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Rush Enterprises, Inc. Reports Second Quarter 2022 Results, Announces $0.21 Per Share Dividend

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Rush Enterprises, Inc.
Rush Enterprises, Inc.
  • Revenues of $1.8 billion, net income of $110.2 million

  • Earnings per diluted share of $1.75, excluding one-time gain related to its acquisition of additional interest in Rush Truck Centres of Canada Limited

  • Absorption ratio 136.4%

  • Record quarterly revenues and EPS

  • Board declares cash dividend of $0.21 per share of Class A and Class B common stock, a 10.5% increase over prior quarter

SAN ANTONIO, July 26, 2022 (GLOBE NEWSWIRE) -- 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 June 30, 2022, the Company achieved revenues of $1.791 billion and net income of $110.2 million, or $1.92 per diluted share, compared with revenues of $1.316 billion and net income of $58.0 million, or $1.00 per diluted share, in the quarter ended June 30, 2021. On May 2, 2022, the Company closed on its acquisition of an additional 30% interest in Rush Truck Centres of Canada Limited, which resulted in a $9.8 million gain. Excluding the one-time gain related to the acquisition, the Company’s adjusted net income for the quarter ended June 30, 2022 was $100.4 million, or $1.75 per diluted share. Additionally, the Company’s Board of Directors declared a cash dividend of $0.21 per share of Class A and Class B Common Stock, to be paid on September 12, 2022, to all shareholders of record as of August 12, 2022.

“We are very proud of our strong financial performance in the second quarter, which resulted in record second quarter revenues and net profits," said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and President of Rush Enterprises, Inc. “Our second quarter results were largely the result of strong freight demand and generally healthy consumer spending, which continues to drive strong demand for new commercial vehicles and aftermarket services. New truck production capacity continues to be limited due to ongoing component part supply chain issues, but our Class 8 new truck sales substantially outperformed the market in the second quarter. In addition, we achieved strong aftermarket revenue growth due to strong demand for parts and service,” stated Rush. "Further, we continue to see growth and a strong financial impact in connection with our acquisition of 19 dealership locations from The Summit Truck Group in the fourth quarter of 2021. These additional locations, in addition to the fifteen locations in Canada whose operating results are now consolidated into the Company’s financials as a result of the acquisition of an additional 30% interest in Rush Truck Centres of Canada Limited and the $9.8 million gain associated therewith, positively impacted our financial performance in the second quarter,” said Rush.

"Our Board of Directors approved a $0.02 increase in our quarterly cash dividend, our fifth increase since we announced our intent to begin paying a quarterly cash dividend in July 2018 as part of our capital allocation strategy. This dividend increase represents a 10.5% increase over the first quarter of 2022 dividend and is further evidence of our intent to increase the dividend on an annual basis, although 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. In addition, the dividend increase also reflects our continuing ability to return value to our shareholders while also investing in our Company’s future,” explained Rush.

“Though economic growth may have slowed slightly from previous quarters, our industry remains healthy. However, we are cautiously monitoring inflation and rising interest rates, which may negatively impact consumer spending moving forward. We also note that elevated fuel prices are negatively impacting spot market rates. Despite these negative headwinds, the supply constraints our industry has experienced have led to pent up demand for new commercial vehicles and aftermarket parts and services, which we believe will continue through the rest of 2022,” said Rush.

“We believe our financial results will be strong for the remainder of 2022 as we continue to manage expenses company-wide, while also continuing to focus on our long-term strategic goals,” Rush stated. “As always, I would like to thank our employees for their incredible dedication and hard work, which makes it possible for our Company to achieve its financial goals, while also providing best-in-class support to our customers,” Rush said.

Operations

Aftermarket Products and Services

Aftermarket products and services accounted for approximately 62% of the Company’s total gross profit in the second quarter of 2022, with parts, service and collision center revenues reaching $598.3 million. The Company achieved a quarterly absorption ratio of 136.4% in the second quarter of 2022, compared to 129.1% in the second quarter of 2021.

“In the second quarter, we continued to experience strong demand for aftermarket parts and service in most market segments we support. Our strategic focus on growing our dedicated aftermarket sales team, including in our newly acquired locations, has enabled us to leverage our extended reach with large national fleets, resulting in notable growth in aftermarket sales,” said Rush. “Additionally, we remained focused on our strategic initiatives, including expanding and improving the proficiency of our technician workforce and growing revenues associated with our Xpress services and contract maintenance offerings, which contributed to our strong aftermarket performance in the second quarter,” he added.

