Press Release Details
Rush Enterprises, Inc. Reports Fourth Quarter and Year-End 2014 Results
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Annual revenues reach record
$4.7 billion ; up 39.7% compared to 2013 - Annual absorption ratio at new record of 117.8%
- Network of Rush Truck Centers expands to 112 locations in 20 states
- Record new and used truck sales of 35,352 trucks
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Record aftermarket revenues of
$1.3 billion
"In 2014, we set out to 'integrate and execute' across our Rush Truck Centers dealership network, particularly in the areas of asset management, process standardization and customer service consistency," said
"I could not be more proud of our employees for their commitment to serving our customers first while also focusing on performance metrics. Because of our employees' efforts to integrate our culture of service excellence into all of our operations, we are making significant progress in providing a consistent, outstanding experience at all of our locations," he continued.
Operations
Aftermarket Solutions
Aftermarket services accounted for 62.6% of the Company's total gross profits in 2014 with parts, service and body shop revenues reaching a new record of
"A range of factors continued to drive our strong aftermarket performance, including the full year impact of acquisitions completed in 2013 and early 2014, continued demand for maintenance and repair of aged vehicles, record new and used truck sales requiring pre-delivery inspections and modifications and mobile service support for a range of market segments," explained Rush.
"Throughout the year, we continued to expand our portfolio of aftermarket solutions, implementing regional RushCare Rapid Parts call centers across the country and adding natural gas service at locations in five states. Plans also remain on target to launch our new Momentum Fuel Technologies natural gas fuel system in mid-2015," he continued.
We are progressing on initiatives to deliver transparent and real-time updates to customers with vehicles in our shops," said Rush. "This combined with our ongoing focus on telematics and remote diagnostic solutions will not only improve uptime for our customers but also improve fleet utilization and scheduling."
Truck Sales
In 2014, Rush Class 8 retail sales accounted for 7.1% of the total U.S. Class 8 market. The Company sold 15,833 Class 8 trucks, an increase of 66% compared to 2013, significantly outpacing the U.S. market, which increased only 19.4%.
"Class 8 truck sales climbed during the fourth quarter, a trend that began from last spring. Large fleets continued replacing aged vehicles to upgrade equipment to more cost-efficient technology and appeal to a wider range of drivers. Stock truck sales also continued to improve as smaller fleets and vocational operators took advantage of increased activity in construction and other market segments across the country," Rush continued.
"While new truck sales and incremental volume from our Navistar acquisitions also contributed to our truck sales performance throughout 2014, we continue to face challenges with customers relating to Navistar's initial MaxxForce engine technology offerings. I am pleased with the efforts of our Navistar Division as they work to overcome these challenges, and support Navistar's current product and engine technology, which continues to gain acceptance in the market," Rush explained.
Rush's U.S. Class 4-7 medium-duty truck sales reached 9,922 units in 2014, up 17.5% over 2013, and accounted for 4.9% of the total U.S. Class 4-7 market. "Our strong performance continues to be the result of our ability to offer a diverse range of truck brands that meet the varied needs of medium-duty truck buyers combined with a large inventory of ready-to-roll equipment in stock across the country," he added.
Continued Network Growth
The Company expanded its Rush Truck Centers dealership network, to include a total of 112 locations in 20 states. This month, the Company completed the acquisition of certain assets of
"We also added multiple independent outlets for used truck sales," Rush added.
"We continued to invest in new construction and existing facility expansions, having completed renovations and expansions at several dealership locations in
Outlook for 2015
"We expect demand for Class 8 trucks will remain strong as fleets upgrade to new equipment and activity in construction continues, but could be moderated somewhat by the continued shortage of drivers. We expect Class 4-7 new truck sales will remain strong in 2015 as medium-duty fleets also upgrade to new equipment, and longer lead times from Class 4-7 OEMs drive the need for our ready-to-roll inventory," said Rush. "We also expect ongoing benefit from our ability to offer a range of medium-duty product as fleets consolidate their supplier base and look for one source to meet a variety of their vehicle needs."
"We continue to monitor the price of oil and its impact on activity in the energy sector. Currently, we are seeing early signs of softening in our truck sales and aftermarket parts and service business with respect to our energy sector customers. However, we do not expect to know the full impact of lower oil prices on our business until the spring.
"Conversely, we believe that lower fuel prices resulting from lower oil prices will have a positive impact on many of our customers, the overall economy and consumer spending, resulting in increased activity in other market segments including general freight, which should help offset decreases from the energy sector."
