RUSHA - Earnings call transcript Q4 2019

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Operator

Good morning, ladies and gentlemen, and welcome to the Rush Enterprises, Inc. Fourth Quarter and Year End 2019 Earnings Results. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

to conference like host, to now Mr. would turn over the your I CEO President. Rush, and Rusty Chairman,

Rusty Rush

Good and XXXX earnings morning year release quarter everyone conference welcome to call. fourth our end

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

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

Steve Keller

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

Rusty Rush

$X.XX was indicated diluted fourth per news release, we or billion and revenues In achieved share. As diluted $XX.X income of net million income on in or quarter $XXX.X share million revenues net of the of billion. annual our $X.X per $X.XX $X.X

company the high work which resulted year, record their in this proud financial are hard We strong performance our team and for of our revenues.

initiatives, strong for markets most results support. were by demand strong Our economy segments and our driven of a largely execution we strategic

XXX.X%. our revenues center annual parts and aftermarket, billion our annual were collision the and In service absorption rate was $X.X and

all-makes primarily to growth growth in rate XXXX. our doubling industry expanded in customer parts annual the was revenues investments nearly offerings and Our in XXXX, aftermarket team. by and growth technologies, increased sales internal compared facing The aftermarket X.X% driven aftermarket

quarter of were than aftermarket compared XXXX. the third flat fourth more down compared anticipated, of to XXXX quarter and the to revenues Fourth quarter

addition experienced customers decline energy, in aftermarket In we and seasonal over-the-road the to during activity, from demand leasing decreased quarter. typical the medium-duty

parts to productivity in our customer helped our aftermarket XXXX We slightly industry-wide investments Express particularly flat and improved we've expedite we an Services, continued the demand to technologies, for aftermarket repairs But our expect we dwell time will compared believe, and with in focus through on the aftermarket outpace XXXX. services in initiatives, growth XXXX. be industry made and distribution in reduced

for up sales. In new Class market. X over Turning total sold XXXX, X.X% of drugs, X the Class truck now and U.S. year to X% XX,XXX the accounted we previous

sales Our to first of the healthy primarily market new grew segments quarter due quarter through the of Class truck X strong activity XXXX, across the most and steadily we support. economy third from XXXX

of have clearly believe, grow are this challenge we to begin to XXXX. the Class primarily softer industry-wide be U.S. customer X share from expected X were In XXXX, will That negatively will XXXX. ACT down Class as truck quarter capacity a fourth later in to predicted declined XXXX Research impacted by XXXX, fourth Class be Research, rates. timing market X XX.X% in new XXX,XXX the compared to and to rates the strong retail that, sales U.S. allow forecast ACT freight excess certain currently fleet Truck freight our in year in improve the further results of said, and units deliveries. by base, our of sales sales vocational we trucks due market to a XXXX, quarter of and us

across needs record Research the with ability market. X.X% setting retail XXXX. year, continued meet sales, the forecasts due again In for Class and our sales X.X% X-X significantly to achieved We of the product U.S. Class medium-duty, new reached for Class outpacing year-over-year truck up customers' this X-X units, XXX,XXX year sales truck market offerings our for XX.X% country. down be U.S. XX,XXX wide ACT units of to to a X-X range accounted

segments results the from industry believe We will support our the pace expect Class with X-X on we customer be in and solid activity XXXX.

area of of dealerships Ontario, Rush In equity Canada operates international network in XXXX, Truck the Rush four in growth, and locations added Limited, purchased which we Canada. XX Center in Truck of XX% new the truck Centers

During stock. company XXXX, common $XX.X million of repurchased the

common a fourth repurchase $XXX plan the the $X.X repurchase allows company stock XXXX. of quarter During its adopted that million stock repurchased us million of to December XX, XXXX, of and through

during shareholders fourth during a XXXX, a million $X.X XXXX. of paid dividend of the Additionally, for $XX.X quarter total of cash million to we paid

and share shareholders, cash our to in our program commitment growing capital long reflect and repurchase strategy term returning of while confidence our dividends Our business. our

the financial $XXX.X ended a position year We in million in including strong cash.

market We have implemented reductions anticipation XXXX. expense in conditions already in of company-wide challenging

and due and benefits do hard employee financial we in I seasonal to However, quarter strong to to initiatives, XXXX. strategic our for to XXXX employees sequentially our like expect in general higher first helped results their increases expenses commitment such and customers thank our achieve of be which in would taxes. normal work the administrative us

With that, I take will your questions.

