Rush Enterprises, Inc. (NASDAQ: RUSHA & RUSHB), which operates
the largest network of commercial vehicle dealerships in North
America, today announced that for the quarter ended March 31, 2019,
the Company achieved revenues of $1.348 billion and net income of
$37.1 million, or $0.98 per diluted share, compared with revenues
of $1.241 billion and net income of $21.0 million, or $0.51 per
diluted share, in the quarter ended March 31, 2018. The first
quarter 2018 results included an additional pre-tax charge to
amortization expense of $10.2 million, or $0.19 per diluted share,
associated with the replacement of certain components of the
Company’s enterprise resource planning software platform (ERP
Platform). Excluding the charge related to the ERP Platform, the
Company’s adjusted net income the first quarter of 2018 was $28.7
million, or $0.70 per diluted share. Additionally, today the
Company’s Board of Directors declared a cash dividend of $0.12 per
share of Class A and Class B Common Stock, to be paid on June 10,
2019, to all shareholders of record as of May 9, 2019.
“We are very proud of our strong financial results this
quarter,” said W.M. “Rusty” Rush, Chairman, Chief Executive Officer
and President of Rush Enterprises, Inc. “The healthy economy
and commercial vehicle market positively impacted our results, as
did the growth we are seeing from our aftermarket strategic
initiatives,” Rush said.
“I would like to thank our dedicated employees, who continue to
provide superior service to our customers while staying focused on
our long-term strategic goals,” said Rush. “Our strong start to the
year is a direct result of their hard work,” he added.
Operations
Aftermarket Products and Services
Aftermarket products and services accounted for approximately
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 to the first quarter of 2018. The
Company achieved a quarterly absorption ratio of 121.5% in the
first quarter of 2019.
“Growth in our aftermarket parts and service revenues was
primarily driven by our successful execution of various strategic
initiatives and continued strong demand for aftermarket parts and
service throughout the country. 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.
“As part of our efforts to increase customer uptime, we
increased the total number of technicians in our dealerships across
the country in the first quarter by 85, allowing us to better
support customers when and where they need us,” Rush said. “We also
officially introduced RushCare Xpress Services, which features
same-day preventive maintenance and expedited diagnostics for
larger repairs. Additionally, we expanded our hours of operation,
giving us more opportunities to build strong, long-lasting
relationships with customers,” he added.
“In March, we launched RushCare Parts Connect, a comprehensive
online source for all-makes parts and the requisite next step that
we believe will enable us to achieve our parts sales growth goals,”
said Rush. “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.
“Looking ahead, we believe that industry wide aftermarket
activity will remain steady throughout the year and that our
aftermarket growth will remain on pace with our first quarter
performance,” Rush noted.
Commercial Vehicle Sales
New U.S. Class 8 retail truck sales were 64,374 units in the
first quarter, up 24.5% over the same time period last year,
according to ACT Research. The Company sold 3,558 new Class 8
trucks in the first quarter, an increase of 7.4% compared to the
first quarter of 2018, and accounted for 5.5% of the new U.S. Class
8 truck market. ACT Research forecasts U.S. retail sales for new
Class 8 vehicles to be 264,000 units in 2019, a 3.2% increase
compared to 2018.
“Our new Class 8 truck sales remained strong this quarter, due
to the healthy economy and activity in virtually all of the market
segments we support. Given the recent decrease in industry-wide
Class 8 new truck orders, our backlog has decreased from its peak
in the last half of 2018. However, our backlog remains
strong, and we expect our new Class 8 truck sales in the second and
third quarters to remain on pace with our 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 Class 4-7 medium-duty commercial vehicles
in the first quarter, a decrease of 3.4% compared to the first
quarter of 2018, and accounted for 4.2% of the U.S. Class 4-7
commercial vehicle market. ACT Research forecasts U.S. retail sales
for Class 4-7 vehicles to reach 262,300 units in 2019, a 1.6%
increase over 2018.
“Our medium-duty truck backlog is as high as it has ever been.
