Rush Enterprises, Inc. Reports Fourth Quarter and Year-End 2022 Results, Announces $0.21 Per Share Dividend
Rush Enterprises reported record annual revenues of $7.1 billion for 2022, with a net income of $391.4 million, equating to earnings of $6.85 per diluted share. This reflects a significant increase from $5.1 billion in revenues and $241.4 million in net income in 2021. The board declared a cash dividend of $0.21 per share for both Class A and Class B stock, to be paid on March 16, 2023. The strong performance was attributed to increased dealership numbers and robust demand for Class 8 trucks and aftermarket services. Aftermarket revenues rose 32.3% year-over-year, contributing to overall profitability.
- Record revenues of $7.1 billion in 2022, up from $5.1 billion in 2021.
- Net income increased to $391.4 million, up from $241.4 million in 2021.
- Cash dividend declared at $0.21 per share, showcasing confidence in future performance.
- 32.3% year-over-year growth in aftermarket revenues, highlighting strong demand.
- Production constraints may affect future supply and profitability.
- Used truck values are expected to depreciate rapidly, impacting sales.
- Annual revenues of
$7.1 billion ; net income of$391.4 million - Annual earnings per diluted share of
$6.85 - Record high revenues and profitability due to increased number of dealerships and strong demand for new Class 8 trucks and aftermarket parts and services
- 4th quarter revenues of
$1.9 billion ; net income of$98.3 million - Board declares cash dividend of
$0.21 per share of Class A and Class B common stock
SAN ANTONIO, Texas, Feb. 15, 2023 (GLOBE NEWSWIRE) -- Rush Enterprises, Inc. (NASDAQ: RUSHA & RUSHB), which operates the largest network of commercial vehicle dealerships in North America, today announced that for the year ended December 31, 2022, the Company achieved revenues of
“We are very proud of our team and our record-setting financial performance in 2022. Our 2022 financial results mark the successful achievement of our previously announced strategic financial goals of achieving
“In addition to the market factors described above, a reason for our overall revenue and market share growth for 2022 was the full-year inclusion in our financials of the 17 dealership locations we acquired from the Summit Truck Group in December 2021 and the consolidation of Rush Truck Centres of Canada Limited’s 15 dealership locations into our financials starting in May 2022. As we continue our integration efforts at these dealerships, we are confident they will continue to have a positive financial impact on our organization,” said Rush.
“We are also happy to announce that our Board of Directors has declared a quarterly cash dividend of
“Looking ahead, supply chain issues are still a factor, but parts availability has improved significantly, and new truck production continues to normalize. We continue to add technicians and aftermarket sales representatives to our network, allowing us to focus on our strategic initiatives and support large national fleets. For commercial vehicle sales, we expect demand to remain strong through the first half of 2023. We expect used truck values to continue to depreciate at a higher than normal pace for at least the first half of 2023. As we look at the second half of 2023, we are closely monitoring inflation, interest rates, the housing market, spot rates and fuel prices, all of which may have an impact on demand for new vehicles and aftermarket services,” Rush added.
“As always, it is important that I thank all of our employees for their incredible performance during 2022, which was another record-setting year for us. In particular, I want to thank all of the employees at the 33 new dealerships that were integrated into our network from mid-December 2021 through 2022, as well as all of our existing employees who worked on the monumental task of integrating these new locations. I know that it is never easy to teach or learn new business processes and procedures, but I am confident that these new processes and procedures will lead to both operational and financial improvements at each of these dealerships over the next couple years,” said Rush.
Network Growth
In January 2022, the Company and Cummins closed on Cummins’ acquisition of a
On May 2, 2022, the Company acquired an additional
The Company also expanded its network with the opening of Rush Truck Centers – Miami Northwest, a parts and used truck sales location in Florida, and Rush Truck Centers – Jefferson City, a full-service International Truck dealership in Missouri. Additionally, the Company added an International franchise at Rush Truck Centers – Olathe (Kansas).
“Our new locations, including those in Ontario, Canada and those acquired in December 2021 from The Summit Truck Group, all of which are now more fully integrated into our business, strengthen our presence in major trucking markets in North America and enhance our abilities to support customers no matter when or where they need us,” said Rush. “Further, our joint venture with Cummins shows our commitment to strategic growth while supporting customers interested in natural gas vehicles,” he added.
