Rush Enterprises Inc. Reports Fourth Quarter and Year End Results
SAN ANTONIO--March 26, 2003--Rush Enterprises Inc. , which operates the largest network of Peterbilt heavy-duty truck dealerships in North America, a John Deere construction equipment dealership in Texas, and is presently discontinuing the operations of its farm and ranch superstore (D&D), today announced results for the quarter and year ended Dec. 31, 2002.In the fourth quarter, the Company's gross revenues totaled $197.3 million, a 21.3 percent increase from gross revenues of $162.7 million reported for the fourth quarter ended Dec. 31, 2001. Income from continuing operations was $2.1 million or $0.15 per diluted share during the fourth quarter of 2002 and 2001.
The company reported a net loss of ($7.1) million, or ($0.49) per diluted share, during the fourth quarter of 2002 compared to net income of $0.6 million, or $0.04 per diluted share, during the fourth quarter of 2001. Included in the 2002 fourth quarter results are nonrecurring and unusual charges, net of income tax benefits, of $8.3 million ($0.58 per diluted share) related to the Company's discontinued operations.
On Nov. 12, 2002, the Company announced that it would sell its Michigan John Deere construction equipment dealerships as a result of continuing deterioration in the Michigan construction equipment market, and its location in regards to the Company's other operations and its plans for future expansion.
The sale of the Michigan construction equipment dealerships was substantially complete at Dec. 31, 2002. The $8.3 million in charges recorded in the fourth quarter of 2002 included charges, net of income tax benefits, of approximately $2.5 million related Michigan John Deere construction stores sold during December 2002.
Included in the $2.5 million Michigan construction equipment store charge was a goodwill impairment of $1.3 million, a loss on the disposal of inventory of $0.9 million, a $0.4 million provision for termination benefits, and a gain on the sale of fixed assets of $0.2 million. The remainder of the charges are related to costs associated with infrastructure reduction, including professional fees and facilities. In addition the operations of the Michigan construction equipment stores recorded a loss, net of tax benefits, of $0.3 million during the fourth quarter of 2002.
On Nov. 12, 2002, the Company decided to discontinue its D&D operations, which operated three farm and ranch retail stores in Seguin, Hockley and Denton, Texas. The Company decided that D&D did not fit into its long-term plans of growing its core heavy-duty truck and construction equipment businesses. The Denton store was closed during December, the Hockley store began liquidating inventory during November and completed the liquidation on March 9, 2003, and the Company plans to sell the Seguin store by Dec. 31, 2003.
The $8.3 million in charges recorded in the fourth quarter of 2002 included charges, net of income tax benefits, of approximately $5.8 million related to the closing, liquidation and pending sale of D&D. Included in the $5.8 million D&D charge was a $3.1 million loss for the sale of fixed assets, $0.9 million loss on the disposal of inventory, $0.7 million provision for termination benefits and a $0.9 million impairment of goodwill.
The remainder of the charges are related to costs associated with infrastructure reduction, including professional fees and facilities. In addition the operations of D&D recorded a loss, net of tax benefits, of $0.5 million during the fourth quarter of 2002.
The Company's heavy-duty truck segment recorded revenues of approximately $186.1 million in the fourth quarter of 2002, compared to approximately $151.2 million in the fourth quarter of 2001. The Company delivered 1,200 and 557 new and used trucks, respectively, during the fourth quarter of 2002 compared to 989 and 391 new and used trucks, respectively, for the same period in 2001. Parts, service and body shop sales increased 3.1 percent from $49.2 million from in the fourth quarter of 2001 to $50.8 million in the fourth quarter of 2002.
The Company's construction equipment segment, that is included in the continuing operations of the Company, recorded revenues of $9.8 million in the fourth quarter of 2002, compared to $9.2 million in the fourth quarter of 2001. New and used construction equipment unit sales revenue increased $0.7 million or 11.5 percent from the same period in 2001. Parts and service sales were $2.5 million in the fourth quarter of 2001 and the fourth quarter of 2002. Rental sales decreased from $474,000 to $355,000, or 25.1 percent, from the fourth quarter of 2001 to the fourth quarter of 2002.
Additionally, Robin M. Rush, executive vice president, secretary, treasurer and director of Rush Enterprises Inc., has elected to leave the Company effective June of 2003 to pursue personal interests. Robin has been with the Company since 1990, and has been primarily responsible for the operations of the Company's construction equipment operations and farm and ranch retail division since 1997. Martin A. Naegelin Jr., senior vice president and chief financial officer, will replace Robin as secretary and treasurer of the Company.
For the year ended Dec. 31, 2002, the Company's gross revenues totaled $757.1 million, a 9.5 percent increase compared to gross revenues of $691.5 million reported during 2001. Income from continuing operations was $8.7 million or $0.60 per diluted share during 2002, a 45 percent increase compared to income for continuing operations of $6.0 million or $0.42 per diluted share recorded during 2001. The company reported a net loss of ($1.7) million, or ($0.12) per diluted share, during 2002 compared to net income of $3.3 million, or $0.23 per diluted share, during 2001.