We believe our 2019 medium-duty sales will accelerate through the
rest of 2019, as we continue to see strong demand from our
customers. We believe that this strong Class 4-7 truck sales market
may help to partially offset any downturn in the new Class 8 truck
sales market that may occur towards the end of the year,” said
Rush.
“Our used trucks revenue increased 2.8%, from $80.6 million in
the first quarter of 2018 to $82.9 million in the first quarter of
2019. Used truck values remained stable in the first quarter but
will likely come under pressure later in 2019. We believe our used
truck inventory is positioned appropriately given current used
truck market conditions,” Rush added.
Network Expansion
In February, a subsidiary of the Company purchased 50% of the
equity in Rush Truck Centres of Canada Limited, which operates 14
commercial vehicle dealerships in the Province of Ontario,
Canada. “Our investment in Rush Truck Centres of Canada
Limited is our first investment in a dealership network outside of
the United States, and we continue to evaluate opportunities to
expand our commercial vehicle dealership network,” said Rush.
Financial Highlights
In the first quarter of 2019, the Company’s gross revenues
totaled $1.348 billion, an 8.7% increase from $1.241 billion in the
first quarter of 2018. Net income for the quarter was $37.1
million, or $0.98 per diluted share, compared to net income of
$21.0 million, or $0.51 per diluted share, in the quarter ended
March 31, 2018. The first quarter of 2018 results include a pre-tax
charge to amortization expense of $10.2 million, or $0.19 per
diluted share, associated with the replacement of certain
components of the Company’s ERP Platform. Excluding the charge
related to the ERP Platform, the Company’s adjusted net income the
first quarter of 2018 was $28.7 million, or $0.70 per diluted
share.
Aftermarket products and services revenues were $438.4 million
in the first quarter of 2019, compared to $400.3 million in the
first quarter of 2018. The Company delivered 3,558 new heavy-duty
trucks, 2,614 new medium-duty commercial vehicles, 539 new
light-duty commercial vehicles and 1,840 used commercial vehicles
during the first quarter of 2019, compared to 3,312 new heavy-duty
trucks, 2,705 new medium-duty commercial vehicles, 431 new
light-duty commercial vehicles and 1,859 used commercial vehicles
during the first quarter of 2018.
The Company increased its lease and rental revenues by 3% and
its lease and rental gross profits by 6% in the first quarter,
primarily due to increased rental fleet demand and utilization,
management of operating costs and execution of its lease fleet
service model. Rush Truck Leasing operates 45 PacLease and
Idealease franchises with more than 8,100 trucks in its lease and
rental fleet and more than 1,100 trucks under contract maintenance
agreements.
Selling, general and administrative expenses increased in the
first quarter, as is expected in the first quarter of every year,
primarily due to employee benefits and payroll taxes. During the
first quarter of 2018, the Company recorded amortization expense of
$10.6 million, including $10.2 million of accelerated amortization
expense, related to replacement of its ERP Platform components.
“During the first quarter of 2019, the Company repurchased $26.0
million of its common stock, bringing the total amount of
repurchases to $91.9 million since we adopted a plan to repurchase
up to $150 million of stock in November of 2018. In addition, we
paid a cash dividend of $4.4 million during the first quarter and
today we declared our fourth consecutive quarterly dividend of
$0.12 per common share. I remain confident in our continued ability
to generate free cash flow to grow our business while returning
capital to shareholders,” said Rush.
Conference Call Information
Rush Enterprises will host its quarterly
conference call to discuss earnings for the first quarter on
Thursday, April 25, 2019, at 10 a.m. Eastern/9 a.m.
Central. The call can be heard live by dialing
877-638-4557 (U.S.) or 914-495-8522
(International) or via the Internet at
http://investor.rushenterprises.com/events.cfm.
For those who cannot listen to the live
broadcast, the webcast will be available on our website at the
above link until July 10, 2019. Listen to the audio replay until
May 1, 2019 by dialing 855-859-2056 (U.S.) or 404-537-3406
(International) and entering the Conference ID
7288466
About Rush Enterprises,
Inc.
