rusha20220216_8k.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported): February 16, 2022
 
 
Rush Enterprises, Inc.
(Exact name of registrant as specified in its charter)
 
Texas
(State or other jurisdiction
of incorporation)
0-20797
(Commission File Number)
74-1733016
(IRS Employer Identification No.)
 
555 IH-35 South, Suite 500
New Braunfels, Texas
(Address of principal executive offices)
 
78130
(Zip Code)
 
Registrant’s telephone number, including area code: (830) 302-5200
 
Not Applicable
______________________________________________
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share
RUSHA
Nasdaq Global Select Market
Class B Common Stock, par value $0.01 per share
RUSHB
Nasdaq Global Select Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
Item 2.02         Results of Operations and Financial Condition.
 
On February 16, 2022, Rush Enterprises, Inc. (the “Company”) issued a press release announcing the Company’s financial results for its fiscal fourth quarter ended December 31, 2021 and for the full year 2021 (the “Earnings Press Release”). A copy of the Earnings Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
Item 7.01         Regulation FD Disclosure.
 
The Earnings Press Release also announced that the Company’s Board of Directors declared a quarterly cash dividend of $0.19 per share of Class A and Class B Common Stock, to be paid on March 15, 2022, to all shareholders of record as of February 28, 2022.
 
The information in this Current Report on Form 8-K (including the exhibit attached hereto) is being furnished under Item 2.02 and Item 7.01 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
 
Item 9.01         Financial Statements and Exhibits.
 
(d)         Exhibits
 
Exhibit No.         Description
 
99.1
 
104
Cover Page Interactive Data File (formatted in Inline XBRL).
 
 

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
RUSH ENTERPRISES, INC.
February 16, 2022
By:
/s/ Steven L. Keller
Steven L. Keller
Chief Financial Officer and Treasurer
 
 
ex_337059.htm

 

Exhibit 99.1

 

 

https://cdn.kscope.io/6287d3181426b7de163307337e5f9cb1-logo01.jpg

 

 

Contact:

Rush Enterprises, Inc., San Antonio

Steven L. Keller, 830-302-5226

 

RUSH ENTERPRISES, INC. REPORTS FOURTH QUARTER AND YEAR-END 2021 RESULTS,

ANNOUNCES $0.19 PER SHARE DIVIDEND

 

 

Annual revenues of $5.1 billion; record-high net income of $241.4 million

 

Annual earnings per diluted share of $4.17

 

Achieved strong financial results despite supply constraints limiting production of new commercial vehicles

 

Completed acquisition of The Summit Truck Group, the largest in Company history

 

4th quarter revenues of $1.3 billion; net income of $68.6 million

 

Board declares cash dividend of $0.19 per share of Class A and Class B common stock

 

 

SAN ANTONIO, Texas, February 16, 2022 — Rush Enterprises, Inc. (NASDAQ: RUSHA & RUSHB), which operates the largest network of commercial vehicle dealerships in North America, today announced that for the year ended December 31, 2021, the Company achieved revenues of $5.1 billion and record-high net income of $241.4 million, or $4.17 per diluted share, compared with revenues of $4.7 billion and net income of $114.9 million, or $2.04 per diluted share, for the year ended December 31, 2020. Additionally, the Company’s Board of Directors declared a cash dividend of $0.19 per share of Class A and Class B Common Stock, to be paid on March 15, 2022, to all shareholders of record as of February 28, 2022.

“Given the supply chain challenges our industry faced this past year, we are pleased with our strong financial results in 2021. We are also happy to announce that our Board of Directors has declared a quarterly cash dividend of $0.19 per share. This, combined with the $100 million share repurchase authorization approved in the fourth quarter of 2021, reflects on our ability to return value to our shareholders while continuing to grow our network and invest in the future of our business,” said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and President of Rush Enterprises, Inc.

“During 2021, the general economy was strong, and increased consumer spending led to solid freight rates and healthy demand for new commercial vehicles. However, the industry was also negatively impacted by supply chain issues that affected the ability of the manufacturers we represent to obtain component parts for both new commercial vehicle production and aftermarket support. As a result, such manufacturers’ commercial vehicle production capabilities were limited,” Rush explained.


