Rush Enterprises Inc (NASDAQ:RUSHB) Q1 2019 Earnings Conference Call - Final Transcript
Apr 25, 2019 • 10:00 am ET
Good day, ladies and gentlemen, and welcome to the Rush Enterprises First Quarter 2019 Earnings Result. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Chairman, CEO and President of Rush Enterprises, Mr. Rusty Rush. You may begin, sir.
W.M. Rusty Rush
Good morning, everyone, and welcome to our First Quarter 2019 Earnings Release Conference Call. On the call today are Steve Keller, Chief Financial Officer; Derrek Weaver, Executive Vice President; Jay Hazelwood, Vice President and Controller; Michael Goldstone, Vice President, General Counsel and Corporate Secretary; and Steve Taylor, Vice President Medium-Duty Trucks. I would like now to turn it over to Steve Keller for some forward-looking statements. Steve?
Steven L. Keller
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, 2018, and in our other filings with the Securities and Exchange Commission.
W.M. Rusty Rush
As stated in our news release, we achieved quarterly revenues of $1.3 billion and net income of $37 million, or $0.98 per diluted share. We're extremely proud of our strong financial performance this quarter, which was driven by our focus on our strategic initiatives and positively impacted by the strengthening economy and robust industry activity. We are also pleased to declare another quarterly cash dividend of $0.12 per common share.
In the aftermarket, our parts, service and body shop revenues were $438 million, up 9.5% from the first quarter of 2018. Our aftermarket gross profit grew at an even faster pace than our revenue, resulting in aftermarket growth profit margins of 37.7% in the first quarter of 2019, compared to 36.4% in the same quarter of 2018. Our absorption ratio for the first quarter was 121.5%. Our aftermarket growth was primarily attributable to the successful execution of our strategic initiatives, particularly expanded All-Makes Parts offerings and technologies, increase in hours of operations, new service offerings and additional technicians in our network.
There was healthy activity from most locational customers, but the energy sector activity was down approximately 30% year-over-year. Given the decline in the energy section -- sector, I'm very pleased with our overall first quarter aftermarket growth. We expect industry-wide aftermarket activity to remain strong and believe that aftermarket activity in the energy sector will improve modestly throughout the remainder of the year. With our continued efforts to drive (inaudible) efficiencies and reduce dwell time through our initiatives, we believe our overall aftermarket growth will be on pace with our first quarter results.
Turning to truck sales. We sold 3,558 new Class 8 trucks, up 7% year-over-year and accounting for 5.5% of the total U.S. Class