RUSH ENTERPRISES INC TX
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
RUSHB$58.61-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001437749-24-025891
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001437749-24-033921
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 121 current paragraphs.
48 unchanged; 50 reworded; 22 added; 21 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
With respect to our parts, service, and collision center (collectively referred to herein as “Aftermarket Products and Services”) operations, revenues were down slightly year-over-year, but were improved compared to our second quarter results. Although the ongoing freight recession continues to negatively affect Aftermarket Products and Services results, we did experience growth in the third quarter with respect to our over-the-road and wholesale customers for the first time since 2023. We are hopeful that declines in Aftermarket Products and Sales revenues are behind us and that we will begin to experience more normal market conditions starting in the first quarter of 2025. We expect that our Aftermarket Products and Services revenues will remain flat to slightly down in 2024, compared to 2023.
Current report
Critical Accounting Estimates
Current report
Total revenues decreased $84.6 million, or 4.3%, in the third quarter of 2024, compared to the third quarter of 2023. This decrease was primarily the result of the ongoing freight recession resulting in continued weak demand for Class 8 trucks.
Current report
Revenues from sales of new and used commercial vehicles decreased $72.5 million, or 5.9%, in the third quarter of 2024, compared to the third quarter of 2023. The decrease in new and used commercial vehicle revenues was primarily a result of weak demand for Class 8 trucks, which was partially offset by strong demand for Class 4 through 7 medium-duty commercial vehicles.
Current report
We sold 3,604 new Class 8 trucks in the third quarter of 2024, a 16.7% decrease compared to 4,326 new Class 8 trucks sold in the third quarter of 2023. The decrease in new Class 8 truck sales was primarily due to the ongoing freight recession that is negatively impacting over-the-road-carriers. New U.S. and Canadian Class 8 retail truck sales totaled 73,037 units in the third quarter of 2024, a decrease of 3.5% compared to the third quarter of 2023, according to ACT Research.
Current report
Finance and insurance revenues decreased $0.5 million, or 8.5%, in the third quarter of 2024, compared to the third quarter of 2023. This decrease is primarily due to the decline in sales of Class 8 trucks and tighter lending requirements from finance companies. Finance and insurance revenues have limited direct costs and, therefore, contribute a disproportionate share of our operating profits.
Current report
Gross margins on new Class 4 through 7 commercial vehicle sales increased to 10.3% in the third quarter of 2024, from 9.2% in the third quarter of 2023. For 2024, we expect overall gross margins from new medium-duty commercial vehicle sales of approximately 9.0% to 10.0%, but this will largely depend upon the mix of purchasers and types of vehicles sold.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
Revenues
Current report
Total revenues decreased $100.4 million, or 1.7%, in the first nine months of 2024, compared to the first nine months of 2023.
Current report
Aftermarket Products and Services revenues decreased $33.3 million, or 1.7%, in the first nine months of 2024, compared to the first nine months of 2023.
Current report
Revenues from the sales of new and used commercial vehicles decreased $61.4 million, or 1.7%, in the first nine months of 2024, compared to the first nine months of 2023.
Current report
We sold 1,567 new light-duty commercial vehicles during the first nine months of 2024, a 4.3% increase compared to 1,381 light-duty commercial vehicles in the first nine months of 2023.
Current report
We sold 5,370 used commercial vehicles during the first nine months of 2024, a 0.4% increase compared to 5,350 used commercial vehicles in the first nine months of 2023.
Current report
Truck lease and rental revenues remained flat in the first nine months of 2024, compared to the first nine months of 2023.
Current report
Finance and insurance revenues decreased $2.0 million, or 10.3%, in the first nine months of 2024, compared to the first nine months of 2023.
Current report
Gross margins on new Class 4 through 7 medium-duty commercial vehicle sales increased to 9.3% in the first nine months of 2024, from 8.9% in the first nine months of 2023.
Current report
Interest Expense, Net
Current report
Income before income taxes decreased $56.1 million, or 15.7%, in the first nine months of 2024, compared to the first nine months of 2023.
Current report
The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. We have reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased.
Current report
During the first nine months of 2024, cash used in investing activities was $305.8 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment and the acquisition of new businesses. See Note 12 of the Notes to Consolidated Financial Statements for a detailed discussion of the business acquisitions. Acquisition of property and equipment totaled $304.2 million during the first nine months of 2024 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $223.1 million for purchases of rental and lease vehicles for our rental and leasing operations.
Current report
During the first nine months of 2023, cash used in investing activities was $291.0 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $289.1 million during the first nine months of 2023 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $210.5 million for purchases of rental and lease vehicles for our rental and leasing operations.
Removed paragraphs (21)
Previous report
With respect to our parts, service, and collision center (collectively referred to herein as “Aftermarket Products and Services”) operations, we expect that the sluggish freight market and persistent high interest rates will continue to negatively impact our over-the-road customers, including both small carriers and larger fleets. Despite the challenging operating environment that is impacting the industry, we believe that the strategic decisions we made several years ago to diversify our customer base and focus on supporting large national fleets, along with the operating expense reduction measures we undertook at the beginning of the second quarter, will allow us to successfully navigate this difficult market cycle. We also believe that our Aftermarket Products and Services revenues will remain flat to slightly down in 2024, compared to 2023.
Previous report
Critical Accounting Policies and Estimates
Previous report
Total revenues increased $24.0 million, or 1.2%, in the second quarter of 2024, compared to the second quarter of 2023. This increase was primarily due to strong truck sales during the quarter.
Previous report
Revenues from sales of new and used commercial vehicles increased $49.5 million, or 4.0%, in the second quarter of 2024, compared to the second quarter of 2023. This increase was primarily due to the timing of deliveries to certain large fleet customers and continued strong demand from vocational fleets.
