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Rush Enterprises

Industry suppliers Rush Enterprises Inc. and Allison Transmission Holdings Inc. said net income and revenue dropped in the fourth quarter and that they were taking a guarded approach to 2016.

For the period ended Dec. 31, Rush, the nation’s only publicly traded commercial vehicle dealership, reported that quarterly net income of $9.8 million, or 24 cents, dropped 60% compared with $24.6 million, or 60 cents in the same quarter of the previous year.

Revenue slipped to $1.2 billion compared with $1.3 billion in the 2014 quarter.

For the year, net income fell 17% to $66.1 million, or $1.61 per share, compared with $80 million, or $1.96, in 2014.

Revenue rose to $5 billion from $4.7 billion reported in 2014.

The quarterly results included a $6.1 million write-down of new and used-truck inventory in the fourth quarter of 2015, which reduced quarterly and 2015 per-share earnings by 9 cents, according to the company.

“We were able to offset lost revenues from declining energy-related Class 8 truck sales with lower-margin truck sales to large fleets throughout 2015,” said W.M. “Rusty” Rush, chairman and CEO.

“This lower-margin business combined with declining demand for aftermarket services from the energy sector and a significant decline in used-truck values in the fourth quarter, had a negative impact on net income and earnings,” he said.

San Antonio-based Rush operates 118 dealerships in 21 states.

Overall, the company said it sold 37,702 new and used commercial vehicles in 2015, a 7% increase from 35,352 in 2014.

Of those, 16,874 were new heavy-duty trucks, 11,241 new medium-duty vehicles, 1,665 new light-duty vehicles and 7,922 used vehicles.

Looking at 2016, Rush said his company’s Class 8 sales could be off 15% to 20% compared with 2015. “A lot is going to have to do with the economy,” he said.

ACT Research forecast U.S. retail sales of Class 8 trucks to total 222,000 units in 2016, a 12.2% decrease from 2015 retail sales.

“Given the decreasing freight trends,” Rush said, “increased capacity as a result of 2015 being the best truck sales year since 2006, lower used-truck values and ongoing slowness in the energy sector, we believe 2016 U.S. retail sales of Class 8 trucks could be significantly less.”

Meanwhile, Allison Transmission, based in Indianapolis and a global provider of fully automatic transmissions for medium- and heavy-duty commercial vehicles, said that fourth-quarter net income of $13 million, or 8 cents, fell 74% from $50.5 million, or 28 cents, a year earlier amid weakness in its off-highway segment.

Revenue slipped to $478 million, down 12% from $544 million, but that exceeded the “consensus estimate of $465 million,” analyst Jamie Cook with Credit Suisse said in an investor note.

For the year, Allison reported net income of $182.3 million, or $1.03, down 20% from $228.6 million, or $1.25, in 2014.

Sales in 2015 slipped to $1.98 billion from $2.13 billion in 2014.

“During the fourth quarter, we refinanced all debt maturing in 2017 to 2019, settled $10 million of share repurchases, paid a dividend of 15 cents per share and repaid $6 million of debt,” according to the company’s earnings announcement.

Allison’s guidance is for its sales to fall 6.5% to 9.5% this year.

“Given expectations for tempering demand conditions in the North America on-highway end market, no meaningful relief from the global off-highway end markets challenges and divergent global economic environments, Allison is taking a guarded approach to 2016,” said Lawrence Dewey, chairman and CEO.

In a conference call, Dewey said the company has a “pretty clear view” of the next several months based on interactions with truck makers, relative to their line rates and down days.

“It appears they are addressing what has been a growing inventory situation, both in medium-duty and more pronounced in Class 8 straight trucks,” he said.

“Medium-duty is more stable, but still some signs of softness are there,” Dewey said.

“We look at the inventory-to-retail-sales numbers . . . and that has gone [in] the wrong direction,” he added, “and we have seen the [truck makers] addressing that in a fairly aggressive manner. Obviously, that impacts us.”��