“Our large inventory of parts and our ability to obtain parts from multiple sources allowed us to mitigate the negative impact of aftermarket component supply chain constraints. So, although component parts supply chain issues did limit our aftermarket products and services growth last year, we are still very pleased with our aftermarket revenues, which increased by 12.1%,” he stated. “Increased demand for parts sales and service repairs from the market segments we support, particularly our large fleet customers, along with our strategic initiatives, contributed to our aftermarket growth last year. Going forward into 2022, our teams remain focused on managing expenses. Our ability to successfully manage expenses during 2021 directly contributed to us more than doubling our annual earnings per share compared to 2020,” said Rush.

 

 


“In December 2021, we completed the largest acquisition in our history, acquiring 17 dealerships in five states from The Summit Truck Group, all of which are now operating as Rush Truck Centers. By implementing our business strategies at these new locations and remaining focused on expense management at our other locations, we believe we can increase our revenue growth and enhance profitability moving forward,” Rush said.

“Looking ahead, supply constraints will likely continue to limit production of new commercial vehicles through at least the middle of 2022. However, we expect demand for new commercial vehicles to remain strong through the year. Considering our current backlog and our recent acquisitions, we believe our heavy-duty truck sales will outperform the market in 2022,” said Rush. “In addition, we believe that our continued focus on growing our parts sales market share, adding service technicians to our workforce and continuing to successfully manage expenses will contribute to increased aftermarket revenues and overall profitability in 2022,” he added.

 

“As always, I want to thank our employees for their outstanding work in 2021, for providing superior service to our customers and remaining committed to our long-term goals, especially given the continuing challenges of the COVID-19 pandemic. It is important that I emphasize that our record-high net income and EPS results could not have been achieved without their dedicated work and focus,” said Rush.

 

Network Growth

 

In 2021, the Company acquired certain assets of The Summit Truck Group, including 16 full-service commercial vehicle dealerships in four states representing International, IC Bus, Idealease, Isuzu and other commercial vehicle manufacturers. The Company also acquired Summit’s dealership in Wichita Falls, Texas, which the Company is operating as a full-service Peterbilt commercial vehicle dealership. This acquisition also included Idealease commercial vehicle leasing operations at eight locations, a used truck sales facility in Kansas City and a collision center in Memphis.

 

Additionally, the Company expanded its nationwide network with a new parts and service location, Rush Truck Centers – Phoenix East, a full-service Hino and Isuzu dealership in Elk Grove, Illinois and a full-service Peterbilt dealership in Victorville, California.

In January 2022, the Company and Cummins closed on Cummins’ acquisition of a 50% equity interest in Momentum Fuel Technologies. The joint venture between subsidiaries of the Company and Cummins, will seek to enhance production of near-zero emissions natural gas powertrains by manufacturing “Cummins” branded natural gas fuel delivery systems for the commercial vehicle market in North America. The joint venture will offer aftermarket support through Rush Truck Centers dealerships and Cummins distributors, which will be able to service both the engine and fuel delivery system.

“We believe our new Rush Truck Centers locations will strengthen our dealership network in several of the most important trucking markets in the country, and, along with our joint venture with Cummins, reflect our commitment to strategic growth that will allow us to continue to provide superior service to our customers and increase future shareholder returns,” Rush said.

 

Operations

 

Aftermarket Products and Services

 

Aftermarket products and services accounted for approximately 62.7% of the Company’s total gross profits in 2021, with parts, service and collision center revenues reaching $1.8 billion, up 12.1% compared to 2020. The Company achieved an annual absorption ratio of 129.8% in 2021, compared to 118.7% in 2020.

 

“We experienced strong parts and service activity from a wide variety of market segments, especially large fleet, public sector, refuse and lease and rental customers, which was driven primarily by the continued nationwide economic recovery. We also continued to strategically grow our service capabilities; adding approximately 150 technicians to our company in 2021,” said Rush. “Our enhanced workforce enabled us to focus on our strategic growth initiatives, including our Xpress services, mobile service and contract maintenance offerings,” he added.

