Rush Enterprises Inc. (NASDAQ: RUSHA), which operates the largest network of commercial vehicle dealerships in North America, on Wednesday reported fourth-quarter revenue of $1.3 billion, compared to revenue of $1.5 billion for the fourth quarter of 2018.
Net income for the fourth quarter was $23.8 million, or a profit of 64 cents per diluted share, compared to $47 million, or $1.20 per diluted share, in the fourth quarter of 2018. The report came after the markets closed on Wednesday.
W.M. "Rusty" Rush, chairman, CEO and president New Braunfels, Texas-based Rush Enterprises, said the company's overall performance for "the full year 2019 was strong."
"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," Rush said in a release. "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."
The company sold 2,991 new heavy-duty trucks during the fourth quarter, a 38% decline compared to the same quarter in 2018, when it delivered 4,811 new heavy-duty trucks.
In 2019 overall, Rush sold 14,986 new Class 8 trucks, an increase of 2.2% compared to 2018, and accounted for 5.3% of the new U.S. Class 8 truck market.
"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.
Rush added, "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."
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, according to a release from Rush officials.
Rush Enterprises also delivered 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.
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," Rush said. "Currently, we believe that used truck values continue to depreciate significantly faster than what is considered a normal rate."
Rush officials said the company achieved record revenue of $5.8 billion and net income of $141.6 million, or $3.77 per diluted share in 2019, compared with revenue of $5.5 billion and net income of $139.1 million, or $3.45 per diluted share, for the year ended Dec. 31, 2018.
Aftermarket products and services accounted for approximately 64.9% of Rush Enterprises' total gross profits in 2019, with parts, service and collision center revenues reaching $1.8 billion, up 5.5% compared to 2018.
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