“Looking ahead, while parts supply constraints will likely continue to impact the industry into 2023, we believe the scale of our nationwide parts inventory and our longstanding partnerships with parts suppliers will better enable us to navigate parts shortages across the country. Further, we continue to add service technicians and aftermarket sales professionals to our organization, as well as implement our strategic initiatives at our newly acquired locations, both of which enhance our ability to serve customers and grow aftermarket revenues. We believe parts and service demand will remain strong and our aftermarket results will significantly outperform the industry this year,” said Rush.

Commercial Vehicle Sales

New U.S. Class 8 retail truck sales totaled 63,993 units in the second quarter of 2022, up 8.8% over the second quarter of last year, according to ACT Research. The Company sold 4,168 new Class 8 trucks in the second quarter, an increase of 41% compared to the second quarter of 2021, which accounted for 6.4% of the new U.S. Class 8 truck market and 1.7% of the Canada Class 8 truck market.

“We experienced widespread demand from most market segments we support in the second quarter, particularly over-the-road, construction, and vocational customers. Though component parts supply chain issues continue to impact new truck production, the Class 8 manufacturers we represent were able to increase production slightly in the second quarter and we are pleased with our second quarter Class 8 truck sales,” Rush added. “As we look ahead, our backlog remains strong, and though production constraints remain, we are optimistic that our manufacturers will continue to increase production capacity through the year. Truck allocation may limit our growth potential this year, but our sales teams are focused on attracting new business and expanding to more customers across our network, and we believe our new Class 8 truck sales will continue to outpace the industry this year,” he said.

New U.S. Class 4 through 7 retail commercial vehicle sales totaled 54,115 units in the second quarter of 2022, down 14.7% over the second quarter last year, according to ACT Research.  The Company sold 2,815 new Class 4-7 medium-duty commercial vehicles in the second quarter of 2022, which was flat compared to the second quarter of 2021, representing 5.1% of the U.S. Class 4-7 commercial vehicle market and 1.3% of the Canada Class 5-7 commercial vehicle market.

“In the second quarter, the medium-duty truck supply constraints continued to significantly limit new truck production, which negatively impacted our ability to meet the needs of the market. However, we continue to experience ongoing healthy demand from most market segments, especially vocational and food and beverage customers,” said Rush. “Looking to the future, we expect medium-duty commercial vehicle production will remain constrained for some time, though we do anticipate that some manufacturers may increase production later this year. We believe our medium-duty commercial vehicle sales will align with the industry in 2022,” he said.

“It should be noted that we are an industry leader with respect to alternative energy commercial vehicles, including both compressed natural gas (CNG) vehicles and electric vehicles (EV) and we are seeing healthy interest from both Class 8 and medium-duty customers with respect to such vehicles, which we expect to continue moving forward,” Rush added.

The Company sold 1,629 used commercial trucks in the second quarter of 2022, a decrease of 22.2% over the second quarter of 2021. “Weak spot rates and high diesel prices in the second quarter put an increased burden on owner-operators and small fleets, the largest segment of used truck buyers, softening the overall demand for Class 8 on-highway used trucks.  However, demand for used trucks from medium-duty, flatbed, vocational and energy customers remained strong,” Rush said. “Used truck values have decreased significantly since they peaked earlier this year, and we expect those values to continue to soften through 2022. We are proactively managing our used truck inventory values and stocking levels and believe we are well positioned to support the needs of the market throughout this year,” said Rush.

Leasing and Rental Sales

Rush Truck Leasing operates 57 PacLease and Idealease franchises across the United States and Canada with more than 10,100 trucks in its lease and rental fleet and more than 1,600 trucks under contract maintenance agreements. Lease and rental revenue increased 31.2% in the second quarter of 2022 compared to the second quarter of 2021. “This increase was primarily related to the acquisitions of the Summit Idealease locations in the fourth quarter of 2021 and the consolidation of the RTC Canada Idealease locations into our financial results in the second quarter of 2022. Additionally, strong rental demand related to a healthy freight environment and supply constraints have positively impacted our lease and rental revenue. These factors, in addition to strategic operational improvements made by management, have led to our lease and rental operations growing to become a significant contributor to our Company’s overall profitability,” said Rush.