Previous report
We sold 4,128 new Class 8 trucks in the second quarter of 2024, a 4.0% decrease compared to 4,300 new Class 8 trucks in the second quarter of 2023. The decrease in new Class 8 truck sales was primarily due to new truck production having caught up to the prior pent-up market demand.
Previous report
Finance and insurance revenues decreased $0.3 million, or 4.1%, in the second quarter of 2024, compared to the second quarter of 2023. This decrease is primarily due to the mix of purchasers of commercial vehicles. During the second quarter of 2024, most of our sales were to larger fleets, which usually arrange their own financing. We are more likely to provide financing to owner-operators and smaller fleets, which comprised a smaller percentage of commercial vehicle sales during the second quarter of 2024. Finance and insurance revenues have limited direct costs and, therefore, contribute a disproportionate share of our operating profits.
Previous report
Gross Margins from truck lease and rental sales decreased to 28.5% in the second quarter of 2024 from 30.5% in the second quarter of 2023. This decrease was primarily related to lower rental utilization. We expect gross margins from lease and rental sales of approximately 28.0% to 30.0% during 2024. We expect rental utilization to increase slightly in the third quarter and will be in line with historical utilization rates. As the age of our leasing and rental fleet continues to decrease with new vehicle production increasing, we expect our operating costs to continue to moderate. Our policy is to depreciate our lease and rental fleet using a straight-line method over each customer’s contractual lease term. The lease unit is depreciated to a residual value that approximates fair value at the expiration of the lease term.
Previous report
Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023
Previous report
Total revenues decreased $15.8 million, or 0.4%, in the first six months of 2024, compared to the first six months of 2023.
Previous report
Sales of new and used commercial vehicles increased $11.1 million, or 0.5%, in the first six months of 2024, compared to the first six months of 2023.
Previous report
Aftermarket Products and Services revenues decreased $22.7 million, or 1.7%, in the first six months of 2024, compared to the first six months of 2023.
Previous report
We sold 993 new light-duty vehicles in the first six months of 2024, a 3.9% increase compared to 956 new light-duty vehicles sold in the first six months of 2023.
Previous report
We sold 3,541 used commercial vehicles in the first six months of 2024, a 0.3% decrease compared to 3,553 used commercial vehicles in the first six months of 2023.
Previous report
Truck lease and rental revenues increased $0.4 million, or 0.2%, in the first six months of 2024, compared to the first six months of 2023.
Previous report
Finance and insurance revenues decreased $1.4 million, or 11.2%, in the first six months of 2024, compared to the first six months of 2023.
Previous report
Gross margins on new Class 4 through 7 medium-duty commercial vehicle sales remained flat at 8.8% in the first six months of 2024, compared to the first six months of 2023.
Previous report
Interest (Income) Expense, Net
Previous report
Income before income taxes decreased $51.8 million, or 20.7%, in the first six months of 2024, compared to the first six months of 2023.
Previous report
During the first six months of 2023, cash used in investing activities was $188.9 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $186.0 million during the first six months of 2023 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $138.6 million for purchases of rental and lease vehicles for our rental and leasing operations.
Previous report
During the first six months of 2024, cash used in investing activities was $161.1 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $172.5 million during the first six months of 2024 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $140.1 million for purchases of rental and lease vehicles for our rental and leasing operations.
Previous report
During the first six months of 2023, cash used in investing activities was $188.9 million. Cash flows used in investing activities consist primarily of cash used for the acquisition of property and equipment. Acquisition of property and equipment totaled $186.0 million during the first six months of 2024 and consisted primarily of purchases of machine and shop equipment, furniture and fixtures, real estate and facilities, improvements to our existing dealership facilities and $138.6 million for purchases of rental and lease vehicles for our rental and leasing operations.
Reworded paragraphs (50)
Previous wording
Peterbilt®* is a registered trademark of Peterbilt Motors Company. PACCAR*®* is a registered trademark of PACCAR, Inc. PacLease*®* is a registered trademark of PACCAR Leasing Corporation. Navistar*®* is a registered trademark of Navistar International, Inc. International*®* is a registered trademark of Navistar, Inc. Idealease is a registered trademark of Idealease, Inc. aka Idealease of North America, Inc. Blue Bird*®* is a registered trademark of Blue Bird Investment Corporation. IC Bus*®* is a registered trademark of IC Bus, LLC. Hino*®* is a registered trademark of Hino Motors, Ltd. Isuzu*®* is a registered trademark of Isuzu Motors Limited. Ford*®* is a registered trademark of Ford Motor Company. Dennis Eagle*®* is a registered trademark of Dennis Eagle Limited. Cummins® is a registered trademark of Cummins, Inc. This report contains additional trade names or trademarks of other companies. Our use of such trade names or trademarks should not imply any endorsement or relationship with such companies.*
Current wording
Peterbilt®* is a registered trademark of Peterbilt Motors Company. PACCAR*®* is a registered trademark of PACCAR, Inc. PacLease*®* is a registered trademark of PACCAR Leasing Corporation. Navistar*®* is a registered trademark of Navistar International, Inc. International*®* is a registered trademark of International Motors, LLC (f/k/a Navistar, Inc.). Idealease is a registered trademark of Idealease, Inc. aka Idealease of North America, Inc. Blue Bird*®* is a registered trademark of Blue Bird Investment Corporation. IC Bus*®* is a registered trademark of IC Bus, LLC. Hino*®* is a registered trademark of Hino Motors, Ltd. Isuzu*®* is a registered trademark of Isuzu Motors Limited. Ford*®* is a registered trademark of Ford Motor Company. Dennis Eagle*®* is a registered trademark of Dennis Eagle Limited. Cummins® is a registered trademark of Cummins, Inc. This report contains additional trade names or trademarks of other companies. Our use of such trade names or trademarks should not imply any endorsement or relationship with such companies.*
Previous wording
Our Rush Truck Centers are principally located in high traffic areas throughout the United States and Ontario, Canada. Since commencing operations as a Peterbilt heavy-duty truck dealer in 1966, we have grown to operate over 125 franchised Rush Truck Centers in 23 states. In 2019, we purchased a 50% equity interest in an entity in Canada, Rush Truck Centres of Canada Limited (“RTC Canada”) and on May 2, 2022, we purchased an additional 30% equity interest in RTC Canada that increased our equity interest to 80%. RTC Canada currently owns and operates 15 International dealership locations in Ontario. Prior to acquiring the additional 30%, we accounted for the equity interest in RTC Canada using the equity method of accounting. Now, the operating results of RTC Canada are consolidated in the Consolidated Statements of Operations, the Statements of Comprehensive Income, the Consolidated Balance Sheets and commercial vehicle unit sales data as of May 2, 2022.