Operations
Aftermarket Products and Services
Aftermarket products and services accounted for approximately
“We experienced strong, broad-based parts and service growth from a wide variety of market segments in 2022, particularly with respect to large fleets, refuse and energy customers. Additionally, supply chain constraints throughout the industry remained somewhat choppy, but parts availability improved significantly throughout the year. We remained focused on expanding our workforce of aftermarket sales representatives to enhance support of our national account customers, and we added more than 190 technicians to our company last year, both of which enabled us to execute on certain strategic initiatives including improving on our Xpress services offering, expanding our mobile service capabilities and increasing our ability to perform contract maintenance for large fleets. While the rate of parts growth began to plateau in the fourth quarter due to normal seasonal softness, our service revenues remained strong, driven largely by the technicians we added to our network,” said Rush.
“In 2023, we expect demand for aftermarket parts and services in the first half of the year to be consistent with demand in the second half of 2022, and we expect moderate revenue growth throughout 2023. We will continue to add technicians across the country, and we will continue to work on fully leveraging our national account relationships across our network. Further, internal resources who had been working on integrating our new locations have now transitioned back fully to revenue-producing roles. While we continue to monitor consumer spending, housing and other economic factors, with our focus on productivity, operational excellence and an enhanced customer experience, we are confident that results from our aftermarket parts and services will remain strong in 2023,” Rush said.
Commercial Vehicle Sales
New U.S. Class 8 retail truck sales totaled 259,220 units in 2022, up
“In 2022, there was widespread pent-up demand throughout our industry due to limited truck production over the past few years. While the industry experienced healthy growth in Class 8 new truck sales, continued constraints on production and the resulting truck allocation from the manufacturers we represent limited our growth potential somewhat,” said Rush. “In addition to experiencing strong demand from most of the market segments we support, our results were also positively impacted by our focus on large national accounts and the timing of some large fleet deliveries in the early part of the year, along with the full-year inclusion in our financials of the 17 dealership locations we acquired from the Summit Truck Group in December 2021 and the consolidation of Rush Truck Centres of Canada Limited’s 15 dealership locations into our financials starting in May 2022, all of which contributed to us significantly outpacing the industry and gaining market share in 2022,” he added. “In the fourth quarter, we experienced continued strong demand, particularly from over-the-road and vocational customers as well as a slight increase from energy customers. We were very pleased to end the year on such a positive note,” Rush said.
“As we look ahead to 2023, new Class 8 truck production has not yet caught up to demand, and we are still working within the confines of truck allocation. That said, production is normalizing, and we are optimistic that the production from manufacturers we represent will be adequate to meet customer demand by the end of 2023. Our backlog remains strong, and we expect truck sales to remain strong through at least the first half of 2023,” said Rush.
In 2022, the Company sold 11,025 new Class 4-7 medium-duty commercial vehicles, an increase of
“We experienced healthy widespread demand for Class 4-7 commercial vehicles in 2022, but production remained constrained due to supply chain issues, and many of our manufacturers chose to ramp up production on heavy-duty trucks, which are more profitable to produce than medium-duty commercial vehicles. However, with Hino’s increase in production year-over-year, and with the additional sales related to acquisitions, we were able to outpace the industry in 2022,” said Rush. “In the fourth quarter, our new medium-duty commercial vehicle sales declined from the peak in the third quarter, largely due to the timing of new medium-duty commercial vehicles becoming available from manufacturers,” he added.
“Looking ahead, the medium-duty manufacturers we represent are not yet back to pre-pandemic production levels; however, ACT Research is forecasting for US retail sales of Class 4-7 commercial vehicles to increase
The Company sold 7,078 used trucks in 2022, a
Leasing and Rental
Leasing and Rental revenue in 2022 was
“The financial results of our Rush Truck Leasing division were strong in 2022, driven primarily by high utilization of our rental fleet and healthy demand for leased vehicles largely due to constraints on new commercial vehicle production throughout the year,” said Rush. “Though operating costs may increase slightly due to the age of our fleet, and we may experience a slight decline in our rental utilization in 2023, we believe the financial results from our leasing and rental business will remain strong,” he said.
