Rush Enterprises Inc (NASDAQ:RUSHA) Q1 2016 Earnings Conference Call - Preliminary Transcript
Apr 21, 2016 • 10:00 am ET
Class 8 retail sales were down 6% over the first quarter, while our Class 8 truck sales decreased 34% over the same time period, accounting for 5% of the U.S. Class 8 market.
Overcapacity of fleet trucks, low used truck valuations and choppy freight environment have caused many fleets [Indecipherable] new Class 8 purchases and we believe this trend will continue through the year.
For 2016, ACT research forecast U.S. Class 8 retail sales will be 207,000 units, down 18% compared to 2015. Given the challenging market conditions impacting large fleets and softness in energy sector, we expect our Class 8 new truck sales of 2015 could decrease more than ACT's current forecast. We do believe our used truck inventories were firmly valued given these conditions.
Our Class 4-7 new truck sales reached 3,271 units in the first quarter, up 22% over 2015 and outpaced the U.S. medium-duty market which increased by 20% over the same time period. Rush's Class 4-7 new truck sales accounting for 5.7% of the total U.S. market.
Our strong medium-duty business was the result of a stable demand across the country in a range of market segments, large deliveries, several lease and rental fleets and continue to be for work-ready inventory to support construction in Florida and California.
ACT research forecast U.S. Class 4-7 retail sales to be 220,850 units in 2016, a 1% increase compared to 2015. We believe our Class 4-7 new truck sales remain on phase with the U.S retail market.
Selling, general and administrative expenses increased in the first quarter compared to the fourth quarter 2015 doing employee benefits, payroll taxes as well as the restructuring charge relating to the closing of certain dealerships and disposition of excess real estate we took. We expect our selling, general and administrative expenses to continue to decrease throughout the remainder of 2016. In the area of growth, we completed ongoing facility construction, renovation and expansion projects in California, Colorado, Ohio and Texas, enhancing service capabilities across our network. And we open a new Peterbilt location in Kentucky.We also launched Rush service Rescue Service connect technology platform which allows customers to receive real time repair status updates, we expand the enemy's manner a minimum compressed natural gas fuel systems product offerings. And closing and great with our employees are mainly focused on our customers and working to launch new initiatives while managing costs across the organization their dedication is greatly appreciated and we work to the challenging market cycle.
With that, I'll take your question.
Thank you, ladies and gentlemen, if you have a question at this time (Operator instruction). And our first question comes from Neil Frohnapple from Longbow Research. Your line is now open.
Hi, good morning, gentlemen. Rust the growth in aftermarket in the first quarter was a positive surprise versus what we are expecting. So it's just trying to get a sense of what do you think for aftermarket revenue for the remainder of the year would you expect, some of