have stabilized, and we believe our used truck inventory is appropriately positioned to support current market dynamics and new truck sales," Rush said.

Rush's Class 4-7 medium-duty sales increased 14.5% from the third quarter of 2016, accounting for 4.6% of the total U.S. market.  U.S. Class 4-7 retail sales were 61,538 units in the third quarter of 2017, up approximately 9.0% over the third quarter of 2016.  ACT Research forecasts U.S. retail sales for Class 4-7 vehicles to reach 238,475 units in 2017, a 5.4% increase over 2016. 

"We had another strong quarter for our medium-duty truck sales, which were also positively impacted by continued strength in a wide variety of industries across the country," said Rush.  "Our continued ability to stock bodied-up medium-duty trucks allows us to meet our customers' immediate needs," he said.  "We expect our Class 4-7 new truck sales to also remain solid throughout the remainder of the year," Rush added.  

Financial Highlights

In the third quarter of 2017, the Company's gross revenues totaled $1.257 billion, a 14.7% increase from gross revenues of $1.096 billion reported for the quarter ended September 30, 2016.  Net income for the quarter was $29.8 million, or $0.72 per diluted share, compared to net income of $14.9 million, or $0.37 per diluted share, in the quarter ended September 30, 2016.

Parts, service and body shop revenues were $375.8 million in the third quarter of 2017, compared to $336.5 million in the third quarter of 2016.  The Company delivered 3,647 new heavy-duty trucks, 2,828 new medium-duty commercial vehicles, 447 new light-duty commercial vehicles and 1,743 used commercial vehicles during the third quarter of 2017, compared to 3,024 new heavy-duty trucks, 2,469 new medium-duty commercial vehicles, 523 new light-duty commercial vehicles and 1,795 used commercial vehicles during the third quarter of 2016.

During the third quarter of 2017, the Company repurchased $1.2 million of its common stock and ended the quarter with $127.9 million in cash and cash equivalents, an increase of $4.1 million from June 30, 2017. 

Conference Call Information

Rush Enterprises will host its quarterly conference call to discuss earnings for the third quarter on Thursday, October 26, 2017, at 10 a.m. Eastern/9 a.m. Central.  The call can be heard live by dialing 877-638-4557 (US) or 914-495-8522 (International), Conference ID 94625029 or via the Internet at http://investor.rushenterprises.com/events.cfm

For those who cannot listen to the live broadcast, the webcast will be available on our website at the above link until February 9, 2018.  Listen to the audio replay until November 2, 2017, by dialing 855-859-2056 (US) or 404-537-3406 (International) and entering the Conference ID 94625029.

About Rush Enterprises, Inc.

Rush Enterprises, Inc. is the premier solutions provider to the commercial vehicle industry. The Company owns and operates Rush Truck Centers, the largest network of commercial vehicle dealerships in the United States, with more than 100 dealership locations in 21 states. These vehicle centers, strategically located in high traffic areas on or near major highways throughout the United States, represent truck and bus manufacturers, including Peterbilt, International, Hino, Isuzu, Ford, Mitsubishi, IC Bus and Blue Bird. They offer an integrated approach to meeting customer needs — from sales of new and used vehicles to aftermarket parts, service and body shop operations plus financing, insurance, leasing and rental. Rush Enterprises' operations also provide CNG fuel systems, telematics products and other vehicle technologies, as well as vehicle up-fitting, chrome accessories and tires. Additional information about Rush Enterprises' products and services is available at www.rushenterprises.com. Follow our news on Twitter at @rushtruckcenter and on Facebook at facebook.com/rushtruckcenters.

Certain statements contained herein, including those concerning current and projected market conditions, sales forecasts, market share forecasts, demand for the Company's services and the impact of strategic initiatives are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, 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, competitive factors, general U.S. economic conditions, economic conditions in the new and used commercial vehicle markets, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, product introductions and acceptance, changes in industry practices, one-time events and other factors described herein and in filings made by the Company with the Securities and Exchange Commission.

                         

-Tables and Additional Information to Follow-


RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Shares and Per Share Amounts)
 
  September 30,   December 31,
    2017       2016  
  (Unaudited)    
Assets      
Current assets:      
  Cash and cash equivalents $   127,915     $   82,026  
  Accounts receivable, net     153,526         156,199  
  Note receivable affiliate   14,320       10,166  
  Inventories, net     960,962         840,304  
  Prepaid expenses and other     7,330         8,798  
  Assets held for sale   10,319       13,955  
  Total current assets   1,274,372       1,111,448  
Investments   6,375       6,231  
Property and equipment, net   1,133,309       1,135,805  
Goodwill, net   290,191       290,191  
Other assets, net     54,743         59,372  
Total assets $   2,758,990     $   2,603,047  
       
Liabilities and shareholders' equity      
Current liabilities:      
Floor plan notes payable $   706,995     $   646,945  
Current maturities of long-term debt     142,675         130,717  
Current maturities of capital lease obligations     15,314         14,449  
Liabilities directly associated with assets held for sale         783  
Trade accounts payable     111,100         97,844  
Customer deposits   22,976       18,418  
Accrued expenses   95,022       83,974  
Total current liabilities   1,094,082         993,130  
Long-term debt, net of current maturities     450,121         472,503  
Capital lease obligations, net of current maturities   64,972       70,044  
Other long-term liabilities   9,575       7,214  
Deferred income taxes, net     206,123    
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