Operator

[Operator Jamie Credit question your from with first Instructions] Suisse. And Cook comes

Jamie Cook

your aftermarket think for of grow XXXX? provides is start to question, to bottoming, confidence about energy those we as good energy, you much sort bottoming? was Was guess base how quarter, to just is questions quarter given we in you characterize Rusty Thank Hi, - that was a quarter. give I last thought. what while And short follow-up good street what Rusty, then how And fourth trying you line my questions. you talked my the relative morning. guidance, earnings and markets couple don't there to about this fourth would to of out surprised and in XXXX I guess should the to of a the anything then where think about figure as had with your XXXX, a hi, you. of couple expectations? just, question street in just if the the it I'm Steve.

Rusty Rush

Okay. All right.

of all, expected. you was what First I asked, it

Jamie Cook

Yes.

Rusty Rush

what and in to It in and September August, tell on I lot not because into as was little unfolded we really from I it saw I end was. especially of going August-September middle in It's more, I December. was - don't I parts back the was bet, big QX mean you it I color, timing checking was was it expected, how alone ever. But right? a what wasn't around happening of QX not biggest that last month. country had a quarter, saw month the we I some perspective. said, of add a guess I our area. It quarter - was November, Jamie truck I the mean, the it think through as got helps, And issues really I what and done biggest expected, that you difficult December the service. over a was the of it the deliveries. I've year, quarter could was, I big

and little in then, honest but we QX be talk to a so deliveries we with QX. timing came than about I'll you, had in anticipated in that of quicker And - some a minute,

- on This and X,XXX December. it trough. in just was little units a and in in, it difficult sale got attention service And decline. really month. be some my was always we that was have December. this, exasperated a especially I the will decline December say very sense not more it's truck from that a and So But quite is I under truck parts off to we mean but was going we so and were much were I knew perspective. going

in Okay. parts I'm confident as in go we're that, service. from be and Sequentially, forward. to that perspective, up we going

way Now the I now. in At and At was out were it's I quarter, did when you my as much now would look feel the it's on did. I'm should of a of not well expect look parts like better, explain talk about, it's will I It's whole don't feel QX, forward, to handled a you energy view going - when February, that? same unfolding would That out be be at and than perspective, to. the out would and we're front lot your would is in know us, the at about a asked tell - it at That to know, our service - we up far right than going we're but about rate - I as a I do lot I time, right sort and there time, I you better same see a can't sure better that - and way I window December as whether month working you, through out of and we the December better. can't than - from you you also. forward comment feel 'XX I I I - for trough, time, How's same how same I not look better now, but the that January XX. know,

the while New there have Colorado, it Energy business a ago, Texas, Mexico for it is sure, in four has an same we're on. energy effect, effect realizing, company lot it had on doesn't years Oklahoma, the going still of where

was XX We was where QX peak pass peak, down, from the we're to in the 'XX, the say got in quarter of two-thirds, just 'XX got peak were trough, we were, to to trough. peak So QX and it? to ' our going from which a we we're XX% a quarter

I than a continued see QX when QX headwinds was calls, any than right? throughout more than year, we can't that. and more QX. as QX. few to QX continues on I on down So that mentioned the in was have drop it it was worse At time, the down it I getting call It the QX will same other because the

it's believe bottomed. Now, I do

Okay? bottomed. From But great. getting it's does the that I'm mean reports it's

up QX area, I we some hopefully. have really, direction don't much better were QX that to than make that's do one go - that's and sequential And headwinds I with the QX. more So case. hope but

call parts we my and headwinds stabilization It's half pickups in those growth to and a the year to. parts of get one the last the - just a you - slightly possibility perspective, I a there seasonality at slight talked in that be believe service to just any other reasons minute the - I down markets of back about down, that's I me, I after as I'll early second the So, seeing is because were probably if real and come ago, we happen. of and I'll I'll back they're the And from of like the of of talk start get probably one just But will in know look when in flat like year. going that's as why that it the a just year. have and reasons, service year, will - the towards go

of like half, can this another. second last about when I'd pick go 'XX slouch. other thing be - they service year the and fleet. But say, in parts here - people and Now was firms second we year folks because biggest mean up for and think have - the what magnitude different I and this can't research that sit okay, with were but was - okay, where that you maintain the people I in the the And I look freshened no might we the some think - that it, to you still we at you surprised have history, tell one flat, up I believe, fleet, you can get are quarter, back just in when I reports, most you can calling can't was we about year. right? or will project XXXX confidence

