Rush Enterprises, Inc. (NASDAQ: RUSHA & RUSHB), which operates
the largest network of commercial vehicle dealerships in North
America, today announced that for the year ended December 31, 2019,
the Company achieved record revenues of $5.8 billion and net income
of $141.6 million, or $3.77 per diluted share, compared with
revenues of $5.5 billion and net income of $139.1 million, or $3.45
per diluted share, for the year ended December 31, 2018.
During 2018, the Company incurred a non-cash charge to amortization
expense and a charge to selling, general and administrative expense
totaling $20.9 million associated with the upgrade and 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 in
2018 was $154.9 million, or $3.85 per diluted share.
Additionally, the Company’s Board of Directors declared a cash
dividend of $0.13 per share of Class A and Class B Common Stock, to
be paid on March 17, 2020, to all shareholders of record as of
February 25, 2020.
“We are pleased with our strong financial performance in 2019,”
said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and
President of Rush Enterprises, Inc. “Though we experienced
declines in new Class 8 truck sales and aftermarket products and
services sales in the fourth quarter, our overall performance for
the full year 2019 was strong, primarily due to a healthy economy
and activity throughout the markets we support. In addition,
the successful execution of our strategic initiatives continues to
contribute to our parts and service revenue growth, and we gained
market share in our new medium-duty truck sales,” he added.
“I want to thank our employees who continue to inspire me with
their dedication to our customers and to our company’s success.
It is only because of their hard work that we were able to
achieve such a successful year,” Rush said.
Operations
Aftermarket Products and Services
Aftermarket products and services accounted for approximately
64.9% of the Company’s total gross profits in 2019, with parts,
service and collision center revenues reaching $1.8 billion, up
5.5% compared to 2018. The Company achieved an annual
absorption ratio of 120.2% in 2019. “Our aftermarket products
and services revenue growth remained strong in 2019, primarily due
to our continued focus on our strategic initiatives. In 2019,
we continued to invest in internal and customer-facing
technologies, such as our ecommerce platform and RushCare Parts
Connect. We also continued to grow our all-makes parts
product offerings and expanded our aftermarket products and
services sales force,” said Rush. “Despite our strong
aftermarket products and services sales growth for the full year
2019, activity from our energy customers declined throughout 2019,
negatively impacting our aftermarket products and services results,
particularly in the fourth quarter. Widespread weakness in
aftermarket demand, typical seasonal decline and the timing of the
mid-week holidays further impacted our fourth quarter results.
Though the end of the year was not without its challenges, we
are proud of our sales and service team’s ability to continue
growing our aftermarket products and services revenues,” said
Rush.
“Looking forward, we expect that parts and service activity
throughout the industry will be relatively flat in 2020 compared to
2019. We believe aftermarket demand from our energy sector
customers has bottomed, which will limit our year over year
aftermarket growth in the first half of 2020 because stronger
energy sector demand existed in the first half of 2019,” said
Rush. “We remain focused on our strategic initiatives and
have ambitious targets for improving efficiency and productivity in
our parts fulfillment processes to facilitate additional parts
sales. We are also excited about RushCare® Complete, which we
launched in the summer of 2019. RushCare® Complete is an
all-inclusive service that expedites vehicle repairs through
qualified service facilities across North America. We believe
this new service solution will drive parts and service revenue
growth and improve vehicle uptime,” Rush said.
“As a direct result of the technology investments we have made
over the past 18 months in the furtherance of our strategic
initiatives, we have more insight into our business than ever
before, and we are using that insight to our advantage.
Though industry demand for aftermarket products and services
may remain flat in 2020, we are laser focused on gaining market
share and believe we are positioned for modest aftermarket products
and services revenues growth in 2020,” said Rush.
Truck Sales
New U.S. Class 8 retail truck sales totaled 281,440 units in
2019, up 10% over 2018, according to ACT Research. The
Company sold 14,986 new Class 8 trucks in 2019, an increase of 2.2%
compared to 2018, and accounted for 5.3% of the new U.S. Class 8
truck market.
