Rush Enterprises (NASDAQ:RUSHA) reported strong first quarter 2019 revenues of nearly $1.34 billion on April 24, up 8.7 percent from $1.24 billion compared with the previous year.
The company’s net income in the first quarter was $37.1 million, or $0.98 cents per diluted share, up 76.6 percent compared to net income of $21 million, or $0.51 per diluted share in the first quarter of 2018. This exceeded analysts’ expectations of $0.88 per share for the first quarter of 2019.
The prior year’s first quarter results included an additional pre-tax charge to amortization expense of $10.2 million, or $0.19 per diluted share, associated with the replacement of certain components of Rush’s enterprise resource planning (ERP) software planning platform, Rush said in its first quarter earnings release.
Excluding the ERP platform expense, Rush’s adjusted net income for the first quarter of 2019 was $28.7 million, or $0.70 per diluted share, the company said.
The San Antonio-based company is the country’s only publicly traded truck dealer, with more than 100 dealerships in 22 states.
“We are very proud of our strong financial results this quarter,” said W.M. “Rusty” Rush, chairman and chief executive of Rush Enterprises. “The healthy economy and commercial vehicle market positively impacted our results, as did the growth we are seeing from our aftermarket strategic initiatives.”
Aftermarket products and services accounted for approximately 64 percent of the company’s total gross profit in the first quarter of 2019, with parts, service and collision repair revenue reaching $438.4 million, up 9.5 percent compared with the first quarter of 2018.
“Growth in our aftermarket parts and service revenue was primarily driven by our successful execution of various strategic initiatives and continued strong demand for aftermarket parts and services throughout the country,” Rush said in the release.
The company was able to achieve strong aftermarket growth despite a downturn in the energy sector compared to the same quarter a year ago, Rush said.
Rush Enterprises increased its total number of technicians by 85 in its more than 100 dealerships nationwide in the first quarter of 2019 compared with the same period a year ago.
The company also introduced RushCare Xpress Services, which provides same-day preventative maintenance and expedited diagnostics for larger truck repairs, Rush said.
In March, the company also launched RushCare Parts Connect, “a comprehensive online source for all-makes parts and the requisite next step that we believe will enable us to achieve our parts sales growth goals,” the company said in the release.
“Looking ahead, we believe that industry-wide, aftermarket activity will remain steady throughout the year and that our aftermarket growth will remain on pace with our first quarter performance,” Rush said.
U.S. Class 8 sales were 64,374 trucks in the first quarter of 2019, up 24.5 percent from the same period a year ago, according to ACT Research. Rush reported it sold 3,558 new Class 8 trucks in the first three months of the year, an increase of 7.4 percent compared to the same quarter in 2018.
“Our new Class 8 truck sales remained strong this quarter, due to the healthy economy and activity in virtually all of the market segments we support,” Rush said. “Given the recent decrease in industry-wide Class 8 new truck orders, our backlog has decreased from its peak in the last half of 2018.”
Rush Enterprises expects its new Class 8 truck sales to remain on pace with its first quarter performance in the second and third quarters, Rush said.
The company sold 2,614 Class 4-7 medium-duty commercial vehicles in the first quarter of 2019, down 3.4 percent compared with the same period a year ago, and accounted for 4.2 percent of the U.S. Class 4-7 commercial vehicle market. ACT is forecasting U.S. retail sales of medium-duty vehicles to reach 262,300 trucks in 2019, a 1.6 percent increase from the first quarter of 2018.
“We believe our 2019 medium-duty sales will accelerate through the rest of 2019 as we continue to see strong demand from our customers,” Rush said in the earnings release. “We believe that this strong Class 4-7 truck sales market may help to partially offset any downturn in the new Class 8 truck sales market that may occur toward the end of the year.”
The company’s revenue from used trucks increased to $82.9 million in the first quarter, up 2.8 percent from $80.6 million for the same period a year earlier.
“Used truck values remained stable in the first quarter but will likely come under pressure later in 2019,” Rush said. “We believe our used truck inventory is positioned appropriately given current used truck market conditions.”
The company’s stock was at $45.19 at the end of trading on April 24, up about 1.41 percent from its close the previous day.