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 September 30,
2018, the Company achieved revenues of $1.38 billion and net income
of $41.7 million, or $1.03 per diluted share, compared with
revenues of $1.26 billion and net income of $29.8 million, or $0.72
per diluted share, in the quarter ended September 30, 2017.
“A strong commercial vehicle market and overall healthy economy,
combined with progress in executing our strategic initiatives,
positively contributed to our outstanding results this quarter,”
said W.M. “Rusty” Rush, Chairman, Chief Executive Officer and
President of Rush Enterprises, Inc. “Once again, I am pleased
to declare a cash dividend, which illustrates our confidence in the
Company’s financial outlook,” Rush added.
“It is important for me to thank our employees for their
unwavering dedication to our customers,” said Rush. “Without their
hard work each and every day, a successful quarter like this would
not have been possible,” he said.
Capital Allocation
In recognition of the Company’s strong cash flow generation and
their confidence in the Company’s financial outlook, the Company
has implemented a capital allocation strategy pursuant to which the
Company expects to spend approximately 25-35% of its free cash flow
on strategic growth initiatives and 35-40% of its free cash flow on
shareholder return programs. Each year the Company expects to
repurchase shares opportunistically and to increase the dividend
over time; however, future share repurchases and 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. During the third quarter, the Company
repurchased 291,598 shares of common stock for approximately $12.1
million and paid a cash dividend of $4.7 million.
Additionally, on October 22, 2018, the Company’s Board
of Directors declared a cash dividend of $0.12 per share of Class A
and Class B Common Stock, to be paid on December 10, 2018, to all
shareholders of record as of November 7, 2018.
“We have repurchased $58.2 million of shares during 2018, and
$161.0 million of shares since we began repurchasing our shares in
2013. Issuing a quarterly dividend and continuing our share
repurchase program while also investing in our strategic growth
initiatives reflects our confidence in those initiatives and in our
ability to generate positive free cash flow in all cycles of the
truck market,” said Rush.
Operations
Aftermarket Solutions Aftermarket
products and services accounted for approximately 63.6% of the
Company's total gross profits in the third quarter, with parts,
service and body shop revenues up 13.6% as compared to the third
quarter of 2017. This contributed to a quarterly absorption
ratio of 122.4%.
“Our aftermarket performance was impressive this quarter, driven
by continued execution of our strategic initiatives and economic
strength and activity throughout the country, particularly in the
energy, refuse and construction market segments,” said Rush.
“This quarter we launched our second All-Makes Parts catalog
and opened four new locations in the Southern United States.
These new locations expand our support to customers by
providing commercial vehicle parts and services, as well as used
truck sales in two of the four locations,” he said.
“We added nearly 60 additional service technicians to
dealerships around the country in the third quarter, and we expect
our technician numbers to continue to grow in 2019,” said Rush.
“Further, this quarter we embarked on a project to increase the
hours of operation throughout our dealership network, which will
allow us to better support customers and get them up and running
even faster,” he added.
“We continue to invest in technology solutions for internal use
and integrated technology solutions that connect us to our
customers. These technology solutions are intended to
maximize uptime for our customers and drive efficiencies to our
dealerships. We believe these technology solutions
differentiate us from competitors, which is critical to our future
success,” Rush said.
“Though growth in aftermarket revenues in our Navistar
dealerships continues to trail our overall growth rate due to fewer
International trucks in operation, we are encouraged by increased
activity over the past few quarters. We remain
optimistic that contributions from our Navistar dealerships to our
aftermarket growth will continue to accelerate,” Rush added.
“While we expect the overall demand for aftermarket products and
services to remain strong, we also expect to experience typical
seasonal softness beginning in the fourth quarter and lasting
throughout the winter months,” Rush said.
Truck SalesU.S. Class 8 retail sales were
69,607 units in the third quarter, up 35% over the same period last
year, according to ACT Research. The Company sold 3,325 Class
8 trucks in the third quarter, which accounted for 4.8% of the U.S.
