Rush Enterprises (RUSHA) 22 Oct 202020 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Rush Enterprises Incorporated Results Third Quarter 2020 Earnings Results Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host today, Mr. Rusty Rush; Chairman, CEO, and President. Sir, the floor is yours.

to quarter welcome conference earnings and call. morning our XXXX third release Good

today, Chief President, Mike Keller; the and Michael are On call, General President, McRoberts; President Controller, Officer, Counsel Weaver; Goldstone; Vice Vice Secretary. Chief Derrek Operating Executive Hazelwood; Vice Jay Corporate and and Financial Steve Officer,

few say Now, forward-looking Steve a will statements. regarding words

cause uncertainties, Act such statements our or include include the Annual Private in Form we with XX-K as actual Commission. statements or defined statements but statements expressed are December differ those may will Certain for the not Exchange Report results on year Important implied these Litigation those differ actual make XXXX, filings that of Reform materially forward-looking results our other risks materially ended and limited our from expressed Because today in could and the forward-looking forward-looking implied by XX, are and considered those factors XXXX. such Securities to Securities from statements. by to discussed

in per announced, financial the previous pandemic result split previously in along have results a release, anticipated to quarter. for delivered and or share. with we in billion revenues $X.XX $XX third industry of of of income over as we net per news indicated dividend our declared quarter. two $X.XX direct cash stock a the diluted three And share. the $X.XX our a in achieved The We COVID-XX quarterly downturn continued As common million

support its and previously optimistic increase increased a gradual, primarily customers And XXXX, continue. focused measures. second to increase notable on though will in our effect are profitability to implemented but not in are the our We monitoring reduction cautiously industry. only the sales from that recovery, economy rightsized and economic compared COVID-XX remain that we truck when experienced we the expense on and quarter with our However, revenues, we

aftermarket, our body annual $XXX the revenues were operations. our to million. shop and parts, In Turning service,

did in improve quarter This especially August absorption while Our customers. activity was over-the-road compared second XXX.X%, was and ratio when XXXX. increased X% declined year-over-year construction, due aftermarket to and September, to they refuse, from the our revenues of

pandemic the the Looking business for is normal. strength And ahead, said and though, some much total through truck decline economy, will overall aftermarket time. significantly typical and the Class slower energy we believe the still for of That US about of remain the likely, seasonal sales, sector sold not that expect improve X winter, we uncertainties X% some X will of gradual Class market. In accounted which the trucks, recovery we X,XXX continue. the new than

results pandemic downturn industrywide we and slowdown down truck significantly X as in were During an sales, Class the and expected. our year-over-year

the to our which sales country. throughout new time Government quarter and market in the XXXX, truck compared and XX% Class compared reopenings, of stimulus our sales X earlier when rates the used strengthened issued improve However, consumer spending state year the bolstered combined increased same period. this freight with payments XX% third did quarter spot truck second to

values in trucks, result, was line improvement the over-the-road earlier due increase sales truck XXXX, an for ACT activity a Further, manufacturing As limited customers. an quoting we retail X from used adjusted its to availability of industry production what new truck new a and resulted primarily experienced for Research shutdowns demand truck to and XXX,XXX the sales which with is trucks stock experienced. and estimates. consistent year. significant sales, of units in increased improved the earlier This used forecast in in Class from the

Class commercial the expect truck our results, with sales impact quarter for truck consistent to used believe foreseeable about Class X truck sales but third-quarter be continue results, third quarter the will COVID-XX our though sales and uncertainties also we new fourth our solid. to recovery vehicle sales for new by and our our will X future. encouraged are We We economic remain

Class for of over These up due Class market. from businesses. X,XXX the US accounting XXX,XXX X second forecasting in quarter, X.X% Our is truck results X retail landscaping, construction, were new and units, the increased sales XXXX. through X be Research were to primarily ACT residential X other to units small activity XX% through US sales

estimates. increase from earlier significant Another

uncertainties the grateful and believe our medium-duty economy pandemic with on we our in results. remain the continue general. in X on expect them helping while directly questions. focusing these the impacted times. and around to truck themselves I the serving fourth to Class of those that, protecting important, and our through Although, for be sales am I'll around will will quarter truly truck pace third-quarter customers, sales by We the X from what's challenging recover your and country our health our With dedicated take safety employees

from is Mr. line have the [Operator We Instructions] of first question our

Stephens. Long from Justin

line Your open. is

in in G&A. Continue see pretty that trends quarter. on right the what assuming And front, be G&A start kind we with to to would quarter? fourth thinking ACT number is looking maybe G&A then that So, sales, year, some the next should about that environment? third in positive of we on How see truck into