Rush Enterprises, Inc. is the premier solutions
provider to the commercial vehicle industry. The Company owns and
operates Rush Truck Centers, the largest network of commercial
vehicle dealerships in the United States, with more than 100
dealership locations in 22 states. These vehicle centers,
strategically located in high traffic areas on or near major
highways throughout the United States, represent truck and bus
manufacturers, including Peterbilt, International, Hino, Isuzu,
Ford, Mitsubishi, IC Bus and Blue Bird. They offer an integrated
approach to meeting customer needs — from sales of new and used
vehicles to aftermarket parts, service and collision center
operations plus financing, insurance, leasing and rental. Rush
Enterprises' operations also provide vehicle upfitting, CNG fuel
systems and vehicle telematics products. Additional information
about Rush Enterprises’ products and services is available at
www.rushenterprises.com. Follow our news on Twitter at
@rushtruckcenter and on Facebook at
facebook.com/rushtruckcenters.
Certain statements contained herein, including
those concerning current and projected market conditions, sales
forecasts, market share forecasts, demand for the Company’s
services, the impact of strategic initiatives and the Company’s
capital allocation strategy, including future issuances of cash
dividends and future repurchases of the Company’s common stock, are
“forward-looking” statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Because such
statements include risks and uncertainties, actual results may
differ materially from those expressed or implied by such
forward-looking statements. Important factors that could cause
actual results to differ materially from those expressed or implied
by such forward-looking statements include, but are not limited to,
competitive factors, general U.S. economic conditions, economic
conditions in the new and used commercial vehicle markets, customer
relations, relationships with vendors, the interest rate
environment, governmental regulation and supervision, product
introductions and acceptance, changes in industry practices,
one-time events and other factors described herein and in filings
made by the Company with the Securities and Exchange Commission. In
addition, the declaration and payment of cash dividends and
authorization of future share repurchase programs remains at the
sole discretion of the Company’s Board of Directors and the
issuance of future dividends and authorization of future share
repurchase programs will depend upon the Company’s financial
results, cash requirements, future prospects, applicable law and
other factors that may be deemed relevant by the Company’s Board of
Directors.
-Tables and Additional Information to Follow-
RUSH ENTERPRISES, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In Thousands, Except Shares and Per Share
Amounts)
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
126,572 |
|
|
$ |
131,726 |
|
Accounts
receivable, net |
|
195,120 |
|
|
|
190,650 |
|
Note
receivable affiliate |
|
18,629 |
|
|
|
12,885 |
|
Inventories, net |
|
1,465,442 |
|
|
|
1,339,923 |
|
Prepaid
expenses and other |
|
11,425 |
|
|
|
10,491 |
|
Assets
held for sale |
|
2,269 |
|
|
|
2,269 |
|
Total
current assets |
|
1,819,457 |
|
|
|
1,687,944 |
|
Property and equipment,
net |
|
1,195,824 |
|
|
|
1,184,053 |
|
Right-of-use assets,
net |
|
53,144 |
|
|
|
– |
|
Goodwill, net |
|
291,725 |
|
|
|
291,391 |
|
Other assets, net |
|
61,876 |
|
|
|
37,962 |
|
Total
assets |
$ |
3,422,026 |
|
|
$ |
3,201,350 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Floor plan
notes payable |
$ |
1,111,473 |
|
|
$ |
1,023,019 |
|
Line of
credit |
|
75,000 |
|
|
|
– |
|
Current
