- Annual revenues of
$7.9 billion ; net income of$347.1 million - Annual earnings per diluted share of
$4.15 - 4th quarter revenues of
$2.0 billion ; net income of$78.0 million - Record high annual revenues driven by strong new truck demand and aftermarket growth
- Board declares cash dividend of
$.17 per share of Class A and Class B common stock
“We are very proud of our results in 2023,” said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and President of
“Despite a challenging operating environment in 2023 caused by low freight rates and high interest rates that negatively impacted our over-the-road customers, our largest customer segment, we were able to achieve healthy growth in aftermarket revenues in 2023, due primarily to strong demand with respect to our refuse, public sector, wholesale and energy customers. In addition, our aftermarket revenues were bolstered by adding service technicians to our network during 2023. Expanding our service technician workforce is a key aspect of our strategic initiatives with respect to mobile service, Xpress services and our other contract maintenance offerings, all of which are strategic elements to achieving our long-term financial goals. Throughout the year, we also maintained our strategic focus on diversifying our customer base and supporting large national accounts, which enabled us to offset some of the challenging market conditions that the industry faced during 2023 and contributed to our achieving record-setting revenues this year,” Rush added.
“We are also happy to announce that our Board of Directors has declared a quarterly cash dividend of
“Looking to 2024, we expect that retail sales of new Class 8 trucks will decline compared to 2023, as the pent-up demand in the market from the last few years has largely been met. With respect to medium-duty commercial vehicles, as production of new Class 4-7 vehicles continues to increase, we believe that demand will likely be consistent with 2023, though ongoing delays from truck body companies will likely continue to impact the timing of medium-duty vehicle deliveries,” said Rush. “While the aftermarket industry will likely continue to face challenging operating conditions during 2024 due to excess truck capacity in the market, low freight rates and high interest rates, we will remain focused on our strategic initiatives, including but not limited to adding technicians to our workforce and expanding our mobile service offerings across the country, both of which will enable us to leverage our footprint and provide industry-leading support to large fleet customers. In addition, since we are no longer in a truck allocation environment, we believe that our focus on diversifying our customer base, along with our focus on large national accounts and our other aftermarket strategic initiatives, will allow us to gain market share, and we believe our financial results will outpace the industry in 2024,” Rush stated.
“It is very important that I express my sincere gratitude to all of our employees for their impressive work in 2023. They did a great job supporting our customers and each other, and it was each of their valuable contributions to our company that enabled us to achieve another strong year,” Rush said.
Network Growth
The Company expanded its network in 2023 by adding Rush Truck Centers –
Operations
Aftermarket Products and Services
Aftermarket products and services accounted for approximately 59.5% of the Company’s total gross profits in 2023, with parts, service and collision center revenues reaching
“While the industry experienced challenging operating conditions in 2023, we were able to increase our annual aftermarket revenues, driven largely by our ability to support to large fleets, parts sales growth from energy, refuse and leasing customers and the addition of service technicians to our network. In 2023, we added 215 technicians to our network, which enabled us to grow our back-counter parts sales and execute on many of our strategic initiatives, including improving our Xpress services, contract maintenance and mobile service offerings. Our ability to expand our service technician network, along with our continued strategic focus on diversifying our customer base and focusing on large national accounts, helped us offset the generally softer aftermarket conditions faced by the industry this year,” Rush said.
“In 2024, we expect demand for aftermarket parts and services in the first half of the year to be consistent with demand in the second half of 2023, and we expect aftermarket revenues to remain flat. Challenging freight conditions continue to impact our customers, including larger fleets. However, we are hopeful that the current freight recession may begin to ease by late summer, which we believe could provide a tailwind to the aftermarket industry in the second half of 2024. Challenging economic conditions aside, we believe that the investments we have made in our business over the past several years and our ability to execute on our strategic initiatives are proving that we can achieve strong financial results that outpace the industry despite challenging industry conditions. During 2024, we will continue to focus on our strategic initiatives, including supporting large national account customers and expanding our service technician workforce, and we believe these efforts, along with certain other strategic initiatives that we have already achieved and integrated into our business over the years, will allow us to achieve flat to modest aftermarket revenue growth in 2024,” Rush said.
Commercial Vehicle Sales
New
“Throughout 2023, the Class 8 truck manufacturers we represent continued to ramp up production to more normal levels. Despite high interest rates and a freight recession, we experienced broad-based demand from a variety of market segments we support, primarily due to pent-up demand resulting from limited new truck production over the past few years,” said Rush. “In the fourth quarter, we continued to see economic factors, including low freight rates, high interest rates and escalating fuel prices, negatively impacting larger over-the-road fleets, as well as smaller carriers. However, our results were positively impacted by our ongoing focus on supporting large national accounts, and we are proud of our strong new Class 8 truck sales in 2023,” he said.