“Our new Class 8 truck sales grew steadily from the first
quarter of 2019 through the third quarter of 2019, primarily due to
the healthy economy and strong activity across the market segments
we support. In the fourth quarter of 2019, as predicted by
ACT Research, all new U.S. Class 8 truck retail sales declined
compared to the fourth quarter of 2018, and our results were
further negatively impacted by the timing of certain fleet
deliveries,” Rush said.
ACT Research forecasts U.S. retail sales of new Class 8 trucks
to total 190,000 units in 2020, a 32.5% decrease compared to 2019.
“2020 will be a challenging year for the new Class 8 truck
market due to excess truck capacity in the market resulting from
exceptionally high unit sales volumes over the past two
years. This excess truck capacity has negatively impacted
freight rates for our customers. Declining freight rates,
coupled with the fact that this is an election year, generally
results in our customers being more cautious with their purchase
decisions. That said, freight rates are expected to improve
in the second half of the year, the housing sector is growing and
the economy is healthy. Our team will continue to closely
monitor market conditions impacting Class 8 truck sales, and we
believe that we are well positioned to gain market share in 2020,”
said Rush.
The Company sold 14,470 new Class 4-7 medium-duty commercial
vehicles in 2019, an increase of 11.7% compared to 2018, accounting
for 5.4% of the total U.S. market and significantly outpacing the
industry. New U.S. Class 4-7 medium-duty commercial vehicle
sales were 266,977 units in 2019, up 3.4% over 2018.
“While our fourth quarter 2019 new medium-duty commercial
vehicle sales results were flat compared to the fourth quarter of
2018, we experienced strong activity from all of the market
segments we support in 2019 and our annual sales significantly
outpaced the market, resulting in another record-setting year for
new Class 4-7 medium-duty commercial vehicle sales,” said Rush. “By
offering a breadth of options from the five medium-duty
manufacturers we represent, we continue to evolve to meet our
customers’ needs, moving us further towards our medium-duty
commercial vehicle sales strategic goals,” said Rush.
ACT Research forecasts U.S. retail sales for new Class 4-7
commercial vehicles to be approximately 253,400 units in 2020, a
5.1% decrease compared to 2019.
“We believe our medium-duty performance will be on pace with the
market in 2020, due to solid activity across the markets we
support, and we are well-positioned to take advantage of every
opportunity possible and continue the long-term upward trend of our
new Class 4-7 commercial vehicle sales,” said Rush.
The Company sold 7,741 used vehicles in 2019, a 3.5% decrease
compared to 2018. “Record new truck deliveries in the past
few years caused an oversupply of used trucks in the market in
2019, which put pressure on used truck values in the second half of
the year,” said Rush. “Currently, we believe that used truck values
continue to depreciate significantly faster than what is considered
a normal rate. We continue to closely monitor used truck
values and other market factors, but we believe our inventory, in
terms of quantity and value, is well positioned to meet current
market demand,” he added.
Network
Expansion
In 2019, the Company opened full-service Peterbilt dealerships
in Victoria and Beaumont, Texas as well as a second Peterbilt
location in Jacksonville, Florida, which is operating as Rush Truck
Center – Jacksonville East. Further, the Company acquired a Ford
commercial vehicle dealership in Ceres, California, now Rush Truck
Center – Ceres, which offers a full range of Ford trucks, parts and
service.
In its first investment in a dealership network outside of the
United States, on February 25, 2019, a subsidiary of the Company
purchased 50% of the equity in Rush Truck Centres of Canada
Limited, which operates 14 International Truck dealerships in the
Province of Ontario, Canada. The Company has an option
to purchase the remaining 50% equity interest until the close of
business on February 25, 2024.
“We remain focused on the strategic expansion of our dealership
network, which will enhance the support we offer our customers
whenever and wherever they need us and support our long-term growth
goals,” Rush said.
