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Rush Enterprises, Inc. (RUSHA)
Q3 2013 Earnings Call
October 23, 2013 11:00 am ET
Rusty Rush - Chairman, President & CEO
Steven Keller - SVP & CFO
Marty Naegelin - EVP
Jay Hazelwood - VP & Controller
Derrek Weaver - SVP, General Counsel & Secretary
Chaz Jones - Wunderlich
Neil Frohnapple - Longbow Research
Lynda Yuan - Credit Suisse
Brad Delco - Stephens
Rhem Wood - BB&T Capital Market
Art Hatfield – Raymond James
Bill Armstrong - CL King & Associates
Previous Statements by RUSHA
» Rush Enterprises, Inc. (RUSHA) CEO Discusses Q2 2013 Results - Earnings Call Transcript
» Rush Enterprises' CEO Discusses Q1 2013 Results - Earnings Call Transcript
» Rush Enterprises Inc. Q1 2010 Earnings Call Transcript
» Rush Enterprises, Inc., Q4 2008 Earnings Call Transcript
I would now like to turn the conference over to Mr. Rusty Rush, Chairman, CEO and President. Sir, you may begin.
Welcome to our third quarter earnings release conference call. On the call today with me are Marty Naegelin, Executive Vice President; Steven Keller, Senior Vice President and Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Derrek Weaver, Senior Vice President, General Counsel and Secretary.
Now Steve will say a few words regarding 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, 2012 and our other filings with the Securities and Exchange Commission.
As you have read in the news release, our net income was $15.2 million or $0.37 per share on gross revenues of $913 million this quarter. We're very pleased with our revenue growth, but we will continue to see higher overall G&A expense given the pace of acquisitions over the next several months along with significant investments we're making in technology and human resources to support our larger organization. And we're also accelerating the roll out plan of our business operating system which will also impact expenses.
We did see an increase in truck sales this quarter although certain market segments remain challenging. Our Class A retail sales were up 26% and our Class 427 retail sales were up 24% over the last quarter with both accounting for more than 5% US market share. Navistar is gaining market acceptance with its SCR engine strategy and this momentum resulted in increased truck sales for our Navistar division this quarter.
We expect our truck sales to continue at their current pace for the rest of the year. We mentioned last quarter that we believe 2013 US Class A retail sales could fall short of forecasted levels. Recently, industry experts reduced the Class A forecast for 2013 to 188,000 units and we're anticipating that 2013 will end about 5.5% below 2012. Industry experts also reduced their US Class A retail sales forecast for 2014 to 215,000 units.
With signs of economic improvement continuing, we expect Class A truck sales to increase next year. We're also encouraged by the activity we've seen in the segments of the medium duty market which is expected to reach 193,500 units next year.
After-market revenues were strong and our sourcing rate remains above 114%. We expect demand for maintenance and repair to continue into 2014. We believe our purpose is to keep customers up and running when and where they need us with our expanded network of service points, growing portfolio of solutions and technology that improves diagnostics and customer communication.
Let's talk about growth. We completed two acquisitions this quarter: Midwest Truck Sales in Kansas and Missouri, and TransAuthority in Virginia. We've also announced purchase agreements with two additional dealer groups, Prairie International in Central Illinois and Chicago International Trucks and Indy Truck Sales in Illinois and Indiana.
We also added an International parts and service location in Springfield, Ohio and we'll open a new Peterbilt and Paclease dealership in Corpus Christi, Texas in December. When completed, our network will expand to 106 dealership locations in 20 states. This not only adds significant presence and service coverage for customers operating in mid-western and the eastern US, but it also gives us the ability to support those who run through these regions on route to other destinations.
Finally, I would like to thank all of our employees for their efforts this quarter given their contributions to helping us expand our network and implement new technologies at a very accelerated pace. We are happy to have the employees at Midwest Truck Sales and TransAuthority join our family. And we look forward to welcoming those at Prairie International, Chicago International Trucks and Indy Truck Sales in the near future.
With that, I will take you questions.
Thank you. (Operator Instructions). Our first question comes from Chaz Jones from Wunderlich.
Chaz Jones - Wunderlich
Hi, good morning guys. Nice quarter. Just want to start off by asking what's your confidence level that we get to 188,000 this year, and then maybe, Rusty, just kind of a take on how you kind of expect next year to sort of progress as we move through the year?