Press Release Details
Rush Enterprises, Inc. Reports First Quarter 2013 Results
- Parts, service and body shop revenues set new quarterly record
- Medium-duty truck sales up 26% over first quarter of 2012
- First quarter absorption ratio of 111.9%
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Cash position remains strong at
$205 million
"The Company's financial performance remained strong this quarter despite expected sluggishness in energy sector activity and a decrease in Class 8 new truck retail sales. Geographic expansion of our dealership network, breadth of product offerings and a sustained focus on aftermarket solutions continue to positively impact the company's financial performance," said
Operations
Aftermarket Solutions
"Despite the decline in the energy sector activity and integration of newly acquired locations in
"Our efforts to be the premier solutions provider to the commercial vehicle industry continue to drive outstanding performance of our aftermarket operations. We have invested in personnel, facility enhancements, advanced diagnostic technology, mobile service offerings, custom vehicle modifications services and alternative fuel capabilities that expand our portfolio of customer solutions. The investments we have made allow us to efficiently support our customers in our shops or their job sites and are a key factor in our ability to increase aftermarket revenues," continued
"We expect parts, service and body shop revenues will remain strong throughout 2013,"
Truck Sales
In the first quarter, Rush's Class 8 retail sales accounted for 5.2% of the U.S. Class 8 truck market. "As expected, declines in energy sector activity resulted in a decrease of our new Class 8 truck deliveries," said
Rush's Class 4-7 medium-duty sales increased 26% over the first quarter of 2012, outpacing the U. S. Class 4-7 market, which decreased 2%. Rush's Class 4-7 market share accounted for 5% of the total U.S. market, a record high and up from 4% in the first quarter of 2012. "This is the result of solid execution by our medium-duty franchises across the country, including continued good performance from our Navistar Division," said
"Light duty truck sales were also up 43% compared to the first quarter of 2012, as a result of continued efforts at our Ford franchises. Our used truck sales also increased, up 13% over the first quarter of 2012,"
Industry experts forecast U.S. Class 8 retail truck sales to remain flat with 2012 at 198,000 units. "We believe that steady U.S. Class 8 order intake over the past several months combined with increased activity in residential construction in key regions of the country will likely result in increased Class 8 retail truck deliveries beginning in the second half of 2013. U.S. Class 4-7 retail sales are expected to reach 182,000 units, up 11% over 2012," continued
"We are encouraged by Navistar's successful launch of the 15-liter Cummins ISX engine in the first quarter and the recent
Financial Highlights
In the first quarter, the Company's gross revenues totaled
Parts, service and body shop sales revenue was
"I am very pleased with our financial performance this quarter. Our strong financial position will enable us to continue to execute our strategic initiatives and help ensure we remain the premier solutions provider to the commercial vehicle industry," said
Conference Call Information
http://investor.rushenterprises.com/events.cfm.
For those who cannot listen to the live broadcast, the webcast will be available on our website at the above link until
855-859-2056 (US) or 404-537-3406 (International) and entering the Conference ID 33538695.
About
Certain statements contained herein, including those concerning current and projected market conditions, sales forecasts, and demand for the Company's products and services are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, competitive factors, general U.S. economic conditions, economic conditions in the new and used commercial vehicle markets, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, product introductions and
acceptance, changes in industry practices, onetime events and other factors described herein and in filings made by the Company with the
-Tables and Additional Information to Follow-
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| CONSOLIDATED BALANCE SHEETS | ||
| (In Thousands, Except Shares and Per Share Amounts) | ||
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| 2013 | 2012 | |
| (Unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 205,049 | $ 198,773 |
| Accounts receivable, net | 76,598 | 89,615 |
| Inventories, net | 676,594 | 690,953 |
| Prepaid expenses and other | 10,026 | 12,088 |