Financial Highlights
For the year ended December 31, 2019, the Company’s revenues
totaled $5.8 billion, compared to revenues of $5.5 billion reported
in 2018. The Company reported net income for 2019 of $141.6
million, or $3.77 per diluted share, compared with net income of
$139.1 million, or $3.45 per diluted share in 2018. During
2018, the Company incurred a non-cash charge to amortization
expense and a charge to selling, general and administrative expense
totaling $20.9 million associated with the upgrade and 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 in
2018 was $154.9 million, or $3.85 per diluted share.
Aftermarket products and services revenues were $1.8 billion in
the year ended 2019, compared to $1.7 billion in the year ended
2018. The Company sold 39,416 new and used commercial
vehicles in 2019, a 4.3% increase compared to 37,797 new and used
commercial vehicles in 2018. The Company delivered 14,986 new
heavy-duty trucks, 14,470 new medium-duty commercial vehicles,
2,219 new light-duty commercial vehicles and 7,741 used commercial
vehicles during 2019, compared to 14,666 new heavy-duty trucks,
12,949 new medium-duty commercial vehicles, 2,161 new light-duty
commercial vehicles and 8,021 used commercial vehicles during
2018.
In the fourth quarter of 2019, the Company’s revenues totaled
$1.3 billion, compared to revenues of $1.5 billion reported for the
fourth quarter of 2018. Net income for the quarter ended
December 31, 2019 was $23.8 million, or $0.64 per diluted share,
compared to $47.0 million, or $1.20 per diluted share, in the
quarter ended December 31, 2018.
Aftermarket product and services revenues were $421.2 million in
the fourth quarter of 2019, compared to $420.0 million in the
fourth quarter of 2018. The Company’s absorption ratio was
116.6% in the fourth quarter of 2019, compared to 124.3% in the
fourth quarter of 2018. The Company delivered 2,991 new
heavy-duty trucks, 3,424 new medium-duty commercial vehicles, 436
new light-duty commercial vehicles and 1,932 used commercial
vehicles during the fourth quarter of 2019, compared to 4,811 new
heavy-duty trucks, 3,421 new medium-duty commercial vehicles, 487
new light-duty commercial vehicles and 1,895 used commercial
vehicles during the fourth quarter of 2018.
Primarily due to healthy rental fleet demand and utilization and
successful execution of its leasing service model, including
reducing leasing operating costs, the Company increased its lease
and rental revenues by 3.9% in 2019, compared to 2018. Rush
Truck Leasing now operates 45 PacLease and Idealease franchises in
markets across the country with more than 8,500 trucks in its lease
and rental fleet and more than 1,000 trucks under contract
maintenance agreements.
During 2019, the Company repurchased $58.3 million of its common
stock. During the fourth quarter of 2019, the Company
repurchased $4.1 million of its common stock and adopted a
repurchase plan that allows us to repurchase $100 million of stock
through December 31, 2020. As of December 31, 2019, there is
$99.5 million remaining to spend under the plan. Further,
during the fourth quarter of 2019, we paid a cash dividend of $4.7
million, for a total of $18.3 million paid to shareholders during
2019. “Our cash dividends reflect our commitment to our
capital allocation strategy and enhancing shareholder value. We
also continued to invest in our long-term initiatives and ended the
year in a strong financial position of $181.6 million in cash and
cash equivalents,” said Rush.
“In anticipation of more challenging industry conditions in
2020, we implemented companywide expense reductions in the fourth
quarter of 2019 to help offset the expectation of lower
revenues. As in previous years, employee benefits and payroll
taxes will negatively impact expenses in the first quarter of 2020
compared to the fourth quarter of 2019,” said Rush.
Conference Call
Information
Rush Enterprises will host its quarterly conference call to
discuss earnings for the fourth quarter and year-end on
Thursday, February 13, 2020, at 10 a.m. Eastern/9 a.m.
