Truck dealership Rush Enterprises Inc. saw revenue and net income climb in the first quarter amid strong gains in aftermarket products and services.
For the period ended March 31, net income jumped 76% to $37.1 million, or 98 cents per diluted share, on revenue of $1.34 billion.
A year earlier, net income was $21 million, or 51 cents, on revenue of $1.24 billion.
The first quarter 2018 results included an additional pre-tax charge to amortization expense of $10.2 million, or 19 cents, associated with the replacement of certain components of the company’s enterprise resource planning software platform. Excluding the charge, Rush’s adjusted net income the first quarter of 2018 was $28.7 million, or 70 cents.
“The healthy economy and commercial vehicle market positively impacted our results, as did the growth we are seeing from our aftermarket strategic initiatives,” W.M. “Rusty” Rush, chairman and CEO of Rush Enterprises, said in a statement.
Aftermarket products and services accounted for 64% of the company’s total gross profit in the first quarter of 2019, with parts, service and collision center revenues reaching $438.4 million, up 9.5% compared with a year earlier.
Rush achieved a quarterly absorption ratio of 121.5% in the first quarter of 2019.
The San Antonio-based company 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.
“It is important to note that we were able to achieve this strong aftermarket growth despite a significant decrease in activity in the energy sector compared to the first quarter of last year,” Rush said.
In the quarter, Rush added 85 technicians, and introduced RushCare Xpress Services for same-day preventive maintenance and expedited diagnostics for larger repairs. The nation’s only publicly traded truck dealership also expanded its hours of operation.
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“Additionally, we continue to expand our all-makes parts product offerings and invest in enhanced technologies to take advantage of every identifiable opportunity to increase parts sales,” Rush added.
At the same time, Rush sold 3,558 new Class 8 trucks in the first quarter, an increase of 7.4% compared with the first quarter of 2018, and it accounted for 5.5% of the new U.S. Class 8 truck market, as determined by ACT Research.
Rush expects new Class 8 truck sales in the second and third quarters to remain on pace with its first quarter performance.
“While we are cautiously optimistic about the fourth quarter of 2019, we will closely monitor market conditions, including freight tonnage, freight rates, used truck values and truck capacity, which we believe could adversely impact the market beginning in the fourth quarter of 2019,” Rush said.
The company sold 2,614 Classes 4-7 medium-duty commercial vehicles in the first quarter, a decrease of 3.4% compared with the first quarter of 2018. It accounted for 4.2% of all sales in that market.