maturities of long-term debt |
|
157,213 |
|
|
|
161,955 |
|
Current
maturities of finance lease obligations |
|
19,709 |
|
|
|
19,631 |
|
Current
maturities of operating lease obligations |
|
9,528 |
|
|
|
– |
|
Trade
accounts payable |
|
149,077 |
|
|
|
127,451 |
|
Customer
deposits |
|
24,438 |
|
|
|
36,183 |
|
Accrued
expenses |
|
104,247 |
|
|
|
125,056 |
|
Total
current liabilities |
|
1,650,685 |
|
|
|
1,493,295 |
|
Long-term debt, net of
current maturities |
|
438,794 |
|
|
|
439,218 |
|
Finance lease
obligations, net of current maturities |
|
49,947 |
|
|
|
49,483 |
|
Operating lease
obligations, net of current maturities |
|
43,746 |
|
|
|
– |
|
Other long-term
liabilities |
|
13,975 |
|
|
|
11,118 |
|
Deferred income taxes,
net |
|
141,458 |
|
|
|
141,308 |
|
Shareholders’
equity: |
|
|
|
Preferred
stock, par value $.01 per share; 1,000,000 shares authorized;
0 shares outstanding in 2019 and 2018 |
|
– |
|
|
|
– |
|
Common
stock, par value $.01 per share; 60,000,000 Class A shares
and 20,000,000 Class B shares authorized;
28,186,893 Class A shares and 8,775,206
Class B shares outstanding in 2019; and 28,709,636 Class A
shares and 8,290,277 Class B shares outstanding
in 2018 |
|
465 |
|
|
|
458 |
|
Additional
paid-in capital |
|
379,451 |
|
|
|
370,025 |
|
Treasury
stock, at cost: 4,430,753 Class A shares and 5,084,211 Class
B shares in 2019 and 3,791,751 Class A shares
and 5,030,787 Class B shares in 2018 |
|
(271,890 |
) |
|
|
(245,842 |
) |
Retained
earnings |
|
975,011 |
|
|
|
942,287 |
|
Accumulated
other comprehensive income |
|
384 |
|
|
|
– |
|
Total
shareholders’ equity |
|
1,083,421 |
|
|
|
1,066,928 |
|
Total
liabilities and shareholders’ equity |
$ |
3,422,026 |
|
|
$ |
3,201,350 |
|
RUSH ENTERPRISES, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(In Thousands, Except Per Share
Amounts)(Unaudited)
|
Three Months EndedMarch
31, |
|
2019 |
|
2018 |
|
(Unaudited) |
|
(Unaudited) |
Revenues: |
|
|
|
New and used commercial vehicle sales |
$ |
838,283 |
|
$ |
773,100 |
|
Parts and service sales |
|
438,354 |
|
|
400,295 |
|
Lease and rental |
|
59,433 |
|
|
57,524 |
|
Finance and insurance |
|
6,610 |
|
|
4,741 |
|
Other |
|
5,637 |
|
|
5,121 |
|
Total revenue |
|
1,348,317 |
|
|
1,240,781 |
|
Cost of products sold: |
|
|
|
New and used commercial vehicle sales |
|
768,417 |
|
|
710,914 |
|
Parts and service sales |
|
273,189 |
|
|
254,444 |
|
Lease and rental |
|
49,795 |
|
|
48,428 |
|
Total cost of products sold |
|
1,091,401 |
|
|
1,013,786 |
|
Gross profit |
|
256,916 |
|
|
226,995 |
|
Selling,
general and administrative expense |
|
187,181 |
|
|
171,670 |
|
Depreciation and amortization expense |
|
12,925 |
|
|
22,908 |
|
Loss on
sale of assets |
|
57 |
|
|
(28 |
) |
Operating income |
|
56,867 |
|
|
32,389 |
|
Equity in
earnings of unconsolidated entities |
|
49 |
|
− |
|
Interest
expense, net |
|
7,358 |
|
|
4,306 |
|
Income before taxes |
|
49,558 |
|
|
28,083 |
|
Provision
for income taxes |
|
12,454 |
|
|
7,044 |
|
Net income |
$ |
37,104 |
|
$ |
21,039 |
|
|
|
|
|
Earnings per common share: |
|
|
|
Basic |
$ |
1.01 |
|
$ |
.53 |
|
Diluted |
$ |
.98 |
|
$ |
.51 |
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
Basic |
|
36,817 |
|
|
39,665 |
|
Diluted |
|
37,834 |
|
|
41,092 |
|
This press release and the attached financial
tables contain certain non-GAAP financial measures as defined under
SEC rules, such as Adjusted net income, Adjusted total debt,
Adjusted net (cash) debt, EBITDA, Adjusted EBITDA, Free cash flow,
Adjusted free cash flow and Adjusted invested capital, which
exclude certain items disclosed in the attached financial
tables. The Company provides reconciliations of these
measures to the most directly comparable GAAP measures.
