Rush Enterprises, Inc. (NASDAQ: RUSHA & RUSHB) reported that gross revenues for the second quarter from continuing operations totaled $329.8 million, a 9% increase from gross revenues from continuing operations of $302.6 million reported for the second quarter ended June 30, 2009.
Income from continuing operations for the quarter was $5.4 million, or $0.14 per diluted share, compared with loss from continuing operations of $1.7 million, or ($0.05) per diluted share, in the quarter ended June 30, 2009. The company reported net income for the quarter of $5.7 million, or $0.15 per diluted share, compared with a net loss of $1.5 million, or ($0.04) per diluted share, in the quarter ended June 30, 2009.
During the second quarter of 2009, the company incurred a $4.9 million pre-tax impairment charge, which equated to a net loss of ($0.08) per diluted share, related to General Motors Corporation’s decision to stop manufacturing medium-duty trucks and wind-down of the company’s GMC Medium-Duty Truck Dealership Agreements.
On June 18, the company announced that it had signed a definitive agreement to sell the assets of its John Deere construction equipment business, including its Rush Equipment Centers in Houston and Beaumont, Texas, to Doggett Heavy Machinery Services, LLC. The purchase price for the Rush Equipment Centers is estimated to be approximately $37 million for assets and goodwill. The transaction, which is subject to customary closing conditions, is expected to close in the third quarter of 2010.
As a result of this announcement, the results of the company’s construction equipment business are being reported as income from discontinued operations. The construction equipment business recorded income from discontinued operations, net of tax, of $0.3 million ($0.01 per diluted share) during the second quarter of 2010, compared to $0.2 million ($0.01 per diluted share) during the second quarter of 2009.
The Company’s truck segment recorded revenues of $325.5 million in the second quarter of 2010, compared to $298.0 million in the second quarter of 2009. The company delivered 813 new heavy-duty trucks, 828 new medium-duty trucks and 889 used trucks during the second quarter of 2010, compared to 954 new heavy-duty trucks, 638 new medium-duty trucks and 776 used trucks in the second quarter of 2009. Parts, service and body shop sales revenue was $116.0 million in the second quarter of 2010, compared to $95.8 million in the second quarter of 2009.
“We are pleased to report the company has continued to perform, delivering another quarter of widening profits,” said W. Marvin Rush, Chairman and Founder of Rush Enterprises, Inc. “This has been one of the longest and most difficult market downturns that we have seen in the company’s 45-year history, but we are proud of our solid financial performance throughout the downturn, which we believe is the result of the hard work of all of our employees.”
“General economic uncertainty combined with the introduction of new emissions-compliant engine technology weighed heavily in creating yet another challenging market for new truck sales in the second quarter,” said W. M. “Rusty” Rush, President and Chief Executive Officer for Rush Enterprises, Inc. “However, improvements in used truck and parts, service and body shop revenues contributed significantly to the company’s profitability this quarter.
“As expected, retail sales of new heavy- and medium-duty trucks remained sluggish throughout the second quarter, as fleets remain hesitant to take delivery of new trucks. Additionally, higher priced 2010 emissions-compliant engines are now the only available engines in most new trucks, and only a few fleets want to be among the first to adopt the new technology. This coupled with an undersupply of used trucks due to depressed new truck sales in recent years helped the used truck market continue to improve in the second quarter.
“Truck dealership parts, service and body shop operations have accelerated, with revenues increasing by 16.7% in the second quarter compared to the first quarter of 2010 and 21.1% compared to the second quarter of 2009. This resulted in a second quarter absorption rate of 104.3%. We expect our back-end operations to remain strong throughout the year. The average age of the fleet remains the highest in history and we believe truck capacity is now at equilibrium with freight movement, which results in more trucks in service and subsequently an increase in truck maintenance needs.”