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Rush Enterprises, Inc. (RUSHA)
Q3 2008 Earnings Call
October 23, 2008 11:00 am ET
Marvin Rush - Chairman
Rusty Rush - President, Chief Executive Officer
Steve Keller - Vice President and Chief Financial Officer
Marty Naegelin - Executive Vice President
Jay Hazelwood - Controller
Derrek Weaver - Chief Compliance Officer
Jamie Cook - Credit Suisse
Andrew Obin - Merrill Lynch
Chaz Jones - Morgan Keegan
Rhem Wood - Stephens Inc.
Todd Maiden - BB&T Capital Markets
Gerry Heffernan - Lord Abbett
Previous Statements by RUSHA
» Rush Enterprises, Inc., Q4 2008 Earnings Call Transcript
» Rush Enterprises, Inc. Q2 2008 Earnings Call Transcript
» Rush Enterprises Inc. Q1 2008 Earnings Call Transcript
Good morning and welcome to our third quarter 2008 earnings release conference call. On the call, with me today are Rusty Rush, President and Chief Executive Officer; Marty Naegelin, Executive Vice President; Steve Keller, Vice President and Chief Financial Officer; Jay Hazelwood, Controller; and Derrek Weaver, our Chief
Now, Steve Keller would like to say a few words regarding our forward-looking statements.
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, 2007 and in our other filings with the Securities and Exchange Commission.
Now, we would like to give you an update on our progress. Let us talk about the third quarter results. In the third quarter, the Company’s revenues totaled approximately $414 million, a 20% decrease of revenues from $522 million reported in the same period last year. Net income for the quarter was $8 million or $0.21 per diluted share compared to $13.1 million or $0.34 per diluted share in last year’s third quarter.
Third quarter 2008 business segment results, I will compare this with the third quarter of 2007. Let us talk about truck segment. Our truck segment recorded revenues of $392 million in the third quarter of ’08 compared to $409 million for the same period in ‘07. The Company delivered 1350 new heavy-duty trucks compared to 1820 in the third quarter of last year. Revenue for Class 8 trucks sales decreased approximately $61 million or 27% to $162 million.
Revenues from medium-duty trucks sales decreased approximately $22 million or 28% to $54 million in the third quarter of 2008 with 919 new medium-duty trucks sales. Revenue from used trucks decreased $11 million or 21% to $42 million for the third quarter of ’08. The Company sold 936 used trucks in the third quarter of 2008 and 1032 used trucks in the same period ’07. As expected given this current lull to economic conditions about Class 8, and medium-duty trucks mortgage remain weak in the third quarter.
Truck load carriers have been the most severely impacted. Construction related truck sales have also declined dramatically on the East and West Coast. Decline in these sales has been offset by some strong oil and gas markets in the central part of our dealership network. Our Class 4 through 7 truck sales remained consistent with the industry which was down 41% compared to the same period last year.
Parts, service, and body shop sales remained flat at $116 million for the third quarter. Gross profit margins on the backend sales increased 6/10 of 1% to 41.7% in the third quarter of this year.
Talk about the construction equipment business. The Company’s construction equipment segment recorded revenues of approximately $17 million in the third quarter of 2008 compared to $25 million as of the same quarter of last year. New and used construction equipment sales for the same period decreased 40% to $11.7 million. Those sales decrease compared to last year are equipment sales able to out perform the overall consistent construction market which recorded sales to contractors and other end users down 52% in the third quarter compared to the third quarter of last year.
Construction equipment parts and service sales were flat at $5.1 million for the third quarter of ’08.
Talk about the absorption rate. We are on target to achieve our annual absorption right goal of 105% despite the depressed truck market. During the third quarter of ‘08, our absorption rate increased to 106.8% from 105.1% for the same period in 2007. Our year-to-date absorption rate is 106.3% up 1% compared at this time last year. This quarter’s, absorption rate is proof we can perform in tough times. We made significant reductions in our expense structure and our people have worked extremely hard to control spending throughout the year without compromising our customer service.
The effort combined with our business model, our geographic product diversity has allowed us to weather this storm yet be in a strong financial position to pursue opportunities for growth. We had some impact on the Texas hurricane with 18 locations in Texas our truck and equipment leasing operations were adversely affected by the hurricane activity throughout this summer particularly hurricane Ike in Houston in east Texas and hurricane Dolly in south Texas. We are proud that our people remained committed to our business despite significant personal challenge. The dealership operations experienced business interruption resulting from mandatory evacuations, power outages, restricted traffic and reduced employee attendance as employees work to restore safe living conditions for their family. Although difficult to qualify, these storms obviously had a negative effect on our earnings in the third quarter.