Class 8 truck market. ACT Research forecasts U.S. retail
sales for Class 8 vehicles to be 254,100 units in 2018, a 28.8%
increase compared to 2017.
“We had another solid quarter in Class 8 new truck sales due to
widespread activity across all market segments,” said Rush.
“Our quarterly vehicle sales are down compared to the third
quarter of 2017, primarily because of the timing of some large
fleet deliveries in the third quarter of 2017 and current new
vehicle supply chain constraints,” explained Rush. “However,
our Class 8 vehicle sales are up year to date compared to 2017,
driven by a generally strong economy and continued demand from all
markets and geographies,” he said.
“We expect our Class 8 new truck sales to accelerate in the
fourth quarter, primarily due to large fleet deliveries, but the
product mix could put pressure on truck sales margins in the
quarter,” Rush said.
“Our used truck sales are up 26% over the third quarter of last
year, driven by a robust used truck market and our efforts to
appropriately position inventory in the right markets,” Rush noted.
“Extended lead times for new Class 8 trucks are bolstering the used
truck market, helping to stabilize used truck values and decreasing
the impact of the large volume of used trucks entering the market,”
he added.
The Company’s Class 4-7 medium-duty sales increased 18% from the
third quarter of 2017, accounting for 5.1% of the total U.S.
market. U.S. Class 4-7 retail sales were 65,268 units in the
third quarter of 2018, up approximately 6% over the third quarter
of 2017. ACT Research forecasts U.S. retail sales for Class
4-7 vehicles to reach 254,000 units in 2018, a 5% increase over
2017.
“Our medium-duty truck sales significantly exceeded the market
in the third quarter due to strength in the construction sector,
especially in Florida and Texas, and activity from fleets and
leasing and rental customers,” said Rush. “We believe our
medium-duty sales will end the year strong due to our robust
inventory of work-ready trucks available to support our customers’
requirements nationwide,” he added.
Financial Highlights
In the third quarter of 2018, the Company’s gross revenues
totaled $1.38 billion, a 9.4% increase from gross revenues of $1.26
billion reported for the third quarter of 2017. Net income
for the third quarter was $41.7 million, or $1.03 per diluted
share, compared to net income of $29.8 million, or $0.72 per
diluted share, in the third quarter of 2017.
Parts, service and body shop revenues were $426.8 million in the
third quarter of 2018, compared to $375.8 million in the third
quarter of 2017. The Company delivered 3,325 new heavy-duty
trucks, 3,349 new medium-duty commercial vehicles, 567 new
light-duty commercial vehicles and 2,197 used commercial vehicles
during the third quarter of 2018, compared to 3,647 new heavy-duty
trucks, 2,828 new medium-duty commercial vehicles, 447 new
light-duty commercial vehicles and 1,743 used commercial vehicles
during the third quarter of 2017.
During the third quarter of 2018, the Company repurchased $12.1
million of its common stock, paid a cash dividend of $4.7 million
and ended the quarter with $205.6 million in cash and cash
equivalents, an increase of $57.3 million from June 30,
2018.
“I am confident in the Company’s ability to continue generate
free cash flow that will allow us to continue to invest in our
strategic initiatives while also returning capital to our
shareholders,” Rush said.
Conference Call
Information
Rush Enterprises will host its quarterly conference call to
discuss earnings for the third quarter on Wednesday,
October 24, 2018, at 10 a.m. Eastern/9 a.m. Central.
The call can be heard live by dialing 877-638-4557 (US) or
914-495-8522 (International), Conference ID 2789512 or via
the Internet at
http://investor.rushenterprises.com/events.cfm.
For those who cannot listen to the live broadcast, the webcast
will be available on our website at the above link until February
15, 2019. Listen to the audio replay until October 31, 2018,
by dialing 855-859-2056 (US) or 404-537-3406
(International) and entering the Conference ID
2789512.
