Rush Enterprises, Inc. (NASDAQ:RUSHA)
(NASDAQ:
RUSHB), which operates the largest
network of commercial vehicle dealerships in North America, today
announced that for the quarter ended June 30, 2018, the Company
achieved revenues of $1.349 billion and net income of $29.4
million, or $0.72 per diluted share, compared with revenues of
$1.204 billion and net income of $22.0 million, or $0.54 per
diluted share, in the quarter ended June 30, 2017. During the
second quarter of 2018, the Company incurred an additional pre-tax
charge to amortization expense and a charge to selling, general and
administrative expense totaling of $10.7 million, or $0.20 per
diluted share, associated with the upgrade and replacement of
certain components of the Company’s Enterprise Resource Planning
software platform (ERP Platform).
“We are extremely proud of our exceptional performance this
quarter and our teams who worked hard to achieve it,” said W.M.
“Rusty” Rush, Chairman, Chief Executive Officer and President of
Rush Enterprises, Inc. Rush added, “Additionally, I am
pleased to announce the approval of our first ever cash dividend
this quarter, which reflects our confidence in the Company’s future
performance. Our strategic initiatives continue to have a
positive impact on our financial results, which were further
strengthened by widespread activity across the commercial vehicle
market and strong general economic conditions.” “As always, I’d
like to thank our employees for their focus on our strategic growth
initiatives, which continues to have a direct and positive impact
on our financial results,” said Rush. “Their endless
hard work and dedication to our customers has made and kept us
successful for more than 53 years and I believe it will keep us
successful for many years to come.”
Capital Allocation
In recognition of the Company’s strong cash flow generation and
their confidence in the Company’s financial outlook, the Company’s
Board of Directors authorized management of the Company to initiate
a quarterly cash dividend as part of the Company’s capital
allocation strategy, which also uses free cash flow from operations
to fund the Company’s strategic growth initiatives and its share
repurchase program. Accordingly, on July 24, 2018, the
Company’s Board of Directors declared an initial quarterly cash
dividend of $0.12 per share of Class A and Class B Common Stock, to
be paid on August 29, 2018, to all shareholders of record as of
August 8, 2018. The Company expects to increase the dividend
on an annual basis over time, however, future declarations of
dividends are subject to approval by the Company’s Board of
Directors and may be adjusted as business needs or market
conditions change.
“Initiating a quarterly cash dividend reflects the confidence of
both the Company’s Board of Directors and our executive management
team in our strategic growth plan, strong balance sheet and our
ability to generate positive free cash flow in all truck market
cycles. We believe that issuing a quarterly dividend
and continuing our share repurchase program, while continuing to
invest in our strategic growth initiatives, strikes an optimal
balance between our commitment to long-term growth and to returning
capital to shareholders,” said Rush.
Operations
Aftermarket SolutionsAftermarket services
accounted for approximately 64.8% of the Company's total gross
profits, with parts, service and body shop revenues reaching $422.9
million, up 15.4%, as compared to the second quarter of 2017.
The Company achieved a quarterly absorption ratio of 122.8% in the
second quarter of 2018.
“Our strong aftermarket performance was driven by our strategic
initiatives, particularly through additions to our aftermarket
sales organization, focus on our all-makes and Rig Tough parts
growth, and investment in technology and productivity improvements
for our Parts operations. Our results were further supported by
robust activity across the United States.
“We also added 300 technicians to our organization over the past
year, significantly expanding our service capabilities throughout
the country. Mobile technicians make up a significant portion
of this growth, illustrating our abilities to serve customers no
matter where and when they need us,” he said.
“Throughout our Navistar dealerships, our aftermarket revenues
have been hindered for the past two years because there are fewer
International trucks in operation,” Rush said. “While we expect
those headwinds to continue, we are encouraged by the increased
activity we saw in the second quarter,” he added.
“With our aftermarket sales team building momentum and continued
growth from our strategic initiatives, we believe our aftermarket
results will remain solid through the second half of 2018,” Rush
said.
Truck SalesU.S. Class 8 retail sales were
60,812 units in the second quarter, up 24.7% over the same period
last year, according to ACT Research. The Company sold 3,218
Class 8 trucks in the second quarter and accounted for 5.3% of the
U.S. Class 8 truck market. ACT Research forecasts U.S. retail
sales for Class 8 vehicles to be 251,700 units in 2018, a 27.6%
increase compared to 2017.
“Our new Class 8 truck deliveries were down slightly in the
second quarter, primarily due to truck and component manufacturer
production constraints. However, our new Class 8 truck
deliveries are up 7.8% year to date as compared to the same time
frame last year,” said Rush. “The healthy economy created
significant activity in virtually all market segments and
especially strong demand from over-the-road, construction and
refuse customers,” he said.