Current wording
Our Rush Truck Centers are principally located in high traffic areas throughout the United States and Ontario, Canada. Since commencing operations as a Peterbilt heavy-duty truck dealer in 1966, we have grown to operate 124 franchised Rush Truck Centers in 23 states. In 2019, we purchased a 50% equity interest in an entity in Canada, Rush Truck Centres of Canada Limited (“RTC Canada”) and on May 2, 2022, we purchased an additional 30% equity interest in RTC Canada that increased our equity interest to 80%. RTC Canada currently owns and operates 15 International dealership locations in Ontario. Prior to acquiring the additional 30%, we accounted for the equity interest in RTC Canada using the equity method of accounting. The operating results of RTC Canada are consolidated in the Consolidated Statements of Operations, the Statements of Comprehensive Income, the Consolidated Balance Sheets and commercial vehicle unit sales data since May 2, 2022.
Previous wording
A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and forecasting service provider, currently forecasts new U.S. Class 8 retail truck sales to be 228,700 units in 2024, which would represent a 15.8% decrease compared to 2023. As anticipated, we experienced healthy sales growth in the second quarter, compared to the first quarter, due primarily to the timing of deliveries to certain large customers and continued strong demand from vocational fleets. We expect vocational sales to remain strong in the third quarter. However, we also expect that new U.S. Class 8 retail truck sales in the second half of 2024 will be less than in the first half of the year. We expect our U.S. market share of new Class 8 truck sales to range between 5.7% and 6.1% in 2024. This market share percentage would result in the sale of approximately 13,000 to 14,000 new Class 8 trucks in 2024. Additionally, we expect to sell approximately 450 new Class 8 trucks in Canada in 2024.
Current wording
A.C.T. Research Co., LLC (“A.C.T. Research”), a commercial vehicle industry data and forecasting service provider, currently forecasts new U.S. Class 8 retail truck sales to be 235,000 units in 2024, which would represent a 13.5% decrease compared to 2023. We expect our U.S. market share of new Class 8 truck sales to range between 6.1% and 6.6% in 2024. This market share percentage would result in the sale of approximately 14,500 to 15,500 new Class 8 trucks in 2024. Additionally, we expect to sell approximately 450 new Class 8 trucks in Canada in 2024.
Previous wording
With respect to new U.S. Class 4 through 7 retail commercial vehicle sales, A.C.T. Research currently forecasts sales to be 262,000 units in 2024, which would represent a 3.7% increase compared to 2023. As we look forward, production continues to increase and delivery lead times have improved. However, we continue to monitor delays at body manufacturers that could impact deliveries to customers. Currently, we believe Class 4 through 7 commercial vehicle sales in third quarter will be consistent with our second quarter results. We expect our U.S. market share of new Class 4 through 7 commercial vehicle sales to range between 4.9% and 5.3% in 2024. This market share percentage would result in the sale of approximately 13,000 to 14,000 new Class 4 through 7 commercial vehicles in 2024. Additionally, we expect to sell approximately 500 new Class 5 through 7 commercial vehicles in Canada in 2024.
Current wording
With respect to new U.S. Class 4 through 7 retail commercial vehicle sales, A.C.T. Research currently forecasts sales to be 268,300 units in 2024, which would represent a 4.2% increase compared to 2023. We expect our U.S. market share of new Class 4 through 7 commercial vehicle sales to range between 5.0% and 5.4% in 2024. This market share percentage would result in the sale of approximately 13,500 to 14,500 new Class 4 through 7 commercial vehicles in 2024. Additionally, we expect to sell approximately 550 new Class 5 through 7 commercial vehicles in Canada in 2024.
Previous wording
We expect to sell approximately 1,800 to 2,000 light-duty vehicles and approximately 6,500 to 7,500 used commercial vehicles in 2024. In addition, we expect lease and rental revenues to remain flat during 2024.
Current wording
We expect to sell approximately 2,000 to 2,200 light-duty vehicles and approximately 6,500 to 7,500 used commercial vehicles in 2024. We expect lease and rental revenue to remain flat during 2024, compared to 2023.
Previous wording
The following discussion and analysis includes our historical results of operations for the three months and six months periods ended June 30, 2024 and 2023.
Current wording
The following discussion and analysis includes our historical results of operations for the three months and nine months ended September 30, 2024 and 2023.
Previous wording
The following table sets forth the unit sales and revenues for new heavy-duty, new medium-duty, new light-duty and used commercial vehicles and the absorption ratio (revenues in millions):
Current wording
The following table sets forth the unit sales and revenues for new heavy-duty, new medium-duty, new light-duty and used commercial vehicles and our absorption ratio (revenue in millions):
Previous wording
Management uses several performance metrics to evaluate the performance of our commercial vehicle dealerships and considers Rush Truck Centers’ “absorption ratio” to be of critical importance. Our absorption ratio is calculated by dividing the gross profit from our Aftermarket Products and Services 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, all of the gross profit from the sale of a commercial vehicle, after sales commissions and inventory carrying costs, directly impacts operating profit. Our commercial vehicle dealerships achieved a 134.0% absorption ratio for the second quarter of 2024 and a 139.7% absorption ratio for the second quarter of 2023.