About Rush Enterprises,
Inc.Rush Enterprises, Inc. is the premier
solutions provider to the commercial vehicle industry. The Company
owns and operates Rush Truck Centers, the largest network of
commercial vehicle dealerships in the United States, with more than
100 dealership locations in 21 states. These vehicle centers,
strategically located in high traffic areas on or near major
highways throughout the United States, represent truck and bus
manufacturers, including Peterbilt, International, Hino, Isuzu,
Ford, Mitsubishi, IC Bus and Blue Bird. They offer an integrated
approach to meeting customer needs — from sales of new and used
vehicles to aftermarket parts, service and body shop operations
plus financing, insurance, leasing and rental. Rush Enterprises'
operations also provide vehicle upfitting, CNG fuel systems and
vehicle telematics products. Additional information about Rush
Enterprises’ products and services is available at
www.rushenterprises.com. Follow our news on Twitter at
@rushtruckcenter and on Facebook at
facebook.com/rushtruckcenters.
Certain statements contained herein, including
those concerning current and projected market conditions, sales
forecasts, market share forecasts, demand for the Company’s
services, the impact of strategic initiatives and the Company’s
capital allocation strategy, including future issuances of cash
dividends and future repurchases of the Company’s common stock, are
“forward-looking” statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Because such
statements include risks and uncertainties, actual results may
differ materially from those expressed or implied by such
forward-looking statements. Important factors that could cause
actual results to differ materially from those expressed or implied
by such forward-looking statements include, but are not limited to,
competitive factors, general U.S. economic conditions, economic
conditions in the new and used commercial vehicle markets, customer
relations, relationships with vendors, the interest rate
environment, governmental regulation and supervision, product
introductions and acceptance, changes in industry practices,
one-time events and other factors described herein and in filings
made by the Company with the Securities and Exchange Commission. In
addition, the declaration and payment of cash dividends and
authorization of future share repurchase programs remains at the
sole discretion of the Company’s Board of Directors and the
issuance of future dividends and authorization of future share
repurchase programs will depend upon the Company’s financial
results, cash requirements, future prospects, applicable law and
other factors that may be deemed relevant by the Company’s Board of
Directors.
|
-Tables and Additional Information to Follow- |
|
|
|
RUSH ENTERPRISES, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In Thousands, Except Shares and Per Share
Amounts) |
|
|
September 30, |
|
December 31, |
|
2018 |
|
2017 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
205,569 |
|
|
$ |
124,541 |
|
Accounts
receivable, net |
|
177,162 |
|
|
|
183,875 |
|
Note receivable
affiliate |
|
12,455 |
|
|
|
11,914 |
|
Inventories,
net |
|
1,270,941 |
|
|
|
1,033,294 |
|
Prepaid expenses
and other |
|
10,281 |
|
|
|
11,969 |
|
Assets held for
sale |
|
4,827 |
|
|
|
9,505 |
|
Total current
assets |
|
1,681,235 |
|
|
|
1,375,098 |
|
Investments |
|
− |
|
|
|
6,375 |
|
Property and equipment,
net |
|
1,176,746 |
|
|
|
1,159,595 |
|
Goodwill, net |
|
291,391 |
|
|
|
291,391 |
|
Other assets, net |
|
40,431 |
|
|
|
57,680 |
|
Total
assets |
$ |
3,189,803 |
|
|
$ |
2,890,139 |
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Floor plan notes
payable |
$ |
990,594 |
|
|
$ |
778,561 |
|
Current
maturities of long-term debt |
|
159,972 |
|
|
|
145,139 |
|
Current
maturities of capital lease obligations |
|
16,977 |
|
|
|
17,119 |
|
Trade accounts
payable |
|
135,983 |
|
|
|
107,906 |
|
Customer
deposits |
|
40,569 |
|
|
|
27,350 |
