Rush Enterprises, Inc. Q2 2010 Earnings Call Transcript
Both higher used truck values and increased back-end revenues are strong indicators that an industry recovery is underway. However, we do not anticipate a significant increase in retail truck sales during the third quarter.
Recently, most truck manufacturers have reported increases in new truck orders, indicating that confidence is returning, which we believe will lead to a strong truck sales market in 2011, 2012 and 2013.
Our balance sheet remains strong and the company has been able to generate positive cash flow despite market conditions. We are confident in our strategy and our ability to execute it. Thanks to our employees we remain financially strong and a profitable company.
We're now prepared to answer any questions you may have.Question-and-Answer SessionOperator(Operator Instructions) Our first question comes from John Barnes with RBC Capital Markets.John Barnes - RBC Capital MarketsRusty, can you talk a little bit about just the used market and the firming of used truck price? We're seeing it a little bit on both sides. The truckers are awarding used truck sales, but lower gains on sale of that equipment. Seeing from your standpoint that used prices are firming up. So can you just talk about the pricing environment there?Rusty RushThere is no question, John, that used truck values since January have firmed up since the end of last year and beginning of this year. Values have obviously firmed and increased. And at least our margins being somewhat higher than what they have been historically is the fact that you got to remember we traded for these trucks roughly in the last quarter or last half of last year.So as you sell out of that inventory in the first and second quarter of this year, as market values go up, you experienced obviously higher margins and higher return on the used truck sales. But we expect our inventory to get more in line with current valuations and margins to go down to where they were in the last two quarter and be more in line with our historical averages.Read the rest of this transcript for free on seekingalpha.com
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