Current wording
Management uses several performance metrics to evaluate the performance of our commercial vehicle dealerships and considers Rush Truck Centers’ “absorption ratio” to be of critical importance. Our absorption ratio is calculated by dividing the gross profit from our Aftermarket Products and Services departments by the overhead expenses 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, the gross profit from the sale of a commercial vehicle, after sales commissions and inventory carrying costs, directly impacts operating profit. Our commercial vehicle dealerships achieved a 132.6% absorption ratio for the third quarter of 2024, compared to a 132.8% absorption ratio for the third quarter of 2023.
Previous wording
Our Aftermarket Products and Services revenues decreased $23.7 million, or 3.6%, in the second quarter of 2024, compared to the second quarter of 2023. The decrease in Aftermarket Parts and Services revenues was primarily a result of weaker demand caused by the ongoing freight recession and high interest rates impacting our over-the-road customers.
Current wording
Our Aftermarket Products and Services revenues totaled $633.0 million in the third quarter of 2024, down 1.6% from the third quarter of 2023. The decrease in Aftermarket Parts and Services revenues was primarily a result of weaker demand caused by the ongoing freight recession.
Previous wording
We sold 3,691 new Class 4 through 7 commercial vehicles, including 343 buses, in the second quarter of 2024, a 6.2% increase compared to 3,477 new medium-duty commercial vehicles, including 462 buses, in the second quarter of 2023. The increase in new Class 4 through 7 commercial vehicle sales was primarily a result of strong demand and increased production of commercial vehicles from the manufacturers we represent.
Current wording
We sold 3,379 new Class 4 through 7 medium-duty commercial vehicles, including 258 buses, in the third quarter of 2024, a 4.2% increase compared to 3,224 new medium-duty commercial vehicles, including 422 buses, in the third quarter of 2023. The increase in new Class 4 through 7 commercial vehicle sales was primarily a result of strong demand and increased production of commercial vehicles from the manufacturers we represent. New U.S. and Canadian Class 4 through 7 retail commercial vehicle sales totaled 68,923 units in the third quarter of 2024, down 1.1% compared to the third quarter of 2023, according to ACT Research.
Previous wording
We sold 537 light-duty vehicles in the second quarter of 2024, an 18.8% increase compared to 452 light-duty vehicles sold in the second quarter of 2023.
Current wording
We sold 574 light-duty vehicles in the third quarter of 2024, a 35.1% increase compared to 425 light-duty vehicles sold in the third quarter of 2023.
Previous wording
We sold 1,723 used commercial vehicles in the second quarter of 2024, a 7.8% decrease compared to 1,869 used commercial vehicles sold in the second quarter of 2023. We experienced a decline in used commercial vehicle sales year-over-year due to low freight rates, more readily available new truck alternatives and elevated interest rates.
Current wording
We sold 1,829 used commercial vehicles in the third quarter of 2024, a 1.8% increase compared to 1,797 used commercial vehicles in the third quarter of 2023. We experienced a slight increase in used commercial vehicle sales year-over-year primarily due to our ability to successfully execute on our commercial vehicle sales strategies.
Previous wording
Commercial vehicle lease and rental revenues decreased $0.9 million, or 1.0%, in the second quarter of 2024, compared to the second quarter of 2023. This decrease in commercial vehicle lease and rental revenues was primarily a result of decreased rental vehicle utilization.
Current wording
Commercial vehicle lease and rental revenues decreased $0.3 million, or 0.4%, in the third quarter of 2024, compared to the third quarter of 2023. This decrease in commercial vehicle lease and rental revenues was primarily a result of a slight decrease in rental vehicle utilization.
Previous wording
Gross profit decreased $21.5 million, or 5.2%, in the second quarter of 2024, compared to the second quarter of 2023. Gross profit as a percentage of sales decreased to 19.4% in the second quarter of 2024, from 20.7% in the second quarter of 2023. This decrease in gross profit as a percentage of sales is a result of a change in our product sales mix. Commercial vehicle sales, a lower margin revenue item, increased as a percentage of total revenues to 64.1% in the second quarter of 2024, from 62.4% in the second quarter of 2023. Aftermarket Products and Services revenues, a higher margin revenue item, decreased as a percentage of total revenues to 31.0% in the second quarter of 2024, from 32.5% in the second quarter of 2023.
Current wording
Gross profit decreased $15.4 million, or 3.6%, in the third quarter of 2024, compared to the third quarter of 2023. Gross profit as a percentage of sales increased to 20.0% in the third quarter of 2024, from 19.9% in the third quarter of 2023. This increase in gross profit as a percentage of sales is a result of a change in our product sales mix. Commercial vehicle sales, a lower margin revenue item, decreased as a percentage of total revenues to 61.3% in the third quarter of 2024, from 62.4% in the third quarter of 2023. Aftermarket Products and Services revenues, a higher margin revenue item, increased as a percentage of total revenues to 33.4% in the third quarter of 2024, from 32.5% in the third quarter of 2023.
Previous wording
Gross margins from our Aftermarket Products and Services operations decreased to 37.5% in the second quarter of 2024, from 38.1% in the second quarter of 2023. Gross profit from our Aftermarket Products and Services operations decreased to $235.3 million in the second quarter of 2024, from $247.8 million in the second quarter of 2023. This decrease is primarily related to decreased demand resulting from the current freight recession and high interest rates. Historically, gross margins on parts sales range from 28% to 30% and gross margins on service and collision center operations range from 66% to 68%. Gross profits from parts sales represented 58.4% of total gross profit from Aftermarket Products and Services operations in the second quarter of 2024 and 60.5% in the second quarter of 2023. Service and collision center operations represented 38.8% of total gross profit from Aftermarket Products and Services operations in the second quarter of 2024 and 39.5% in the second quarter of 2023. We expect blended gross margins on Aftermarket Products and Services operations to range from 36.0% to 38.0% in 2024.