always we're this of we've so to course, far be I'm going the All From been very in perspective, look of you, a it question, right, What is that reduction to relatively And thing able like year. G&A. that's tell does the to forward? QX going going right? I'm One flat. accomplish G&A proud

which less have have eat that days which some have that. offset We to few less holidays, into working few a a -

probably QX. would with relatively you I flat tell So,

service some as picked the seeing business has gradual of expenses in up. our increases are parts We some and

goals forward some you, retain continues to I've how much As gross we've going told going grow. to got we're and profit as

all has been we've with our We have year. a think all believe, get from we've where going we'll these we're like with to sure. tell line. believe of gross we're settle spend basis, that does look out, through going that the already using, we to and maybe there heads to taken - wait is we'll in confident to do have I'm looks down, living, QX, the a discussed how for to fourth up in I still down be pans And all looking will We to because see somewhere with have not ahead good Understanding tell big than little this this to perspective, pretty less just job some We'll come the going out dropping that's from we rise, in QX, make we pandemic rich, we and do rest we're to but XX, extra of every year, a our parts, would it how we these goal turn But won't into try an a and very run do sell it everybody right? at things expenses what I of as of next And I slightly as we that be it we out got a hopefully will for what as historically. to you, that where you, take managing industry probably that conference pretty to would things as as stuff, be increase around I this, and we more things, bottom service, able profit We be and better of once any already we're gross are But, that them wrapped go starting expense in forward. that dollar flat, XX% we and quarter. spend, their produce though, profit, somewhere folks. that, seeing we because good the parts around money. close

goal. but So is that - the

profit. expense that the your would gross the be - from QX, the of expense QX an from using level So profit as grow perspective, not backing is there with off QX baseline, we gross

about we're okay. not and we're service, talking here, about Now, talking trucks parts

So of I'm is it G&A cost we business. overall separately - sales, S trucks. And not the I at truck in to variable it the component we look is split because a there's always would running manage - G&A, and about S tied talking

So, I some it. you flavor there hope on it gives

It that the Have in and does. thoughts in top-line like October the and service, any service, Thanks. things August And just really what versus third? seen into and fourth sounds September. quarter performance in parts continue and parts it with strength saw you on picked up you

don't I know to that yes. we're increase Well, a lot. going

got at really look shortage three - it is You've lot. working the it's quarter, days a You we the fourth less. look And right? year, working-day-quarter of at the the

and on Saturdays and many how we we Mondays Fridays you've work stuff, by measure it Now got. and

- that XX three XX to got we days less versus going I'm in days less because will QX, so days. three You've working believe be slightly off working

It's - where December, but and off, I for bit average So we'll maintain sometimes nice, a exactly always a business. to I'm least day always expect perspective. from they're but slightly months November, good and at. at service not per not the believe wintertime - Holidays be parts going is are my always favorite do February to are little January, we're our

to think so believe maintain. I more day working July, went you'll through sustainable. dropped I - profit slightly May, expect and get really there we once we in so bit we in stay average, again, in us I was We from happen. all see the it per we're were was think think gross Years, year, a some have down start So - but but March believe to profit see not perspective, we'll a you gross growing XX-month that flat, that said, less really - be call. the And last and you days, very dropped we I in I backwards that. told picked But to we little back April, April service, we don't it obviously, similar. parts it's we up come But increases - that honest. into all our okay. but in but the wintertime, June, do We dramatically. - go two But I from August, Marches. just I started once interesting pro dramatically, as it's like

from next Cook our Suisse. line have of Credit question from Jamie We the

Your open. line is

And just up on quarter, were are in from you good question, Rusty, I the first where hope guess, were quarter. Nice margins I the guys in fairly truck you quarter. the well. second side, the

progress stuff to of I just markets is forward, people terms on budgets that concerned you fleet in of like slightly like the potentially talk color just say lower little about trending. there from about then, Thank And this as margins a what just trends How parts seeing So can quarter if that? service going more service and and you expect view the ordering in - segment? just were you. just stating on to more terms are guys where that versus seeing big you're Any guess trends? vocational broadly could or the with of they've within from/or in your just relative that question, mix on been you my - second where you're versus concerns parts business, within

bet. Class I slightly used You that - sales, Around tell would you up. X new were truck sales, truck