Financial Highlights

In the second quarter of 2022, the Company’s gross revenues totaled $1.791 billion, a 36.1% increase from gross revenues of $1.316 billion reported in the second quarter of 2021. Net income for the second quarter of 2022 was $110.2 million, or $1.92 per diluted share, compared to net income of $58.0 million, or $1.00 per diluted share, in the second quarter of 2021. On May 2, 2022, the Company closed on its acquisition of an additional 30% interest in Rush Truck Centres of Canada Limited which resulted in a $9.8 million gain. Excluding the one-time gain related to the acquisition, the Company’s adjusted net income for the quarter ended June 30, 2022 was $100.4 million, or $1.75 per diluted share.

Aftermarket products and services revenues were $598.3 million in the second quarter of 2022, compared to $445.5 million in the second quarter of 2021. The Company delivered 4,168 new heavy-duty trucks, 2,815 new medium-duty commercial vehicles, 408 new light-duty commercial vehicles and 1,629 used commercial vehicles during the second quarter of 2022, compared to 2,954 new heavy-duty trucks, 2,825 new medium-duty commercial vehicles, 472 new light-duty commercial vehicles and 2,094 used commercial vehicles during the second quarter of 2021.

During the second quarter of 2022, the Company repurchased $38.4 million of its common stock pursuant to its stock repurchase plan. In addition, the Company paid a cash dividend of $10.5 million during the second quarter of 2022.

“We remain committed to both disciplined expense management and our long-term strategic initiatives, which we believe contributed significantly to our record revenues and profitability in the second quarter,” said Rush. “Additionally, we are proud to continue to return value to shareholders while continuing to invest in our Company’s future and maintaining a strong balance sheet and cash position,” he added.

Conference Call Information

Rush Enterprises will host its quarterly conference call to discuss earnings for the second quarter on Wednesday, July 27, 2022, at 10 a.m. Eastern/9 a.m. Central. Participants can register for the call using the link https://register.vevent.com/register/BIc37471feec604e528162a09fe6955135 and to listen to the call visit our website 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, 2022. Listen to the audio replay via the webcast replay at http://investor.rushenterprises.com/events.cfm.

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 150 locations in 23 states and Ontario, Canada, including 125 franchised dealership locations. These vehicle centers, strategically located in high traffic areas on or near major highways throughout the United States and Ontario, Canada, represent truck and bus manufacturers, including Peterbilt, International, Hino, Isuzu, Ford, 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 CNG fuel systems (through its investment in Cummins Clean Fuel Technologies, Inc.), telematics products and other vehicle technologies, as well as vehicle up-fitting, chrome accessories and tires. For more information, please visit us at www.rushtruckcenters.com, www.rushenterprises.com and www.rushtruckcentersracing.com, on Twitter @rushtruckcenter and Facebook.com/rushtruckcenters.

Certain statements contained in this release, including those concerning current and projected market conditions, sales forecasts, market share forecasts, the impact of the acquisition of certain dealership assets from The Summit Truck Group and anticipated demand for the Company’s services, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements only speak as of the date of this release and the Company assumes no obligation to update the information included in this release. 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, inflation and the interest rate environment, governmental regulation and supervision, product introductions and acceptance, changes in industry practices, the duration and severity of the COVID-19 pandemic and governmental mandates in connection therewith, one-time events and other factors described herein and in filings made by the Company with the Securities and Exchange Commission, including in our annual report on Form 10-K for the fiscal year ended December 31, 2021. 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. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual business and financial results and could cause actual results to differ materially from those in the forward-looking statements. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.

-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,

 

 

 

2022

 

2021

 

 

 

(unaudited)

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

216,694

 

$

148,146

 

Accounts receivable, net

 

 

232,129

 

 

140,186

 

Inventories, net

 

 

1,273,969

 

 

1,020,136

 

Prepaid expenses and other

 

 

19,959

 

 

15,986

 

Total current assets

 

 

1,742,751

 

 

1,324,454

 

Property and equipment, net

 

 

1,347,748

 

 

1,278,207

 

Operating lease right-of-use assets, net

 

 

106,301

 

 

69,008

 

Goodwill, net

 

 

418,270

 

 

370,331

 

Other assets, net

 

 

54,299

 

 

77,977

 

Total assets

 

$

3,669,369

 

$

3,119,977

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Floor plan notes payable

 

$

851,715

 

$

630,731

 

Current maturities of finance lease obligations

 

 

26,388

 

 

26,695

 

Current maturities of operating lease obligations

 

 

15,406

 

 

12,096

 

Trade accounts payable

 

 

175,563

 

 

122,291

 