Current wording
Gross margins from our Aftermarket Products and Services operations increased to 36.8% in the third quarter of 2024, from 36.2% in the third quarter of 2023. Gross profit for the Aftermarket Products and Services departments increased to $233.1 million in the third quarter of 2024, from $232.7 million in the third quarter of 2023. Historically, gross margins on parts sales range from 28% to 30% and gross margins on service and collision center operations range from 66% to 68%. Gross profits from parts sales represented 57.5% of total gross profit for Aftermarket Products and Services operations in the third quarter of 2024 and 58.4% in the third quarter of 2023. Service and collision center operations represented 42.5% of total gross profit for Aftermarket Products and Services operations in the third quarter of 2024 and 41.6% in the third quarter of 2023. We expect blended gross margins on Aftermarket Products and Services operations to range from 36.5% to 37.5% in 2024.
Previous wording
Gross margins on new Class 8 truck sales decreased to 8.6% in the second quarter of 2024, from 10.3% in the second quarter of 2023. This decrease was primarily due to weak demand and elevated new truck inventory valuation reserves. In 2024, we expect overall gross margins from new heavy-duty truck sales of approximately 8.5% to 9.5%.
Current wording
Gross margins on new Class 8 truck sales decreased to 9.2% in the third quarter of 2024, from 9.9% in the third quarter of 2023. This decrease was primarily due to weak demand caused by the ongoing freight recession. For 2024, we expect overall gross margins from new Class 8 truck sales of approximately 9.0% to 10.0%.
Previous wording
Gross margins on used commercial vehicle sales increased to 19.2% in the second quarter of 2024, from 11.8% in the second quarter of 2023. This increase was primarily due to the successful execution of our used truck inventory and sales strategy. We expect margins on used commercial vehicles to range between 15.0% and 20.0% in 2024.
Current wording
Gross margins on used commercial vehicle sales increased to 18.0% in the third quarter of 2024, from 11.3% in the third quarter of 2023. This increase was primarily due to the successful execution of our used commercial vehicle sales strategy. We expect margins on used commercial vehicles to range between 18.0% and 20.0% in 2024.
Previous wording
Gross Margins from truck lease and rental sales decreased to 28.5% in the second quarter of 2024 from 30.5% in the second quarter of 2023. This decrease was primarily related to lower rental utilization. We expect gross margins from lease and rental sales of approximately 28.0% to 30.0% during 2024. Our policy is to depreciate our lease and rental fleet using a straight-line method over each customer’s contractual lease term. The lease unit is depreciated to a residual value that approximates fair value at the expiration of the lease term.
Current wording
Gross margins from truck lease and rental sales decreased to 28.6% in the third quarter of 2024, from 30.6% in the third quarter of 2023. This decrease was primarily related to lower rental utilization. We expect gross margins from lease and rental sales of approximately 28.0% to 30.0% during 2024.
Previous wording
Selling, General and Administrative (“SG&A”) expenses decreased $5.3 million, or 2.1%, in the second quarter of 2024, compared to the second quarter of 2023. This decrease primarily resulted from reductions to our operating expenses. SG&A expenses as a percentage of total revenues decreased to 12.4% in the second quarter of 2024, from 12.8% in the second quarter of 2023. Annual SG&A expenses as a percentage of total revenues have ranged from approximately 12.4% to 14.4% over the last five years. In general, when new and used commercial vehicle revenues increase as a percentage of total revenues, SG&A expenses as a percentage of total revenues will be at the lower end of this range. For 2024, we expect SG&A expenses as a percentage of total revenues to range from 12.0% to 14.0%. For 2024, we expect the selling portion of SG&A expenses to be approximately 25.0% to 30.0% of new and used commercial vehicle gross profit.
Current wording
Selling, General and Administrative (“SG&A”) expenses decreased $17.4 million, or 6.8%, in the third quarter of 2024, compared to the third quarter of 2023. This decrease primarily resulted from reductions to our operating expenses. SG&A expenses as a percentage of total revenues decreased to 12.6% in the third quarter of 2024, from 13.0% in the third quarter of 2023. Annual SG&A expenses as a percentage of total revenues have ranged from approximately 12.4% to 14.4% over the last five years. In general, when new and used commercial vehicle revenues increase as a percentage of total revenues, SG&A expenses as a percentage of total revenues will be at the lower end of this range. For 2024, we expect SG&A expenses as a percentage of total revenues to range from 12.5% to 13.5%. For 2024, we expect the selling portion of SG&A expenses to be approximately 25.0% to 30.0% of new and used commercial vehicle gross profit.
Previous wording
Net interest expense increased $7.2 million, or 59.1%, in the second quarter of 2024, compared to the second quarter of 2023. This increase in interest expense is a result of an increase in our vehicle inventory levels and elevated interest rates on our variable rate debt compared to the second quarter of 2023. We expect net interest expense in 2024, compared to 2023, to increase due to increased borrowings and interest related to our working capital lines of credit and floor plan debt, but the amount of the increase will depend on inventory levels, interest rate fluctuations and the amount of cash available to make prepayments on our floor plan arrangements.
Current wording
Net interest expense increased $3.5 million, or 24.4%, in the third quarter of 2024, compared to the third quarter of 2023. This increase in interest expense is a result of an increase in our vehicle inventory levels and elevated interest rates on our variable rate debt, compared to the third quarter of 2023. For 2024, we expect net interest expense to increase 34.5% to 37.5% compared to 2023, primarily due to increased borrowings under our credit facilities and the interest related thereto.