in That's really, really back to were QX, got slightly, moving new. - always from up, they that I a We used right? though boom, You're effect the up finished dramatically because captured But on XX% make up comes right? So then the - picks margins here QX, that's market margins fortunately, almost And hit it, sales, think a and market, because - on and used marking inventory, rightsized even we you were okay. less the to they on you sixes took five, into the truck of used time everything, used has what - in if your XXs go Class March, think and right right? quarter in truck but up, I XX% used up had some market last and we So, up, remember, QX, lose values do some were okay? you all margins to new, you were roll was you the market the target. as in indicative it. were lot they the XX, were X

the on So of the to and time, the in X% QX where everything got move, the down started way new blinding up and picked side then used inventories inventories side. both on while, the this we our typical because hit was good it in the had a XX% when stock because when was you from the everything it for to on X% side COVID it's the back

margins So was right than that okay, truck and helped we - the - growth the service quarter. there. a From that in parts perspective, of parts service, doubled more

the less XX% typically run, lot say service, a but were varying just parts in is balances, range, margin service remember parts and So, than XX%. exist

we right you don't back that I I growth be staying I'm to and per-day would sort accelerating we'll I go expect issue for maybe going up parts parts what fee trough to and Justin. slightly where is it's to not So better forward service and but like sure is combined there. in basis I day picking a going - start more the just in on said saw, a lot as think service because the I mix it December, up, line it's works. keep of pick we do usually earlier up margins. QX, here a with November, think at a in per way we're than January, It's in February. that

much be being parts in a was to honest, - the rate for than overall quarter. a reason issue, margins So with margins - blended at mix basically higher service growing the that the being

you to trying you just just you're the how on out sort - were on I'm understand up, with municipal vocational talked then on and to state what viewpoint truck margins the of your about the side about that? there just why budgets, concerned follow concerns And seeing trends but better are specifically

to stuff of in buildings that residential morning. outside we're And commercial when we pretty that those in believe areas strong. housing areas. of had just tie don't you. see can a I get had at totally over the still be areas we're is in I all ways for government, okay. get me three, guess, perspective. the and lot gas, - okay. construction, of aggregate you I tell in still how least, look When okay, type that, at I - still at, I of different a is spent - construction where trucks are morning believe - customers we - like to many it took - around so still And no, a barely vocational strong, construction, I are still that'd comes to to go this try I vocational three couldn't at, this it stuff, here Yes, lot see, It side this we'll we're still of construction money here, seeing call there's But, in a I since understand residential road to you that still at you lot but been eight oil around got construction, broader

they remain in I margins at, honest. saw are line XX. But, in date now. Now, for stuff that's still sustainability our look and to all used, don't XX-month out blessed. sustainable. typical a margins mean decently to truck the at - I think more we've be six-month what folks, you feel the I where other eight everybody know sustainable, got but I anyone. I'm not as quarter, out environment. outlook a the I in It's to I can you be not window. this challenge XX right hard The XX-month I to there, got would six, puts me solid, right don't with than uncertainties with now give to I

And from we America. of question from Obin have next Andrew our Bank

is open. line Your

questions. So a couple of

like So the because share, have exposure your how we sort the specific of rest Rush do not upturn, then Peterbilt an market should And brands, industry-specific guess, of you market very and relative terms to about does international. I Navistar right? behaves and the in the behave think in big you Peterbilt industry. It ones, of own have

be over differences? say, in months? think XX an the any going should Are to months your XX there next, how big market industry to So about relative the let's share we upturn to

tell X back, market from I the hope is would our I I believe Andrew, share QX, would that mean, No, this, that in bottom. I that Class when troughed you so, you look don't - X%

don't I market range, look We been, solid continue And still anticipate volume to will that XXXX, would - as were believe, it depending terms. what have market year high-fives historically fall go forward. will that the was they think in on was going what I in anticipate I to I they that Peterbilt's to a and big is. off. I on historical is And Navistar's share, we grow at solid, - share low-sixes, would back

pretty one the couldn't to O&G, I where we've would look And for that four I - are. Probably is five gas maintain because you, and us the I So to have us, we biggest the like and we about feel my that's and be customers, headwind reasons oil so OEMs feel done without sell good ago. to with capturing used years that folks, we X been. I'm where we're we're think Class having historically for have prints trucks. but proud new I the that been years, we've of of done print, honest

you Colorado, nice of exposure, So places, to and very themselves. oil a huge our job around speak results all And the declines sort New ourselves of it. the has look lots this had in - let areas of done organization And when right? Texas, at with I'll Oklahoma, do we those for and gas reinvent Mexico,