In announcing the results, W. Marvin Rush, chairman and chief executive officer of Rush Enterprises, said, "I am very pleased with our fourth quarter continuing operations. As expected, truck sales declined from the third quarter, but were stronger than the prior year. Fourth quarter deliveries were higher due to a spillover of orders from the third quarter. While we expect sales to remain soft in the first half of 2003, we are optimistic about the latter half of the year."
Mr. Rush added, "I am very excited with the direction our Company is headed. Our recent heavy-duty truck expansion into Florida marked our entrance into the eastern sunbelt states, while our decisions to exit the Michigan construction equipment market and the farm and ranch retail market allow us to focus on our core competencies. As always we look forward to the challenges ahead and we remain positioned to take advantage of any opportunities that may arise."
Rush Enterprises operates the largest network of Peterbilt heavy-duty truck dealerships in North America and a John Deere construction equipment dealership in Texas. Its current operations include a network of dealerships located in Texas, California, Oklahoma, Louisiana, Colorado, Arizona, New Mexico and Florida. These dealerships provide an integrated, one-stop source for the retail sale of new and used heavy-duty trucks and construction equipment; aftermarket parts, service and body shop facilities; and a wide array of financial services, including the financing of truck and equipment sales, insurance products and leasing and rentals. The Company is also discontinuing the operations of its retail farm and ranch superstore that serves the greater San Antonio, Texas, area.
Certain statements contained herein, including those concerning industry conditions, are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, competitive factors, general economic conditions, cyclicality, economic conditions in the new and used truck and construction equipment markets, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, one-time events and other factors described herein and in filings made by the company with the Securities and Exchange Commission.
RUSH ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2002
(In Thousands, Except Shares and Per Share Amounts)
December 31, December 31,
2001 2002
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ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $19,852 $24,763
Accounts receivable, net 26,403 24,935
Inventories 84,155 115,333
Prepaid expenses and other 1,244 1,764
Assets held for sale 43,971 16,962
Deferred income taxes 1,508 4,375
------------- -------------
Total current assets 177,133 188,132
PROPERTY AND EQUIPMENT, net 118,375 117,859
OTHER ASSETS, net 42,703 38,519
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Total assets $338,211 $344,510
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LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------
CURRENT LIABILITIES:
Floor plan notes payable $85,300 $89,288
Current maturities of long-term debt 23,993 24,958
Advances outstanding under lines of
credit 22,459 22,395
Trade accounts payable 15,284 15,082
Accrued expenses 23,047 28,414
------------- -------------
Total current liabilities 170,083 180,137
LONG-TERM DEBT, net of current
maturities 74,177 69,958
DEFERRED INCOME TAXES, net 12,512 14,720
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per
share; 1,000 shares authorized; 0
shares outstanding in 2001 and 2002 -- --
Common stock, par value $.01 per
share; 50,000,000 shares authorized;
14,004,088 shares outstanding in 2001
and 2002 140 140
Additional paid-in capital 39,155 39,155
Retained earnings 42,144 40,400
------------- -------------
Total shareholders' equity 81,439 79,695
------------- -------------
Total liabilities and
shareholders' equity $338,211 $344,510
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RUSH ENTERPRISES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
--------- -------- --------- ---------
REVENUES:
New and used truck
sales $130,903 $98,728 $488,456 $438,143
Parts and service 50,959 49,273 211,478 188,566
Construction equipment
sales 6,803 6,081 24,324 31,666
Lease and rental 6,634 6,511 25,277 25,040
Finance and insurance 1,474 1,157 5,448 5,251
Other 527 917 2,164 2,847
--------- -------- --------- ---------
Total revenues 197,300 162,667 757,147 691,513
COST OF PRODUCTS SOLD 162,302 130,202 615,942 562,316
--------- -------- --------- ---------
GROSS PROFIT 34,998 32,465 141,205 129,197
SELLING, GENERAL AND
ADMINISTRATIVE 27,766 25,059 111,721 101,832
DEPRECIATION AND
AMORTIZATION 2,127 2,348 8,594 9,176
--------- -------- --------- ---------
OPERATING INCOME 5,105 5,058 20,890 18,189
INTEREST INCOME
(EXPENSE): (1,622) (1,715) (6,499) (9,267)
GAIN (LOSS) ON SALE OF
ASSETS 44 194 155 1,067
--------- -------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 3,527 3,537 14,546 9,989
PROVISION FOR INCOME
TAXES 1,411 1,415 5,818 3,996
--------- -------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS 2,116 2,122 8,728 5,993
(LOSS) FROM DISCONTINUED
OPERATIONS, NET (9,180) (1,542) (10,472) (2,731)
--------- -------- --------- ---------
NET INCOME (LOSS) $(7,064) $580 $(1,744) $3,262
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EARNINGS PER SHARE:
EARNINGS (LOSS) PER
COMMON SHARE -- BASIC
Income from continuing
operations $0.15 $0.15 $0.62 $0.43
========= ======== ========= =========
Net income (loss) $(0.50) $0.04 $(0.12) $0.23
========= ======== ========= =========
EARNINGS (LOSS) PER
COMMON SHARE -- DILUTED
Income from continuing
operations $0.15 $0.15 $0.60 $0.42
========= ======== ========= =========
Net income (loss) $(0.49) $0.04 $(0.12) $0.23
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