Rush Enterprises(US:RUSHA)2019-04-28 01:09Financial Data and Key Metrics Changes - The company reported quarterly revenues of $1.3 billion, with a net income of $37 million or $0.98 per diluted share, reflecting strong financial performance driven by strategic initiatives and a robust economy [5] - Aftermarket gross profit margins increased to 37.7% from 36.4% year-over-year, indicating improved profitability in this segment [6] Business Line Data and Key Metrics Changes - Parts, service, and body shop revenues reached $438 million, up 9.5% from the first quarter of 2018, with aftermarket growth attributed to expanded offerings and increased operational hours [6] - New Class 8 truck sales increased by 7% year-over-year, totaling 3,558 units, representing 5.5% of the total U.S. Class 8 market [8] - Medium-duty truck sales (Class 4-7) reached 2,614 units, accounting for 4.2% of the U.S. market, with expectations for acceleration in sales throughout 2019 [9] Market Data and Key Metrics Changes - The energy sector experienced a 30% year-over-year decline in activity, yet overall aftermarket growth remained strong, with expectations for modest improvement in the energy sector later in the year [7] - The company noted that the U.S. Class 8 retail sales forecast for 2019 is 264,000 units, while Class 4-7 retail sales are expected to increase by 1.6% from 2018 [8][9] Company Strategy and Development Direction - The company is focused on strategic initiatives to enhance service offerings and operational efficiencies, including the expansion of its All-Makes Parts offerings and the acquisition of 50% equity in Rush Truck Centers of Canada [10] - Management emphasized the importance of diversifying beyond Class 8 trucks, highlighting the stability of the medium-duty market and the potential for growth in parts and service even amid a downturn in truck sales [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining growth in parts and service despite potential declines in Class 8 truck sales, citing the aging fleet as a driver for continued demand [20][22] - The company anticipates that the aftermarket activity will remain strong, with expectations for continued growth in parts and service even if truck sales decline [19][34] Other Important Information - The company declared a quarterly cash dividend of $0.12 per common share, reflecting its commitment to returning capital to shareholders [5] - Management acknowledged increased expenses due to employee benefits and payroll taxes but maintained a strong balance sheet to support future investments [10] Q&A Session Summary Question: Inquiry about parts and service gross margins - Management expects gross margins to continue trending higher, with potential for further improvement driven by service initiatives [14][15] Question: Sales cadence for Class 8 trucks - Management noted a slight adjustment in expectations for Class 8 sales in the second and third quarters, with backlogs decreasing but remaining strong [28][29] Question: Heavy truck cycle and used truck values - Management indicated that while cancellations are muted, there may be pressure on used truck values later in the year, with expectations for some devaluation [39][45] Question: SG&A costs and structural changes - Management discussed the variability of SG&A costs tied to truck sales and the ongoing investments in technology and operations to drive growth [55][57]