Rush Enterprises, Inc. (NASDAQ: RUSHA & RUSHB), reported that its network of commercial vehicle dealerships generated revenues of $405.8 million in the third quarter, up 38.1% from a year ago. Income from continuing operations for the quarter was $8.0 million, compared with $3.0 million for the quarter ended September 30, 2009.
The company’s truck segment recorded revenues of $401.7 million in the third quarter of 2010, compared to $289.8 million in the third quarter of 2009. The Company delivered 1,283 new heavy-duty trucks, 678 new medium-duty trucks and 899 used trucks during the third quarter of 2010, compared to 1,030 new heavy-duty trucks, 637 new medium-duty trucks and 760 used trucks in the third quarter of 2009. Parts, service and body shop sales revenue was $133.3 million in the third quarter of 2010, compared to $96.0 million in the third quarter of 2009.
On September 9, 2010, the company sold 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 construction equipment business recorded income from discontinued operations, net of tax, of $6.1 million during the third quarter of 2010, compared to $20,000 during the third quarter of 2009. A majority of the income from discontinued operations during the quarter is attributable to the gain on the sale of Rush Equipment Centers’ assets.
“Despite the fact that general economic uncertainty continues to negatively impact demand for new trucks, we were able to increase new Class 8 truck deliveries by 25% as compared to the same quarter last year and 58% over the second quarter of 2010, reaching the highest levels of new Class 8 truck deliveries we’ve seen since the fourth quarter of 2008,” said W. M. "Rusty" Rush, president. “Major oilfield and general freight fleet customers have gained enough confidence in their business outlook to begin to invest in new Class 8 trucks this quarter. New truck sales are clearly poised for a return to historically normal levels as customers have accepted the new emissions-compliant engine technology and pricing, and the age of the current fleet continues to drive the need for truck replacement.
“However, the sustainability of this increase in new truck retail sales activity is still in question. Until improvements are evident in major sectors that drive freight movement, like residential construction and capital goods manufacturing, new truck sales may remain volatile. However, used Class 8 truck sales and values are expected to remain strong for the foreseeable future.”
Rush said that manufacturer production delays limited the availability of medium-duty trucks, which negatively impacted Rush’s medium-duty truck sales this quarter. In addition, the company continues to work to replace lost GM franchise revenues with other truck brands.
Rush added that parts, service and body shop revenues continued to be strong throughout the third quarter, up 38% over the third quarter of 2009 and approaching peak levels achieved prior to the downturn in 2008. This resulted in a third quarter absorption rate of 109.1%, the second highest quarterly absorption rate in the company’s history.