Management believes the presentation of these
non-GAAP financial measures provides useful information about the
results of operations of the Company for the current and past
periods. Management believes that investors should have the same
information available to them that management uses to assess the
Company’s operating performance and capital structure. These
non-GAAP financial measures should not be considered in isolation
or as a substitute for the most comparable GAAP financial measures.
Investors are cautioned that non-GAAP financial measures utilized
by the Company may not be comparable to similarly titled non-GAAP
financial measures used by other companies.
|
|
Three Months Ended |
Commercial Vehicle Sales Revenue (in
thousands) |
|
March 31,2019 |
|
March 31,2018 |
New heavy-duty
vehicles |
|
$ |
530,918 |
|
|
$ |
472,078 |
|
New medium-duty
vehicles (including bus sales revenue) |
|
|
199,680 |
|
|
|
199,189 |
|
New light-duty
vehicles |
|
|
22,019 |
|
|
|
16,617 |
|
Used
vehicles |
|
|
82,992 |
|
|
|
80,614 |
|
Other
vehicles |
|
|
2,674 |
|
|
|
4,602 |
|
|
|
|
|
|
Absorption Ratio |
|
|
121.5 |
% |
|
|
120.0 |
% |
Absorption RatioManagement uses
several performance metrics to evaluate the performance of its
commercial vehicle dealerships and considers Rush Truck Centers’
“absorption ratio” to be of critical importance. Absorption ratio
is calculated by dividing the gross profit from the parts, service
and collision center 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. When 100% absorption is
achieved, then gross profit from the sale of a commercial vehicle,
after sales commissions and inventory carrying costs, directly
impacts operating profit.
This earnings release includes “adjusted net
income (non-GAAP)” and “adjusted net income per diluted share
(non-GAAP),” which are financial measures that are not in
accordance with U.S. generally accepted accounting principles,
since they exclude the charges related to the upgrade and
replacement of the ERP platform in 2018. These measures differ from
the most directly comparable measures calculated in accordance with
GAAP and may not be comparable to similarly titled non-GAAP
financial measures used by other companies. Reconciliations from
the most directly comparable GAAP measures of adjusted net income
(non-GAAP) and adjusted net income per diluted share (non-GAAP) are
as follows:
|
|
Three Months Ended |
Adjusted Net Income (in
thousands) |
|
March 31,2019 |
March 31,2018 |
Net Income |
|
$ |
37,104 |
$ |
21,039 |
Charges related to
upgrade and replacement of ERP platform, net of tax |
|
|
– |
|
7,671 |
Adjusted Net
Income (non-GAAP) |
|
$ |
37,104 |
$ |
28,710 |
|
|
|
|
Per Diluted Share |
|
|
|
Net Income |
|
$ |
0.98 |
$ |
0.51 |
Charges related to
upgrade and replacement of ERP platform, net of tax |
|
|
– |
|
0.19 |
Adjusted Net
Income (non-GAAP) |
|
$ |
0.98 |
$ |
0.70 |
Debt Analysis (in
thousands) |
|
March 31,2019 |
March 31,2018 |
Floor plan notes
payable |
|
$ |
1,111,473 |
|
$ |
805,531 |
|
Line of
credit |
|
|
75,000 |
|
|
– |
|
Current maturities of
long-term debt |
|
|
157,213 |
|
|
143,401 |
|
Current maturities of
finance lease obligations |
|
|
19,709 |
|
|
17,399 |
|
Current maturities of
operating lease obligations |
|
|
9,528 |
|
|
– |
|
Long-term debt, net of
current maturities |
|
|
438,794 |
|
|
453,986 |
|
Finance lease
obligations, net of current maturities |
|
|
49,947 |
|
|
60,706 |
|
Operating lease
obligations, net of current maturities |
|
|
43,746 |
|
|
– |
|
Total Debt
(GAAP) |
|
|
1,905,410 |
|
|
1,481,023 |
|
Adjustments: |
|
|
|
Debt
related to lease & rental fleet |
|
|
(597,182 |
) |
|
(583,906 |
) |
Floor plan
notes payable |
|
|
(1,111,473 |
) |
|
(805,531 |
) |
Adjusted Total
Debt (Non-GAAP) |
|
|
196,755 |
|
|
91,586 |
|
Adjustment: |
|
|
|
Cash and
cash equivalents |
|
|
(126,572 |
) |
|
