Rush Enterprises, Inc. (Nasdaq:RUSHA) (Nasdaq:RUSHB), which operates the largest network of commercial vehicle dealerships in North America, announced that the company's net income for the third quarter was $14.9 million, or $0.38 per diluted share, compared with net income of $16 million, or $0.41 per diluted share, for the third quarter of 2011.
The company continued to implement its strategy to extend its geographic footprint this quarter, signing an agreement to purchase certain assets of a dealership group in Ohio with International, IC Bus, Isuzu and Idealease franchises. The agreement includes locations in Akron, Cincinnati, Cleveland, Columbus, Dayton, Findlay and Lima, Ohio. While this transaction remains subject to regulatory approval, the company plans to complete the acquisition by year end and expects it to be accretive to future earnings.
"When complete, the newly acquired dealership locations will operate within our Rush Truck Centers' Navistar Division, said W. M. "Rusty" Rush, Chief Executive Officer and President of Rush Enterprises, Inc. "We are excited to not only expand our Navistar Division, but also bring our philosophy and service commitment to customers in Ohio as well as add service points to our network.
"We also relocated our full service dealership in Phoenix, Arizona, to a newly renovated facility, which tripled our service capabilities in this market. A grand opening for this new dealership facility will take place in November.
"In addition to growth through acquisition and facility expansion, we believe our network of Rush Truck Centers also provides us a unique opportunity for growth in our industry. We remain committed to expanding our service solutions, to meet the evolving needs our customers, whatever they may be.”
Aftermarket services accounted for more than 65% of the company's total gross profits for the third quarter of 2012. Third quarter parts, service and body shop revenues increased by 15%, compared to third quarter 2011. This resulted in another record aftermarket revenue quarter despite fewer working days during the period. Third quarter absorption ratio was 113%.
"Our commitment to providing the innovative solutions to serve our customers' unique business needs continues to drive our record setting parts, service and body shop revenues," Rusty Rush said. "These solutions include our fleet of mobile service units, mobile technicians working in our customers' shops, dedicated natural gas service bays with natural gas certified technicians along with our Custom Vehicle Solutions' up-fitting and body installation services. Service needs resulting from aging fleet vehicles along with continued activity in the energy sector also contributed to record aftermarket revenues this quarter."
The company expects parts, service and body shop operations could experience a sequential decline in fourth quarter revenues due to reduced seasonal activity and fewer new truck deliveries.
Rush's Class 4-7 medium-duty truck sales increased 16% over the third quarter of 2011, outpacing the U. S. Class 4-7 market, which increased approximately 11% during the same time period. Rush's Class 4-7 market share accounted for 4.1% of the total U.S. market during the third quarter.
"This continues to be the result of medium-duty truck sales to national fleets across the country, solid execution by our Peterbilt, Navistar, Hino, Isuzu and Ford locations and our ability to quickly deliver vehicles to our vocational customers," explained Rusty Rush.
In the third quarter, Rush's Class 8 unit sales, which accounted for 4.7% of the U.S. market, decreased by 8% over the same time period in 2011, and 19% as compared to the second quarter of 2012.
"As anticipated, reduced order intake over the past several months and general economic and political uncertainty resulted in decreased Class 8 truck deliveries this quarter. Despite year-end tax incentives and EPA regulations that will increase the cost of trucks next year, we expect that Class 8 truck deliveries could decrease sequentially by up to 10% during the fourth quarter," Rusty Rush cautioned.
Industry experts forecast 2013 U. S. Class 8 retail sales to be 207,500 units, a slight increase from 2012 expectations.
"While it is difficult to predict next year's climate until after November, we believe that order intake will increase during the latter part of this year, but that activity would not result in an increase in our Class 8 truck deliveries until at least the second quarter of next year," Rusty Rush explained. Industry experts also forecast U. S. medium-duty truck sales to reach 163,000 units in 2012 and 186,000 units in 2013.
In the third quarter, the company's gross revenues totaled $745.1 million, a 7% increase from gross revenues of $696.4 million reported for the third quarter ended September 30, 2011.
Parts, service and body shop sales revenue was $210.7 million in the third quarter of 2012, compared to $182.6 million in the third quarter of 2011. The company delivered 2,272 new heavy-duty trucks, 1,650 new medium-duty commercial vehicles, 363 new light-duty commercial vehicles and 1,211 used commercial vehicles during the third quarter of 2012, compared to 2,472 new heavy-duty trucks, 1,427 new medium-duty commercial vehicles, 301 new light-duty commercial vehicles and 1,170 used commercial vehicles during the third quarter of 2011.
"The company ended the quarter in a strong financial position including a record high cash balance of $230 million. I am very pleased with our financial performance this quarter, given the current economic climate and our customers' hesitancy to purchase Class 8 trucks. Our strong financial position provides us the ability to move forward with confidence toward our strategic initiatives for growth," said W. Marvin Rush, Chairman and Founder of Rush Enterprises, Inc.