Financial Highlights
For the year ended December 31, 2022, the Company’s revenues totaled
Aftermarket products and services revenues were
In the fourth quarter of 2022, the Company’s revenues totaled
Aftermarket products and services revenues were
Rush Truck Leasing operates 57 PacLease and Idealease franchises across the United States and Canada with more than 10,100 trucks in its lease and rental fleet and more than 1,600 trucks under contract maintenance agreements. Lease and rental revenue increased
During 2022, the Company repurchased
“In 2017, we announced a goal of achieving revenues of
“We are very proud of our record high revenues and profitability in 2022, especially given that we were working within the confines of truck allocation and parts supply constraints. We remain dedicated to returning value to shareholders through earnings growth, quarterly dividends and our stock repurchase program while keeping our balance sheet and cash position strong and continuing to invest in our company’s future,” said Rush.
Conference Call Information
Rush Enterprises will host its quarterly conference call to discuss earnings for the fourth quarter and year-end on Thursday, February 16, 2023, at 10 a.m. Eastern/9 a.m. Central. The call can be heard live via the Internet at http://investor.rushenterprises.com/events.cfm.
Participants may register for the call at:
https://register.vevent.com/register/BIf3f73d114808404582fe8377f14402d1
While not required, it is recommended that you join the event 10 minutes prior to the start.
For those who cannot listen to the live broadcast, the webcast replay will be available at http://investor.rushenterprises.com/events.cfm.
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 North America, with more than 150 locations in 23 states and Ontario, Canada, including 125 franchised dealership locations. These vehicle centers, strategically located in high traffic areas on or near major highways throughout the United States and Ontario, Canada, represent truck and bus manufacturers, including Peterbilt, International, Hino, Isuzu, Ford, 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 CNG fuel systems (through its investment in Cummins Clean Fuel Technologies, Inc.), telematics products and other vehicle technologies, as well as vehicle up-fitting, chrome accessories and tires. For more information, please visit us at www.rushtruckcenters.com, www.rushenterprises.com and www.rushtruckcentersracing.com, on Twitter @rushtruckcenter and Facebook.com/rushtruckcenters.
Certain statements contained in this release, including those concerning current and projected market conditions, sales forecasts, market share forecasts, the impact of the acquisition of certain dealership assets from The Summit Truck Group, the impact of the operating results of the locations in Canada being consolidated into the Company’s financials and anticipated demand for the Company’s services, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements only speak as of the date of this release and the Company assumes no obligation to update the information included in this release. 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, inflation and the interest rate environment, governmental regulation and supervision, product introductions and acceptance, changes in industry practices, the duration of the COVID-19 pandemic, one-time events and other factors described herein and in filings made by the Company with the Securities and Exchange Commission, including in our annual report on Form 10-K for the fiscal year ended December 31, 2021. 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. Although we believe that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect our actual business and financial results and could cause actual results to differ materially from those in the forward-looking statements. All future written and oral forward-looking statements by us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.
-Tables and Additional Information to Follow-
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Shares and Per Share Amounts)
| December 31, | December 31, | |||||
| 2022 | 2021 | |||||
| (unaudited) | ||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 201,044 | $ | 148,146 | ||
| Accounts receivable, net | 220,651 | 140,186 | ||||