“Looking ahead to 2024, new Class 8 truck production has caught up to the pent-up demand resulting from limited new truck production over the past few years. As a result, and due to challenging economic and industry conditions, we expect new Class 8 truck sales to be down significantly industry wide. However, as a result of strategic decisions we made with respect to diversifying our customer base and focusing on vocational and large national fleet customers, we believe we are well positioned to navigate a down year in new Class 8 truck sales, and we believe our new Class 8 truck sales results will outpace the industry in 2024,” Rush said.
New
“In 2023, pent-up demand for new Class 4-7 commercial vehicles remained due to limited production over the past few years. In addition, the manufacturers we represent were able to increase production throughout the year. These factors, coupled with our ongoing efforts to diversify our customer base and support large national fleets, allowed our medium-duty commercial vehicle sales to significantly outpace the industry,” said Rush. “In the fourth quarter, we continued to experience delays from truck body companies that impacted new Class 4-7 commercial vehicle deliveries, which limited our growth somewhat. Given those challenges, we were pleased to end the year with such strong new Class 4-7 commercial vehicle sales results,” said Rush.
“As we look ahead, we continue to monitor freight rates, consumer spending, interest rates and other economic factors that heavily impact new Class 4-7 commercial vehicle sales, as well as ongoing delays from truck body builders. We expect demand to remain strong and that we will continue to see an increase in production from the medium-duty manufacturers we represent, and if both of these things occur, we believe we will achieve strong new Class 4-7 commercial vehicle sales results in 2024,” Rush said.
The Company sold 7,117 used trucks in 2023, a 0.6% increase compared to 2022. “Throughout 2023, the increase in new truck production, along with soft freight rates and high interest rates, resulted in weak demand and a corresponding decline in values for used trucks industrywide. Because of these factors, we kept our used truck inventory at a lower-than-normal level throughout the year. In the fourth quarter of 2023 we sold 37% more used trucks than we did during the fourth quarter of 2022,” said Rush. “Looking ahead, we expect that the rate at which used trucks are depreciating will continue to decrease and that used truck values will stabilize over the course of 2024. With our strategically diverse product mix and ability to move used truck throughout our network on an as-needed basis, we are confident that we can support our customers’ used truck needs in 2024,” he added.
Leasing and Rental
Leasing and Rental revenue in 2023 was
Financial Highlights
For the year ended
Aftermarket products and services revenues were
In the fourth quarter of 2023, the Company’s revenues totaled
Aftermarket products and services revenues were
During 2023, the Company repurchased
“We are very proud of our financial performance and record high revenues in 2023, especially as we were operating within the confines of truck allocation and other challenging economic conditions. We remain committed to executing on our strategy, and we are confident that the strategic initiatives we have invested in over the past several years will continue to, not only increase our overall earnings, but also improve the quality of our earnings. We also remain dedicated to returning value to shareholders through achieving strong earnings, quarterly dividends and our stock repurchase program, while strategically managing our expenses and keeping our balance sheet and cash position strong so that we may continue to invest in our company’s future,” Rush said.
Conference Call Information
Participants may register for the call at: https://register.vevent.com/register/BIec6d8d296bc249da80d63927cc7252e1
While not required, it is recommended that you join the event 10 minutes prior to the start.
For those who cannot listen to the live broadcast, the webcast replay will be available at http://investor.rushenterprises.com/events.cfm.