Customer deposits

 

 

73,768

 

 

80,561

 

Accrued expenses

 

 

156,713

 

 

131,130

 

Total current liabilities

 

 

1,299,553

 

 

1,003,504

 

Long-term debt, net of current maturities

 

 

401,760

 

 

334,926

 

Finance lease obligations, net of current maturities

 

 

82,204

 

 

89,835

 

Operating lease obligations, net of current maturities

 

 

92,076

 

 

57,976

 

Other long-term liabilities

 

 

19,876

 

 

26,514

 

Deferred income taxes, net

 

 

144,589

 

 

140,473

 

Shareholders’ equity:

 

 

 

 

 

Preferred stock, par value $.01 per share; 1,000,000 shares authorized; 0 shares outstanding in 2022 and 2021

 

 

 

 

 

Common stock, par value $.01 per share; 60,000,000 Class A shares and 20,000,000 Class B shares authorized; 42,808,333 Class A shares and 12,266,309 Class B shares outstanding in 2022; and 43,107,867 Class A shares and 12,398,606 Class B shares outstanding in 2021

 

 

570

 

 

563

 

Additional paid-in capital

 

 

488,170

 

 

470,750

 

Treasury stock, at cost: 979,978 Class A shares and 927,330 Class B shares in 2022; and 339,786 Class A shares and 492,052 Class B shares in 2021

 

 

(90,686

)

 

(36,933

)

Retained earnings

 

 

1,212,919

 

 

1,031,582

 

Accumulated other comprehensive income

 

 

64

 

 

787

 

Total Rush Enterprises, Inc. shareholders’ equity

 

 

1,611,037

 

 

1,466,749

 

Noncontrolling interest

 

 

18,274

 

 

 

Total shareholders’ equity

 

 

1,629,311

 

 

1,466,749

 

Total liabilities and shareholders’ equity

 

$

3,669,369

 

$

3,119,977

 

 

 

RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2022

 

2021

 

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

New and used commercial vehicle sales

 

$

1,098,255

$

797,269

 

$

2,033,974

$

1,544,988

Parts and service sales

 

 

598,298

 

445,526

 

 

1,141,561

 

861,263

Lease and rental

 

 

80,538

 

61,396

 

 

151,873

 

119,623

Finance and insurance

 

 

7,755

 

7,407

 

 

15,280

 

13,872

Other

 

 

6,395

 

4,417

 

 

11,755

 

8,075

Total revenue

 

 

1,791,241

 

1,316,015

 

 

3,354,443

 

2,547,821

Cost of products sold

 

 

 

 

 

 

 

 

 

New and used commercial vehicle sales

 

 

994,406

 

719,768

 

 

1,829,399

 

1,396,860

Parts and service sales

 

 

367,284

 

277,078

 

 

701,492

 

538,920

Lease and rental

 

 

55,335

 

48,387

 

 

103,896

 

96,445

Total cost of products sold

 

 

1,417,025

 

1,045,233

 

 

2,634,787

 

2,032,225

Gross profit

 

 

374,216

 

270,782

 

 

719,656

 

515,596

Selling, general and administrative expense

 

 

225,327

 

184,734

 

 

449,774

 

359,689

Depreciation and amortization expense

 

 

13,910

 

13,421

 

 

27,584

 

27,147

Gain on sale of assets

 

 

44

 

164

 

 

224

 

256

Operating income

 

 

135,023

 

72,791

 

 

242,522

 

129,016

Other income

 

 

8,333

 

1,746

 

 

22,397

 

2,665

Interest expense (income), net

 

 

3,168

 

(212

)

 

4,387

 

295

Income before taxes

 

 

140,188

 

74,749

 

 

260,532

 

131,386

Provision for income taxes

 

 

29,515

 

16,705

 

 

57,406

 

28,009

Net income

 

 

110,673

 

58,044

 

 

203,126

 

103,377

Less: Net income attributable to noncontrolling interests

 

 

446

 

 

 

446

 

Net income attributable to Rush Enterprises, Inc.

