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Rush Enterprises Inc(RUSHA)
Q1 2008 Earnings Call
April 18, 2008 11:00 am ET
Marvin Rush - Chairman
Rusty Rush - CEO
Steve Keller - VP and CFO
Marty Naegelin - EVP
Jay Hazelwood - Controller
Derrek Weaver - Chief Compliance Officer
Peter Nesvold - Bear Stearns
John Barnes - BB&T Capital Markets
Peter Chang - Credit Suisse
Chaz Jones - Morgan, Keegan
Milan Gupta - Southpoint Capital
Previous Statements by RUSHA
» Rush Enterprises, Inc., Q4 2008 Earnings Call Transcript
» Rush Enterprises, Inc. Q3 2008 Earnings Call Transcript
» Rush Enterprises, Inc. Q2 2008 Earnings Call Transcript
Good morning and welcome to our first quarter 2008 earnings release conference call. On the call with me today are Rusty Rush, Chief Executive Officer; Marty Naegelin, Executive Vice President; Steve Keller, Vice President and CFO; Jay Hazelwood, Controller of Rush Enterprises and Derrek Weaver, Chief Compliance Officer. Now Steve Keller would like to say a few words regarding the 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's talk about the third-quarter results. In the first quarter, the company revenues totaled $404 million, a 24% decrease from revenues of $531 million reported for the same period last year. Net income for the quarter was $9.7 million or $0.25 per diluted share compared to $13 million or $0.34 per diluted share in last year's first quarter.
Let's talk about the business segments. The truck segment: Our truck segment recorded revenues of $377 million in the first quarter of ‘08 compared to $505 million in the first quarter of ‘07. The company delivered 1266 new heavy-duty trucks in the first quarter of 2008 compared to 2030 heavy-duty trucks in the same period of '07. Revenue from Class 8 truck sales decreased $88 million or 37% to $152 million in the first quarter of '08 compared to $240 million in '07.
In the first quarter of '08, 972 medium-duty trucks were sold versus 1439 new medium-duty trucks in the same quarter last year. Revenue from medium-duty trucks sales decreased $21 million or 28% to $55 million in the first quarter of '08 from $76 million in '07.
The company delivered 900 used trucks in the first quarter of '08 compared to 1077 in the same period of '07. Revenue from used truck sales decreased to $11 million or 20% from $243 million in the first quarter of ’08 from $54 million in ‘07.
Parts, service and body shop sales decreased 1% to $109 million in the first quarter of '08 compared to $110 million in '07. Gross profit margins on backend sales remained relatively flat at 43% in the first quarter of '08.
Talk about the construction equipment business: The construction equipment segment recorded revenues of $22 million in the first quarter of '08 compared to $21 million in the first quarter of '07. New and used construction equipment sales revenue increased 1% to $16.9 million in the first quarter of '08 compared to $16.7 in the first quarter of '07.
Construction equipment parts, service and body shop sales increased approximately 16% to $5.2 million in the first quarter of '08 from $4.5 million in the first quarter of '07.
Our absorption rate: we remain focused on increasing our absorption rate. Our absorption rate increased to 104.9% during the first quarter of '08 from 101.7% during the first quarter of '07. This strength in our absorption rate was primarily driven by the expense reductions implemented during the first quarter.
Our goal is to achieve an annual absorption rate of 105% in '08, which is consistent with '07, despite the decrease in Class 8 truck market.
Talk about the industry outlook: As expected, the impact of the Class 8 and medium-duty truck market downturn that was originally forecast to recover in late '07 has continued to the first quarter of '08. We believe that the current freight and capacity environment coupled with record high fuel prices and tightening credit will cause Class 8 and medium-duty truck deliveries to remain soft through the remainder of 2008.
Recently, A.C.T. Research has lowered their estimate of 2008 US Class 8 truck deliveries to approximately 140,000 units, a 10% decline over the already depressed 2007 Class 8 truck market.
Currently A.C.T. is forecasting retail sales of medium-duty trucks in the US to be down approximately 12% in '08 compared to '07. However, we believe sales of medium-duty trucks in the US will decline approximately 20% to 25% in '08.
Currently, we do not believe there will a significant recovery in truck sales until the first quarter of '09. However, we continue to believe that 2009 will be a strong year for Class 8 truck deliveries given replacement cycles of vehicles purchased in 2004 to 2006 and impending 2010 emission regulations.