Rush Enterprises, Inc. Reports Fourth Quarter and Year-End 2017 Results

By , in PR PR Economy on .

Annual revenues of $4.7 billion; net income of $172.1 million, a record highEarnings per diluted share reached $4.20Results from strategic initiatives and strength in most market segments contributed to outstanding financial performanceRecord annual absorption ratio 121%SAN ANTONIO, Feb. 14, 2018 — Rush Enterprises, Inc. (NASDAQ:RUSHA) (NASDAQ:RUSHB), which operates the largest network of commercial vehicle dealerships in North America, today announced that for the year ended December 31, 2017, the Company achieved revenues of $4.7 billion and net income of $172.1 million, or $4.20 per diluted share, compared with revenues of $4.2 billion and net income of $40.6 million, or $1.00 per diluted share, in the year ended December 31, 2016.  Pretax income was reduced by $7.2 million, or $0.11 per diluted share as the result of the Company’s decision to pay a one-time discretionary bonus to all of its employees as a result of the recently-passed tax reform legislation.  Also, as a result of the tax reform legislation, the Company’s tax expense was reduced by $82.9 million, which resulted in an increase of $2.02 in earnings per diluted share during 2017.  This tax adjustment was primarily attributable to the revaluation of the Company’s deferred tax liabilities at the new federal income tax rate of 21% compared to the previous rate of 35%.“We are extremely proud of our record financial performance in 2017,â€� said W.M. “Rustyâ€� Rush, Chairman, Chief Executive Officer and President of Rush Enterprises, Inc.  â€œOur strategic initiatives, including our aftermarket offerings and vehicle technologies’ solutions, were key contributors this year and made a significant positive impact on our results, as did strong growth in multiple industries that we support and the general strength of the U.S. economy,â€� he said.  â€œIn December, I was happy to present all of our employees with a one-time discretionary $1,000 bonus.  We viewed the recently-passed tax reform legislation as a unique opportunity to honor all of our employees’ important contributions to our Company.  As always, I am incredibly grateful for their unwavering dedication to Rush Enterprises and our customers,â€� he added. “The tax reform will lower our effective tax rate and we plan to use a portion of these tax savings to further invest in our employees and information technology as well as to accelerate the investment in our strategic growth initiatives,â€� said Rush.OperationsAftermarket SolutionsAftermarket products and services accounted for 65% of the Company’s total gross profits in 2017, with parts, service and body shop revenues reaching $1.5 billion, up 10.4% over 2016.  The Company achieved a record annual absorption ratio of 121%. â€œOur aftermarket revenues and profits in 2017 were positively impacted by broad-based activity across the variety of industry sectors that we support, particularly refuse, construction and energy,â€� said Rush.  â€œThese results also reflect a positive financial impact from parts and service strategic initiatives, which accelerated through the second half of the year,â€� Rush said.“During 2017, we reinforced our focus on aftermarket offerings by expanding our all-makes parts business, adding to our already talented team of aftermarket sales representatives and increasing the number of service technicians we have across the country to support our customers with all of their parts and service needs,â€� he said.  â€œWe also continued to enhance our portfolio of RushCare solutions by making further investments in multiple areas, including telematics, RushCare Service Connect, our customer support center, contract technicians, mobile service and alternative fuel solutions,â€� Rush said.  â€œIn addition to our overall strong year, I’d like to note that our aftermarket revenues in the fourth quarter were up 16% over the fourth quarter of 2016, and our absorption ratio in the fourth quarter of 2017 was 128%, a record high.  As we look to 2018, we expect we will continue to see parts and service revenue growth from our strategic initiatives and from continued strength in the market segments we serve,â€� Rush said.Truck SalesIn 2017, Rush Class 8 retail sales accounted for 6.6% of the total U.S. Class 8 market, compared to 5.5% in 2016.  The Company sold 13,083 Class 8 trucks in 2017, an increase of 21% compared to 2016, while the U.S. Class 8 market remained essentially flat.“A healthy economy, strength in most geographic market segments, growth from customers in the energy sector and solid demand for vocational trucks and from over-the-road fleets contributed to our strong new truck sales performance,â€� Rush said.ACT Research forecasts U.S. retail sales of Class 8 trucks to total 247,000 units in 2018, a 25.2% increase compared to 2017. “We believe continued economic growth, implementation of the ELD mandate, improved fuel efficiency and continued strength in most market segments, evidenced by near record-high order intake for January, will drive Class 8 truck sales in 2018,â€� Rush added. â€œIn 2017, our Class 8 market share grew to 6.6% due primarily to the strong vocational market.  Looking to 2018, we believe our Class 8 truck sales will remain strong, though we expect our sales mix to shift more towards over-the-road fleets and our market share may normalize closer to historical levels,â€� Rush explained.