Rush Enterprises Increases Stock Repurchase, Targets $7 Billion in Revenue
National truck dealership Rush Enterprises Inc. increased its existing stock repurchase program by $35 million, and views the move as supporting its multiyear growth strategy.
This increase came as the company neared the original authorization limit of $40 million, now $75 million, according to the San Antonio, Texas-based company.
“We see further opportunities to enhance shareholder value through this $35 million increase to our stock repurchase program, which reflects our continued confidence in the company’s strategic plan and future growth opportunities,” W.M. “Rusty” Rush, chairman and CEO of the company, said in a statement March 14.
The company’s stated goal is to increase annual revenue to $7 billion by 2022.
In 2017, Rush reported annual revenue of $4.7 billion. A year earlier, revenue was $4.2 billion.
Rush pointed to the stimulating effect of the Tax Cuts and Jobs Act, signed into law in December, which among other features, reflects the new 21% federal corporate income tax rate, down from 35%.
“So you know, we’re going to continue to invest. The initiatives that we have invested in are paying off and we’re going to invest more now in some other initiatives that we count on the drawing board. So I just, maybe, accelerate some of them up, I think that’s what the plan was with this, you know, cutting of the corporate tax rate,” Rush said in his recent fourth-quarter earnings call with analysts.
For example, the company intends to grow its parts and service business, Rush said. Aftermarket products and services revenue were $1.5 billion for the full year compared with $1.3 billion in the 2016 period.
“Obviously that’s the key piece of our organization,” he said. “[That’s] where the revenues truly come from, where the gross profits really will come from. So we’re excited about what we’ve seen and this makes us more excited for the future,” he said.
Rush “dramatically” added sales people for parts and that is helping push more business, he said.
Mobile service and an embedded-technician program in customers’ shops are expanding, too.
Rush added between 100 and 500 technicians in 2017, he said, while declining to supply an exact number. “We look to continue that. We have lots of room to grow and understand how to use our shops more effectively [24/7].”
The company has provided mobile repair for 15 years. Initially, it was 90% devoted to the oil field business, he said. That segment is about 35%, now.
“So we broadened that piece to other markets,” Rush said. “It’s the old saying, you know, to use best practices and move them around.”
The company is the nation’s only publicly traded truck dealership with about 100 dealerships in 20 states.
Rush is a dealer for Paccar Inc. and Navistar International Corp.
Paccar’s brands include Kenworth Truck Co. and Peterbilt Motors Co.
Navistar is the parent of International Truck.
Rush said he expects International to grow its market share and become a bigger piece of his company. Through February, International’s share of Class 8 U.S. retail sales was 14.1%, up from 11.7% a year earlier, according to WardsAuto.com.
Rush also sells trucks by Mitsubishi Fuso Truck of America Inc., a unit of Daimler AG; Ford Motor Co.; Hino Trucks, a brand of the Toyota Group; and Isuzu Commercial Truck of America Inc.