| Inventories, net | 1,429,429 | 1,020,136 | ||||
| Prepaid expenses and other | 16,619 | 15,986 | ||||
| Total current assets | 1,867,743 | 1,324,454 | ||||
| Property and equipment, net | 1,368,594 | 1,278,207 | ||||
| Operating lease right-of-use assets, net | 102,685 | 69,008 | ||||
| Goodwill, net | 416,363 | 348,580 | ||||
| Other assets, net | 65,681 | 99,728 | ||||
| Total assets | $ | 3,821,066 | $ | 3,119,977 | ||
| Liabilities and shareholders’ equity | ||||||
| Current liabilities: | ||||||
| Floor plan notes payable | $ | 933,203 | $ | 630,731 | ||
| Current maturities of finance lease obligations | 29,209 | 26,695 | ||||
| Current maturities of operating lease obligations | 15,003 | 12,096 | ||||
| Trade accounts payable | 171,717 | 122,291 | ||||
| Customer deposits | 116,240 | 80,561 | ||||
| Accrued expenses | 163,302 | 131,130 | ||||
| Total current liabilities | 1,428,674 | 1,003,504 | ||||
| Long-term debt, net of current maturities | 275,433 | 334,926 | ||||
| Finance lease obligations, net of current maturities | 93,483 | 89,835 | ||||
| Operating lease obligations, net of current maturities | 89,029 | 57,976 | ||||
| Other long-term liabilities | 19,455 | 26,514 | ||||
| Deferred income taxes, net | 151,970 | 140,473 | ||||
| Shareholders’ equity: | ||||||
| Preferred stock, par value $.01 per share; 1,000,000 shares authorized; 0 shares outstanding in 2022 and 2021 | – | – | ||||
| Common stock, par value $.01 per share; 60,000,000 Class A shares and 20,000,000 Class B shares authorized; 42,345,361 Class A shares and 12,083,085 Class B shares outstanding in 2022; and 43,107,867 Class A shares and 12,398,606 Class B shares outstanding in 2021 | 572 | 563 | ||||
| Additional paid-in capital | 500,642 | 470,750 | ||||
| Treasury stock, at cost: 1,626,777 Class A shares and 1,112,446 Class B shares in 2022; and 339,786 Class A shares and 492,052 Class B shares in 2021 | (130,930 | ) | (36,933 | ) | ||
| Retained earnings | 1,378,337 | 1,031,582 | ||||
| Accumulated other comprehensive income | (4,130 | ) | 787 | |||
| Total Rush Enterprises, Inc. shareholders’ equity | 1,744,491 | 1,466,749 | ||||
| Noncontrolling interest | 18,531 | – | ||||
| Total shareholders’ equity | 1,763,022 | 1,466,749 | ||||
| Total liabilities and shareholders’ equity | $ | 3,821,066 | $ | 3,119,977 | ||
RUSH ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||
| Revenues | |||||||||
| New and used commercial vehicle sales | $ | 1,175,195 | $ | 765,621 | $ | 4,351,370 | $ | 3,039,953 | |
| Parts and service sales | 608,748 | 469,080 | 2,372,439 | 1,793,363 | |||||
| Lease and rental | 84,696 | 64,922 | 322,257 | 247,234 | |||||
| Finance and insurance | 6,822 | 7,241 | 29,741 | 27,964 | |||||
| Other | 7,480 | 4,936 | 25,863 | 17,628 | |||||
| Total revenue | 1,882,941 | 1,311,800 | 7,101,670 | 5,126,142 | |||||
| Cost of products sold | |||||||||
| New and used commercial vehicle sales | 1,062,034 | 683,231 | 3,937,091 | 2,736,502 | |||||
| Parts and service sales | 375,376 | 289,463 | 1,455,616 | 1,109,249 | |||||
| Lease and rental | 59,426 | 44,699 | 221,804 | 188,093 | |||||
| Total cost of products sold | 1,496,836 | 1,017,393 | 5,614,511 | 4,033,844 | |||||
| Gross profit | 386,105 | 294,407 | 1,487,159 | 1,092,298 | |||||
| Selling, general and administrative expense | 235,453 | 191,761 | 927,836 | 731,340 | |||||
| Depreciation and amortization expense | 14,120 | 13,070 | 55,665 | 53,354 | |||||
| Gain on sale of assets | 22 | 275 | 2,455 | 1,432 | |||||
| Operating income | 136,554 | 89,851 | 506,113 | 309,036 | |||||
| Other income | 156 | 1,801 | 22,338 | 6,417 | |||||
| Interest expense, net | 8,462 | 1,204 | 19,124 | 1,770 | |||||
| Income before taxes | 128,248 | 90,448 | 509,327 | 313,683 | |||||
| Provision for income taxes | 29,952 | 21,809 | 117,242 | 72,268 | |||||
| Net income | 98,296 | 68,639 | 392,085 | 241,415 | |||||
| Less: Net income attributable to noncontrolling interest | (30 | ) | – | 703 | – | ||||
| Net income attributable to Rush Enterprises, Inc. | $ | 98,326 | $ | 68,639 | $ | 391,382 | $ | 241,415 | |
| Net income attributable to Rush Enterprises, Inc. per share of common stock: | |||||||||
| Basic | $ | 1.79 | $ | 1.23 | $ | 7.06 | $ | 4.32 | |
| Diluted | $ | 1.74 | $ | 1.18 | $ | 6.85 | $ | 4.17 | |
| Weighted average shares outstanding: | |||||||||
