Revenues of $1.0 billion, net income of $16.8 million
Earnings per diluted share of $0.46Absorption ratio 110.2%Board declares cash dividend of $0.14 per share of Class A and Class B common stock, increasing dividend by 7.7% over prior quarterly dividendCompany to resume purchases under its stock repurchase planRevenues continue to be negatively impacted by the COVID-19 pandemic and industry downturnExpense reductions allowed Company to maintain profitabilitySAN ANTONIO, Texas, July 22, 2020 (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, 2020, the Company achieved revenues of $1.003 billion and net income of $16.8 million, or $0.46 per diluted share, compared with revenues of $1.545 billion and net income of $41.6 million, or $1.10 per diluted share, in the quarter ended June 30, 2019.  Additionally, the Company’s Board of Directors declared a cash dividend of $0.14 per share of Class A and Class B Common Stock, to be paid on September 10, 2020, to all shareholders of record as of August 7, 2020.“As expected, the COVID-19 pandemic and resulting shutdown orders that forced many businesses to close, combined with the previously expected industry downturn in new commercial vehicle sales, and the unexpected energy price war and precipitous drop in oil prices, had a significant negative impact on our financial results in the second quarter,” said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and President of Rush Enterprises, Inc.  “To address the challenging market conditions, we expeditiously implemented steps to appropriately reduce and manage expenses in order to maintain profitability,” he said.“Based on current market conditions, we believe the worst is behind us. We will continue to carefully monitor the pandemic and its impact on our customers and the general economy. We believe any recovery will be gradual and intermittent over the next few quarters,” Rush said.“Despite challenging market conditions and in recognition of management’s ability to effectively manage costs while also delivering superior customer service, our Board of Directors approved a $0.01 increase in our quarterly cash dividend, our second 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 7.7% increase over the first quarter of 2020 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,” explained Rush.  “In addition, we are lifting the previously announced suspension of our stock repurchase program, effective immediately. While we intend to be cautious on stock repurchases going forward, we believe that our cash position and business outlook are both strong enough to warrant resuming repurchasing activity,” he added.“As always, but especially now, I am sincerely thankful for our dedicated employees across the country.  They remain focused on what’s important:  protecting the health and safety of themselves and those around them while helping keep our customers up and running.  Our employees are a vital part of our nation’s economic recovery and they are helping ensure that medical equipment, food and supplies get where it is needed.  And in these difficult times, our employees are keeping their spirits up, which inspires me every day,” said Rush.
Our Response to the COVID-19 Pandemic and Its Impact on Our Business and Outlook“As anticipated, following the limited effects of the COVID-19 pandemic on our revenues in the first quarter of 2020, we experienced significant revenue declines in the second quarter.  We expect our business to be negatively impacted by COVID-19 for the foreseeable future, but we are cautiously optimistic that we will not see any further declines in revenues.  With the expense reductions we have put in place over the past two quarters, we feel we are rightsized to meet the demands of the market while ensuring our Company’s long-term financial strength,” said Rush.“It should be noted that our first and foremost concern remains the health and safety of our employees, customers and communities.  Accordingly, we have implemented appropriate policies and procedures to ensure that our locations are operating in as safe a manner as possible,” Rush added.Supporting Essential Functions While Focusing on Health and Safety 
Classified as “essential businesses,” Rush Truck Centers have remained fully operational across the Company’s dealership network, though some hours of operation remain modified to accommodate previous staffing reductions and frequent cleaning and sanitizing of locations.  The Company continues to provide curbside parts pick-up, online parts ordering and web-based vehicle service communications.“We continue to stress the importance of compliance with CDC guidelines and all applicable federal, state and local executive orders for limiting the spread of COVID-19.  In addition, we are frequently communicating with employees regarding our mandatory COVID-19 policies and procedures.  Even in states or cities in which face coverings are not required, our employees are required to wear face coverings at all of our locations,” said Rush.Liquidity and Expense Reduction 
In the second quarter, the Company continued the expense reduction measures initiated in the first quarter to help navigate the challenging economic and industry conditions.  “Our expense reduction measures were widespread, came from all areas of the business, and barring any major unforeseen event, we don’t anticipate making any further expense reductions at this time,” said Rush.“It is also important to note that, despite our cost containment efforts, in early July we announced an increase to the minimum wage that we pay our hourly employees.  All of our hourly employees now make a minimum of $15 per hour.  We made this change to improve the lives of our employees and their families, and encourage them to build long careers with us,” said Rush.  “Earlier this week, we also announced that the wage freeze that we implemented during the second quarter has been lifted for our service technicians in recognition of the important work they are doing to keep our customers up and running,” he added.  “While none of us have experienced a global pandemic before, we have gone through numerous other economic downturns and crises, and we used the lessons learned and experiences gained from those times to take swift action to manage expenses based on our expectations of future market conditions,” said Rush.  “Our balance sheet and cash position are strong, even in this challenging market, and we believe we are well positioned to navigate through the downturn,” said Rush.  The Company ended the second quarter with $215.6 million in cash, compared to $137.5 million as of March 31, 2020, and had no outstanding draws on its $100 million line of credit.  “As evidenced by our decision to increase our quarterly dividend to $0.14 per share, and to resume purchases under our stock repurchase plan, we remain firmly committed to returning value to shareholders,” Rush said.OperationsAftermarket Products and Services