“Our fourth quarter aftermarket revenues were essentially flat compared to the third quarter, but considering there were fewer working days in the fourth quarter, we are pleased with our results,” said Rush.

 

 


“Supply constraints limited our parts and service sales growth somewhat in 2021, and while conditions improved in the fourth quarter, we expect that parts supply chain constraints will extend through at least the middle of 2022. That said, we expect strong demand for aftermarket parts and services throughout the year. With a continued focus on adding technicians throughout our network and leveraging our existing aftermarket strategies at our new dealerships, we believe our aftermarket products and services growth will meaningfully outpace the industry in 2022,” Rush said.

 

Commercial Vehicle Sales

 

New U.S. Class 8 retail truck sales totaled 227,374 units in 2021, up 16.2% over 2020, according to ACT Research. The Company sold 11,052 new Class 8 trucks in 2021, an increase of 3.6% compared to 2020, and accounted for 4.9% of the new U.S. Class 8 truck market. ACT Research forecasts U.S. retail sales of new Class 8 trucks to total 247,500 units in 2022, an 8.9% increase compared to 2021. Our current backlog for Class 8 trucks is $2.3 billion, up 143% from the same time last year.

 

“As we entered 2021, demand for new Class 8 trucks was high due to the continued nationwide economic recovery, but component parts supply chain constraints limited the production capacity of original equipment manufacturers. The timing of the supply issues hit us particularly hard this year as they came at a time when we were scheduled to make some significant fleet deliveries that ultimately were not filled in 2021. As a result, our 2021 heavy-duty truck sales did not keep pace with the overall industry,” explained Rush. “In the fourth quarter, new Class 8 truck demand remained strong and we experienced an increase in sales as we neared the end of the year, which generally translates to healthy sales in the first quarter,” Rush added.

“In 2022, with broad-based demand from the market segments we support, we anticipate demand for new Class 8 trucks will remain strong. While we are still working within the confines of truck allocation by the manufacturers we represent, and component parts supply chain constraints will likely remain an issue affecting the industry, we believe our new Class 8 truck sales results will significantly outpace the market in 2022,” said Rush.

 

The Company sold 10,485 new Class 4-7 medium-duty commercial vehicles in 2021, a decrease of 7.3% compared to 2020, accounting for 4.2% of the total U.S. market. New U.S. Class 4-7 medium-duty commercial vehicle sales were 249,753 units in 2021, up 7.6% over 2020. ACT Research forecasts U.S. retail sales for new Class 4-7 commercial vehicles to be approximately 263,700 units in 2022, a 5.6% increase compared to 2021.

 

“While demand remained solid for medium-duty commercial vehicles throughout the year, production capacity was limited in 2021 as some commercial vehicle manufacturers focused more on ramping up their more profitable heavy-duty truck production, as opposed to medium-duty commercial vehicles. Further, although Hino resumed commercial vehicle production in September, they and the other medium-duty manufacturers that we represent, were not able to increase production to pre-pandemic levels due to component parts supply chain issues. Both of these factors significantly impacted our ability to secure medium-duty trucks for our customers. In short, we sold everything we had to sell, but we were not able to match the industry growth in 2021,” said Rush.

“In 2022, while demand is expected to remain healthy, we believe we will experience similar production-related constraints on the availability of new Class 4-7 commercial vehicles that we experienced in 2021. We believe our Class 4-7 new commercial vehicle sales will be in-line with industry growth in 2022,” said Rush.

 

The Company sold 7,527 used trucks in 2021, a 1.7% increase compared to 2020. “Due to production constraints of new commercial vehicles, as well as strong spot rates throughout the country, there was healthy demand for used trucks throughout 2021. If freight demand remains healthy, we expect strong demand for used trucks to continue through 2022. Used truck values have increased significantly from their low point in the second quarter of 2020, though we anticipate those values to begin to normalize in the second half of 2022 if supply chain issues are resolved and manufacturers are able to increase new commercial vehicle production to a level that meets customer demand,” Rush said.