| Deferred income taxes, net | 13,037 | 14,630 |
| Total current assets | 981,304 | 1,006,059 |
| Investments | 6,628 | 6,628 |
| Property and equipment, net | 627,261 | 622,112 |
| Goodwill, net | 198,282 | 198,257 |
| Other assets, net | 47,840 | 48,510 |
| Total assets | $ 1,861,315 | $ 1,881,566 |
| Liabilities and shareholders' equity | ||
| Current liabilities: | ||
| Floor plan notes payable | $ 498,265 | $ 534,520 |
| Current maturities of long-term debt | 80,524 | 80,030 |
| Current maturities of capital lease obligations | 10,200 | 10,673 |
| Trade accounts payable | 80,771 | 62,270 |
| Accrued expenses | 64,618 | 100,953 |
| Total current liabilities | 734,378 | 788,446 |
| Long-term debt, net of current maturities | 326,966 | 319,634 |
| Capital lease obligations, net of current maturities | 38,965 | 39,300 |
| Other long-term liabilities | 2,883 | 2,484 |
| Deferred income taxes, net | 125,232 | 123,756 |
| Shareholders' equity: | ||
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Preferred stock, par value |
— | — |
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Common stock, par value |
411 | 404 |
| Additional paid-in capital | 233,847 | 222,627 |
| Treasury stock, at cost: 1,639,843 class B shares | (17,948) | (17,948) |
| Retained earnings | 418,166 | 404,619 |
| Accumulated other comprehensive loss, net of tax | (1,585) | (1,756) |
| Total shareholders' equity | 632,891 | 607,946 |
| Total liabilities and shareholders' equity |
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| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (In Thousands, Except Per Share Amounts) | ||
| (Unaudited) | ||
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Three Months Ended |
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| 2013 | 2012 | |
| Revenues: | ||
| New and used commercial vehicle sales | $ 489,610 | $ 551,928 |
| Parts and service sales | 231,479 | 196,646 |
| Lease and rental | 30,140 | 23,476 |
| Finance and insurance | 3,133 | 3,137 |
| Other | 2,426 | 2,142 |
| Total revenue | 756,788 | 777,329 |
| Cost of products sold: | ||
| New and used commercial vehicle sales | 452,574 | 510,807 |
| Parts and service sales | 145,713 | 118,256 |
| Lease and rental | 24,713 | 20,006 |
| Total cost of products sold | 623,000 | 649,069 |
| Gross profit | 133,788 | 128,260 |
| Selling, general and administrative | 102,106 | 93,015 |
| Depreciation and amortization | 7,110 | 5,884 |
| Gain on sale of assets | 41 | 19 |
| Operating income | 24,613 | 29,380 |
| Interest expense, net | 2,513 | 3,304 |
| Income before taxes | 22,100 | 26,076 |
| Provision for income taxes | 8,553 | 10,170 |
| Net income | $ 13,547 | $ 15,906 |
| Earnings per common share: | ||
| Earnings per common share - Basic | $ 0.35 | $ 0.41 |
| Earnings per common share - Diluted | $ 0.34 | $ 0.40 |
| Weighted average shares outstanding: | ||
| Basic | 39,119 | 38,387 |
| Diluted | 40,269 | 39,607 |
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under
Management believes the presentation of these non-GAAP financial measures provides useful information about the results of operations of the Company for the current and past periods. Management believes that investors should have available the same information that management uses to assess operating performance and assess capital structure of the Company. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most comparable GAAP financial measures. Investors are cautioned that non-GAAP financial measures utilized by the Company may not be comparable to similarly titled non-GAAP financial measures used by other companies.
| (in thousands) | Three Months Ended | |
| Vehicle Sales Revenue: |
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| New heavy-duty vehicles | $ 287,144 | $ 384,211 |
| New medium-duty vehicles (including bus sales revenue) | 132,866 | 100,722 |
| New light-duty vehicles | 11,975 | 9,209 |
| Used vehicles | 55,708 | 54,445 |
| Other vehicles | 1,917 | 3,341 |
| Absorption Ratio | 111.9% | 116.7% |
Absorption Ratio
Management uses several performance metrics to evaluate the performance of its commercial vehicle dealerships, and considers Rush Truck Centers' "absorption ratio" to be of critical importance. Absorption ratio is calculated by dividing the gross profit from the parts, service and body shop departments by the overhead expenses of all of a dealership's departments, except for the selling expenses of the new and used commercial vehicle departments and carrying costs of new and used commercial vehicle inventory. When 100% absorption is achieved, then gross profit from the sale of a commercial vehicle, after sales commissions and inventory carrying costs, directly impacts operating profit.