 

$

110,227

$

58,044

 

$

202,680

$

103,377

 

 

 

 

 

 

 

 

 

 

Net income attributable to Rush Enterprises, Inc. per share of common stock:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.98

$

1.04

 

$

3.63

$

1.85

Diluted

 

$

1.92

$

1.00

 

$

3.52

$

1.79

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

55,640

 

56,009

 

 

55,788

 

55,819

Diluted

 

 

57,310

 

57,956

 

 

57,610

 

57,846

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.19

$

0.18

 

$

0.38

$

0.36

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

June 30, 2022

 

June 30, 2021

New heavy-duty vehicles

 

$

691,242

 

$

434,902

 

New medium-duty vehicles (including bus sales revenue)

 

 

240,268

 

 

226,231

 

New light-duty vehicles

 

 

20,147

 

 

21,370

 

Used vehicles

 

 

142,463

 

 

112,563

 

Other vehicles

 

 

4,135

 

 

2,203

 

 

 

 

 

 

 

Absorption Ratio

 

 

136.4

%

 

129.1

%

 

 

 

 

 

 

 

 

Absorption Ratio
Management 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.

 

Debt Analysis (in thousands)                                

 

 

June 30,
2022

 

June 30,
2021

Floor plan notes payable

 

$

851,715

 

$

470,877

 

Current maturities of long-term debt

 

 

 

 

120,593

 

Current maturities of finance lease obligations

 

 

26,388

 

 

26,006

 

Long-term debt, net of current maturities

 

 

401,760

 

 

332,165

 

Finance lease obligations, net of current maturities

 

 

82,204

 

 

91,209

 

Total Debt (GAAP)

 

 

1,362,067

 

 

1,040,850

 

Adjustments:

 

 

 

 

 

Debt related to lease & rental fleet

 

 

(506,003

)

 

(565,556

)

Floor plan notes payable

 

 

(851,715

)

 

(470,877

)

Adjusted Total Debt (Non-GAAP)

 

 

4,349

 

 

4,417

 

Adjustment:

 

 

 

 

 

Cash and cash equivalents

 

 

(216,694

)

 

(315,911

)

Adjusted Net Debt (Cash) (Non-GAAP)

 

$

(212,345

)

$

(311,494

)

 

 

 

 

 

 

 

 

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 floor plan credit agreements require it to repay loans used to purchase vehicles when such vehicles are sold. The Company has the capacity to finance all of its lease and rental fleet under its lines of credit established for this purpose, but may choose to only partially finance the lease and rental fleet depending on business conditions and its management of cash and interest expense. The Company’s lease and rental fleet inventory 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 and 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, 2022

 

June 30, 2021

Net Income attributable to Rush Enterprises, Inc. (GAAP)

 

$

340,718

 

$

178,341

 

Provision for income taxes

 

 

101,665

 

 

50,587

 

Interest expense

 

 

5,862

 

 

2,331

 

Depreciation and amortization

 

 

53,791

 

 

55,757

 

Gain on sale of assets and business acquisition

 

 

(8,959

)

 

(627

)

EBITDA (Non-GAAP)

 

 

493,077

 

 

286,389

 

Adjustments:

 

 

 

 

 

Interest expense associated with FPNP

 

 

(1,862

)

 

(1,615

)

Adjusted EBITDA (Non-GAAP)

 

$

491,215

 

$

284,774

 

 

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, 2022

 

June 30, 2021

Net cash provided by operations (GAAP)

 

$

242,822

 

$

578,796

 

Acquisition of property and equipment

 

 

(190,051

)

 

(138,316

)

Free cash flow (Non-GAAP)

 

 

52,771

 

 

440,480

 

Adjustments:

 

 

 

 

 

Draws (payments) on floor plan financing, net

 

 

350,337

 

 

(171,720

)

Proceeds from L&RFD

 

 

14,105

 

 

90,232

 

Principal payments on L&RFD

 

 

(42,871

)

 

(180,937

)

Cash used for L&RF purchases

 

 

105,308

 

 

 

Non-maintenance capital expenditures

 

 

21,677

 

 

8,127

 

Adjusted Free Cash Flow (Non-GAAP)

 

$

501,327

 

$

186,182

 

 

“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 scheduled principal payments on fixed rate notes payable related specifically to the financing of the lease and rental fleet that are included in Cash flows from financing activities; (v) subtracts lease and rental fleet purchases that are included in acquisition of property and equipment and not financed under the lines of credit for cash and interest expense management purposes; and (vi) 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, 2022

 

June 30, 2021

Total Rush Enterprises, Inc. Shareholders' equity (GAAP)

 

$

1,611,037

 

$

1,360,199

 

Adjusted net debt (cash) (Non-GAAP)

 

 

(212,345

)

 

(311,494

)

Adjusted Invested Capital (Non-GAAP)

 

$

1,398,692

 

$

1,048,705

 

 

“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