Rush Enterprises, Inc.
Q1 2021 Earnings Call Transcript

Published:

  • Operator:
    Good day and thank you for standing-by and welcome to the Rush Enterprises Inc. Report First Quarter 2021 Earnings Results. At this time, all participations are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker, Mr. Rusty Rush, Chairman, CEO and President. Please go ahead.
  • Rusty Rush:
    Good morning and welcome to our first quarter 2021 earnings release conference call. On the call, today, are Mike McRoberts; Chief Operating Officer, Steve Keller; Chief Financial Officer, Derrek Weaver; Executive Vice President, Jay Hazelwood; Vice President and Controller, and Michael Goldstone; Vice President, General Counsel and Corporate Secretary. Now, Steve will say a few words regarding forward-looking statements.
  • Steve Keller:
    Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important 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 those discussed in our Annual Report on Form 10-K for the year ended December 31, 2020, and then our other filings with the Securities and Exchange Commission.
  • Rusty Rush:
    As indicated in our news release, in the first quarter, we achieved revenues of $1.2 billion, net income of $45.3 million or $0.79 per diluted share. We're also very proud and declared a cash dividend of $0.18 per common share. Our results were driven by the nationwide economic recovery and healthy activity for most market segments we support. Gradual increases in product and service activity and healthy demand for new Class A trucks and rising these truck value has contributed to our strong quarter, along with our continued focus on expense management, which significantly increase our net income compared to the first quarter of 2020. As we look ahead supply constraints will likely affect the availability of parts and new trucks in the next few quarters. However, we expect supply chain constraints to begin to subside late in the first third quarter and for demand for trucks and aftermarket services remain strong throughout the year. We believe our financial results will be strong in 2021. As the economic - as the economy continues to recover and businesses reopen throughout the country. In the aftermarket, our first quarter product, service and body shop revenues were $415.7 million and absorption ratio was 122.6%. Our aftermarket revenues decreased by 2.9% compared to the first quarter of 2020, but we are seeing some pockets of strain, particularly when it comes to product sales and activity from refuse construction and public sector customers. Service revenues recovering at a slower pace and parts. We continue to add technicians to our dealership network in the first quarter an anticipation of increased demand later in the year. As we look ahead, we expect supply constraints the impact products available in the industry for the next few quarters. But we are leveraging our nationwide inventory to lessen any impact that may have. We continue to focus on expanding our technician workforce and service offerings, especially contract maintenance and preventive maintenance. We believe this will contribute to increasing aftermarket demand as the national economy continues to recover through the rest of the year. Turning to truck sales, in the first quarter we sold 2,995 new Class 8 trucks, getting from 5.4% of the total U.S. Class 8 market. Consumer spending and freight rates continue to be strong and customer demand was widespread, with particularly strong activity from over the road, vocational and construction customers. ACT Research forecasts U.S. Class 8 retail sales to be 249,000 units in 2021 up 27.2% from 2020. While we expect the country's economic recovery to continue, component manufacturers supply chain issues will limit the growth in Class 8 truck sales in the next two quarters. However, we do expect to supply constraints and truck production to improve late in the third quarter and for industry remain to remain strong and that the annual industry sales forecast is due. Our Class 4 through 7 new truck sales raise 2,334 in the first quarter, accounting for 3.8% of the U.S. market. Our decline was driven by weak demand from our leasing and rental customers and food service customers. In addition to production shutdowns from some of the manufacturers we represent and components supplier constraints affecting other manufacturers. ACT Research forecast U.S. Class 4 through 7 retail sales reached 251,500 units in 2021, up 8.4% from 2020. We expect demand for medium-duty vehicles to remain strong for our annual Class 4 through 7 truck sales in 2021 to be relatively flat compared to 2020. Our used truck sales raised 1,924 units for the first quarter, up 23.5% for the same time period in 2020. Demand for used drugs remained high in the first quarter due to new truck production constraints. Further used truck values increased approximately 10% over the fourth quarter of 2020. We believe that demand and pricing may decrease somewhat as more new trucks are available, but we're still remains strong this year. But we are confident the volume and pricing of our inventory will meet the needs of the market. It is important for me to recognize our employees providing superior service to our customers, while remaining focused on protecting the health and safety of those around them. Their hard work has directly contributed to a strong start to the year. With that I'll take your questions.
  • Operator:
    [Operator Instructions] Your first question comes from Jamie Cook.
  • Operator:
    Your next question comes from Joel Tiss.
  • Operator:
    Your next question comes from Justin Long.
  • Operator:
    And your next question comes from Andrew Obin.
  • Operator:
    And you do have a follow-up question from Joel Tiss.
  • Operator:
    And there are no further questions at this time.
  • Rusty Rush:
    All right. Well, thank you ladies and gentlemen, and we will speak to you in July with the second quarter results.

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