|
Accrued
expenses |
|
102,986 |
|
|
|
96,132 |
|
Total current
liabilities |
|
1,447,081 |
|
|
|
1,172,207 |
|
Long-term debt, net of
current maturities |
|
439,418 |
|
|
|
466,389 |
|
Capital lease
obligations, net of current maturities |
|
54,689 |
|
|
|
66,022 |
|
Other long-term
liabilities |
|
12,020 |
|
|
|
9,837 |
|
Deferred income taxes,
net |
|
147,436 |
|
|
|
135,311 |
|
Shareholders’
equity: |
|
|
|
Preferred
stock, par value $.01 per share; 1,000,000 shares authorized; 0
shares outstanding in 2018 and 2017 |
|
– |
|
|
|
– |
|
Common
stock, par value $.01 per share; 60,000,000 Class A shares and
20,000,000 Class B shares authorized; 30,502,338 Class A shares and
8,358,525 Class B shares outstanding in 2018; and 31,345,116 Class
A shares and 8,469,427 Class B shares outstanding in 2017 |
|
458 |
|
|
|
454 |
|
Additional paid-in capital |
|
367,654 |
|
|
|
348,044 |
|
Treasury
stock, at cost: 1,988,354 class A shares and 4,962,539 class B
shares in 2018; and 934,171 class A shares and 4,625,181 class B
shares in 2017 |
|
(178,911 |
) |
|
|
(120,682 |
) |
Retained
earnings |
|
899,958 |
|
|
|
812,557 |
|
Total
shareholders’ equity |
|
1,089,159 |
|
|
|
1,040,373 |
|
Total liabilities and shareholders’ equity |
$ |
3,189,803 |
|
|
$ |
2,890,139 |
|
|
|
|
|
|
|
|
|
|
RUSH ENTERPRISES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In Thousands, Except Per Share Amounts) |
(Unaudited) |
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
New and used commercial vehicle sales |
$ |
878,845 |
|
|
$ |
819,028 |
|
$ |
2,508,970 |
|
$ |
2,230,969 |
Aftermarket products and services sales |
|
426,845 |
|
|
|
375,835 |
|
|
1,250,080 |
|
|
1,092,540 |
Lease and rental |
|
60,825 |
|
|
|
54,630 |
|
|
177,342 |
|
|
158,922 |
Finance and insurance |
|
5,053 |
|
|
|
4,771 |
|
|
15,286 |
|
|
13,092 |
Other |
|
4,568 |
|
|
|
3,195 |
|
|
14,070 |
|
|
10,256 |
Total revenue |
|
1,376,136 |
|
|
|
1,257,459 |
|
|
3,965,748 |
|
|
3,505,779 |
Cost of products sold: |
|
|
|
|
|
|
|
New and used commercial vehicle sales |
|
808,634 |
|
|
|
754,762 |
|
|
2,311,156 |
|
|
2,061,135 |
Aftermarket products and services sales |
|
268,521 |
|
|
|
237,452 |
|
|
788,148 |
|
|
693,910 |
Lease and rental |
|
49,924 |
|
|
|
45,197 |
|
|
147,015 |
|
|
133,707 |
Total cost of products sold |
|
1,127,079 |
|
|
|
1,037,411 |
|
|
3,246,319 |
|
|
2,888,752 |
Gross profit |
|
249,057 |
|
|
|
220,048 |
|
|
719,429 |
|
|
617,027 |
Selling,
general and administrative expense |
|
177,405 |
|
|
|
159,281 |
|
|
527,729 |
|
|
469,037 |
Depreciation and amortization expense |
|
12,794 |
|
|
|
12,438 |
|
|
57,395 |
|
|
37,374 |
(Loss)
gain on sale of assets |
|
(209 |
) |
|
|
107 |
|
|
159 |
|
|
76 |
Operating income |
|
58,649 |
|
|
|
48,436 |
|
|
134,464 |
|
|
110,692 |
Interest
expense, net |
|
4,468 |
|
|
|
3,101 |
|
|
13,268 |
|
|
8,716 |
Income before taxes |
|
54,181 |
|
|
|
45,335 |
|
|
121,196 |
|
|
101,976 |
Provision
for income taxes |
|
12,516 |
|
|
|
15,551 |
|
|
29,103 |
|
|
35,714 |
Net income |
$ |
41,665 |
|
|
$ |
29,784 |
|
$ |
92,093 |
|
$ |
66,262 |
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
Basic |
$
|
1.06 |
|
|
$
|
.75 |
|
$ |
2.33 |
|
$ |
1.68 |
Diluted |
$ |
1.03 |
|
|
$
|
.72 |
|
$ |
2.27 |
|
$ |
1.62 |
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
39,309 |
|
|
|
39,825 |
|
|
39,480 |
|
|
39,560 |
Diluted |
|
40,388 |
|
|
|
41,146 |
|
|
40,635 |
|
|
40,830 |
|
|
|
|
|
|
|
|
Dividends declared per common share |
$ |
0.12 |
|
|
− |
|
$ |
0.12 |
|
− |
|
|
|
|
|
|
|
|
|
|
|
This press release and the attached financial
tables contain certain non-GAAP financial measures as defined under
SEC rules, such as Adjusted total debt, Adjusted net (cash) debt,
EBITDA, Adjusted EBITDA, Free cash flow, Adjusted free cash flow
and Adjusted invested capital, which exclude certain items
disclosed in the attached financial tables. The Company
provides reconciliations of these measures to the most directly
comparable GAAP measures.
