Rush Enterprises, Inc. (Nasdaq:RUSHA) (Nasdaq:RUSHB), which operates the largest network of commercial vehicle dealerships in North America, reported record annual revenues along with the highest quarterly pre-tax income in the company's history.
Annual revenues reached $2.6 billion, compared to $1.5 billion in 2010. Income from continuing operations for the quarter was $19.4 million, or $0.50 per diluted share, compared with income from continuing operations of $9.2 million, or $0.24 per diluted share, in the quarter ended December 31, 2010.
"2011 was a milestone year for Rush Enterprises in which we achieved record financial performance and accomplished several strategic goals," said W. M. "Rusty" Rush, President and Chief Executive Officer of Rush Enterprises, Inc. "We continued to transition the company into the premier solutions provider to the commercial vehicle industry and decreased the impact of Class 8 truck sales on our financial performance. We ended 2011 in a strong financial position."
"Throughout 2011 we delivered on our three-pronged growth strategy – to expand aftermarket capabilities, to broaden the scope of our commercial vehicle product offerings and to extend our network of Rush Truck Centers. We achieved record quarterly absorption rates in three of the four quarters of 2011 and set a new record for our annual absorption rate. We expanded our aftermarket service solutions, while adding specialized up-fitting and modification capabilities. Also, we purchased additional commercial vehicle franchises and expanded in our existing territories thereby growing our network of Rush Truck Centers to over 70 dealership locations."
Aftermarket services accounted for about 63% of the company's total gross profits in 2011. "Parts, service and body shop revenues reached record highs in March and continued to climb throughout the second and third quarter of this year, remaining strong through year end. This resulted in another record quarterly absorption rate of 117% for the fourth quarter of 2011 and an annual absorption rate of 114%, our highest ever. This substantial increase was the result of increased service needs of aging vehicles as well as incremental business generated by service solutions we are providing to our customers. We will continue to seek opportunities to expand the aftermarket services we provide our customers, and we expect parts, service and body shop revenues to remain strong throughout 2012," Rush said.
In 2011, Rush's Class 8 retail sales increased by 91% over 2010, far outpacing the U.S. Class 8 truck market, which increased by 58%. Rush's Class 8 truck sales accounted for 5.2% of the total U.S. Class 8 retail truck sales market in 2011. "Increased Class 8 truck sales were primarily the result of continued strong demand from our energy sector customers and replacement purchases by large fleets," Rush said.
Similarly, Rush's U.S. Class 4-7 medium-duty sales were up 94% over 2010, significantly outpacing the U.S. Class 4-7 market. Rush's medium-duty retail sales accounted for 3.8% of all U.S. Class 4-7 retail sales in 2011. "The majority of our medium-duty growth was achieved through Navistar Division dealerships and Ford and Isuzu dealerships in Texas, Florida, Oklahoma and California that were acquired during 2010 and 2011. As a result of our recent Ford acquisitions, we also delivered over 1,000 light-duty trucks to the marketplace for the first time ever in 2011," Rusty Rush said.
The Company expects U.S. Class 8 retail sales will remain on pace to reach approximately 200,000 to 215,000 units in 2012, just slightly above historical replacement levels. U. S. retail sales for Class 4-7 are expected to reach 163,000 units in 2012, a 13% increase over 2011. "We expect first-quarter deliveries to be less than fourth-quarter deliveries due to the expiration of tax incentives related to bonus depreciation, and because a brake valve used on many new Class 8 trucks was recently recalled," Rush cautioned.
"We believe activity will remain strong for service and sales in the energy sector in 2012. We are also encouraged by steady economic growth, which has lead to improvements in vocational segments not related to the energy sector. Based on the average age of the U.S. Class 8 truck fleet and assuming continued general economic stability, we continue to expect strong truck sales markets in 2013 and 2014," Rusty Rush added.
In the fourth quarter ended December 31, 2011, the company's gross revenues totaled $776.1 million, a 67.6% increase from gross revenues of $463 million reported for the fourth quarter ended December 31, 2010. Income from continuing operations and net income for the quarter was $19.4 million, or $0.50 per diluted share, compared to $9.2 million, or $0.24 per diluted share, in the quarter ended December 31, 2010.
For the year ended December 31, 2011, the company's gross revenues totaled $2.6 billion, a 72% increase from gross revenues of $1.5 billion reported in 2010. Income from continuing operations for the year was $55.2 million, or $1.42 per diluted share, compared with income from continuing operations of $24.6 million, or $0.64 per diluted share, in 2010. The company reported net income for the year of $55.2 million, or $1.42 per diluted share, compared with a net income of $31.3 million, or $0.82 per diluted share in 2010.
In September 2010, the company sold the assets of its John Deere construction equipment business, including its Rush Equipment Centers in Houston and Beaumont, Texas. The construction equipment business recorded income from discontinued operations, net of tax, of $6.7 million ($0.18 per diluted share) during 2010. A majority of the income from discontinued operations during 2010 was attributable to the gain on the sale of Rush Equipment Centers' assets.
Parts, service and body shop revenue was $176.7 million in the fourth quarter of 2011, compared to $132.8 million in the fourth quarter of 2010. The company delivered 2,872 new heavy-duty trucks, 1,711 new medium-duty commercial vehicles, 292 new light-duty commercial vehicles and 1,215 used commercial vehicles during the fourth quarter of 2011, compared to 1,681 new heavy-duty trucks, 780 new medium-duty commercial vehicles, 33 new light-duty commercial vehicles and 987 used commercial vehicles in the fourth quarter of 2010.
Parts, service and body shop revenue was $675.3 million in the year ended 2011, compared to $489.3 million in the year ended 2010. The company sold 20,189 new and used commercial vehicles in 2011, an 81.2% increase compared to 11,141 new and used commercial vehicles in 2010. The Company delivered 9,052 new heavy-duty trucks, 5,469 new medium-duty commercial vehicles, 1,019 new light-duty commercial vehicles and 4,649 used commercial vehicles during 2011, compared 4,746 new heavy-duty trucks, 2,820 new medium-duty commercial vehicles, 114 new light-duty commercial vehicles and 3,461 used commercial vehicles during 2010.
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