rusha20210630

rusha20210630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _______________________

Commission File Number 0-20797

RUSH ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Texas

74-1733016

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

555 I.H. 35 South, Suite 500

New Braunfels, Texas 78130

(Address of principal executive offices)

(Zip Code)

(830) 302-5200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller Reporting company ☐

			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicated below is the number of shares outstanding of each of the issuer’s classes of common stock, as of July 29, 2021.

Title of Class

Number of Shares

Outstanding

Class A Common Stock, $.01 Par Value

43,164,420

Class B Common Stock, $.01 Par Value

12,522,176

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	RUSHA	NASDAQ Global Select Market
Class B Common Stock, $0.01 par value	RUSHB	NASDAQ Global Select Market

Table of Contents

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION			Page

	Item 1.	Financial Statements	3

		Consolidated Balance Sheets - June 30, 2021 (unaudited) and December 31, 2020	3

		Consolidated Statements of Income and Comprehensive Income - For the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	4

		Consolidated Statements of Shareholders’ Equity – For the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	5

		Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 2021 and 2020 (unaudited)	7

		Notes to Consolidated Financial Statements (unaudited)	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

	Item 4.	Controls and Procedures	28


PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	29

	Item 1A.	Risk Factors	29

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

	Item 3.	Defaults Upon Senior Securities	30

	Item 4.	Mine Safety Disclosures	30

	Item 5.	Other Information	30

	Item 6.	Exhibits	30

SIGNATURES			31

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2021 AND DECEMBER 31, 2020

(In Thousands, Except Shares)

	June 30,			December 31,
	2021			2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	315,911		$	312,048
Accounts receivable, net		160,435			172,481
Inventories, net		813,773			858,291
Prepaid expenses and other		16,161			14,906
Total current assets		1,306,280			1,357,726
Property and equipment, net		1,179,312			1,203,719
Operating lease right-of-use assets, net		62,025			60,577
Goodwill, net		292,142			292,142
Other assets, net		72,365			71,229
Total assets	$	2,912,124		$	2,985,393

Liabilities and shareholders’ equity
Current liabilities:
Floor plan notes payable	$	470,877		$	511,786
Current maturities of long-term debt		120,593			141,672
Current maturities of finance lease obligations		26,006			26,373
Current maturities of operating lease obligations		10,950			10,196
Trade accounts payable		124,124			110,728
Customer deposits		50,484			74,209
Accrued expenses		125,777			151,830
Total current liabilities		928,811			1,026,794
Long-term debt, net of current maturities		332,165			387,982
Finance lease obligations, net of current maturities		91,209			90,740
Operating lease obligations, net of current maturities		52,321			51,155
Other long-term liabilities		35,582			34,246
Deferred income taxes, net		111,837			126,439
Shareholders’ equity:
Preferred stock, par value $.01 per share; 1,000,000 shares authorized; 0 shares outstanding in 2021 and 2020		–			–
Common stock, par value $.01 per share; 60,000,000 Class A shares and 20,000,000 Class B shares authorized; 43,104,231 Class A shares and 12,560,943 Class B shares outstanding in 2021; and 42,503,925 Class A shares and 12,470,308 Class B shares outstanding in 2020		560			551
Additional paid-in capital		456,785			437,646
Treasury stock, at cost: 12,999 Class A shares and 327,824 Class B shares in 2021; and 10,335 Class A shares and 73,437 Class B shares in 2020		(13,585	)		(2,879	)
Retained earnings		915,003			831,850
Accumulated other comprehensive income		1,436			869
Total shareholders’ equity		1,360,199			1,268,037
Total liabilities and shareholders’ equity	$	2,912,124		$	2,985,393

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021		2020

Revenues
New and used commercial vehicle sales	$	797,269		$	559,062	$	1,544,988	$	1,348,616
Aftermarket products and services sales		445,526			377,553		861,263		805,531
Lease and rental sales		61,396			57,290		119,623		118,071
Finance and insurance		7,407			4,960		13,872		9,427
Other		4,417			3,647		8,075		7,530
Total revenue		1,316,015			1,002,512		2,547,821		2,289,175
Cost of products sold
New and used commercial vehicle sales		719,768			521,494		1,396,860		1,250,033
Aftermarket products and services sales		277,078			237,196		538,920		508,611
Lease and rental sales		48,387			51,491		96,445		103,699
Total cost of products sold		1,045,233			810,181		2,032,225		1,862,343
Gross profit		270,782			192,331		515,596		426,832
Selling, general and administrative expense		184,734			156,195		359,689		341,269
Depreciation and amortization expense		13,421			14,516		27,147		28,846
Gain on sale of assets		164			1,381		256		1,481
Operating income		72,791			23,001		129,016		58,198
Other income		1,746			1,720		2,665		2,961
Interest (income) expense, net		(212	)		2,209		295		6,978
Income before taxes		74,749			22,512		131,386		54,181
Income tax provision		16,705			5,696		28,009		14,258
Net income	$	58,044		$	16,816	$	103,377	$	39,923

Earnings per common share:
Basic	$	1.04		$	0.31	$	1.85	$	0.73
Diluted	$	1.00		$	0.30	$	1.79	$	0.72

Weighted average shares outstanding:
Basic		56,009			54,436		55,819		54,581
Diluted		57,956			55,351		57,846		55,670

Dividends declared per common share	$	0 .18		$	0.09	$	0.36	$	0.17

Comprehensive income	$	58,356		$	17,741	$	103,944	$	38,918

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In Thousands)