Management believes the presentation of these
non-GAAP financial measures provides useful information about the
results of operations of the Company for the current and past
periods. Management believes that investors should have the
same information available to them that management uses to assess
the Company’s operating performance and capital structure.
These non-GAAP financial measures should not be considered in
isolation or as a substitute for the most comparable GAAP financial
measures. Investors are cautioned that non-GAAP financial
measures utilized by the Company may not be comparable to similarly
titled non-GAAP financial measures used by other
companies.
|
|
|
|
|
Three Months Ended |
Vehicle Sales Revenue (in
thousands) |
|
September 30,2018 |
|
September 30,2017 |
New heavy-duty
vehicles |
|
$ |
501,478 |
|
|
$ |
515,150 |
|
New medium-duty
vehicles (including bus sales revenue) |
|
|
252,288 |
|
|
|
210,699 |
|
New light-duty
vehicles |
|
|
22,434 |
|
|
|
16,311 |
|
Used
vehicles |
|
|
97,587 |
|
|
|
73,716 |
|
Other
vehicles |
|
|
5,058 |
|
|
|
3,152 |
|
|
|
|
|
|
Absorption Ratio |
|
|
122.4 |
% |
|
|
120.9 |
% |
|
|
|
|
|
|
|
|
|
Absorption Ratio
Management uses several performance metrics to
evaluate the performance of its commercial vehicle dealerships and
considers Rush Truck Centers’ “absorption ratio” to be of critical
importance. Absorption ratio is calculated by dividing the
gross profit from the parts, service and body shop 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, then gross
profit from the sale of a commercial vehicle, after sales
commissions and inventory carrying costs, directly impacts
operating profit.
|
|
|
|
Debt Analysis (in
thousands) |
|
September 30,2018 |
September 30,2017 |
Floor plan notes
payable |
|
$ |
990,594 |
|
$ |
706,995 |
|
Current maturities of
long-term debt |
|
|
159,972 |
|
|
142,675 |
|
Current maturities of
capital lease obligations |
|
|
16,977 |
|
|
15,314 |
|
Long-term debt, net of
current maturities |
|
|
439,418 |
|
|
450,121 |
|
Capital lease
obligations, net of current maturities |
|
|
54,689 |
|
|
64,972 |
|
Total Debt
(GAAP) |
|
|
1,661,650 |
|
|
1,380,077 |
|
Adjustments: |
|
|
|
Debt related to
lease & rental fleet |
|
|
(588,079 |
) |
|
(573,978 |
) |
Floor plan notes
payable |
|
|
(990,594 |
) |
|
(706,995 |
) |
Adjusted Total
Debt (Non-GAAP) |
|
|
82,977 |
|
|
99,104 |
|
Adjustment: |
|
|
|
Cash and cash
equivalents |
|
|
(205,569 |
) |
|
(127,915 |
) |
Adjusted Net
(Cash) Debt (Non-GAAP) |
|
$ |
(122,592 |
) |
$ |
(28,811 |
) |
|
|
|
|
|
|
|
|
Management uses “Adjusted Total Debt” to reflect
the Company’s estimated financial obligations less debt related to
lease and rental fleet (L&RFD) and floor plan notes payable
(FPNP), and “Adjusted Net (Cash) Debt” to present the amount of
Adjusted Total Debt net of cash and cash equivalents on the
Company’s balance sheet. The FPNP is used to finance the
Company’s new and used inventory, with its principal balance
changing daily as vehicles are purchased and sold and the sale
proceeds are used to repay the notes. Consequently, in
managing the business, management views the FPNP as interest
bearing accounts payable, representing the cost of acquiring the
vehicle that is then repaid when the vehicle is sold, as the
Company’s credit agreements require it to repay loans used to
purchase vehicles when such vehicles are sold. The Company’s
lease & rental fleet are fully financed and are either (i)
leased to customers under long-term lease arrangements or (ii), to
a lesser extent, dedicated to the Company’s rental business.
