Rush Enterprises, Inc. Reports Third Quarter Results; Earnings Per Share Increases to $0.53 Compared to $0.35 in 2004
SAN ANTONIO--Oct. 1, 20058, 2005--Rush Enterprises, Inc. (Listed on NASDAQ(R): RUSHA & RUSHB), which operates the largest network of heavy-duty and medium-duty truck dealerships in North America and a John Deere construction equipment dealership in Houston, Texas, today announced results for the third quarter ended September 30, 2005.In the third quarter, the Company's gross revenues totaled $485.4 million, a 63.5% increase from gross revenues of $296.9 million reported for the third quarter ended September 30, 2004. Net income was $13.2 million, or $0.53 per diluted share, during the third quarter of 2005, compared to $5.5 million, or $0.35 per diluted share, in the third quarter of 2004. Income from continuing operations was $13.2 million, or $0.53 per diluted share, during the third quarter of 2005, compared to $5.7 million, or $0.36 per diluted share in the third quarter of 2004.
The Company's truck segment recorded revenues of $467.8 million in the third quarter of 2005, compared to $282.2 million in the third quarter of 2004. The Company delivered 2,709 new heavy-duty trucks, 610 new medium-duty trucks and 890 used trucks during the third quarter of 2005, compared to 1,546 new heavy-duty trucks, 458 new medium-duty trucks and 673 used trucks in the third quarter of 2004. Parts, service and body shop sales increased 26.6% from $70.0 million in the third quarter of 2004 to $88.6 million in the third quarter of 2005.
The Company's construction equipment segment recorded revenues of $14.2 million in the third quarter of 2005, compared to $12.1 million in the third quarter of 2004. Revenue generated from the sale of new construction equipment units increased from $7.4 million in the third quarter of 2004 to $8.8 million in the third quarter of 2005. Parts and service sales for the third quarter of 2005 were $3.7 million compared to $3.5 million in the third quarter of 2004. Pretax income from the construction equipment segment increased from $0.9 million for the third quarter of 2004 to $1.2 million in the third quarter of 2005.
In announcing the results, W. Marvin Rush, Chairman and Chief Executive Officer of Rush Enterprises said, "As our results demonstrate, 2005 continues to be a strong year. We have focused on improving our "quality of earnings" and consequently our same store absorption rate this quarter grew more than 6.0% versus the same period last year. While our overall absorption rate for the year is 100.7% through September, we have an internal goal of attaining an absorption rate of 110.0% over the next several years. Absorption rate is calculated by dividing the gross profit from the parts, service and body shop departments, by the overhead expenses of all of a dealership's departments, except for the selling expenses of the new and used truck departments.
Mr. Rush continued, "This quarter has been extremely active in terms of acquisitions and store openings. We opened a massive 120,000 square foot, state-of-the-art facility in Smyrna, Tennessee to replace our existing Rush Truck Center in Nashville. We made acquisitions aimed at increasing our medium-duty presence in our existing areas of responsibility. We acquired GMC and Isuzu medium-duty truck dealerships in Orlando, Florida and Texarkana, Texas. We subsequently added heavy and medium-duty Peterbilt trucks, parts and service and are operating the newly acquired dealerships as full-service Rush Truck Centers. We also purchased GMC and UD medium-duty truck franchises in Dallas and have combined these franchises with our Peterbilt and Hino franchises at our existing medium-duty truck store in Dallas. Finally, in October, we acquired GMC, Isuzu and Hino medium-duty truck franchises in Fontana, California. These newly acquired franchises are being operated from our existing Fontana Peterbilt dealership. These capital investments and others that are underway to add capacity to our service departments, coupled with our focus on medium-duty truck growth, will be the primary drivers in attaining our 110% absorption rate goal."
"Our outlook remains positive as industry experts forecast class 8 truck sales to remain strong throughout 2006. The combination of market trends and executing our `quality of earnings' strategy should have a positive impact on our profitability," added Mr. Rush.
"On a personal note, we celebrated our fortieth year in business and our ninth year to be listed on the NASDAQ Stock Market by ringing the Opening Bell at the NASDAQ MarketSite in Times Square, New York City on September 14th. In the last 40 years we have built a strong and profitable business with more than 40 locations throughout the southern United States. All of this was made possible by the support from our customers, our employees, our Board of Directors and our shareholders. We owe them each a debt of gratitude and pledge to work hard in upcoming years to deserve their continued loyalty and trust."
Conference Call
Rush Enterprises will host a conference call to review its third quarter results on Wednesday, October 19th, 2005 at 10 a.m. EST/9 a.m. CST. The call can be heard live by dialing 866-200-5866 (US) or 732-694-1637 (International) and entering the Pin Code 519105 followed by the # key, or via the web on the 'Events' section of the Company's website at www.RushEnterprises.com, or at www.earnings.com, or www.streetevents.com. For those who cannot listen to the live broadcast, the Webcast and audio replay will be available until November 2nd, 2005 by dialing 866-206-0173 (US) or 732-694-1587 (International) and entering the Pin Code 159292 followed by the # key.