| Basic | 54,805 | 55,922 | 55,400 | 55,892 | |||||
| Diluted | 56,521 | 58,010 | 57,151 | 57,878 | |||||
| Dividends declared per common share | $ | 0.21 | $ | 0.19 | $ | 0.80 | $ | 0.74 | |
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as Adjusted net income, 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) | December 31, 2022 | December 31, 2021 | ||||
| New heavy-duty vehicles | $ | 789,638 | $ | 395,767 | ||
| New medium-duty vehicles (including bus sales revenue) | 256,749 | 212,280 | ||||
| New light-duty vehicles | 29,475 | 23,204 | ||||
| Used vehicles | 93,178 | 126,514 | ||||
| Other vehicles | 6,155 | 7,856 | ||||
| Absorption Ratio | 136.5 | % | 133.3 | % | ||
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 collision center 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
| Debt Analysis (in thousands) | December 31, 2022 | December 31, 2021 | ||||
| Floor plan notes payable | $ | 933,203 | $ | 630,731 | ||
| Current maturities of finance lease obligations | 29,209 | 26,695 | ||||
| Long-term debt, net of current maturities | 275,433 | 334,926 | ||||
| Finance lease obligations, net of current maturities | 93,483 | 89,835 | ||||
| Total Debt (GAAP) | 1,331,328 | 1,082,187 | ||||
| Adjustments: | ||||||
| Debt related to lease & rental fleet | (393,879 | ) | (447,098 | ) | ||
| Floor plan notes payable | (933,203 | ) | (630,731 | ) | ||
| Adjusted Total Debt (Non-GAAP) | 4,246 | 4,358 | ||||
| Adjustment: | ||||||
| Cash and cash equivalents | (201,044 | ) | (148,146 | ) | ||
| Adjusted Net Debt (Cash) (Non-GAAP) | $ | (196,798 | ) | $ | (143,788 | ) |
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 floor plan credit agreements require it to repay loans used to purchase vehicles when such vehicles are sold. The Company has the capacity to finance all of its lease and rental fleet under its lines of credit established for this purpose, but may choose to only partially finance the lease and rental fleet depending on business conditions and its management of cash and interest expense. The Company’s lease and rental fleet inventory 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 and 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) | December 31, 2022 | December 31, 2021 | ||||
| Net Income (GAAP) | $ | 391,382 | $ | 241,415 | ||
| Provision for income taxes | 117,242 | 72,268 | ||||
| Interest expense | 19,124 | 1,770 | ||||
| Depreciation and amortization | 55,665 | 53,354 | ||||
| Gain on sale of assets | (2,455 | ) | (1,432 | ) | ||
| EBITDA (Non-GAAP) | 580,958 | 367,375 | ||||
| Adjustments: | ||||||
| Interest income (expense) associated with FPNP | (11,785 | ) | 795 | |||
| Adjusted EBITDA (Non-GAAP) | $ | 569,173 | $ | 368,170 | ||
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) | December 31, 2022 | December 31, 2021 | ||||
| Net cash provided by operations (GAAP) | $ | 294,729 | $ | 422,346 | ||
| Acquisition of property and equipment | (243,060 | ) | (167,177 | ) | ||
| Free cash flow (Non-GAAP) | 51,669 | 255,169 | ||||
| Adjustments: | ||||||
| Draws (payments) on floor plan financing, net | 273,906 | 118,945 | ||||
| Draws (payments) on L&RFD | (140,917 | ) | ─ | |||
| Proceeds from L&RFD | ─ | 66,430 | ||||
| Principal payments on L&RFD | ─ | (137,479 | ) | |||
| Cash used for L&RF purchases | 165,673 | 43,603 | ||||
| Non-maintenance capital expenditures | 23,421 | 13,906 | ||||
| Adjusted Free Cash Flow (Non-GAAP) | $ | 373,752 | $ | 360,574 | ||
“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) adds back draws (or subtracts payments) on debt related specifically to the financing of the lease and rental fleet that are included in Cash flows from financing activities; (v) adds back lease and rental fleet purchases that are included in acquisition of property and equipment and not financed under the lines of credit for cash and interest expense management purposes; and (vi) 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) | December 31, 2022 | December 31, 2021 | ||||
| Total Rush Enterprises, Inc. shareholders’ equity (GAAP) | $ | 1,744,491 | $ | 1,466,749 | ||
| Adjusted net debt (cash) (Non-GAAP) | (196,798 | ) | (143,788 | ) | ||
| Adjusted Invested Capital (Non-GAAP) | $ | 1,547,693 | $ | 1,322,961 | ||
“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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