Central. The call can be heard live by dialing
877-638-4557 (US) or 914-495-8522 (International),
conference ID 3148317 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 April 15,
2020. Listen to the audio replay until February 20, 2020, by
dialing 855-859-2056 (US) or 404-537-3406
(International) and entering the conference ID
3148317.
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 North America, 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, FUSO, 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)
|
December 31, |
|
December 31, |
|
2019 |
|
2018 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
181,620 |
|
|
$ |
131,726 |
|
Accounts receivable, net |
|
183,704 |
|
|
|
190,650 |
|
Note receivable affiliate |
|
– |
|
|
|
12,885 |
|
Inventories, net |
|
1,326,080 |
|
|
|
1,339,923 |
|
Prepaid expenses and other |
|
20,728 |
|
|
|
10,491 |
|
Assets held for sale |
|
419 |
|
|
|
2,269 |
|
Total current assets |
|
1,712,551 |
|
|
|
1,687,944 |
|
Property and equipment,
net |
|
1,279,931 |
|
|
|
1,184,053 |
|
Operating lease right-of-use
assets, net |
|
57,197 |
|
|
|
– |
|
Goodwill, net |
|
292,142 |
|
|
|
291,391 |
|
Other assets, net |
|
65,508 |
|
|
|
37,962 |
|
Total
assets |
$ |
3,407,329 |
|
|
$ |
3,201,350 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Floor plan notes payable |
$ |
996,336 |
|
|
$ |
1,023,019 |
|
Current maturities of long-term debt |
|
189,265 |
|
|
|
161,955 |
|
Current maturities of finance lease obligations |
|
22,892 |
|
|
|
19,631 |
|
Current maturities of operating lease obligations |
|
10,114 |
|
|
|
– |
|
Trade accounts payable |
|
133,697 |
|
|
|
127,451 |
|
Customer deposits |
|
42,695 |
|
|
|
36,183 |
|
Accrued expenses |
|
112,390 |
|
|
|
125,056 |
|
Total current liabilities |
|
1,507,389 |
|
|
|
1,493,295 |
|
Long-term debt, net of current
maturities |
|
438,413 |
|
|
|
439,218 |
|
Finance lease obligations, net
of current maturities |
|
69,478 |
|
|
|
49,483 |
|
Operating lease obligations,
net of current maturities |
|
47,555 |
|
|
|
– |
|
Other long-term
liabilities |
|
20,704 |
|
|
|
11,118 |
|
Deferred income taxes,
net |
|
164,297 |
|
|
|
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; 27,953,648 Class A
shares and 8,240,486 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 |
|
397,267 |
|
|
|
370,025 |
|
Treasury stock, at cost: 5,055,783 Class A shares and 5,306,341
Class B shares in 2019 and 3,791,751 Class A shares and
5,030,787 Class B shares in 2018 |
|
(304,129 |
) |
|
|
(245,842 |
) |
Retained earnings |
|
1,065,553 |
|
|
|
942,287 |
|
Accumulated other comprehensive income |
|
337 |
|
|
|
Total shareholders’
equity |
|
1,159,493 |
|
|
|
1,066,928 |
|
Total liabilities and
shareholders’ equity |
$ |
3,407,329 |
|
|
$ |
3,201,350 |
|
RUSH ENTERPRISES, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS
(In Thousands, Except Per Share Amounts)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
|