In both cases, the lease and rental payments received fully cover
the capital costs of the lease & rental fleet (i.e., the
interest expense on the borrowings used to acquire the vehicles and
the depreciation expense associated with the vehicles), plus a
profit margin for the Company. The Company believes excluding
the FPNP and L&RFD from the Company’s total debt for this
purpose provides management with supplemental information regarding
the Company’s capital structure and leverage profile and assists
investors in performing analysis that is consistent with financial
models developed by Company management and research analysts.
“Adjusted Total Debt” and “Adjusted Net (Cash) Debt” are both
non-GAAP financial measures and should be considered in addition
to, and not as a substitute for, the Company’s debt obligations, as
reported in the Company’s consolidated balance sheet in accordance
with U.S. GAAP. Additionally, these non-GAAP measures may
vary among companies and may not be comparable to similarly titled
non-GAAP measures used by other companies.
|
|
|
|
|
Twelve Months Ended |
EBITDA (in thousands) |
|
September 30,2018 |
September 30,2017 |
Net Income
(GAAP) |
|
$ |
197,960 |
|
$ |
78,752 |
|
Provision (benefit) for
income taxes |
|
|
(42,341 |
) |
|
43,619 |
|
Interest expense |
|
|
16,862 |
|
|
11,708 |
|
Depreciation and
amortization |
|
|
70,090 |
|
|
50,153 |
|
Loss (gain) on sale of
assets |
|
|
22 |
|
|
(260 |
) |
EBITDA
(Non-GAAP) |
|
|
242,593 |
|
|
183,972 |
|
Adjustment: |
|
|
|
Interest expense
associated with FPNP |
|
|
(15,021 |
) |
|
(9,555 |
) |
Adjusted EBITDA
(Non-GAAP) |
|
$ |
227,572 |
|
$ |
174,417 |
|
|
|
|
|
|
|
|
|
The Company presents EBITDA and Adjusted EBITDA,
for the twelve months ended each period presented, as additional
information about its operating results. The presentation of
Adjusted EBITDA that excludes the addition of interest expense
associated with FPNP to EBITDA is consistent with management’s
presentation of Adjusted Total Debt, in each case reflecting
management’s view of interest expense associated with the FPNP as
an operating expense of the Company, and to provide management with
supplemental information regarding operating results and to assist
investors in performing analysis that is consistent with financial
models developed by management and research analyst. “EBITDA”
and “Adjusted EBITDA” are both non-GAAP financial measures and
should be considered in addition to, and not as a substitute for,
net income of the Company, as reported in the Company’s
consolidated statements of income in accordance with U.S.