 

 

 

Financial Highlights

 

For the year ended December 31, 2021, the Company’s revenues totaled $5.1 billion, compared to revenues of $4.7 billion in 2020. The Company reported record-high net income for 2021 of $241.4 million, or $4.17 per diluted share, compared with net income of $114.9 million, or $2.04 per diluted share in 2020.

 

Aftermarket products and services revenues were $1.8 billion for the year ended 2021, compared to $1.6 billion for the year ended 2020. The Company sold 30,786 new and used commercial vehicles in 2021, a 0.9% increase compared to 30,513 new and used commercial vehicles in 2020. The Company delivered 11,052 new heavy-duty trucks, 10,485 new medium-duty commercial vehicles, 1,722 new light-duty commercial vehicles and 7,527 used commercial vehicles during 2021, compared to 10,670 new heavy-duty trucks, 11,311 new medium-duty commercial vehicles, 1,132 new light-duty commercial vehicles and 7,400 used commercial vehicles during 2020.

 

In the fourth quarter of 2021, the Company’s revenues totaled $1.3 billion, compared to revenues of $1.3 billion reported for the fourth quarter of 2020. Net income for the quarter ended December 31, 2021 was $68.6 million, or $1.18 per diluted share, compared to $41.0 million, or $0.72 per diluted share, in the quarter ended December 31, 2020.

 

Aftermarket products and services revenues were $469.1 million in the fourth quarter of 2021, compared to $394.7 million in the fourth quarter of 2020. The Company’s absorption ratio was 133.3% in the fourth quarter of 2021, compared to 132.9% in the fourth quarter of 2020. The Company delivered 2,529 new heavy-duty trucks, 2,534 new medium-duty commercial vehicles, 494 new light-duty commercial vehicles and 1,797 used commercial vehicles during the fourth quarter of 2021, compared to 3,142 new heavy-duty trucks, 2,773 new medium-duty commercial vehicles, 328 new light-duty commercial vehicles and 2,019 used commercial vehicles during the fourth quarter of 2020.

 

Rush Truck Leasing now operates 45 locations representing PacLease or Idealease in markets across the country with more than 8,900 trucks in its lease and rental fleet and more than 1,500 trucks under contract maintenance agreements. Lease and rental revenue increased 7.8% in the fourth quarter of 2021, compared to the fourth quarter of 2020.

 

During 2021, the Company repurchased $34.1 million of its common stock. During the fourth quarter of 2021, the Company repurchased $12.1 million of its common stock and adopted a stock repurchase plan that allows us to repurchase $100 million of stock through December 31, 2022. As of December 31, 2021, there was $95.1 million remaining to spend under the plan. Further, during the fourth quarter of 2021, we paid a cash dividend of $10.7 million, for a total of $41.1 million paid to shareholders during 2021, an 85.6% increase over 2020.

 

“In 2021, though we experienced the negative effects of component parts supply constraints, which negatively impacted both our truck sales and aftermarket revenues, we significantly grew our dealership network, remained committed to our long-term strategic goals and kept focused on a diligent approach to managing our expenses. Our efforts were rewarded by record-high profitability. Additionally, during 2021 we paid off all of our remaining real estate debt, restructured our lease and rental fleet debt to allow us to take advantage of our strong free cash flow and paid the majority of the purchase price of our acquisitions in cash. We are proud that our approach helped us keep our balance sheet and cash position strong while we continued to return value to our shareholders through our earnings growth, quarterly dividends and our stock repurchase plan,” said Rush.

 

Conference Call Information

 

Rush Enterprises will host its quarterly conference call to discuss earnings for the fourth quarter and year-end on Thursday, February 17, 2022, at 10 a.m. Eastern/9 a.m. Central. The call can be heard live by dialing 877-638-4557 (US) or 914-495-8522 (International), conference ID 3358158 or via the Internet at 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 April 15, 2022. Listen to the audio replay until February 24, 2022, by dialing 855-859-2056 (US) or 404-537-3406 (International) and entering the conference ID 3358158.

 

About Rush Enterprises, Inc.