Previous wording
As a result of the factors described above, income before income taxes decreased $25.5 million, or 19.5%, in the second quarter of 2024, compared to the second quarter of 2023.
Current wording
As a result of the factors described above, income before income taxes decreased $4.3 million, or 4.0%, in the third quarter of 2024, compared to the third quarter of 2023.
Previous wording
Income taxes decreased $5.7 million, or 17.9%, in the second quarter of 2024, compared to the second quarter of 2023. We provided for taxes at a 24.5% effective rate in the second quarter of 2024 and 24.5% in the second quarter of 2023. We expect our effective tax rate to be approximately 24.0% to 25.0% of pretax income in 2024.
Current wording
Income taxes decreased $3.1 million, or 11.5%, in the third quarter of 2024, compared to the third quarter of 2023. We provided for taxes at a 23.0% effective rate in the third quarter of 2024 and 25.0% in the third quarter of 2023. We expect our effective tax rate to be approximately 23.5% to 24.5% of pretax income in 2024.
Previous wording
Unless otherwise stated below, our variance explanations and future expectations with regards to the items discussed in this section are set forth in the discussion of the “Three Months Ended June 30, 2024, Compared to Three Months Ended June 30, 2023.”
Current wording
Unless otherwise stated below, our variance explanations and future expectations with regard to the items discussed in this section are set forth in the discussion of the Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023.
Previous wording
We sold 7,391 new Class 8 heavy-duty trucks in the first six months of 2024 in the United States, an 11.7% decrease compared to 8,368 new Class 8 heavy-duty trucks in the first six months of 2023. According to A.C.T. Research, retail sales in the U.S. Class 8 truck market decreased 16.0% in the first six months of 2024, compared to the first six months of 2023. We sold 231 new Class 8 heavy-duty trucks in the first six months of 2024 in Canada, a 22.2% decrease compared to 297 new Class 8 heavy-duty trucks in the first six months of 2023.
Current wording
We sold 10,895 new Class 8 heavy-duty trucks during the first nine months of 2024, a 13.1% decrease compared to 12,536 new Class 8 heavy-duty trucks in the first nine months of 2023. According to A.C.T. Research, new U.S. Class 8 truck sales decreased 11.6% in the first nine months of 2024, compared to the first nine months of 2023. We sold 331 new Class 8 heavy-duty trucks in the first nine months of 2024 in Canada, a 27.3% decrease compared to 455 new Class 8 heavy-duty trucks in the first nine months of 2023.
Previous wording
We sold 6,829 new Class 4 through 7 medium-duty commercial vehicles, including 734 buses, in the United States in the first six months of 2024. This represented a 4.9% increase compared to 6,513 new Class 4 through 7 medium-duty commercial vehicles, including 805 buses, in the first six months of 2023. A.C.T. Research estimates that unit sales of new Class 4 through 7 commercial vehicles in the U.S. increased approximately 1.4% in the first six months of 2024, compared to the first six months of 2023. We sold 193 new Class 5 through 7 medium-duty commercial vehicles in the first six months of 2024 in Canada, a 6.6% increase compared to 181 new Class 5 through 7 medium-duty commercial vehicles in the first six months of 2023.
Current wording
We sold 10,076 new Class 4 through 7 medium-duty commercial vehicles, including 922 buses, during the first nine months of 2024, a 6.3% increase compared to 9,483 new Class 4 through 7 medium-duty commercial vehicles, including 1,232 buses, in the first nine months of 2023. A.C.T. Research estimates that unit sales of new Class 4 through 7 commercial vehicles, including buses, in the U.S increased 0.2% in the first nine months of 2024, compared to the first nine months of 2023. We sold 325 new Class 5 through 7 medium-duty commercial vehicles in the first nine months of 2024 in Canada, an 18.6% increase compared to 274 new Class 5 through 7 medium-duty commercial vehicles in the first nine months of 2023.
Previous wording
Gross profit decreased $30.4 million, or 3.7%, in the first six months of 2024, compared to the first six months of 2023. Gross profit as a percentage of sales was 20.1% in the first six months of 2024 and 20.8% in the first six months of 2023.
Current wording
Gross profit decreased $45.7 million, or 3.8%, in the first nine months of 2024, compared to the first nine months of 2023. Gross profit as a percentage of sales decreased to 20.0% in the first nine months of 2024, from 20.5% in the first nine months of 2023.
Previous wording
Gross margins from Aftermarket Products and Services operations decreased to 37.0% in the first six months of 2024, from 38.0% in the first six months of 2023. Gross profit for Aftermarket Products and Services was $472.2 million in the first six months of 2024, compared to $493.9 million in the first six months of 2023. Gross profit from parts sales represented 58.1% of the total gross profit for Aftermarket Products and Services operations in the first six months of 2024 and 61.0% in the first six months of 2023. Service and collision center operations represented 41.9% of the total gross profit for Aftermarket Products and Services operations in the first six months of 2024 and 39.0% in the first six months of 2023.
Current wording
Gross margins from our Aftermarket Products and Services operations decreased to 36.9% in the first nine months of 2024, from 37.4% in the first nine months of 2023. Gross profit for the Aftermarket Products and Services departments was $705.3 million in the first nine months of 2024, compared to $726.5 million in the first nine months of 2023. Gross profits from parts sales represented 57.9% of total gross profit for Aftermarket Products and Services operations in the first nine months of 2024 and 60.1% in the first nine months of 2023. Service and collision center operations represented 42.1% of total gross profit for Aftermarket Products and Services operations in the first nine months of 2024 and 39.9% in the first nine months of 2023.
Previous wording
Gross margins on new Class 8 heavy-duty truck sales decreased to 9.1% in the first six months of 2024, from 10.1% in the first six months of 2023.