About
Certain statements contained in this release, including those concerning current and projected market conditions, sales forecasts, market share forecasts s and anticipated demand for the Company’s services, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements only speak as of the date of this release and the Company assumes no obligation to update the information included in this release. Because such statements include risks and uncertainties, 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, competitive factors, general
-Tables and Additional Information to Follow- | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(In Thousands, Except Shares and Per Share Amounts) | ||||||
2023 | 2022 | |||||
(unaudited) | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 183,725 | $ | 201,044 | ||
Accounts receivable, net | 259,353 | 220,651 | ||||
Inventories, net | 1,801,447 | 1,429,429 | ||||
Prepaid expenses and other | 15,779 | 16,619 | ||||
Total current assets | 2,260,304 | 1,867,743 | ||||
Property and equipment, net | 1,488,086 | 1,368,594 | ||||
Operating lease right-of-use assets, net | 120,162 | 102,685 | ||||
420,708 | 416,363 | |||||
Other assets, net | 74,981 | 65,681 | ||||
Total assets | $ | 4,364,241 | $ | 3,821,066 | ||
Liabilities and shareholders’ equity | ||||||
Current liabilities: | ||||||
Floor plan notes payable | $ | 1,139,744 | $ | 933,203 | ||
Current maturities of finance lease obligations | 36,119 | 29,209 | ||||
Current maturities of operating lease obligations | 17,438 | 15,003 | ||||
Trade accounts payable | 162,134 | 171,717 | ||||
Customer deposits | 145,326 | 116,240 | ||||
Accrued expenses | 172,549 | 163,302 | ||||
Total current liabilities | 1,673,310 | 1,428,674 | ||||
Long-term debt, net of current maturities | 414,002 | 275,433 | ||||
Finance lease obligations, net of current maturities | 97,617 | 93,483 | ||||
Operating lease obligations, net of current maturities | 104,514 | 89,029 | ||||
Other long-term liabilities | 24,811 | 19,455 | ||||
Deferred income taxes, net | 159,571 | 151,970 | ||||
Shareholders’ equity: | ||||||
Preferred stock, par value | – | − | ||||
Common stock, par value | 806 | 572 | ||||
Additional paid-in capital | 542,046 | 500,642 | ||||
(119,835 | ) | (130,930 | ) | |||
Retained earnings | 1,450,025 | 1,378,337 | ||||
Accumulated other comprehensive income | (2,163 | ) | (4,130 | ) | ||
1,870,879 | 1,744,491 | |||||
Noncontrolling interest | 19,537 | 18,531 | ||||
Total shareholders’ equity | 1,890,416 | 1,763,022 | ||||
Total liabilities and shareholders’ equity | $ | 4,364,241 | $ | 3,821,066 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
(In Thousands, Except Per Share Amounts) | |||||||||
Three Months Ended | Year Ended | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||
(unaudited) | (unaudited) | ||||||||
Revenues | |||||||||
New and used commercial vehicle sales | $ | 1,309,683 | $ | 1,175,195 | $ | 4,957,969 | $ | 4,351,370 | |
Parts and service sales | 619,162 | 608,748 | 2,562,141 | 2,372,439 | |||||
Lease and rental | 89,099 | 84,696 | 353,780 | 322,257 | |||||
Finance and insurance | 5,194 | 6,822 | 24,271 | 29,741 | |||||
Other | 6,327 | 7,480 | 26,863 | 25,863 | |||||
Total revenue | 2,029,465 | 1,882,941 | 7,925,024 | 7,101,670 | |||||
Cost of products sold | |||||||||
New and used commercial vehicle sales | 1,186,618 | 1,062,034 | 4,474,616 | 3,937,091 | |||||
Parts and service sales | 392,942 | 375,376 | 1,609,383 | 1,455,616 | |||||
Lease and rental | 63,837 | 59,426 | 247,935 | 221,804 | |||||
Total cost of products sold | 1,643,397 | 1,496,836 | 6,331,934 | 5,614,511 | |||||
Gross profit | 386,068 | 386,105 | 1,593,090 | 1,487,159 | |||||
Selling, general and administrative expense | 251,091 | 235,453 | 1,021,722 | 927,836 | |||||
Depreciation and amortization expense | 15,099 | 14,120 | 59,830 | 55,665 | |||||
Gain on sale of assets | 247 | 22 | 843 | 2,455 | |||||
Operating income | 120,125 | 136,554 | 512,381 | 506,113 | |||||
Other income | 213 | 156 | 2,597 | 22,338 | |||||
Interest expense, net | 15,502 | 8,462 | 52,917 | 19,124 | |||||
Income before taxes | 104,836 | 128,248 | 462,061 | 509,327 | |||||
Provision for income taxes | 26,723 | 29,952 | 114,000 | 117,242 | |||||
Net income | 78,113 | 98,296 | 348,061 | 392,085 | |||||
Less: Net income attributable to noncontrolling Interest | 66 | (30 | ) | 1,006 | 703 | ||||
Net income attributable to | $ | 78,047 | $ | 98,326 | $ | 347,055 | $ | 391,382 | |
Net income attributable to | |||||||||
Basic | $ | 0.98 | $ | 1.20 | $ | 4.28 | $ | 4.71 | |
Diluted | $ | 0.95 | $ | 1.16 | $ | 4.15 | $ | 4.57 | |
Weighted average shares outstanding: | |||||||||
Basic | 79,453 | 82,208 | 81,089 | 83,100 | |||||
Diluted | 82,143 | 84,781 | 83,720 | 85,727 | |||||
Dividends declared per common share | $ | 0.17 | $ | 0.14 | $ | 0.62 | $ | 0.53 | |
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under
Management believes the presentation of these non-GAAP financial measures provides useful information about the results of operations of the Company for the current and past periods. Management believes that investors should have the same information available to them that management uses to assess the Company’s operating performance and capital structure. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most comparable GAAP financial measures. Investors are cautioned that non-GAAP financial measures utilized by the Company may not be comparable to similarly titled non-GAAP financial measures used by other companies.
