Rush Enterprises Inc (NASDAQ:RUSHA) Q1 2016 Earnings Conference Call - Preliminary Transcript
Apr 21, 2016 • 10:00 am ET
Good day, ladies and gentlemen. And welcome to the Rush Enterprises, Incorporated First Quarter 2016 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.
I would now like to introduce your host for today's conference, Mr. Rusty Rush, Chairman, CEO and President. Sir, please go ahead.
Good morning everyone and welcome to our first quarter 2016 earnings release conference call. On the call today are Marty Naegelin, Senior Vice President; Steve Keller, Senior Vice President and Chief Financial Officer; Jay Hazelwood, Vice President and Controller, and Derrek Weaver, Senior Vice President, General Counsel and Secretary.
Now, Steve will say a few words regarding forward-looking statements.
Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our 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 those discussed in our Annual Report on Form 10-K for the year ended December 31, 2015 and our other filings with the Securities and Exchange Commission.
As indicated in our news release, we achieved revenues of $1.1 billion and net income of $2.4 million or $0.06 per diluted share. As expected, increased capacity from 2015, new record Class 8 truck sales depressed used truck values and continue softness in the energy sector negatively impacted our financial performance this quarter. As a result, we've implemented broad and significant expense reductions.
During the first quarter we took measures to reduce our personnel and variable expenses by approximately $6 million per quarter. Additionally we have recently announced our plan to consolidate 12 Navistar Division locations and to existing dealerships that are operating close proximity to each other. Majority of these consolidations will take place in May and June.
We've also consolidated one location in our Peterbilt Division into a nearby location in Texas. When complete we expect these consolidations will result an additional annual expense savings of approximately $11 million. We will continue to closely monitor the current business environment and will make expense credits that we believe on that best interest for our customers and shareholders.
In the aftermarket, our parts, service and body shop revenues were $342 million and absorption ration of 106.4%, continue decline in the energy sector adversely affecting our parts and service business in the first quarter. We will now offset portion of loss revenues with general vehicle maintenance and repair activity on the Western and Southeast coasts, which are benefiting from the improved economy and related construction.
We remained diligent in our efforts to pursue incremental aftermarket revenues initiatives all-makes parts, rapid parts call centers, mobile services, telematics and expanded RushCare services.
Turning to truck sales. U.S.