Revenues: |
|
|
|
|
|
|
|
New and used commercial vehicle sales |
$ |
823,632 |
|
|
$ |
1,049,667 |
|
$ |
3,757,584 |
|
|
$ |
3,558,637 |
Parts and service |
|
421,205 |
|
|
|
419,972 |
|
|
1,762,510 |
|
|
|
1,670,052 |
Lease and rental |
|
63,576 |
|
|
|
60,896 |
|
|
247,549 |
|
|
|
238,238 |
Finance and insurance |
|
5,569 |
|
|
|
5,249 |
|
|
24,443 |
|
|
|
20,535 |
Other |
|
3,722 |
|
|
|
4,658 |
|
|
17,761 |
|
|
|
18,728 |
Total revenue |
|
1,317,704 |
|
|
|
1,540,442 |
|
|
5,809,847 |
|
|
|
5,506,190 |
Cost of products
sold: |
|
|
|
|
|
|
|
New and used commercial vehicle sales |
|
763,198 |
|
|
|
969,810 |
|
|
3,480,682 |
|
|
|
3,280,966 |
Parts and service |
|
267,184 |
|
|
|
261,536 |
|
|
1,097,337 |
|
|
|
1,049,684 |
Lease and rental |
|
52,884 |
|
|
|
50,256 |
|
|
206,200 |
|
|
|
197,271 |
Total cost of products sold |
|
1,083,266 |
|
|
|
1,281,602 |
|
|
4,784,219 |
|
|
|
4,527,921 |
Gross
profit |
|
234,438 |
|
|
|
258,840 |
|
|
1,025,628 |
|
|
|
978,269 |
Selling, general and
administrative |
|
180,105 |
|
|
|
177,497 |
|
|
753,749 |
|
|
|
705,226 |
Depreciation and
amortization |
|
14,820 |
|
|
|
13,094 |
|
|
55,372 |
|
|
|
70,489 |
(Loss) gain on sale of
assets |
|
(90 |
) |
|
|
138 |
|
|
(102 |
) |
|
|
297 |
Operating
income |
|
39,423 |
|
|
|
68,387 |
|
|
216,405 |
|
|
|
202,851 |
Other (expense) income |
|
(391 |
) |
|
|
– |
|
|
1,925 |
|
|
|
– |
Interest expense, net |
|
5,687 |
|
|
|
6,414 |
|
|
28,807 |
|
|
|
19,682 |
Income before
taxes |
|
33,345 |
|
|
|
61,973 |
|
|
189,523 |
|
|
|
183,169 |
Provision for income
taxes |
|
9,591 |
|
|
|
15,004 |
|
|
47,940 |
|
|
|
44,107 |
Net
income |
$ |
23,754 |
|
|
$ |
46,969 |
|
$ |
141,583 |
|
|
$ |
139,062 |
|
|
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.65 |
|
|
$ |
1.22 |
|
$ |
3.86 |
|
|
$ |
3.55 |
Diluted |
$ |
0.64 |
|
|
$ |
1.20 |
|
$ |
3.77 |
|
|
$ |
3.45 |
|
|
|
|
|
|
|
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
36,406 |
|
|
|
38,460 |
|
|
36,659 |
|
|
|
39,223 |
Diluted |
|
37,410 |
|
|
|
39,277 |
|
|
37,571 |
|
|
|
40,293 |
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 |
Vehicle Sales Revenue (in thousands) |
|
December 31,2019 |
|
December 31,2018 |
New heavy-duty vehicles |
|
$ |
444,497 |
|
|
$ |
672,614 |
|
New medium-duty vehicles (including bus sales revenue) |
|
|
279,311 |
|
|
|
262,797 |
|
New light-duty vehicles |
|
|
18,105 |
|
|
|
20,200 |
|
Used vehicles |
|
|
76,989 |
|
|
|
88,682 |
|
Other vehicles |
|
|
4,730 |
|
|
|
5,374 |
|
|
|
|
|
|
Absorption Ratio |
|
|
116.6% |
|
|
|
124.3% |
|
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 certain components of the Company’s Enterprise
Resource Planning software platform (ERP platform) in the second
quarter of 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:
|
|
Twelve Months Ended |
Adjusted Net
Income (in
thousands) |
|
December 31,2019 |
December 31,2018 |
Net
Income |
|
$ |
141,583 |
$ |
139,062 |
