Texas-based Rush Enterprises, which operates the largest network of heavy-duty and medium-duty truck dealerships in North America, experienced falling revenues and income in the second quarter compared to last year, but is looking ahead to an upswing in 2009.
In the second quarter, the company's gross revenues totaled $454.7 million, a 12.5% decrease from gross revenues of $519.4 million reported for the second quarter ended June 30, 2007. Net income for the quarter was $6.1 million, or $0.16 per diluted share, compared with net income of $13.0 million, or $0.34 per diluted share, in the quarter ended June 30, 2007. These results included a $5.4 million write-down of used truck inventory in the second quarter of 2008, which reduced earnings by $.08 per share.
"As expected, Class 8 and medium-duty new and used truck markets remained weak through the second quarter," said W. Marvin Rush, chairman. "We expect truck sales to remain slow through the remainder of 2008. We continue to believe, however, that replacement cycles of vehicles purchased between 2004 and 2006 combined with impending 2010 emissions regulations will create increased demand for Class 8 and medium-duty trucks in 2009."
Rush's truck segment recorded revenues of $425.2 million in the second quarter of 2008, compared to $488 million in the second quarter of 2007. The company delivered 1,665 new heavy-duty trucks, 979 new medium-duty trucks and 795 used trucks during the second quarter of 2008, compared to 1,869 new heavy-duty trucks, 1,324 new medium-duty trucks and 984 used trucks during the second quarter of 2007. Parts, service and body shop sales remained flat at $111.9 million in the second quarter of 2008 compared to $112 million in the second quarter of 2007.
"Used truck revenues were down 25.7% in the second quarter as compared to the second quarter of last year," said W.M. "Rusty" Rush, President and Chief Executive Officer. "Demand for used trucks has rapidly declined in the second quarter and valuations of used trucks have decreased approximately 15% to 20% since April. We have adjusted our used truck inventory values to better reflect these market conditions, which resulted in a reduction of earnings of $.08 per share."
Despite overall soft Class 8 and medium-duty new and used truck sales in 2008, he said, parts, service and body shop sales remained flat as compared to the second quarter of 2007. However, gross margins from these operations were down slightly from the prior year. This resulted in an absorption rate of 105.4% in the second quarter of 2008 compared to 109.0% in the second quarter of 2007.
"Our overall absorption rate for the first six months of 2008 was 105.1% compared to 105.4% for the same period of 2007," said Rusty Rush. "Our ability to maintain our absorption rate was primarily due to actions taken early in 2008 to reduce overhead expense to a level more reflective of anticipated declining business conditions.
"We remain committed to our strategy to diversify our earnings base, expand our geographic network and focus on less cyclical niche markets and aftermarket business."
In addition, the Board of Directors approved a stock repurchase program authorizing the company to repurchase, from time to time, up to an aggregate of $20,000,000 of its shares of Class A common stock, $.01 par value per share, and/or Class B common stock, $.01 par value per share.
In the second quarter, the company's gross revenues totaled $454.7 million, a 12.5% decrease from gross revenues of $519.4 million reported for the second quarter ended June 30, 2007. Net income for the quarter was $6.1 million, or $0.16 per diluted share, compared with net income of $13.0 million, or $0.34 per diluted share, in the quarter ended June 30, 2007. These results included a $5.4 million write-down of used truck inventory in the second quarter of 2008, which reduced earnings by $.08 per share.
"As expected, Class 8 and medium-duty new and used truck markets remained weak through the second quarter," said W. Marvin Rush, chairman. "We expect truck sales to remain slow through the remainder of 2008. We continue to believe, however, that replacement cycles of vehicles purchased between 2004 and 2006 combined with impending 2010 emissions regulations will create increased demand for Class 8 and medium-duty trucks in 2009."
Rush's truck segment recorded revenues of $425.2 million in the second quarter of 2008, compared to $488 million in the second quarter of 2007. The company delivered 1,665 new heavy-duty trucks, 979 new medium-duty trucks and 795 used trucks during the second quarter of 2008, compared to 1,869 new heavy-duty trucks, 1,324 new medium-duty trucks and 984 used trucks during the second quarter of 2007. Parts, service and body shop sales remained flat at $111.9 million in the second quarter of 2008 compared to $112 million in the second quarter of 2007.
"Used truck revenues were down 25.7% in the second quarter as compared to the second quarter of last year," said W.M. "Rusty" Rush, President and Chief Executive Officer. "Demand for used trucks has rapidly declined in the second quarter and valuations of used trucks have decreased approximately 15% to 20% since April. We have adjusted our used truck inventory values to better reflect these market conditions, which resulted in a reduction of earnings of $.08 per share."
Despite overall soft Class 8 and medium-duty new and used truck sales in 2008, he said, parts, service and body shop sales remained flat as compared to the second quarter of 2007. However, gross margins from these operations were down slightly from the prior year. This resulted in an absorption rate of 105.4% in the second quarter of 2008 compared to 109.0% in the second quarter of 2007.
"Our overall absorption rate for the first six months of 2008 was 105.1% compared to 105.4% for the same period of 2007," said Rusty Rush. "Our ability to maintain our absorption rate was primarily due to actions taken early in 2008 to reduce overhead expense to a level more reflective of anticipated declining business conditions.
"We remain committed to our strategy to diversify our earnings base, expand our geographic network and focus on less cyclical niche markets and aftermarket business."
In addition, the Board of Directors approved a stock repurchase program authorizing the company to repurchase, from time to time, up to an aggregate of $20,000,000 of its shares of Class A common stock, $.01 par value per share, and/or Class B common stock, $.01 par value per share.
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