Rush’s Net Income Down in 3Q

Oct. 21, 2015
Rush Enterprises, Inc. (NASDAQ:RUSHA) (NASDAQ:RUSHB) announced that third-quarter revenues were $1.294 billion and net income was $19.9 million, compared with net income of $23.5 million in the same quarter a year ago. 

Rush Enterprises, Inc. (NASDAQ:RUSHA) (NASDAQ:RUSHB) announced that third-quarter revenues were $1.294 billion and net income was $19.9 million, compared with net income of $23.5 million in the same quarter a year ago. 

"We are proud of our solid financial performance this quarter," said W. M. "Rusty" Rush, Chairman, CEO and President of Rush Enterprises, Inc. "As expected, declines in energy sector activity continue to have a negative impact on Class 8 truck sales and aftermarket revenues. However, we were able to partially offset this impact through strong Class 4-7 truck sales, incremental large fleet business and aftermarket services in other regions of the country.

"We continued to implement our strategic growth initiatives through an acquisition in Nevada, expanded service capacity in Texas and Ohio, as well as enhanced aftermarket products and services.”

Aftermarket services accounted for approximately 64% of the company's total gross profits in the third quarter of 2015. Parts, service and body shop revenues increased by 5.9% as compared to the third quarter of 2014 and contributed to a quarterly absorption ratio of 116.2%. 

"Continued demand for repair and maintenance of vehicles in operation, with particular strength on the East and West coasts, fleet and natural gas vehicle modifications and mobile services were the primary drivers of aftermarket revenues this quarter," said Rush. "However, we did see a negative impact to our overall parts and service revenues from decreased activity in the energy sector."

"Across the network, we are expanding our fleet of mobile services, extending our RushCare Rapid Parts call centers capabilities, increasing our aftermarket sales organization presence, expanding service capabilities and executing procurement, asset management and process improvement practices in an effort to improve customer service and aftermarket revenues," Rush added.

“U.S. Class 8 retail sales were 67,241 units in the third quarter, up 13% over the same time period last year. While we outpaced the industry in new truck sales earlier this year, our Class 8 sales remained flat in the third quarter compared to the same period in 2014, and accounted for 6.6% of the U.S. Class 8 truck market. 

"Deliveries to large over-the-road fleets accounted for the majority of our Class 8 new truck sales this quarter. We have been able to replace significant declines in energy sector-related new Class 8 truck sales with expanded business from both current and new customers in other market segments and regions of the country, including incremental sales to large fleets."

Rush's Class 4-7 new truck sales outpaced the U.S. market, increasing by 12% over the third quarter of last year and accounting for 5.1% of the total U.S. market, while U.S. Class 4-7 truck sales in the third quarter were 56,378 units, up 5% over the same time period in 2014.

"We continue to see the benefits of our large inventory of 'ready-to-roll' medium-duty work trucks in stock across the country, providing trucks when needed to those benefitting from a healthier economy," added Rush.

For 2015, ACT Research forecasts U.S. retail sales for Class 8 vehicles to reach 269,000 units and U.S. retail sales for Class 4-7 vehicles to reach 205,950 units by year end.  "We expect our truck sales will remain stable for the remainder of 2015," Rush said.

For 2016, ACT Research forecasts U.S. Class 8 retail sales to be 248,000 units, down 7.8% over this year. ACT Research also forecasts Class 4-7 retail sales to be 212,850, up 3.4% over 2015.   

"While it is still too early to predict, given the decrease in the average age of Class 8 fleet vehicles and the anticipated softening of used truck values, we believe Class 8 truck sales could decrease even further in 2016 than ACT Research currently forecasts," said Rush.