“Used truck values stabilized in 2017, and our used truck sales remained flat compared to last year,â€� said Rush. “We believe there will be a growing supply of used trucks entering the market in 2018, and we will monitor the market carefully. We are confident our inventory and pricing strategy will support expected market demand,â€� he added. Rush’s U.S. Class 4-7 medium-duty truck sales reached 10,952 units in 2017, essentially flat compared to 2016.  Rush’s medium-duty new truck sales accounted for 4.5% of the total U.S. Class 4-7 market in 2017.“Our inventory of bodied-up medium-duty trucks that are ready to support customers in a wide variety of business sectors nationwide contributed to another good year for both medium- and light-duty truck sales,â€� said Rush.ACT Research forecasts U. S. retail sales of Class 4-7 vehicles to reach 244,750 units in 2018, a 1.1% increase over 2017.“We expect the Class 4-7 market to remain strong in 2018, due primarily to expected growth in infrastructure spending, continued strength in a wide variety of industries we support and positive general economic conditions,â€� Rush said.  â€œBy remaining focused on meeting our customers’ immediate needs with ready-to-roll equipment in stock across the country, we believe our medium-duty performance will be strong in 2018,â€� he added.Financial HighlightsFor the year ended December 31, 2017, the Company’s gross revenues totaled $4.7 billion, compared to gross revenues of $4.2 billion reported in 2016.  The Company reported net income for the year of $172.1 million, or $4.20 per diluted share, compared with net income of $40.6 million, or $1.00 per diluted share in 2016. Aftermarket products and services revenues were $1.5 billion in the year ended 2017, compared to $1.3 billion in the year ended 2016.  The Company sold 32,756 new and used commercial vehicles in 2017, a 6.9% increase compared to 30,635 new and used commercial vehicles in 2016.  The Company delivered 13,083 new heavy-duty trucks, 10,952 new medium-duty commercial vehicles, 1,661 new light-duty commercial vehicles and 7,060 used commercial vehicles during 2017, compared to 10,816 new heavy-duty trucks, 11,135 new medium-duty commercial vehicles, 1,676 new light-duty commercial vehicles and 7,008 used commercial vehicles during 2016.In the fourth quarter of 2017, the Company’s gross revenues totaled $1.2 billion, compared to gross revenues of $1.0 billion reported for the fourth quarter of 2016.  Net income for the quarter ended December 31, 2017 was $105.9 million, or $2.54 per diluted share, compared to $12.5 million, or $0.31 per diluted share, in the quarter ended December 31, 2016.  Pretax income was reduced by $7.2 million, or $0.11 per diluted share, as the result of the Company’s decision to pay a one-time discretionary bonus to all of its employees in December 2017.  As a result of the tax reform legislation, the Company’s tax expense was reduced by $82.9 million, which resulted in an increase of $1.99 in earnings per diluted share in the fourth quarter of 2017. Aftermarket product and services revenues were $378.7 million in the fourth quarter of 2017, compared to $325.3 million in the fourth quarter of 2016.  The Company’s absorption ratio was 128.0% in the fourth quarter of 2017, compared to 120.6% in the fourth quarter of 2016.  The Company delivered 3,378 new heavy-duty trucks, 2,498 new medium-duty commercial vehicles, 394 new light-duty commercial vehicles and 1,863 used commercial vehicles during the fourth quarter of 2017, compared to 2,521 new heavy-duty trucks, 2,581 new medium-duty commercial vehicles, 380 new light-duty commercial vehicles and 1,728 used commercial vehicles during the fourth quarter of 2016.The Company’s Rush Truck Leasing operations increased its revenues by 4.4% and widened its margins in 2017, primarily as a result of a successful service model designed to maximize uptime for contracted customers.  Rush Truck Leasing now operates 45 Paclease and Idealease franchises in markets across the country with more than 7,800 trucks in its lease and rental fleet and more than 1,100 trucks under contract maintenance agreements.“As in past years, employee benefits and payroll taxes will negatively impact expenses in the first quarter of 2018 compared to the fourth quarter of 2017,â€� Rush said. Changes in tax reform will result in a reduction of the Company’s effective tax rate from its historical range of 38% to 39% to an expected range of 25% to 26%.  â€œWe intend to reinvest a portion of these tax savings to accelerate investments in our strategic initiatives, which will result in increased SG&A expenses throughout the year,â€� Rush noted.  â€œWe ended 2017 with $125 million in cash and in a strong financial position to continue to invest in our long-term strategic initiatives.  During 2017, we repurchased approximately $34.0 million of stock and in November we adopted a $40.0 million stock repurchase plan, illustrating our commitment to enhancing shareholder value,â€� Rush said.Conference Call Information

The following two tabs change content below.
Marcus Clinker

Marcus Clinker

Marcus is a reporter on the Political Capital team focusing on money in politics. Before joining Daily Telescope, he worked as a researcher and writer for the Institute for Northern Studies at Ohio State University and as a freelance journalist in Portalnd, having been published by over 20 outlets including NPR, the Center for Media and Democracy,The Huffington Post, Salon, Truthout and VICE.com.
%d bloggers like this: