As a Peterbilt dealer, Rush Enterprises helped its own business and the Paccar brand with blowout sales of truck parts in the first quarter.
The nation’s largest commercial truck dealership network reported first-quarter revenues of $1.91 billion compared to $1.56 billion a year ago. Net income of $90.5 million fell slightly below $92.5 million a year ago. Diluted earnings per share were $1.60 in both periods.
Rush gained $12.5 million from the 50% sale of its Momentum Fuel Technology unit to Cummins Inc. Without that gain, Rush had income of $82.9 million, or $1.43.
Aftermarket parts for all
“In the first quarter, we experienced strong, widespread demand for aftermarket parts and services from most market segments we serve,” Rush Enterprises president, CEO and Chairman W.M. “Rusty” Rush said in a news release.
Parts service and body shop revenues were $648 million, up 19.3% year over year. The absorption ratio — an efficiency metric that measures parts and service revenue as a percentage of total dealership expenses — was 136.5%. Effectively, that allowed new and used truck sales to be booked as pure profit.
“I feel very good about the overall parts and service outlook for us going forward regardless of where the market is,” Rush told analysts on a conference call Wednesday. “If you just take the last two, three years, it has been very consistent. We’ve been outperforming our expectations when it comes to growth.”
During a Q1 earnings call Tuesday, Paccar President and CFO Harrie Schippers said working closely with its dealers continues to make the parts business a “high-margin, recurring revenue business.” Paccar posted a 32.3% margin on parts sales in the quarter.
Rush’s other main manufacturing partner, Navistar, also has updated its dealer connections to better predict what parts are needed when.
Moving the metal
Rush sold 4,365 new Class 8 trucks. That accounted for 6.4% of the total U.S. market and 2.2% of the Canada market.
“While continued truck allocation may limit our growth potential, our backlog remains strong and we believe our second-quarter Class 8 truck sales will align with our first-quarter results,” Rush said.
On the medium-duty side, Rush sold 3,038 Class 4-7 new trucks in Q1. That accounted for 5.3% of the U.S. market and 3.2% of the Canadian market.
Used truck sales fell 29.7% to 1,684 units compared with a year ago even as prices retreated to near pre-pandemic ranges after a massive run-up in 2020 and 2021. The ability of OEMs to work through remaining supply chain disruptions and increase production is leading to increased used truck inventories and lower prices.
“As new truck production continues to improve, we expect further deterioration in used truck pricing,” Rush said. “We plan to carefully manage our used truck inventory level until demand begins to increase and values stabilize.”
Related articles:
Paccar posts whopping 19.3% profit margin in Q1
Falling used truck prices push largest dealership network to sidelines
Click for more FreightWaves articles by Alan Adler.
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