(131,712 |
) |
Adjusted Net
Debt (Cash) (Non-GAAP) |
|
$ |
70,183 |
|
$ |
(40,126 |
) |
Management uses “Adjusted Total Debt” to reflect
the Company’s estimated financial obligations less debt related to
lease and rental fleet (L&RFD) and floor plan notes payable
(FPNP), and “Adjusted Net (Cash) Debt” to present the amount of
Adjusted Total Debt net of cash and cash equivalents on the
Company’s balance sheet. The FPNP is used to finance the Company’s
new and used inventory, with its principal balance changing daily
as vehicles are purchased and sold and the sale proceeds are used
to repay the notes. Consequently, in managing the business,
management views the FPNP as interest bearing accounts payable,
representing the cost of acquiring the vehicle that is then repaid
when the vehicle is sold, as the Company’s credit agreements
require it to repay loans used to purchase vehicles when such
vehicles are sold. The Company’s lease & rental fleet are fully
financed and are either (i) leased to customers under long-term
lease arrangements or (ii), to a lesser extent, dedicated to the
Company’s rental business. In both cases, the lease and rental
payments received fully cover the capital costs of the lease &
rental fleet (i.e., the interest expense on the borrowings used to
acquire the vehicles and the depreciation expense associated with
the vehicles), plus a profit margin for the Company. The
Company believes excluding the FPNP and L&RFD from the
Company’s total debt for this purpose provides management with
supplemental information regarding the Company’s capital structure
and leverage profile and assists investors in performing analysis
that is consistent with financial models developed by Company
management and research analysts. “Adjusted Total Debt” and
“Adjusted Net (Cash) Debt” are both non-GAAP financial measures and
should be considered in addition to, and not as a substitute for,
the Company’s debt obligations, as reported in the Company’s
consolidated balance sheet in accordance with U.S. GAAP.
Additionally, these non-GAAP measures may vary among companies and
may not be comparable to similarly titled non-GAAP measures used by
other companies.
|
|
Twelve Months Ended |
EBITDA (in thousands) |
|
March 31,2019 |
March 31,2018 |
Net Income
(GAAP) |
|
$ |
155,127 |
|
$ |
178,689 |
|
(Benefit) provision for
income taxes |
|
|
49,517 |
|
|
(36,265 |
) |
Interest expense |
|
|
22,734 |
|
|
13,825 |
|
Depreciation and
amortization |
|
|
60,506 |
|
|
60,485 |
|
Gain on sale of
assets |
|
|
(382 |
) |
|
(30 |
) |
EBITDA
(Non-GAAP) |
|
|
287,502 |
|
|
216,704 |
|
Adjustment: |
|
|
|
Interest expense
associated with FPNP |
|
|
(21,148 |
) |
|
(11,609 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
266,354 |
|
$ |
205,095 |
|
The Company presents EBITDA and Adjusted EBITDA,
for the twelve months ended each period presented, as additional
information about its operating results. The presentation of
Adjusted EBITDA that excludes the addition of interest expense
associated with FPNP to EBITDA is consistent with management’s
presentation of Adjusted Total Debt, in each case reflecting
management’s view of interest expense associated with the FPNP as
an operating expense of the Company, and to provide management with
supplemental information regarding operating results and to assist
investors in performing analysis that is consistent with financial
models developed by management and research analyst. “EBITDA” and
“Adjusted EBITDA” are both non-GAAP financial measures and should
be considered in addition to, and not as a substitute for, net
income of the Company, as reported in the Company’s consolidated
statements of income in accordance with U.S. GAAP. Additionally,
these non-GAAP measures may vary among companies and may not be
comparable to similarly titled non-GAAP measures used by other
companies.