 

Rush Enterprises, Inc. is the premier solutions provider to the commercial vehicle industry. The Company owns and operates Rush Truck Centers, the largest network of commercial vehicle dealerships in North America, with 139 locations in 23 states, including 125 franchised dealership locations. These vehicle centers, strategically located in high traffic areas on or near major highways throughout the United States, represent truck and bus manufacturers, including Peterbilt, International, Hino, Isuzu, Ford, IC Bus and Blue Bird. They offer an integrated approach to meeting customer needs — from sales of new and used vehicles to aftermarket parts, service and body shop operations plus financing, insurance, leasing and rental. Rush Enterprises' operations also provide CNG fuel systems through our joint venture with Cummins, telematics products and other vehicle technologies, as well as vehicle up-fitting, chrome accessories and tires. For more information, please visit us at www.rushtruckcenters.com, www.rushenterprises.com and www.rushtruckcentersracing.com, on Twitter @rushtruckcenter and Facebook.com/rushtruckcenters.

 

Certain statements contained in this release, including those concerning current and projected market conditions, sales forecasts, market share forecasts, the impact of the acquisition of certain dealership assets from The Summit Truck Group and anticipated demand for the Companys services, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements only speak as of the date of this release and the Company assumes no obligation to update the information included in this release. 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, inflation and the interest rate environment, governmental regulation and supervision, product introductions and acceptance, changes in industry practices, the duration and severity of the COVID-19 pandemic and governmental mandates in connection therewith, one-time events and other factors described herein and in filings made by the Company with the Securities and Exchange Commission, including in our annual report on Form 10-K for the fiscal year ended December 31, 2020. In addition, the declaration and payment of cash dividends and authorization of future share repurchase programs remains at the sole discretion of the Companys Board of Directors and the issuance of future dividends and authorization of future share repurchase programs will depend upon the Companys financial results, cash requirements, future prospects, applicable law and other factors that may be deemed relevant by the Companys Board of Directors. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual business and financial results and could cause actual results to differ materially from those in the forward-looking statements. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.

 

-Tables and Additional Information to Follow-

 

 

 

 

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Shares and Per Share Amounts)

 

   

December 31,

   

December 31,

 
   

2021

   

2020

 
   

(unaudited)

         

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 148,146     $ 312,048  

Accounts receivable, net

    140,186       172,481  

Inventories, net

    1,020,136       858,291  

Prepaid expenses and other

    15,986       14,906  

Total current assets

    1,324,454       1,357,726  

Property and equipment, net

    1,278,207       1,203,719  

Operating lease right-of-use assets, net

    69,008       60,577  

Goodwill, net

    348,580       292,142  

Other assets, net

    99,728       71,229  

Total assets

  $ 3,119,977     $ 2,985,393  
                 

Liabilities and shareholders equity

               

Current liabilities:

               

Floor plan notes payable

  $ 630,731     $ 511,786  

Current maturities of long-term debt

          141,672  

Current maturities of finance lease obligations

    26,695       26,373  

Current maturities of operating lease obligations

    12,096       10,196  

Trade accounts payable

    122,291       110,728  

Customer deposits

    80,561       74,209  

Accrued expenses

    131,130       151,830  

Total current liabilities

    1,003,504       1,026,794  

Long-term debt, net of current maturities

    334,926       387,982  

Finance lease obligations, net of current maturities

    89,835       90,740  

Operating lease obligations, net of current maturities

    57,976       51,155  

Other long-term liabilities

    26,514       34,246  

Deferred income taxes, net

    140,473       126,439  

Shareholders’ equity:

               

Preferred stock, par value $.01 per share; 1,000,000 shares authorized; 0 shares outstanding in 2021 and 2020

           

Common stock, par value $.01 per share; 60,000,000 Class A shares and 20,000,000 Class B shares authorized; 43,107,867 Class A shares and 12,398,606 Class B shares outstanding in 2021; and 42,503,925 Class A shares and 12,470,308 Class B shares outstanding in 2020