“Our used truck unit sales were up 18% over the second quarter
of 2017, and we continue to believe our inventory is
well-positioned to support the market. The used truck market is
strong, due in part to extended lead times for new Class 8 truck
deliveries. We believe this will help stabilize used truck
values and help lessen the impact of the large number of used
trucks entering the market through the rest of the year,” Rush
said.
“We expect our Class 8 vehicle sales will accelerate through the
second half of 2018, although manufacturer production capacity
limitations could delay some deliveries into 2019,” he added.
The Company sold 3,474 Class 4-7 medium-duty commercial vehicles
in the second quarter, an increase of 13% compared to the second
quarter of 2017, and accounted for 5.3% of the U.S. Class 4-7
commercial vehicle market. ACT Research forecasts U.S. retail
sales for Class 4-7 vehicles to reach 251,250 units in 2018, a 3.8%
increase over 2017.
“Our medium-duty truck sales significantly outpaced the market
in the second quarter, due to the strong activity from the
construction sector and our leasing and rental fleet customers,”
said Rush. “Due to our continued ability to support customers
with a nationwide inventory of ready-to-roll trucks, we believe our
medium-duty sales will remain strong through the rest of the year,”
said Rush. “Light-duty truck sales were also strong this quarter,”
Rush noted.
Financial Highlights
In the second quarter of 2018, the Company’s gross revenues
totaled $1.349 billion, a 12.1% increase from gross revenues of
$1.204 billion reported for the quarter ended June 30, 2017.
Net income for the quarter was $29.4 million, or $0.72 per diluted
share, compared to net income of $22.0 million, or $0.54 per
diluted share, in the quarter ended June 30, 2017. During the
second quarter of 2018, the Company incurred an additional pre-tax
charge to amortization expense and selling, general and
administrative expense of $10.7 million, or $0.20 per diluted
share, associated with the upgrade and replacement of certain
components of the Company’s Enterprise Resource Planning software
platform (ERP Platform).
Parts, service and body shop revenues were $422.9 million in the
second quarter of 2018, compared to $366.6 million in the second
quarter of 2017. The Company delivered 3,218 new heavy-duty
trucks, 3,474 new medium-duty commercial vehicles, 679 new
light-duty commercial vehicles and 2,055 used commercial vehicles
during the second quarter of 2018, compared to 3,352 new heavy-duty
trucks, 3,073 new medium-duty commercial vehicles, 473 new
light-duty commercial vehicles and 1,743 used commercial vehicles
during the second quarter of 2017.
During the second quarter of 2018, the Company repurchased $8.0
million of its common stock and ended the quarter with $148.3
million in cash and cash equivalents.
“We are confident in our long-term profitability, which is
reflected in our decision to announce a cash dividend. We remain
well-positioned to invest in our strategic initiatives while
returning capital to our shareholders,” Rush added.
Conference Call
Information
Rush Enterprises will host its quarterly
conference call to discuss earnings for the second quarter on
Wednesday July 25, 2018, at 10 a.m. Eastern/9 a.m.
Central. The call can be heard live by dialing
877-638-4557 (Toll Free) or 914-495-8522 (Conference ID
1072067) 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 October 10, 2018. Listen to the audio replay
until August 1, 2018, by dialing 855-859-2056 (Toll Free)
or 404-537-3406 and entering the Conference ID
1072067.
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 21 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 body shop 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 and the impact of strategic initiatives 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 under the
newly initiated quarterly cash dividend program remains at the sole
discretion of the Company’s Board of Directors and the issuance of
future dividends 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
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In Thousands, Except Shares and Per Share
Amounts) |
|
June 30, |
|
December 31, |
|
|
2018 |
|
|
|
2017 |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
148,316 |
|
|
$ |
124,541 |
|
Accounts
receivable, net |
|
201,197 |
|
|
|
183,875 |
|
Note
receivable affiliate |
|
17,368 |
|
|
|
11,914 |
|
Inventories, net |
|
1,126,613 |
|
|
|
1,033,294 |
|
Prepaid
expenses and other |
|
12,494 |
|
|
|
11,969 |
|
Assets
held for sale |
|
6,622 |
|
|
|
9,505 |
|
Total
current assets |
|
1,512,610 |
|
|
|
1,375,098 |
|
Investments |
