Mega-dealer Rush Enterprises reported net income for the third quarter that was down compared to a year ago, with lower Class 8 sales, higher medium-duty sales, and strong parts and service operations. The company also announced continued geographic growth.
The company's net income for the quarter was $14.9 million, or $0.38 per diluted share, compared with net income of $16 million, or $0.41 per diluted share, in the third quarter last year.
Rush's Class 4-7 medium-duty truck sales increased 16% over the third quarter of 2011, outpacing the U.S. Class 4-7 market, which increased approximately 11% during the same time period. Rush's Class 4-7 sales accounted for 4.1% of the total U.S. market during the third quarter.
Class 8 unit sales, which accounted for 4.7% of the U.S. market, fell by 8% over the same time period in 2011, and dropped 19% compared to the second quarter of this year.
"As anticipated, reduced order intake over the past several months and general economic and political uncertainty resulted in decreased Class 8 truck deliveries this quarter," explained Rusty Rush. "Despite year-end tax incentives and EPA regulations that will increase the cost of trucks next year, we expect that Class 8 truck deliveries could decrease sequentially by up to 10% during the fourth quarter."
Industry experts forecast 2013 U.S. Class 8 retail sales to be 207,500 units, a slight increase from 2012 expectations.
"While it is difficult to predict next year's climate until after November, we believe that order intake will increase during the latter part of this year, but that activity would not result in an increase in our Class 8 truck deliveries until at least the second quarter of next year," Rush explained.
Industry experts also forecast U.S. medium-duty truck sales to reach 163,000 units in 2012 and 186,000 units in 2013.
Aftermarket services accounted for more than 65% of Rush's total gross profits for the third quarter of 2012. Third quarter parts, service and body shop revenues increased by 15%, compared to third quarter 2011. This resulted in another record aftermarket revenue quarter despite fewer working days during the period.
Third quarter absorption ratio was 113%.
The company expects parts, service and body shop operations could experience a sequential decline in fourth quarter revenues due to reduced seasonal activity and fewer new truck deliveries.Financial Highlights
In the third quarter, the company's gross revenues totaled $745.1 million, a 7% increase from gross revenues of $696.4 million reported for the third quarter in 2011.
Parts, service and body shop sales revenue was $210.7 million in the third quarter of 2012, compared to $182.6 million in the third quarter of 2011.
Rush Enterprises delivered 2,272 new heavy-duty trucks, 1,650 new medium-duty commercial vehicles, 363 new light-duty commercial vehicles and 1,211 used commercial vehicles during the third quarter of 2012, compared to 2,472 new heavy-duty trucks, 1,427 new medium-duty commercial vehicles, 301 new light-duty commercial vehicles and 1,170 used commercial vehicles during the third quarter of 2011.Continued Growth
Rush Enterprises signed an agreement to purchase certain assets of a dealership group in Ohio with International, IC Bus, Isuzu and Idealease franchises.
The agreement includes locations in Akron, Cincinnati, Cleveland, Columbus, Dayton, Findlay and Lima, Ohio. While this transaction remains subject to regulatory approval, the company plans to complete the acquisition by year end.
"When complete, the newly acquired dealership locations will operate within our Rush Truck Centers' Navistar Division, said W.M. "Rusty" Rush, CEO and president of Rush Enterprises.
"We also relocated our full service dealership in Phoenix, Arizona, to a newly renovated facility, which tripled our service capabilities in this market," he continued.