Rush Enterprises, Inc. announced that its net income for the quarter ending June 30 was $19.8 million, a 253% increase over the same period a year ago, when it was $5.6 million.
Rush Enterprises, Inc. (Nasdaq:RUSHA) (Nasdaq:RUSHB) announced that its net income for the quarter ending June 30 was $19.8 million, a 253% increase over the same period a year ago, when it was $5.6 million.
During the second quarter of 2014, the company incurred a pre-tax charge of $2 million in its selling, general and administrative expense related to its agreement with 3M to provide the company with compressed natural gas fuel tanks and intellectual property for development of a new fuel system. This charge resulted in a reduction of $1.2 million in net income, or $0.03 per diluted share during the second quarter of 2014. During the second quarter of 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. This charge resulted in a reduction of $6.6 million in net income, or $0.16 per diluted share during the second quarter of 2013.
"Moderate freight growth and a stable economy, combined with our ability to offer unique solutions and company-wide efforts to 'integrate and execute' resulted in record-setting performance this quarter," said W. M. "Rusty" Rush, Chairman, Chief Executive Officer and President of Rush Enterprises. "We significantly outpaced the U. S. market in both heavy- and medium-duty new truck sales, achieving record market share in both segments. Total revenues for the quarter topped $1 billion, and we achieved new quarterly records for net income, aftermarket sales and absorption.”
Aftermarket services remained strong and accounted for approximately 62% of the company's total gross profits for the second quarter of 2014. Second-quarter parts, service and body shop revenues increased by 36% as compared to the second quarter of 2013. This contributed to a record quarterly absorption ratio of 120%.
"Continued repair and maintenance of aged vehicles and increased activity in pre-delivery inspection and vehicle modifications resulting from new truck sales were among the drivers for our strong parts, service and body shop revenues this quarter," explained Rush. "Demand for mobile service also remains strong in the energy sector and is on the rise in other parts of the country as well.
"With the negative impact of seasonal weather conditions that limited days of operation behind us, efforts to integrate operating standards within our Navistar Division and implement continuous improvement across our network paid off in a 9% increase in our absorption compared to the first quarter of 2014.
"We expect that strong aftermarket sales will continue through the remainder of 2014, fueled by the on-going need for vehicle maintenance and repair and growth in our portfolio of aftermarket solutions, including expanded mobile service, regional parts call centers, natural gas capabilities and technology to improve customer communication and vehicle uptime.”
Rush's Class 8 retail sales, which accounted for 6.5% of the U.S. market, increased by 74% over the same time period in 2013. Rush's Class 4-7 medium-duty sales, which accounted for 5.7% of the total U.S. market, increased 49% over the second quarter of 2013.
"During March we began to see the positive impact of a steady economy and improvements in freight movement in our Class 8 truck sales, and this trend continued throughout the second quarter. In particular, sales of our new Class 8 stock trucks significantly increased as independent operators and smaller vocational fleets required work-ready equipment to take advantage of increased activity in energy, construction and refuse segments. Some larger fleets also replaced aged vehicles to reduce maintenance expenses, but fleet expansion remains tempered by the driver shortage and high cost of equipment," said Rush.
"Our Class 4-7 truck sales also significantly outpaced the U. S. retail market. With continued improvement in housing and road construction, our large inventory of Class 4-7 trucks at locations across the country allowed us to provide fast delivery of ready-to-roll equipment to vocational end users, particularly important as lead times from truck manufacturers continue to lengthen. We continue to see sales of trucks across our entire breadth of manufacturers, which includes Peterbilt, International, Hino, Isuzu and Ford. Truck sales to food and beverage fleets and sales of both IC Bus school buses in Ohio and Blue Bird school buses in Texas also contributed to Class 4-7 truck sales this quarter."
In May, the company announced an agreement with 3M to pursue the design, manufacture and installation of a portfolio of compressed natural gas (CNG) fuel systems for use in Class 6-8 vehicles. The agreement allows the company to engineer, assemble and install CNG fuel systems utilizing 3M's CNG tanks, as well as provide market distribution and aftermarket support. In addition to the initial $2 million investment, the company will continue to incur expenses to bring its CNG fuel system to market.
The company also acquired certain assets of Truck Parts Depot, Inc, a parts and service associate dealer for International trucks in Gainesville, Georgia. The newly acquired location will operate as part of the Company's Navistar Division as Rush Truck Center – Gainesville and offer parts and service for International trucks.
"Expanding our service network capabilities also continues as planned, with more than $70 million in capital investments allocated to new facility construction, renovations and expansions. Within our Peterbilt Division, facility projects are underway in seven states, including construction of two new dealership facilities in Colorado and Texas and renovations of existing properties to add more than 160 service bays and 60 natural gas service bays. Similar facility expansions are underway in our Navistar Division, including construction of new dealerships in Ohio and Idaho and renovations in Illinois, Ohio, Missouri and North Carolina," Rush added.