Financial Highlights
In the fourth quarter of 2014, the Company's gross revenues totaled
For the year ended
Parts, service and body shop revenue was
Parts, service and body shop revenue was
The Company's
"We finished 2014 in a strong financial position. We ended the year with
Conference Call Information
For those who cannot listen to the live broadcast, the webcast will be available on our website at the above link until
About
Certain statements contained herein, including those concerning current and projected market conditions, sales forecasts, demand for the Company's services, and the impact of lower oil prices 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 to Follow-
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| CONSOLIDATED BALANCE SHEETS | ||
| (In Thousands, Except Shares and Per Share Amounts) | ||
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| 2014 | 2013 | |
| (Unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 191,463 | $ 217,305 |
| Accounts receivable, net | 178,195 | 103,293 |
| Inventories, net | 1,024,104 | 802,220 |
| Prepaid expenses and other | 28,312 | 14,341 |
| Asset held for sale | 5,053 | ─ |
| Deferred income taxes, net | 18,387 | 16,277 |
| Total current assets | 1,445,514 | 1,153,436 |
| Investments | 6,905 | 6,628 |
| Property and equipment, net | 923,080 | 739,663 |
| Goodwill, net | 265,145 | 215,464 |
| Other assets, net | 53,618 | 52,607 |
| Total assets | $ 2,694,262 | $ 2,167,798 |
| Liabilities and shareholders' equity | ||
| Current liabilities: | ||
| Floor plan notes payable | $ 845,977 | $ 593,649 |
| Current maturities of long-term debt | 149,065 | 97,243 |
| Current maturities of capital lease obligations | 11,231 | 10,268 |
| Liabilities directly associated with asset held for sale | 6,160 | ─ |
| Trade accounts payable | 124,555 | 100,375 |
| Customer deposits | 44,879 | 58,319 |
| Accrued expenses | 92,743 | 69,321 |
| Total current liabilities | 1,274,610 | 929,175 |
| Long-term debt, net of current maturities | 429,189 | 385,538 |
| Capital lease obligations, net of current maturities | 46,019 | 35,199 |
| Other long-term liabilities | 4,470 | 4,683 |
| Deferred income taxes, net | 175,635 | 147,822 |
| Shareholders' equity: | ||
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Preferred stock, par value 1,000,000 shares authorized; 0 shares outstanding in 2014 and 2013 |
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Common stock, par value 60,000,000 class A shares and 20,000,000 class B shares authorized; 29,889,332 class A shares and 9,999,122 class B shares outstanding in 2014; and 28,910,505 class A shares and 10,304,518 class B shares outstanding in 2013 |
424 |
414 |
| Additional paid-in capital | 272,486 | 243,154 |
| Treasury stock, at cost: 2,560,580 class B shares | (41,904) | (30,821) |
| Retained earnings | 533,793 | 453,836 |
| Accumulated other comprehensive loss, net of tax | (460) | (1,202) |
| Total shareholders' equity | 764,339 | 665,381 |
| Total liabilities and shareholders' equity |
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| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In Thousands, Except Per Share Amounts) | ||||
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Three Months Ended |
Year Ended |
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| 2014 | 2013 | 2014 | 2013 | |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
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| Revenues: | ||||
| New and used commercial vehicle sales | $ 951,426 | $ 626,427 | $ 3,195,873 | $ 2,239,847 |
| Parts and service | 335,106 | 256,398 | 1,315,694 | 988,317 |
| Lease and rental | 47,401 | 35,472 | 177,561 | 129,638 |
| Finance and insurance | 5,429 | 4,016 | 19,988 | 15,320 |
| Other | 5,844 | 2,866 | 18,240 | 11,583 |
| Total revenue | 1,345,206 | 925,179 | 4,727,356 | 3,384,705 |
| Cost of products sold: | ||||
| New and used commercial vehicle sales | 890,960 | 584,055 | 2,975,905 | 2,083,439 |
| Parts and service | 215,652 | 160,659 | 842,438 | 620,030 |
| Lease and rental | 40,561 | 30,239 | 152,967 | 109,222 |
| Total cost of products sold | 1,147,173 | 774,953 | 3,971,310 | 2,812,691 |
| Gross profit | 198,033 | 150,226 | 756,046 | 572,014 |
| Selling, general and administrative | 141,727 | 114,743 | 573,670 | 450,340 |
| Depreciation and amortization | 13,303 | 7,987 | 40,786 | 29,925 |
| Gain (loss) on sale of assets | 42 | (14) | 151 | 5 |
| Operating income | 43,045 | 27,482 | 141,741 | 91,754 |
| Interest expense, net | 2,835 | 2,919 | 11,198 | 10,693 |
| Income before taxes | 40,210 | 24,563 | 130,543 | 81,061 |
| Provision for income taxes | 15,583 | 9,704 | 50,586 | 31,844 |
| Net income | $ 24,627 | $ 14,859 | $ 79,957 | $ 49,217 |
| Earnings per common share: | ||||
| Basic | $ .62 | $ .38 | $ 2.01 | $ 1.25 |
| Diluted | $ .60 |
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$ 1.96 | $ 1.22 |
| Weighted average shares outstanding: | ||||
| Basic | 40,030 | 39,389 | 39,783 | 39,405 |
| Diluted | 41,115 | 40,547 | 40,894 | 40,506 |
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: |
2014 |
2013 |
| New heavy-duty vehicles | $ 665,492 | $ 376,838 |
| New medium-duty vehicles (including bus sales revenue) | 175,989 | 153,476 |
| New light-duty vehicles | 12,653 | 17,397 |
| Used vehicles | 94,019 | 74,349 |
| Other vehicles | 3,273 | 4,367 |
| Absorption Ratio | 119.3% | 114.6% |
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.