Charges related to upgrade and replacement of ERP platform, net
of tax |
|
|
– |
|
15,886 |
Adjusted Net Income (non-GAAP) |
|
$ |
141,583 |
$ |
154,948 |
|
|
|
|
Per Diluted
Share |
|
|
|
Net Income |
|
$ |
3.77 |
$ |
3.45 |
Charges related to upgrade and replacement of ERP platform, net
of tax |
|
|
– |
|
0.40 |
Adjusted Net Income (non-GAAP) |
|
$ |
3.77 |
$ |
3.85 |
Debt Analysis (in
thousands) |
|
December 31,2019 |
December 31,2018 |
Floor plan notes payable |
|
$ |
996,336 |
|
$ |
1,023,019 |
|
Current maturities of
long-term debt |
|
|
189,265 |
|
|
161,955 |
|
Current maturities of finance
lease obligations |
|
|
22,892 |
|
|
19,631 |
|
Long-term debt, net of current
maturities |
|
|
438,413 |
|
|
439,218 |
|
Finance lease obligations, net
of current maturities |
|
|
69,478 |
|
|
49,483 |
|
Total Debt
(GAAP) |
|
|
1,716,384 |
|
|
1,693,306 |
|
Adjustments: |
|
|
|
Debt related to lease & rental fleet |
|
|
(661,191 |
) |
|
(589,933 |
) |
Floor plan notes payable |
|
|
(996,336 |
) |
|
(1,023,019 |
) |
Adjusted Total Debt
(Non-GAAP) |
|
|
58,857 |
|
|
80,354 |
|
Adjustment: |
|
|
|
Cash and cash equivalents |
|
|
(181,620 |
) |
|
(131,726 |
) |
Adjusted Net (Cash)
Debt (Non-GAAP) |
|
$ |
(122,763 |
) |
$ |
(51,372 |
) |
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) |
|
December 31,2019 |
December 31,2018 |
Net Income (GAAP) |
|
$ |
141,583 |
|
$ |
139,062 |
|
Provision for income
taxes |
|
|
47,940 |
|
|
44,107 |
|
Interest expense |
|
|
28,807 |
|
|
19,682 |
|
Depreciation and
amortization |
|
|
55,372 |
|
|
70,489 |
|
Loss (gain) on sale of
assets |
|
|
102 |
|
|
(297 |
) |
EBITDA
(Non-GAAP) |
|
|
273,804 |
|
|
273,043 |
|
Adjustment: |
|
|
|
Interest expense associated with FPNP |
|
|
(27,811 |
) |
|
(17,839 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
245,993 |
|
$ |
255,204 |
|
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) |
|
December 31,2019 |
December 31,2018 |
Net cash provided by operations (GAAP) |
|
$ |
421,272 |
|
$ |
215,364 |
|
Acquisition of property and
equipment |
|
|
(293,493 |
) |
|
(238,260 |
) |
Free cash flow
(Non-GAAP) |
|
|
127,779 |
|
|
(22,896 |
) |
Adjustments: |
|
|
|
(Payments) draws on floor plan financing, net |
|
|
(104 |
) |
|
167,812 |
|
Proceeds from L&RFD |
|
|
210,042 |
|
|
156,751 |
|
Principal payments on L&RFD |
|
|
(169,921 |
) |
|
(163,734 |
) |
Non-maintenance capital expenditures |
|
|
43,123 |
|
|
39,268 |
|
Adjusted Free Cash
Flow (Non-GAAP) |
|
$ |
210,919 |
|
$ |
177,201 |
|
“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) |
|
December 31,2019 |
December 31,2018 |
Total Shareholders' equity (GAAP) |
|
$ |
1,159,493 |
|
$ |
1,066,928 |
|
Adjusted net (cash) debt
(Non-GAAP) |
|
|
(122,763 |
) |
|
(51,372 |
) |
Adjusted Invested
Capital (Non-GAAP) |
|
$ |
1,036,730 |
|
$ |
1,015,556 |
|
“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
Antonio Steven L. Keller, 830-302-5226
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