|
6,025 |
|
|
|
6,375 |
|
Property and equipment,
net |
|
1,166,814 |
|
|
|
1,159,595 |
|
Goodwill, net |
|
291,391 |
|
|
|
291,391 |
|
Other assets, net |
|
39,623 |
|
|
|
57,680 |
|
Total
assets |
$ |
3,016,463 |
|
|
$ |
2,890,139 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Floor
plan notes payable |
$ |
867,992 |
|
|
$ |
778,561 |
|
Current
maturities of long-term debt |
|
155,743 |
|
|
|
145,139 |
|
Current
maturities of capital lease obligations |
|
17,137 |
|
|
|
17,119 |
|
Trade
accounts payable |
|
150,904 |
|
|
|
107,906 |
|
Customer
deposits |
|
32,036 |
|
|
|
27,350 |
|
Accrued
expenses |
|
88,677 |
|
|
|
96,132 |
|
Total
current liabilities |
|
1,312,489 |
|
|
|
1,172,207 |
|
Long-term debt, net of
current maturities |
|
434,743 |
|
|
|
466,389 |
|
Capital lease
obligations, net of current maturities |
|
57,548 |
|
|
|
66,022 |
|
Other long-term
liabilities |
|
11,544 |
|
|
|
9,837 |
|
Deferred income taxes,
net |
|
140,061 |
|
|
|
135,311 |
|
Shareholders’
equity: |
|
|
|
Preferred
stock, par value $.01 per share; 1,000,000 shares authorized; 0
shares outstanding in 2018 and 2017 |
|
– |
|
|
|
– |
|
Common
stock, par value $.01 per share; 60,000,000 Class A shares and
20,000,000 Class B shares authorized; 30,647,051 Class A shares and
8,430,123 Class B shares outstanding in 2018; and 31,345,116 Class
A shares and 8,469,427 Class B shares outstanding in 2017 |
|
457 |
|
|
|
454 |
|
Additional paid-in capital |
|
363,440 |
|
|
|
348,044 |
|
Treasury
stock, at cost: 1,768,354 class A shares and 4,890,941 class
B shares in 2018 and 934,171 class A shares and
4,625,181 class B shares in 2017 |
|
(166,804 |
) |
|
|
(120,682 |
) |
Retained
earnings |
|
862,985 |
|
|
|
812,557 |
|
Total
shareholders’ equity |
|
1,060,078 |
|
|
|
1,040,373 |
|
Total liabilities and shareholders’ equity |
$ |
3,016,463 |
|
|
$ |
2,890,139 |
|
|
|
|
|
|
|
|
|
RUSH ENTERPRISES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In Thousands, Except Per Share
Amounts)(Unaudited) |
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
New and
used commercial vehicle sales |
$ |
857,025 |
|
$ |
775,988 |
|
$ |
1,630,125 |
|
$ |
1,411,941 |
|
Parts and
service sales |
|
422,940 |
|
|
366,599 |
|
|
823,235 |
|
|
716,705 |
|
Lease and
rental |
|
58,993 |
|
|
53,048 |
|
|
116,517 |
|
|
104,292 |
|
Finance
and insurance |
|
5,492 |
|
|
4,392 |
|
|
10,233 |
|
|
8,321 |
|
Other |
|
4,381 |
|
|
3,496 |
|
|
9,502 |
|
|
7,061 |
|
Total
revenue |
|
1,348,831 |
|
|
1,203,523 |
|
|
2,589,612 |
|
|
2,248,320 |
|
Cost of
products sold: |
|
|
|
|
|
|
|
New and
used commercial vehicle sales |
|
791,608 |
|
|
718,253 |
|
|
1,502,522 |
|
|
1,306,373 |
|
Parts and
service sales |
|
265,183 |
|
|
231,992 |
|
|
519,627 |
|
|
456,458 |
|
Lease and
rental |
|
48,663 |
|
|
44,206 |
|
|
97,091 |
|
|
88,510 |
|
Total
cost of products sold |
|
1,105,454 |
|
|
994,451 |
|
|
2,119,240 |
|
|
1,851,341 |
|
Gross
profit |
|
243,377 |
|
|
209,072 |
|
|
470,372 |
|
|
396,979 |
|
Selling, general and
administrative expense |
|
178,654 |
|
|
159,353 |
|
|
350,324 |
|
|
309,756 |
|
Depreciation and
amortization expense |
|
21,693 |
|
|
12,444 |
|
|
44,601 |
|
|
24,936 |
|
Gain (loss) on sale of
assets |
|
396 |
|
|
132 |
|
|
368 |
|
|
(31 |
) |
Operating
income |
|
43,426 |
|
|
37,407 |
|
|
75,815 |
|
|
62,256 |
|
Interest expense,
net |
|
4,494 |
|
|
2,824 |
|
|
8,800 |
|
|
5,615 |
|
Income before
taxes |
|
38,932 |
|
|
34,583 |
|
|
67,015 |
|
|
56,641 |
|
Provision for income
taxes |
|
9,543 |
|
|
12,584 |
|
|
16,587 |
|
|
20,163 |
|
Net
income |
$ |
29,389 |
|
$ |
21,999 |
|
$ |
50,428 |
|
$ |
36,478 |
|
|
|
|
|
|
|
|
|
Earnings per
common share: |
|
|
|
|
|
|
|
Basic |
$ |
.75 |
|
$ |
.55 |
|
$ |
1.27 |
|
$ |
.92 |
|
Diluted |
$ |
.72 |
|
$ |
.54 |
|
$ |
1.23 |
|
$ |
.90 |
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
39,399 |
|
|
39,642 |
|
|
39,567 |
|
|
39,493 |
|
Diluted |
|
40,690 |
|
|
40,839 |
|
|
40,967 |
|
|
40,737 |
|
|
|
|
|
|
|
|
|
This press release and the attached financial
tables contain certain non-GAAP financial measures as defined under
SEC rules, such as 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) |
|
June 30, 2018 |
|
June 30, 2017 |
New heavy-duty
vehicles |
|
$ |
474,368 |
|
|
$ |
468,317 |
|
New medium-duty
vehicles (including bus sales revenue) |
|
|
257,012 |
|
|
|
213,192 |
|
New light-duty
vehicles |
|
|
27,397 |
|
|
|
18,216 |
|
Used vehicles |
|
|
92,753 |
|
|
|
72,194 |
|
Other vehicles |
|
|
5,495 |
|
|
|
4,069 |
|
|
|
|
|
|
Absorption
Ratio |
|
|
122.8% |
|
|
|
121.8% |
|
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 body shop 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.
