Rush Enterprises Reports First Quarter Revenue and Net Income Fall
Truck dealership Rush Enterprises reported first-quarter revenue and net income year-over-year fell in the first quarter ended March 31, to $1.1 billion and $2.4 million, respectively, or 6 cents per diluted share.
That compared with revenues of $1.2 billion and net income of $16.8 million, or 41 cents, in the 2015 quarter.
Rush Enterprises is the nation’s only publicly traded truck dealership.
During the first quarter, it incurred an $8.1 million restructuring charge to selling, general and administrative expenses related to the closing and consolidation of certain Navistar dealerships and the disposition of excess real estate, the company said. This restructuring charge reduced earnings per diluted share by 12 cents, it added.
“As we expected, increased capacity from near record Class 8 truck sales in 2015, significantly reduced used truck residual values and continued softness in the energy sector had a negative impact on our new Class 8 truck sales, aftermarket revenues and profitability this quarter,” W.M. "Rusty" Rush, chairman and CEO of Rush Enterprises, said in a statement.
The company said aftermarket services accounted for about 67% of the its total gross profit in the quarter, with parts, service and body shop revenue up 1.5% to $342 million compared with $337 million the first quarter of 2015.
“Parts revenues and margins exceeded expectations as [the company] was able to offset lost aftermarket revenues with general maintenance and repair of vehicles,” Ann Duignan, an analyst with JP Morgan, wrote in an investors note.
The company statement noted that U.S. Class 8 retail sales were 53,203 units in the first quarter, down 6% over the same time period last year. Its own Class 8 sales decreased 34% compared with the first quarter of 2015 and accounted for 5% of the U.S. Class 8 truck market.
The statement also said ACT Research Co. forecasts U.S. retail sales for Class 8 vehicles to be 207,000 units in 2016, an 18% decrease compared with 2015.
“Excess capacity and low used truck valuations have caused many fleets to delay new Class 8 truck purchases. We believe U.S. retail sales for Class 8 vehicles in 2016 could be less than ACT's current forecast,” Rush said.
The company said its Class 4-7 medium-duty sales increased 22% over the year-earlier quarter, and were 5.7% of the total U.S. market and also outpaced U.S. Class 4-7 truck sales in the quarter, which increased by about 20% over the first quarter of 2015.
It said ACT forecasts U.S. retail sales for Class 4-7 vehicles to reach 220,850 units in 2016, a 1% increase over 2015.
In addition, the company said it completed other dealership construction and renovation projects this quarter to expand service across the country and “provide state-of-the art facilities in major markets.”
Rush said it was also continuing to invest in its compressed natural gas fuel system business, Momentum Fuel Technologies.