| Debt Analysis (in thousands) |
2014 |
2013 |
| Floor plan notes payable | $ 845,977 | $ 593,649 |
| Current maturities of long-term debt | 149,065 | 97,243 |
| Current maturities of capital lease obligations | 11,231 | 10,268 |
| Liabilities directly associated with asset held for sale | 6,160 | ─ |
| Long-term debt, net of current maturities | 429,189 | 385,538 |
| Capital lease obligations, net of current maturities | 46,019 | 35,199 |
| Total Debt (GAAP) | 1,487,641 | 1,121,897 |
| Adjustments: | ||
| Debt related to lease & rental fleet | (539,426) | (413,066) |
| Floor plan notes payable | (845,977) | (593,649) |
| Adjusted Total Debt (Non-GAAP) | 102,238 | 115,182 |
| Adjustments: | ||
| Cash and cash equivalents | (191,463) | (217,305) |
| Adjusted Net Debt (Non-GAAP) | $ (89,225) | $ (102,123) |
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 |
December 31, 2014 |
2013 |
| Net Income (GAAP) | $ 79,957 | $ 49,217 |
| Provision for income taxes | 50,586 | 31,844 |
| Interest expense | 11,198 | 10,693 |
| Depreciation and amortization | 40,786 | 29,925 |
| (Gain) loss on sale of assets | (151) | (5) |
| EBITDA (Non-GAAP) | 182,376 | 121,674 |
| Adjustments: | ||
| Interest expense associated with FPNP | (8,432) | (7,089) |
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─ | 10,777 |
| Adjusted EBITDA (Non-GAAP) | $ 173,944 | $ 125,362 |
The Company presents EBITDA and Adjusted EBITDA as additional information about its operating results. The presentation of Adjusted EBITDA that excludes the addition 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. Management recorded a one-time charge to selling, general and administrative expense during the second quarter of 2013 related to the Retirement and Transition Agreement between
| (in thousands) | Twelve Months Ended | |
| Free Cash Flow |
December 31, 2014 |
2013 |
| Net cash provided by (used in) operations (GAAP) | $ 88,937 | $ 173,488 |
| Acquisition of property and equipment | (260,820) | (191,584) |
| Free cash flow (Non-GAAP) | (171,883) | (18,096) |
| Adjustments: | ||
| Draws (payments) on floor plan financing, net | 207,458 | 46,085 |
| Proceeds from L&RFD | 214,622 | 161,767 |
| Debt proceeds related to business acquisitions | (43,317) | (23,939) |
| Principal payments on L&RFD | (112,414) | (90,018) |
| Non-maintenance capital expenditures | 63,256 | 32,644 |
| Adjusted Free Cash Flow (Non-GAAP) | $ 157,722 | $ 108,443 |
"Free Cash Flow" and "Adjusted Free Cash Flow" are key financial measures of the Company's ability to generate cash from operating its business. Free Cash Flow is calculated by subtracting the acquisition of property and equipment included in the Cash flows from investing activities from Net cash provided by (used in) operating activities. For purposes of deriving Adjusted Free Cash Flow from the Company's operating cash flow, Company management makes the following adjustments: (i) adds back draws (or subtracts payments) on the floor plan financing that are included in Cash flows from financing activities as their purpose is to finance the vehicle inventory that is included in Cash flows from operating activities, (ii) adds back proceeds from notes payable related specifically to the financing of the lease and rental fleet that are reflected in Cash flows from financing activities, (iii) subtracts draws on floor plan financing, net and proceeds from L&RFD related to business acquisition assets that are included in Cash flows from investing activities, (iv) subtracts principal payments on notes payable related specifically to the financing of the lease and rental fleet that are included in Cash flows from financing activities, and (v) adds back non-maintenance capital expenditures that are for growth and expansion (i.e. building of new dealership facilities and the development of the business system) that are not considered necessary to maintain the current level of cash generated by the business. "Free Cash Flows" and "Adjusted Free Cash Flows" are both presented so that investors have the same financial data that management uses in evaluating the Company's cash flows from operating activities. "Free Cash Flow" and "Adjusted Free Cash Flow" are both non-GAAP financial measures and should be considered in addition to, and not as a substitute for, net cash provided by (used in) operations of the Company, as reported in the Company's consolidated Statement of Cash Flows 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.
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December 31, 2014 |
2013 |
| Total Shareholders' equity (GAAP) | $ 764,339 | $ 665,381 |
| Adjusted net debt (Non-GAAP) | (89,225) | (102,123) |
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$ 675,114 | $ 563,258 |
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CONTACT:Rush Enterprises, Inc. ,San Antonio Steven L.Keller , 830-626-5226
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