| (in thousands) | ||
| Debt Analysis |
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| Floor plan notes payable | $ 498,265 | $ 628,580 |
| Current maturities of long-term debt | 80,524 | 66,777 |
| Current maturities of capital lease obligations | 10,200 | 10,003 |
| LONG-TERM DEBT, net of current maturities | 326,966 | 275,252 |
| CAPITAL LEASE OBLIGATIONS, net of current maturities | 38,965 | 34,251 |
| Total Debt (GAAP) | 954,920 | 1,014,863 |
| Adjustments: | ||
| Debt related to lease & rental fleet | (332,703) | (248,910) |
| Floor plan notes payable | (498,265) | (628,580) |
| Adjusted Total Debt (Non-GAAP) | 123,952 | 137,373 |
| Adjustments: | ||
| Cash and cash equivalents | (205,049) | (163,790) |
| Adjusted Net Debt (Non-GAAP) | $ (81,097) | $ (26,417) |
Management uses "Adjusted Total Debt" to reflect the Company's estimated financial obligations less debt related to lease and rental fleet (L&RFD) and floor plan notes payable (FPNP), and "Adjusted Net Debt" to present the amount of Adjusted Total Debt net of cash and cash equivalents on the Company's balance sheet. The FPNP is used to finance the Company's new and used inventory, with its principal balance changing daily as vehicles are purchased and sold and the sale proceeds are used to repay the notes. Consequently, in managing the business, management views the FPNP as interest bearing accounts payable, representing the cost of acquiring the vehicle that is then repaid when the vehicle is sold, as the Company's credit agreements require it to repay loans used to purchase vehicles when such vehicles are sold. The Company's lease & rental fleet are fully financed and are either (i) leased to customers under long-term lease arrangements or (ii), to a lesser extent, dedicated to the Company's rental business. In both cases, the lease and rental payments fully cover the capital costs of the lease & rental fleet (i.e., the principal repayments and interest expense on the borrowings used to acquire the vehicles and the depreciation expense associated with the vehicles), plus a profit margin for the Company. The Company believes excluding the FPNP and L&RFD from the Company's total debt for this purpose provides management a more accurate picture of the Company's capital structure and leverage profile and assists investors in performing analysis that is consistent with financial models developed by Company management and research analysts. "Adjusted Total Debt" and "Adjusted Net Debt" are both non-GAAP financial measures and should be considered in addition to, and not as a substitute for, the Company's debt obligations, as reported in the Company's consolidated balance sheet in accordance with U.S. GAAP. Additionally, these non-GAAP measures may vary among companies and may not be comparable to similarly titled non-GAAP measures used by other companies.
| (in thousands) | Twelve Months Ended | |
| EBITDA and Adjusted EBITDA | March 31, 2013 |
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| Net Income (GAAP) | $ 60,096 | $ 63,851 |
| Provision for income taxes | 37,111 | 40,781 |
| Interest expense | 12,226 | 9,265 |
| Depreciation and amortization | 26,242 | 21,788 |
| (Gain) loss on sale of assets | (198) | (480) |
| EBITDA (Non-GAAP) | 135,477 | 135,205 |
| Adjustments: | ||
| Interest expense associated with FPNP | (7,868) | (5,605) |
| Adjusted EBITDA (Non-GAAP) | $ 127,609 | $ 129,600 |
The Company presents EBITDA and Adjusted EBITDA as additional information about its operating results. The presentation of Adjusted EBITDA with an add back of interest expense associated with FPNP, to EBITDA is consistent with management's presentation of Adjusted Total Debt, in each case reflecting management's view of interest expense associated with the FPNP as an operating expense of the Company, and to provide management a more accurate picture of its operating results and to assist investors in performing analysis that is consistent with financial models developed by management and research analysis. "EBITDA" and "Adjusted EBITDA" are both non-GAAP financial measures and should be considered in addition to, and not as a substitute for, net income of the Company, as reported in the Company's consolidated statements of income in accordance with U.S. GAAP. Additionally, these non-GAAP measures may vary among companies and may not be comparable to similarly titled non-GAAP measures used by other companies.
| (in thousands) | Twelve Months Ended | |
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Free |
March 31, 2013 |
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| Net cash provided by (used in) operations (GAAP) | $ 406,619 | $ (194,249) |
| Acquisition of property and equipment | (163,110) | (152,297) |
| Free cash flow (Non-GAAP) | 243,509 | (346,546) |
| Adjustments: | ||
| Draws (payments) on floor plan financing, net | (162,641) | 344,687 |
| Proceeds from L&RFD | 144,021 | 115,185 |
| Debt proceeds related to business acquisitions | (64,000) | − |
| Principal payments on L&RFD | (77,312) | (60,010) |
| Non-maintenance capital expenditures | 25,130 | 20,333 |
| Adjusted Free Cash Flow (Non-GAAP) | $ 108,707 | $ 73,649 |
"Free
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March 31, 2013 |
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| Total Shareholders' equity (GAAP) | $ 632,891 | $ 555,675 |
| Adjusted net debt (Non-GAAP) | (81,097) | (26,417) |
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$ 551,794 | $ 529,258 |
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CONTACT:Rush Enterprises, Inc. ,San Antonio Steven L. Keller , 830-626-5226
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