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Truck dealership Rush Enterprises reported decidedly higher net income and revenue for the second quarter as the nation’s economy and the company’s markets bounced back.
Net income for the period ended June 30 climbed to $58 million, or $1 per diluted share, compared with $16.8 million, 30 cents, a year earlier.
Revenue jumped to $1.3 billion compared with $1 billion in the 2020 period, according to the San Antonio-based company
Revenue from new and used commercial vehicle sales reached $797 million compared with $559 million a year earlier.
The company sells trucks from Peterbilt Motors Co., a brand of Paccar Inc.; Traton SE subsidiary Navistar Inc.’s International brand; Hino Trucks, a Toyota Group company; Isuzu Commercial Truck of America Inc.; and Ford Motor Co.
Lease and rental revenue improved to $61.3 million compared with $57.2 million.
Revenue from Rush’s finance and insurance activities was $7.4 million compared with $4.9 million in the 2020 period.
Aftermarket products and services accounted for 62% of the company’s total gross profit, with parts, service and collision center revenues reaching $445.5 million compared with $377.5 million a year earlier. Rush noted that the parts business recovered more than the services side given supply chain issues and continued service technician staffing issues common in the industry.
“Our parts and services revenues were up 18% in the second quarter of 2021 compared to the same quarter last year, which we attribute to the overall recovery of the national economy,” company chairman and CEO W.M. “Rusty” Rush said in a release.
“Our parts sales are back to pre-pandemic levels, with healthy activity in a variety of market segments, especially leasing, refuse and over-the-road customers and from independent service centers. However, parts sales are beginning to be impacted by supplier constraints.”
He added, “To date, we have been able to mitigate most of the impact of supplier constraints with the size of our parts inventory at our nationwide dealership network. Service revenues are improving at a slower pace, which is due in part to staffing issues common in the industry, along with supply chain issues.”
Rush said the company is actively hiring parts personnel and service technicians throughout its network, and remains focused on promoting its Xpress Services preventive and contract maintenance offerings.
The company sold 2,954 new Class 8 trucks in the second quarter, an increase of 58.3% compared with the second quarter of 2020, and noted that accounted for 5% of the new U.S. Class 8 truck market based on what ACT Research found to be U.S. Class 8 retail truck sales of 58,844 units, up 63.3% over the second quarter last year.
Rush sold 2,825 new Classes 4-7 medium-duty commercial vehicles in the second quarter of 2021, an increase of 21.1% compared with the second quarter of 2020, representing 4.5% of the U.S. Classes 4-7 commercial vehicle market.
“As we look ahead, component supply issues will likely continue to impact new Class 8 truck production through the third quarter or longer, pushing out the delivery dates for new trucks and contributing to a historically high backlog,” Rush said. “Depending on our manufacturers’ ability to ramp up production capacities, we believe our third-quarter new Class 8 truck sales will be consistent with our second-quarter results and expect new Class 8 truck sales will accelerate later this year and into 2022.”
Rush achieved a quarterly absorption ratio of 129.1% in the second quarter of 2021, compared to 110.2% in the second quarter of 2020. Rush calculates absorption ratio by dividing the gross profit from the parts, service and body shop 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.
In the quarter, Rush signed a letter of intent to sell a 50% equity interest in its Momentum Fuel Technologies company to engine maker Cummins Inc. The joint venture will produce Cummins-branded natural gas fuel delivery systems for the commercial vehicle market in North America, and offer aftermarket support through Rush Truck Centers dealerships and Cummins distributors, which will be able to service both the engine and the fuel delivery system.
Rush is the largest network of commercial vehicle dealerships in North America with more than 100 dealership locations in 22 states.
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