About Rush Enterprises
Rush Enterprises operates the largest network of heavy-duty truck and medium-duty dealerships in North America and a John Deere construction equipment dealership in Houston, Texas. Its operations include a network of over 40 Rush Truck Centers located in Alabama, Arizona, California, Colorado, Florida, Oklahoma, New Mexico, Tennessee and Texas. The Company has developed its Rush Truck Centers and its Rush Equipment Center as "one-stop centers" where, at one convenient location, its customers can purchase new or used trucks or construction equipment, purchase insurance products, purchase aftermarket parts and accessories and have service performed by certified technicians. For additional information on Rush Enterprises, Inc., please visit www.rushenterprises.com.
Certain statements contained herein, including those concerning industry conditions and our ability to execute our "quality of earnings" strategy, 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, onetime 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
SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(In Thousands, Except Shares and Per Share Amounts)
September December
30, 2005 31, 2004
---------- ---------
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 120,678 $ 158,175
Accounts receivable, net 48,500 30,296
Inventories 323,235 189,792
Prepaid expenses and other 1,686 1,418
Deferred income taxes 2,351 1,544
---------- ---------
Total current assets 496,450 381,225
PROPERTY AND EQUIPMENT, net 180,073 138,953
OTHER ASSETS, net 105,525 45,755
---------- ---------
Total assets $ 782,048 $ 565,933
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Floor plan notes payable $ 288,158 $ 168,002
Current maturities of long-term debt 19,490 16,083
Current maturities of capital lease obligations 1,979 -
Advances outstanding under lines of credit 2,643 2,434
Trade accounts payable 24,000 16,970
Accrued expenses 48,065 39,495
---------- ---------
Total current liabilities 384,335 242,984
LONG-TERM DEBT, net of current maturities 105,782 79,973
CAPITAL LEASE OBLIGATIONS, net of current
maturities 9,876 -
DEFERRED INCOME TAXES, net 23,292 20,169
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per share;
1,000 shares authorized; 0 shares outstanding
in 2004 and 2005 - -
Common stock, par value $.01 per share;
50,000,000 shares authorized; 23,896,976
shares outstanding in 2004 and 24,373,332
outstanding in 2005 244 239
Additional paid-in capital 160,301 156,423
Retained earnings 98,218 66,145
---------- ---------
Total shareholders' equity 258,763 222,807
---------- ---------
Total liabilities and shareholders' equity $ 782,048 $ 565,933
========== =========
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- ---------------------
2005 2004 2005 2004
-------- -------- ---------- --------
REVENUES:
New and used truck sales $365,786 $203,443 $1,008,657 $527,167
Parts and service 94,426 75,230 269,425 214,563
Construction equipment
sales 10,164 8,333 29,883 23,711
Lease and rental 8,735 6,802 24,825 20,278
Finance and insurance 4,256 1,838 11,492 5,619
Other 2,060 1,258 5,005 2,629
-------- -------- ---------- --------
Total revenues 485,427 296,904 1,349,287 793,967
COST OF PRODUCTS SOLD:
New and used truck sales 338,907 188,360 937,758 488,839
Parts and service 54,593 46,537 157,772 132,985
Construction equipment
sales 8,809 7,250 25,904 20,861
Lease and rental 6,759 4,969 18,797 14,673
-------- -------- ---------- --------
Total cost of products
sold 409,068 247,116 1,140,231 657,358
-------- -------- ---------- --------
GROSS PROFIT 76,359 49,788 209,056 136,609
SELLING, GENERAL AND
ADMINISTRATIVE 49,778 36,473 141,084 106,060
DEPRECIATION AND AMORTIZATION 2,684 2,358 7,687 6,834
-------- -------- ---------- --------
OPERATING INCOME 23,897 10,957 60,285 23,715
INTEREST EXPENSE, NET 3,632 1,454 9,343 4,360
GAIN ON SALE OF ASSETS 370 45 455 504
-------- -------- ---------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 20,635 9,548 51,397 19,859
PROVISION FOR INCOME TAXES 7,481 3,819 19,324 7,944
-------- -------- ---------- --------
INCOME FROM CONTINUING
OPERATIONS 13,154 5,729 32,073 11,915
GAIN FROM DISCONTINUED
OPERATIONS, NET 0 (240) 0 (143)
-------- -------- ---------- --------
NET INCOME $ 13,154 $ 5,489 $ 32,073 $ 11,772
======== ======== ========== ========
EARNINGS PER COMMON SHARE -
BASIC
Income from continuing
operations $ .54 $ .38 $ 1.33 $ .81
======== ======== ========== ========
Net income $ .54 $ .36 $ 1.33 $ .80
======== ======== ========== ========
EARNINGS PER COMMON SHARE -
DILUTED
Income from continuing
operations $ .53 $ .36 $ 1.29 $ .76
======== ======== ========== ========
Net income $ .53 $ .35 $ 1.29 $ .75
======== ======== ========== ========
Weighted average shares
outstanding:
Basic 24,301 15,081 24,100 14,647
======== ======== ========== ========
Diluted 25,041 15,867 24,899 15,600
======== ======== ========== ========