Rush Enterprises announced that for the first quarter ended March 31, 2021, the company achieved revenues of $1.232 billion and net income of $45.3 million compared with revenues of $1.287 billion and net income of $23.1 million.
Additionally, the company’s board of directors declared a cash dividend of $0.18 per share of Class A and Class B Common Stock, to be paid on June 10, 2021, to all shareholders of record as of May 10, 2021.
“We are proud of our strong financial results for the first quarter of 2021, which were primarily driven by the continuing recovery of the national economy and widespread activity across the market segments we support,” says W.M. “Rusty” Rush, chairman, CEO and president of Rush Enterprises.
“Gradually increasing demand for aftermarket products and services, and strong demand for Class 8 new and used trucks contributed to our strong quarter,” says Rush. “Further, in the first quarter, we maintained our strict focus on expense management, which helped us nearly double our net income over the first quarter of 2020. While the COVID-19 pandemic is not over, business conditions have improved significantly and, consumer spending remains strong. We expect the general economic recovery to continue as more states re-open across the country and businesses return to operating at full or close-to-full capacity,” he adds.
“Though our industry will likely be impacted by supply constraints over the next few quarters affecting the availability of new commercial vehicles, we believe there is strong demand and that our sales will increase throughout the year as vehicle availability increases. We also expect that our parts and service revenues will improve steadily throughout the year, and with a continued focus on expense management, we believe we will achieve strong financial results in 2021,” Rush says.
Operations: Aftermarket products, services
Aftermarket products and services accounted for approximately 63 percent of the company’s total gross profit in the first quarter of 2021, with parts, service and collision center revenues reaching $415.7 million, down 2.9 percent compared with the first quarter of 2020. The company achieved a quarterly absorption ratio of 122.6 percent in the first quarter of 2021, compared with 114.3 percent in the first quarter of 2020.
“Our parts and services revenues are down slightly year-over-year, but they improved over the fourth quarter of 2020, and we expect to see gradual improvements as the year progresses,” says Rush. “Much of our quarter-over-quarter aftermarket growth can be attributed to parts sales related to the continued economic recovery, as well as healthy aftermarket activity from our refuse, construction and public sector customers. While service revenues are improving at a slower pace than parts revenues, we are currently adding service technicians to our network in anticipation of increased demand as the year progresses.”
“It should also be noted that winter storms throughout Texas and the Southern United States negatively impacted revenue in the first quarter,” adds Rush.
“Looking ahead, supply constraints are expected to impact the industry over the next two quarters. However, we intend to leverage the size of our nationwide dealership network and the scale of our nationwide parts inventory to attempt to mitigate parts supply chain issues as much as possible. Currently, we do not believe parts supply constraints will have a significant effect on our aftermarket revenues in 2021. We plan to continue to add technicians to our workforce with a focus on contract and preventive maintenance, which will offer not only expanded services for customers, but learning opportunities and a career path for less-experienced technicians. As the economic recovery continues, we believe aftermarket demand will grow throughout the remainder of 2021,” Rush notes.
Commercial vehicle sales
New U.S. Class 8 retail truck sales totaled 55,402 units in the first quarter of 2021, up 13.9 percent over the same time period last year, according to ACT Research. The company sold 2,995 new Class 8 trucks in the first quarter, a decrease of 2.7 percent compared with the first quarter of 2020, and accounted for 5.4 percent of the new U.S. Class 8 truck market. “In the first quarter, solid consumer spending and strong freight rates continued, and Class 8 truck manufacturers ramped up production capabilities. Our Class 8 new truck sales results were down slightly year-over-year, largely because we made some large fleet deliveries in the first quarter of 2020. However, we experienced a very strong first quarter in stock truck sales this year with robust activity from over-the-road customers, as well as vocational and construction customers nationwide,” Rush says. “As we look ahead, we expect component manufacturers’ supply chain issues to impact second and third quarter new Class 8 truck sales across the industry. That said, there is currently strong demand for new Class 8 trucks and we believe sales will accelerate through the end of 2021. We also believe we are well positioned to increase our market share as the year progresses,” he says.
New U.S. Class 4 through 7 retail commercial vehicle sales totaled 62,088 units in the first quarter of 2021, up 13.5 percent over the same time period last year, according to ACT Research. The company sold 2,334 Class 4-7 medium-duty commercial vehicles in the first quarter, a decrease of 28.5 percent compared with the first quarter of 2020, and accounted for 3.8 percent of the U.S. Class 4 through 7 commercial vehicle market.
“Our first quarter Class 4-7 new commercial truck sales were down primarily due to decreased activity from our lease and rental and food service customers. In addition, production shutdowns from some of the manufacturers we represent, and component supplier constraints also negatively impacted our first quarter Class 4 through 7 new commercial vehicle sales. Looking ahead, demand for Class 4 through 7 new commercial vehicles appears to be strong and we expect our market share to increase throughout 2021,” Rush says.
The company sold 1,924 used commercial vehicles in the first quarter of 2021, a 23.5 percent increase compared with the first quarter of 2020.
“We estimate that used commercial vehicle values increased approximately 10 percent in the first quarter of 2021 compared with the fourth quarter of 2020, and demand remained strong due to production constraints of new commercial vehicles. Though demand and pricing may soften somewhat as more new commercial vehicles are available, we believe overall used commercial vehicle values and demand will remain strong through 2021. Despite limited supply of used commercial vehicles, we believe our inventory is positioned appropriately to meet the needs of the market,” says Rush.
The company bolstered its support of customers nationwide by adding Rush Truck Center – Phoenix East, a parts and service location, to its nationwide network.
“We are proud to announce this new location, as it is a reflection of our steadfast commitment to support or customers and keep them up and running,” says Rush.
In the first quarter of 2021, the company’s gross revenues totaled $1.232 billion, a 4.3 percent decrease from $1.287 billion in the first quarter of 2020. Net income for the quarter was $45.3 million, or $0.79 per diluted share, compared with net income of $23.1 million, or $0.41 per diluted share, in the quarter ended March 31, 2020.
Aftermarket products and services revenues were $415.7 million in the first quarter of 2021, compared with $428.0 million in the first quarter of 2020. The company delivered 2,995 new heavy-duty trucks, 2,334 new medium-duty commercial vehicles, 395 new light-duty commercial vehicles and 1,924 used commercial vehicles during the first quarter of 2021, compared with 3,078 new heavy-duty trucks, 3,264 new medium-duty commercial vehicles, 267 new light-duty commercial vehicles and 1,558 used commercial vehicles during the first quarter of 2020.
Rush Truck Leasing operates 45 PacLease and Idealease franchises in markets across the country with more than 8,500 trucks in its lease and rental fleet and more than 1,000 trucks under contract maintenance agreements. Lease and rental revenue declined 4.2 percent in the first quarter of 2021 compared to the first quarter of 2020. However, due to efficient management of the fleet and increased rental fleet utilization, our lease and rental gross profit increased 18.6 percent over the same time period.
During the first quarter of 2021, the company repurchased $6.5 million of its common stock pursuant to its stock repurchase plan. In addition, the company paid a cash dividend of $9.9 million during the first quarter.
“In the first quarter, our disciplined adherence to expense management, as well as our laser focus on earning every sale possible, resulted in a record-high $316 million in cash and cash equivalents,” Rush says. “With our strong balance sheet and free cash flow, we continue to return capital to our shareholders through our dividend and share repurchase programs while we also invest in our strategic initiatives, which will help us achieve our long-term growth goals.”