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Earnings Watch: Daimler, Dana and Rush Enterprises

October 22, 2015

By Evan Lockridge

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Daimler AG, Dana and Rush Enterprises all saw weaker third-quarter financials compared to a year ago, thanks in part to the recession in Brazil and the downturn in the North American oil and gas industry.

Daimler Sets North America Truck Sales Record

The parent of Freightliner and Western Star, as well as Mercedes Benz, Germany’s Daimler AG (DAI) reported a net profit totaling 2.39 billion euros or $2.7 billion, down about 14% from the same time a year earlier. Revenue increased by 13% to 37.3 billion euros.

With sales of 720,000 cars and commercial vehicles, the company sold 13% more vehicles between July and September than in the prior-year period.

North America, Western Europe and Japan drove Daimler Trucks’ unit sales up 2% over the third quarter of last year to 128,500 vehicles. The division saw 19% in North America, with sales of 52,200 trucks, a new company record.

In Western Europe, Daimler Trucks increased its unit sales by 12%.

A drop of 37% was recorded in Latin America due to the significant market slump in Brazil. In this environment, Daimler Trucks was able to take over the market leadership in Brazil in the medium- and heavy-duty segment, according to the company. Unit sales in Asia were 6% lower than in the prior-year quarter.

Looking ahead, in the worldwide market for medium- and heavy-duty trucks, another pronounced drop in demand is expected in 2015 following last year’s significant decrease, according to Daimler, adding the situation will remain highly varied from one region to another.

“In North America, the main economic indicators continue to suggest that demand for trucks will remain favorable, supporting expectations of growth in demand in the magnitude of 10% to 15%,” the company said in a news release. “Thanks to the relatively solid economic recovery in Europe, Daimler anticipates market growth of 10% to 15% there as well."

In contrast, Daimler sees unfavorable market conditions in Brazil, Indonesia, Russia and China, but expects a significant recovery in India.

Daimler assumes that the market in Europe for medium-sized and large vans will grow significantly in 2015, and slight growth is expected in the market for small vans. For the United States, significant growth is expected in the market for large vans.

There are more details on the Daimler website.

Dana Loses Some Steam in North America, Overseas

Net income for Dana Holding Corp. (DAN) improved to $119 million in the third quarter from $90 million a year earlier, or 75 cents per diluted share in the most recent quarter versus 52 cents last year.

However, the company said when adjusting for certain items, net income for the quarter was lower than last year by $47 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter was $167 million, compared with $198 million for the same period in 2014.

Sales for the quarter were $1.468 billion, $169 million lower compared with the same period in 2014.

The company says lower sales were driven by significant weakness in South American truck production, and lower market share with a North American customer as a result of supply constraints in the first half of the year.

In Dana’s commercial vehicle driveline technologies business, sales were $367 million in the third quarter of 2015, compared with $487 million last year. Sales in North America were lower by $30 million, reflecting lower customer share, but numbers also were affected by weaker foreign currencies and lower truck production in Brazil.

Segment EBITDA for the third quarter of 2015 was $31 million compared with last year's segment EBITDA of $47 million.

“While commercial-vehicle supply chain challenges in North America have been resolved, the company expects lower customer share positions to persist through the remainder of this year, which, coupled with weaker end-market demand in the fourth quarter, will impact commercial vehicle driveline sales,” Dana said. “Macroeconomic factors are expected to further temper light-vehicle demand in South America and Asia, and weaker global demand for construction and agriculture equipment will lower sales for the remainder of 2015.”

Accordingly, the company has lowed it full-year 2015 financial targets to sales of approximately $6.05 billion and adjusted EBITDA of approximately $675 million.

More information on the company’s financial performance is on the Dana website.

Rush Enterprises Profit Falls as Energy Industry Declines

Mega-truck dealer Rush Enterprises Inc. (RUSHA and RUSHB) saw its net income fall in the third quarter compared to a year ago, to $19.9 million or 48 cents per diluted share, from last year's $23.5 million, or 57 cents per diluted share.

It reported third quarter 2015 revenue of $1.294 billion compared to $1.241 billon for the third quarter of 2014, a 4.3% increase.

"We are proud of our solid financial performance this quarter," said W.M. "Rusty" Rush, chairman, CEO and president. "As expected, declines in energy sector activity continue to have a negative impact on Class 8 truck sales and aftermarket revenues. However, we were able to partially offset this impact through strong Class 4-7 truck sales, incremental large fleet business and aftermarket services in other regions of the country."

While Rush says it outpaced the industry in new truck sales earlier this year, its Class 8 sales remained flat in the third quarter compared to the same period in 2014, and accounted for 6.6% of the U.S. Class 8 truck market.

Rush's Class 4-7 new truck sales outpaced the U.S. market, increasing by 12% over the third quarter of last year and accounting for 5.1% of the total U.S. market. In comparistotal on, U.S. Class 4-7 truck sales in the third quarter were 56,378 units, up 5% over the same time period in 2014.

"We continue to see the benefits of our large inventory of 'ready-to-roll' medium-duty work trucks in stock across the country, providing trucks when needed to those benefitting from a healthier economy," said Rusty Rush.

Parts, service and body shop revenues were $360.7 million in the third quarter of 2015, compared to $340.6 million in the third quarter of 2014.

The company delivered 4,412 new heavy-duty trucks, 2,889 new medium-duty commercial vehicles, 312 new light-duty commercial vehicles and 2,169 used commercial vehicles during the third quarter of 2015. This compares to 4,384 new heavy-duty trucks, 2,587 new medium-duty commercial vehicles, 377 new light-duty commercial vehicles and 1,956 used commercial vehicles during the third quarter of 2014.

Aftermarket services accounted for approximately 64% of the company's total gross profits in the third quarter of 2015. Parts, service and body shop revenues increased by 5.9% as compared to the third quarter of 2014.

There are more details on the Rush Enterprises website.

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