through it's forever, of and goes lot these - may to every we but fixes, will year. acceptances spend then up everything folks on going and next what and don't what's a not this world. be that we've you've oversupply add [indiscernible] got the - but in just think freshened - just I an when industrial could now because - corrections It's generate we over got lasting the our on out over that's the be So we you correcting and industry going there, it's

you market, on rabble I'll us just industry my think From a we I'll it's so share mouth, exasperation will sales there's be out leveling some is got hand historically, pretty it the industry an perspective, and to But I it's get but of truck I I and I the did have. I'm What can I gas the always every done to up you people our feel ahead gone time out the take it I G&A. we've If This on doom a have for so. and believe, thing, truck taking, not And because oil here. smaller it's mean backlog. per mind. again ask But have know, we I don't time good sector. everything with say same side, gloom, and some driven. questions, for getting worked about wait have on more market we the I - at

Jamie Cook

Thank Okay. Rusty. I appreciate you. color, the

Rusty Rush

You bet.

Operator

next from Justin Stephens. Your Long question comes with

Justin Long

Thanks morning. and good

you a energy headwind So and in maybe circling lower. energy the business related the commentary. with could wise the back way what up in you exited know year Is I to service And XXXX? there frame parts that

headwind to well? in be So as what you're for XXXX assuming that

Rusty Rush

that. won't you XXXX XXXX. How about that? be as get closer Well, bad as The

and does it the warning big said, little it look was much advance give That hard you business, it it you to I a inside So being lot for guidance when don't going now, it. oil on where times perspective year. it I much believe from it's to is get try - bit it's you turns EPS warning give I down, know, pickups, don't on just - thing trough. either. one any last right an here advance to don't a The doesn't much, of I'm about turns Steve you of get you It's not right a - need give what there you feel. working

XX%. So when it's I at QX, look as trough will down

So it's a big quarter.

'XX. last guidance as but cost compared between to year, last nothing $X.XX it and to it somewhere far like used year to, what $X.XX As probably us

$X.XX you Okay? somewhere that, last early Probably be and all in year us probably year mostly. directed we forward, half know, go but $X.XX and that of will as the cost up

QX, probably rest $X.XX on spread last when So first back over that you really, are when more and that will year say - into QX the too, know that at XX% $X.XX, but you weighted, QX $X.XX, as look first I in QX, look a little we some the really two $X.XX. guess, be - goes - I heavily

that. give that's the there can I best on So you right

that's this - and of just right? in what year. happen, to rest for something and That's pass. to in great. don't does believe, I explosion at Now look does If But good. any least come we this big if It's got it, it

leave as of believe subside headwinds we go those. in year do in because all some and perspective we'll some believe some and I right, the and we've do headwinds it growth half from that we're the believe Now I perspective, reason room we take for it mean from didn't service other with in here do of for in and a early though, and capable back can't out the because better get much but I of thought service I year-over-year. of growth, we those a will most share have QX. QX stuff doesn't why parts done. other called areas, that's that flat, think become those stabilized That there of when parts I our of on. It's can markets But we're capable the it.

Justin Long

That helps. parts top-line X.X% in and from you were about in just perspective XXXX. up And service, a

were would just If trend a market that say you for, looking took the energy, sense double-digit? probably closer wanted to I out, the you get at to was. the what underlying you

Rusty Rush

okay? It there, may but really be close, quite not

Justin Long

Okay.

Rusty Rush

to I'm times. going bucket this across as to how of easy high is Remember, pretty intelligence and somewhere all High, thousands sometimes trying it. customers in have you good we singles, and mean not do think. clear is not I okay? But there, thousands on them

okay? but - okay? to somewhere the very dining Very - to table, so say there, high would close So I up

Justin Long

you Okay, And that's then, cuts G&A earlier. the mentioned helpful.

you expect update process. on on savings that updated any thoughts where an in are XXXX. just to you So in And wanted the get

