Rush Holds Profit Steady as Truck Revenue Slips
Second-quarter revenue fell 1.6% to $1.900 billion as commercial-vehicle sales weakened.
Rush Enterprises Inc. (RUSHA), the commercial-vehicle dealership operator, held quarterly profit nearly flat as lower interest expense cushioned weaker vehicle sales and narrower margins.
The results reflected a split market: Rush outperformed the broader contraction in heavy-duty trucks, while its medium-duty business lost ground and aftermarket growth slowed.
Revenue fell 1.6% from a year earlier, while net income edged up to $72.8 million from $72.4 million. Diluted earnings increased to $0.91 a share from $0.90 a share. Operating income declined 11.8% to $97.2 million as gross margin narrowed to about 19.0% from 19.7%.
Lower financing costs preserved the bottom line. Net interest expense fell to $4.4 million from $12.7 million, offsetting the decline in operating profit.
New- and used-commercial-vehicle revenue decreased 3.6% to $1.149 billion. Aftermarket revenue rose 1.5% to $645.7 million and lease-and-rental revenue increased 1.9% to $94.8 million. Aftermarket products and services produced about 64.0% of gross profit, though the absorption ratio declined to 130.8% from 135.5%.
Rush sold 3,172 new U.S. Class 8 trucks, nearly even with the year-earlier period as the broader market contracted 6.7%, lifting the company's market share to 5.8%. Medium-duty sales fell 12.7% to 3,165 units, compared with a 5.0% industry decline. Used-commercial-vehicle deliveries rose 4.3%, and June was its strongest used-truck sales month of the year.
Rush expects second-half Class 8 sales to be considerably stronger than first-half sales and continues to anticipate a gradual industry recovery. Order intake and quoting activity were significantly higher as the second quarter progressed.
The company also announced a three-for-two stock split and raised its post-split quarterly dividend 10.5% to $0.14 a share. Rush added 10 dealerships in Louisiana and Ontario and announced a 50%-owned joint venture expected to close in the third quarter, extending its service network as it awaits the projected heavy-truck recovery.