    563       551  

Additional paid-in capital

    470,750       437,646  

Treasury stock, at cost: 339,786 Class A shares and 492,052 Class B shares in 2021; and 10,335 Class A shares and 73,437 Class B shares in 2020

    (36,933 )     (2,879 )

Retained earnings

    1,031,582       831,850  

Accumulated other comprehensive income

    787       869  

Total shareholders’ equity

    1,466,749       1,268,037  

Total liabilities and shareholders equity

  $ 3,119,977     $ 2,985,393  

 

 

 

 

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

 

   

Three Months Ended

December 31,

   

Year Ended

December 31,

 
   

2021

   

2020

   

2021

   

2020

 
    (unaudited)     (unaudited)     (unaudited)          

Revenues

                               

New and used commercial vehicle sales

  $ 765,621     $ 802,939     $ 3,039,953     $ 2,863,309  

Parts and service sales

    469,080       394,654       1,793,363       1,600,445  

Lease and rental

    64,922       60,239       247,234       236,223  

Finance and insurance

    7,241       6,889       27,964       21,949  

Other

    4,936       3,476       17,628       14,014  

Total revenue

    1,311,800       1,268,197       5,126,142       4,735,940  

Cost of products sold

                               

New and used commercial vehicle sales

    683,231       733,262       2,736,502       2,641,487  

Parts and service sales

    289,463       249,584       1,109,249       1,016,574  

Lease and rental

    44,699       49,168       188,093       202,412  

Total cost of products sold

    1,017,393       1,032,014       4,033,844       3,860,473  

Gross profit

    294,407       236,183       1,092,298       875,467  

Selling, general and administrative expense

    191,761       168,502       731,340       665,258  

Depreciation and amortization expense

    13,070       14,187       53,354       57,456  

Gain on sale of assets

    275       45       1,432       1,852  

Operating income

    89,851       53,539       309,036       154,605  

Other income

    1,801       1,058       6,417       6,132  

Interest expense, net

    1,204       983       1,770       9,014  

Income before taxes

    90,448       53,614       313,683       151,723  

Provision for income taxes

    21,809       12,589       72,268       36,836  

Net income

  $ 68,639     $ 41,025     $ 241,415     $ 114,887  
                                 

Earnings per common share:

                               

Basic

  $ 1.23     $ 0.74     $ 4.32     $ 2.09  

Diluted

  $ 1.18     $ 0.72     $ 4.17     $ 2.04  
                                 

Weighted average shares outstanding:

                               

Basic

    55,922       55,260       55,892       54,866  

Diluted

    58,010       57,180       57,878       56,242  
                                 

Dividends declared per common share

  $ 0.19     $ 0.18     $ 0.74     $ 0.41  

 

 

 

 

This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as Adjusted net income, Adjusted total debt, Adjusted net (cash) debt, EBITDA, Adjusted EBITDA, Free cash flow, Adjusted free cash flow and Adjusted invested capital, which exclude certain items disclosed in the attached financial tables. The Company provides reconciliations of these measures to the most directly comparable GAAP measures.

 

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 the same information available to them that management uses to assess the Company’s operating performance and capital structure. 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.

 

   

Three Months Ended

 

Vehicle Sales Revenue (in thousands)

 

December 31, 2021

   

December 31, 2020

 

New heavy-duty vehicles

  $ 395,767     $ 458,582  

New medium-duty vehicles (including bus sales revenue)

    212,280       236,525  

New light-duty vehicles

    23,204       15,320  

Used vehicles

    126,514       88,802  

Other vehicles

    7,856       3,710  
                 

Absorption Ratio

    133.3 %     132.9 %

 

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 collision center 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)

 

December 31, 2021

   

December 31, 2020

 

Floor plan notes payable

  $ 630,731     $ 511,786  

Current maturities of long-term debt

          141,672  

Current maturities of finance lease obligations

    26,695       26,373  

Long-term debt, net of current maturities

    334,926       387,982  

Finance lease obligations, net of current maturities

    89,835       90,740  

Total Debt (GAAP)

    1,082,187       1,158,553  

Adjustments:

               

Debt related to lease & rental fleet

    (447,098 )     (601,272 )

