PART I. FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements detail the company's financial position, operations, and cash flows for the three and nine months ended September 30, 2024, showing total assets of $4.65 billion and nine-month revenues of $5.80 billion Consolidated Balance Sheets Total assets increased to $4.65 billion as of September 30, 2024, driven by higher inventories and property, while total liabilities and shareholders' equity also rose Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 (unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $2,460,393 | $2,260,304 | | Inventories, net | $1,964,835 | $1,801,447 | | Total Assets | $4,648,471 | $4,364,241 | | Total Current Liabilities | $1,752,032 | $1,673,310 | | Floor plan notes payable | $1,285,033 | $1,139,744 | | Total Liabilities | $2,545,514 | $2,473,825 | | Total Shareholders' Equity | $2,102,957 | $1,890,416 | Consolidated Statements of Income Q3 2024 total revenue decreased to $1.90 billion, with nine-month revenue at $5.80 billion, resulting in net income of $229.4 million for the nine-month period Q3 & YTD 2024 vs 2023 Performance (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,896,133 | $1,980,740 | $5,795,160 | $5,895,559 | | Gross Profit | $379,041 | $394,405 | $1,161,305 | $1,207,022 | | Operating Income | $120,754 | $121,621 | $355,845 | $392,256 | | Net Income (to Co.) | $79,132 | $80,278 | $229,401 | $269,008 | | Diluted EPS | $0.97 | $0.96 | $2.81 | $3.19 | | Dividends per Share | $0.18 | $0.17 | $0.52 | $0.45 | Consolidated Statements of Cash Flows Net cash from operating activities increased to $227.3 million for the nine months ended September 30, 2024, while investing activities used $305.8 million Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $227,268 | $211,059 | | Net Cash used in Investing Activities | ($305,828) | ($290,954) | | Net Cash from Financing Activities | $79,928 | $70,845 | | Net Change in Cash | $1,368 | ($9,050) | Notes to Consolidated Financial Statements The notes detail accounting policies, including a three-for-two stock split, the single 'Truck Segment' reporting, and recent acquisitions totaling over $32 million - On July 25, 2023, the company's Board of Directors declared a three-for-two stock split for both Class A and Class B common stock. All share and per-share data have been adjusted to reflect this split24 - The company operates under a single reportable business segment, the 'Truck Segment,' which includes a network of commercial vehicle dealerships providing sales, aftermarket parts and services, and financial services35 - The company completed two recent acquisitions: Nebraska Peterbilt in July 2024 for approximately $16.5 million and Freeway Ford Truck Sales in December 2023 for approximately $16.3 million5152 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the 4.3% Q3 2024 revenue decrease due to a freight recession, forecasting a 13.5% decline in U.S. Class 8 truck sales, while maintaining strong liquidity and a significantly reduced order backlog Outlook The 2024 outlook forecasts a 13.5% decrease in U.S. Class 8 truck sales and a 4.2% increase in Class 4-7 sales, with aftermarket revenues expected to be flat to slightly down 2024 Sales Forecast | Vehicle Class | U.S. Market Forecast (A.C.T. Research) | Company Sales Forecast (Units) | | :--- | :--- | :--- | | Class 8 | 235,000 units (-13.5% YoY) | 14,500 - 15,500 | | Class 4-7 | 268,300 units (+4.2% YoY) | 13,500 - 14,500 | - Aftermarket Products and Services revenues are expected to remain flat to slightly down in 2024 compared to 2023, with hopes for a return to normal market conditions in Q1 202563 Results of Operations Q3 2024 total revenues decreased 4.3% due to a 16.7% drop in heavy-duty truck sales, while the absorption ratio remained stable at 132.6% Vehicle Unit Sales (Q3 2024 vs Q3 2023) | Vehicle Type | Q3 2024 Units | Q3 2023 Units | % Change | | :--- | :--- | :--- | :--- | | New heavy-duty | 3,604 | 4,326 | -16.7% | | New medium-duty | 3,379 | 3,244 | 4.2% | | Used vehicles | 1,829 | 1,797 | 1.8% | - The absorption ratio, which measures the ability of aftermarket gross profit to cover fixed overhead, was 132.6% in Q3 2024, a slight decrease from 132.8% in Q3 202370 - SG&A expenses decreased by 6.8% in Q3 2024 compared to Q3 2023, primarily due to reductions in operating expenses85 Liquidity and Capital Resources The company maintains strong liquidity with $714.2 million in working capital, planning $325-350 million in leasing capital expenditures and continuing its $150 million stock repurchase program - As of September 30, 2024, the company had working capital of approximately $714.2 million, including $185.1 million in cash99 - The company expects to spend $325.0 million to $350.0 million on commercial vehicles for its leasing operations and $40.0 million to $45.0 million on other capital expenditures during 2024103 - A stock repurchase program authorizing up to $150.0 million was approved in December 2023. As of September 30, 2024, $77.4 million had been repurchased under this program105 Backlog The commercial vehicle order backlog significantly decreased to approximately $1.33 billion as of September 30, 2024, from $3.30 billion in the prior year, reflecting softening demand Order Backlog Comparison | Date | Backlog Value | | :--- | :--- | | September 30, 2024 | $1,332.9 million | | September 30, 2023 | $3,297.4 million | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its $1.68 billion variable-rate debt, with a 1% rate change impacting annual interest expense by approximately $16.8 million - The company's primary market risk is interest rate changes on its variable-rate debt, which totaled $1,676.1 million as of September 30, 2024133 - A 100 basis point (1%) increase or decrease in the relevant interest rates (SOFR, CORRA, prime rate) would impact annual interest expense by approximately $16.8 million133 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting during Q3 2024 - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2024134 - No changes occurred during Q3 2024 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting135 PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course litigation but believes no pending legal matters will materially adversely affect its financial position as of September 30, 2024 - The company states that as of September 30, 2024, it does not believe any pending litigation will have a material adverse effect on its financial position136 Risk Factors No material changes to the company's risk factors have been reported since the 2023 Annual Report on Form 10-K - There has been no material change in the company's risk factors as disclosed in the 2023 Annual Report on Form 10-K138 Unregistered Sales of Equity Securities and Use of Proceeds The company made no unregistered equity sales in Q3 2024, repurchasing 5,586 shares under its program, with approximately $72.6 million remaining for future repurchases Stock Repurchase Activity (Q3 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Value Remaining for Purchase | | :--- | :--- | :--- | :--- | | Jul 2024 | 3,796 | $39.28 | $72,690,317 | | Aug 2024 | 419 | $45.00 | $72,671,450 | | Sep 2024 | 1,371 | $44.64 | $72,610,206 | | Total | 5,586 | | | Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during Q3 2024 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended September 30, 2024140 Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, a Senior Advisor Agreement, and CEO/CFO certifications - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act143
Rush Enterprises(RUSHB) - 2024 Q3 - Quarterly Report