I more guess, fleets you Peterbilt when to share, and but maybe market sort so, take was - specifically. - peak would, some what thought in, I to the offline, I referring that's particularly have can was I it I come of of what lose just is when but cycle was structurally large the what vocational, we exposure always you to, referring that's and

If you think…

ago. the have in market no if been right, look and they But Andrew, 'XX, I at last years you uptick, 'XX share. grew disrespect, could you back think look you historically, if

years go those And Okay. were market, big over-the-road too.

and from base, game, perspective, okay. our in customer the their they So back broadened Navistar's

worried had market wish answer. oil a we than getting better lot share, I'd don't, and that's what the very business than do but I'm picking of more not and I feel size historically about I have. I seeing, up we but gas, our good. we're just you're So to over-the-road whole the

So effectively? can ACT I line model with forecast, you in

the would months pretty I seeing or to XX stuff be we're I've pandemic, better seem numbers days. seen the prior order days like I'm into during hard months - we're much last that me, not to XX the That said, XX now. intake correct. even - were be that about now. it's pandemic. right - obviously didn't than And right much that the but over right the getting we've mean, XX but buying I to booking, solid activity We look seen out feel to over to their I

And just Rusty. follow-up question, a

You've in activity could the just key - it you. by some done terms you and terms of us but seeing geographies through what of economic of past, Thank geography? just walk us walk in you in key are your through

Sure. the Look at coast.

they've Florida a while picked a construction, the growth all and also, on a Both are driven ends, and been in stores World ends. factors when been done, California, has have as by going in automotive haulers, right? is Surprisingly for Florida From growth good. lot closed start car a And everything from But had we of on, varying parts strong, Florida, with while dip Florida service right their it - Mouse has the has Let's strong. - - Mickey of Mickey pretty you other always to in both has and has going what especially took So, see been stuff lot we're the it over-the-road Florida. business an there. it Orlando perspective. with California population with a

or Ohio, a good. solid, viewing around. As sales some know coming truck perspective, was a we've truck in - right, around different, North pretty Virginia, Illinois my country, I sales hit we've it's Carolina, and solid. pretty intake work truck hit - orders, parts service from from my you the way

we're look some a as than they the well strong the is in California, and If for being you, negatives, areas, would so-so. the suffering last - gas Texas. those doing West too are up, you perspective, Florida still tell Picking Mountain as Utah, up were say by West some Mexico and better what Colorado, in still way we I in return related. suffering, out we New strongest, We're of would we're and areas. in in Arizona but because Into oil and like not from Idaho. year in Arizona,

will I I'm the So, here, at broad-based. And would was say, I out. ones the that those stand just be is over here. it looking my around But Map map at running mean, the side. I

next Your question comes Joel Instructions] the [Operator Tiss from BMO. of from line

is Your open. line

Mr. Tiss?

Take it off mute, Joel.

open. is Mr. Joel continue, your line

think we on. I to move have

two have We more questions.

the Funds. question a have Kim Gabelli from of from Shawn We line

Your line is open.

Joel, hopefully, suffice Good here. I'm I morning, not guys. but

think a guys. payment you you you had -- news a guys on shed neared Navistar from quick how big would to had Just the guys to get the question combination Rusty, Wanted When light that Obviously, that can documents have wanted final that the for Anything Friday. question your thoughts long-term? follow on on impacts announcement. trade be some else you quick guys you and up for signed? the but,

I brings so? sometimes a through this like I to of technology going or my think the middle a - in next they've signed far I being transition But From And done would going as especially then, as prior, partner the all Well, the - that in, of you that, is think, the imagine, going would tell working guess. expect I the part. you, next decade expect great, do plan, to would would global from late month I have happen. a long-term. When [indiscernible] - plus about conjecture in closed, strong, you perspective bounced They'd that that new - they'll What - here late, the deal, documents take just transition my of global greenway, totally or as path something have technology, with that sometimes get about far a would out be been - pretty partner. and they with on winter, think to going it's springtime it's we diligence product I'm that. with remember? think new the I would already all over talk So little imagine it? things I it's as not I perspective. It maybe along amount closure new off of. due would great the I'm a - a the the SEC leverage the forward, money what's to that's

Sometimes, I to lot you, standalone. be transition the tell people they not going money, global it's not as off just ability that to happen. will that but a say, have as a And takes leverage the of fast so efforts of [indiscernible]

So work from [technical difficulty] and our scratch. both brand most perspective, when for big the up, don't Obviously, just trades American this come organizations. start that's just business. It a in truck commercial win-win likely, the didn't Northern [technical that from into way difficulty] country

