In 2013, the company recognized a pre-tax charge of $10.8 million in its selling, general and administrative expense related to the Retirement and Transition Agreement with W. Marvin Rush, Chairman Emeritus. The charge results in a reduction of $6.6 million in net income, or $0.16 per diluted share.
In the fourth quarter of 2013, the company's gross revenues totaled $925.2 million, a 26.3% increase from gross revenues of $732.3 million reported for the fourth quarter of 2012. Net income for the quarter was $14.9 million, or $0.37 per diluted share, compared to $14.2 million, or $0.36 per diluted share, in the quarter ended December 31, 2012.
"2013 was a year of continued investment, growth and solid financial performance, for our company," said W. M. "Rusty" Rush, Chairman, CEO and President of Rush Enterprises, Inc. "We achieved record annual revenues, increased medium-duty, light-duty and used truck sales, and expanded our leasing business and revenues. We also augmented our solutions capabilities, completed expansion projects on existing facilities and acquired 5 dealer groups, adding 29 dealership locations to our Rush Truck Centers network.
"I am proud of our performance in 2013 and extremely grateful to all our employees who contributed to the Company's success this year, especially given our rapid pace of growth. We welcomed more than 1,300 new employees to the Company in 2013 and look forward to serving new and existing customers across the country with excellence.
"2013 was a year of growth. We expanded the Rush Truck Centers network to 107 locations in 20 states across the country. Our goal to keep our customers up and running drives our growth strategy. We want to consistently service customers when and where they operate – locally, regionally and nationally. We made substantial progress towards our growth strategy in two ways – by investing in our core Peterbilt Division and expanding our Navistar footprint," said Rush.
"We continue to strengthen our Peterbilt Division by investing in facility expansions, construction of new dealerships and aftermarket services that provide our long-standing customers more solutions to help drive efficiencies into their businesses. In 2013, the company opened a new Peterbilt, Hino and Paclease dealership and leasing operation in Corpus Christi, Texas and renovated existing facilities in Laredo, Houston and Dallas, Texas to increase square footage and capabilities. The Company also has projects underway to construct new facilities in San Antonio, Texas and Denver, Colorado and increase capacity in Abilene, Texas and Whittier, California in 2014. We also installed dedicated natural gas service bays at certain dealerships in Oklahoma and Texas and have plans underway for similar investments in Arizona, Colorado, Florida, Tennessee, and Texas. When completed, these projects will result in a direct investment of more than $40 million in our Peterbilt Division.”
Aftermarket services accounted for 64.4% of the company's total gross profits in 2013 with parts, service and body shop revenues reaching a new record of $988.3 million, up 20.9% over 2012.
"Continued strong demand for maintenance and repair of aged vehicles combined with our expanding portfolio of aftermarket solutions continued to drive strong parts, service and body shop revenues throughout the year, " Rush commented.
"Keeping our customers up and running, when and where they need it, is a top priority for our parts and service network. We continue to invest in technology, human resources, training and facilities to enhance our capabilities in mobile service, custom vehicle modifications, alternate fuel service, repair diagnostics, rapid parts delivery, customer communication and preventive care," he explained. "We continue to evaluate all opportunities to add innovative products or services to expand our solutions capabilities."
In 2013, Rush's Class 8 retail sales of 9,545 units accounted for 5.1% of the total U.S. Class 8 retail truck sales market. U.S. Class 8 retail sales in 2013 decreased 6%, to 187,610 units from 198,715 units in 2012.
"As anticipated, energy sector customers delayed truck purchases in 2013 as they worked through excess capacity purchased in 2011 and 2012, and large fleets experienced continued driver shortages. Incremental truck sales from our newly acquired Navistar locations did help offset the decline in our Class 8 truck sales," said Rush.
"Peterbilt continues to be a strong player in the fleet, owner-operator and vocational segments and its next generation product line has gained market acceptance. In addition, our sales of Peterbilt's natural gas-powered Class 8 trucks continue to rise, having sold more than 800 trucks in 2013. We expect natural gas will continue to gain momentum as the fueling infrastructure is put in place across the country.
"Navistar continues to gradually regain market share. We believe truck sales from our Navistar Division will continue to improve in 2014 as customers continue to gain confidence in their truck and engine combinations."
Rush's U.S. Class 4-7 medium-duty truck sales reached 8,441 units in 2013, up 18% over 2012, and accounted for 4.7% of the U.S. Class 4-7 market. Light-duty truck sales also increased 41% over last year. "Continued improvement in housing and construction, growth in the vocational fleet market and incremental truck sales from newly acquired locations drove improvement in medium-duty truck sales this year. In light-duty, we are seeing the benefits of synergies with our existing customer base and our ability to offer a diverse product line-up that meets a range of vehicle needs. Our Ford franchises, particularly the ones in Florida and Texas, have performed extremely well," Rush commented.
Used truck sales were also up 35% in 2013. "We expect demand for used trucks will continue as fewer new trucks built from 2008 to 2010 come into the secondary market. We are developing new business models to take advantage of the used truck market potential," said Rush.
Industry experts forecast U.S. retail sales for Class 8 vehicles to reach 213,500 units in 2014, a 14% increase over 2013. Industry experts also forecast U.S. retail sales for Class 4-7 vehicles to reach 193,500 units in 2014, an 8% increase over 2013.
"With the economy gaining momentum, order intake climbing in the past few months, and improved activity in automotive, housing, construction and energy sectors, we believe retail sales could improve in the second half of 2014," explained Rush.