(Unaudited)

Common Stock

Accumulated

Outstanding

$0.01

Par

Additional

Paid-In

Treasury

Retained

Other

Comprehensive

Class A

Class B

Value

Capital

Stock

Earnings

Income

Total

Balance, December 31, 2020

42,504

12,470

551

437,646

(2,879

)

831,850

869

1,268,037

Stock options exercised and stock awards

298

–

5,416

–

5,419

Stock-based compensation related to stock options, restricted shares and employee stock purchase plan

–

11,520

–

11,520

Vesting of restricted share awards

–

345

(6,780

)

–

(6,777

)

Issuance of common stock under employee stock purchase plan

–

1,988

–

1,989

Common stock repurchases

)

(155

)

–

(6,483

)

–

(6,483

)

Dividend Class A common stock

–

(7,684

)

–

(7,684

)

Dividend Class B common stock

–

(2,380

)

–

(2,380

)

Other comprehensive income

–

255

Net income

–

45,333

–

45,333

Balance, March 31, 2021

42,885

12,660

558

449,790

(9,362

)

867,119

1,124

1,309,229

Stock options exercised and stock awards

219

–

3,926

–

3,928

Stock-based compensation related to stock options, restricted shares and employee stock purchase plan

–

3,683

–

3,683

Vesting of restricted share awards

–

(614

)

–

(614

)

Common stock repurchases

–

(99

)

–

(4,223

)

–

(4,223

)

Dividend Class A common stock

–

(7,735

)

–

(7,735

)

Dividend Class B common stock

–

(2,425

)

–

(2,425

)

Other comprehensive income

–

312

Net income

–

58,044

–

58,044

Balance, June 30, 2021

43,104

12,561

560

456,785

(13,585

)

915,003

1,436

1,360,199

Table of Contents

Common Stock

Accumulated

Outstanding

$0.01

Par

Additional

Paid-In

Treasury

Retained

Other

Comprehensive

Class A

Class B

Value

Capital

Stock

Earnings

Income (Loss)

Total

Balance, December 31, 2019

41,930

12,360

465

397,267

(304,129

)

1,065,553

337

1,159,493

Stock options exercised and stock awards

110

–

1,421

–

1,422

Stock-based compensation related to stock options, restricted shares and employee stock purchase plan

–

8,553

–

8,553

Vesting of restricted share awards

–

337

(2,416

)

–

(2,414

)

Issuance of common stock under employee stock purchase plan

–

1,900

–

1,901

Common stock repurchases

(833

)

(81

)

–

(19,902

)

–

(19,902

)

Dividend Class A common stock

–

(3,646

)

–

(3,646

)

Dividend Class B common stock

–

(1,108

)

–

(1,108

)

Other comprehensive income

–

(1,930

)

(1,930

)

Net income

–

23,107

–

23,107

Balance, March 31, 2020

41,299

12,616

469

406,725

(324,031

)

1,083,906

(1,593

)

1,165,476

Stock options exercised and stock awards

294

–

4,529

–

4,531

Stock-based compensation related to stock options, restricted shares and employee stock purchase plan

–

3,586

–

3,586

Vesting of restricted share awards

–

(28

)

–

(28

)

Dividend Class A common stock

–

(3,581

)

–

(3,581

)

Dividend Class B common stock

–

(1,165

)

–

(1,165

)

Other comprehensive income

–

925

Net income

–

16,816

–

16,816

Balance, June 30, 2020

41,593

12,616

471

414,812

(324,031

)

1,095,976

(668

)

1,186,560

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

RUSH ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2021			2020
Cash flows from operating activities:
Net income	$	103,377		$	39,923
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization		84,891			89,897
Gain on sale of property and equipment, net		(256	)		(1,481	)
Stock-based compensation expense related to employee equity awards and employee stock purchases		15,203			12,139
Deferred income tax expense		(14,602	)		(10,437	)
Change in accounts and notes receivable, net		12,046			21,027
Change in inventories, net		76,772			358,945
Change in prepaid expenses and other, net		(1,255	)		5,246
Change in trade accounts payable		12,376			(36,147	)
Payments on floor plan notes payable – trade, net		–			(32,609	)
Change in customer deposits		(23,725	)		(25,086	)
Change in accrued expenses		(26,243	)		(1,207	)
Other, net		(881	)		(2,000	)
Net cash provided by operating activities		237,703			418,210
Cash flows from investing activities:
Acquisition of property and equipment		(84,352	)		(82,236	)
Proceeds from the sale of property and equipment		327			5,342
Other		1,146			2,515
Net cash used in investing activities		(82,879	)		(74,379	)
Cash flows from financing activities:
Payments on floor plan notes payable – non-trade, net		(40,909	)		(238,781	)
Proceeds from long-term debt		52,325			119,348
Principal payments on long-term debt		(129,221	)		(160,704	)
Principal payments on finance lease obligations		(6,361	)		(5,768	)
Proceeds from issuance of shares relating to employee stock options and employee stock purchases		3,945			5,412
Payments of cash dividends		(19,922	)		(9,500	)
Common stock repurchased		(10,818	)		(19,902	)
Net cash used in financing activities		(150,961	)		(309,895	)
Net increase in cash and cash equivalents		3,863			33,936
Cash and cash equivalents, beginning of period		312,048			181,620
Cash and cash equivalents, end of period	$	315,911		$	215,556
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	13,213		$	22,559
Income taxes, net of refund

SEC Form 10-Q filed by Rush Enterprises, Inc.