Aftermarket products and services accounted for approximately 73% of the Company’s total gross profit in the second quarter of 2020, with parts, service and collision center revenues reaching $377.6 million.  The Company achieved a quarterly absorption ratio of 110.2% in the second quarter of 2020.“Our second quarter aftermarket revenue declined 15.8% compared to the second quarter of last year, due to declines across the country in almost every market segment we support, which is consistent with what is happening across the industry,” said Rush.  “Activity from the energy sector remains the most severely impacted. Global pricing actions have negatively affected rig counts and the number of energy vehicles in service, and this segment is not expected to improve in the near term,” he added.“Early in the second quarter, we saw the negative impact of COVID-19 on parts sales.  However, as the quarter progressed the decline in demand for vehicle upfitting, reduced pre-delivery inspections as a result of fewer new truck sales and a reduction of our service technician workforce caused service revenues to lag behind parts revenues.“Looking ahead, there is still tremendous uncertainty about the strength of our overall economy.  We expect that any recovery will be gradual, and that COVID-19 will continue to impact our aftermarket revenues for the foreseeable future,” Rush said.  “That said, we will continue to execute our strategy and invest with discipline, especially in the technologies that are helping us support customers safely during the pandemic.  For example, our RushCare Call Centers are fully equipped to handle customer phone calls within seconds, Parts Connect offers online ordering and Service Connect offers 24/7 real-time communications.  Each of these technologies enable our customers to transact business with us safely, efficiently and conveniently, no matter where they need us. We plan to expand and enhance these types of product offerings in the future,” Rush said.Commercial Vehicle Sales
New U.S. Class 8 retail truck sales were 36,042 units in the second quarter of 2020, down 50.5% over the same period last year, according to ACT Research.  The Company sold 1,866 new Class 8 trucks in the second quarter, a decrease of 54.7% compared to the second quarter of 2019, and accounted for 5.2% of the new U.S. Class 8 truck market.  ACT Research forecasts U.S. retail sales for new Class 8 vehicles to be 159,000 units in 2020, a 43.5% decrease compared to 2019. “Our Class 8 new truck sales in the second quarter were down significantly from the same time period in 2019, as we expected they would be, due to the anticipated industry downturn in new Class 8 truck sales and the COVID-19 pandemic.  New truck sales were further impacted by production shutdowns in the beginning of the quarter by the truck manufacturers we represent.  It is worth noting that ACT Research’s current estimate of 159,000 new U.S. Class 8 retail truck sales in 2020 has increased from last quarter, when ACT Research estimated annual sales would only reach 127,500 units,” said Rush.  “In the second quarter, we experienced overall declines in demand for new Class 8 vehicles from all customer segments.  While we are beginning to see quoting activity increase, we believe customers remain hesitant to purchase new vehicles due to uncertainty regarding the COVID-19 pandemic, the economy and the upcoming presidential election.  Our truck sales professionals remain focused on understanding the needs of our customers and are positioned to support them during these challenging times.  Additionally, most of the truck manufacturers we represent are offering favorable financing terms to support customers and stimulate new truck sales,” Rush added.New U.S. Class 4 through 7 retail commercial vehicle sales were 50,287 units in the second quarter of 2020, down 28% over the same time period last year, according to ACT Research.  The Company sold 2,333 new Class 4-7 medium-duty commercial vehicles in the second quarter of 2020, a decrease of 39.7% compared to the second quarter of 2019, and accounted for 4.6% of the U.S. Class 4-7 commercial vehicle market.  ACT Research forecasts U.S. retail sales for new Class 4 through 7 vehicles to reach 176,500 units in 2020, a 33.9% decrease compared to 2019.“Similar to our Class 8 new truck sales, our second quarter Class 4 through 7 new commercial vehicle sales were significantly impacted by the COVID-19 pandemic and overall industry downturn,” said Rush.  “Uncertainty about our economy remains a concern for our medium-duty customers, as many are small businesses.  Though we have seen some cancellations of Class 4 through 7 new truck orders, those cancellations are not as prevalent as we expected,” he said.  “We believe our medium-duty truck sales will continue to be negatively impacted by the pandemic and overall weakness of the economy,” said Rush.The Company sold 1,768 used commercial trucks in the second quarter of 2020, a decrease of 15.8% over the second quarter of 2019.  “In anticipation of a decline in used truck sales resulting from the pandemic, we took aggressive action to reduce inventory and used truck pricing.  Following a significant decline in sales in April and May, used truck sales began to stabilize in June, and we expect used truck sales to remain steady moving forward.  A bright spot in the market is that spot freight rates are healthy, which is encouraging more new businesses to enter the market, and those new business usually begin by purchasing used trucks,” Rush said. Financial HighlightsIn the second quarter of 2020, the Company’s gross revenues totaled $1.003 billion, a 35.1% decrease from gross revenues of $1.545 billion reported in the second quarter of 2019.  Net income for the second quarter of 2020 was $16.8 million, or $0.46 per diluted share, compared to net income of $41.6 million, or $1.10 per diluted share, in the second quarter of 2019. Aftermarket products and services revenues were $377.6 million in the second quarter of 2020, compared to $448.2 million in the second quarter of 2019.  The Company delivered 1,866 new heavy-duty trucks, 2,333 new medium-duty commercial vehicles, 254 new light-duty commercial vehicles and 1,768 used commercial vehicles during the second quarter of 2020, compared to 4,119 new heavy-duty trucks, 3,866 new medium-duty commercial vehicles, 719 new light-duty commercial vehicles and 2,101 used commercial vehicles during the second quarter of 2019.The Company’s lease and rental revenues decreased by 7.0% in the second quarter of 2020, compared to the second quarter of 2019.  Rush Truck Leasing operates 45 PacLease and Idealease franchises with more than 8,800 trucks in its lease and rental fleet and more than 1,300 trucks under contract maintenance agreements.Conference Call Information
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