Current wording
Gross margins on new Class 8 truck sales decreased to 9.1% in the first nine months of 2024, from 10.0% in the first nine months of 2023.
Previous wording
Gross margins on used commercial vehicle sales increased to 20.5% in the first six months of 2024, from 10.5% in the first six months of 2023.
Current wording
Gross margins on used commercial vehicle sales increased to 19.7% in the first nine months of 2024, from 10.8% in the first nine months of 2023.
Previous wording
Gross margins from truck lease and rental sales decreased to 28.0% in the first six months of 2024, from 30.4% in the first six months of 2023.
Current wording
Gross margins from truck lease and rental sales decreased to 28.2% in the first nine months of 2024, from 30.4% in the first nine months of 2023.
Previous wording
SG&A expenses increased $1.5 million, or 0.3%, in the first six months of 2024, compared to the first six months of 2023. SG&A expenses equaled 13.2% of total revenue in the first six months of 2024, compared to 13.1% in the first six months of 2023.
Current wording
SG&A expenses decreased $15.9 million, or 2.1%, in the first nine months of 2024, compared to the first nine months of 2023. SG&A expenses equaled 13.0% of total revenue in the first nine months of 2024, compared to 13.1% in the first nine months of 2023.
Previous wording
Net interest expense increased $14.2 million, or 61.2%, in the first six months of 2024, compared to the first six months of 2023.
Current wording
Net interest expense increased $17.7 million, or 47.3%, in the first nine months of 2024, compared to the first nine months of 2023.
Previous wording
Income taxes decreased $12.7 million, or 21.1%, in the first six months of 2024, compared to the first six months of 2023. We provided for taxes at a 24.1% rate in the first six months of 2024 and a 24.2% rate in the first six months of 2023.
Current wording
Income taxes decreased $15.9 million in the first nine months of 2024, compared to the first nine months of 2023. We provided for taxes at a 23% rate in the first nine months of 2024 and a 24.4% rate in the first nine months of 2023.
Previous wording
Our short-term cash requirements are primarily for working capital, inventory financing, the renovation and expansion of existing facilities and the construction or purchase of new facilities. Historically, these cash requirements have been met through the retention of profits, borrowings under our floor plan arrangements and bank financings. As of June 30, 2024, we had working capital of approximately $673.0 million, including $167.3 million in cash, available to fund our operations. We believe that these funds, together with expected cash flows from operations, are sufficient to meet our operating requirements for at least the next twelve months. From time to time, we utilize our excess cash on hand to pay down our outstanding borrowings under various credit agreements. The resulting interest earned on the floor plan credit agreement with BMO Harris Bank N.A. (“BMO Harris”) (the “Floor Plan Credit Agreement”) is recognized as an offset to our interest expense.
Current wording
Our short-term cash requirements are primarily for working capital, inventory financing, the renovation and expansion of existing facilities and the construction or purchase of new facilities. Historically, these cash requirements have been met through the retention of profits, borrowings under our floor plan arrangements and bank financings. As of September 30, 2024, we had working capital of approximately $714.2 million, including $185.1 million in cash, available to fund our operations. We believe that these funds, together with expected cash flows from operations, are sufficient to meet our operating requirements for at least the next twelve months. From time to time, we utilize our excess cash on hand to pay down our outstanding borrowings under various credit agreements. The resulting interest earned on the floor plan credit agreement with BMO Harris Bank N.A. (“BMO Harris”) (the “Floor Plan Credit Agreement”) is recognized as an offset to our interest expense.
Previous wording
We continually evaluate our liquidity and capital resources based upon: (i) our cash and cash equivalents on hand; (ii) the funds that we expect to generate through future operations; (iii) current and expected borrowing availability under our secured line of credit, working capital lines of credit available under certain of our credit agreements and our Floor Plan Credit Agreement; and (iv) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, acquisitions, equity repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements, commitments and contingencies, debt repayments, acquisitions, capital expenditures and any operating requirements for at least the next twelve months.
Current wording
We continually evaluate our liquidity and capital resources based upon: (i) our cash, cash equivalents and restricted cash on hand; (ii) the funds that we expect to generate through future operations; (iii) current and expected borrowing availability under our secured line of credit, working capital lines of credit available under certain of our credit agreements and our Floor Plan Credit Agreement; and (iv) the potential impact of our capital allocation strategy and any contemplated or pending future transactions, including, but not limited to, acquisitions, equity repurchases, dividends, or other capital expenditures. We believe we will have sufficient liquidity to meet our debt service and working capital requirements, commitments and contingencies, debt repayments, acquisitions, capital expenditures and any operating requirements for at least the next twelve months.
Previous wording
Our long-term debt, floor plan financing agreements and our credit agreement with Wells Fargo Bank, National Association the (“WF Credit Agreement”) require us to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio, and the fixed charge coverage ratio. As of June 30, 2024, we were in compliance with all debt covenants related to debt secured by lease and rental units, our floor plan credit agreements and the WF Credit Agreement. We do not anticipate any breach of these covenants in the foreseeable future.
Current wording
Our long-term debt, floor plan financing agreements and the credit agreement with Wells Fargo Bank, National Association (the “WF Credit Agreement”) require us to satisfy various financial ratios such as the leverage ratio, the asset coverage ratio and the fixed charge coverage ratio. As of September 30, 2024, we were in compliance with all debt covenants related to debt secured by lease and rental units, our floor plan credit agreements and the WF Credit Agreement. We do not anticipate any breach of these covenants in the foreseeable future.
Previous wording
We expect to purchase or lease commercial vehicles worth approximately $170.0 million to $180.0 million for our leasing operations during 2024, depending on customer demand. We also expect to make capital expenditures for the purchase of recurring items such as computers, shop tools and equipment and company vehicles of approximately $35.0 million to $40.0 million during 2024.