Floor plan notes payable

    (630,731 )     (511,786 )

Adjusted Total Debt (Non-GAAP)

    4,358       45,495  

Adjustment:

               

Cash and cash equivalents

    (148,146 )     (312,048 )

Adjusted Net Debt (Cash) (Non-GAAP)

  $ (143,788 )   $ (266,553 )

 

 

 

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 (Cash) 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 floor plan credit agreements require it to repay loans used to purchase vehicles when such vehicles are sold. The Company has the capacity to finance all of its lease and rental fleet under its lines of credit established for this purpose, but may choose to only partially finance the lease and rental fleet depending on business conditions and its management of cash and interest expense. The Company’s lease and rental fleet inventory 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 received fully cover the capital costs of the lease and rental fleet (i.e., the 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 with supplemental information regarding 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 (Cash) 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.

 

   

Twelve Months Ended

 

EBITDA (in thousands)

 

December 31, 2021

   

December 31, 2020

 

Net Income (GAAP)

  $ 241,415     $ 114,887  

Provision for income taxes

    72,268       36,836  

Interest expense

    1,770       9,014  

Depreciation and amortization

    53,354       57,456  

Gain on sale of assets

    (1,432 )     (1,852 )

EBITDA (Non-GAAP)

    367,375       216,341  

Adjustments:

               

Interest income (expense) associated with FPNP

    795       (8,078 )

Adjusted EBITDA (Non-GAAP)

  $ 368,170     $ 208,263  

 

The Company presents EBITDA and Adjusted EBITDA, for the twelve months ended each period presented, 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 with supplemental information regarding operating results and to assist investors in performing analysis that is consistent with financial models developed by management and research analyst. “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.

 

   

Twelve Months Ended

 

Free Cash Flow (in thousands)

 

December 31, 2021

   

December 31, 2020

 

Net cash provided by operations (GAAP)

  $ 422,346     $ 762,982  

Acquisition of property and equipment

    (167,177 )     (136,200 )

Free cash flow (Non-GAAP)

    255,169       626,782  

Adjustments:

               

Draws (payments) on floor plan financing, net

    118,945       (369,592 )

Proceeds from L&RFD

    66,430       88,434  

Principal payments on L&RFD

    (137,479 )     (180,212 )

Cash used for L&RF purchases

    43,603    

 

Non-maintenance capital expenditures

    13,906       13,547  

Adjusted Free Cash Flow (Non-GAAP)

  $ 360,574     $ 178,959  

 

 

 

“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 scheduled principal payments on fixed rate notes payable related specifically to the financing of the lease and rental fleet that are included in Cash flows from financing activities; (v) subtracts lease and rental fleet purchases that are included in acquisition of property and equipment and not financed under the lines of credit for cash and interest expense management purposes; and (vi) adds back non-maintenance capital expenditures that are for growth and expansion (i.e. building of new dealership facilities) that are not considered necessary to maintain the current level of cash generated by the business. “Free Cash Flow” and “Adjusted Free Cash Flow” 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.

 

Invested Capital (in thousands)

 

December 31, 2021

   

December 31, 2020

 

Total Shareholders' equity (GAAP)

  $ 1,466,749     $ 1,268,037  

Adjusted net debt (cash) (Non-GAAP)

    (143,788 )     (266,553 )

Adjusted Invested Capital (Non-GAAP)

  $ 1,322,961     $ 1,001,484  

 

“Adjusted Invested Capital” is a key financial measure used by the Company to calculate its return on invested capital. For purposes of this analysis, management excludes L&RFD, FPNP, and cash and cash equivalents, for the reasons provided in the debt analysis above and uses Adjusted Net Debt in the calculation. The Company believes this approach provides management a more accurate picture of the Company’s leverage profile and capital structure and assists investors in performing analysis that is consistent with financial models developed by Company management and research analysts. “Adjusted Net (Cash) Debt” and “Adjusted Invested Capital” are both non-GAAP financial measures. Additionally, these non-GAAP measures may vary among companies and may not be comparable to similarly titled non-GAAP measures used by other companies.