Rush Enterprises, which operates the largest network of commercial vehicle dealerships in North America, reported $17.4 million in net income for the second quarter, up from $12.5 million the same quarter a year ago.
President and CEO Rusty Rush credited the company's "strategy to expand the scope of aftermarket solutions we provide to the commercial vehicle market combined with our ability to offer a diverse product lineup of new trucks into a range of market segments." However, it's expecting a drop in heavy truck deliveries the second half of the year.
The company set new records this quarter for aftermarket parts, service and body shop revenues as well as medium-duty new truck sales and market share, he said.
Aftermarket services accounted for more than 62% of the company's total gross profits for the second quarter of 2012. Second quarter parts, service and body shop revenues increased by 22% as compared to second quarter 2011. This contributed to a quarterly absorption ratio of 117.7%, also another record.
"Our parts, service and body shop activity remained strong as a result of increased service needs of aging vehicles, continued service activity in the energy sector and expanded service offerings," said Rusty Rush.
The company continues to expand its service abilities. It recently doubled service bay capacity in Fort Worth, Texas; will soon relocate its Phoenix operations and triple its service capabilities; and is building new facilities in Ardmore, Okla., Corpus Christi, Texas, and San Antonio, Texas.
Four Rush Truck Centers in Arizona, Georgia and Texas are now equipped to service compressed natural gas vehicles. The company plans to bring an additional six facilities online in key markets by year end. Currently, 70 technicians have been certified to work on natural gas vehicles, with an additional 30 technicians scheduled to complete certification over the next few months.
Rush's Class 4-7 medium-duty sales increased 41% over the second quarter of 2011, outpacing the U. S. Class 4-7 market, which increased 11% for the same time period. Rush says its Class 4-7 market share accounted for 5% of the total U.S. market, up from 3.9% in the second quarter of 2011.
"This growth is primarily the result of increased new truck sales to medium-duty fleets across the country along with strong performance by our Ford franchises," said Rusty Rush. Rush's second quarter light-duty truck sales also increased by 9% as compared to the second quarter of 2011.
In the second quarter Rush's Class 8 retail sales, which accounted for 5.3% of the U.S. market, increased by 19% over the same time period in 2011, primarily driven by strong activity in the energy sector and replacement truck deliveries to larger fleets.
Used truck sales and residual values remained steady throughout the quarter and are expected to continue at current levels for the remainder of 2012.
Rush expects U.S. Class 8 retail sales to reach approximately 180,000 to 185,000 units by year end. Reduced order intake during the past several months could result in as much as a 20% decrease in new truck deliveries during the second half of 2012.
"Although business for most of our customers remains steady, we believe that fleet decision makers will exercise caution in making new truck replacement purchases during the second half of the year due to current political and fiscal uncertainty. We expect that as these uncertainties subside, order intake should increase by year end," said Rusty Rush.
Current industry forecasts indicate an increase in 2013 U. S. Class 8 retail sales to 227,000 units. "This is driven primarily by the need for replacement trucks to offset the age of fleet vehicles and should result in an improved truck sales market next year," said Rusty Rush.
Industry experts also forecast U. S. Class 4-7 retail sales to be at 160,000 units in 2012 and 184,000 units in 2013.