Current wording
We expect to purchase or lease commercial vehicles worth approximately $325.0 million to $350.0 million for our leasing operations during 2024, depending on customer demand. We also expect to make capital expenditures for the purchase of recurring items such as computers, shop tools and equipment and company vehicles of approximately $40.0 million to $45.0 million during 2024.
Previous wording
During the second quarter of 2024, we paid a cash dividend of $13.5 million. Additionally, on July 31, 2024, our Board of Directors declared a cash dividend of $0.18 per share of Class A and Class B common stock, to be paid on September 10, 2024, to all shareholders of record as of August 13, 2024, which represents a 5.6% increase compared to the cash dividend we paid in the first quarter of 2024. We expect to continue paying cash dividends on a quarterly basis. However, there is no assurance as to future dividends because the declaration and payment of such dividends is subject to the business judgment of our Board of Directors and will depend on historic and projected earnings, capital requirements, covenant compliance and financial conditions and such other factors as our Board of Directors deem relevant.
Current wording
During the third quarter of 2024, we paid a cash dividend of $14.2 million. Additionally, on October 28, 2024, our Board of Directors declared a cash dividend of $0.18 per share of Class A and Class B common stock, to be paid on December 12, 2024, to all shareholders of record as of November 12, 2024. We expect to continue paying cash dividends on a quarterly basis. However, there is no assurance as to future dividends because the declaration and payment of such dividends is subject to the business judgment of our Board of Directors and will depend on historic and projected earnings, capital requirements, covenant compliance and financial conditions and such other factors as our Board of Directors deem relevant.
Previous wording
On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing management to repurchase, from time to time, up to an aggregate of $150.0 million of our shares of Class A common stock and/or Class B common stock. In connection with the adoption of the new stock repurchase plan, we terminated the prior stock repurchase plan, which was scheduled to expire on December 31, 2023. Repurchases, if any, will be made at times and in amounts as we deem appropriate and may be made through open market transactions at prevailing market prices, privately negotiated transactions or by other means in accordance with federal securities laws. The actual timing, number and value of repurchases under the stock repurchase program will be determined by management at its discretion and will depend on a number of factors, including market conditions, stock price and other factors, including those related to the ownership requirements of our dealership agreements with Peterbilt. As of June 30, 2024, we had repurchased $77.2 million of our shares of common stock under the current stock repurchase program. The current stock repurchase program expires on December 31, 2024, and may be suspended or discontinued at any time.
Current wording
On December 6, 2023, we announced that our Board of Directors approved a new stock repurchase program authorizing management to repurchase, from time to time, up to an aggregate of $150.0 million of our shares of Class A common stock and/or Class B common stock. In connection with the adoption of the new stock repurchase plan, we terminated the prior stock repurchase plan, which was scheduled to expire on December 31, 2023. Repurchases, if any, will be made at times and in amounts as we deem appropriate and may be made through open market transactions at prevailing market prices, privately negotiated transactions or by other means in accordance with federal securities laws. The actual timing, number of shares and value of repurchases under the stock repurchase program will be determined by management at its discretion and will depend on a number of factors, including market conditions, stock price and other factors. As of September 30, 2024, we had repurchased $77.4 million of our shares of common stock under the current stock repurchase program, excluding federal excise tax. The current stock repurchase program expires on December 31, 2024, and may be suspended or discontinued at any time.
Previous wording
Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. During the first six months of 2024, operating activities resulted in net cash provided by operations of $115.5 million. Net cash provided by operating activities primarily consisted of $150.3 million in net income, as well as non-cash adjustments related to depreciation and amortization of $114.3 million, stock-based compensation of $19.6 million and cash inflows for deferred income tax expense of $1.5 million. Cash provided by operating activities included an aggregate of $169.7 million net change in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $3.9 million from the increase in accounts payable, which were offset by cash outflows of $34.0 million from the increase in accounts receivable, $63.4 million from the increase in inventories, $7.6 million from the increase in other assets, $49.2 million from the decrease in customer deposits and $19.4 million from the increase in accrued expenses. Most of our commercial vehicle inventory is financed through our floor plan credit agreements.
Current wording
Cash flows from operating activities include net income adjusted for non-cash items and the effects of changes in working capital. During the first nine months of 2024, operating activities resulted in net cash provided by operations of $227.3 million. Net cash provided by operating activities primarily consisted of $229.7 million in net income, as well as non-cash adjustments related to depreciation and amortization of $175.5 million, gain on sale of property and equipment of $0.7 million, stock-based compensation of $24.9 million and the benefit for deferred income tax expense of $11.1 million. Cash used by operating activities included an aggregate of $212.7 million net changes in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $11.6 million from the increase in accounts payable, which was offset primarily by cash outflows of $108.1 million from the increase in inventories, $30.5 million from the increase in accounts receivable, $58.2 million from the decrease in customer deposits and $22.3 million from the decrease in accrued expenses. Most of our commercial vehicle inventory is financed through our floor plan credit agreements.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
During the first nine months of 2023, operating activities resulted in net cash provided by operations of $211.1 million. Net cash provided by operating activities primarily consisted of $269.9 million in net income, as well as non-cash adjustments related to depreciation and amortization of $165.1 million, gain on sale of property and equipment of $0.6 million, stock-based compensation of $25.3 million and the benefit for deferred income tax expense of $3.5 million. Cash used by operating activities included an aggregate of $252.2 million net change in operating assets and liabilities. Included in the net change in operating assets and liabilities were cash inflows of $4.5 million from the increase in accounts payable, which was offset by cash outflows of $193.7 million from the increase in inventories, $42.8 million from the increase in accounts receivable, $13.3 million from the decrease in customer deposits and $4.1 million from the decrease in accrued expenses.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Finance and insurance revenues and other revenues, as described above, have limited direct costs and, therefore, contribute a disproportionate share of gross profit.