Rush Enterprises(US:RUSHA)2019-10-26 17:39Financial Data and Key Metrics Changes - The company reported quarterly revenues of $1.6 billion and net income of $39.1 million, or $1.05 per diluted share, indicating a strong financial performance positively impacted by aftermarket initiatives [5][6] - The absorption ratio for the aftermarket was strong at 120%, reflecting effective management and strategic initiatives [6] Business Line Data and Key Metrics Changes - Aftermarket revenues from parts, service, and body shop reached $455 million, a 6.5% increase over Q3 2018 [6] - New Class 8 truck sales totaled 4,318 units, up 30% year-over-year, capturing 5.5% of the total U.S. Class 8 market [8] - Class 4 to 7 new truck sales reached 4,566 units, accounting for 6.5% of the U.S. market, marking a record-setting quarter [10] - Used truck sales decreased by 15% compared to Q3 2018, with inventory at its lowest level of the year [12] Market Data and Key Metrics Changes - The U.S. Class 8 retail sales forecast for 2019 is 277,300 units, with expectations of a decline to 204,000 units in 2020, a 26% drop [9] - The U.S. Class 4 to 7 sales forecast for 2019 is 266,000 units, up 3% from 2018, with a projected decline to 257,000 units in 2020, down 3% [11] Company Strategy and Development Direction - The company aims to continue outperforming the market in aftermarket revenues through strategic initiatives, including technology solutions and e-commerce platforms [7] - The company is focused on maintaining strong performance in the medium-duty truck market, which is expected to remain stable over the next few years [20] Management's Comments on Operating Environment and Future Outlook - Management noted significant headwinds from the energy sector, with activity down over 50%, impacting parts and service revenue [18] - The company is implementing G&A cost cuts, expecting to save a couple of million dollars per month starting in 2020 [20][26] - Management expressed confidence in achieving better results than in previous downturns due to strategic focus and operational improvements [45] Other Important Information - The company declared a quarterly cash dividend of $0.13 per common share [5] - The Tallman Group joint venture has grown by $100 million since its inception, with positive performance expected to continue [58] Q&A Session Summary Question: What was the energy headwind for parts and service revenue this quarter? - Management indicated that energy sector activity was down over 50%, significantly impacting performance, but noted that the company managed to perform well despite these challenges [18] Question: Any updates on G&A cost cuts? - Management confirmed that G&A cost cuts would phase into Q4, with expectations of saving a couple of million dollars per month starting in 2020 [20][26] Question: What are customers saying about order expectations? - Management noted that while there is uncertainty in the market, they expect order intake to improve gradually, but not to previous peak levels [41] Question: Can you comment on parts and service revenue performance on the Navistar side? - Management reported improvement in parts and service revenue performance, indicating that the negative impacts from low market share are behind them [54] Question: Any updates on the Tallman Group JV and M&A opportunities? - Management expressed satisfaction with the Tallman Group's performance and indicated that while there are strategic M&A opportunities, they are not ready to disclose specifics [58]