Texas-based Rush Enterprises announced its first quarter results, noting it remained profitable despite historically tough market conditions.
In the first quarter, the country's largest dealer group saw gross revenues of $329.1 million, an 18.5 percent decrease from gross revenues of $403.9 million reported for the first quarter of 2008. Net income for the quarter was $2.9 million, compared with net income of $9.7 million a year ago.
The company's truck segment recorded revenues of $313 million in the first quarter of 2009, compared to $376.7 million in the first quarter of 2008. Rush's dealers delivered 1,032 new heavy-duty trucks, 754 new medium-duty trucks and 577 used trucks during the first quarter of 2009, compared to 1,266 new heavy-duty trucks, 972 new medium-duty trucks and 900 used trucks in the first quarter of 2008. Parts, service and body shop sales revenue was $101.8 million in the first quarter of 2009 compared to $109.4 million in the first quarter of 2008.
"The ongoing recession more adversely impacted our aftermarket operations during the first quarter of 2009 than in any quarter that I can remember," noted W.M. "Rusty" Rush, president and CEO. "Rush Truck Center aftermarket parts, service and body shop revenues decreased 6.4 percent and gross profit decreased 12.8 percent. This sharp decline in aftermarket gross profit caused our absorption rate to decrease to 97.2 percent from 104.9 percent in the first quarter of last year."
Rusty Rush explained that decreased freight tonnage and overall weakness creates excess capacity for the company's customers, which is allowing them to delay maintenance on the trucks they already own as well as delaying purchases of new trucks.
"Currently, industry analysts forecast 2009 U.S. retail sales of Class 8 trucks to be 114,600 units, down 18% over 2008," Rusty Rush said. "However, we expect that 2009 sales of Class 8 units to be in the range of 100,000 to 110,000 units. We also believe U.S. retail sales of medium-duty trucks could be off as much as 20 percent compared to 2008. As expected, the first quarter of 2009 was one of the weakest quarters for U.S. Class 8 truck sales since 1991, and we anticipate truck sales to continue at a slow pace throughout the second quarter. Continued weak truck and aftermarket sales will likely cause the second quarter to be the most challenging operating period since this downturn began in 2007."
However, he said, the company believes demand for new Class 8 trucks will begin to increase during the second half of the year because of the current average age of trucks in operation, which is at a level last seen in the early 1990's, and due to the impending 2010 diesel emissions regulations.
"While depressed used truck values and tight credit continue to impede truck sales efforts, we are seeing increasing interest and requests for quotes from some of our customers," Rusty Rush said. "Unfortunately, economic uncertainty remains high and we are not in a position to predict when the economy will improve or when lenders will begin to ease credit requirements. We are hopeful that the increased interest we currently see will translate into improved truck sales in the second half of 2009."
In the first quarter, the country's largest dealer group saw gross revenues of $329.1 million, an 18.5 percent decrease from gross revenues of $403.9 million reported for the first quarter of 2008. Net income for the quarter was $2.9 million, compared with net income of $9.7 million a year ago.
The company's truck segment recorded revenues of $313 million in the first quarter of 2009, compared to $376.7 million in the first quarter of 2008. Rush's dealers delivered 1,032 new heavy-duty trucks, 754 new medium-duty trucks and 577 used trucks during the first quarter of 2009, compared to 1,266 new heavy-duty trucks, 972 new medium-duty trucks and 900 used trucks in the first quarter of 2008. Parts, service and body shop sales revenue was $101.8 million in the first quarter of 2009 compared to $109.4 million in the first quarter of 2008.
"The ongoing recession more adversely impacted our aftermarket operations during the first quarter of 2009 than in any quarter that I can remember," noted W.M. "Rusty" Rush, president and CEO. "Rush Truck Center aftermarket parts, service and body shop revenues decreased 6.4 percent and gross profit decreased 12.8 percent. This sharp decline in aftermarket gross profit caused our absorption rate to decrease to 97.2 percent from 104.9 percent in the first quarter of last year."
Rusty Rush explained that decreased freight tonnage and overall weakness creates excess capacity for the company's customers, which is allowing them to delay maintenance on the trucks they already own as well as delaying purchases of new trucks.
"Currently, industry analysts forecast 2009 U.S. retail sales of Class 8 trucks to be 114,600 units, down 18% over 2008," Rusty Rush said. "However, we expect that 2009 sales of Class 8 units to be in the range of 100,000 to 110,000 units. We also believe U.S. retail sales of medium-duty trucks could be off as much as 20 percent compared to 2008. As expected, the first quarter of 2009 was one of the weakest quarters for U.S. Class 8 truck sales since 1991, and we anticipate truck sales to continue at a slow pace throughout the second quarter. Continued weak truck and aftermarket sales will likely cause the second quarter to be the most challenging operating period since this downturn began in 2007."
However, he said, the company believes demand for new Class 8 trucks will begin to increase during the second half of the year because of the current average age of trucks in operation, which is at a level last seen in the early 1990's, and due to the impending 2010 diesel emissions regulations.
"While depressed used truck values and tight credit continue to impede truck sales efforts, we are seeing increasing interest and requests for quotes from some of our customers," Rusty Rush said. "Unfortunately, economic uncertainty remains high and we are not in a position to predict when the economy will improve or when lenders will begin to ease credit requirements. We are hopeful that the increased interest we currently see will translate into improved truck sales in the second half of 2009."
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