GAAP. Additionally, these non-GAAP measures may vary among
companies and may not be comparable to similarly titled non-GAAP
measures used by other companies.
|
|
|
|
|
Twelve Months Ended |
Free Cash Flow (in thousands) |
|
September 30,2018 |
September 30,2017 |
Net cash
provided by operations (GAAP) |
|
$ |
185,485 |
|
$ |
304,726 |
|
Acquisition of property
and equipment |
|
|
(247,382 |
) |
|
(176,175 |
) |
Free cash flow
(Non-GAAP) |
|
|
(61,897 |
) |
|
128,551 |
|
Adjustments: |
|
|
|
Draws (payments)
on floor plan financing, net |
|
|
203,135 |
|
|
(35,962 |
) |
Proceeds from
L&RFD |
|
|
170,460 |
|
|
115,258 |
|
Principal
payments on L&RFD |
|
|
(160,420 |
) |
|
(153,459 |
) |
Non-maintenance
capital expenditures |
|
|
42,348 |
|
|
32,429 |
|
Adjusted Free
Cash Flow (Non-GAAP) |
|
$ |
193,626 |
|
$ |
86,817 |
|
|
|
|
|
|
|
|
|
“Free Cash Flow” and “Adjusted Free Cash Flow”
are key financial measures of the Company’s ability to generate
cash from operating its business. Free Cash Flow is
calculated by subtracting the acquisition of property and equipment
included in the Cash flows from investing activities from Net cash
provided by (used in) operating activities. For purposes of
deriving Adjusted Free Cash Flow from the Company’s operating cash
flow, Company management makes the following adjustments: (i) adds
back draws (or subtracts payments) on the floor plan financing that
are included in Cash flows from financing activities as their
purpose is to finance the vehicle inventory that is included in
Cash flows from operating activities; (ii) adds back proceeds from
notes payable related specifically to the financing of the lease
and rental fleet that are reflected in Cash flows from financing
activities; (iii) subtracts draws on floor plan financing, net and
proceeds from L&RFD related to business acquisition assets that
are included in Cash flows from investing activities; (iv)
subtracts principal payments on notes payable related specifically
to the financing of the lease and rental fleet that are included in
Cash flows from financing activities; and (v) adds back
non-maintenance capital expenditures that are for growth and
expansion (i.e. building of new dealership facilities) that are not
considered necessary to maintain the current level of cash
generated by the business. “Free Cash Flow” and “Adjusted
Free Cash Flow” are both presented so that investors have the same
financial data that management uses in evaluating the Company’s
cash flows from operating activities. “Free Cash Flow” and
“Adjusted Free Cash Flow” are both non-GAAP financial measures and
should be considered in addition to, and not as a substitute for,
net cash provided by (used in) operations of the Company, as
reported in the Company’s consolidated statement of cash flows in
accordance with U.S. GAAP. Additionally, these non-GAAP
measures may vary among companies and may not be comparable to
similarly titled non-GAAP measures used by other
companies.
|
|
|
|
Invested Capital (in thousands) |
|
September 30,2018 |
September 30,2017 |
Total Shareholders'
equity (GAAP) |
|
$ |
1,089,159 |
|
$ |
934,117 |
|
Adjusted net (cash)
(Non-GAAP) |
|
|
(122,592 |
) |
|
(28,811 |
) |
Adjusted
Invested Capital (Non-GAAP) |
|
$ |
966,567 |
|
$ |
905,306 |
|
|
|
|
|
|
|
|
|
“Adjusted Invested Capital” is a key financial
measure used by the Company to calculate its return on invested
capital. For purposes of this analysis, management excludes
L&RFD, FPNP, and cash and cash equivalents, for the reasons
provided in the debt analysis above and uses Adjusted Net Debt in
the calculation. The Company believes this approach provides
management a more accurate picture of the Company’s leverage
profile and capital structure, and assists investors in performing
analysis that is consistent with financial models developed by
Company management and research analysts. “Adjusted Net
(Cash) Debt” and “Adjusted Invested Capital” are both non-GAAP
financial measures. Additionally, these non-GAAP measures may
vary among companies and may not be comparable to similarly titled
non-GAAP measures used by other companies.
Contact:
Rush Enterprises, Inc., San Antonio Steven L. Keller,
830-302-5226
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