|
|
Twelve Months Ended |
Free Cash Flow (in thousands) |
|
March 31,2019 |
March 31,2018 |
Net cash
provided by operations (GAAP) |
|
$ |
58,445 |
|
$ |
232,876 |
|
Acquisition of property
and equipment |
|
|
(253,616 |
) |
|
(218,923 |
) |
Free cash flow
(Non-GAAP) |
|
|
(195,171 |
) |
|
13,953 |
|
Adjustments: |
|
|
|
Draws on floor
plan financing, net |
|
|
261,536 |
|
|
84,753 |
|
Proceeds from
L&RFD |
|
|
162,473 |
|
|
159,144 |
|
Principal
payments on L&RFD |
|
|
(161,962 |
) |
|
(151,369 |
) |
Non-maintenance
capital expenditures |
|
|
48,050 |
|
|
26,912 |
|
Adjusted Free
Cash Flow (Non-GAAP) |
|
$ |
114,926 |
|
$ |
133,393 |
|
“Free Cash Flow” and “Adjusted Free Cash Flow”
are key financial measures of the Company’s ability to generate
cash from operating its business. Free Cash Flow is calculated by
subtracting the acquisition of property and equipment included in
the Cash flows from investing activities from Net cash provided by
(used in) operating activities. For purposes of deriving Adjusted
Free Cash Flow from the Company’s operating cash flow, Company
management makes the following adjustments: (i) adds back draws (or
subtracts payments) on the floor plan financing that are included
in Cash flows from financing activities as their purpose is to
finance the vehicle inventory that is included in Cash flows from
operating activities; (ii) adds back proceeds from notes payable
related specifically to the financing of the lease and rental fleet
that are reflected in Cash flows from financing activities; (iii)
subtracts draws on floor plan financing, net and proceeds from
L&RFD related to business acquisition assets that are included
in Cash flows from investing activities; (iv) subtracts principal
payments on notes payable related specifically to the financing of
the lease and rental fleet that are included in Cash flows from
financing activities; and (v) adds back non-maintenance capital
expenditures that are for growth and expansion (i.e. building of
new dealership facilities) that are not considered necessary to
maintain the current level of cash generated by the business. “Free
Cash Flow” and “Adjusted Free Cash Flow” are both presented so that
investors have the same financial data that management uses in
evaluating the Company’s cash flows from operating activities.
“Free Cash Flow” and “Adjusted Free Cash Flow” are both non-GAAP
financial measures and should be considered in addition to, and not
as a substitute for, net cash provided by (used in) operations of
the Company, as reported in the Company’s consolidated statement of
cash flows in accordance with U.S. GAAP. Additionally, these
non-GAAP measures may vary among companies and may not be
comparable to similarly titled non-GAAP measures used by other
companies.
Invested Capital (in thousands) |
|
March 31,2019 |
March 31,2018 |
Total Shareholders'
equity (GAAP) |
|
$ |
1,083,421 |
$ |
1,031,669 |
|
Adjusted net debt
(cash) (Non-GAAP) |
|
|
70,183 |
|
(40,126 |
) |
Adjusted
Invested Capital (Non-GAAP) |
|
$ |
1,153,604 |
$ |
991,543 |
|
“Adjusted Invested Capital” is a key financial
measure used by the Company to calculate its return on invested
capital. For purposes of this analysis, management excludes
L&RFD, FPNP, and cash and cash equivalents, for the reasons
provided in the debt analysis above and uses Adjusted Net Debt in
the calculation. The Company believes this approach provides
management a more accurate picture of the Company’s leverage
profile and capital structure, and assists investors in performing
analysis that is consistent with financial models developed by
Company management and research analysts. “Adjusted Net (Cash)
Debt” and “Adjusted Invested Capital” are both non-GAAP financial
measures. Additionally, these non-GAAP measures may vary among
companies and may not be comparable to similarly titled non-GAAP
measures used by other companies.
Contact:Rush Enterprises, Inc., San AntonioSteven L. Keller,
830-302-5226
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