"The positive impact of continued moderate freight growth and economic improvement in the third quarter contributed to the Company achieving another quarter of record performance in total revenues, net income, Class 8 new truck sales and market share, aftermarket sales and absorption," said W. M. "Rusty" Rush, Chairman, CEO and President of Rush Enterprises, Inc. "We also continued to 'integrate and execute' across the network in areas of asset management, process standardization and customer service consistency, while expanding our portfolio of solutions to help drive efficiencies for our customers."
Aftermarket services remained strong and accounted for approximately 63% of the company's total gross profits in the third quarter of 2014. Third-quarter parts, service and body shop revenues increased by 32.3% as compared to the third quarter of 2013 and contributed to a quarterly absorption ratio of 120.2%.
"Continued repair and maintenance of aged vehicles, increased activity in pre-delivery inspection and vehicle modifications resulting from new truck sales, and service support for a broad range of market segments continued to drive our strong aftermarket services revenues this quarter," said Rush.
"Efforts to incorporate consistent operating standards into our customer-focused service culture and our ability to offer a range of unique solutions such as Rapid Parts call centers, mobile services and natural gas service also continued to positively impact aftermarket revenues.
"We expect aftermarket sales to remain strong through the remainder of 2014 and into 2015; however, we continue to monitor the price of oil and its potential impact on activity in the energy sector going forward.”
In the third quarter of 2014 Rush's Class 8 retail sales accounted for a record 7.4% of the U.S. market and increased by 68% over the third quarter of 2013, significantly outpacing U.S. Class 8 retail sales, which increased by 20% over the same time period. Rush's Class 4-7 medium-duty sales, which accounted for 4.8% of the total U.S. market in the third quarter of 2014, increased 7% over the third quarter of 2013.
"The positive trend in our new Class 8 truck sales that began in spring continued throughout the third quarter. Large fleets continued to replace aged vehicles to improve uptime, capitalize on gains in fuel efficiency, and appeal to a wider pool of potential drivers. Stock truck sales also rose as demand from small and mid-size fleets operating in vocational segments continued. We also saw significant mixer equipment order intake and deliveries this quarter to support construction," said Rush.
"Our third quarter Class 4-7 truck sales accounted for the second largest quarterly sales volume in the Company's history. We believe this was a direct result of our investment in a large inventory of ready-to-roll equipment, which allows us to meet the immediate demands of vocational customers, particularly those in construction, and will continue to differentiate us as lead times from medium-duty truck manufacturers lengthen.
"Increased new truck sales and incremental volume from our Navistar acquisitions also contributed to our truck sales performance this quarter. We continue to be pleased with the overall performance of our recently acquired Navistar dealerships and continue to evaluate opportunities to expand our network of Rush Truck Centers."
ACT Research increased its forecast of U. S. Class 8 retail sales to 227,100 units in 2014, up 21% over 2013 and forecasts U. S. Class 4-7 retail sales to be at 196,300 units in 2014, up 9% over last year.
"We expect demand for Class 8 trucks will remain strong as fleets continue to upgrade to new equipment, but expect fleet expansion will be moderated by the continued shortage of drivers. We also expect Class 4-7 new truck sales to remain strong," Rush explained.
Aftermarket services revenue was $340.6 million in the third quarter of 2014, compared to $257.5 million in the third quarter of 2013. The company delivered 4,384 new heavy-duty trucks, 2,587 new medium-duty commercial vehicles, 377 new light-duty commercial vehicles and 1,956 used commercial vehicles during the third quarter of 2014, compared to 2,605 new heavy-duty trucks, 2,421 new medium-duty commercial vehicles, 515 new light-duty commercial vehicles and 1,635 used commercial vehicles during the third quarter of 2013.