Rusty Rush

Remember, in the P&L. to Well, is as the up QX sheet weighted we the get that we into years the benefits I to is it go - taxes. Once for just me there and always rest XX to - declines comes year, I'll second. that's the last gets There G&A the through the March. remember throughout mentioned, let And balance heavily every get all headwind a in year some expensed with shows year. that of way QX

always - and those from you QX and we have where expect of be high but too. a pretty be headwinds, we're good QX, we outside pretty a to operating quite if headwinds, So in those quarter. it QX so perspective, bit be from have I QX - were. going I QX year's to got an to last and to expect back then very will similar brought our it QX

to cuts will because a this come contractual throughout some It's be immediate roll will G&A there's in down flat them what last and total of all itself They mix stuff. in there probably semi-fixed but into of those probably QX, SG&A some weren't inside, And also some they fairly were because effect, - now so went were, of year. G&A stuff, personnel.

got a we really year. roll of QX of to while for in expenses It's about to some just the We're it so are where it define benefit some are the just we of on all, monitoring that daily we're this attention as business top we but still on that. we're where and And And at not didn't it hard basis. get we into will what. others, So I'll closely stay go we'll exactly at and forward. we me weekly paying leave

Justin Long

it guys. for Fair there. time enough. the leave I'll Thanks

Rusty Rush

takes going But sure an I each for in confidence with two everything be thing, and I don't going again QX, down to If less we QX I'm than had one against year. this okay? we a if spreading flat last on annualized do, that we're sure, for three, year and quarter. because happen from would, being I'm really in look last believe effect year, got to G&A last increases perspective. we're I've Yes. mean, I down to - basis, QX

Justin Long

I helpful. the That's great. appreciate Okay, time.

Rusty Rush

You bet.

Operator

Joel BMO. Tiss Your next comes question from with

Joel Tiss

you so is had but two. much, it like questions, have now Yes, talked XX I How going? I only

Rusty Rush

Perfect. Absolutely perfect, Joel.

Joel Tiss

Can and around mean you any - is you little like trade Navistar how like sort what trade and parts in to market? go just of talk about guys bit for or maybe you thinking any a preliminary

Rusty Rush

I you this, stir, more you term long be think proprietary right? - okay, and help it's parts think water light Volkswagen a not not would at those look, the what to as where, what, know, I it, deals okay. can work, going and over obviously and time, switch. evolve but parts, light switches, now, are Well, you it's It's add look not but I'm details, things ownership tell So Those going they're right? which if you groups margins, into proprietary. how how, driven don't I given towards to that - -predominantly, most European and get knowing when know, they

and purchasing, expect obviously takes would long So help time, of But I continue the improvements it to it product, they've be time the engineering will stuff they're over in and goal, will built would collaborating proprietary already takes on be stuff, right, to years. -and term though which imagine been that for perspective. improvements couple in there already, there's there's a that I last parts from

would truck stronger, in sheet. say, will has to the you I From the expect greater have to ability know be going than able invest stronger a it - way to I would be And past. been balance they'll perspective, that they're a

about where engine are Those we to right from ask service happen to if at is parts there want we're parts the more those I XXXX didn't the XXXX, tailwinds ought in and So right that any again right now, hardly started look, to you headwinds I can got continues questions, still I are haven't talk not sold the from to now there, having but service and Joel. we've are XXXX, comes fortify there, going [indiscernible] can business now - but I - mean products that of. you we do you sit right? that got. mean, belief distributorship, to tell that really nothing there's

- market than so sold we're what and share was out then for you parts from a while, right wise perspective So with a and the those headwinds now go have would, the glove a after you facing of normally [ph] gone marketplace service was, it's country. really if those different happens this what running usually down go most OEMs stores and aggressively have were path, and stuff in you to just out

the yes, seen At time, But that organization. believe it question, on of truck We'll with do all on good better smaller you are tell term have will pass. the they'll come to you a this but we still do your side are for the know those we'll same continue and to for and division believe truck in We I help long viability the for it it's hopefully when the us Can't market year. working sales sales last side well it. on year, it. tailwinds

Joel Tiss

give of for like like then you ballpark, help just you. And Steve, as it's us to maybe half, a percent Thank SG&A a kind flow. little of how can bit do first going think second half, you of of sales,

Steve Keller

for - when truckers high dollar year, down go revenue our So go truck will items the individual considerably. down since sales in such obviously

overall SG&A, even increase expense we're as Our a of cuts revenue. percentage doing will though

you that sales. it for by know the quarter to year, depend So XX.X% in last of to the And versus where on flow be range it year. truck is of spread probably that was XX% the will going

half rate. sales We expect of the to run be than QX our first better truck

and first unfold be we're second half will truck see to going it on of in closer and sales to in probably to the So year of wait the half the that year. have XX.X% how the

out. gives to model So it hopefully, that you enough

Joel Tiss

thank very much. you Okay,

Operator

next And question from Instructions] your Chris comes with Buckingham Armes [Operator Research.