Debt Analysis (in
thousands) |
|
June 30, 2018 |
June 30, 2017 |
Floor plan notes
payable |
|
$ |
867,992 |
|
$ |
692,125 |
|
Current maturities of
long-term debt |
|
|
155,743 |
|
|
137,320 |
|
Current maturities of
capital lease obligations |
|
|
17,137 |
|
|
15,443 |
|
Long-term debt, net of
current maturities |
|
|
434,743 |
|
|
443,465 |
|
Capital lease
obligations, net of current maturities |
|
|
57,548 |
|
|
66,313 |
|
Total Debt
(GAAP) |
|
|
1,533,163 |
|
|
1,354,666 |
|
Adjustments: |
|
|
|
Debt
related to lease & rental fleet |
|
|
(579,434) |
|
|
(560,380) |
|
Floor
plan notes payable |
|
|
(867,992) |
|
|
(692,125) |
|
Adjusted Total
Debt (Non-GAAP) |
|
|
85,737 |
|
|
102,161 |
|
Adjustment: |
|
|
|
Cash and
cash equivalents |
|
|
(148,316) |
|
|
(123,807) |
|
Adjusted Net
Debt (Cash) (Non-GAAP) |
|
$ |
(62,579) |
|
$ |
(21,646) |
|
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) |
|
June 30, 2018 |
June 30, 2017 |
Net Income
(GAAP) |
|
$ |
186,079 |
|
$ |
63,848 |
|
(Benefit) provision for
income taxes |
|
|
(39,306) |
|
|
37,491 |
|
Interest expense |
|
|
15,495 |
|
|
11,892 |
|
Depreciation and
amortization |
|
|
69,734 |
|
|
50,729 |
|
(Gain) loss on sale of
assets |
|
|
(294) |
|
|
(1,719) |
|
EBITDA
(Non-GAAP) |
|
|
231,708 |
|
|
162,241 |
|
Adjustments: |
|
|
|
Interest
expense associated with FPNP |
|
|
(13,513) |
|
|
(9,747) |
|
Adjusted EBITDA
(Non-GAAP) |
|
$ |
218,195 |
|
$ |
152,494 |
|
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) |
|
June 30, 2018 |
June 30, 2017 |
Net cash
provided by operations (GAAP) |
|
$ |
211,998 |
|
$ |
428,976 |
|
Acquisition of property
and equipment |
|
|
(246,563) |
|
|
(161,269) |
|
Free cash flow
(Non-GAAP) |
|
|
(34,565) |
|
|
267,707 |
|
Adjustments: |
|
|
|
Draws
(payments) on floor plan financing, net |
|
|
106,203 |
|
|
(151,966) |
|
Proceeds
from L&RFD |
|
|
169,723 |
|
|
103,806 |
|
Principal
payments on L&RFD |
|
|
(155,884) |
|
|
(159,665) |
|
Non-maintenance capital expenditures |
|
|
33,613 |
|
|
34,142 |
|
Adjusted Free
Cash Flow (Non-GAAP) |
|
$ |
119,090 |
|
$ |
94,024 |
|
“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) |
|
June 30, 2018 |
June 30, 2017 |
Total
Shareholders' equity (GAAP) |
|
$ |
1,060,078 |
|
$ |
894,880 |
|
Adjusted net debt
(cash) (Non-GAAP) |
|
|
(62,579) |
|
|
(21,646) |
|
Adjusted
Invested Capital (Non-GAAP) |
|
$ |
997,499 |
|
$ |
873,234 |
|
“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
Rush Enterprises (NASDAQ:RUSHA)
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