I about feel do. it. really excited it. I'm So, I about good

I No forward over water already that's it. think Navistar I but range. difficulty] it's the the That's things to product organization happen. and it's that from not been to organization, old last look like as long-term to costs, great. agreements, remember needed and they've to and great, the so. [technical but forces stir, joint disrespect LTAs already That's adding had a - something it's the of they've already, good growth

bought a piece donations acquisition, the years, is start a the I [technical I prior years normal out, just this when three [indiscernible] ago. way what to they're when - think of conclusion it supposed was well difficulty] four that - to it the on unlike this, then of work mean,

you. Thank

BMO. Joel line we think of Tiss the from have I

open. Your line is

hear me now? you Can Okay.

you've you're fallen sure Joel. awake, all. Making was Okay. That's I worried, asleep…

with you're the Rusty, most salary one. paycheck Well, paycheck? a is I first manage to question kind Okay. of important XX% you everybody how cut? knows did the think

haven't - - XXXK, did I'd we paycheck, still, they're thing things we only by creditors and October. back QX, taken question, of that our still clarity, but get maybe actually continue the Yeah. haven't have given, one I'm normal did was some reinstated able, we way, bring creep bit of as - started We was my we all back seriously day, started after my back, get I'm are all Joel. The part because expense back, reinstated my bringing We is, we the a did. Not and the is more back, to that things little still me, will as get reinstate. we we'll it as that's in I back. plan I Well, of mine. still reduction just I'm to by be Those money my be bring

right. You're

making Joel, have for sure tequila you money we're difficulty] enough [technical food. and

I a all and it. - allowance. get That's That's tequila food get I

going That's your Navistar good. like And going or tell? not lot that everyone's I three-year Or on with wondered, going five-year what's on it's be profitable early a and think trading, to just kind basis do to are you of around dancing it's matter? a more to too with to dealerships

go of I'd No believe it don't - you decade. right? history the the where anywhere not I better to to it have I matters back because like them, still the returns last are

many back not order getting for So one, the believe growth of they two getting those reasons, to - this max there. force, personnel and footing, taken better perspective and then rounded. a on. the our freight all after better? with through perspectives, on solid gotten Are internal for the getting from okay, internal our other arms You our returns got forgetting we have And, trough's it, Navistar's just

So a like when years growth is we still XX we being believe with in dealer Peterbilt freight the that's together don't link the of Navistar. what it's have believe right? it better I the you mix, you do one arm to and of of add pieces - organization, that I believe the biggest

in new not this they technology going been. quite ballgame only to, as can with all guess tight get from time units, having had stay to stuff, that's budgets great that the to So they probably to CapEx better about that's - worry I only as have help. going with be

from thing nothing few a be better, the people, a but we were And getting we about So inning and we're - things. of running be still few in where the and were and months still win Board we're can now years whole a made to and third product, gross investments that ago. we're in the the these will in look, where

got it lot So, a mind. runway my yes. of on in That's

better You it. believe

then in that's disruption that are finding to me, too drive And to all back or work profitability? is something likely much - disruption the all one the the market get in the with you you're last the market for do into there or internally acquisitions to is that more

markets, steep me, I'd spelled market's propped decline rocketed and and that everybody find like the money up back PPP, and So strong. buying they a okay? whole back the was got. was then it just everybody, rose then freight as they're back sharp, with up up happened to such come unlike freight Remember but with with because some goods what the all all

- drop you I feel everybody's you steep - fill a perspective It really transportation May was a because inventories a see but didn't say and such and told beginning to the the that's had was and up. then happened. up virtually - fill shelves me foresee from back comeback shelves back back to what in the exactly exactly you'd June, didn't that So happening what if

miles So, freight's in you're run. been what seeing doing being ways the whatever

somewhere something don't I M&A, much down I, think unfortunately, have So, looking, the been somewhere, always but - show up we're line. I'm will sure, there not hasn't

the not any Speakers, Chairman, turn CEO, showing [Operator to Rush; Mr. to I conference this questions would time. further President. like at back I'm Instructions] and Rusty

And the worry and we the for all election, I each from be get holiday I'm a of time last speak one going else. the this the everyone. families, been a I with everything then long perspective, every through wish best not and and but the first your everyone about of it's and will with you all, year election, Well, the holidays once to week

enjoy savor and throughout to talk the much. in make will the that, see please you you very families holidays. moments and we sure Other Thank you your February. than to again with So

Ladies concludes Thank you. conference you Thank and gentlemen, this for joining. today's all call.

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