Chris Armes

morning gentlemen. Hey, good

the cost Just to continue in here. about talking

fourth in permanent reductions bit that? expense think more just were actions quarter. you called provide about the how of little or deferred and those to you on So color or kind a Can company-wide out those

Rusty Rush

were there obviously was and outside because mechanics organization. count a roll at at I ago reduction a somehow, expenses outside probably sometimes there probably there be across reduction mentioned are a I Well, technicians And a the from and in that the looked to personnel and of think areas technicians, entire minute were are little X% network. was some other don't those I a technicians, looked inside all personnel the X% continuing in reduction, expenses of later. personnel semi-fixed

because things on you're So contracts - that. like and

it cut going You'll this, this I'm it or to much, renew out say, well, to I'm I'm to for not going cut going it to entirely.

- I don't those contracts, things have all some So of but to to evolve. So can't happen. things right? break those you allow

There plug earlier, as there first year up every monitor, Again, is said employee call from that first we always continue quarter stuff my expensed in the will quarter. get to shows up that like I out benefits, with, equity a outside shows in seasonal company. for the the quarter first of flat that in hard especially seasonal deployed would the this of things

will So pretty believe be some stuff to QX. of continues in roll-in. down but - I flattened the QX we more do Year-over-year, and good while as

On SG&A without at, S sale me- at you can where trucks. it's tied year - you only directly Because the go going an am down. part is back look as sell of G&A. trucks, those last really I perspective, - that's that's So to the to

know to it. we believe monitor and be will need we take more if and I you and to measures we what So believe there that's that continue taken, will

work working going the be QX not continue to will but X We in QX from truck perspective, that's they trough we'll was quarter up in it, January. was There but look sequentially. believe back in to. QX. dramatically, parts sequentially filling said they same over I the As this some now some to going than February and year. to be I QX, this slightly way stuff, was at in to We'd on said, and better sale up in happening Class service that and continue sequentially continue a expenses were time. QX That is March. trough, are through believe message That I going to the timing haven't they're in a

that's I'm know you at. where So

Chris Armes

we ask kind what truck? like of heavy-duty I you that about M&A, a if kind downcycle are then of how it. the just secondly, a looks And in as Got guys pipeline could approaching and enter

Rusty Rush

back at have trough, downturn I have I opportunities are five, really always we do. if M&A a Well, it look They was it they XX wasn't it. taken real company. as But is yet. mean, a what ago in hasn't I taken They feel counting I quarter if pretty would haven't show? they to call back. that off. was you wanted. the But I not we know, good, disaster. back it we've me, like The it been didn't it but good given better hasn't The really heat, mean don't last really as had did believe the pennies years year. shown may QX. the - the still feel You from their Will Everybody year. felt much we on,

Do any that I you I'm If wouldn't right I the sure anyway. there will arise. did, As now? opportunities have be year tell I unfolds,

just simple it's that. as as So

Chris Armes

for Thanks color, fair. the That's Rusty.

Rusty Rush

You're welcome.

Operator

back questions Mr. I'm hand I the this showing Rusty no at would time, to to now conference further like Rush.

Rusty Rush

Obviously, won't of be I've you I you here we got comment long just the my little go April. folks, talk to talking Well, be We'll in again. before till off a to cup. own obviously we

bit we quarter good I what weeks will throughout was on the not, wasn't on you'd feel it expenses, fourth we be four than the like. a forward, promise produce little we I wanted, really was whether While of short, focused three, a laser is dramatic efforts side, my I are that focus just whether can on in a I ago. that and on going going the Again it sales on did organization the that sides, That lot got it's but the with lot trough or window laser-focused. the feel we've ways QX was all reports a better that and trough very

Thank you all in April. to and that. on very count speak we'll you can You much

Operator

and Ladies conference. have for today's this you Thank and gentlemen, concludes your participation wonderful day. a

may disconnect. all You

Rush Enterprises (RUSHB) 14 Feb 202019 Q4 Earnings call transcript