Three Months Ended | ||||
Vehicle Sales Revenue (in thousands) | 2023 | 2022 | ||
New heavy-duty vehicles | $ | 816,532 | $ | 789,638 |
New medium-duty vehicles (including bus sales revenue) | 359,767 | 256,749 | ||
New light-duty vehicles | 28,240 | 29,475 | ||
Used vehicles | 95,170 | 93,178 | ||
Other vehicles | 9,974 | 6,155 | ||
Absorption Ratio | 130.8% | 136.5% | ||
Absorption Ratio
Management uses several performance metrics to evaluate the performance of its commercial vehicle dealerships and considers Rush Truck Centers’ “absorption ratio” to be of critical importance. Absorption ratio is calculated by dividing the gross profit from the parts, service and collision center departments by the overhead expenses of all of a dealership’s departments, except for the selling expenses of the new and used commercial vehicle departments and carrying costs of new and used commercial vehicle inventory. When 100% absorption is achieved, then gross profit from the sale of a commercial vehicle, after sales commissions and inventory carrying costs, directly impacts operating profit.
Debt Analysis (in thousands) | 2023 | 2022 | ||||
Floor plan notes payable | $ | 1,139,744 | $ | 933,203 | ||
Current maturities of finance lease obligations | 36,119 | 29,209 | ||||
Long-term debt, net of current maturities | 414,002 | 275,433 | ||||
Finance lease obligations, net of current maturities | 97,617 | 93,483 | ||||
Total Debt (GAAP) | 1,687,482 | 1,331,328 | ||||
Adjustments: | ||||||
Debt related to lease & rental fleet | (543,626 | ) | (393,879 | ) | ||
Floor plan notes payable | (1,139,744 | ) | (933,203 | ) | ||
Adjusted Total Debt (Non-GAAP) | 4,112 | 4,246 | ||||
Adjustment: | ||||||
Cash and cash equivalents | (183,725 | ) | (201,044 | ) | ||
Adjusted Net Debt (Cash) (Non-GAAP) | $ | (179,613 | ) | $ | (196,798 | ) |
Management uses “Adjusted Total Debt” to reflect the Company’s estimated financial obligations less debt related to lease and rental fleet (L&RFD) and floor plan notes payable (FPNP), and “Adjusted Net (Cash) Debt” to present the amount of Adjusted Total Debt net of cash and cash equivalents on the Company’s balance sheet. The FPNP is used to finance the Company’s new and used inventory, with its principal balance changing daily as vehicles are purchased and sold and the sale proceeds are used to repay the notes. Consequently, in managing the business, management views the FPNP as interest bearing accounts payable, representing the cost of acquiring the vehicle that is then repaid when the vehicle is sold, as the Company’s floor plan credit agreements require it to repay loans used to purchase vehicles when such vehicles are sold. The Company has the capacity to finance all of its lease and rental fleet under its lines of credit established for this purpose, but may choose to only partially finance the lease and rental fleet depending on business conditions and its management of cash and interest expense. The Company’s lease and rental fleet inventory are either: (i) leased to customers under long-term lease arrangements; or (ii) to a lesser extent, dedicated to the Company’s rental business. In both cases, the lease and rental payments received fully cover the capital costs of the lease and rental fleet (i.e., the interest expense on the borrowings used to acquire the vehicles and the depreciation expense associated with the vehicles), plus a profit margin for the Company. The Company believes excluding the FPNP and L&RFD from the Company’s total debt for this purpose provides management with supplemental information regarding the Company’s capital structure and leverage profile and assists investors in performing analysis that is consistent with financial models developed by Company management and research analysts. “Adjusted Total Debt” and “Adjusted Net (Cash) Debt” are both non-GAAP financial measures and should be considered in addition to, and not as a substitute for, the Company’s debt obligations, as reported in the Company’s consolidated balance sheet in accordance with
Twelve Months Ended | ||||||
EBITDA (in thousands) | 2023 | 2022 | ||||
Net Income (GAAP) | $ | 347,055 | $ | 391,382 | ||
Provision for income taxes | 114,000 | 117,242 | ||||
Interest expense | 52,917 | 19,124 | ||||
Depreciation and amortization | 59,830 | 55,665 | ||||
Gain on sale of assets | (843 | ) | (2,455 | ) | ||
EBITDA (Non-GAAP) | 572,959 | 580,958 | ||||
Adjustments: | ||||||
Interest (expense) associated with FPNP | (54,022 | ) | (11,785 | ) | ||
Adjusted EBITDA (Non-GAAP) | $ | 518,937 | $ | 569,173 | ||
