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North American truck dealership Rush Enterprises Inc. reported a jump in third-quarter net income and slightly more revenue as demand for trucks, services and aftermarket rose.
For the period ended Sept. 30, Rush reported net income of $69.4 million, or $1.20 per diluted share, compared with $33.9 million, 60 cents, a year earlier.
Revenue reached $1.27 billion compared with $1.18 billion in the 2020 period.
“We continue to see economic recovery and a strong freight environment throughout the country, which has created widespread demand for new and used trucks, as well as aftermarket products and services. Our profitability was largely driven by our diligent expense management during the quarter,” Chairman and CEO W.M. “Rusty” Rush said during the earnings call.
Aftermarket products and services accounted for 64.5% of the company’s total gross profits in the quarter, with parts, service and collision center revenues totaling $463 million, up 15.7% compared with the third quarter of 2020.
The company achieved a record quarterly absorption ratio of 134% in the third quarter of 2021, compared with 119.4% in the third 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.
“Service revenues continued to gradually improve during the third quarter, which we largely attribute to an increase in technician hires and the improved proficiency of our technicians. Our service revenues were also positively impacted in the third quarter by our enhanced service communication technologies, our mobile service offerings, Xpress Services and contract maintenance offerings,” said Rush.
Additionally, on Sept. 7, the company entered into an agreement with affiliates of The Summit Truck Group to acquire full-service truck dealerships in Arkansas, Kansas, Mississippi, Missouri, Oklahoma, Tennessee and Texas.
“The Summit deal represents quite a bit of growth for us,” Rush said. “When you look at it, it’s the second largest International dealer, OK?”
The acquisition includes dealerships representing International, IC Bus, Idealease, Isuzu and other commercial vehicle manufacturers. It is expected to close in December, the San Antonio-based company reported.
The company acquired an independent parts and service facility in Victorville, Calif., that will be converted into a full-service Peterbilt Motors Co. dealership. Rush also plans to acquire a full-service Hino and Isuzu dealership in Elk Grove, Ill., in November 2021.
Rush also plans to close the previously announced agreement for Cummins Inc. to acquire a 50% equity interest in Momentum Fuel Technologies during the fourth quarter of 2021. 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 fuel delivery system.
In this episode, host Michael Freeze asks, how are companies saving money by leasing trucks rather than owning? For answers, we speak with Jim Lager of Penske Truck Leasing and Al Barner of strategic fleet solutions at Fleet Advantage. Hear a snippet above, and get the full program by going to RoadSigns.TTNews.com.
Looking ahead, Rush said, “I think that some of the demands when we talk about electric and hydrogen and fuel cell and all the other good stuff, the governments better be careful pressing it too hard because we got to catch up to what we want. I know we’ve got to clean things up, but those types of things will be where opportunities might come that I can’t see right now, but I am very comfortable with the truck makers I have, participating in that transition.”
He called this time “a transitionary decade like never seen. Transition creates a little bit confusion, which creates opportunity; trust me, we’re poised.”
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.
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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