Rush Earnings, Revenue Fall as Large Fleets Slash Demand
Multistate truck dealership Rush Enterprises Inc. said net income was cut nearly in half and revenue slipped in the second quarter as large fleet customers “severely” reduced demand for new trucks.
The company reported for the quarter ended June 30 net income year-over-year fell to $10.8 million, or 27 cents per diluted share, compared with $19.6 million, or 48 cents.
Revenue slipped to $1 billion from $1.3 billion in the year-earlier period.
Year-to-date results were not immediately available.
The company said its Class 8 sales decreased 45% compared with the second quarter of 2015, and accounted for 4.9% of the U.S. Class 8 truck market, based on sales data from ACT Research Co.
“As expected, continued softness in the energy sector, a choppy freight environment, excess Class 8 fleet vehicle capacity and declining used truck values plagued the industry and negatively impacted our Class 8 new and used truck sales and parts and service revenues in the second quarter,” W. M. "Rusty" Rush, chairman and CEO of Rush Enterprises, said in a statement.
Also, the company, which has dealerships in 20 states, said its previously announced plan to consolidate truck center locations in eight states operating close to others in the areas was intended to offset the declines by reducing expenses.
“We are beginning to see the benefit from these actions, but do not expect to realize the full results of our expense management efforts until later this year,” he said.
The company said it incurred a restructuring charge of $900,000 to selling, general and administrative expenses related to the consolidation of certain dealerships, which reduced quarterly earnings by 1 cent.
"Despite these headwinds, we continue to invest in our long term strategic growth initiatives in the areas of all-makes parts, service technology and natural gas fuel systems,” Rush said.