The Company presents EBITDA and Adjusted EBITDA, for the twelve months ended each period presented, as additional information about its operating results. The presentation of Adjusted EBITDA that excludes the addition of interest expense associated with FPNP and the L&RFD to EBITDA is consistent with management’s presentation of Adjusted Total Debt, in each case reflecting management’s view of interest expense associated with the FPNP and L&RFD as an operating expense of the Company, and to provide management with supplemental information regarding operating results and to assist investors in performing analysis that is consistent with financial models developed by management and research analyst. “EBITDA” and “Adjusted EBITDA” are both non-GAAP financial measures and should be considered in addition to, and not as a substitute for, net income of the Company, as reported in the Company’s consolidated statements of income in accordance with
Twelve Months Ended | ||||||
Free Cash Flow (in thousands) | 2023 | 2022 | ||||
Net cash provided by operations (GAAP) | $ | 295,713 | $ | 294,729 | ||
Acquisition of property and equipment | (368,881 | ) | (243,060 | ) | ||
Free cash flow (Non-GAAP) | (73,168 | ) | 51,669 | |||
Adjustments: | ||||||
Draws on floor plan financing, net | 205,487 | 273,906 | ||||
Draws (payments) on L&RFD | 119,768 | (140,917 | ) | |||
Cash used for L&RF purchases | 257,049 | 165,673 | ||||
Non-maintenance capital expenditures | 26,609 | 23,421 | ||||
Adjusted Free Cash Flow (Non-GAAP) | $ | 535,745 | $ | 373,752 | ||
“Free Cash Flow” and “Adjusted Free Cash Flow” are key financial measures of the Company’s ability to generate cash from operating its business. Free Cash Flow is calculated by subtracting the acquisition of property and equipment included in the Cash flows from investing activities from Net cash provided by (used in) operating activities. For purposes of deriving Adjusted Free Cash Flow from the Company’s operating cash flow, Company management makes the following adjustments: (i) adds back draws (or subtracts payments) on the floor plan financing that are included in Cash flows from financing activities, as their purpose is to finance the vehicle inventory that is included in Cash flows from operating activities; (ii) adds back proceeds from notes payable related specifically to the financing of the lease and rental fleet that are reflected in Cash flows from financing activities; (iii) subtracts draws on floor plan financing, net and proceeds from L&RFD related to business acquisition assets that are included in Cash flows from investing activities; (iv) subtracts scheduled principal payments on fixed rate notes payable related specifically to the financing of the lease and rental fleet that are included in Cash flows from financing activities; (v) subtracts lease and rental fleet purchases that are included in acquisition of property and equipment and not financed under the lines of credit for cash and interest expense management purposes; and (vi) adds back non-maintenance capital expenditures that are for growth and expansion (i.e. building of new dealership facilities) that are not considered necessary to maintain the current level of cash generated by the business. “Free Cash Flow” and “Adjusted Free Cash Flow” are both presented so that investors have the same financial data that management uses in evaluating the Company’s cash flows from operating activities. “Free Cash Flow” and “Adjusted Free Cash Flow” are both non-GAAP financial measures and should be considered in addition to, and not as a substitute for, net cash provided by (used in) operations of the Company, as reported in the Company’s consolidated statement of cash flows in accordance with
Invested Capital (in thousands) | 2023 | 2022 | ||||
$ | 1,870,879 | $ | 1,744,491 | |||
Adjusted net debt (cash) (Non-GAAP) | (179,613 | ) | (196,798 | ) | ||
$ | 1,691,266 | $ | 1,547,693 |
“Adjusted Invested Capital” is a key financial measure used by the Company to calculate its return on invested capital. For purposes of this analysis, management excludes L&RFD, FPNP, and cash and cash equivalents, for the reasons provided in the debt analysis above and uses Adjusted Net Debt in the calculation. The Company believes this approach provides management a more accurate picture of the Company’s leverage profile and capital structure and assists investors in performing analysis that is consistent with financial models developed by Company management and research analysts. “Adjusted Net (Cash) Debt” and “Adjusted Invested Capital” are both non-GAAP financial measures. Additionally, these non-GAAP measures may vary among companies and may not be comparable to similarly titled non-GAAP measures used by other companies.
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